"Annual Report on Administrative and Criminal Legal Risks of China's A-Share Listed Companies (2025)" Released: Criminal Risks Require Advance Prevention, Listed Companies Urgently Need to Fill in Criminal Compliance Gaps

2026 is a critical year for the start of the 14th Five-Year Plan. High-quality development of the capital market and comprehensive compliance of listed companies have become core requirements of macro policies and industrial transformation. Against this backdrop, the research results focusing on the legal environment and risk prevention in the A-share market—China A-Share Listed Companies Administrative and Criminal Legal Risk Annual Report (2025) (hereinafter referred to as the Annual Report)—are officially released.

As the first domestic annual legal risk report for listed companies that covers both administrative regulation and criminal accountability perspectives, the Annual Report systematically reviews regulatory penalties, judicial cases, and compliance focus in 2025, providing in-depth analysis of high-frequency risks, typical issues, and future trends for listed companies.

Recently, Securities Times reporter interviewed Hong Can, senior partner at Xinda Law Firm and head of the research team for this report, to discuss key topics such as the new characteristics of securities legal risks in 2026, enforcement trends under strengthened regulation, and how listed companies can build a comprehensive compliance system and address both administrative and criminal legal risks under the new 14th Five-Year cycle.

Securities Times Reporter: Your team has been releasing this series of reports for eight consecutive years. What are the core perspectives in this edition of the Annual Report? What practical value does it offer to market participants?

Hong Can: Under the regulatory ecosystem where registration-based reform is deepening and solidifying, with dual enforcement of administrative penalties and criminal accountability, identifying compliance risks is a challenge faced by all market entities. Today’s capital market views compliance risk management not just as a cost but as a source of competitiveness and a form of value investment. Based on this philosophy, we have continuously analyzed securities legal risks from a unique dual perspective of “administrative + criminal” over the past eight years. This Annual Report is the 39th in our series. We hope it can serve as a risk reference for listed companies and their directors, supervisors, and senior management to identify risks proactively and control them during operations, helping prevent securities violations and preempt potential criminal risks. Additionally, we aim for the Annual Report to help intermediaries and investors better understand market ecological changes and provide practical compliance guidance.

Securities Times Reporter: Based on the data in the Annual Report, what are the most prominent changes in the regulatory environment of the capital market in 2025? What do these mean for listed companies?

Hong Can: 2025 marks the final year of the 14th Five-Year Plan and is a key year for the maturity of the legal ecosystem in the capital market. The most notable regulatory changes can be summarized as a dual focus on “strict regulation” and “refined regulation,” with a legal market ecosystem that is becoming more standardized, transparent, open, vibrant, and resilient at an accelerated pace. We observe four prominent features: First, the accountability chain has become more comprehensive and in-depth. While the total number of administrative penalty cases remains high (472 cases), the number of individuals penalized has increased to 1,556, showing a pattern of “multiple penalties per case and full-chain accountability.” Enforcement emphasizes both “pursuing the main offenders” and “punishing accomplices,” including third-party fakers and negligent intermediaries. Second, the cost of violations has surged exponentially. The total fines and confiscations reached a historic high of 8.193 billion yuan, with the first case of A-share actual controllers fined over 500 million yuan. The number of bans issued in 2025 was 127, a 98.4% increase year-on-year, signaling a resolute crackdown on serious violators among key personnel of listed companies. Third, criminal enforcement has been fully integrated, with criminal risks being front-loaded. The Supreme Procuratorate has overseen 43 major financial fraud cases, and the Supreme Court and CSRC jointly issued guidelines on “strict and fair law enforcement and judicial services to support high-quality development of the capital market,” emphasizing the priority of criminal transfer procedures. Future criminal risks in securities are expected to be more proactive. The severity of penalties for securities crimes like market manipulation has increased. How to prevent and control criminal risks during administrative investigations has become a key concern for listed companies and their senior management. Fourth, the responsibility of intermediary agencies as “gatekeepers” has been reinforced and implemented in depth. In 2025, there were 54 cases of securities service agencies penalized for negligence, accounting for 10.93%, surpassing market manipulation cases to become the third-largest violation type.

Securities Times Reporter: Based on the data and cases in the Annual Report, what are the main pain points in securities compliance for listed companies currently?

Hong Can: The main compliance issues for listed companies still center on information disclosure violations, insider trading, and market manipulation, which together account for 74.49%. These risks are increasingly intertwined with active capital operations such as mergers, acquisitions, and restructuring, with many risks erupting during capital transactions. The Annual Report also provides special observations and practical analyses on these three behaviors:

In information disclosure violations, the use of the “total amount method” to artificially inflate revenue became a prominent risk in 2025, while fund occupation showed a clear trend of “transaction concealment.” Regulatory scrutiny now involves a transparent, substantive review, focusing on the economic substance of transactions. This requires compliance reviews to go beyond contractual forms and assess the real business nature and reasonableness of performance.

In insider trading, passing-type cases have become the majority, with insider information leakage cases increasing to 15. Listed companies must shift from preventing “insiders trading on insider information” to preventing “insiders leaking information.” As the transition period between old and new laws nears completion, the cost of insider trading violations has risen sharply, with cases where fines exceeded 270 times the profit, making such violations increasingly unprofitable.

In market manipulation, “false reporting” accounts for 50%, becoming a regulatory focus; some administrative penalty cases involve trading data that already meet criminal prosecution thresholds, highlighting the rising criminal risks. Additionally, behaviors where actual controllers manipulate the market under the guise of “market value management” face a trend toward heavier penalties.

Securities Times Reporter: What do you think are the most critical criminal risks for listed companies in 2025, and how should they respond?

Hong Can: Currently, there is a prevalent misconception among listed companies that “post-event remediation” is more important than “pre-emptive prevention,” especially regarding criminal risks. According to the Annual Report, securities-related crimes are the most common criminal risks for listed companies and their senior management, accounting for 34.48%. In July 2025, four senior executives of listed companies were criminally prosecuted for violations related to improper disclosure or nondisclosure of important information. Seven actual controllers were suspected of market manipulation. The Supreme Court and CSRC have jointly issued documents emphasizing the “priority of criminal transfer,” meaning criminal risks for listed companies and their senior management will become more front-loaded. These risks can have irreversible negative impacts on operations, market value, and reputation.

To address these risks, companies should focus on two key points: First, seize the golden window during administrative investigations. In 2025, the acceptance rate of defense statements in administrative penalties was 9.03%, an increase from 2024. Accepted defenses can reduce administrative liability and play a crucial role in preventing subsequent criminal risks. We also recommend that upon receiving a notice of case filing from the CSRC, companies should immediately engage professional teams with expertise in securities compliance and criminal defense to intervene—avoiding the separation of administrative response and criminal defense, and preventing the loss of the best risk mitigation window. Second, prepare proactive plans for criminal risk response. Companies should develop specific procedures for the smooth transfer of management rights and public opinion handling after criminal incidents involving directors and senior managers, preventing personal criminal risks from affecting normal operations and safeguarding the company’s fundamental interests.

Securities Times Reporter: The Annual Report mentions that subsidiaries have become high-risk areas for criminal risks at the operational end of listed companies. What new requirements does this pose for group governance of listed companies?

Hong Can: In the Annual Report, among risk category A (cases where the listed company or its subsidiaries are defendants), over 60% involve subsidiaries, covering issues like tax rebate fraud, illegal explosive trade, and contract fraud in production and operation. In risk category C (cases where the listed company or its subsidiaries are victims), subsidiaries are also the main victims of contract fraud and trade secret infringement. This reveals that some listed companies’ compliance and risk control are limited to the headquarters level, especially for externally acquired subsidiaries. While performance is prioritized, strict compliance management is often overlooked. As a result, criminal risks from subsidiaries can directly transfer to the main company and even involve its directors, supervisors, and senior management.

To prevent and control subsidiary criminal risks, listed companies should adapt to the stricter regulatory environment by improving governance structures and methods, especially for acquired subsidiaries. They should ensure “good transactions” before mergers and acquisitions, “good management” during operations, “good supervision,” and “good response” after any crises, avoiding governance issues that could bring unnecessary legal risks to the company, controlling shareholders, and senior management.

Securities Times Reporter: Looking ahead to 2026, what are your suggestions for compliance development and securities legal risk control for listed companies?

Hong Can: First, establish two core compliance values:

One is that listed companies should regard compliance as a long-term value investment rather than just operational costs. The essence of compliance investment is hedging future uncertainties. From the 2025 cases, the fines and subsequent market value losses from securities violations often amount to dozens or hundreds of times the annual compliance costs, making neglecting securities risks a false economy.

The second is to develop a bottom-line mindset that “no minor violation is trivial,” and to eliminate the complacency that small violations don’t matter. We also highlight in the Annual Report that “small violations accumulate,” evolving into risks of “criminal disclosure or nondisclosure of important information.”

If securities compliance risks have already manifested, listed companies and their senior management should prepare two levels of response:

One is to proactively conduct self-inspections and rectifications according to the CSRC’s Discretion Rules for Administrative Penalties, promptly take remedial actions, and communicate with regulators—these are key to reducing, mitigating, or even avoiding penalties.

The other is to bring in professional teams with expertise in both administrative and criminal law to develop contingency plans during the investigation stage, preventing adverse evidence from becoming solidified and leading to incarceration. In summary, securities compliance must control risks at their inception—what is called “treating the disease before it manifests”—to support the sustainable growth of listed companies.