Research On The Legal Status And Responsibilities Of Sponsors In China

Great hopes have been pinned on the sponsor system when it was introducedinto the main-board market in China. However, practice has shown that it has notachieved the effects as expected. It is, therefore, necessary to conduct a systematicand comprehensive study on the sponsor system, especially on the issues of thesponsor’s legal status and legal responsibility. This thesis in the first place analyzesthe sponsor’s legal status from the perspective of fundamental legal relationshipbetween sponsors and related security market entities and simultaneouslysummarizes the current situations of sponsors’legal status. Afterwards, this thesisfurther studies sponsors’legal responsibility based on the case of Jiangsu QionghuaCo. Ltd, which happened soon after the establishment of the sponsor system inChina. Ultimately, the author tentatively offers several proposals for theimprovement of the sponsor system.When it comes to the fundamental legal relationship between sponsors andrelated security market entities, this thesis holds the view that the legal relationshipbetween CSRC (China Securities Regulatory Commission) and sponsors is notlongitudinal. Besides, the legal relationship between sponsors and issuers can not besimply characterized as legal relationship in public law and priority should be givento social law to adjust such legal relationship. A special guaranteed legal relationshipcan be established between sponsors and investors based on the formation of atrustworthy relationship. In addition, it is, essentially, a horizontal legal relationshipbetween sponsors and other intermediaries and they are still equal civil subjects.Sponsors as a market entity independent from issuers possess two differentresponsibilities and usually have to make choices between protecting the interests ofinvestors and pursuing market profits. The issue of how to enhance the independence of sponsors has been taken into consideration when legislators designthe system. However, the independence is, in reality, still insufficient for the legalstatus of sponsors. The independences of sponsors and sponsor deputies arerestricted due to the qualification acquisition systems and the employmentrelationship between them.This thesis mainly analyzes the legal responsibilities of sponsors for issuers andinvestors. Sponsors take large liabilities for negligence in contracting and breach ofcontract. As for sponsors’liability for investors, the thesis claims that it would bemore reasonable to treat it as a specially guaranteed responsibility.Through the above analyses, conclusions can be drawn as follows. Firstly,sponsors, as an independent market entity consuming responsibilities for profits andlosses, which meanwhile undertake important responsibility for protecting theinterests of investors, have been entitled to partially take charge of the duty ofsupervision by Securities Regulator, so that sponsors have been endowed with aspecial legal properties. Secondly, it is urgent to enhance the independence ofsponsors’legal status. Moreover, it is supposed to dissolve the employmentrelationship between sponsors and sponsor deputies in due course with the purposeof fully improving the independence of sponsor deputies. Thirdly, from theperspective of legal responsibility of sponsors, it is urgent to clarify theresponsibilities of sponsors and the participants of other securities market especiallyCSRC.