Zheng Jian Fa [2005] No. 86

Chapter I General Provisions

Article 1 With a view to regulating the share-trading reform of listed companies, promoting the reform, opening-up and
sustained development of the capital market and protecting the legitimate rights and interests of investors, the present
Measures are formulated according to the Company Law, the Securities Law, the Interim Regulations on the Administration
of Issuing and Trading of Stocks, Some Opinions of the State Council on Promoting the Reform, Opening-up and Sustained
Development of the Capital Market as well as the Guiding Opinions for the Share-trading Reform of Listed Companies
jointly promulgated by China Securities Regulatory Commission, the State-owned Assets Supervision and Administration
Commission, the Ministry of Finance, the People's Bank of China and the Ministry of Commerce.

Article 2 The term "share-trading reform of listed companies" refers to the process during which the institutional
difference in aspect of the share transfer in A-share market is eliminated through the negotiation mechanism for balancing
the interests between the holders of non-tradable shares and the holders of tradable shares.

Article 3 The share-trading reform of listed companies shall follow the principles of openness, fairness and impartiality,
and be carried out on the basis of negotiation on an equal footing, good faith, mutual understanding and autonomy in
decision-making. China Securities Regulatory Commission (hereinafter referred to as the CSRC) shall exercise
supervision and administration on all the parties involved in the share-trading reform and the relevant activities, and
shall organize, guide, coordinate and promote the share-trading reform.

Article 4 Stock exchanges shall, in light of the authorization of the CSRC and the provisions of the present
Measures, exercise front-line supervision over the share-trading reform of listed companies, coordinate and guide
the operations regarding the share-trading reform of listed companies, and handle the formalities for the listing of
non-tradable shares.
Stock exchanges and the securities depository & clearing corporation shall, according to the present Measures,
formulate the operation guidelines, provide services to those listed companies that undergo the share-trading reform
(hereinafter referred to as the company) for their conducting the relevant operations and exercise continuous supervision
over the fulfillment of the obligation of information disclose and the fulfillment of commitments for the reform by the
parties concerned, as well as the selling of shares by the original holders of non-tradable shares of the company after
completion of the reform.

Chapter II Operation Procedures

Article 5 In general, the motion for the share-trading reform
shall be made by all the holders of non-tradable shares of a
company upon consensus, or may be made by the holders that
solely or jointly hold 2/3 or more of the non-tradable shares
of the company if the consensus can not be reached. When
making the motion for reform, the holders of non-tradable
shares shall entrust in writing the board of directors of the
company to call in the relevant shareholders in the A-share
market for a meeting (hereinafter referred to as the meeting
of relevant shareholders) to review the share-trading reform
schemes of the company (hereinafter referred to as the reform
schemes).
Such matters as convocation or voting of the meeting of
relevant shareholders or the information disclosure shall be
conducted by referring to the relevant provisions on the
general meetings of shareholders of listed companies, and the
relevant shareholders shall vote on the reform schemes by
category.
Article 6 Upon receipt of a written authorization of the
holders of non-tradable shares, the board of directors of the
company shall employ a sponsor to cooperate in the formulation
of the reform scheme and to issue sponsor's opinion, and
employ a law office to examine and verify the regulation
compliance of the matters concerning the share-trading reform
and to issue legal opinion.
Article 7 The board of directors of a company, holders of
non-tradable shares, the sponsor and the sponsor
representative, the law office and its handling lawyers shall
sign written agreements specifying the secrecy obligation and
stipulating that all the parties may not disclose the relevant
matters prior to the publicity of the reform scheme.
Article 8 The board of directors of a company shall entrust
the sponsor to solicit opinions of the stock exchange in
regard to the technical feasibility of the reform scheme and
the time arrangement for the meeting of relevant shareholders.
The stock exchange shall give operation guidance to the
share-trading reform, evenly control reform progress and
determine the time for the meeting of relevant shareholders
upon negotiation.
Article 9 The board of directors of a company shall, pursuant
to the time arrangement determined through negotiation with
the stock exchange, promulgate a notice on the meeting of
relevant shareholders, publicize the statement of the reform,
letters of opinions of independent directors, the sponsor's
opinion as well as the legal opinion, and shall apply for the
suspension of trading of stocks of the company.
Article 10 The board of directors of a company shall, within
ten days as of the announcement of the notice on the meeting
of relevant shareholders, cooperate with the holders of
non-tradable shares in sufficiently communicating and
negotiating with the holders of tradable shares in A-share
market (hereinafter referred to as the holders of tradable
shares) by means of the symposium of investors, press
conference, roadshow online, visiting institutional investors
and issuance of letters on soliciting opinions, etc., and
shall publicize hot lines, faxes and emails to widely solicit
opinions from the holders of tradable shares, so as to form a
wide base of shareholders for the reform scheme.
Article 11 After the conclusion of procedures of the
communication and negotiation between holders of non-tradable
shares and tradable shares as prescribed in the preceding
article, if the reform scheme needs not to be adjusted, the
board of directors shall make an announcement and apply for
the resumption of trading; if the reform scheme needs to be
adjusted, the board of directors shall apply for the
resumption of trading after making corresponding adjustments
and supplementary explanations on the statement of the reform,
letters of opinions of independent directors, sponsor's
opinion and legal opinion, etc. and making an announcement.
After the resumption of trading of the company's shares, the
reform scheme may not be adjusted again.
Article 12 The board of directors of a company shall apply
for the suspension of trading of the company' shares when
convening the meeting of relevant shareholders. The period for
the aforesaid suspension of trading shall be calculated from
the day following the date of equity registration at the
meeting of relevant shareholders to the day when the
prescribed procedures for the reform are finished.
Article 13 The board of directors of a company shall, prior
to the meeting of relevant shareholders, publish an
announcement to remind the relevant shareholders of the
meeting on the designated newspapers and periodicals for not
less than two times.
The solicitation of voting rights at the meeting of relevant
shareholders shall be in the charge of the board of directors
of the company.
Article 14 The board of directors of a company shall work out
the technical arrangements on online voting for the
shareholders attending the meeting of relevant shareholders to
vote. The time for online voting may not be less than three
days.
Article 15 Where the implementation of the consideration
arrangement for balancing interests in the share-trading
reform (hereinafter referred to as the consideration
arrangement) by the holders of non-tradable shares shall be
subject to the approval of the state-owned asset supervision
and administration institution, the approval shall be obtained
and the approval document shall be published prior to the
online voting at the meeting of relevant shareholders.
Article 16 When the meeting of relevant shareholders takes a
vote on the reform scheme, the reform scheme shall be adopted
by shareholders with two-thirds or more of the voting rights
participating in the voting and by the holders of tradable
shares with two-thirds or more of the voting rights
participating in the voting.
Article 17 If the reform scheme is voted through at the
meeting of relevant shareholders, the board of directors shall
publish the result of the voting at the meeting the meeting of
relevant shareholders within two working days.
The board of directors shall, pursuant to the time
arrangement as determined upon negotiation with the stock
exchange, publish such matters as the implementation of the
reform scheme and the resumption of trading of the company'
shares.
As to a company or a banking company with foreign shares
holding an approval certificate for foreign-invested
enterprises, if the reform scheme involves any matter subject
to the examination and approval for the foreign capital
administration, the company shall obtain the examination and
approval document of the relevant department under the State
Council prior to the announcement of the implementation of the
reform scheme.
Article 18 In case a reform scheme is not adopted at the
meeting of relevant shareholders, the board of directors shall
publish the result of the voting at the meeting of relevant
shareholders within two working days, and apply for resumption
of trading of the company' shares on the next day.
In case a reform scheme is not adopted at the meeting of
relevant shareholders, the holders of non-tradable shares may,
after three months and according to Article 5 of the present
Measures, entrust the board of directors of the company to
hold the meeting of relevant shareholders for the
share-trading reform once again.
Article 19 The share-trading reform of any listed company
that is under abnormal circumstances shall be carried out
according to the following principles:
(1) Where the relevant parties of a company are suspected of
being involved in insider trading by making use of the
information on the share-trading reform of the company and is
being put on the file for investigation, the reform can be
carried out only after the investigation is completed;
(2) Where the trading of stocks of the company is suspected
of being involved in market manipulation and is being put on
the file for investigation or the shares of the company are
suspected of being collectively and illegally held by an
institution or individual, the reform can be carried out only
after the risks are eliminated;
(3) Where any holding shareholder of a company is suspected
of wrongfully taking over the interests of the company and is
being put on the file for investigation, the reform can be
carried out only after there is a feasible scheme that can
solve the problem; or
(4) Where there is any other abnormality, the reform can be
carried out only after the approval of the CSRC.
Article 20 As to a listed company that issues foreign shares
listed overseas or at home, the relevant shareholders in the
A-share market shall negotiate on the listing of shares held
by the holders of non-tradable shares in the A-share market.
Article 21 As to an overseas listed company holding the
non-tradable shares of a listed company in the A-share market,
the decision-making process for the consideration arrangement
shall comply with its articles of association and the
provisions on the disposal of company assets of the overseas
country or region where the company are listed.
As to a domestic listed company holding the non-tradable
shares of a listed company in the A-share market, the
decision-making process for the consideration arrangement
shall comply with its articles of association and the
provisions on the disposal of company assets as prescribed in
the operation rules of stock exchanges.

Chapter III Reform Scheme
Article 22 The reform scheme shall pay attention to the
immediate interests and the long-term interests of all the
shareholders, be good for the development of the company and
stabilization of the market, and may, according to the actual
situation of the company, adopt feasible measures for
stabilizing the share price, such as the shareholding increase
by controlling shareholders, buy-back of shares by the listed
company, presetting of actual selling conditions for original
non-tradable shares, pre-design of sell-back price or call
warrant.
Article 23 The commitments made by any holder of non-tradable
shares in a reform scheme shall meet the technical conditions
for the supervision by the stock exchange and the securities
depository & clearing corporation. Or any party that has made
commitments shall take measures for guarantying the
fulfillment of the commitments. Any holder of non-tradable
shares shall make a written statement on faithful fulfillment
of commitments.
Article 24 No holder of non-tradable shares may transfer the
shares held thereby before completely fulfilling his
commitments, unless the transferee agrees and has the capacity
to fulfill the commitments for him.
Article 25 The treatment of the shares held by holders of
non-tradable shares who have objections to or have not clearly
expressed their consent to the reform scheme shall be
specified in the reform scheme, and lawful and feasible
solution shall be put forward and explained in the reform
scheme.
Article 26 Where the share-trading reform of a company is
carried out together with the assets reorganization, and the
reorganizing parties involved take the realization of the
profitable capacity or the improvement of financial status of
the company as the consideration arrangement by injecting
high-quality assets or assuming debts, etc., the procedures
for assets reorganization and the share-trading reform shall
be in line with the present Measures and the relevant
provisions as provided for by the CSRC.

Chapter IV Selling of Original Non-tradable shares of
Companies after the Reform
Article 27 The following provisions shall be followed for the
selling of original non-tradable shares of a company after the
reform:
(1) The original non-tradable shares may not be listed for
trading or be transferred within twelve months as of the day
when the reform scheme comes into force; and
(2) Where the original holders of non-tradable shares holding
5% or more of the shares of a listed company sell their
original non-tradable shares through listing in a stock
exchange beyond the time limit as prescribed in the preceding
item, the amount of the original non-tradable shares sold may
not exceed 5% of the total shares of the company within twelve
months and not exceed 10% of the total shares of the company
within twenty-four months.
Article 28 Where an original holder of non-tradable shares
sells a large amount of shares held thereby, he may place them
to target investors.
Article 29 The measures for the administration of the shares
held by foreign shareholders after the implementation of the
share-trading reform scheme shall be separately prescribed.

Chapter V Information Disclosure
Article 30 Anyone that is obliged to disclose information on
the share-trading reform shall timely perform the obligation
of information disclosure, authentically, accurately and
completely disclose the information and ensure that there be
no false record, misleading statement or major omission in the
information disclosed thereby.
Article 31 The notice on the meeting of relevant shareholders
shall specify the rights of holders of tradable shares in
their participation of the share-trading reform as well as the
methods, conditions and time limit for them to exercise
rights.
Article 32 The introduction on the share-trading reform shall
include:
(1) Information on the formation and every alteration of
equity structure as of establishment of the company;
(2) The holders of non-tradable shares that has brought
forward the share-trading reform on the quantity and
proportion of shares of the company, and explanations on
whether there is any property right dispute, pledge or
freezing, etc.;
(3) Explanations of the holders of non-tradable shares on the
quantity and proportion of shares of the company held thereby
and the association relationship between each other;
(4) Explanations of non-tradable shares and the actual
controllers of the holders of non-tradable shares who hold 5%
or more of the total shares of the company on the their
holding of the company's tradable shares in the two days prior
to the day when the board of directors announces the statement
of the reform, and on the their purchasing and selling of
tradable shares of the company within the previous six months
prior to the day of announcement;
(5) Specific contents of the share-trading reform;
(6) Explanations of the holders of non-tradable shares on the
measures for guarantying the fulfillment of their commitments;
(7) Possible impact of the share-trading reform to the
corporate governance;
(8) Possible risks involved in the share-trading reform and
corresponding plans to deal with the risks;
(9) Names and contact information of the sponsor and law
office that offer professional services for the share-trading
reform;
(10) Explanations of the sponsor and law office on the
holding of the company's tradable shares in the two days prior
to the day when the board of directors announces the statement
of the reform, and on the purchasing and selling of he
company's tradable shares within the previous six months prior
to the day of announcement; and
(11) Other matters that need to be explained.
Article 33 The sponsor's opinion shall include:
(1) Whether the non-tradable shares of the listed company are
under ownership dispute, pledge or freezing, and the impact of
these issues on the implementation of the reform scheme;
(2) Evaluation on the impacts of the implementation of the
reform scheme on the rights and interests of the holders of
tradable shares;
(3) Conclusion on verification of the documents regarding the
share-trading reform;
(4) Feasibility analysis of relevant commitments in the
reform scheme;
(5) Explanations on whether there is any circumstance that
may affect the sponsor to fairly fulfill its duties;
(6) Other matters that the sponsor deems necessary to be
explained; and
(7) Sponsor's conclusion and the reasons therefor.
Article 34 The letter of opinions of independent directors
shall include the explanations on impacts of the share-trading
reform on the improvement of corporate governance structure,
protection of rights and interests of shareholders, the
long-term development of the company as well as other
important matters.
Article 35 The notice on the meeting of relevant
shareholders, the result of the voting at the meeting of
relevant shareholders, letters for soliciting votes as well as
the abstract of the statement of share-trading reform shall be
disclosed on the designated newspapers and periodicals.
The statement of share-trading reform, the letter of opinions
of independent directors, sponsor's opinion, legal opinion of
law office and the scheme on implementing the share-trading
reform shall be disclosed in full text on the websites of the
company and the stock exchange where the company is listed.
The stock exchange shall set up a special column on its
website to gratuitously provide services of information
disclosure for the share-trading reform of listed companies.
Article 36 Where the implementation of a share-trading reform
scheme involves the decrease or increase in shareholding and
thus results in the change of the total shares held and
controlled by shareholders, the Regulations on the Takeover of
Listed Companies, the Measures for the Administration of
Information Disclosure of Shareholder Equity Changes of Listed
Companies and the present Measures shall be abided by; where
the obligation of tender offers is triggered due to the
implementation of the reform scheme, the obligation of tender
offers may be exempted upon application.
Article 37 A company shall, within two working days after the
alteration registration of the listing of no-tradable shares
is completed, publish the report on the share structure change
after the share-trading reform on the designated newspaper and
periodical.
Article 38 After the implementation of the share-trading
reform scheme, if the prescribed selling period for the shares
held by the original holders of non-tradable shares expires,
the company shall make a relevant announcement ahead of three
trading days to prompt the expiration of selling period.
Article 39 Any original holder of non-tradable shares who
holds or controls 5% or more of shares of a company shall make
an announcement within two working days as of the day when the
shares sold through listing in the stock market amount to 1%
of the company's total shares, and the trading of shares needs
not to be suspended during the announcement period.

Chapter VI Intermediary Institutions
Article 40 Any intermediary institution that offers
professional services for the share-trading reform shall
comply with laws and regulations, faithfully perform its
duties, be honest, faithful, diligent and responsible,
maintain the interests of companies and shareholders, and may
not seek for improper interests for its own institution or for
any individual by taking advantage of its professional
position.
Article 41 A sponsor shall fulfill the following duties:
(1) Providing assistance in the formulation of the reform
scheme;
(2) Undertaking diligent survey for matters concerning the
reform scheme;
(3) Conducting verification and examination on the documents
concerning the reform scheme;
(4) Expressing opinions on the abilities of shareholders of
non-tradable shares to carry out the consideration arrangement
or fulfill commitments;
(5) Issuing sponsor's opinion;
(6) Providing assistance in the implementation of the reform
scheme;
(7) Providing assistance in the formulation and
implementation of the measures for stabilizing the share
price; and
(8) Conducting continuous supervision and direction on the
fulfillment of commitments by the parties concerned.
Article 42 Where a sponsor has any of the following
associated relationship with a company, its major
shareholders, actual holders and important related parties,
the sponsor may not act as the sponsor for the share-trading
reform of the aforesaid company:
(1) The sum of shares of a listed company held by the sponsor
and its major shareholders, actual holders and important
related parties exceeds 7% of the total shares of the listed
company;
(2) The sum of shares of a sponsor held or controlled by a
listed company and its major shareholders, actual holders and
important related parties exceeds 7% of the total shares of
the sponsor; or
(3) The circumstance under which the representative,
directors, supervisors, managers or other senior managers of a
sponsor hold shares of a listed company or hold positions in a
listed company and the fair performance of sponsor's duties
may be thus affected.
Article 43 A sponsor shall designate one representative to be
specifically responsible for the sponsoring work relating to
the share-trading reform of a company. The sponsoring
representative may not concurrently be responsible for the
sponsoring work relating to the share-trading reform of any
other listed company before the relevant voting procedures of
the meeting of relevant shareholders of the former listed
company are completed.
Article 44 The legal representative and the sponsor
representative of a sponsor shall affix their signatures on
the sponsor's opinion and assume corresponding legal
liabilities.
Article 45 A law office or any of its lawyers that affixes
his signature on the legal opinion shall perform the following
duties:
(1) Verifying the validity of the subjects involved in the
share-trading reform;
(2) Verifying the legal matters related to the reform scheme;
(3) Verifying the legal documents related to the reform
scheme;
(4) Expressing opinions on the validity of the contents and
executive procedures of the reform scheme; and
(5) Issuing legal opinion.
Article 46 The law office or any of its lawyers that has
affixed his signature on the legal opinion shall not have any
relation that may affect its/his fair performance of duties
with the listed company for which it/he provides professional
services for the share-trading reform.
Article 47 The sponsor and its sponsor representative, and
the law office and its lawyers that has affixed his signature
on the legal opinion shall ensure that there be no false
record, misleading statement or major omission in the
sponsor's opinion and legal opinion issued thereby.

Chapter VII Supervision Measures and Legal Liabilities
Article 48 No entity or individual may conduct securities
trading by taking advantage of insider information on the
share-trading reform of a listed company, manipulate the
market by taking advantage of the share-trading reform of a
listed company, or forge or spread false information on the
share-trading reform of a listed company. The CSRC shall
investigate into and impose punishment on any above mentioned
act, and shall transfer the case to the judicial organ for
criminal liabilities if the circumstances are serious and a
crime is suspected of being constituted.
Article 49 The stock exchange shall carry out special
supervision on the abnormalities in market transactions during
the course of the share-trading reform, and if any suspected
insider trading or manipulation of the market is found, timely
deter it and report it to the CSRC for investigation and
handling.
Article 50 Any shareholder that fails to fulfill the
commitments made thereby during the course of the
share-trading reform shall be denounced by the stock exchange
publicly, and the CSRC shall order it to make corrections and
take relevant regulatory measures; if the legitimate rights
and interests of any other shareholder are thus damaged, it
shall assume the relevant legal liabilities.
Article 51 Where a sponsor or its sponsor representative
submits the documents for the share-trading reform that
contain any false record, misleading statement or significant
omission, or fails to fulfill the obligation of investigation
with due diligence or continuous guidance and direction, the
stock exchange shall denounce it/him publicly, and the CSRC
shall order it/him to make corrections; where the
circumstances are serious, it/he shall be wiped off from the
name list of sponsors or sponsor representatives.
Article 52 Where a law office or its lawyers that has affixed
his signature on the legal opinion issues the legal opinion
that contains any false record, misleading statement or
significant omission, or fails to fulfill the obligation of
verification, the CSRC shall order it/him to make corrections;
where the circumstances are serious, the legal documents on
the securities business issued thereby shall not be accepted
temporarily.
Article 53 Where a company or any of its holders of
non-tradable shares, a fund management company, securities
company, insurance company or assets management company
disturbs the normal decision-making of any other investor,
manipulates the result of the voting at the meeting of
relevant shareholders by any improper means, or undertakes
improper exchange of interests, the CSRC shall order it to
make corrections; where the circumstances are serious, the
persons mainly liable shall be regarded as the person being
prohibited from the market, and may not take the senior
manager position in any listed company or securities company
for a certain period or forever.

Chapter VIII Supplementary Provisions
Article 54 The power to interpret and amend the present
Measures shall remain with the CSRC.
Article 55 The present Measures shall go into effect as of
the date of promulgation. The Circular on the relevant Issues
concerning the Piloting of the Share-trading Reform of Listed
Companies (Zheng Jian Fa [2005] No. 32) and the Circular on
the relevant Issues concerning Doing a Good Job in the
Piloting Work relating to the Share-trading Reform of Listed
Companies of the Second Batch (Zheng Jian Fa [2005] No. 42 )
shall be simultaneously repealed.

Bright Jon    Attorney-at-law   Fax: +86-512-53516040  email@colaw.cn
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