Legal Liability Of False Disclosure In China

In the beginning of this article, the author makes brief introductionand comments on the information disclosure systems of several countriesin the world and the one of China as the starting point of the rest ofthe article. Then based on two logical questions: who to disclose and whomto disclose to and disclosure regulations in China's securities law, theauthor categorizes four groups of parties who shoulder the disclosureobligation: 1) issuer, sponsor and their responsible persons; 2)securities traders and their responsible persons; 3) securitiesintermediary agencies and their responsible person; 4) regulators andtheir responsible persons. The securities investment consultationagencies, credit rating agencies, registration and clearance agencies,common entities and the common public are excluded. The categorizationnot only highlights the essence of information disclosure: disclosureobligation is compulsory and for public interests but also leads out thedisclosure regulations and punishment and remedies on false disclosure.After this, this article makes extensive explanation on "false",including the disclosure violating the substantive principles of truth,accuracy, completeness and timeliness and procedural principles ofstandardization and applicability. Based on this understanding and thecategorization of disclosure obligators, "grossness standard" isintroduced and definition of false disclosure is given. Starting from the basic theory of legal liability, this articlediscusses the composition of legal liabilities of false disclosure. Thecategorization of disclosure obligators solves the problem of who are theparties liable for false disclosure. The explanation of the meanings offalse and false disclosure solves the problem of the objective mattersof false disclosure legal liability. Through analysis and argumentation,this article solves both the subjective side and the objective one of theissue. In the false disclosure civil liability part, this article analysesof issuer's and sponsor's liability competition of breach of contractand torts and their responsible person's torts liability and commentson the principle of strict liability imputation. This article alsoanalyses the torts liabilities of law firms, accounting firms, assetsevaluation agencies and their responsible persons and the previousparties ' liability imputation principles. In the administrativeliability part, the different means of administrative liabilities areanalyses in the method of explanatory jurisprudence and the strength ofimplementation and punishment, transparency and system of theadministrative regulation and supervision of information disclosure areexamined. In the criminal liability part, this article summarizes thecriminal law provisions on false disclosure and analyses different crimesof false disclosure. Through the previous introduction, this articlemakes comments on the leak hole of application, narrowness of punishedsubjects and weakness of punishment. As the regulator deserves special consideration, there is a separatesection in this article on this issue. The author defines the regulator's administrative liabilities, criminal liabilities and administrativecompensation liabilities as governmental liabilities and states that thisis a natural conclusion for a country ruled of law. This article commentson the administrative compensation liability of the regulator to theinvestors and explains the theoretical and legal reasonableness of theliability. In the author's opinion, the introduction of the previousliability has a much more profound meaning than that of investmentcompensation.