Caring for Investors, Working Together for Action - Interpretation of the New Securities Law

May 25,2021

"Caring for Investors, Working Together for Action - Learning Party History to Uphold Our Original Intention and Doing Practical Things for Investors." To further cultivate a rational investment culture, gather consensus from all market participants, and create a good atmosphere where everyone cares for, loves, and pays attention to the legitimate rights and interests of small and medium investors, the China Securities Regulatory Commission has designated May 15th of each year as "National Investor Protection Publicity Day."

Caring for Investors, Working Together for Action - Interpretation of the New Securities Law

"Caring for Investors, Working Together for Action - Learning Party History to Keep Our Original Intention, Doing Practical Things for Investors." To further cultivate a rational investment culture, gather consensus from all parties in the market, and create a good atmosphere where everyone cares for and pays attention to the legitimate rights and interests of small and medium investors, the China Securities Regulatory Commission has designated May 15 each year as "National Investor Protection Publicity Day."
Shandong Meichen Ecological Environment Co., Ltd. (hereinafter referred to as "the Company") interprets new industry regulations for you, reminds you of investment risks, and advocates rational investment.
What provisions does the new Securities Law make regarding "the solicitation of shareholder rights"?
In order to standardize the relevant behaviors of soliciting shareholder rights, the new Securities Law has made specific provisions from five aspects.
First, the soliciting entity is clarified, specifying that the board of directors of the listed company, independent directors, shareholders holding more than 1% of voting shares, or investor protection organizations according to law can act as solicitors.
Second, the solicitation method is clarified, specifying that the solicitor can either solicit on their own or entrust a securities company or securities service organization to publicly request shareholders of the listed company to authorize them to attend the shareholders' meeting and exercise rights such as proposal rights and voting rights.
Third, information disclosure is clarified, specifying that the solicitor should disclose the solicitation documents, and the listed company should cooperate.
Fourth, it is clarified that soliciting shareholder rights publicly in a paid or disguised paid manner is not allowed.
Fifth, it is clarified that if the public solicitation of shareholder rights violates regulations and causes losses to the listed company or its shareholders, compensation should be legally borne.
The new Securities Law also mentions cash dividend distribution; how is this aspect regulated?
The new Securities Law aims to improve the cash dividend system of listed companies. On one hand, it stipulates that listed companies should clearly specify the specific arrangements and decision-making procedures for distributing cash dividends in their articles of association, legally safeguarding shareholders' rights to asset income; on the other hand, it clarifies that if the listed company's after-tax profit for the year has surplus after making up for losses and extracting statutory reserves, cash dividends should be distributed according to the provisions of the company's articles of association. The new Securities Law promotes listed companies to actively implement cash dividends through the requirement for provisions in the articles of association, effectively ensuring the asset income rights of small and medium investors.
The new Securities Law mentions the "advance compensation" mechanism for the first time; what does this specifically refer to?
Advance compensation is an investor rights relief measure pioneered in China, which has accumulated practical experience in the early stages. The new Securities Law establishes this system, clarifying that if the issuer causes losses to investors due to fraudulent issuance, false statements, or other major illegal acts, the "advance compensation mechanism" can be applied; the compensation entities include the controlling shareholders and actual controllers of the issuer, as well as related securities companies; the compensation method is to entrust investor protection organizations to reach agreements with the affected investors regarding compensation matters and provide advance compensation.
In addition, a recourse mechanism is also established, allowing for legal recourse against the issuer and other jointly liable parties after advance compensation.

Caring for investors, working together for action - Beware of illegal stock recommendation activities under the guise of 'investor education'.

March 15 Consumer Rights Protection Day: Safeguard the legitimate rights and interests of investors, enhance investors' awareness of risk prevention, and promote the stable and healthy development of the capital market.

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