Research On The Legal Issues Of The Sponsor's Advance Payment System

The sponsor's advance indemnity system refers to a system in which the sponsor first assumes liability to the investor before judicial relief when the issuer commits major illegal acts such as false statements and fraudulent issuance in the process of initial issuance and listing,and then the sponsor obtains compensation from the issuer's other liable subjects.China's legislation in the field of securities investor protection is not yet complete.Investors whose interests have been infringed are very difficult to obtain compensation because of the difficulty of proof,the long period of safeguarding rights and the high cost,and often the compensation obtained through reconciliation with issuers is insufficient to compensate for the damage.As a result,the main body of compensation liability is single and the compensation intensity is insufficient.In the long run,it is not only unable to stimulate a more mature and active securities market,but also unable to maintain the balance of the responsibility of market participants.What is more,it damages the investment confidence of securities investors and reduces the vitality of the securities market.In order to promote the reform and transformation of the securities market,implement the principles of openness,fairness and impartiality required by the Securities Law,establish and improve the sponsor's advance compensation system,facilitate investors to get damages,urge sponsors and other listed counseling institutions to perform their functions,and supervise issuers'financing behavior.By analyzing the cases of the sponsor's advance payment represented by Xintai Electric Company in China,this paper combs the characteristics and problems of the current mode in China,and draws lessons from the advanced experience of foreign countries in securities investor protection,such as the share repurchase system in Hong Kong and the fair fund model in the United States.It is suggested that the legal basis and implementation rules of the sponsor's advance compensation system be clarified as soon as possible;put forward the specific standards of the system be reasonably;the professional identification of the system of advance compensation and the risk of the sponsor should be reduced by using the system of returning fine and forfeiture and the way of the sponsor's advance compensation liability insurance.At the time of the reform of the securities market and the revision of the Securities Law,the sponsor should take the lead.The compensation system should be implemented in order to make it more mature and play its due role.