Strengthen Front-line Supervision, Improve the Governance Structure----SZSE Released Amended Articles of Association

date: 2017-7-11

In order to comprehensively strengthen the front-line supervision, improve the legal person governance structure of the stock exchange, Shenzhen Stock Exchange (hereinafter referred to as SZSE) recently released amended Shenzhen Stock Exchange Articles of Association (hereinafter referred to as Articles of Association).


Amended Articles of Association had been adopted by the all the members at the General Meeting of SZSE on 15 April, 2017, and came into effect after the approval and disclosure by China Securities Regulatory Commission lately. The guiding ideology for amending the Articles of Association was: earnestly implementing the spirit of 2017 National Securities and Futures Supervision Conference, grasping the overall tone of promoting progress while maintaining stability, resolving the prominent problem in the work of front-line supervision and management operation of SZSE with reformation as leading dynamic, stability as baseline, and adherence to problem-oriented. In the process of amendment to the Articles of Association, SZSE have organized several symposiums, absorbing the market advice substantially, and as a result, a broad consensus was reached. The amendment covers mainly the following five fields:


First, the Party’s leadership is comprehensively strengthened, with the core role of party committee political leadership implemented. The amended Articles of Association clearly stipulates that the party committee plays political leadership core role in the governance of the exchange, and the Discipline Inspection Commission plays the role of supervision, and grassroots party organizations at all levels play the role of fighting fortress.


Second, SZSE’s front-line supervision function is intensified, front-line supervision scope is expanded, and front-line supervision means is enriched. The revised Articles of Association is provided that SZSE’s trading rules are generally binding on the members, the issuer of the securities and other market participants; new provisions that SZSE may carry out spot and non-spot inspection, and take appropriate disciplinary action and regulatory measures depending on the compliance with the Articles of Association and the Rules of Business by the members, the issuer of the securities and other market participants is added in the Articles of Association.


Third, the implementation of ‘supervision member as center’ trading behavior supervision mode is push forward. The requirement on management on member client and self-management is strengthened. It is provided that members should get to know their clients and supervise and management the trading behavior of their clients and it is also provided that SZSE protect the members’ right on participation on market business of SZSE.


Fourth, the governance structure of the exchange is improved. Provision on the function and rights of SZSE’s General Meeting is improved, and provision on specific procedures such as convening and hosting General Meeting was specified; the Council's decision-making function is strengthened. Provision regarding the Council’s formulating the SZSE’s strategic development planning, validation of the termination of membership and other powers are added in the Articles of Associations. A new chapter on supervisory committee is added, providing comprehensively the issues such as the function and power of supervisory committee, constitution of supervisor committee, and tenure, etc. The function and power of general manager is further clarified. Provisions regarding general manager’s function and power of drafting and organizing the implementation of annual work plan, planning the financial budget and resolution plan are added in the Amended Articles of Association.


Fifth, the legitimate rights and interest of investors are fully protected. It is provided that as a function of exchange, the exchange established investor appropriateness management system for specific securities trading variety and innovative business. New provision regarding the functions of major issues such as examining and verifying the investor’s education and protection is added in the function and power of the Council. The member’s obligation of protecting investors is strengthened in the part of Obligation of Members. It is provided that members should conduct appropriateness management on their clients, should carry out investors’ education.