I. Introduction

One of the persistent themes underlying modern securities market is the protection of ordinary investors. Compared with sophisticated investors, the retail investors generally stand in a weaker position due to information asymmetry. Hence, the securities legislations have always been expected to give a hand to ordinary investors. Recently in China, increasingly relevant to this concern is about improving the remedy system for ordinary investor, as China’s economic reform is approaching to expand direct financing and it requires institutional adaptation to a more liberalized and stable stock market.

According to Doing Business 2020 published by the World Bank, China witnessed a remarkable rise in the index of minority investor protection (10%). To accomplish this improvement, the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) was in charge of revising related regulations. With the revision of Guidelines for Articles of Association of Listed Companies and Rules Governing the Listing of Stocks on Stock Exchange being fruitful , the CSRC now aims at building a “General Investor Protection System.” One of its critical missions is to propel the legislature to grant more diversified remedial approach so as to improve investors’ awareness and ability on seeking remedies.

The securities law’s preferential protection system for ordinary investors can be viewed from two branches: the substantive branch and the procedural branch. Substantive branch mainly entitles rights to investors and obligations to issuers, while procedural branch consists of special procedural arrangements on investor remedies, including investor protection organizations as well as multiple means of dispute settlement and compensation. The Securities Law (2019 Revision) encompasses an addition of two special chapters, Information Disclosure and Investor Protection, which correspond to the two branches of the investor protection system.

This Note focuses on the procedural protection under the new Securities Law and comments on the development of dispute resolution and damage compensation between investors and liable parties. To start with, in Section II, the Note goes through multiple forms of litigation available before and after the new Securities Law, and focuses on the most prominent creation, China’s “opt-out” group litigation. In Section III, alternative approaches of non-litigation dispute resolution and their improvement under the new Securities Law are introduced. Furthermore, Section IV intends to view the procedural investor protection as a whole and extract feature of related law revision.