Legal Analysis Of The "Xintai Electric Delisting"

Dandong Xintai Electric Co.,Ltd.(hereinafter referred to as "Xintai"),was investigated and punished by the China Securities Regulatory Commission(CSRC)for suspected fraud and major information disclosure violation.Shenzhen Stock Exchange has also started its Delisting procedures."Green-Land fraudulent listing case" and " Wanfu biotechnology fraudulent listing case" and other cases of fraudulent listing frequently occuered in Chinese stock market.However,due to the implement delisting system,those illegal companies still exist in the stock market.Xintai is the first delisting company for fraudulent listing in Chinese stock market,and this case becomes “The first delisting case for fraudulent listing” in the stock market.It shows the regulators' determination on strictly regulating the stock market fraud.This thesis is to analyze the contentious issues brought by this delisting case from the perspective of law and describe the writer's views on those issues,then to explore the fundamental cause that caused the controversial focus of this case Based on that,this thesis puts forward proposed countermeasures on how to complete the compulsory delisting system of our country's stock market.The dissertation is divided into four parts:Part I:“Xintai delisting”profiles.This part summarizes how Xintai was investigated and punished by the CSRC for its fraudulent listing and then points out the three controversial focuses of this case,which are whether Xintai should be delisted,whether the punishment of the relevant responsible parties is comprehensive and whether the the sponsor institution Societe Generale Securities' advance compensation scheme is reasonable.Part II: Legal analysis of the controversial focuses of "Xintai delisting".The author analyzes the controversial focuses of this delisting case from the perspective of law and points out the following views.Firstly,Xintai's Fraudulent behavior seriously violates the principle of integrity and the delisting system.It should be delisted for its behavior so that the delisted regulations be executed thouroughly.Secondly,the responsibilities of the relevant parties are not held comprehensively.The securities issuers' administrative responsibility is unbalanced compared to its illegal gains and is lack of civil responsibility.And some agencies were not.required to take their responsibility and the responsibility of the relevant parties are not fully implemented.Finally,the advance compensation standards of the sponsor is unreasonable,to be specific,the compensation scope is too narrow,the calculation of compensation is not reasonable and the compensation scheme should be formulated by an independent third party.Part III: The fundamental reason that brought up the disputes of ”Xintai delisting".This part focuses on the controversial focuses mentioned in the above part and deeply analyzes the fundamental reason of the disputes.First of all,the delisting system for fraudulent is lack of executive force.On the one hand,the delisting regulations for fraudulent has not been clearly defined.On the other hand,the objectives of the securities supervision is wrong.Secondly,the parties responsible for the delisting of the listed companies are multifaceted.However in practice,the accountability mechanism for delisted company is imperfect,especially that the suspension of the intermediary agencies is missing.As a consequence,those angencies can not take the prudent duty or act as the gatekeeper of the securities market;Finally,The legal position of the the advance compensation in our country has not been defined,nor has it been established.Consequentially,so that the standards of it can not be unified.Part IV: the inspiration of “Xintai delisting” to perfect the related system.It mainly includes three aspects: Firstly,further strengthen the compulsory delisting system on fraudulent listed companies through increasing law enforcement efforts and promoting media supervision.Secondly,uphold the principle of equal rights and responsibilities and establish the investigating mechanism of responsibility to strengthen the intensity of law enforcement on the compulsory delisting of listed companies,so that each of the illegal parties are responsible for their own violations to reflect the deterrent of the law.Thirdly,establish the advance compensation system.Above all,define its legal status,then specify the implementation rules such as the compensation standard of advance compensation system,so that the advance compensation system can be put into practice and exerting its function on investor protection and market order maintaining.