Article 129 Where a securities company establishes, purchases or cancels a branch, alters its business scope or registered capital, alters its shareholders or actual controllers who hold more than 5% of its stock rights, alters any important article of its constitution, has any merger or spilt-up, alters its form of corporation, suspends its business, goes through dissolution or bankruptcy, it shall be subject to the approval of the securities regulatory authority under the State Council. Where a securities company establishes, purchases a securities operation institution abroad or purchases the shares of any securities operational institution abroad, it shall be subject to the approval of the securities regulatory authority under the State Council.

Article 130 The securities regulatory authority under the State Council shall formulate provisions on the risk control indicators of a securities company such as net capital, the ratio between net capital and liabilities, the ratio between net capital and net assets, the ratio between net capital and operational scale of self-operation, underwriting and asset management, the ratio between liabilities and net asset as well as the ratio between current assets and current liabilities. A securities company may not provide any financing or guaranty for its shareholders or any related person thereof.

Article 131 The directors, supervisors and senior managers of a securities company shall be honest and integrate, have good moral grade, be familiar with the laws and administrative regulations on securities and have the ability of operation and management as required by the performance of their functions and duties, and shall have obtained the post-holding qualification as verified by the securities regulatory authority under the State Council before assuming his post. Anyone who is under any circumstance as prescribed in Article 147 of the Corporation Law of the People's Republic of China or is under any of the following circumstances may not hold the post of director, supervisor or senior manager of a securities company:
 (1) Where a person-in-charge of a stock exchange or securities registration and clearing institution or a director, supervisor or senior manager of a securities company has been removed from his post for his irregularity or disciplinary breach and if it has been within 5 years as of the day when he is removed from his post; and
 (2) Where a professional of a law firm, accounting firm or investment consulting organization, financial advising organization, credit rating institution, asset appraisal institution or asset verification institution has been disqualified for his irregularity or disciplinary breach and if it has been within 5 years as of the day when he is removed from his post.

Article 132 A practitioner of a stock exchange, securities registration and clearing institution, securities trading service institution or securities company or any functionary of the state organ, who has been dismissed for his irregularity or disciplinary breach, may not be employed as a practitioner of a stock exchange.

Article 133 A functionary of the state organ and any other personnel as prohibited by laws and administrative regulations from taking any job in a company on a part-time basis may not take any job in a securities company on a part-time basis.

Article 134 The state shall establish the securities investor protection fund. The securities investor protection fund shall be composed of the capital as paid by securities companies and any other capital as lawfully raised. The specific measures for financing, administration and use of the foregoing fund shall be formulated by the State Council.

Article 135 A securities company shall withdraw a trading risk reserve from its annual after-tax profits to cover any loss from securities transaction. The specific proportion for withdrawal shall be prescribed by the securities regulatory authority under the State Council.

Article 136 A securities company shall establish and improve an internal control system, adopt an effective measures of separation so as to prevent any interest conflict between the company and its clients or between different clients thereof. A securities company shall undertake its operations of securities brokerage, underwriting, self-operation and asset management in a separate manner but not in a mixed manner.

Article 137 A securities company shall undertake its self-operation in its own name and may not make use of any other person's name or in an individual's name. A securities company shall undertake its self-operation by using its own capital and funds as lawfully raised. A securities company may not lend its self-operation account to any other person.

Article 138 A securities company may enjoy its right of independent management according to law and its legal operation may not be interfered.

Article 139 The trading settlement funds of the clients of a securities company shall be deposited in a commercial bank and be managed through accounts as separately opened in the name of each client. The specific measures and implementation procedures shall be formulated by the State Council. A securities company may not incorporate any trading settlement funds or securities of its clients into its own assets. Any entity or individual is prohibited from misusing any trading settlement funds or securities of its/his clients in any form. Where a securities company goes bankruptcy or goes through liquidation. The trading settlement funds or securities of its client may not be defined as its insolvent assets or liquidation assets. Under any other circumstance as irrelevant to the liabilities of its clients or under any other circumstance as prescribed by law, the trading settlement funds or securities of its clients may not be sealed-up, frozen, deducted or enforced compulsorily.

Article 140 Where a securities company engages in any brokerage business, it shall arrange a uniformly formulated the power of attorney of securities transactions for the entrusting party. Where any other means of entrustment is adopted, the relevant entrustment records shall be made. For an entrustment of securities transaction as made by a client, whether the transaction is concluded or not, the entrustment records shall be kept in the relevant securities company within the prescribed period.

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