Laws of the People's Republic of China

The State Administration of Foreign Exchange, China Securities Regulation Commission

Circular jointly issued by the State Administration of Foreign Exchange (SAFE) and China Securities Regulation Commission (CSRC) on Further Improving Foreign Exchange Administration of Overseas Listing

HuiFa [2002] No.77

August 5, 2002

SAFE branches in all provinces, autonomous regions and municipalities directly under the Central Government, exchange administration offices, and SAFE branches in the cities of Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; all CSRC securities supervisory offices, agencies, and offices of special commissioners; all overseas listed companies:

In order to normalize foreign exchange income and outlay related to overseas listing, strengthen foreign exchange administration of repatriation, purchase and sale of funds raised by way of overseas listing, a circular on relevant matters is given hereunder:

1.

An H-share company in this Circular refers to a domestically registered and overseas listed company. A Red-chip company in this Circular refers to an overseas registered and listed company whose controlling stake is held by domestically registered companies.

2.

An H-share company or a domestic shareholder of a Red-chip company shall go through formalities of foreign exchange registration for overseas listed stock at a relevant SAFE office within 30 days after it has acquired the approval of the CSRC on its overseas offering and listing (For registration form, see attachment) by presenting the following documents:

(1)

Written application;

(2)

Business license and certificate of institutional code (photocopy);

(3)

Document of approval issued by the CSRC (photocopy);

(4)

Preliminary prospectus;

(5)

Plan of repatriation referred to in item 3 or 4 in this Circular;

(6)

Other materials as requited by circumstances.

3.

An H-share company shall repatriate the raised funds within 30 days after they are paid in with related listing costs deducted; and shall not retain them abroad without the SAFE office's approval. Repatriated funds shall be regarded as foreign direct investment in terms of administration, and may either be deposited in a special foreign exchange account or sold to a bank with the approval of the SAFE office concerned. When applying for opening a special foreign exchange account for the repatriated funds or selling them to a bank, the following documents shall be submitted to the SAFE office:

(1)

Written application;

(2)

Official prospectus;

(3)

Certificate of foreign exchange registration for overseas listed stocks.

4.

An H-share company or a domestic shareholder of a Red-chip company shall repatriate its foreign exchange income from selling stocks of subject listed company or its assets (equity) via subject listed company within 30 days after it is paid in; and shall not retain it abroad without the SAFE office's approval. Subject repatriated foreign exchange shall be sold to a bank with approval of the SAFE office. The following documents shall be submitted to the SAFE office for handling the formalities for the sale:

(1)

Written application;

(2)

Official prospectus;

(3)

Certificate of foreign exchange registration;

(4)

Projection on income from selling stocks;

(5)

Contract of assets (or equity) transfer.

5.

For temporary deposit of the foreign exchange income mentioned in items 3 and 4 of this Circular before its repatriation, a special overseas account may be opened with the SAFE office's approval for up to 3 months from the opening date.

6.

If a Red-chip company puts its funds raised abroad into domestic undertakings as investment or external debt, it shall go through corresponding formalities according to relevant regulations on foreign exchange administration related to FDI or external debt.

7.

Before transferring its assets or equity to its overseas subsidiary, a domestic shareholder of a Red-chip company shall go through formalities of foreign exchange registration for overseas investment. Value of subject assets or equity shall be assessed before the transfer. Amount of registered overseas investment shall not be lower than the assessed value. If state assets are involved, formalities of assets assessment and confirmation shall be handled according to the rules of the administrative department of state assets.

8.

If an H-share company needs to buy back its shares circulating abroad, it shall go through formalities of altering foreign exchange registration related to overseas listed shares, opening an overseas account, and remitting foreign exchange to overseas at the relevant SAFE office after the buyback has been approved by the CRSC.

9.

Current H-share companies and domestic shareholders of current Red-chip companies shall make up the formalities of foreign exchange registration of overseas listing at SAFE offices concerned within 3 months after the promulgation of this Circular.

10.

For overseas equity financing by a domestic entity in the manner of domestic registration, overseas private placements, or overseas registration, overseas private placements, or in any other similar manner, formalities related to foreign exchange administration shall be handled in the light of the above-mentioned principles, and documents related to the private placements shall be presented therefor.

11.

The SAFE and the CSRC are responsible for the interpretation of this Circular.

12.

This Circular shall enter into force as of September 1, 2002. Circular on Issues Related to Opening and Use of Foreign Exchange Account by an Overseas Listed Company ([97] HuiZiHanZi No. 139) promulgated by State Administration of Foreign Exchange shall be nullified at the same time.

Attachment: Registration Form of Foreign Exchange Registration for Overseas Listed Stock(omitted)