Three Chinese Characteristics of the Investors Protection System under the New securities Law

Professor Chen Jie

China revised the Securities Law in 2019. The new Securities Law sets a special chapter on the system of protection of investors, establishes specialized the investor protection organs, innovated the mechanism for the realization of the investor’s right to civil compensation, thereby demonstrating China’s determination to protect investors in capital market,active exploration in the investor protection system and the legislative wisdom and institutional confidence in the construction of a investor protection mechanism with Chinese characteristics.

Firstly, setting up an independent chapter on investor protection is a major characteristic and a bright spot of the newly-revised Securities Law. On the one hand, it highlights the important position of investor protection in the Securities Law and the importance attached by the legislature to investor protection, and expressed in a concentrated way the legislative purpose and core value of investor protection. On the other hand, realizes the integration of jurisprudential logic and institutional design at the legislative level, and is conducive to the concrete implementation and convenient application of legal provisions.

Secondly, the establishment of a specialize organ for investor protection is another main characteristic of the new Securities Law. Chapter Six of the revised Securities Law uses four articles (out of the total of eight articles in the chapter) to provide for the position and functions of investor protection institution, which refers to China Securities Investor Services Center. As a major measure for the protection of medium and small investors, the Center was established by China Securities Regulatory Commission in August 2014. Its main function is to provide educational, legal, information and technical services to small and medium-sized investors in independently safeguarding their legitimate rights and interests.

Thirdly, the revised Securities Law carried out major explorations and institutional innovations on ways of effectively realizing the investor’s right of civil compensation. Among them, the systems of compensation in advance and collective litigation are the ones with most distinct Chinese characteristics.

It is believed that the effective operation of the above-mentioned mechanisms with Chinese characteristics is able to give full play to the functions of the securities market system, enhance the roles and functions of various social organizations in the maintenance of the securities market order, effectively protect the rights and interests of investors, and ensure the effective realization of the purposes and objectives of the Securities Law in China.