Research On The Advance Payment System Of Sponsor Institution

In recent years,China’s securities market has been fraudulent issuance,false statements and other illegal violations,seriously harming the rights and interests of investors.For investors,they can usually only protect their rights in the form of civil compensation litigation.Judging from the statistics of past judicial cases,there are often disadvantages such as long litigation time and cumbersome procedures to solve the problem through judicial channels,which cannot effectively enable investors to obtain compensation..Therefore,there have been three cases of first trial advance payment in our securities market,which laid a foundation for the implementation of the follow-up system.Finally,in the newly revised "Securities Law" in 2019,the advance compensation system was incorporated into the law for the first time,confirming the effect of this system in the securities market.However,in practice,there are still problems such as the difficulty in determining the conditions for the initiation of the advance payment procedure,the lack of clear standards for the formulation of the compensation agreement,and the difficulty of guaranteeing the right of recovery after the sponsor’s first compensation.If these issues cannot be effectively resolved or the relevant standards are clarified,it will inevitably affect the advancement and the operating effect of the compensation mechanism in the securities market.The first chapter is divided into two parts.The first part sorted out the theoretical basis of the advance indemnity system of sponsor institutions,combined with the analysis of the practice case of advance indemnity,summed up the advantages of sponsor institutions as the advance indemnity.Based on the legal basis,this paper analyzes the nature of the advance payment system of sponsor institutions,which is summarized into three characteristics:private relief nature,voluntary equity nature and unilateral promise nature,and discusses the positive significance of the advance payment system to the whole securities market.The second part describes the status quo of the implementation of the advance payment system of sponsor institutions.From the compensation results,the implementation effect is remarkable and the rights and interests of investors are effectively protected.However,due to the lack of specific implementation rules and effective supporting incentive measures,it is difficult to promote and implement the advance payment system of sponsor institutions.The second chapter discusses the related disputes after the advance payment into the law.In the process of revising the advance payment system,there has been controversy over the scope of advance payment subjects.Issues such as whether to join the issuer,why the investor protection agency should be deleted,and whether the scope of advance payment subjects are too small are hot topics of discussion.Even if the "Securities Law" clarifies the three types of compensation subjects,the responsibilities and compensation sequence among the three are not clear,which may lead to mutual prevarication and fail to achieve the effect of the advance compensation mechanism.Second,since there are few cases of advance payment,is the scope of application of advance payment limited to fraudulent issuance and misrepresentation?The author puts forward his own views.Finally,due to the differences in practical cases,there is no definite number on whether the advance payment mechanism should be initiated on the premise of litigation.However,it can be reversed in combination with the issue of false statements in civil compensation before litigation.The cancellation of the settlement procedure has also been put on the agenda,so if the cancellation of the pre-procedure will affect the start-up procedure of the advance payment mechanism,this chapter conducts an in-depth analysis and research on this.The second chapter discusses the relevant disputes after the advance payment method.In the process of the amendment of advance payment system,there are always controversies about the scope of advance payment subject,such as whether to add issuer,why to delete investor protection agency and securities service agency,whether the scope of advance payment subject is too small and so on.Even though the Securities Law clearly defines the three types of compensation subjects,the responsibilities and compensation sequence among them are not clear,which may lead to shirking among the three and thus fail to achieve the effect of advance compensation system.Secondly,because there are few cases of advance payment,is the scope of application of advance payment limited to fraudulent issuance and false statement?The author puts forward his own views on the scope of application.Finally,due to the difference of practical cases,it is not certain whether the advance payment system should be based on the premise of litigation preposition,but it can be combined with the problem of litigation preposition in the false statement of civil compensation.As the cancellation of the civil compensation preposition procedure has been put on the agenda recently,Therefore,this chapter makes an in-depth analysis and research on the influence of the cancellation of the pre-payment procedure on the initiation procedure of the pre-payment system.In terms of the construction of advance indemnity system,the author firstly proposes that the issuer should be listed as the indemnity subject,which should be consistent with the logic stated in the articles.Secondly,the author puts forward a new viewpoint on the distribution of burden of proof under the general trend of canceling pre-procedure.The third chapter discusses the determination of compensation standard in the compensation agreement signed by sponsor institutions and investors.Compensation agreement set is mainly around the scope of compensation and the eligibility of leading compensation range of investors,the scope of eligible investors rely on to expose,and other important time node determine,only made clear the node to statistics of investors,but investors do not necessarily must be adequate to get compensation from the investors,should be in a reasonable scope to reduce their investors;The range of compensation amount depends on the determination of compensation calculation method.In the case of Xintai Electric,the identification of securities market system risk was put forward for the first time in its calculation method,which makes the calculation method of compensation payment in advance more reasonable and fair.In terms of the establishment of compensation agreement,the paper firstly proposes a new identification standard for the disclosure date,and then suggests a reasonable reduction in the identification of the scope of indemnified investors.It is pointed out again that the existence of systemic risk in securities market should be proved by sponsor institutions and the identification standard is put forward.Finally,the author tries to find a most practical calculation method for the advance compensation system by referring to the calculation method in the false statement judicial case.Chapter four puts forward relevant views on the protection of the rights and interests of sponsors after performing their first compensation obligations.The "Securities Law" clarifies the recourse rights of sponsors,but there are no relevant rules for perfecting how to recourse.Sponsor institutions will not only face the risk of investors’ second litigation compensation,but also may not be able to recover the excess from other responsible parties after the first compensation.In the process of recovery,firstly,there are uncertainties in the scope of the subject of recovery,and secondly,there is no relevant legal basis for the clear division of the way of assuming responsibility among the relevant subjects.Chapter four puts forward some opinions on the protection of rights and interests of sponsor institutions after performing the duty of paying compensation in advance.The Securities Law clearly defines the right of recourse of sponsor institutions,but there is no relevant rules to improve how to recover.Sponsor institutions will not only face the risk of second lawsuit compensation from investors,but also are more likely to be unable to recover the excess from other responsible subjects after the first payment.In practice,first of all,there is uncertainty in the subject scope of recovery,and second,there is no relevant legal basis for clear division of the way of undertaking the responsibility among relevant subjects.In terms of the protection of the right of recourse of the sponsor agencies,the standards of liability determination are summarized based on several recent typical judicial decisions.Secondly,it is expected that by introducing the right of subrogation and the participation of third-party institutions,the sponsoring institutions can avoid the risk of being sued twice.