More Than 60 A-Share Companies Were Investigated in 2026: How Can Directors, Supervisors, and Senior Executives Protect the Boundary of Personal Liability in Information Disclosure Violations?
No sooner had the 2026 annual report disclosure season ended than the capital market saw a wave of intensive enforcement. According to Wind statistics, as of September 10, more than 60 A-share companies had been placed under investigation by the CSRC during the year, with information disclosure violations accounting for the overwhelming majority. On just one trading day in April, the pace was such that four companies were simultaneously placed under investigation and three received prior notices of administrative penalties. Yunchuang Data was ordered to pay approximately RMB 149
From a lawyer's perspective, the core change in this round of enforcement is not the number of cases but the structure of liability. Since the implementation of the new Securities Law, the dual-penalty system plus piercing through to individuals has become the norm: companies are penalized, directors, supervisors, and senior managers are penalized individually, controlling shareholders and actual controllers face additional penalties if they organize or direct the conduct, and intermediaries are held accountable at the same time. With all four parties under simultaneous pressure, how directors, supervisors, and senior managers can safeguard the boundaries of their personal liability is the most pressing issue after a company is placed under investigation.
Piercing Liability: The Enforcement Logic from "Punishing Companies" to "Punishing Individuals"
Article 197 of the Securities Law is the core provision in the vast majority of information disclosure violation cases, and its penalty regime is structured in three tiers. The first tier is corporate liability: failure to disclose as required is punishable by a fine of RMB 500,000 to RMB 5 million; if it constitutes false records, misleading statements, or material omissions, the applicable provision is upgraded and the fine range is substantially increased. The second tier covers directly responsible persons in charge and other directly responsible persons, who are subject to a fine of RMB 200,000 to RMB 2 million—the core range for the personal liability of directors, supervisors, and senior managers. The third tier is the liability of controlling shareholders and actual controllers for organizing or instigating the violation, subject to a fine of RMB 500,000 to RMB 5 million.
The three-tier structure may be applied cumulatively. In the 2026 Yilianzhong case, Zhang Xi, the actual controller, was fined RMB 3 million as the directly responsible person in charge and separately fined RMB 14.5 million as the actual controller who organized and instigated the conduct, totaling RMB 17.5 million, and was banned from the market for life. The fine imposed on the individual far exceeded that imposed on the company itself, which was almost unimaginable under the old law.
Of greater concern is the parallel chain of liability. In addition to administrative penalties, investors may, on the basis of the administrative penalty decision, bring civil damages claims for misrepresentation, with the amount claimed often being several times the administrative fine. If the circumstances are serious and the case is transferred to the public security authorities, the directly responsible persons in charge may face criminal prosecution under Article 161 of the Criminal Law for the crime of disclosing or failing to disclose important information in violation of regulations, with a maximum sentence of up to ten years' imprisonment. The response strategy at the administrative investigation stage must be shifted in tandem to a criminal defense mindset.
The Golden 72 Hours: The Window Most Easily Wasted After Case Filing
The 72 hours after receipt of the Notice of Case Filing are the most critical window in the entire response process. Actions at this stage directly determine the tone of cooperation, the state of evidence, and public announcement compliance in the subsequent investigation.
The first step is to establish a “dual internal/external line” response team. At the company level, the team should consist of the actual controller, the chief financial officer, the board secretary, and outside counsel, and should present a unified external position. At the individual level, directors, supervisors, and senior executives should separately retain their own counsel. This detail is often overlooked but is critical. Article 52 of the Measures for the Administration of Information Disclosure by Listed Companies expressly provides that the chairperson, the general manager, and the board secretary bear primary responsibility for the truthfulness, accuracy, completeness, timeliness, and fairness of interim reports. When an individual’s interests diverge from the company’s interests—for example, where a director explicitly raised objections during a board vote—sharing the same lawyer would create a conflict of interest, and there would be no way to separate individual liability.
The second step is to back up evidence, not destroy it. Immediately verify item by item against the annual report any potentially problematic data, undisclosed transactions, and unrecorded related-party fund transfers, and fully preserve financial system data, approval-process records, email and chat records, and board meeting materials. In practice, the most common mistake is that, after a case is filed against a company, it modifies historical data and deletes chat records. This conduct may constitute the crime of aiding in the destruction or forgery of evidence under Article 307 of the Criminal Law, directly escalating an administrative violation into a criminal offense. During the investigation stage, all materials should only be mirror-backed up and must not be altered or deleted in any way.
The third action is to determine whether a temporary announcement needs to be issued. Receiving a case filing notice is itself a major event that should be disclosed, but the company must also simultaneously check whether there are other matters that should be disclosed but have not been disclosed, such as the freezing of shares held by the controlling shareholder, major guarantees, or major litigation, so as to avoid stacking new violations on top of the disclosure of the case filing matter. In the Shenzhen Hongtao Group case, the company was fined 500,000 yuan by the Shenzhen Securities Regulatory Bureau under Article 197, Paragraph 1 of the Securities Law for failing to timely disclose the freezing of shares held by the controlling shareholder.
Cooperating with investigations and hearings: How to downgrade "fraud" to an "accounting error"
After entering the on-site investigation stage, the core challenge facing the company is how to downgrade the matter under investigation from "financial fraud" to "accounting treatment discrepancies" or "delayed disclosure." These two differ vastly in legal nature, penalty severity, and delisting consequences.
The 2026 Jiangsu Sopo case is instructive. The company retrospectively adjusted its financial statements for 2022 to 2024, involving multiple line items such as operating revenue, operating costs, and R&D expenses, and ultimately the Jiangsu Securities Regulatory Bureau issued a warning letter rather than the maximum administrative penalty. In the Rongfeng Holding case, the company was likewise ordered to rectify and issued a warning letter for misstating the revenue recognition method for its cross-border logistics business. The essential difference between these two cases and the Yunchan Data and Yuandao Communications cases is this: the former involve differences in accounting judgment or irregular accounting, while the latter involve systematic, multi-year subjective fraud through circular fund flows to fabricate business. In regulatory practice, the key evidence for distinguishing the two is: whether there was subjective intent, whether there was a systematic fund circulation, and whether there was forged documentation or tampered system data.
During the cooperation with the investigation stage, lawyers should adhere to three principles. First, cooperate but do not blindly admit liability. Facts supported by evidence should be truthfully confirmed, while parts involving accounting judgment discretion or factual discrepancies should be explicitly raised in written objections. Silence will not be regarded as a cooperative attitude in subsequent hearings; instead, it may be deemed an acknowledgment of the facts. Second, proactively submit rectification reports. Article 32 of the Administrative Penalty Law stipulates that those who proactively eliminate or mitigate the harmful consequences of illegal acts shall be given a lighter or mitigated penalty. This mitigating circumstance must be proactively asserted. In a case of information disclosure violation that I handled, the company proactively submitted a self-inspection report and a detailed rectification plan during the investigation stage, and ultimately received a penalty about 40% lower than similar cases. Third, simultaneously assess the exposure to civil claims. After the announcement of case filing, investor claim solicitation typically begins within one to three months, and the company should concurrently calculate the claim amount and evaluate the possibility of mediation or settlement.
After receiving the Advance Notice of Administrative Penalty, making statements, presenting defenses, and requesting a hearing are statutory rights. Many companies assume that a hearing is merely a procedural formality and give up their right to apply for one, which wastes enforcement resources. The core value of a hearing lies in giving the party an opportunity to present facts, legal application, and views on the severity of the penalty directly to the penalty committee. In a case I previously handled, it was precisely at the hearing stage that we identified key evidentiary flaws in the regulator's factual findings, ultimately reducing the fine by approximately 40%. At a hearing, the focus should be on challenging factual findings—whether the amount of the violation is accurate, whether the calculation methodology is reasonable, and whether disagreements over accounting judgments have been wrongly characterized as false records; at the same time, challenge the application of law—whether Article 197, Paragraph 1 or Paragraph 2 of the Securities Law should apply in this case, as the two provisions differ in the intensity of pursuing individual liability.
Personal Defense Lines for Directors and Senior Executives: Independent Directors, CFOs, and Board Secretaries Each Have Their Own Points of Separation
In this round of enforcement storms, directors, supervisors, and senior executives in different roles face different risks, and the entry points for liability separation also vary.
The core defense for independent directors lies in having "exercised reasonable care." According to regulatory practice, if an independent director explicitly votes against or abstains during a board vote and this is recorded in the meeting minutes, or promptly reports anomalies to the regulatory authorities upon discovery, this can constitute grounds for exemption or mitigation of liability. However, mere claims of being "unaware" or "not involved in operations" are difficult to be accepted in judicial and enforcement practice.
The chief financial officer faces the most concentrated risk. Financial data lies at the core of disclosure violations, and the person in charge of finance is typically identified as the "directly responsible manager." The key to severing liability lies in proving that the relevant accounting treatment was based on the opinions of an external audit institution or a collective management decision, and that the individual raised dissenting views that were not adopted. This requires the CFO to maintain complete written records of objections in their daily work.
The boundary of the board secretary's responsibilities lies in organizing and coordinating information disclosure. If the board secretary has fulfilled the obligations of organization and supervision in accordance with the Administrative Measures for Information Disclosure of Listed Companies, but the relevant matters were deliberately concealed by the chairman or the actual controller, the board secretary may assert a separation of liability. However, if the board secretary participated in the concealment or passively failed to act, it would be difficult to be exempted from liability.
For controlling shareholders and actual controllers, the risks are the most severe. Once they are determined to have "organized or instigated" the violation, they not only face fines of 500,000 to 5 million yuan, but may also be subject to a lifetime market ban and even criminal liability. In the Yunchuang Data case, the actual controller couple was banned from the market for life, meaning they can never serve as directors, supervisors, or senior executives of a listed company or engage in securities business—the real destructive power of this penalty often exceeds that of the fine itself.
From a practical perspective, how a company responds after being investigated is essentially a comprehensive contest involving evidence management, legal application, and communication strategy. Evidence preservation within the first 72 hours sets the tone for the investigation, the defense strategy during the cooperation stage determines how the case is characterized, and the professional arguments made during the hearing stage determine the final scope of penalties. Each of these milestones requires deep involvement by lawyers.
The financial dispute resolution team at Guangdong Zhiming Law Firm has been deeply engaged in the fields of securities compliance and information disclosure disputes for many years, accumulating extensive practical experience in emergency response after a company is placed under investigation, severing the personal liability of directors, supervisors, and senior executives, defense at administrative penalty hearings, and responding to civil claims by investors. If a company or its directors, supervisors, or senior executives receive a notice of case filing or a prior notice of administrative penalty, it is advisable to bring in a professional legal team as early as possible to complete evidence preservation and strategic deployment within the golden window period, so as to avoid missing mitigating circumstances due to improper response.
