“23 Measures” to Protect Small and Medium Investors Issued — Covers IPO Pricing, Delisting, Trading and More

23 Measures to Protect Small and Medium Investors — this regulatory package reshapes IPO pricing, delisting, trading and accountability across China’s capital markets.

Key Points

Overview

On October 27, 2025, the China Securities Regulatory Commission (Zhongguo Zhengquan Jiandu Guanli Weiyuanhui 中国证券监督管理委员会, CSRC 证监会) released “Several Opinions on Strengthening Protection of Small and Medium Investors in the Capital Market“ (hereafter, the “Opinions“).

The document aims to further improve investor-protection mechanisms and to embed investor protection across capital-market reforms — from IPO pricing and margin trading to algorithmic trading, delisting procedures and dispute resolution.

Below is a clean, practical breakdown of what the 23 Measures mean for investors, intermediaries, and founders.

Key themes: full-chain protection, tougher enforcement, and clearer duties

The Opinions make three strategic moves:

• Embed investor protection into the entire capital-market reform chain, clarifying regulatory expectations across issuance, trading and termination of listing.
• Tighten enforcement against misconduct that harms small and medium investors — including fraudulent issuances and falsified financial disclosures — with precise liability for controlling shareholders and actual controllers.
• Clarify and tighten the responsibilities of intermediaries and market operators for investor education, complaint handling, suitability management and disclosure quality.

Putting investor protection into the full reform chain

The Opinions target a string of issues that have raised investor concerns in recent years.

• IPO pricing and offline allocation: The Opinions call for optimization of IPO pricing mechanisms and stronger management of investor classification in offline allotments.
• Underwriter and intermediary responsibilities: Underwriters must be more cautious when producing research reports and profit forecasts, improve risk warnings, and avoid fee structures that vary with issuance results.
• Disclosure quality: Prospectuses should be clearer and more readable, and regulator guidance will include model prospectus templates and inspections of sponsoring institutions, law firms and accounting firms involved in IPOs.
• Margin financing and short-selling (rongzi rongquan 融资融券): The Opinions require enhanced supervision of margin trading businesses to improve transparency and fairness.
• Algorithmic (程序化) trading: Strengthened reporting checks and abnormal-trade monitoring standards will raise oversight of programmatic trading strategies.

Practical insight: embedding investor protection into IPO and trading mechanics changes incentives for intermediaries and market-makers.

Holding market participants accountable — stronger penalties and coordination

The Opinions emphasize intensified enforcement against major misconduct that damages investor interests — especially fraud in issuance and fabricated financial reports.

Regulators will pursue precise accountability for those who design, direct or execute violations, including controlling shareholders and actual controllers.

They also call for deeper law-enforcement cooperation with public security and judicial bodies to crack down on market-disrupting crimes and to speed up investigation and prosecution where appropriate.

Practical insight: founders and controlling shareholders should expect earlier and sharper civil and criminal follow-up when violations are suspected.

Operational responsibilities for brokers and other institutions

To strengthen protection at the service level, the Opinions require operating institutions (e.g., securities and futures brokers) to:

• Embed investor education into business workflows and perform detailed suitability assessments before selling products.
• Explain business rules and important contract terms clearly before providing services, and provide targeted, effective risk warnings.
• Improve complaint and dispute-handling mechanisms and link complaint-source analysis with internal controls and compliance to root out systemic service failings.
• Be held accountable where they cannot demonstrate fulfillment of suitability and disclosure obligations — courts are supported in interpreting standard contract terms favorably to small investors where applicable.

Practical insight: brokers should prepare to document investor education and suitability decisions more thoroughly to limit regulatory and litigation risk.

Stronger protection in delisting and termination-of-listing procedures

As normal delisting mechanisms deepen, the Opinions address investor compensation and safeguards across three scenarios:

• Ongoing supervision of companies at risk of delisting: Companies with delisting risk are required to fully disclose that risk and regulators will step up abnormal-trade monitoring to prevent speculative runs.
• Forced delisting for major violations: For companies subject to forced delisting for serious illegal conduct, the Opinions encourage controlling shareholders and actual controllers to proactively offer upfront compensation or take other measures to protect investors.
• Voluntary delisting: Companies voluntarily terminating listing should provide protections such as a cash exit option, and for firms with offshore-listed domestic shares (B-shares), the Opinions support temporary onshore B-share accounts to facilitate cash exit options for affected investors.

Practical insight: clearest winner here is the minority investor who gains more structured exit and compensation pathways when a delisting occurs.

Special-representative lawsuits (特别代表人诉讼) and dispute resolution

The Opinions endorse broader use of the special representative plaintiff mechanism in securities disputes and encourage courts to apply it more consistently.

They also support the use of advance compensation (先行赔付) by issuers’ controlling shareholders, actual controllers or related securities firms to speed investor relief.

Examples cited in the Opinions show the institutional effect of representative litigation:

• Kangmei Pharmaceutical (Kangmei Yiyao 康美药业) — in the first major securities special-representative case, the China Securities Investor Protection Center (or equivalent investor-service body) represented roughly 52,000 investors who received about ¥2,459,000,000 RMB ($342 million USD).
• Zeda Yisheng (Zeda Yisheng 泽达易盛) — the Sci-Tech Innovation Board’s first special-representative case ended with mediation, where the investor-service body represented 7,195 investors who received about ¥280,000,000 RMB ($39 million USD).

Practical insight: representative litigation has already produced large-scale recoveries and the Opinions seek to make that pathway more routine.

Enhancing the role of investor-protection institutions

Investor-protection organizations are urged to expand their litigation functions: filing derivative suits, supporting representative suits, and accepting investor mandates to file civil claims in bankruptcy reorganization and liquidation proceedings.

The Opinions encourage these bodies to publish when they exercise shareholder rights or initiate litigation, to help mobilize investor participation and to build precedent through representative cases.

Practical insight: expect more proactive litigation and public campaigns from investor-protection bodies intended to coordinate and concentrate small-investor claims.

Legal and legislative support

The Opinions call for improved legal foundations for investor protection, including:

• Strengthening review mechanisms to ensure new securities and futures rules protect small and medium investors.
• Establishing legislative contact points to broaden investor input into capital-market legislation.
• Supporting development or revision of financial laws and judicial interpretations (e.g., civil compensation rules for market manipulation and insider trading) that strengthen legal remedies for harmed investors.

Practical insight: legislative and judicial alignment makes regulatory guidance stickier and gives investors clearer legal recourse over time.

What this means for investors and market participants

Regulators are signaling a period of heightened investor protection.

IPO procedures and pricing, disclosure quality, algorithmic-trading oversight, margin-business transparency, and delisting rules will all face clearer rules and stricter supervision.

Market intermediaries should expect more rigorous checks on disclosure, suitability and complaint handling, while controlling shareholders and insiders face sharper liability exposure for fraud or asset misuse.

Practical takeaway: firms that already document suitability, maintain high-quality disclosure practices, and have clean governance will be better positioned to absorb these changes.

Selected translated highlights from the Opinions

The Opinions set out 23 numbered items organized under eight major topics.

Below are condensed translations of the main points:

• Optimize IPO pricing and offline allocation; strengthen classification and evaluation of offline investors; ban inquiry institutions that manipulate quotes from participating in offline bookbuilding.
• Raise prospectus readability and require model prospectus templates; make disclosure quality a core metric in evaluating sponsors and intermediaries.
• Require listed companies and related parties to provide accurate, timely information needed for investor decisions.
• Encourage companies to return value to shareholders via stable dividends and mechanisms like cancellation-style buybacks.
• Improve margin-trading rules and monitoring; strengthen checks on algorithmic trading and abnormal-trade detection.
• Require operating institutions to embed investor education and suitability assessments into processes and to upgrade complaint-handling systems.
• Increase penalties and pursue precise accountability for fraud, false disclosure, insider trading, market manipulation and misuse of listed-company funds.
• Develop multichannel dispute resolution: enhance mediation capabilities, implement “model judgment + bulk mediation” for mass disputes, and broaden the use of special-representative litigation and advance compensation.
• Empower investor-protection institutions to pursue derivative suits, submit claims in bankruptcy processes and act as litigation leaders for small investors.
• Promote legislative and judicial measures to consolidate small-investor protections in law and judicial interpretation.

Practical takeaways

• Retail and small institutional investors may gain clearer, faster paths to compensation in cases of fraud or major violations, especially where controlling shareholders or actual controllers are involved.
• Underwriters, sponsors, auditors and law firms should expect stricter post-event accountability for IPOs and greater supervisory scrutiny.
• Securities firms and other operating institutions should intensify investor-education efforts and improve complaint and suitability processes to reduce regulatory and legal risk.

References

• 关于加强资本市场中小投资者保护的若干意见 – China Securities Regulatory Commission (中国证券监督管理委员会)
• 中小投资者保护“23条”出台 事关新股发行、退市、交易等多环节 – 证券时报 (reprint on Eastmoney)
• 证券时报网首页 – 证券时报 (Zhengquan Shibao 证券时报)

Final note: the 23 Measures to Protect Small and Medium Investors mark a clear shift toward full-chain investor protection and sharper accountability across China’s capital markets.