The China Securities Regulatory Commission (CSRC) published a draft set of implementation rules for administrative penalties in cases involving unlawful transfers of securities, opening it for public comment. The draft is intended to improve the enforcement framework for improper share disposals and other unlawful transfer conduct. The 18-article draft standardises how “unlawful transfer of securities” is identified, clarifying the meanings and applicable scenarios of the concepts in Article 186 of the Securities Law, including “transfer of securities”, “transfer of securities during a restricted transfer period”, and transfers that do not comply with laws, administrative regulations, or CSRC rules. It also addresses how to determine liability for parties acting in concert. For enforcement operability, the draft subdivides unlawful transfer conduct into four categories: illegal transfers during restricted transfer periods, non-compliance with holding period and sale timing requirements, non-compliance with sale quantity and information disclosure requirements, and failure to suspend trading as required. On sanctions, it sets differentiated discretion tiers for the different categories, lists circumstances for adjusting penalty levels, and provides indicative guidance on combined penalties versus applying the heavier punishment, adjustment scenarios, and potential market bans. The CSRC invited feedback from the public and stated it will revise and refine the rules based on responses before issuing them through its formal procedures.

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