Nearly four years after the first attempt to win the backing of the courts in getting back money they lost after making investments based on false information supplied by listed companies, Chinese shareholders are now closer than ever to their goal, following the Supreme People's Court decision yesterday.
The first group of litigants began their battle in April 1999. Shareholders of the Shanghai-listed firm Hongguang sued the company for fraud relating to information disclosure and asked for compensation.
The lawsuit, though rejected by the court, nevertheless opened the way for the introduction of rights protection for China's 68 million shareholders. Cases involving insider-trading and price-rigging in the securities market also began finding their way into the nation's courtrooms.
In September 2001, a local court in East China's Wuxi accepted jurisdiction in a case in which a number of small and medium-sum investors asked for civil compensation from the Guangxia (Yinchuan) Industry Co, which had been found to have acted dishonestly in information disclosure. But 10 days later, the Supreme People's Court issued a directive to local courts asking them to temporarily suspend the hearing of civil cases relating to stock trading fraud, while they reviewed existing legislation.
The first case to be accepted by the courts following the initial judicial interpretation involved three shareholders vs. the Shanghai-listed Daqing Lianyi. Since then nearly 900 similar actions have been accepted or tried by courts across China.
(China Daily January 10, 2003)
