Study On The Advance Compensation System In Misrepresentation

From the first case of advance compensation by sponsors in 2013 till now,the advance compensation system has played an important role in the implementation of the principle of priority in civil compensation for infringement in security market.However,due to the lack of rules,the problem of whether the compensation agreement can be enforced and how to guarantee the indemnity right of the compensation subjects can not be solved in practice.Until 2015,China Securities Regulatory Commission issued Guidelines for the Content and Format of Corporate Information Disclosure for Public Offerings of Securities No.1-Prospectuses(Revised in 2015)(hereinafter referred to as “Guideline 1”)for the first time mentioning the advance compensation system of security market,stipulating the compulsory advance compensation obligation of the sponsor in Misrepresentation.Clause 93 of the Securities Law of the People’s Republic of China,amended in December 2019,clearly stipulates the principle of voluntary advance compensation,and that the controlling shareholder,the actual controller and the relevant security companies of the issuer can conduct advance compensation for investors.But the existing rules still do not respond to the abovementioned questions in practice and raise new ones: as for the problem of voluntary advance compensation,there is a conflict between the Securities Law of the People’s Republic of China and the Guideline 1.As for the problem of scope of compensation subjects,the compensation subjects stipulated in the Securities Law of the People’s Republic of China is inconsistent with the liability subjects of misrepresentation.Issuers and security service institutions that have the willingness and ability to conduct the advance compensation are excluded from the scope of compensation subjects.The solution of these problems has an important influence on the construction of advance compensation system.Based on the analysis of the legitimacy basis of the advance compensation system,this paper holds that the legislative purpose of the advance compensation system is to solve the civil infringement disputes in the security market efficiently and save the cost of litigation,so as to better protect the rights and interests of investors.Then,this paper studies the nature of the advance compensation in the misrepresentation,and on this basis analyzes the problem of the effectiveness of the compensation agreement,the protection of the indemnity right,the principle of voluntary advance compensation and the scope of the compensation subjects,and puts forward the following suggestions for the improvement of the advance compensation system.In order to better realize the efficiency value of the advance compensation system and reduce the cost of investors’ private right relief,this paper suggests that the enforcement power of compensation agreement should be clarified,the principle of voluntary advance compensation should be adhered to,the scope of compensation subjects should be expanded,and the indemnity right of compensation subjects should be guaranteed.And at the same time,in the process of perfecting the advance compensation system,the principle of private law autonomy should be taken into account to better realize the purpose of investor protection.