Answer in one line: Yes. Securities fraud in China is not one crime but a family of offences, and the two most common are fraudulent issuance of securities (Criminal Law Article 160) and false or incomplete disclosure by a listed company (Article 161). Both carry prison time — up to 15 years for fraudulent issuance and up to 10 years for serious disclosure violations.
Fraudulent issuance — Article 160
Article 160, as amended by Criminal Law Amendment (XI) in 2021, punishes anyone who conceals a material fact or fabricates major false content in a prospectus, subscription form, bond-raising document or other issuance document in order to issue shares, corporate bonds, depositary receipts or other securities recognised by the State Council. The 2021 amendment deliberately widened the offence to cover depositary receipts and modern issuance documents.
The penalty is tiered: where the amount is huge, the consequences serious or other aggravating circumstances exist, up to five years of imprisonment or criminal detention plus a fine; where the amount is especially huge or the consequences especially serious, five years or more and a fine. Controlling shareholders and actual controllers who organise or direct the conduct are also liable, and can be fined 20% to 100% of the funds raised.
False disclosure — Article 161
Article 161 targets companies that are legally obliged to disclose information. It punishes the provision of false or materially incomplete financial reports to shareholders and the public, or the failure to disclose other important information as required, where this seriously harms shareholders or others. The 2021 amendment raised the maximum from three years to ten: the directly responsible managers and other responsible persons face up to five years in serious cases, and five to ten years where the circumstances are especially serious.
How is this different from insider trading and market manipulation?
These are separate offences. Insider trading is Article 180 (up to 10 years), and manipulating the securities market is Article 182 (up to 10 years, with a list of banned trading tactics). Securities fraud in the Article 160 and 161 sense is about what a company puts into, or leaves out of, its public filings — not about trading on inside information or moving the price.
What does this mean in practice?
The biggest risk sits with directors, senior managers, CFOs and controlling shareholders, because the law targets the people directly responsible for the filing. A defence usually turns on whether the information was genuinely material, whether the omission was deliberate or a real error, and whether the company corrected the disclosure and cooperated early — which can reduce liability.
Hypothetical scenario: a company’s CFO signs off on a prospectus that overstates revenue by inflating related-party sales. If the issuance succeeds and the true figures later surface, prosecutors can charge the company and its responsible officers under Article 160, even though nobody traded on secret information.
The bottom line: in China, misleading the market about a company’s finances is a criminal matter, not merely a regulatory one — and since 2021 the sentences have become significantly heavier.
Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512