The China Securities Regulatory Commission (CSRC) has released the "Regulations on the Supervision of Former Employees of the CSRC System Investing in Enterprises Intending to Go Public (Trial)" which will take effect on October 8th.

On September 6, the China Securities Regulatory Commission (CSRC) issued the "Regulations on the Supervision of Former CSRC Employees Investing in Listed Companies (Trial)" to be implemented starting from October 8, 2024. The regulations include extending the prohibition period for former employees to invest in listed companies. The prohibition period for former CSRC officials or supervisory staff to invest in listed companies will be extended to 10 years; for former officials below the department level and non-supervisory staff, the prohibition period will be extended from 3 years to 5 years for department level and above, and from 2 years to 4 years for officials below the department level. The scope of strict supervision of former employees will be expanded to include their parents, spouse, children, and their spouse. Higher verification requirements are proposed. The original text is as follows: CSRC Issues "Regulations on the Supervision of Former CSRC Employees Investing in Listed Companies (Trial)" In order to further strengthen the management of former employees of the CSRC (hereinafter referred to as former employees) investing in listed companies, maintain the openness, fairness, and justice of the capital market, the CSRC today issued the "Regulations on the Supervision of Former CSRC Employees Investing in Listed Companies (Trial)" (hereinafter referred to as the "Former Employee Supervision Regulations"). The CSRC attaches great importance to the issue of former employees of the CSRC investing in listed companies and has specifically introduced the "Regulatory Rules Applicable Guidance No. 2" in May 2021, requiring intermediary institutions to conduct thorough investigations of former employees of the CSRC who are shareholders. If there are improper investment situations such as using former positions to seek investment opportunities and investing during the prohibition period, they must be strictly cleaned up. In order to further improve the management system of former employees in a strict and stringent manner, based on the "Guidelines No. 2", the CSRC formulated the "Former Employee Supervision Regulations" and solicited public opinions from April 27 to May 11, 2024. The market generally supported the content of the rules and proposed suggestions for improvement. The CSRC studied and carefully adopted each suggestion and made corresponding modifications to the rules. The "Former Employee Supervision Regulations" incorporate the main contents of "Guidelines No. 2" and add three new provisions: firstly, extending the prohibition period for former employees to invest. The prohibition period for former officials or supervisory staff to invest is extended to 10 years; the prohibition period for former officials below the department level and non-supervisory staff is extended from 3 years to 5 years for department level and above, and from 2 years to 4 years for officials below the department level. Secondly, expanding the scope of strict supervision of former employees. The scope of strict review is expanded from the former employees themselves to include their parents, spouses, children, and their spouses. Thirdly, proposing higher verification requirements. Intermediary institutions should conduct comprehensive checks on the investment background, source of funds, fairness of prices, and the authenticity of clean-up for former employees, with the CSRC conducting rechecks on relevant work. In the implementation of the system, securities exchanges will provide policy interpretations and guidance to listed companies and intermediary institutions. Next, the CSRC will strictly implement the relevant requirements of the "Opinions of the State Council on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Capital Market" regarding "Improving the Management of Former Employees in a Strict and Stringent Manner", continue to tighten the entry points, strengthen cooperation with disciplinary and supervisory departments, resolutely transfer clues of illegal and disciplinary violations discovered to relevant departments for handling, and maintain a fair, open, and just regulatory order for the issuance. [Announcement No. 11] "Regulations on the Supervision of Former CSRC Employees Investing in Listed Companies (Trial)" China Securities Regulatory Commission Announcement [2024] No. 11 The "Regulations on the Supervision of Former CSRC Employees Investing in Listed Companies (Trial)" are hereby announced, to be implemented from October 8, 2024. China Securities Regulatory Commission September 5, 2024 This article is excerpts from the China Securities Regulatory Commission, edited by GMTEight: Chen Wenfang.