Research On The Securities Sponsors’ Civil Liability To The Third Party Under The Reform Of Registration System

The sponsor’s system has been developed in China more than a decade. The sponsor should recommend the issuing company and check the information of documents released by the companies and make sure that all the information are reliable, accurate and complete. The sponsor shall protect the investors’right to know and create a good investment environment so that the security dealers can know much better about the company. The direction of China’s securities issuance system reform is to change Approval System to substantive examination registration system. The most important part of the reform is that the decision will be made by the security market. The security market will pay more attention to information disclosure of accurate, timely, complete and truth. The quality of information disclosure determines the effect of implementation of the registration system reform. The sponsor shall take more responsibilities to supervise the company as the "gatekeeper". This thesis explains the sponsors’civil liability’s nature. It also discusses the commitment and responsibility of the sponsors.This thesis is divided into three parts.The first part is about the sponsors’civil liability’s nature. Scholars now think this problem among contract liability, tortious liability, guarantee liability, product liability and legal liability. This thesis argues that the tortious liability is more appropriate. Because there is no direct contract relationship between the sponsor and the third party. And the tortious liability can push the sponsors to diligence to their duties of guidance, supervision and recommendation of the listed companies.The second part is about the cognizance of the sponsor’s civil liability to the third party which is mainly from two aspects:the imputation principle and constitutions. This thesis argues that we should adopt the principle of presumption of fault. On the one hand, this principle reduces the proof burden from the third party and create a good condition for the weak investors. On the other hand giving the sponsors enough right to defense themselves. From the perspective of tort liability law, this thesis analysis the elements of tortious liability. If the sponsors have a subjective fault, the third party has real profit loss and there exists causal relationship, then it can be identified that the sponsor should take the tortious liability for the third party. Due to uncertainty and volatility of the securities market, the sponsor responsibility scope should be strictly limited so that we can protect the sponsor and the investor equally.The third part is about the civil liability of the sponsor. It’s very important to expand the scope of the "third party" so that all the investors with damaged interests can get compensation. We need to clear the internal responsibility of sponsor agency and sponsor representative so we can protect the investors’ interest better. Nowadays, the investors get economic compensation mainly through the way of civil action. But the civil action has a long lead procedure. Investors have to wait for the effective administrative penalty or the criminal judgment. In the process of civil action, the difficulties are brought by the representative litigation system. This system is lack of maneuverability. This thesis argues that it is the great opportunity to cancel the pre-procedure through the revise of the securities law. We can learn from foreign experience of American group litigation and simplify investors difficulty through the proceedings to obtain compensation. At the same time, the legislation should encourage the sponsor compensating the investors first so that the investors can get full compensation timely. The stock market will be soon stabilized.