CIRCULAR OF THE CHINA SECURITIES REGULATORY COMMISSION ON GUARANTEE OF SECURITY COMPANIES

The China Securities Regulatory Commission

Circular of the China Securities Regulatory Commission On Guarantee of Security Companies

ZhengJianFa [2001] No.69

April 24, 2001

All security regulatory offices, representative offices, special commissioner’s offices and all security companies:

The issues concerning guaranty of security companies are as follows, in a bid to standardize guarantee activities of security companies
and forestall risks that may be caused by guarantee activities of security companies:

1.

According to the Circular on the Adjustment of Calculating Rules of Security Companies’ Net Assets of the Commission, (ZhengJianJiGouZi
[2000] No.223), security companies with net assets below the floor qualification for comprehensive security companies (200 million
RMB) prescribed by the Commission, shall not provide guarantee for other persons. Those qualified for guarantee provision shall disclose
in detail the guarantee matters in the annotations of accounting statements and the explanation of net assets status.

2.

The guaranteed amount a security company provides should not exceed 20% of its net assets.

3.

All security companies shall strictly abide by the Industrial Pact on Financing or Financing in Disguised Form in Stock Underwriting
of the Security Industry Association of China (ZhongZhengXieZi [2000] No.20) and shall not provide loan guarantee for enterprises
in stock underwriting.

4.

Security companies, which are not qualified for guarantee provision shall, since the date of the issuing of this circular review former
guarantee, and disclose in detail the information of review in the explanation of net capital status.

5.

Security companies shall not provide guarantee for clients who get loans in order to trade stocks.

6.

Security companies which provide guarantee against the provisions stated above, or disclose guarantee matters in an inaccurate, false
or delayed way, and the responsible staff, shall be punished, exclusively or concurrently, by way of criticism circular, warning,
suspension or even cancellation of the business qualification, suspension or even cancellation of the occupational qualification.