CSRC to establish securities-related legal service framework
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The China Securities Regulatory Commission (CSRC) established the securities-related legal service regulatory framework by issuing two tentative regulations to take effect on January 1, 2011, to strengthen the monitoring of lawyers' practices and the cooperation among securities supervision departments, executive and judicial branches and lawyers' self-regulatory agencies, according to a Securities Times report on Monday, citing a high level official from CSRC.
CSRC stated on its website that the old legal system cannot catch up with the fast development of China's securities market. Also that the Securities Law, Law of the People's Republic of China on Lawyers and Measures on Administration of Engagement in Securities Legal Services by Law Firms, are not detailed and sophisticated enough; that the responsibilities, service standard and supervision are not clearly defined; and thus a new framework is of urgent necessity.
Huang Wei, Director-General of CSRC's Department of Legal Affiairs, said CSRC and the Ministry of Justice (MOJ) jointly launched two tentative regulations on December 23, which will provide a new guideline to lawyers' practices in securities and IPO-related services. They (tentative regulations) mark the establishment of the regulatory framework for securities-related legal services.
The framework demands more responsibility and higher professional ethics by lawyers. Lu Wenshan, Deputy-Director of CSRC's Public Offering Department, said that the regulations adopt a more stricter and detailed standard on companies' legal advice reports used in securities-related businesses provided by lawyers, in which lawyers should investigate and preserve evidences the two regulations require. Also, lawyers' work will be supervised by related government bodies and self-regulatory agencies; and the same will be more heavily penalized if neglecting their duties.
More regulations on IPO financing, merger and acquisitions, overseas financing, detailed regulations on securities companies' business and futures companies' business will be drafted in the following year to enrich the framework, according to Huang.
