A Study on the Listed Company’s Civil Liability for the Violations of the Disclosure Obligation in China

The securities law of China places more emphasis on administrative sanctions or criminal sanctions regarding the liability for illegal acts. Although it has a certain deterrent effect on violators, it lacks regulatory power from the perspective of civil liability, resulting in investors still not receiving effective compensation after suffering losses. Civil liability for damages compensation is the most effective and direct means to effectively compensate for investors’ losses and maintain their confidence in the securities market. At the same time, high civil compensation also increases the cost of violating the law, making the illegal subject economically unprofitable, and to some extent, curbing illegal activities such as violating disclosure obligations. Information disclosure is the main channel for investors to understand and master the basic situation of listed companies, and establishing a sound civil liability system for information disclosure can more targeted restrict and regulate the behavior of listed companies, provide favorable legal remedies and protection for investors after being infringed, and increase the investment confidence of public investors. Therefore, in order to comprehensively and systematically regulate information disclosure violations in the securities market and provide sufficient legal remedies for investors’ rights and interests, it is urgent to improve the civil liability system for information disclosure. This research uses empirical analysis and comparative analysis to comprehensively analyze the listed companies’ civil liability for the violations of the disclosure obligation stipulated in China’s information disclosure system from the aspects of the subject, constituent requirements, exemption and defense, amount of damages, the cease of claims, and the securities class action, etc. Combined with the current development status and actual problems of the securities markets in China, considerations and recommendations for the betterment of the civil liability for the violations of the disclosure obligation in the securities market are proposed in order to exert the compensation and warning functions of securities civil liability, ensure the legitimate rights and interests of social public investors, and promote the order and development of the securities market.