China Securities Regulatory Commission

Circular of the China Securities Regulatory Commission on Several Issues Concerning the Standardization on Overseas Listing of Subordinated
Enterprises of Domestically-Listed Companies

Zheng Jian Fa [2004] No.67

August 10, 2004

To various listed companies:

In accordance with the provisions of such laws, administrative regulations as the Company Law of the People’s Republic of China, the
Securities Law of the People’s Republic of China and the Special Provisions of the State Council Concerning the Overseas Offering
and Listing of Shares by Joint Stock Limited Companies, related issues concerning the standardization on overseas listing of the
enterprises subordinated to domestically-listed companies (hereinafter referred to as “listed companies”) are hereby notified as
follows:

1.

Overseas listing of the enterprises subordinated to listed companies as used herein shall refer to acts of subordinated enterprises
under the control of listed companies (hereinafter referred to as “subordinated enterprises”) to issue shares in a public offer on
overseas securities markets.

2.

Listed companies shall meet the following requirements if their subordinated enterprises apply for overseas listing:

(1)

Listed companies have been profitable for the last consecutive three years.

(2)

Businesses and assets, into which listed companies’ issued shares and raised funds in the last three fiscal years were invested, shall
not be used as capital of the subordinated enterprises for the application for overseas listing.

(3)

Net profits of subordinated enterprises enjoyed by listed companies according to rights and interests in consolidated statements of
the last fiscal year shall not exceed 50% of net profits of such listed companies in consolidated statements;

(4)

Net assets of subordinated enterprises enjoyed by listed companies according to rights and interests in consolidated statements of
the last fiscal year shall not exceed 30% of net assets of such listed companies in consolidated statements;

(5)

No horizontal competition may exist between listed companies and their subordinated enterprises, their assets and financial affairs
shall be separated from each other and no cross appointment among management personnel may take place between them;

(6)

Shares of subordinated enterprises as held by directors, senior executives and affiliated persons of the listed companies and their
enterprises subordinated shall not exceed 10% of the total share capital before such subordinated enterprises are listed abroad;

(7)

Listed companies may not have the circumstance that their funds or assets are occupied by any individual, legal person or other organization
and affiliated person hereto which have de facto control, and there is no other major affiliated transaction that will injure the
companies’ rights and interests; and

(8)

Limited companies haven’t committed grave offenses in contravention of laws and regulations in the recent three years.

3.

As to matters on the overseas listing of subordinated enterprises, listed companies shall, according to the requirements of this Circular,
make resolutions on the following items subject to laws:

(1)

The board of directors shall make resolutions on such matters as whether or not overseas listing of subordinated enterprises conform
to this Circular, overseas listing programs of subordinated enterprises, commitments made by listed companies to maintain their independent
listing status as well as explanations on the capacity to continue their profits and prospects of their continuous profits, and shall
report all of such matters to the shareholders’ general meeting for approval;

(2)

The shareholders’ general meeting shall item by item review and vote for the overseas listing programs of subordinated enterprises,
independent listing status maintained by listed companies, explanations on capacity for continuous profits and prospects of their
continuous profits as stated under proposals submitted by the board of directors; and

(3)

Where directors of listed companies and their senior executives arrange shareholding plans for subordinated enterprises, independent
directors shall solicit voting rights from shareholders of tradable shares (public shares) for the said arrangement, the resolution
of which shall be adopted with half or more of the voting rights held by shareholders of tradable shares (public shares) present
at the shareholder’s general meeting.

4.

Listed companies shall appoint securities operating institutions, which were registered with the China Securities Regulatory Commission
and incorporated into a name list of sponsored institutions, to act as their financial advisors (hereinafter referred to as “financial
advisors”) in charge of the maintenance of the continuous listing status of such companies. Such financial advisors shall exercise
the following duties:

(1)

The financial advisor shall, according to this Circular, carry out an conscientiously investigation and verification in due diligence
on documents of application filed by the enterprises subordinated to listed companies for overseas listing, produce financial advisor
reports, undertake that there is no false recording, misrepresentation or important omission in listed companies’ application documents
with good reasons and firmly believe that listed companies will still hold independent and continuous listing status, and retain
persistently-operable core assets and business, after the enterprises subordinated to such listed companies are listed abroad;

(2)

Financial advisors shall, within the remaining days of the current year when subordinated enterprises are listed abroad and a full
fiscal year thereafter, ceaselessly supervise listed companies to maintain their listing status and shall undertake the following
tasks:

1)

to continuously focus on independent operating status and persistent operation capacity of the core assets and business of listed
companies;

2)

in respect of changes in assets and financial status made by subordinated enterprises that have grave impacts on interests and benefits
of listed companies, as well as other important information affecting the share price of listed companies, to supervise such listed
companies to perform their obligations of disclosure subject to laws; and

3)

within ten working days after the completion of continuous supervision, to report to the China Securities Regulatory Commission and
stock exchanges the “Summary Report on Continued Listing”.

5.

Listed companies shall, on the next day following the events below, perform their obligations of disclosure:

(1)

resolutions adopted by the board of directors and the shareholders’ general meeting in terms of the overseas listing of subordinated
enterprises;

(2)

acceptance of application filed by subordinated enterprises to the China Securities Regulatory Commission for overseas listing;

(3)

approved overseas issuance in an public offer of subordinated enterprises; and

(4)

listed companies shall timely disclose major events to domestic investors which are firstly disclosed by subordinated enterprises
to foreign investors and may cause abnormal fluctuations of share price. Listed companies shall, under items of significant events
in the annual report, explain business development of their subordinated enterprises.

6.

Any financial advisor shall, by applying mutatis mutandis the provisions of the Interim Measures for the Stock Issuance and Listing
Recommendation System, observe laws, administrative regulations, provisions stipulated by the China Securities Regulatory Commission
as well as industry codes of practice, follow the principles of honesty and good faith in due diligence, conscientiously produce
related financial advisor reports, and continuously supervise listed companies to maintain their independent listing status. The
China Securities Regulatory Commission shall, in accordance with the Interim Measures for the Stock Issuance and Listing Recommendation
System, conduct supervision over the practice of financial advisors.

7.

The enterprises subordinated to listed companies applying for overseas listing shall prepare and report application documents and
relevant materials according to the requirements of the China Securities Regulatory Commission, which shall be responsible for granting
administrative licenses to the said subordinated enterprises for their application for overseas listing.

8.

This Circular shall not apply to listed companies that simultaneously issue domestic listing of Chinese-oriented stocks and domestic
listing of foreign-oriented stocks