Article 1  These Regulations have been formulated in order to suit the
needs of the development of the socialist market economy, to establish and
develop a uniform and efficient national share market, to protect the lawful
interests of investors and the public interest of the society at large and to
promote the development of the national economy.

    Article 2  All issuance or trading of shares and related activities within
the territory of the People’s Republic of China must abide by these
Regulations.

     The provisions of these Regulations concerning shares shall apply to
securities that have the nature or function of shares.

    Article 3  The issuance and trading of shares shall comply with the
principles of openness, fairness, and credit-worthiness.

    Article 4  Shares shall be issued and traded so as to preserve the leading
position of socialist public ownership and so as not to endanger state-owned
assets.

    Article 5  The State Council Securities Commission (hereinafter referred
to as “SCSC”) shall be the agency in charge of the national securities market
and shall be responsible for the unified administration of securities markets
throughout China in accordance with the provisions of laws and regulations.
The China Securities Supervisory and Regulatory Commission (hereinafter
referred to as “CSSRC”) shall be the supervising and administering agency of
the SCSC and supervise specific activities relating to the issuance and
trading of securities in accordance with the provisions of laws and
regulations.

    Article 6  Specific measures with respect to the issuance and trading of
special Renminbi denominated shares shall be formulated separately.

    Article 7  Only companies limited by shares qualified to issue shares may
issue shares.

    Companies limited by shares referred to in the preceding paragraph include
both already established companies limited by shares and companies limited by
shares that have obtained approval but yet to be established.

    Article 8  To establish a company limited by shares and to apply for the
issue of shares to the public, the following conditions must be satisfied:

    1. Its production and operations are in compliance with the industrial
policies of the state;

    2. Only one class of common shares are to be issued, with equal rights
attaching to the same shares;

    3. Shares subscribed for by promoters shall not represent less than 35% of
the total capital that the company intends to issue;

    4. Of the total amount of capital that the company intends to issue, the
promoters shall subscribe not less than Renminbi 30,000,000 yuan, except where
national regulations provide otherwise;

    5. The shares to be offered to the public shall represent not less than
25% of the total amount of capital that the company intends to issue, and the
amount of capital that employees of the company subscribe for shall not exceed
10% of the total amount of capital to be offered to the public; where the
total amount of capital that the company intends to issue exceeds Renminbi
400,000,000 yuan, the CSSRC may, in accordance with relevant provisions and the
circumstances, reduce the proportion to be offered to the public, provided,
however, that the amount issued to the public shall not be less than 10% of
the total amount of capital that the company plans to issue;

    6. The promoters have not engaged in serious illegal activities in the
prior three years;

    7. Other conditions that the SCSC may impose.

    Article 9  If an existing enterprise that is to be restructured as a
company limited by shares applies to issue shares to the public, it shall meet
the following conditions in addition to those enumerated under Article 8:

    1. At the end of the year preceding the issuance, net assets shall account
for at least 30% of the total assets, intangible assets shall be not more
than 20% of the total assets, except where the SCSC provides otherwise; and

    2. It shall have shown a profit in each of the most recent three
consecutive years.

    If an existing state-owned enterprise is to be restructured as a company
limited by shares and issue shares to the public, the proportion of the
state-owned capital to the total amount of capital that the company proposes
to issue shall be provided for by the State Council or a department authorized
by the State Council.

    Article 10  A company limited by shares that applies to issue shares to the
public for the purpose of increasing its capital shall meet the following
conditions in addition to those enumerated in Article 8 and 9 hereof:

    1. The proceeds raised from any immediately preceding public issuance of
shares shall have been used in compliance with the description in the
prospectus concerning the use of proceeds and the use of such proceeds shall
have obtained satisfactory results;

    2. Not less than twelve months shall have elapsed since the preceding
public issuance of shares;

    3. There shall have been no serious illegal activities during the period
from the preceding public issuance of shares to the subject application; and

    4. Other conditions that the SCSC may impose.

    Article 11  A company that has raised capital by private placement that
applies to issue shares to the public shall meet the following conditions in
addition to those enumerated in Article 8 and 9 hereof:

    1. The funds raised by private placement shall have been used in
compliance with the description in the prospectus concerning the use of
proceeds and the use of such proceeds shall have obtained satisfactory results;

    2. Not less than twelve months shall have elapsed since the preceding
private placement of shares;

    3. There shall have been no serious illegal activities during the period
from the preceding placement of shares to the subject application;

    4. Stock purchase warrants for staff and employees shall have been
distributed in accordance with the prescribed scope by the state and in
centralized custody of the securities dealing institution prescribed by the
state; and

    5. Other conditions that the SCSC may impose.

    Article 12  An application to issue shares to the public shall be made in
accordance with the following procedure:

    1. The applicant shall retain professionals such as an accounting firm, an
asset valuation institution and a law firm, to review and evaluate its credit
history, assets and financial status and to issue legal opinions with respect
to related matters. Thereafter, it shall, in accordance with the applicable
jurisdiction, file an application to issue shares to the public with the
People’s Governments of the province, autonomous region, municipality directly
under the Central Government or municipality listed separately under State
plan (hereinafter referred to as the “Local Governments”), or with the
department in charge of central enterprises;

    2. Within the scope of permitted share issuances designated by the state,
Local Governments shall review for approval share issuance applications of
local enterprises and the departments in charge of central enterprises shall
review for approval the applications of central enterprises after consultation
with the Local Government of the place where the applicant is located; the
Local Government or the department in charge of central enterprises shall,
within thirty business days of the receipt of the shares issuance application,
render a decision after review and shall send a copy of the decision to the
SCSC;

    3. The approved issuance application shall be submitted to the CSSRC for
review. The CSSRC shall issue an opinion within twenty business days of its
receipt of the review application and a copy of the CSRC opinion shall be
transmitted to the SCSC. If approval is granted by the CSSRC after review, the
applicant shall file an application with the listing commission of the
relevant securities exchange. The shares may be issued only after the relevant
listing commission has agreed to the listing of the applicant’s shares.

    Article 13  Applicants seeking to issue shares to the public shall submit
the following documents to the Local Government(s) or the department(s) in
charge of central enterprises:

    1. an application report;

    2. resolutions of the promoters’ or shareholders’ general meeting
approving the issuance of shares to the public;

    3. approval documentation with respect to the establishment of the company
limited by shares;

    4. the business license of the company limited by shares or a registration
certificate evidencing the subscription for and establishing of the company
limited by shares, issued by the administration for industry and commerce;

    5. the articles of association or the draft articles of association of the
company;

    6. the share prospectus;

    7. a feasibility study concerning the use of proceeds; in the case of the
fixed asset investment project requiring state provided capital or other
conditions, an approval document from the relevant department of the state
evidencing agreement with the capital investment project proposal shall also
be submitted;

    8. audited financial statements for the most recent three years or the
period since its establishment accompanied by an audit report signed by more
than two certified accountants (in addition to the auditing firm) and sealed
by the respective firm;

    9. a written legal opinion signed by more than two lawyers and sealed by
the respective law firm of such lawyers;

    10. an asset valuation report signed by more than two professional
appraisers and sealed by the respective institution of such appraisers and a
verification report signed by more than two certified accountants and sealed
by the respective accounting firm of such accountants; if state-owned assets
are involved, a confirmation document issued by the administrative department
in charge of state-owned assets shall also be furnished;

    11. the proposed share distribution and the distribution agreement;

    12. other documents that the Local Governments or the departments in
charge of central enterprises may require.

    Article 14  When the approved share issuance application is submitted to
the CSSRC for review, the following documents shall be submitted in addition
to those enumerated in Article 13 hereof:

    1. the document of the Local Government or the department in charge of
central enterprises approving the issuance application; and

    2. other documents that the CSSRC may require.

    Article 15  The prospectus referred to in Article 13 hereof shall be
prepared in accordance with the form prescribed by CSSRC and shall address the
following matters:

    1. the name and domicile of the company;

    2. a brief description of the promoter(s) and issuer;

    3. the purpose of the funds subscription;

    4. the company’s current total capital, the classes and total value of the
shares that the company proposes to issue in the subject issuance, the par
value and sale price per share, the net asset value attributable to each share
prior to the issuance and the estimated net asset value attributable to each
share on the conclusion of the issuance, distribution expenses and commissions
related to the issuance;

    5. information regarding share subscriptions by the promoters of the
initial issuance, the share rights structure and the verification
certifications for the subscriptions;

    6. the name of the distributing institutions, the method of distribution
and the number of shares to be distributed;

    7. the proposed purchasers of the share issuance, the time and place of
the share issuance, and the methods for share subscription and payment of
purchase;

    8. the plan for the use of proceeds and the prediction of profitability
and risks;

    9. a near-term development plan of the company, and a projection of the
following year’s profit of the company, audited by a certified accountant and
for which such accountant has issued an audit opinion;

    10. major contracts;

    11. major litigations involving the company;

    12. a list of the names and brief biographies of each of the board
directors and the supervisors of the company;

    13. a description of production and operations for the most recent three
years or in the period since the company’s establishment and the basic
business development situation;

    14. audited financial statements of the company for the most recent three
years or the period since its establishment accompanied by an audit report
signed by more than two certified accountants (in addition to the auditing
firm) and sealed by their respective firm;

    15. with respect to any company seeking to increase its capital,
information on the use of proceeds from any previous public share issue;

    16. other matters that the CSSRC requires to be addressed.

    Article 16  The cover of the share prospectus shall set forth the
following: “THE ISSUER HEREBY WARRANTS THE TRUTHFULNESS, ACCURACY AND
COMPLETENESS OF THE CONTENTS OF THIS SHARE PROSPECTUS. NO DECISION MADE BY THE
GOVERNMENT OR ANY STATE SECURITIES REGULATORY DEPARTMENT CONCERNING THIS
ISSUANCE INDICATES THAT SUCH BODIES HAVE SUBSTANTIVELY PASSED UPON OR
WARRANTED THE VALUE OF THE SHARES BEING OFFERED BY THE ISSUER OR ANY POTENTIAL
GAIN TO THE INVESTORS.”

    Article 17  All the promoters or directors and the principal distributors
shall sign the share prospectus, warranting that the share prospectus contains
no false or seriously misleading statements or important omissions and that
such persons will be jointly and severally liable for the same.

    Article 18  In performing their duties, the certified accountants and
their firms, professional appraisers and their institutions and lawyers and
their firms that issue documents for the issuer shall, in accordance with the
recognized business standards and ethics codes of their respective
professions, check and verify the truthfulness, accuracy and completeness of
the contents of the documents that they have issued.

    Article 19  Before a public share issuance has been approved, no person
shall disclose in any form the contents of the prospectus.  The issuer shall
publicize the share prospectus within two to five business days prior to the
commencement of the distribution period after the public share issuance has
been approved.

    The issuer shall provide all subscribers with a prospectus. Institutions
distributing securities shall place copies of the prospectus at the place of
business and have the obligation to remind the subscribers to read the
prospectus.

    The prospectus shall be effective for a period of six months, commencing
from the date when all of the signatures to the prospectus have been applied.
After the prospectus ceases to be effective the share issuance shall be
terminated immediately.

    Article 20  Shares being offered to the public shall be distributed by
securities dealing institutions. “Distribution” comprehends two methods:
underwriting and sales on a best effort basis.

    The issuer and the securities dealing institution shall execute a
distribution agreement, in which the following matters shall be addressed.

    1. the names and domiciles of the parties and the names of their legal
representatives;

    2. the method of distribution;

    3. the types, volume, value and issue price of the shares to be
distributed;

    4. the distribution period and the commencement and termination dates;

    5. the time and method of payment for the distribution;

    6. calculation of the distribution expenses, and the method and time of
payment therefor;

    7. liability for breach of contracts;

    8. other matters that need to be agreed upon.

    The principles pursuant to which a securities dealing institution
collects distribution fees shall be determined by the CSSRC.

    Article 21  In distributing the shares, a securities dealing institution
shall check the truthfulness, accuracy and completeness of the prospectus and
other related materials that are distributed; if it is determined that they
contain false or substantially misleading statements or important omissions,
no offer invitation or offer may be made; if an offer invitation or an offer
has already been made, distribution shall be stopped immediately and
appropriate remedial measure shall be taken.

    Article 22  Public share issuances, the total par value of which exceeds
Renminbi 30,000,000 yuan or the projected total sales price of which may
exceed Renminbi 50,000,000 yuan, shall be distributed by a distribution
syndicate.

    A distribution syndicate shall be made up of two or more distributing
institutions. The principal distributor(s) shall be selected by the issuer in
accordance with the principle of fair competition and by means of bid
invitation or consultation. The principal distributor(s) shall sign a
distribution syndicate agreement with the other distributors.

    Article 23  If the total par value of the shares to be offered to the
public exceeds Renminbi 100,000,000 yuan or the projected total sales price of
the shares to be offered to the public may exceed Renminbi 150,000,000, the
number of distributors from other localities shall account for a reasonable
proportion of the distribution syndicate and the number of shares to be sold
in other localities shall account for a reasonable proportion of total sales.

    “Other localities” referred to in the preceding paragraph means places
other than the province, autonomous region or municipality directly under the
Central Government where the issuer is located.

    Article 24  The distribution period shall not be less than ten days and
more than ninety days.

    During the distribution period, the distributing institution must make
every effort to sell to subscribers the shares that it has undertaken to sell,
and may not keep distributed shares for itself.

    Upon the expiration of the distribution period, the then unsold shares
shall be disposed of in accordance with the method of underwriting or sale on
a best effort basis, respectively, as agreed in the distribution agreement.

    Article 25  In issuing share subscription or applications to the public, a
distributing institution or its authorized organ may not collect a fee that
equals more than the cost of the print of subscription form and issuing
expenses. Moreover, such entities may not place a limit on the number of
subscription forms distributed.

    If the number of shares subscribed for exceeds the total number of shares
to be offered, the distributing institutions shall sell the shares in
accordance with the principle of fairness and by means of proportional
allotments, proportional allotments after cumulative reductions, or by
lottery. In case the lottery method is used, the distributing institution
shall, under the supervision of the notary public office and in accordance
with the prescribed procedures, publicly conduct the lottery form of all the
share subscription applications at a given date and sell shares to those whose
lots are drawn.

    Other than the distributing institutions or their authorized organs, no
unit or individual may distribute or resell share subscription applications.

    Article 26  Within fifteen business days after the expiration of the share
distribution period, the distributing institutions shall submit to the CSSRC a
written report on the share distribution.

    Article 27  If, after the distribution period expires, the securities
dealing institution intends to make to the public (other than the issuer) an
offer invitation to buy or an offer to sell, or intends to sell, the issuer’s
shares in its possession to the public (other than the issuer), the matter
shall be handled in accordance with prescribed procedures, subject to approval
by the CSSRC.

    Article 29  The trading of shares must be conducted at securities
exchanges authorized for share trading by the SCSC.

    Article 30  A company limited by shares that applies to have its shares
traded on a securities exchange shall meet the following conditions:

    1. Its shares shall have been already offered to the public;

    2. Its total amount of capital after the issuance shall be not less than
Renminbi 50,000,000 yuan;

    3. Not less than 1,000 shareholders hold individually shares the par value
of which is at least Renminbi 1,000 yuan and the total par value of the shares
owned by individuals is not less than Renminbi 10,000,000 yuan;

    4. The company has a record of profitability over the most recent three
consecutive years; in the case of an existing enterprise that is being
restructured as a company limited by shares, the existing enterprise shall
have had a record of profitability over the most recent three consecutive
years, without regard to the newly-established company limited by shares; and

    5. Other conditions that the SCSC may impose.

    Article 31  A company limited by shares which intends to apply to have its
shares traded on a securities exchange and that offers shares to the public
and meets the conditions provided in the preceding Article shall apply to the
listing commission of the relevant securities exchange; the listing commission
shall, within twenty business days upon receipt of the application, make a
decision after review and determine the specific time when the applicant may
be listed. The approved review document shall be submitted to the CSSRC for
the record, with a copy thereof to the SCSC.

    Article 32  A company limited by shares that applies for its shares to be
traded on a securities exchange shall file the following documents with the
listing commission of the securities exchange:

    1. the application document;    

    2. the registration document of the company;

    3. the document approving the public issuance of shares;

    4. the company’s financial statements for the three most recent years or
the period since its establishment audited by an accounting firm, accompanied
by an audit report signed by more than two certified accountants (in addition
to the auditing firm) and sealed by the accounting firm of such accountants;

    5. recommendation letter(s) from members of the securities exchange;

    6. the most recent prospectus; and

    7. other documents that the securities exchange may require.

    Article 33  After the shares are approved for trading on a securities
exchange, the listing company shall make a listing announcement and publicize
the documents listed in Article 32 hereof.

    Article 34  In addition to the major items of the prospectus provided for
in Article 15 hereof, the contents of the listing announcement shall also
include the following matters:

    1. the date when approval is granted for the shares to be traded at the
securities exchange and the approval document number;

    2. information on the share issue, the share rights structure and the
names of the ten largest shareholders and the amount of shares they each hold;

    3. the resolution of the company’s inaugural meeting or a shareholder’s
general meeting approving the trading of the company’s shares on the
securities exchange;

    4. brief biographies of the directors, supervisors and senior managers and
information with respect to their ownership of company shares;

    5. documents showing the operating results and financial status of the
company over the most recent three years or the period since its establishment
and profit projection for the following year; and

    6. other matters that the securities exchange may require to be specified.

    Article 35  In performing their duties, the certified accountants and
their firms, professional appraisers and their institutions and lawyers and
their firms that issue documents for the listing company shall, in accordance
with the recognized business standards and ethics codes of their respective
professions, check and verify the truthfulness, accuracy and completeness of
the contents of the documents that they have issued.

    Article 36  The transfer of state-owned shares shall be subject to
approval by the relevant state authorities, for which specific measures will
be formulated separately.

    The transfer of state-owned shares may not jeopardize the rights and
interests of the state-owned shares.

    Article 37  The securities exchanges and institutions administering the
safekeeping, clearance, transfer, registration and distribution of securities
shall ensure that clients of different localities shall enjoy the same
treatment as the clients of the locality of such institutions and shall not be
discriminated against or be subjected to restrictions.

    Article 38  Any profits made by any company limited by shares’ director,
supervisor, senior management and a legal person shareholder that owns more
than 5% of the voting shares of a company from selling company shares that
such person purchased within the six months prior to such sale, or from
purchasing company shares that such person sold within the six months prior to
such purchase, shall be vested in the company.

    The preceding paragraph shall apply to the directors, supervisors and
management of a legal person shareholder that owns more than 5% of the voting
shares of the company.

    Article 39  No pe