Laws of the People's Republic of China

Circular of China Securities Regulatory Commission on the Relevant Issues Concerning Futures Brokerage Companies' Acceptance of Capital Contribution

ZhengJianQiHuoZi [2003] No.5 January 14, 2003

Securities regulatory offices, agencies and accredited representative's offices:

In order to regulate futures companies' acceptance of capital contribution, and to promote the normative development of the futures market, the relevant issues concerning futures companies' acceptance of capital contribution are hereby notified as follows:

I.

A contributor of futures company shall meet the following conditions:

(1)

Qualified as a Chinese legal person;

(2)

Having at least a minimum of 10 million RMB for registered capital and net assets each;

(3)

Having operated successively for 2 years or more; 1 year or more if both the registered capital and net assets exceed 50 million RMB;

(4)

Having made profits successively for the latest 2 years; no profit requirement if both the registered capital and net assets exceed 50 million RMB;

(5)

Having no major violation of laws and rules within the latest 2 years;

(6)

The legal representative, general manager and nature person controlling shareholder of the contributor are not involved in any of the situations provided for in Article 57 of the Company Law;

(7)

Other prudent conditions provided for by China Securities Regulatory Commission (CSRC).For the contributors that hold less than 10% of the shares of the futures brokerage company and don't actually control the company, there are no requirements on their registered capital, net assets, profits and operating period etc.

II.

The following organizations may not become contributors of a futures brokerage company:

(1)

Any organization whose pending action objects amount to 30% of its net assets;

(2)

Party and political bodies, armies, people's organizations and government-sponsored institutions as legal persons;

(3)

Other organizations prohibited from contributing to futures brokerage companies by laws and regulations.

Futures brokerage companies may not hold shares of each other; and futures brokerage companies and their contributors may not hold shares of each other.

III.

This Circular shall enter into force as of the date of its printing and distribution. The Circular on Several Issues Concerning Regulating Futures Companies' Acceptance of Contribution (ZhengJianQiZi [1996] No.16) promulgated by CSRC on December 23, 1996 shall be repealed at the same time. Where subparagraphs 3), 4) of Article 1 of the Circular on the Conditions, Procedures and Application Materials for Examining and Approving the Qualifications of Shareholders of Futures Brokerage Companies (ZhengJianQiHuoZi [2002] No.39) conflict with this Circular, the latter shall prevail.

The agencies shall transmit this Circular to the futures brokerage companies upon its receipt, and urge them to carry it out accordingly. When examining the establishment and share alteration of futures brokerage companies, the agencies shall, according to the requirements of this Circular, strictly examine the qualifications of the contributors and their act of contribution, so as to promote the normative function of the companies.