The Research On The Legal System Of Prospectus Mandatory Disclosure

The prospectus is an important document of the public offering mandatory disclosure system under the registration system.Prospectus registration can implement securities issuance supervision,prospectus communication can promote the formation of securities prices,and the disclosure responsibility of prospectus can prevent securities fraud and enhance investor confidence.To improve the quality and effectiveness of mandatory disclosure under the background of the registration system,it is necessary to study the prospectus disclosure regulation system.This paper attempts to outline the legal reform direction of China’s prospectus disclosure under the registration system by using normative analysis methods,historical analysis methods,comparative analysis methods,cultural analysis methods,empirical analysis methods,combined with the theoretical changes and legislative evolution of prospectus disclosure under the registration system.This paper is divided into six chapters:The first chapter combs the theory basis of prospectus mandatory disclosure.The prospectus is not only a recommendation document for securities issuance but also a legal document for securities issuance supervision.It has the dual attributes of public law and private law.The prospectus misrepresentation belong to public offering fraud.The optimal compensation for securities fraud must consider many factors,such as unconditional deterrence of public offering fraud,transaction fairness and management incentive,wealth transfer and risk dispersion,and the importance of difference in disclosure documents.The mandatory disclosure system is famous for the old saying “sunshine is the best insecticide”.The disclosure philosophy has triggered a long time debate.The strong SEC,securities law competition and securities law contract model provide a new paradigm to solve the deficiency of mandatory disclosure.The legal functions of prospectus disclosure are reflected in issuance supervision,market measurement,investment education,and fiduciary shaping.The second chapter reviews the legislative evolution of the prospectus mandatory disclosure system.Firstly,the registration and disclosure of prospectus have experienced decentralization,compliance,and integration.Registration decentralization is reflected in central and local,public and self-discipline two dimensions.Registration compliance includes formal review,exchange quality control and fair control of blue sky law.Registration integration is represented by horizontal legislation of international and regional,issuance and trading markets and financial legal system.Secondly,the registration procedure control and communication exemption based on the gun jumping rule are constantly improved.The network environment and standard text put forward new requirements for the electronic and concise disclosure of the prospectus.Thirdly,the liability of the prospectus has experienced the independence,interaction and aggravation of the degree.The liability of the primary market is independent of the secondary market.The communication and registration of the prospectus may lead to a variety of liabilities.Compared with the liability of the secondary market,the liability of the prospectus is more stringent.Finally,the motivation to improve registration disclosure lies in the local competition,law enforcement competition,and international competition of securities regulation.The improvement of communication disclosure quality is related to the informed layman theory and information filtering theory.The improvement of disclosure responsibility is due to the decline of contract law and the displacement of contract law from contract law to tort law.The third chapter analyzes the problems existing in China’s prospectus disclosure system and looks forward to the improving direction of prospectus mandatory disclosure under the registration system.Under the background of China’s registration system reform,public offering supervision focuses on information disclosure,and the accountability mechanism for fraudulent issuance is upgraded.However,there are still some problems,such as limited types,homogeneous content of prospectus,single procedure of prospectus disclosure and limited law enforcement of prospectus misrepresentation.The reason for the problem is that the restrictive interpretation of the legal nature limits the function of the prospectus,the popular misunderstanding of the dichotomy of approval system and registration system deviates from the orientation of the prospectus disclosure system,the civil liability for misrepresentation is mixed with legislation,which overhead the civil litigation right of the prospectus and the double presumption of fraud market causality weakens the accountability effect of the prospectus.To further optimize the business environment,cultivate the rational investment culture,guide the securities litigation rights protection and serve the overall situation of national rejuvenation,the design of China’s prospectus information disclosure system under the registration system should establish the concepts of fairness and efficiency,equal emphasis on openness and substance,high-quality response and investor-friendly disclosure.The direction of system adjustment lies in the refinement of registration procedure control,the optimization of registration supervision allocation,the strengthen of effective market communication,and the coordination of responsible public and private law enforcement.The fourth chapter discusses the types and contents of China’s prospectus under the registration system.Firstly,enrich the types of the prospectus.The legal nature of the prospectus should be expanded and interpreted,so as to realize the expansion of appearance and form.The supply of summary prospectus,preliminary prospectus,and free writing prospectus shall be increased,and the information revision mechanism of registered prospectus shall be established.Secondly,improve the disclosure content of the prospectus.The disclosure of voluntary information shall follow the principle of fairness and shall not be selectively disclosed.Forward-looking information can use bespeaks caution doctrine as a defense against securities fraud,the language of the risk factors must be meaningful.Thirdly,improve the recognized standards of material information in the prospectus,the standards of reasonable investors and price fluctuation should be considered,and the qualitative and quantitative standards could also be judged comprehensively.For forward-looking information,the identification of material information should be based on the possibility of the event and the magnitude of the event.The fifth chapter discusses the perfection of China’s prospectus mandatory disclosure system under the registration system.Firstly,a variety of compliance standards shall be considered in the registration review of a stock exchange,and the intervention time of the CSRC shall be further advanced to conduct the formal review,fairness review,and the filing of the prospectus.In the process of registration,cancellation of transactions based on material adverse changes shall be allowed.Secondly,the restrictions on prospectus communication should also be relaxed by the introduction of the gun-jumping rule,and provide differentiated prospectus communication exemptions of different types and contents for different subjects based on different stages of the silent period,waiting period,and effective period of the registration procedure.Thirdly,if the issuer has submitted the registered prospectus through the network,the access equals delivery rule can be applied.The identification of electronic delivery of the prospectus shall meet the requirement of notification,access,and delivery certificate,the notification shall be authorized by the informed consent of the investor.Finally,formulate the simplified disclosure guidelines for the prospectus,clarify the requirements for language simplification and format optimization,and improve the expression skills.The sixth chapter discusses the dynamic liability of China’s prospectus mandatory disclosure under the registration system.Firstly,discusses the legal liability for the defects of the prospectus registration procedure.Criminal liability involves the crime of public offerings without authorization and the crime of public offering fraud.Administrative responsibility involves administrative penalties and self-discipline measures that do not meet legal conditions and procedures.The civil remedy for the return of the issue price caused by the defect of the registration procedure should be interpreted as the liability for contracting fault.If considering to introduction of the gun-jumping rule,the civil liability of the issuer for violating the communication procedure should also be enhanced.Secondly,discusses the liability subject of prospectus registration,communication misrepresentation,including scienter and negligence,causation determination,and exemption defense under the logic of the distinction between the primary market and the secondary market.Thirdly,discusses the claim concurrence of public offering fraud in the primary market and securities misrepresentation liability in the secondary market,the supply of cause of action of securities market misrepresentation should be increased,the tracking limit for civil claims of public offering fraud in the secondary market should be required,the determination of public offering fraud in the secondary market should return to the price impact.