A Study On Several Legal Problems Of Small And Medium Investors 'Protection In China' S Securities Market

To protect medium and small investors’ rights and interest is the most important and central issue of the worldwide capital market’s development. As China’s economy develops rapidly, numerous discussions and practical investigations prove that the more perfect and complete the country or region’s laws that protect medium and small investors’ rights are, the more advanced the stock markets will be, the better capability that the market could withstand financial risks, and the more effectively to promote the economic development.In practice, since China’s stock markets started late, the legislation is relatively weak. Even though during the recent ten years our country has rapidly established a great quantity of laws and regulations in favor of protecting the medium and small investors, but interrelated laws and regulations still contain some flaws, causing invasion on the rights and interest of medium and small investors. The negative influences from the legal environment strongly confine and impede China’s capital market’s rapid development. Currently, our country’s stock market confronts many problems, such as to give a lesser punishment to illegal actions by corporations insiders; incomplete and deficient information disclosure system; high cost of right-safeguarding for individual investors; investors’ participation rights are not effective ensured, and a number of other problems.In terms of the protection mechanisms to the medium and small investors in overseas capitalization markets, the Sarbanes-Oxley Act in America protects the investors’ rights through strict supervision and aggravation penalty on delinquent behaviors upon public accounting firms and listed companies; Britain has constructed a complete investor protection system by the year of 2000; Germany has established Federal Financial Supervision Department, supervising stock market, banks, insurance companies and government properties. In order to achieve a better protection to the medium and small investors’ rights and interests in the capital market in our country, China ought to modify the relevant provision on liable corporations insiders’ illegal activities, to strengthen their duties and severely punish those who violate the laws and disciplines. To better establish listed companies information disclosure system, to ensure the legislate interest of medium and small investors. To empower them the right of class action lawsuit; and to complete the lawsuit system for representatives of stock holders. To efficiently decrease the lawsuit cost, to reinforce their right of participation, and to ensure their will to be reflected as a majority of stock holders. The target is to improve the legal system for medium and small investor protection in our country.