(Effective Date:1992.02.19–Ineffective Date:)
CONTENTS
CHAPTER 1. GENERAL PROVISIONS CHAPTER 2. ESTABLISHMENT PROCEDURE CHAPTER 3. TYPES OF COMPANIES CHAPTER 4. RESTRUCTURING OF STATE-OWNED
ENTERPRISES AS JOINT STOCK LIMITED COMPANIES CHAPTER 5. CHINESE-FOREIGN JOINT STOCK LIMITED COMPANIES CHAPTER 6. SHARES CHAPTER 7.
COMPANY DEBTS CHAPTER 8. SHAREHOLDERS AND SHAREHOLDERS’ MEETINGS CHAPTER 9. BOARD OF DIRECTORS AND MANAGER CHAPTER 10. SUPERVISORY
BOARD CHAPTER 11. FINANCIAL AFFAIRS AND ACCOUNTING CHAPTER 12. MERGER AND DIVISION CHAPTER 13. AMENDMENTS TO ARTICLES OF ASSOCIATION
CHAPTER 14. TERMINATION AND LIQUIDATION CHAPTER 15. PENAL PROVISIONS CHAPTER 16. SUPPLEMENTARY PROVISIONS
CHAPTER 1. GENERAL PROVISIONS
Article 1. These Regulations are formulated in order to establish the legal position of joint stock limited companies, to standardize their
code of conduct, to protect the lawful rights and interests of joint stock limited companies and their shareholders and creditors,
to ensure the leading position of the system of public ownership, to safeguard the socialist economic order and to promote economic
development.
Article 2. These Regulations shall be applicable to joint stock limited companies established in Shenzhen Municipality. Joint stock limited
companies from outside Shenzhen Municipality that are listed on the Shenzhen Securities Exchange shall also comply with these Regulations.
Article 3. The term “joint stock limited company” (a “Company”) refers to an enterprise with the status of a legal person that is established
in accordance with these Regulations, raises capital through the issue of shares and divides all of its registered capital into equal
shares, and whose shareholders are liable toward it to the extent of the shares subscribed for by them, and that is liable for its
debts to the extent of all of its assets.
Article 4. Companies shall adhere to the principles of voluntary capital injection, equal share rights, joint enjoyment of gains and joint bearing
of risks.
Article 5. The production and business activities of Companies must comply with the laws and regulations of the state and safeguard the interests
of the state and the public interest, and shall be subject to supervision by the relevant departments of the state.
Article 6. The production and business activities and lawful rights and interests of Companies shall be protected by law and may not be infringed
upon or unlawfully interfered with by any organization or individual.
Article 7. Companies may not become shareholders with unlimited liability of other profit-seeking organizations.
Where a Company other than an investment Company approved by the state is a shareholder with limited liability of another profit-seeking
organization, its shareholding in such other organization may not exceed 50 percent of the Company’s registered capital.
Article 8. The names of Companies shall comply with the laws and regulations concerning administration of the registration of names of enterprises
with the status of a legal person, and shall contain the words “joint stock limited”. The names of Companies that have not been established
in accordance with these Regulations may not contain the words “joint stock limited” or “stock”.
Article 9. A company’s domicile shall be the place where its main administrative establishment is located.
Article 10. The scope of industries in which enterprises may restructure themselves as Companies or establish Companies is set forth below:
Ordinary industry, commerce, transportation, construction, tourism, services, cultivation, breeding, etc..
Production enterprises, high-technology enterprises, and enterprises generating foreign exchange through export, that comply with
the industrial policies of the state and Shenzhen Municipality and that let the market regulate the production, sale and pricing
of their main products may restructure themselves as Companies or establish Companies on a priority basis.
Enterprises that are run by the state on a monopoly basis and are extremely profitable, such as duty free companies, enterprises selling
liquor and tobacco on a monopoly basis, gold and jewelry processing enterprises, etc., as well as enterprises engaged in industries
in which the government has prohibited the establishment of Companies may not restructure themselves as Companies or establish Companies.
CHAPTER 2. ESTABLISHMENT PROCEDURE Article 11. Companies may be established by means of sponsorship or by means of share offer.
The term “establishment by means of sponsorship” refers to the form of establishment where all the issued shares of the Company are
subscribed for by five or more sponsors themselves, and where no shares are offered to the Company’s internal staff and workers or
to the public. The term “establishment by means of share offer” refers to the form of establishment where the sponsors shall subscribe
for more than 35 percent of the issued shares of the Company and where he balance is offered to the internal staff and workers of
the Company, to other legal persons or to the public.
Article 12. The sponsors of a Company must be legal persons, or departments that have been authorized by the state to make investments.
Article 13. A Company’s paid-up capital shall be its registered capital. The minimum registered capital of a Company shall be RMB 5 million yuan.
Article 14. To establish a Company, its sponsors shall draft the following documents and submit the same to the Shenzhen Municipal Commission
on the Restructuring of the Economic System (the “Municipal Restructuring Commission”), which shall review them in conjunction with
the relevant departments and submit them to the Shenzhen Municipal People’s Government (the “Municipal Government”) for approval:
(1) an application for the establishment of a Company;
(2) a feasibility study;
(3) the articles of association of the Company;
(4) the share prospectus and share offer plan;
(5) the sponsors’ documents certifying that they have the status of a legal person (the documents approving their establishment and
the legal person business licenses), and their resident’s identification documents or passports;
(6) the sponsors’ certificates of creditworthiness; and
(7) the contract among the sponsors.
An existing enterprise that applies for permission to restructure itself as a Company shall also submit an asset valuation report
and an investment verification report issued by an accounting firm qualified to perform asset valuation or by an asset valuation
institution.
Article 15. Where an existing enterprise wishes to restructure itself as a Company, the responsible persons of the enterprise and representatives
of the owners of the property rights in the enterprise shall jointly form a Committee for the Preparation of a Joint Stock Limited
Company, which shall be responsible for the following matters:
(1) to apply to the Municipal Government for approval to restructure the enterprise as a Company and to submit to the Municipal Government
the relevant documents specified in Article 14 hereof;
(2) to thoroughly examine the claims and debts of the enterprise, and to entrust an accounting firm qualified to perform asset valuation
or an asset valuation institution with performing asset valuation and verification, to determine what portion of shares will cover
the enterprise’s remaining net assets, to draw up a plan for the share rights and types of shares to be created, to work out the
number of shares to be issued, etc.; where the said activities involve state assets, matters shall be handled in accordance with
the relevant regulations of the state;
(3) to be in charge of the drafting of necessary documents such as the restructuring plan, the Company’s articles of association,
the prospectus, etc.;
(4) to offer the shares; and
(5) to convene the inaugural meeting of the Company.
Article 16. The Preparation Committee shall be automatically dissolved on the date of establishment of the Company’s board of directors.
Article 17. An application for approval to establish a Company shall specify the following:
(1) the names and domiciles of the sponsors (in the case of an existing enterprise intending to restructure itself as a Company, the
name and domicile of the existing enterprise shall be specified as well);
(2) the grounds for establishment of the Company;
(3) the name of the Company to be established;
(4) the share rights intended to be created; and
(5) the basic applications of the capital to be raised by the Company.
Article 18. The feasibility study shall specify the following:
(1) the names and domiciles of the sponsors (in the case of an existing enterprise intending to restructure itself as a Company, the
name and domicile of the existing enterprise shall be specified as well);
(2) an outline of the production and business activities of the sponsors, their creditworthiness, their investment abilities, etc.;
(3) the state of affairs and distribution of the assets, liabilities, net assets and profit of the enterprise to be restructured during
the past three years;
(4) the scope and scale of business, including the names of the products, the domestic and foreign demand for the products, production
details, the scale of production, the regions where the products are sold, the sales channels and the ratio of domestic sales to
exports;
(5) the estimated investment, i.e. the sum of the fixed assets and the working capital to be invested in the project;
(6) the source of funds, i.e. the amount of shares that the sponsors intend to subscribe for (including the method of subscription)
and the amount of shares intended to be offered, the proportion of such shares to the total amount of shares of the Company, the
amount of funds to be borrowed, and the proportion of net assets to the total value of assets; and
(7) the profit forecast, profit rate on funds, profit rate on share capital and surplus per share.
Article 19. The articles of association of a Company shall be drafted by its sponsors or by legal counsel instructed by its sponsors. After the
articles of association have been unanimously agreed upon by all sponsors, they shall be submitted to the Municipal Restructuring
Commission for approval and be made public by an appropriate method, in accordance with the type of Company. The articles of association
of a Company must specify the following:
(1) the name and domicile of the Company;
(2) the purpose and scope of business of the Company;
(3) the method of establishment and type of the Company;
(4) the names and domiciles of the sponsors and the names and positions of their legal representatives;
(5) the total amount of the Company’s registered capital, the types of shares to be issued, the rights attaching to and the total
amount of each type of share, and the amount of each share;
(6) the methods and amount of capital injection by each type of shareholder, and the proportion of each type of shareholder’s shareholding
to the total amount of shares;
(7) the method of transfer of shares in the Company;
(8) the types of convertible securities of the Company and the method of conversion;
(9) the establishment, official powers and rules of procedure of the Company’s shareholders’ meeting and board of directors, and the
appointment and official powers of the Company’s manager;
(10) the Company’s legal representative, the procedure for his appointment and his official powers;
(11) the financial and accounting systems of the Company;
(12) the distribution of the Company’s after tax profit;
(13) the termination and liquidation of the Company;
(14) the method by which the Company is to make public announcements;
(15) the procedure for amendment of the Company’s articles of association;
(16) the date of formulation of the articles of association and the signatures of the sponsors; and
(17) other matters that the sponsors deem necessary to be specified.
The contents of the articles of association of a Company may not be in conflict with these Regulations.
The articles of association of a Company shall be valid only when the Special Seal of Shenzhen Municipality for Approval of the Articles
of Association of Joint Stock Limited Companies is affixed thereto.
Article 20. Within 30 days after the approval by the Municipal Government of an application for approval to establish a Company, the sponsors
shall apply to the Shenzhen Municipal Administration for Industry and Commerce (the “AIC”) for registration of preparation and construction.
Article 21. Where a Company is established by means of issuing shares to its internal staff and workers and other legal persons or by means of
offering shares to the public, its sponsors shall submit a share offer application to the Shenzhen Special Economic Zone branch of
the People’s Bank of China (the “PBOC”). Shares may be issued only after such application has been approved in accordance with the
relevant regulations of the People’s Bank of China.
Where a Company is to be established by means of sponsorship, its sponsors shall apply to the PBOC for the handling of matters concerning
the issue of shares. The procedures for the printing of share certificates may be carried out only after such application has been
approved.
Article 22. Sponsors shall publicly issue a prospectus by an appropriate method, in accordance with the type of Company. A prospectus shall specify
the following:
(1) the name and domicile of the Company;
(2) the scope of business;
(3) basic information on the sponsors;
(4) the grounds for the issue of shares;
(5) the total amount of shares to be issued, the class(es) and number of shares to be issued, and the face value, book value and selling
price of each share to be issued;
(6) the target (s) of the share issue;
(7) the opening and closing dates of the share issue;
(8) conditions attached to the issue of shares;
(9) relevant information on the Company’s business: the state of affairs of the main business operations, profit forecast and forecast
of dividends and bonuses;
(10) the number of shares subscribed for by the sponsors and the verification certificates for such subscriptions;
(11) the name(s) and domicile(s) of the securities distributors(s), the amount of shares to be distributed and the method of distribution;
and
(12) the method of share subscription.
In the case of a Company creating new shares to increase its capital or an existing enterprise being restructured as a Company, basic
information on the Company’s directors and manager shall be added under item (3) hereof, the book value of each existing share shall
be added under item (5) hereof, and information on the profitability and equity-debt situation shall be specified under item (9)
hereof.
In the case of an existing enterprise being restructured as a Company, an evaluation of and a verification report on the enterprise’s
remaining assets shall be included.
Article 23. The sponsors of a Company shall prepare subscription forms to be filled out by subscribers. Such subscription forms shall set forth
the relevant items of the prospectus and the number and date of the PBOC’s approval document for the share offer.
Article 24. Subscribers shall pay their subscription moneys in accordance with the amount of shares entered on the subscription form and the
time limit for payment. If a subscriber fails to pay his subscription moneys within the time limit therefor, he shall automatically
be deemed to have relinquished the shares subscribed for, which shall then be offered to others. If such failure to pay causes damage
to the Company, the subscriber shall be liable for compensation therefor.
Article 25. A Company may not sell shares beyond the time limit for sale or beyond the maximum amount of shares to be issued.
Article 26. The sponsors of a Company shall convene the inaugural meeting within 40 days after the subscription moneys have been paid in full.
An inaugural meeting shall be attended by more than two-thirds of the subscribers for the Company’s shares. Resolutions voted on at
such meeting shall be passed by a two-thirds majority of the affirmative votes of the subscribers present.
Article 27. The following official powers may be exercised at an inaugural meeting:
(1) to hear the sponsors’ report concerning the preparation and construction of the Company;
(2) to adopt or amend the Company’s articles of association;
(3) to elect the members of the board of directors and of the supervisory board; and
(4) to decide other matters concerning the establishment of the Company.
Article 28. Within 30 days after its establishment, a board of directors shall apply to the AIC for registration and submit to it the following
documents:
(1) an application for registration;
(2) the document from the Municipal Government approving the establishment of the Company;
(3) the document from the PBOC approving the share offer;
(4) the Company’s articles of association;
(5) the register of shareholders;
(6) the minutes of the inaugural meeting;
(7) the share capital verification certificates of the shareholders; and
(8) other documents required by the AIC.
A Company shall be established and obtain the status of a legal person upon verification and approval of registration and issue of
a Business License of an Enterprise with the Status of a Legal Person by the AIC.
Article 29. The sponsors of a Company shall assume the following responsibilities:
(1) to be jointly and severally liable for subscription for any issued shares of the Company that are not taken up;
(2) if the Company cannot be established, to be jointly and severally liable for the expenses and debts arising from the establishment
activities; and
(3) if the Company publicly issued shares but cannot be established, to be jointly and severally liable for repayment of the subscription
moneys already paid up by the subscribers, together with the statutory interest thereon.
CHAPTER 3. TYPES OF COMPANIES
Article 30. Companies can be divided into the following two major categories, depending on the scope and method of the share offer, subscription
and transfer:
(1) Internal Companies, being Companies whose shares are subscribed for by its sponsors alone or simultaneously issued to the Company’s
internal staff and workers and other legal persons. Internal Companies are divided into the following two kinds:
(a) Companies that are established by means of sponsorship and whose shares are subscribed for by their sponsors, are not issued to
any persons other than their sponsors and are transferred between legal persons;
(b) Companies that are established by means of share offer and (i) whose shares are subscribed for by their sponsors and internal
staff and workers or other legal persons, (ii) the shareholding of whose internal staff and workers may not exceed 30 percent of
their total amount of shares and (iii) whose shares are transferred between their internal staff and workers and legal persons and
are strictly forbidden to be issued and transferred to any persons other than their staff and workers.
The term “internal staff and workers of a Company” refers to a Company’s directors, manager, staff and workers, and such persons as
aforesaid of subsidiaries in which such Company owns more than 50 percent of the total shares.
(2) Public Companies, being Companies whose shares are publicly issued to the public. Public Companies are divided into the following
two kinds:
(a) Companies whose shares are issued to the public and, upon approval by the PBOC, are traded over the counters of securities dealers;
(b) Companies whose shares are issued to the public and, upon approval by the PBOC, are listed and traded on the Securities Exchange.
Article 31. A Company that issues its shares to the public shall meet each of the following conditions:
(1) its business conforms to the industrial policies of the state and Shenzhen Municipality;
(2) the total amount of shares of a newly organized Company, or the net assets of an existing enterprise prior to being restructured
as a Company, are not less than RMB 10 million yuan;
(3) the proportion of its net tangible assets to its tangible assets for the year preceding its being restructured as a Company is
not lower than 25 percent;
(4) the sponsor’s share subscriptions are not less than 35 percent of the Company’s total amount of shares;
(5) the shares taken up by the public constitute not less than 25 percent of the Company’s total amount of shares;
(6) the portion of shares subscribed for by the Company’s staff and workers does not exceed 10 percent of the portion of shares issued
by the Company to the public or, in the case of an internal Company being changed to a public Company that exceeds this limit, no
shares are placed with its internal staff and workers;
(7) the number of shareholders is not less than 800;
(8) the financial affairs are public; and
(9) the political and professional quality of the main responsible persons of the enterprise is comparatively good, they observe discipline
and abide by the law, and they have no record of bad business operations.
Article 32. In order for shares to be listed, the Company requesting their listing shall submit an application to the Securities Exchange, which
shall review the same and subsequently submit it to the PBOC for approval.
Article 33. A listed Company shall meet each of the following conditions:
(1) the Company’s business conforms to the industrial policies of the state and Shenzhen Municipality;
(2) the Company has a record of profitability for more than three consecutive years and has provided financial information covering
the past three years;
(3) the proportion of its net tangible assets to its tangible asset is not lower than 38 percent; however, in the case of a public
company that has been in existence for more than one year, such requirement shall have been satisfied one year prior to the application
for listing;
(4) the Company’s profit rate for the past two years is higher than the average profit rate of the same industry;
(5) the Company’s net assets prior to listing and issue are not less than RMB 15 million yuan;
(6) it meets the other conditions for public Companies; and
(7) other conditions imposed by the Securities Exchange.
Article 34. A Company established by means of sponsorship that requests approval for being changed to an internal Company whose shares are held
by its own staff and workers, and an internal Company that requests approval for being changed to a public Company, shall submit
an application to the Municipal Restructuring Commission, which shall review the same and subsequently submit it to the Municipal
Government for approval. Upon Approval by the Municipal Government of such application, an application for approval of share offer
and listed trading shall be submitted to the PBOC. The Company may be changed only after the PBOC has approved the application in
accordance with the relevant regulations of the People’s Bank of China.
CHAPTER 4. RESTRUCTURING OF STATE-OWNED ENTERPRISES AS JOINT STOCK LIMITED COMPANIES
Article 35. The term “restructuring of a state-owned enterprise as a joint stock limited company” means the restructuring of an existing state-owned
enterprise as a Company by dividing the enterprise’s net assets (assets less liabilities) into state-owned shares and subsequently
(i) selling a portion of such shares to other legal persons and individuals or (ii) issuing a portion of new shares to departments
authorized by the state to make investments, other legal persons and individuals.
The rights, interests and debts of the original enterprise shall be vested in and borne by the Company formed through the restructuring.
Collective enterprises, and enterprises established jointly by investors from both inside and outside special zones, may be restructured
as Companies by reference to this Chapter.
Article 36. The following shares may be created in the course of restructuring state-owned enterprises as joint stock limited companies:
(1) state-owned shares, being shares that are held directly, or that others have been authorized to hold, by government departments
for state asset administration;
(2) legal person shares, being shares formed by legal persons in the People’s Republic of China through investments in legally disposable
assets;
(3) individual shares, being (i) individual shares of staff and workers of the enterprise, that is, internally issued shares held
by the staff and workers of the issuing Company or (ii) public individual shares, that is, publicly issued shares of a Company that
are purchased by members of the public with their lawful individual property;
(4) foreign capital shares, being shares formed by foreign legal persons and individuals and by legal persons and individuals from
Hong Kong, Macao and Taiwan through foreign currency investments.
Article 37. Proportion of state-owned shares:
(1) in Companies of key importance for the national economy and the people’s livelihood, the controlling interest of state-owned shares
shall be maintained;
(2) in other Companies, there shall be no limitations on the proportion of state-owned shares.
The assignment of state-owned shares in a Company of key importance for the national economy and the people’s livelihood by a Company
that has been authorized to hold such shares shall be examined by the department for state asset administration, which shall submit
the assignment to the Municipal Government for approval. The assignment of state-owned shares by an enterprise under the Municipal
Government that has been authorized to hold such shares shall be reported to the municipal department for state asset administration
for approval. The assignment of state-owned shares by a second-or third-tier enterprise that is subordinate to an enterprise under
the Municipal Government and that has been authorized to hold such shares shall be reported to the enterprise in charge of it for
approval.
Article 38. Where a state-owned enterprise wishes to restructure it self as a Company, a preparation committee shall be formed by representatives
of all sides, such as the representative of the owner of the state assets, the department in charge of the enterprise, the responsible
persons of the enterprise, etc.. Such preparation committee shall be responsible for the restructuring of the enterprise as a Company,
etc..
The state asset representatives of group companies (head offices of companies) and of enterprises under the Municipal Government shall
be appointed by the government department for state asset administration. The state asset representatives of second-tier enterprises
shall be appointed by the enterprises in charge that have direct post_title to the assets.
Article 39. The examination and approval procedure for the restructuring of enterprises as Companies shall be as set forth below:
(1) the restructuring of a group company, the head office of a company of an enterprise under the Municipal Government as a Company
shall be reported to the Municipal Government for approval;
(2) the restructuring of an enterprise subordinate to a group company, to a head office of a company or to an enterprise under the
Municipal Government as a Company shall be agreed to by the Company in charge and subsequently be reported to the Municipal Government
for approval;
(3) where an enterprise established by investors from both inside and outside special zones wishes to apply for approval to be restructured
as a Company, the investors in such enterprise shall adopt a resolution in favor of such restructuring and subsequently submit an
application to the Municipal Government for approval; Where a Chinese enterprise outside the People’s Republic of China wishes to
apply for approval to be restructured as a Company, such restructuring shall be agreed to by the unit in charge and subsequently
be reported to the Municipal Government for approval;
(4) the restructuring of an enterprise under a district or county as a Company shall be agreed to by the district or county government
and subsequently be reported to the Municipal Government for approval.
CHAPTER 5. CHINESE-FOREIGN JOINT STOCK LIMITED COMPANIES
Article 40. The term “Chinese-foreign joint stock limited companies” means Companies established pursuant to these Regulations by Chinese and
foreign investors. With respect to Chinese-foreign joint stock limited companies, relevant laws and regulations concerning foreign
investment enterprises shall be referred to in addition to implementing these Regulations.
Article 41. The establishment of Chinese-foreign joint stock limited companies shall comply with the state’s policies concerning industries invested
in by foreign business entities.
Newly organized Chinese-foreign joint stock limited companies shall generally be established by means of sponsorship.
The minimum registered capital of Chinese-foreign joint stock limited companies shall be RMB 30 million yuan.
To invest abroad or in Hong Kong, Macao or Taiwan, Chinese-foreign joint stock limited companies shall apply to the municipal examination
and approval authority for foreign investment in accordance with the examination and approval procedure, and may only carry out procedures
for the outward remittance of funds, etc. after approval by the municipal examination and approval authority for foreign investment
or the Ministry of Foreign Economic Relations and Trade.
Article 42. To establish a Chinese-foreign joint stock limited company, an existing enterprise may be restructured as a Chinese-foreign joint
stock limited company, or a Chinese-foreign joint stock limited company may be newly organized.
Where a foreign investment enterprise wishes to apply for approval to restructure itself as a Chinese-foreign joint stock limited
company, the original investors shall adopt a resolution in favor of such restructuring and submit an application to the Municipal
Restructuring Commission, in conjunction with the municipal examination and approval authority for foreign investment, shall review
such application in accordance with the relevant regulations, making reference to the current procedure and limits of authority for
the examination and approval of Chinese-foreign equity joint ventures, and subsequently submit the same to the M
Provisional Measures of Shenzhen Municipality for Supervision and Control of Listed Companies
(Effective Date:1992.04.04–Ineffective Date:)
CONTENTS
CHAPTER 1. GENERAL PROVISIONS CHAPTER 2. PUBLIC STATEMENTS CHAPTER 3. REPORTS OF FINANCES AND RESULTS CHAPTER 4. IMPORTANT TRANSACTIONS
CHAPTER 5. TAKE-OVER AND MERGER CHAPTER 6. MATERIAL CHANGES CHAPTER 7. INTERNAL CONTROL CHAPTER 8. SHARE MATTERS CHAPTER 9. PENALTIES
CHAPTER 10. SUPPLEMENTARY PROVISIONS
CHAPTER 1. GENERAL PROVISIONS
Article 1. These Measures are formulated on the basis of the Provisional Regulations of Shenzhen Municipality Concerning Joint Stock Limited
Companies and the Provisional Measures of Shenzhen Municipality for Administration of the Issue and Trading of Shares (the “Provisional
Measures”), in order to protect the lawful rights and interests of investors, to maintain the order of the securities market and
to strengthen the supervision and control of listed companies.
Article 2. All publication of information, and all important transactions and changes that affect share price fluctuations, on the part of companies
publicly issuing shares in Shenzhen or whose shares are listed in Shenzhen must be carried out in compliance with these Measures.
Article 3. The Shenzhen Special Economic Zone branch of the People’s Bank of China (the “Authority in Charge”), under the direction of the People’s
Bank of China and the Shenzhen Municipal People’s Government, shall be responsible for the supervision and control of listed companies
in Shenzhen.
Article 4. The Authority in Charge shall be responsible for the confirmation of the public statements mentioned in Chapter 2 and for supervision
and control of the very substantial transactions, major transactions and share transactions mentioned in Chapter 4, the take-overs
and mergers mentioned in Chapter 5, the material changes mentioned in Chapter 6, the internal control mentioned in Chapter 7 and
part of the share matters mentioned in Chapter 8 hereof.
Article 5. The Authority in Charge shall authorize the Shenzhen Securities Exchange (the “Exchange”) to carry out routine supervision and control
of listed companies in Shenzhen and to be responsible for examination of the listing announcements mentioned in these Measures and
the reports of finances and results mentioned in Chapter 3 and for the supervision and control of the disclosable transactions and
the transactions with connected persons mentioned in Chapter 4 and part of the share matters mentioned in Chapter 8 hereof.
CHAPTER 2. PUBLIC STATEMENTS
Article 6. The term “public statements” refers to the special documents that joint stock companies disclose to the public when making public
issues of shares, when listing and trading shares and when carrying out other very substantial matters. The term includes prospectuses
for the issue of shares toward the public, listing announcements for the listing of shares, bonus prospectuses for the issue of bonus
shares to existing shareholders, public statements concerning important matters and the relevant attached statements.
Article 7. The standard for preparing public statements shall be that the company applying for issue or listing (the “Applicant Company”) must
make a publication sufficient to allow investors to gain a clear and comprehensive understanding and evaluation of such company’s
business development, financial situation, management situation, future prospects and the rights and interests associated with the
shares involved. The contents must be, stated accurately, clearly, truthfully and comprehensively and there may not be any ambiguities,
falsehoods or omissions therein, still less misleading or deceptive elements.
Article 8. The contents of a prospectus shall, in addition to meeting the requirements of Article 18 of the Provisional Measures, also state
in detail the company’s process of capital formation, types of products, production process, sales situation, business results, property
and equipment, rights and interested, main interested persons, the plan for application of the proceeds from share issue, analysis
of benefits, and risk factors.
Article 9. Simultaneously with the disclosure of the prospectus, an asset valuation report and written confirmation from an institution with
professional qualifications, a financial report with its explanatory notes, major contracts and matters of litigation shall be published
in newspapers and periodicals.
Article 10. A listing announcement shall, in addition to meeting the requirements for share prospectuses, also clearly state the following particulars:
(1) the date of the company’s listing and the number of the approval document granting the listing;
(2) details of the share issue and the composition of share rights;
(3) the main points of the resolution of the inaugural meeting or shareholders’ general meeting concerning listing;
(4) resumes of the directors, supervisors and senior management personnel and details of their shareholding; (5) the equity of shareholders
with holdings of more than 1 percent;
(6) details of application of funds and financial position following the share offer, financial situation and the forecast for the
coming year;
(7) the contact person and contact address, telephone and facsimile numbers for members of the public wishing to inquire about company
information at any time; and
(8) other items of importance.
If the time between public issue and listing is less than six mouths, the listing announcement need not publish the contents of the
prospectus.
Article 11. A bonus share prospectus shall be prepared by reference to the share prospectus. A public statement concerning an important matter
shall be prepared in accordance with the appropriate provisions of Chapters 4 and 5 hereof.
Article 12. A public statement must be confirmed by the Authority in Charge and may be published in designated newspapers and periodicals only
after the Authority in Charge requires no further amendments. No major amendments may be made to the final version of a public statement
without the permission of the Authority in Charge. When a public statement is published, it shall carry this important note: “The
Authority in Charge does not guarantee the accuracy or completeness of the contents of this public statement and bears no responsibility
for any losses caused thereby.”
Article 13. The sponsors and members of the board of directors of an Applicant Company must bear joint and several liability for the accuracy
and completeness of the contents of public statements.
Article 14. The distributor for a share issue must investigate the contents of the share prospectus during the distribution period and shall
bear major responsibility for the accuracy and completeness of such contents.
Article 15. Notarial institutions such as accounting firms and other parties that provide certifications for the issue of shares must handle
matters in accordance with laws and regulations, perform their duties and bear joint and several liability for the contents of public
statements.
Article 16. All publicity materials of an Applicant Company during the period between its receiving approval for issue and the listing of its
shares must be reviewed by the Authority in Charge. The contents thereof must comply with the relevant regulations and may not promote
or advertise the products or business of such company.
Article 17. Prospectuses, bonus share prospectuses and public statements concerning important matters must be submitted to the Authority in Charge
for review and finalization. The Authority in Charge shall make a reply within three weeks after receiving the official draft; otherwise
approval shall be deemed to have been given. Listing announcements must be submitted to the Exchange for review; final approval shall
be given by the Authority in Charge. Finalized versions of public statements must be delivered in four copies each to the Authority
in Charge and the Exchange for the record three days prior to their publication. Prospectuses and bonus share prospectuses shall
be delivered in two copies each to the Administration for Industry and Commerce for the record.
Article 18. Prior to the formal publication of a public statement, insiders of the Applicant Company and their advisers must maintain the confidentiality
of the relevant materials. If it is discovered that contents of the relevant materials have been divulged, the Authority in Charge
may refuse to consider the application.
Article 19. A public statement shall be effective as from the date of its publication. A listed company must abide by the provisions and regulations
thereof and perform its duties and may not alter such statement at will. If alteration is necessary, it must show cause therefor
to the public. Major alterations must be approved at a shareholders’ general meeting or by the relevant department in charge; otherwise,
the company’s parties concerned shall bear all liability arising from such alterations.
CHAPTER 3. REPORTS OF FINANCES AND RESULTS
Article 20. A listed company must establish a system whereby its financial situation and business results are disclosed to the public at regular
intervals. Such information shall be published twice in each fiscal year, namely in an interim report and an annual report. The interim
report shall be published within 60 days following the end of the first six months of each fiscal year; the annual report shall be
published within 90 days following the end of each fiscal year.
Article 21. Ten days prior to publication, a listed company shall submit the materials to be published to the Exchange and shall publish them
in designated newspapers and periodicals on the strength of a signed opinion from the Exchange. The Exchange shall make a reply within
10 days. The Exchange shall formulate the corresponding detailed rules on the basis of the Enterprise Accounting Principles of the
Shenzhen Special Economic Zone (for Trial Implementation) and these Measures.
Article 22. Company financial reports shall include balance sheets, profit and loss statements, statements of changes in shareholders’ equity
and statements of changes in financial position and their explanatory notes. An accounting firm shall be engaged to check over interim
reports and to audit final reports. Accounting firms shall bear joint and several liability for the methods of examination of reports
certified by them and for the truthfulness, reliability and completeness of their contents.
Article 23. A financial report shall provide detailed statements of the following matters:
(1) where accounting treatments differ from fair and equitable accounting principles, the details thereof and the discrepancies produced
by the different treatments shall be stated;
(2) where a choice exists between several fair and equitable accounting methods, the method chosen shall be indicated;
(3) where accounting treatments are changed for a special reason and such change affects the comparison of information from the periods
preceding and following such change, the reason for the change and its specific effects on the contents of the report shall be stated;
and
(4) details of the consolidation of statements of affiliated companies.
Article 24. An interim report shall contain at least the following contents: (1) financial situation:
(a) balance sheet;
(b) profit and loss statement, which must state:
(i) turnover, sales of main products;
(ii) profits (or losses) before taxes from ordinary items;
(iii) revenue and expenditure relating to extraordinary items (major items shall be noted); and
(iv) tax base and profit after taxes;
(c) changes in shareholders’ equity;
(d) comparisons of the figures for all items with those for the same period during the preceding year; and
(e) obligatory comments from an accounting firm;
(2) business review, providing a concise summary of the progress and profitability all the business activities of the company, mainly
consisting of an analysis by region and by industry;
(3) statements of important matters, and publication of abstracts of the contents of major contracts;
(4) forecast of prospects (comments from an accounting firm);
(5) details of the securities holdings in the company and changes in the equity of directors, supervisors, the manager and large shareholders
with holdings of more than 1 percent; and
(6) relevant resolutions of the board of directors.
Article 25. An annual report shall include at least the following items:
(1) a basic overview of the company: capital structure, organizational system (major business departments and branches and administrative
structure), the rights and interests appertaining to it (subsidiaries, types and quantities of securities holdings, real property
owned), working personnel (number, educational composition, average age, average length of service);
(2) business situation: details of production and sales of main products, development of new products and details of important matters;
(3) financial information: balance sheet, profit and loss statement, statement of changes in shareholders’ equity, statement of changes
in financial position and profit distribution statement, certified by an accounting firm; comparisons of the figures for all items
with those for the same period during the preceding year;
(4) statement of the company’s indebtedness: details of bank loans, guarantees and itemizations of company debts, and the relevant
parties, main contents and initial and final dates, etc. thereof;
(5) business outlook: reasonable expectations of long-term and short-term developments in all types of company business and investment
targets, and reliable forecasts of foreseeable major factors affecting company prospects;
(6) details of bonus and dividend distribution;
(7) an audit report from an accounting firm; if there are reservations attached to such report, the factors contributing thereto must
be stated; and
(8) the intention to extend or terminate the appointment of the accounting firm.
Article 26. Interim reports must be approved by the board of directors of the company and signed by the supervisory board in acknowledgment of
perusal Annual reports must be approved at a shareholders’ general meeting. Both types of report shall be submitted in four copies
each to the Authority in Charge and the Exchange for reference three days prior to their publication.
Article 27. All reports involving the business situation or financial data of a listed company must be reviewed by the Exchange and simultaneously
submitted to the Authority in Charge for reference prior to publication; otherwise, they shall be deemed to have been published with
the intent to manipulate the prices of the shares concerned.
Article 28. A listed company may not disclose or supply at will information that will affect prices. The disclosure of important information
that will affect prices must be reported to the Exchange and the Authority in Charge 48 hours beforehand, and the authorization of
the Exchange thereto must be obtained. If the Exchange has made no reply within 24 hours, it shall be deemed to have given its authorization.
These time limits shall be extended accordingly in the case of official holidays or legal holidays.
CHAPTER 4. IMPORTANT TRANSACTIONS Article 29. The following shall be important transactions:
(1) very substantial transactions;
(2) major transactions;
(3) disclosable transactions;
(4) share transactions; and
(5) transactions with connected persons.
Article 30. “The term very substantial transaction” refers to an act whereby a listed company or a subsidiary thereof takes over another enterprise,
acquires assets or realizes its own assets so as to reach any of the proportions set forth below:
(1) an acquisition or realization of assets in an amount of more than 50 percent of the company’s total assets;
(2) an acquisition or realization of assets from which the forecast net profit will constitute more than 50 percent of the company’s
net profit for that category;
(3) an acquisition in consideration of which shares constituting more than 50 percent of the total share capital will be issued;
(4) relevant acquisitions capable of causing changes in share controllership.
The relevant acts of acquisition or asset realization in each of the above items shall include the entry into or early termination
of financing, operation or lease agreements which will affect the assets, liabilities and profits of the company.
Article 31. Very substantial acquisitions must be authorized by the Authority in Charge and approved at a shareholders’ general meeting.
Article 32. Shareholders having a major interest in a very substantial transaction shall not have the right to vote at such shareholders’ general
meeting.
Article 33. Trading of the shares of a company must be suspended as from the date on which formal negotiations concerning a very substantial
transaction commence and may not be resumed until the publication of an agreement. Resumption of quotation shall be regarded as a
new application for listing and shall be handled in accordance with the procedures for new listings.
Article 34. Within three days following the reaching of an agreement over the provisions of a very substantial transaction, the issuer shall
deliver the agreement to the Authority in Charge and shall publish the same in newspapers and periodicals following review by the
Authority in Charge.
Article 35. The term “major transactions” refers to the transactions set forth in each item of Article 30 where the corresponding figure is more
than 25 percent.
Article 36. Major transactions shall be handled in accordance with the procedure for very substantial transactions, with the exception that resumption
of quotation shall not be treated as a new listing.
Article 37. The term “disclosable transactions” refers to the transactions set forth in items (1), (2) and (4) of Article 30, where the corresponding
figure is more than 10 percent.
Article 38. Within three days following the reaching of an agreement over the provisions of a disclosable transaction, the issuer shall deliver
such agreement to the Exchange for review and simultaneously to the Authority in Charge for the record, and shall publish the same
in newspapers and periodicals following its review by the Exchange.
Article 39. Within 15 days following the publication of a written agreement concerning any important transaction, the issuer must prepare and
publish a public statement concerning such transaction, which shall include at least the following contents:
(1) the purpose of the transaction;
(2) the date of the transaction and an overview of the parties to the transaction;
(3) the general nature of the transaction; (4) the asset situation and business circumstances relating to the transaction;
(5) the amount of the transaction and the method of payment;
(6) the transaction price and the method by which the amount was determined;
(7) the benefits to be obtained through the transaction. If it is a take-over or acquisition, a forecast of the profits derivable
from the transaction must be attached; if it is a realization of assets, the earnings from their sale and the application thereof
must be stated; and
(8) other information publication of which is required by the Authority in Charge or the Exchange.
Article 40. The term “share transaction” refers to the act whereby assets are acquired by means of share issue.
Article 41. Share transactions shall be handled in accordance with the procedures for major transactions.
Article 42. The public statement for a share transaction must include, in addition to each of the items set forth in Article 39, the following
contents:
(1) the number of shares to be issued;
(2) the document number and main points of the document by which the Authority in Charge granted approval for share issue;
(3) changes in the shareholdings of major shareholders (those with holdings of more than 1 percent of the total); and
(4) other information required by the Authority in Charge.
Article 43. The term “transactions with connected persons” refers to transactions concluded between the issuer and its subsidiaries on the one
hand and the directors, supervisors and senior executive personne l of the company and their relatives on the other hand (including
transactions with companies whose shares are controlled by the above-mentioned persons).
Article 44. Transactions with connected persons must be handled in accordance with the procedures for disclosable transactions.
Article 45. The following transactions with connected persons need not be handled in accordance with the procedure prescribed above:
(1) the acquisition or selling off of consumer goods or service facilities by a company from or to connected persons in the course
of routine business and in accordance with general commercial principles;
(2) transactions between an issuer and its wholly-owned subsidiary;
(3) transactions between an issuer and a non-wholly-owned subsidiary, provided that the connected persons do not control the shares
(hold more than 25 percent of the shares) of such subsidiary; and
(4) transactions in the amount of less than 100,000 yuan.
Article 46. All persons involved in a transaction with connected persons that must be passed at a shareholders’ general meeting and persons with
a material interest in such transaction must relinquish their voting rights at such shareholders’ general meeting.
CHAPTER 5. TAKE-OVER AND MERGER
Article 47. The term “take-over and merger” refers to the act whereby a legal or natural person or his or its agent acquires a controlling interest
in a listed company (or public company) by means of acquisition of the shares of such company.
The term “controlling interest” means the ownership of more than 25 percent of the shares or voting rights in a listed company.
Article 48. All parties to a take-over and merger shall observe the following general principles:
(1) when changes occur in the controlling interests in a company, any shareholder acquiring a controlling interest shall promptly
notify all the shareholders; (2) a shareholder acquiring a controlling interest in a company must undertake to present a take-over
proposal to the holders of the same type of shares on the same conditions, and carry out such proposal;
(3) the board of directors of each of the parties to a take-over and merger must take the interests of the mass of medium-sized and
small shareholders as a prerequisite and must ultimately ensure the overall interests of its own party’s shareholders;
(4) the directors and senior executive personnel of the company to be taken-over may not take any action that would affect the implementation
of the take-over prior to adoption of a pertinent resolution at a shareholders’ general meeting of the company that is taking over;
and
(5) all parties involved in a take-over and merger shall make best efforts to prevent the occurrence of a false market.
Article 49. Any act whereby a cumulative total of more than 25 percent of the shares or voting rights in a listed company is acquired shall be
an act of take-over and merger.
Article 50. Take-over shall include partial take-over and total takeover:
(1) the term “partial take-over” refers to the act whereby a cumulative total of more than 25 percent but less than 100 percent of
the shares or voting rights in a listed company is acquired;
(2) partial take-over is divided into three grades of control, namely a cumulative controlling interest of more than 25 percent, more
than 50 percent and more than 75 percent. The reaching or surpassing of each of these ratios must be handled as an act of take-over
and merger;
(3) the term “total take-over” refers to the act whereby 100 percent of the shares or voting rights in a listed company are acquired.
Article 51. All take-over agreements must be delivered to the Authority in Charge three days prior to their official publication and published
in newspapers and periodicals following review. Such agreements shall become effective following their approval at shareholders’
general meetings of all parties. The same provisions shall apply to amendments to such agreements.
Article 52. Following the finalization of the intention of a company to carry out a take-over and merger, it must be presented to the board of
directors of the company taking over. The directors of the company to be taken over shall have the right to require the company taking
over to provide a guarantee, in order to ensure the full performance of such agreement.
All parties to an agreement and all insiders shall maintain strict confidentiality prior to the official publication of such agreement.
Article 53. From the date of the conclusion of a take-over and merger agreement through the date of its performance in full, the company being
taken over may not issue any securities or sign any contracts relating to matters outside the normal scope of business of such company.
Article 54. A partial take-over must comply with the following provisions:
(1) the company taking over may not purchase shares in the company to be taken-over during the period between the signing of the agreement
and its entry into effect;
(2) where the number of shares that the shareholders of the company to be taken over are willing be acquired is greater than the number
to be acquired, the company taking over must make acquisitions on a pro-rata basis; and
(3) the take-over agreement shall be effective only after its adoption by more than 50 percent of the shareholders with independent
voting rights.
The term “shareholder with independent voting rights” means a shareholder unrelated to the relevant take-over.
Article 55. A take-over and merger of a holding company or subsidiary of a listed company that involves a substantial transfer of shares or voting
rights as set forth in Article 49 shall be a chain take-over. Chain take-overs shall be handled in accordance with the provisions
concerning take-over and merger contained in these Measures.
Article 56. A company taking over another company shall prepare and publish a public statement within 20 days following the publication of the
agreement. The contents of such public statement shall include:
(1) the name, place of registration and take-over agent of the company;
(2) the number of shares in the company taking over and in the company to be taken over held by holding companies, subsidiaries and
directors and senior executive personnel;
(3) the take-over price and method of payment, and explanations thereof;
(4) schedule arrangement;
(5) the obligations of the company taking over and the rights of shareholders in the company to be acquired;
(6) the equity-debt, profit-loss and shareholding situations for the preceding three years;
(7) details of the liabilities of the company and its subsidiaries, such as loans taken out and loans granted, mortgages, debt guarantees,
etc.; (8) major contracts and explanations thereof;
(9) the company’s articles of association and relevant internal rules;
(10) plans for continued operation of the company to be taken over;
(11) plans for reorganization of the assets of the company to be taken over;
(12) plans for disposition of the staff of the company to be taken over;
(13) a revaluation of assets and explanation thereof; and
(14) other information required by the Authority in Charge.
Article 57. A company to be taken over shall prepare and publish a public statement within 20 days following the publication of the agreement.
The contents of such public statement shall include:
(1) the state of affairs of the company;
(2) comments from the company’s board of directors on the takeover;
(3) detailed statements of the shares in the company taking over held by the directors and senior executive personnel of the company;
(4) the state of affairs of holding companies and their subsidiaries;
(5) the equity-debt and profit-loss situations of the company for the preceding three years;
(6) detail of loans taken out and loans granted, mortgages, debt guarantees and details of other debts of the company and its subsidiaries;
(7) material contracts and explanations thereof;
(8) detailed statements shall be made concerning directors and senior executive personnel who have a material interest in the acquiring
company; and
(9) other information required by the Authority in Charge.
Article 58. No amendments may be made to an agreement after the twentieth day following its signing, with the exception of amendments permitted
by the Authority in Charge. An agreement shall automatically become void if not approved at a shareholders’ general meeting within
45 days.
Article 59. All persons participating in the negotiation of an agreement and all relevant insiders must maintain an agreement and all relevant
insiders maintain confidentiality throughout the process of negotiation of or consultation concerning the entry into such agreement,
up through the date of publication of such agreement. Such individuals may not purchase shares in the company taking over during
the same period.
Article 60. Relevant persons as described in the preceding Article who, following the publication of the agreement provided for in the preceding
Article, participate in the sale or purchase of shares of a party to the agreement must report the details of such transactions to
the Authority in Charge for reference.
Article 61. If there is no proposal of total take-over in the provisions of an initial agreement, such agreement must be reported to the Authority
in Charge for approval of exemption.
Article 62. In the case of take-over by means of the issue of new shares, the Authority in Charge may consider exempting the company taking over
from proposing a total take-over, provided that the following conditions are met:
(1) the independent shareholders have voted to approve it;
(2) no insider trading is carried on;
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