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Order of the China Securities Regulatory Commission
No. 30
The Measures for the Administration of the Issuance of Securities by Listed Companies, which were deliberated and adopted at the 178th
executive meeting of the chairmen of China Securities Regulatory Commission on April 26, 2006, are hereby promulgated and shall come
into force as of May 8, 2006.
Chairman of China Securities Regulatory Commission, Shang Fulin
May 6, 2006
Measures for the Administration of the Issuance of Securities by Listed Companies
Chapter I General Provisions
ArticleArticle 1
These Measures are formulated pursuant to the Securities Law and Company Law with a view to regulating the issuance of securities
by listed companies and protecting the lawful rights and interests of investors and the social and public interests.
Article 2
The listed companies which apply for issuing securities within the territory of China shall be governed by these Measures.
The securities as mentioned in these Measures shall refer to the following types of securities:
(1)
Stocks;
(2)
Convertible corporate bonds; and
(3)
Other types as recognized by the China Securities Regulatory Commission (hereinafter referred to as the CSRC).
Article 3
A listed company may make a public issuance of securities towards unspecified objects or may make a private issuance of securities
towards specified objects.
Article 4
When issuing securities, a listed company shall disclose or provide the genuine, accurate and complete information timely and fairly,
which shall not contain any false record or misleading statement or has any serious omission.
Article 5
The fact that the CSRC approves the issuance of securities of a listed company does not mean that the CSRC makes any substantial
judgment or guarantee about the investment value of the securities or about the proceeds of the investors. The investors who subscribe
to the securities shall bear the investment risks themselves due to any changes in the business operations and proceeds of the listed
company.
Chapter II Conditions for the Public Issuance of Securities
Section 1 General Provisions
Article 6
A listed company which satisfies the following provisions shall be deemed that it has a sound and well-operated organizational structure:
(1)
The Articles of association are lawful and effective, and there are sound bylaws for the shareholders assembly, the board of directors,
the board of supervisors, and independent directors, who are able to perform their respective functions according to law;
(2)
The company has sound internal control system, which can ensure the operating efficiency, lawfulness and regulation compliance of
the company, and the reliability of its financial reports. There is no serious defect with regard to the completeness, reasonableness
and validity of the internal control system;
(3)
The incumbent directors, supervisors and senior management members are qualified for their posts and can faithfully and diligently
perform their duties. None of them has committed any act in violation of Article 148 or Article 149 of the Company Law, and has
been given any administrative punishment by the CSRC within the latest 36 months, and condemned publicly by the stock exchange within
the latest 12 months;
(4)
The listed company separates its personnel, assets and financial affairs from those of the controlling shareholder or the actual
controller, has independent institutions and business operations and can carry out business operations and management independently;
(5)
The listed company has not provided any guaranty to any outsider illegally within the latest 12 months.
Article 7
A listed company which meets the following provisions shall be deemed that it has a sustainable profit-making ability:
(1)
It has favorable earnings for the latest 3 consecutive fiscal years. Comparing the net profits after deducting the non-regular profits
and losses with the pre-deduction net profits, of which the lower shall be the calculation basis.;
(2)
It has relatively stable sources of business and profits and it does not excessively rely on its controlling shareholder or actual
controller;
(3)
Its present primary business or investment direction can develop in a sustainable manner. It has a sound business operation mode
and investment plan, and has a good market prospect for its main product or service. There is no major imminent or foreseeable unfavorable
change in the business operation environment and market demands;
(4)
The senior management members and the core technicians are stable and there is no seriously unfavorable change in the latest 12 months;
(5)
The important assets, core technologies or other important rights and interests are lawfully obtained and can be continuously utilized,
and there is no major imminent or foreseeable unfavorable change therein;
(6)
There is no guaranty, lawsuit, arbitration or any other important matter that is likely to seriously affect the sustainable business
operations of the company; and
(7)
Where it has ever issued any securities publicly within the latest 24 months, and no such circumstance ever occurs in which the business
profits of the current year of the issuance decrease by 50% or more as compared to that of the previous year.
Article 8
A listed company which satisfies the following provisions shall be deemed that it has a good financial status:
(1)
Its basic accounting work is standardized and it strictly complies with the uniform accounting system of the state;
(2)
With regard to the financial statements of the latest three years and the recent 1 period, there is no audit report with reserved
opinions, or negative opinions or opinions that cannot be expressed as issued by certified accountants. For an audit report with
no reserved opinions but with emphasized paragraph of matters issued by a certified public accountant, the matters involved have
no major unfavorable effect on the issuer of securities or the major unfavorable effect has been eliminated prior to the issuance
of securities;
(3)
The quality of its assets is good. The non-performing assets cannot result in any major unfavorable effect on the financial status
of the company;
(4)
Its business outcomes are real and the cash flows are normal. The recognition of its business incomes, costs and expenses strictly
complies with the relevant accounting standards of the state. It has made sufficient and reasonable provisions for asset impairment
in latest three years and it has never manipulated its business performances; and
(5)
The profits that it has distributed accumulatively in cash or in stocks in the latest 3 years are not less than 20% of the average
annual distributable profits realized in the latest 3 years.
Article 9
A listed company has no false record in its financial and accounting documents within the latest 36 months and has not committed
any of the following major illegal acts:
(1)
Being subject to any administrative punishment of the CSRC or given any criminal punishment due to the violation of any securities
law, administrative regulation or rules;
(2)
Being subject to any administrative punishment with serious consequences, or any criminal punishment due to violating any law, administrative
regulation or rules on the industry and commerce, tax, land, environmental protection or customs; or
(3)
Other acts in violation of other laws or administrative regulations of the state with serious consequences.
Article 10
The amount and utilization of the funds raised by a listed company shall satisfy the following provisions:
(1)
The amount of funds raised shall not exceed the amount required by the project;
(2)
The utilization of the fund raised complies with the industrial policies of the state as well as the laws and administrative regulations
on the environmental protection and land management;
(3)
Except for a financial enterprise, the fund raised at the time shall not be used on such projects as financial investments such as
holding transactional financial assets or financial assets available for sale and financial investments by lending it to others or
use it by entrusted financing, nor shall it be used to invest directly or indirectly in any company that mainly engages in buying
and selling securities;
(4)
The implementation of the investment project will not result in inter-industry competition between the listed company and the controlling
shareholder or the actual controller, nor will it affect the companys independence in production and business operations; and
(5)
It shall formulate rules on the special deposit of the funds raised and shall deposit the funds raised in the special account as
designated by its board of directors.
Article 11
Where a listed company is under any of the following circumstances, it shall not issue any securities publicly:
(1)
The application documents for the issuance at the time have any false record, misleading statement or major omission;
(2)
It illegally changes the usage of the funds raised in the previous public issuance of securities and fails to make a correction;
(3)
It has ever been publicly condemned by the stock exchange within the latest 12 months;
(4)
It and its controlling shareholder or actual controller fail to perform their public commitments to the investors within the latest
12 months;
(5)
It or any of its incumbent directors, senior management members is investigated by the judicial organ due to any suspected crime
or is investigated by the CSRC due to any suspected violation of laws or regulations; or
(6)
Other circumstances under which it severely impaired the legitimate rights and interests of the investors, and the social and public
interests.
Section 2 Issuance of Securities
Article 12
The allotment and sale of shares to the original shareholders (hereinafter referred to as allotment of shares) shall satisfy the
following provisions in addition to meeting the provisions of Section 1 of this Chapter:
(1)
The amount of the shares to be allotted shall not exceed 30% of the total amount of capital stock prior to allotment of shares at
the time;
(2)
The controlling shareholder shall make a public commitment on the amount of shares it subscribes before the shareholders assembly;
and
(3)
The stocks shall be issued by way of proxy sale prescribed by the Securities Law.
Where the controlling shareholder fails to perform its commitment to subscribe to the shares allotted to it, or the number of shares
subscribed to by the original shareholders does not reach 70% of the number of shares to be allotted at the expiration of the term
of proxy sale, the issuer shall refund to the shareholders who have subscribed to the shares allotted to them on the issuing price
plus interests as calculated at the bank deposit rate for the same period.
Article 13
To publicly raise shares towards against unspecified objects (i.e. to make additional issuance), a listed company shall meet the
following provision in addition to satisfying the provisions of Section 1 of this Chapter: followings:
(1)
The weighted average yield rates of net asset for the latest 3 years shall not be lower than 6%. Comparing the net profit deducting
non-regularity profit and loss with the pre-deduction net profit the lower one shall be the calculation basis of weighted average
yield rates of net asset.;
(2)
Except for a financial enterprise, it does not hold any relatively large amount of transaction financial assets or financial asset
available for sale, nor does it make any financial investment by lending money to others or by making any entrusted financing by
the end of the latest period;
(3)
The issuance price shall not be lower than the average price of the companys stock prices during the 20 transaction days prior
to the announcement of the letter of intent or the average price of the transaction day prior to the issuance.
Section 3 Issuance of Convertible Corporate Bonds
Article 14
To publicly issue convertible corporate bonds, a company shall meet the following provisions in addition to satisfying the provisions
of Section 1 of this Chapter :
(1)
The weighted average yield rates of net asset for the latest 3 years shall be not lower than 6%. Comparing the net profits after
deducting the non-regular profits and losses with the pre-deduction net profits the lower one shall be the calculation basis of weighted
average yield rates of net asset ;
(2)
After the present issuance, the balance of the accumulative corporate bonds shall not exceed 40% of the amount of net assets at the
end of the latest period; and
(3)
The annual average amount of distributable profits realized in latest 3 years is not less than the annual amount of interests of
the corporate bonds.
The term “convertible corporate bonds” as mentioned in the preceding paragraph shall refer to the corporate bonds which are issued
by an issuing company pursuant to law and which may be converted to shares in a certain period under stipulated conditions.
Article 15
The term of convertible corporate bonds shall be 1 year at least, and 6 years at most.
Article 16
The par value of each convertible corporate bond shall be 100 Yuan.
The interest rate of a convertible corporate bond shall be determined by the issuing company consulting with the opinion of the major
underwriter, but it shall conform to the relevant provisions of the state.
Article 17
For issuing convertible corporate bonds publicly, a company shall entrust a qualified credit rating institution to make credit ratings
and follow-up ratings.
A credit rating institution shall announce at least one follow-up rating report every year.
Article 18
A listed company shall finish the matters on paying off the balance of principal and interest of the bonds within 5 working days
after the expiration of the term of convertible corporate bonds.
Article 19
For issuing convertible corporate bonds publicly, a company shall stipulate measures on the protection of the rights of bond holders,
the rights and procedures of bondholders meetings, as well as the conditions for the effectiveness of the resolutions made at bondholders
meetings.
A bondholders meeting shall be held in case any of the following events occurs:
(1)
The stipulations in the prospectus shall be changed;
(2)
The issuer is unable to pay the principals and the interests on schedule;
(3)
The issuer reduces its registered capital, or is merged, split up, dissolved or applies for bankruptcy;
(4)
There is any major change in the guarantor or guaranty; or
(5)
Any other event that may affect the major interests of the bondholders.
Article 20
For issuing convertible corporate bonds publicly, the company shall provide a guaranty unless its unaudited net assets at the end
of the latest period amounts to RMB 1.5 billion Yuan.
Where a guaranty is required, a full amount guaranty shall be provided. The scope of guaranty shall include the principal and interest,
penalty for breach of contract, damages compensation, and expenses for the realization of creditors rights.
Where a guaranty is provided by way of promise, it shall be a guaranty of joint and several liabilities and the amount of the unaudited
net assets of the guarantor at the end of the latest period shall not be less than the accumulative amount of the guaranties of the
guarantor. A securities company or a listed company shall not act as a guarantor for the issuance of convertible bonds, with exception
for listed commercial banks.
When setting a mortgage or pledge, the estimated value of the mortgaged or pledged property shall not be lower than the guaranty amount.
The estimated value shall be assessed by a qualified asset assessment institution.
Article 21
The convertible corporate bonds shall not be converted into corporate stocks unless 6 months have lapsed as of the end date of the
issuance thereof. The time limit for the conversion shall be determined by company in light of the existence period of the corporate
bonds as well as the financial status of the company.
A bondholder shall have the options whether to convert the corporate bonds into stocks or not. It will become a shareholder of the
issuing company the day next to the conversion.
Article 22
The conversion price shall not be lower than the average price of the transaction of companys stock in 20 transaction days prior
to the announcement of the prospectus or the average price of prior one transaction day.
The term “conversion price” as mentioned in the preceding paragraph shall refer to the price paid by per share converted from convertible
corporate bond that is stipulated in the prospectus in advance.
Article 23
A prospectus may stipulate redemption clauses, which shall state that the listed company may redeem the convertible corporate bonds
that have not been converted into stocks in light of the conditions and price stipulated in advance.
Article 24
A prospectus may stipulate the sell-back clauses, which shall state that the bondholders may sell the bonds back to the listed company
in light of the conditions and price stipulated in advance.
The prospectus shall stipulate that the bondholders shall have the sell-back right for once in case that the listed company changes
any of the announced purposes of use of the funds raised.
Article 25
A prospectus shall stipulate the principle and method for adjusting the conversion price. After the issuance of convertible corporate
bonds, the conversion price shall be adjusted at the time when any change in the shares of the listed company is resulted from the
allotment of shares, the issuance of additional shares, gift shares, dividends distribution, split-up or any other event.
Article 26
Where a prospectus contains any clause on downward revision of the conversion price, it shall simultaneously stipulate:
(1)
The conversion price revision plan shall be submitted to the general assembly of shareholders of the company for voting and shall
be subject to approval of 2/3 or more of the voting rights held by the shareholders attending the meeting of the general assembly.
When the assembly of shareholders takes a vote, the shareholders holding convertible corporate bonds shall disqualify themselves;
and
(2)
The price after the revision shall not be lower than the average price of transaction of the companys stock prices 20 transaction
days prior to the announcement of the prospectus and the average price of prior one transaction day.
Article 27
A listed company may publicly issue convertible corporate bonds for which the transaction of warrants is separated from the transaction
of bonds. (Hereinafter referred to as “convertible corporate bonds with separate transactions”)
To issue convertible corporate bonds with separate transactions, the listed company shall satisfy the following provisions in addition
to meeting the provisions of Section 1 of this Chapter :
(1)
The companys unaudited net assets at the end of the latest period amounts to 1.5 billion Yuan or more;
(2)
The average annual distributable profits realized in the latest 3 years is not less than the annual amount of interest of the corporate
bonds;
(3)
The average annual net amount of the cash flows brought about by its business operations within the latest 3 accounting years is
not less than the annual amount of the interest of corporate bonds, with exception for those companies which meets the provisions
in Article 14 (1) of these Measures; and
(4)
After the present issuance, the balance of the accumulative corporate bonds shall not exceed 40% of the amount of the net assets
at the end of the latest period and the expected total amount of fund raised by the exercise of all related warrants shall not exceed
the amount of the convertible corporate bonds to be issued.
Article 28
An application shall be filed with the stock exchange where the the listed company is listed, for listing and trading the convertible
corporate bonds with separate transactions.
The corporate bonds and warrants in the convertible corporate bonds with separate transactions shall get listed for trading respectively
in case that they satisfy the conditions for getting listed listing in the stock exchange.
Article 29
The term of convertible corporate bonds with separate transactions shall be one year at least.
The provisions of Articles 16 through 19 of these Measures shall apply to the par value, interest rate, credit rating and repayment
of the principal and interest of the bonds, as well as the protection of the creditors rights.
Article 30
Where the issuer provides a guaranty for the issuance of convertible corporate bonds with separate transactions, the provision of
Paragraphs 2 through 4 of Article 20 of these Measures shall apply.
Article 31
Where any warrant is listed for trading, the elements it stipulates shall include the exercise price, existence period, exercise
period or exercise date, and exercise ratio.
Article 32
The exercise price of the warrants shall not be lower than the average price of the companys stock prices in 20 transaction days
prior to the announcement of the prospectus or the average price prior one transaction day.
Article 33
The existence period of warrants shall not exceed the term of corporate bonds. It shall not be less than 6 months as of the date
of end of issuance.
No adjustment may be made to the existence period of warrants as announced in the prospectus.
Article 34
No warrants may be exercised until at least 6 months after the end of its issuance. The exercise period shall be a period prior to
the expiration of the existence period or shall be a special transaction date within the existence period.
Article 35
The prospectus of convertible corporate bonds with separate transactions shall stipulate that the bondholders shall have the sell-back
right for once in case that the listed company changes the announced purposes of use of the fund to be raised.
Chapter III Conditions for Private Offering of Stocks
Article 36
The term “private offering of stocks” as mentioned in these Measures shall refer to the offering of stocks to specified objects by
a listed company in a private manner.
Article 37
The specified objects of private offering of stocks shall meet the following provisions:
(1)
The specified objects meet the conditions as stipulated in the resolution of the shareholders assembly;
(2)
The offering number of specified objects shall not exceed 10.
Where a specified object is an overseas strategic investor, it shall be subject to the approval of the relevant department of the
State Council prior to the offering.
Article 38
To make a private offering of stocks, a listed company shall meet the following provisions:
(1)
The offering price shall not be lower than 90% of the average price of the companys stocks in 20 transaction days prior to the
benchmark date of pricing;
(2)
The shares presently offered shall not be transferred to others within 12 months as of the end of offering. The shares subscribed
by the controlling shareholder or actual controller and enterprises it controlled shall not be transferred to others within 36 months;
(3)
The utilization of the fund raised funds shall conform to the provisions of Article 10 of these Measures; and
(4)
Where the present offering shall result in any change in the controlling power of the listed company, it shall conform to other provisions
of China Securities Regulatory Commission.
Article 39
Where any listed company is under any of the following circumstances, it shall not make any private offering of stocks:
(1)
The application documents for the present offering have any false record, misleading statement or major omission;
(2)
The rights and interests of the listed company are severely impaired by its controlling shareholder or actual controller and the
impairment has not been eliminated;
(3)
The listed company or its subsidiary company illegally provides any guaranty to others and the guaranty has not been cancelled;
(4)
Any of the incumbent directors or senior management members of the listed company has ever been given any administrative punishment
by the CSRC within the latest 36 months or has been condemned publicly by the stock exchange within the latest 12 months;
(5)
The listed company or any of its incumbent directors, senior management members is under investigation conducted by the judicial
organ due to any suspected crime or is under investigation conducted by the CSRC due to any suspected violation of laws or regulations;
(6)
The listed company has ever been issued audit report with reserved opinions, negative opinions or opinions that can not be expressed
by a certified public accountant for its financial statements in the latest 3 years and in the latest one period, unless the consequences
of the events involved therein have been eliminated or the present offering involves significant restructuring; or
(7)
Other circumstances under which the lawful rights and interests of the investors, and social and public interests are severely impaired.
Chapter IV Issuance Procedures
Article 40
Where a listed company applies for issuing securities, its board of directors shall make a resolution on the following matters and
shall submit it to the shareholders assembly for approval:
(1)
A plan for the present issuance of securities;
(2)
A feasibility report on the purposes of uses of the funds to be raised by the present issuance;
(3)
A report on the purposes of uses of the funds raised by in the previous issuance; and
(4)
Other matters that must be specified.
Article 41
The shareholders assembly shall make a resolution on the issuance of stocks, which shall include the following matters at least:
(1)
Type and amount of securities of the present issuance;
(2)
Issuance method, objects of the issuance and the arrangement about the allotment to the original shareholders;
(3)
Pricing method or the price range;
(4)
Purposes of use of the funds to be raised;
(5)
Valid period of the resolution;
(6)
Authorization to the board of directors to deal with specific issues relating to the present issuance; and
(7)
Other matters that must be specified.
Article 42
The shareholders assembly shall make a resolution on the issuance of convertible corporate bonds, which shall include the following
matters at least:
(1)
Matters as prescribed in Article 41 of these Measures;
(2)
Interest rate of the bonds;
(3)
Term of the bonds;
(4)
Guaranty related matters;
(5)
Sell-back clauses;
(6)
Time limit and method for the repayment of principal and interest;
(7)
Conversion period; and
(8)
Determination and revision of the conversion price.
Article 43
The shareholders assembly shall make a resolution on the issuance of convertible corporate bonds with separate transactions, which
shall include the following matters at least:
(1)
Matters as prescribed in Articles 41 and items (2) through (6) of Article 42 of these Measures;
(2)
Exercise price of the warrants;
(3)
Existence period of the warrants; and
(4)
Exercise period or exercise date of the warrants.
Article 44
A resolution made by the shareholders assembly regarding the issuance of securities shall be subject to the agreement by the 2/3
of the voting rights of the shareholders attending the meeting. Where the listed company issues securities to its specific shareholders
and their connected parties, the connected shareholders shall disqualify themselves when the shareholders assembly takes a vote
on the issuance plan.
Where a listed company convenes a shareholders assembly with respect to the matters of issuance of securities, it shall make it
convenient for the shareholders to attend the shareholders assembly by providing them with network service or other facilities.
Article 45
Where a listed company applies for the public issuance of securities or private offering of new shares, it shall be recommended by
a recommender, which shall file an application with China Securities Regulatory Commission.
The recommender shall make and submit the application documents on issuance according to the relevant provisions of the CSRC.
Article 46
The CSRC shall examine a securities issuance application in light of the following procedures:
(1)
It shall decide whether to accept the application documents or not within 5 working days after it receives them;
(2)
It shall conduct a preliminary examination over the application documents after it accepts them;
(3)
Its Issuanc
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the Ministry of Commerce
Announcement No.38, 2006 of the Ministry of Commerce of the People’s Republic of China
[2006] No.38
Ministry of Commerce issued Announcement No. 34 on June 13, 2005, on starting the anti-dumping investigation on imported Wear Resistant
Overlay originating from the U.S and EU. The investigated product is listed under No. 48064000 of Customs Tariff of Import and Export
of the People’s Republic of China.
Since this case is rather complicated, Ministry of Commerce decided to postpone the investigation period for another 6 month, namely
ending on December 13, 2006, in accordance with Article 26 of Anti-dumping Regulations of People’s Republic of China.
Ministry of Commerce
May 22, 2006
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