| The special representative litigation system for securities disputes is a new securities litigation system added to the Securities Law as amended in 2019,with the investor protection agency as the representative of the litigation and the rule of "implied entry and express withdrawal" as the investor’s participation,which is not only different from the ordinary representative litigation in China,but also different from the extraterritorial securities group litigation.Special representative actions can play a special role in securities disputes,reducing the cost of defending investors’ rights,deterring securities fraud by listed companies and improving the efficiency of judicial proceedings.However,the system has just been established and there are still shortcomings,with problems arising from the role of the Investor Service Centre as a representative and obstacles to the operation of the special representative action process,which need to be improved.At present,the actual participation in litigation is mainly by one of the investor protection agencies,the Investment Service Centre,as the representative in litigation,and the appointment of public interest lawyers as litigation agents,but it faces the problem of lack of motivation and supervision when the Investment Service Centre participates in litigation.There are also obstacles to the operation of the special representative litigation process: the poor interface with the conversion process of ordinary representative litigation leads to difficulties in initiating special representative litigation;the conditions for initiating cases are not reasonable;and the design of the notice link throughout the litigation process also makes it difficult to protect the legitimate rights of investors.The improvement of the special representative litigation system for securities disputes needs to be approached from two perspectives.On the one hand,we should propose a solution to the problems of the special representative-cum-investment service centre,establish a special fund for special representative litigation and introduce a risk representation system for lawyers to overcome the lack of motivation of the investment service centre and lawyers to participate in litigation,and then improve the supervision mechanism for the exercise of the rights of the investment service centre by establishing an external supervision system with the participation of multiple entities and conducting comprehensive and transparent information disclosure to solve the problem of lack of supervision.The problem of lack of supervision On the other hand,in order to remove the obstacles to the operation of the special representative proceedings,the procedural interface with the ordinary representative proceedings should be improved,with the Centre intervening in the ordinary representative proceedings in advance and clarifying the rules applicable when the scope of rights holders conflicts due to the transfer of jurisdiction;the conditions for the commencement of cases should be revised and refined,the restrictions on the preliminary procedures should be gradually liberalised,and rules on the selection criteria for cases should be established;the notification of proceedings should be improved,with the use of public notice and individual notification.The notification process should be improved,using a diversified combination of public notice and individual notice,and establishing rules for remedying violations of the notification process. |
