1. Interpretation of specific regulations

(1) Interim Provisions of the China Securities Regulatory Commission on Strengthening the Supervision of Abnormal Stock Trading Related to the Material Asset Restructuring of Listed Companies (CSRC Announcement [2012] No. 33, December 17, 2012)

The "Regulations" link the supervision of abnormal stock transactions with the administrative licensing of major asset reorganizations. In fact, they closely link the management of insider information of the parties to the major asset restructuring, interested parties, and related entities with the major asset restructuring, and relevant parties can only do so. Keep insider information confidential, otherwise it will directly affect the smooth progress of mergers and acquisitions.

Article 2 of the “Regulations” clarifies that in addition to listed companies, counterparties, their controlling shareholders, and actual controllers must also do insider information management and the registration of insider information insiders. If the above entities are found to have insider trading, they will The reorganization has created substantial obstacles that cannot be eliminated.

Article 4 of the “Regulations” clarifies that listed companies should disclose information in stages, that is, when the parties to a major asset restructuring transaction have initially reached substantive intentions or have not reached substantive intentions, it is expected that the information will be difficult to keep confidential. The exchange applies for the suspension of stock trading and conducts phased information disclosure in a true, accurate, complete, timely and fair manner to fully reveal the risks.

Articles 5 to 7 of the “Regulations” establish a system of “verification when changes, suspension when filing a case, resumption when removal, and termination when violations occur”. After the listed company has suspended trading and entered the major asset restructuring process, the exchange immediately initiated the verification process for abnormal stock trading and reported it to the China Securities Regulatory Commission in a timely manner. At the same time, the listed company shall be informed of the conclusion of abnormal trading, and the listed company shall decide whether to proceed with the reorganization independently. If the listed company decides to proceed with the reorganization, it shall also make a risk warning of abnormal stock trading.

After the Securities Regulatory Commission examines the abnormal stock trading information, if it decides that insider trading is suspected of deciding to file a case for inspection, the listed company shall suspend the restructuring process and promptly disclose information and risk warnings. After the suspension of the major asset restructuring process, the relevant parties can classify and deal with the difference between the status and role of the subject suspected of insider trading in the major asset restructuring and the difference between legal persons and natural persons. If it falls within the Regulations, it can be achieved by removing or exiting the reorganization transaction. If the impact is eliminated, the listed company can resume the restructuring process. If the listed company and its controlling shareholder, actual controller, and counterparty that accounted for more than 20% of the total transaction amount of the reorganization are administratively punished by the China Securities Regulatory Commission for insider trading or are investigated for legal responsibility by judicial organs according to law, the listed company The reorganization process should be terminated; if it enters the administrative licensing stage, the China Securities Regulatory Commission will terminate the review.

(2) Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Specific Application of Law in Criminal Cases of Handling Insider Trading and Leaking Inside Information (Fa Shi [2012] No. 6, June 1, 2012)

This judicial interpretation clarifies the main aspects of the determination of insider information, persons who illegally obtained inside information, the identification of obvious abnormalities in related transactions, the determination of the sensitive period of inside information, insider trading, and the conviction and sentencing standards for leaking inside information. Need to pay attention to the following points:

1. Article 2 of the judicial interpretation stipulates that the close relatives of insider information insiders or other persons who are closely related to insider information insiders engage in or express or imply that others are engaged in the insider information sensitive period, or disclose inside information to cause others to engage in it. If the securities and futures transactions related to the inside information are obviously abnormal, and there is no legitimate reason or the source of the information, they will be identified as the persons who illegally obtained the inside information. If the circumstances are serious, criminal responsibility shall be investigated.

2. Article 5 of the judicial interpretation stipulates that the initial time of the motion, planning, decision-making or execution of a major event in inside information is the time when inside information is formed. Listed companies and relevant entities shall complete the registration of insiders and management of inside information from this time.

2. Relevant legal regulations

(1) Securities Law

Article 5 (Provisions in Principle), Article 73 (Prohibition of Insider Trading), Article 74 (Scope of Insiders), Article 75 (Inside Information), Article 76 (Specific Provisions) , Article 202 (Penalty Provisions).

Http://www.law-lib.com/law/law_view.asp?id=102905

(2) Criminal Law (revised in 2011)

Article 180 [Crimes of Insider Trading, Leaking Inside Information] Persons who know the inside information of securities and futures trading or those who illegally obtain inside information of securities and futures trading shall be involved in the issuance of securities, securities, futures trading or other securities , Before the information that has a significant impact on the price of futures trading is made public, buying or selling the securities, or engaging in futures trading related to the inside information, or divulging the information, or expressly or implying that others are engaged in the above-mentioned trading activities, and the circumstances are serious , Sentenced to fixed-term imprisonment of not more than five years or criminal detention, and concurrently or separately a fine of more than one time but not more than five times the illegal income; if the circumstances are particularly serious, the sentence is not less than five years but not more than ten years in prison, and the illegal income is more than one time but not more than five times fine.

Http://www.szxingshi.com/95w9.html

(3) Notice of the General Office of the State Council on forwarding the opinions of the China Securities Regulatory Commission and other departments on cracking down on, preventing and controlling insider trading in the capital market according to law (Guobanfa [2010] No. 55)

The "Notice" requires:

One is to step up efforts to formulate a confidentiality system involving inside information of listed companies, including measures for the management of insider information access by state personnel, clarify the scope of inside information, circulation procedures, confidentiality measures and accountability requirements, and designate institutions and personnel responsible for inside information management.

The second is to establish a registration system for insiders as soon as possible, requiring insiders to register in accordance with regulations, and to implement the confidentiality responsibilities and obligations of relevant personnel.

The third is to improve the information disclosure and trading suspension and resumption systems of listed companies, and urge listed companies and other information disclosure obligors to disclose information in a true, accurate, complete and timely manner in strict accordance with laws and regulations.

Fourth is to improve the evaluation system, incorporate the prevention and control of insider trading into the corporate performance evaluation system, and clarify the principles, content, standards, procedures and methods of evaluation.

http://www.gov.cn/zwgk/2010-11/18/content_1748349.htm

(4) Provisions on the establishment of a registration and management system for insiders of listed companies (CSRC Announcement [2012] No. 30)

The "Regulations" are an important supporting system for the implementation of the State Council's No. 55 document, and are specific specifications for the inside information management of listed companies. The "Regulations" require listed companies to establish a registration and management system for insiders, fill in the files of insiders as required, and manage the confidentiality of inside information. When a listed company conducts acquisitions, major asset reorganizations, issuance of securities, mergers, divisions, share repurchases and other major matters, in addition to the establishment of insider information insiders’ files, a memorandum on the progress of major matters shall be prepared in accordance with the requirements. After publicly disclosed in accordance with the law, the memorandum on the progress of major issues and the insider file of the insider information shall be submitted to the exchange in time.

http://www.csrc.gov.cn/pub/zjhpublic/G00306201/201110/t20111026_201068.htm

(5) Interim Provisions of the China Securities Regulatory Commission on Strengthening the Supervision of Abnormal Stock Trading Related to the Material Asset Restructuring of Listed Companies (China Securities Regulatory Commission Announcement [2012] No. 33)

http://www.csrc.gov.cn/pub/newsite/flb/flfg/bmgf/ssgs/bgcz/201310/t20131016_236320.htm

(6) Notice of the Shenzhen Stock Exchange on Strengthening the Supervision of Abnormal Stock Trading Related to the Major Asset Restructuring of Listed Companies

Http://www.szse.cn/main/disclosure/bsgg/39748761.shtml

(7) Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on the specific application of law in criminal cases involving insider trading and disclosure of insider information (Fa Shi [2012] No. 6)

http://www.court.gov.cn/spyw/xssp/201209/t20120928_178548.htm

(8) "Interpretation on Several Issues Concerning the Specific Application of Law in Criminal Cases of Handling Insider Trading and Leaking Inside Information"

http://www.law-lib.com/fzdt/newshtml/21/20121210134101.htm