Xin Hua Wang·2025-08-12 05:48Core Viewpoint - Recent regulatory actions against shareholders of Oriental Fashion and Wo Le Home for illegal share reductions highlight increased scrutiny and enforcement by regulatory bodies regarding violations such as fraudulent issuance, false disclosures, and illegal reductions [1] Summary by Sections Regulatory Actions - The China Securities Regulatory Commission (CSRC) has emphasized the need for strict punishment of illegal activities, including fraudulent issuance and illegal share reductions [1] - As of September 10, 2023, 133 listed companies' shareholders or executives have faced penalties for illegal reductions, primarily through administrative measures rather than severe penalties [1][2] Reasons for Violations - Common reasons for violations include failure to disclose share reductions in a timely manner, breaching prior commitments, exceeding reduction limits, and trading during restricted periods [2] - Many companies have publicly apologized for violations, attributing them to misunderstandings or operational errors [2] Distinction Between Intentional and Accidental Violations - The distinction between intentional and accidental violations is crucial, with executives expected to have a higher awareness of regulatory changes [2] - Misunderstanding of rules is often cited as a reason for violations, but this should not serve as a valid excuse for executives [2] Administrative Penalties - The Securities Law provides for penalties for illegal reductions, including warnings and confiscation of illegal gains, but actual administrative penalties are often limited [4][5] - Factors contributing to the low number of severe penalties include the low operability of the Securities Law and the leniency of administrative penalty regulations [4] Need for Clearer Regulations - The CSRC is working on revising regulations to enhance the effectiveness of rules governing share reductions and to clarify responsibilities [6] - There is a call for more precise methods for calculating illegal gains and determining penalties to improve compliance and reduce violations [6]