Research On The Advance Compensation System Of Sponsor Institutions

The stable operation of the securities market needs good market environment.The quality of listed companies is the necessary condition to create a good market environment.As the starting point of listed companies,IPO is the most important link.Once fraudulent issuance occurs in the process of IPO,it will directly affect the confidence of securities investors and the market order.In recent years,China's securities market has developed rapidly,but at the same time,there are frequent cases of false statements in the issuance process,which directly damages the interests of securities investors.The investors who suffered losses from fraudulent issuance of securities are most concerned that their losses can be compensated in time.However,China has not yet established a perfect civil compensation system for securities.On the one hand,there is no fair fund system in the public remedy measures of securities fraud in the United States.Once enterprises make false statements in the issuance process,a large number of securities investors have no other choice than litigation.On the other hand,the lack of securities group litigation system is influenced by the current securities civil compensation system and judicial environment.The securities investors' civil compensation for fraudulent issuance through litigation should be based on the administrative penalty decision of the SFC or the criminal judgment of the court.The lag of litigation compensation is not conducive to investors' timely and low-cost compensation.In order to protect the investors' interests damaged in fraudulent issuance more effectively and make up for the shortcomings of the current civil compensation system for securities,at the time of the reform of registration system and the revision of securities law,China is trying to establish the "advance compensation"system at the legislative level.As the gatekeeper of the whole process of enterprise's IPO,the role of sponsor institution in the advance compensation system is particularly important.The first case of fraudulent issuance by sponsor agencies and the first case of delisting by fraudulent issuance of Xintai Electric Company are explored.In 2015,the Securities Regulatory Commission(SFC)made it clear in the "Guidelines for the Content and Format of Corporate Information Disclosure of Public Securities Issued No.1-Prospectus Notes" that "sponsors promise to compensate investors for losses caused by false records,misleading statements or major omissions in the documents produced and issued for the issuer's initial public offering of stocks".The sponsors will first compensate investors for losses.As the precondition of IPO,compensation commitment is actually set as the obligation of sponsors by the promulgation of the normative document.At present,there are a lot of discussions in the theoretical circle about the system of advance compensation,but there are still different understandings about the scope,nature and necessity of construction of the system.Moreover,there is a lack of special research on the system of advance compensation of sponsors.In view of this,systematic research on the system of advance compensation of sponsors is helpful to build a standardized and reasonable system and maintain the order of the securities market.It is of great significance to protect the interests of investors.In this paper,literature research,comparative analysis and other research methods are used.In the structure of the article,the first chapter of this article from the existing two sponsor agencies in advance compensation cases and current legal provisions,introduces the practice of sponsor agencies in China;the second chapter introduces and evaluates the existing academic research on the advance compensation system,and analyzes the advance compensation system.Chapter three raises the question of setting up the obligation of the sponsor's advance compensation through analysis;Chapter four introduces the current situation of the civil compensation system of securities in China,analyses the shortcomings of the current litigation recovery mode and the problems existing in the fund of the sponsor's advance compensation,and it is necessary to standardize the system of the sponsor's advance compensation;Chapter four mainly focuses on the legislative level.Suggestions on the improvement of compensation system are put forward.