[China Securities Regulatory Commission: The most harmful illegal transfer of original shares will be divided into three levels of discretion based on "0-30%-50%-100%" of the transfer amount] On October 19, the China Securities Regulatory Commission announced the "Implementation Rules for Administrative Penalties in Cases of Illegal Transfer of Securities", which will be effective from December 1, 2026. Articles 3 to 6 of the "Rules" distinguish the categories of securities transferred in violation of regulations. The main purpose of the distinction is to set up differentiated discretionary levels to achieve "equivalent penalties for excessive penalties." Specifically: First, for the most harmful illegal transfer of original shares, three levels of discretion will be divided according to "0-30%-50%-100%" of the transfer amount. Second, other transfers of securities that violate restrictive regulations in terms of holding period and selling time will be divided into three discretionary levels according to "0-20%-30%-100%" of the transfer amount. The third is to divide securities transfers that violate restrictive regulations in terms of sales quantity, information disclosure, etc. into three discretionary levels based on "0-10%-20%-100%" of the transfer amount. Fourth, for illegal transfers of stocks during acquisitions such as failure to suspend trading in accordance with regulations, based on the nature of the behavior and the degree of social harm, if a "multiple penalty" is applied within the range of less than the equivalent value of securities purchased and sold, three discretionary levels are divided according to "0-3 times-5 times-10 times" of the illegal income; if the illegal income is less than 1 million yuan, a "fixed penalty" is applicable, and three levels of discretion are divided according to "0-3 million yuan-5 million yuan-10 million yuan". At the same time, considering that some cases involve one-way sales in a short period of time, leading to changes in the control of listed companies, etc., a provision has been added to the severe punishment level: "If the circumstances are particularly serious, a fine of not less than 10 million yuan but not more than 30 million yuan will be imposed." In addition, considering that the harmfulness of illegal stock transfers in acquisitions such as failure to suspend trading as required is usually lower than typical illegal shareholding reductions under the same circumstances, Article 11, paragraph 2, stipulates: "The amount of the fine determined according to the preceding paragraph shall not exceed the upper limit of the discretionary level of fines determined in Article 10 of these Rules under the same circumstances."