On June 30, it was reported that the "Financial Stability Law of the People's Republic of China (Second Reading Draft)" was open for public comment, from June 28, 2024 to July 27, 2024.
Previously, the 10th meeting of the Standing Committee of the 14th National People's Congress deliberated on the Financial Stability Law of the People's Republic of China (Second Reading Draft).
The Financial Stability Law of the People's Republic of China (Second Reading Draft) proposes:
Local people's governments shall support financial institutions in operating independently in accordance with the law, and shall not interfere with financial institutions' business activities or personnel appointments and dismissals in violation of regulations.
The major shareholders of financial institutions shall, in accordance with regulations, make capital contributions with their own funds. Shareholders of financial institutions shall not make false capital contributions, circulate capital injections, or withdraw capital contributions.
If a financial institution experiences abnormal fluctuations in the prudential supervision indicators stipulated by laws, administrative regulations and the financial management department of the State Council, the financial management department of the State Council shall, in accordance with the division of duties, issue risk warnings, interview the directors, supervisors, senior management personnel or major shareholders and actual controllers as needed, and order rectification within a time limit; Where corrections are not made within the time limit, or the prudential regulatory indicators deteriorate, endangering the sound operation of financial institutions, the financial management department of the State Council shall take the following measures in accordance with the provisions of laws and administrative regulations and in accordance with the division of duties and labor:
(1) Restricting business activities, ordering the suspension of part of operations, and stopping the approval or approval of the establishment of new businesses;
(2) Restricting the distribution of dividends, and restricting the remuneration and other income of directors, supervisors, and senior managers;
(3) Restricting the transfer of property or creating other rights in property, controlling credit for major transactions, ordering the transfer of assets, or reducing leverage;
(4) In the event of an event or circumstance that affects the continuous operation of a financial institution, it shall be ordered to write down or convert the loss-absorbing instrument into shares;
(5) Stop approving the establishment of additional branches;
(6) Order the replenishment of capital within a time limit in accordance with the recovery and disposal plan or regulatory commitments;
(7) Ordering the replacement of directors, supervisors, or senior management personnel or restricting their rights;
(8) Designating responsible directors, supervisors, or senior managers as inappropriate persons;
(9) Ordering the responsible shareholder to transfer equity or restricting his shareholder rights;
(10) Other measures provided for by laws and administrative regulations.
In any of the following circumstances, the financial management department of the relevant State Council shall impose penalties in accordance with the provisions of relevant laws and administrative regulations; where relevant laws and administrative regulations do not provide for punishment, it is to be ordered to make corrections within a set period of time, confiscate unlawful gains, and give a fine of between 1 and 10 times the value of unlawful gains; where there are no unlawful gains or the unlawful gains are less than 1,000,000,000 RMB, a fine of between 1,000,000,000 and 10,000,000 RMB where the circumstances are serious, the relevant business permits are to be suspended or revoked concurrently; The responsible directors, supervisors, senior managers and other directly responsible personnel shall be given warnings and fined between 200,000 and 2 million RMB:
(1) Violating prudential business rules, causing financial risks or hidden financial risks;
(2) Failing to perform financial risk reporting obligations or concealing the actual situation of the risk in accordance with regulations, causing serious consequences;
(3) Failure to cooperate with or implement early corrective measures, supervision and management measures, or risk disposal measures.
Editor-in-charge: Chen Yuyao | Review: Li Zhen | Supervisor: Wan Junwei