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Rules Governing Securities Market Guarantee Business

In order to regulate the securities market guarantee business of financing guarantee companies and protect the legitimate rights of investors as well as public interest, on 22 January the Securities Association of China (SAC) issued the Rules Governing the Securities Market Guarantee Business of Financing Guarantee Companies, which came into effect on the same day.

Under the Rules, financing guarantee companies conducting guarantee business in the securities market should join the SAC as member. To become a member of the association, financing guarantee companies must meet the following criteria: have obtained a financing guarantee institution business licence; have been engaged in the financing guarantee business for at least three years; have a registered capital of not less than Rmb600 million, and a registered capital of not less than Rmb1 billion for those which have branches in other provinces, autonomous regions or municipalities; have a corporate credit rating of Grade AA or above; have not committed any major acts of legal offence or non-compliance in the preceding three years; and other conditions specified by the association.

“Members and employees of a guarantee company may not make use of insider information to conduct any securities or derivatives trading activities which have a conflict of interest with their guarantee business.” The Rules state that the following personnel who have access to insider information may not make use of such information to conduct insider trading during the time when the guarantee company is engaged in the business of securities market guarantee: members of the guarantee company, its actual controllers, directors, supervisors and senior managers, members of the guarantee project team and their direct relatives, and project assessment personnel and their direct relatives.

Content provided by Picture: HKTDC Research
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