The China Securities Regulatory Commission (CSRC) revealed a draft of its regulations on securities companies Tuesday and has invites public comment for further improvement.
The draft sets structural criteria for securities companies established within the country and guidelines for enlarging their business scope.
Securities companies will be allowed to participate in venture capital business after acquiring approval from the CSRC.
They will also be allowed to set up subsidiaries to do online brokering business but will have to first apply to the CSRC to get a licence.
Online brokers should possess a minimum 50 million yuan (US$6 million) of registered capital, with at least 10 technical staff to ensure the security of online trading.
Securities houses will also be able to set up or hold shares of Chinese-invested overseas securities institutions, according to the CSRC draft.
They will also be allowed to launch public offerings and issue bonds.
While giving securities firms a broader stage on which to play, regulators will also tighten risk control and supervision to protect the interests of investors and keep order in the market.
The CSRC said securities companies should engage some independent directors who will have an important say in corporate accounting, audit and assignment of managerial staff.
Independent directors should not be employees of a securities company or have any conflicts of interest.
On the other hand, all securities companies will be required to post their basic information more regularly and set up sound inner-control and risk monitoring mechanisms.
For example, their liability should be kept within four times their net assets volume.
Those breaking rules and regulations must bear responsibility for civil compensation if the misconduct leads to losses of investors.
Introduction of civil compensation should push securities firms to operate according to set standards and improve management, analysts said.
(China Daily 06/20/2001)
