Laws of the People's Republic of China

The China Securities Regulatory Commission

Circular of China Securities Regulatory Commission on Issues Concerning Stock Issuance and Public Offering Abroad of Overseas Corporations which Involve Domestic Equity

ZhengJianFaXingZi [2000] No.72

June 9, 2000

Law firms concerned:

Recently, some overseas corporations that involve domestic equity (hereinafter referred to as overseas corporations) have issued stocks and been listed in foreign stock exchange such as HK Grow Enterprise Market (GEM) and American NASTAQ. In view of the inquiry or legal opinions submitted to our Commission by domestic lawyers on matters of stock issuance and public offering as mentioned above, a circular is made as follows:

1.

Matters on overseas stock issuance and public offering belong to situations stipulated in the Circular of the State Council on Further Strengthening the Management of Overseas Stock Issuance and Public Offering (GuoFa [1997] No.21) shall be dealt with according to the said circular.

2.

Legal opinions on the matters of overseas stock issuance and public offering not subject to the document coded GuoFa [1997] No.21 from lawyers shall include, but not limited to, the following contents:

(1)

Basic information of the overseas corporation: time of establishment, place of registration, equity structure (with block diagram) and the shareholders' background (ultimate equity beneficiary), listed assets composition (with block diagram) and business involved, etc;

(2)

Basic information of this issuance: leading underwriter, sponsor, target listing place, expected financing amount and usage etc.

(3)

Where domestic organs or citizens hold, directly or indirectly, equity of the overseas corporation, the process of the formation and evolution of those equity shall be explained in detail, together with the opinion on their legitimacy and validity;

(4)

Where listed assets of overseas corporation involve, directly or indirectly, domestic equity, the process of the formation and evolution of those equity shall be explained in detail, together with the opinion on their legitimacy and validity;

(5)

Explain the business of the domestic enterprises whose equity is held, directly or indirectly, by the overseas corporation, together with the opinions on its conformity with the industrial policy on foreign investment and other relevant laws and regulations.

3.

The Issuance Supervision Department of China Securities Regulatory Commission is in charge of the legal opinions, and shall handle them according to the following procedures:

(1)

Where there is unclear statement of the facts or improper legal recommendations in the legal opinions, inquiry in written form will be made to the lawyer, who shall make amendments or renewal in time;

(2)

China Securities Regulatory Commission may solicit opinions of relevant competent authorities of the State Council on matters of laws, regulations and policies concerning foreign investment;

(3)

Where there is no further opinions, disposal suggestion shall be given within 15 working days since the receipt of the legal opinion, and the law department shall reply to the law firm to that effect.

4.

China Securities Regulatory Commission shall investigate and dispose, in accordance with relevant laws and regulations, the lawyer who, or the law firm which, has submitted false, misleading legal opinion, or legal recommendation with significant omission.