Comment on the SSE warrant the creation of system

   Warrants in the stock market appeared in 2005 August, the first only Baosteel warrants, followed is WISCO warrants and put warrants, then is spent, vanadium steel and Angang warrant. 6 warrants of the Chinese warrants market.
In order to suppress speculation, warrant price frenzy in November 21, 2005, the Shanghai Stock Exchange issued a "notice" on the securities companies to create a relevant matters warrant WISCO, this notice to stop creating warrants rights, and come into force on November 28th. In the arrangement of this system, firms can exchange a condition of approval "to create" out of. Create a subscription or put warrants firms must hold an equal share of the stock or the corresponding amount of cash for a performance guarantee the exercise. The SFC said one person, "when the introduction of warrants, is hoping to increase supply to stabilize prices of warrants warrants market."
A week later, on November 28, 2005, "the creation of the C of E" stage, GF Securities, Changjiang Securities brokerage 10 create 1127000000 copies of WISCO put warrants. The three times the number in the Wuhan Iron and steel group previously sent 474000000 copies of the put warrants, large sell orders quickly put in put warrants closed in the limit. Warrant the creation of system is designed to suppress the warrants market speculation, but the right people are questioned;
"The creation of system protection of small investors?"

"The creation of the system of fair?" ,

A

     In "before, securities law > Edit in 2005, to set up" Research on the related legal problems > project group of product development, special research at home and abroad, especially in Taiwan, Hongkong's warrant legal system, mainly put forward 3 point proposal, intended to "Securities Law > Edit, endowed with the exchange of rights and legal aspects of enough space

   1.To request the state to give warrants a legal status

    2.Warrants the T+0 trading mechanism

   3.In the warrant issuance, listing, trading, supervision and other aspects of the decentralization of authority to give

   In order to meet the 3 proposed this research report can be realized in the new "Securities Law", the SSE prior to the new "Securities Law >5 months issued" Interim Measures of Shanghai stock exchange trading system >, basically the 3 proposals contained in it

   However, the < > amended Securities Law, adopted only first and second, third shall not adopt completely, can reflect the legal provisions "Securities Law from the modified >

   The first proposal, the new "Securities Law" the second paragraph second: "securities derivatives trading, management method, by the State Council in accordance with the provisions of this Law" principle, state recognized legal warrants status

    The second suggestions, new "Securities Law" on the same day to buy > delete 106th original stock, not on the same day to sell ", but also for the warrants transaction implementation of T+0 left a legal space

   To deliver proposed third suggestions, which is the most critical one, the new "Securities Law" was not adopted, does not give over all securities issuing audit authority. With the following provisions:

    Article tenth ", the public offering of securities, must comply with the laws, administrative regulations, and shall be reported to the securities regulatory authority under the State Council or the department authorized by the State Council's approval; without approval, no unit or individual may publicly issuing securities"

This shows, securities issuance approval authority main body not delegated to the SSE, security administration under the State Council or the department authorized by the State Department in institutions outside the public issuance of securities, no power

   According to the new "Securities Law > 236th, the Interim Measures for the administration SSE prior to the new" Securities Law "promulgated" Shanghai stock exchange warrants > occurrence conflict content should be revised, unfortunately these Provisions conflict not only did not modify the content, but in accordance with the provisions of the implementation of the original illegal illegal

Two

    Securities law passed in 1998 "" (hereinafter referred to as the original "Securities Law") second stipulates: "in China territory, stocks, corporate bonds and other lawfully recognized by the State Council and the issuance of securities transactions, the applicability of this law. Not the provisions of this law, provisions of the company law and other laws, administrative rules and regulations. Issuance and trading of government bonds, set separately by law, administrative regulations." The revised Securities Law since January 1, 2006 implementation of the "" (hereinafter referred to as the new "Securities Law" the second stipulation: ") within the territory of the people's Republic of China, stocks, corporate bonds and other lawfully recognized by the State Council and the issuance of securities transactions, the applicability of this method; not the provisions of this law, provisions of" company law "the people's Republic of China and other laws, administrative rules and regulations. The listing and trading of government bonds, share of securities investment funds, the applicability of this law; other laws, administrative regulations have special provisions, such provisions shall be applied. In issuing, transaction management of derivative securities, by the State Council in accordance with the provisions of the principles of this law." Obviously, stock, corporate bond "other securities issuance and trading", and "issue, securities derivatives transaction management approach", should be the "identified" under the State Council shall, in accordance with the provisions of the securities law of the principle of. Warrant is one of the issuing and trading of securities, of course no exception.
　　The original "Securities Law" Tenth article: "public offering of securities, must comply with the provisions of laws and administrative regulations, conditions, and report to the securities regulatory authority under the State Council or the department authorized by the State Council approval or examination and approval according to law; without verification and approval or examination and approval according to law, no unit or individual may make a public offer of securities." Rule thirtieth: "stock exchange securities trading, the parties in accordance with the law, have been issued and delivered in accordance with the law of securities. Not issued in accordance with the law shall not be traded securities." The new "Securities Law" also reaffirmed the provisions.
　Warrants "in conformity with the provisions of laws, administrative regulations and conditions"? No. Laws and administrative regulations, stock, bonds, corporate bonds, bonds of Switching Company, securities investment fund issuance and trading conditions, but there is no legal, administrative regulations on the warrants issuance and trading conditions. From the provisions of the "Securities Law" and the state for the legislation practice of stocks, bonds, corporate bonds, the Switching Company bonds, securities investment fund law, administrative regulations, no law, administrative regulations, approval, not lawfully recognized by the State Council does not have legitimacy warrant. Without a warrant issued and delivered in accordance with law, is not the sale of.
　　 Although China Securities Regulatory Commission, state owned assets supervision and Administration Commission, Ministry of finance, Ministry of Commerce in the people's Bank of China, jointly issued the "about listing Corporation the split share structure reform of guidance" pointed out, "perfect agreement transfer and bulk trading system, in an IPO and refinancing of introducing the warrant products, to balance the market supply and demand", however, the five departments of the "guidance" belongs to the rules of nature, not the law, administrative rules and regulations. The warrants, also without a recognized under the State Council shall, without the approval of the State Council provisions of the issuing, transaction management approach. "Guiding opinions" just "introducing warrants" in "IPO and refinancing", at present, as does not belong to the "IPO and refinancing issue warrants consideration".
　　Chinese Securities Regulatory Commission issued the "measures" management reform is divided into shares of the listing Corporation in regulation: "reform plan consideration shall be given to all the shareholders of the immediate and long-term interests, there is conducive to the development of the company and market stability, and according to the actual situation of the company, the controlling shareholders holdings, listing Corporation repurchase shares, preset the original non tradable shares shares sold, the preset conditions put price, put right with the feasibility of price stability measures." Although here is referred to the "default back to the sale price, put option", but the management is only a departmental rules, not legal, administrative regulations, ineffective lawfully recognized by the state council.
　　The stock exchange is "to provide venues and facilities for the centralized trading of securities, organize and supervise the implementation of securities trading, corporate self-discipline management" (the new "Securities Law" article 102nd), not the organ of state power, nor the state administrative organs, cannot make laws, administrative rules and regulations, only according to the relevant business rules of law, administrative rules and regulations. If there are provisions regarding the issuance and transaction of the laws and administrative regulations, a stock exchange may make the business rules according to the related regulations and laws, administrative regulations and government departments. In the absence of laws, administrative rules and regulations according to the circumstances, China securities supervision and Management Committee have no right to authorize Securities Exchange approved issuing warrants. Although the new "Securities Law" provisions of article forty-eighth of the stock exchange "approval" power securities listed, but also provides the premise "approval" is "in accordance with the law". Therefore, the stock exchange to make "Interim Measures" of the management, the issuance and trading of warrants is ultra vires approval, no laws, administrative rules and regulations according to, is illegal.
　　China securities supervision and Management Committee in a designated newspaper in November 23, 2005 declared that "the creation mechanism law", the "Interim Measures" of the management as "law", "law" is completely wrong. Ultra vires "legislation" of "Interim Measures for the administration" has not only been implemented, also be the authority of the media as a "public law", has seriously misleading the public. The stock exchange to make "Interim Measures" of the regulations actually violated the "legislation on the State Council constitution" and "legislative law", caused the stock exchange can be violated under the State Council shall formulate administrative regulations power bad impression in society, damage to the national law and the Central People's government.
　　The stock exchange according to the illegal "warrant" Interim Measures for the administration of securities companies have approved the listing and trading of warrants warrants and put warrants, further illegal illegal on the basis of.
　　Because of the split share structure reform, the listing Corporation launched warrant scheme is through the general meeting of shareholders the authority of the company approved by, is the contract on the price of non tradable shareholders and tradable shareholders. Shareholders receive warrants is part of the full circulation of price fixing. Regardless of the non tradable shareholders, or tradable shareholder, company issued warrants exercise conditions, including a total of warrants listing is determined. They are to accept the warrants bear the rights and obligations and risks. The real intention of creation is against the holders of tradable shares, change the tradable shareholders receive the consideration of benefits and risks, but also against the real intention of the non tradable shares, the interference of non tradable shareholders corresponding to warrant commitment to results.
　　According to the "contract law" provisions of article fourth, "the parties shall enjoy the right of voluntary contract, any unit and individual shall illegally interfere". Therefore, the stock exchange and the relevant securities company shall not be entitled to the warrant the creation of interference "company law" provisions of the general meeting of shareholders authority, tradable shareholders and tradable shareholders on the warrants illegal intervention on price contract the rights, influence and change on the process and result of price contract.

     In Wuhan Iron and Steel shares as an example, although the company's "2006-009" tips ", if other agencies in company stock as the subject-matter securities issued warrants, may be approved after the listing of the equity division reform related warrants transaction price impact", but is ", decided to other institutions in the company stocks securities issued warrants" and not the general meeting of shareholders own. But, later in the Wuhan Iron and Steel shares of "shareholder structure reform plan notice" and "warrants and put warrants listing announcement", "other institutions are not prompted to company stock as the risk of underlying securities issued warrants", but clearly defines the total municipal warrants. Therefore, the creation of warrants in the listed transactions, in violation of the official announcement of the share reform program and a listing agreement, is invalid.

Three

　　The Shanghai stock exchange only allows several securities company specific create warrants and put warrants, single hand to several securities companies deliver profits, let them take no risk "policy" interests, and damage the interests of other investors, also violated the fair principle established by article third "Securities Law". So, investors have a strong challenge, my "stock" is willing to put in the securities registration and Clearing Corp as the exercise performance guarantee, why can't I create a warrant? I have enough money in the securities registration and Clearing Corp to open the special guarantee funds account performance, why can't I create the put warrants?
　　In addition, the warrant trading implementation of T + O, before the end of 2005, also a violation of the "Securities Law" article 106th of the "securities company commissioned or self-employed, the securities purchased on the same day, shall not re sell". Although the new "Securities Law" allowed TO, but in the implementation of the new "Securities Law", TO remains illegal.
　　Of course, the issuance and transaction of illegal, is not responsible for the listing Corporation, not in the non tradable shareholders and tradable shareholders, and in the planning of the sponsors, making "Interim Measures" of management of the stock exchange and the relevant departments acquiescence, encourage the illegal in ultra vires.
　　The issuing and trading of warrants illegal, especially the illegal introduction of creating warrants, has been seriously distorted the value of the securities market and price signals, indulge the vicious speculation, forming a fight poison, with investment mechanism, illegal illegal speculation in the vicious spiral, expand the split share structure reform in, serious damage to the rule of law and the the principle of fairness of the securities market. Violations of minority interests in warrants of persist in wilfully and arbitrarily, and the interests and aspirations of the majority of investors is to draw further apart.
　　In order to defend the national dignity of law, maintain the order of the securities market, must immediately revoke the illegal "warrant" and the Interim Measures for the administration on securities companies create warrants notice, stop the issuance and trading of warrants illegal, and in accordance with the relevant provisions of "Securities Law" eleventh chapter "legal responsibility", for legal responsibility the illegal income, including the recovery of personnel.