Laws of the People's Republic of China

Circular of the China Securities Regulatory Committee Concerning the Distribution of the Rules for Implementation of Suspending and Terminating the Listing of Failing Listed Companies (Revised)

ZhengJianFa [2001] No.147 November 30, 2001

All listed companies:

With a view to promoting the healthy development and protecting the lawful rights and interests of the investors, the Rules for Implementation of Suspending and Terminating the Listing of Failing Listed Companies (Revised) has been formulated by our Committee and for implementation as of January 1, 2002.

The stock exchanges shall not, during the period of suspension, provide special assignment services for the listed companies whose stocks have been suspended from trading in the stock exchanges as pursuant to the provisions of the present Measures.

As for the companies the trading of whose stocks has been suspended prior to the promulgation of the present Measures, the resumption and termination of the exchange of their shares shall be implemented according to the following provisions:

I.

The stock exchanges shall, as of the day when the grace period expires, stop the provision of special transferring services to the stocks thereof.

II.

The companies that satisfy the conditions as mentioned below may, within 5 working days after disclosing the annual report for the year 2001 and prior to the expiration of the grace period, apply to the stock exchange for resuming the trading of stocks:

1.

Disclosing the annual report for the year 2001 within the statutory time limit;

2.

The 2001 annual financial statement shows that the company is having a favorable balance.

If an auditing report is made by a certified accountant with explanatory notes such as qualified opinions, unqualified opinions, negative opinions or refusal to express opinions for the annual financial statement for the year 2001, the stock exchange may make investigations and verifications over the truthfulness of the financial statement with regard to the profitability of the company.

III.

If the company fails to disclose the 2001 annual financial statement within the statutory time limit, the stock exchange may stop providing special transferring services to the stocks thereof, and decide, within 20 working days after the expiration of the statutory time limit, to terminate the listing of the stocks of the company.

Where the expiration date of the grace period precedes the statutory time limit for disclosing the annual financial statement of 2001 and if the company fails to disclose its 2001 annual financial statement prior to the expiration of the grace period, or it has disclosed the 2001 annual financial statement prior to the expiration of the grace period but fails to file an application within 5 working days after the expiration of the grace period, the stock exchange shall decide to terminate the listing of the stocks of the company within 10 working days after the expiration of the grace period.

IV.

The stock exchanges shall make decisions of resuming or terminating the listing of companies by referring to the relevant provisions of Chapters III and IV of the present Measures.

Attachment: Rules for Implementation of Suspending and Terminating the Listing of Failing Listed Companies (Revised) Chapter I General Provisions

Article 1

The present Measures have been enacted according to the relevant provisions of the Company Law and the Securities Law for the purpose of promoting the healthy development of the securities market and for protecting the lawful rights and interests of the investors.

Article 2

The present Measures shall be applicable to the suspension, resumption and termination of listing of the securities of the listed companies that have been suffering from deficit continuously for years.

Article 3

The stock exchanges decides the suspension, resumption and termination of the listing of the stocks of the listed companies according to law.

The stock exchange shall, within 2 working days after making the above-mentioned decision, report to the China Securities Regulatory Committee (hereinafter referred to as "CSRC") archivist purposes.

Article 4

If the CSRC believes that the decision made by the stock exchange for suspending, resuming or terminating the listing of a stock is inconsistent with the relevant laws, regulations or the present Measures, it may demand the stock exchange to make corrections or revoke the decision directly.

Chapter II Suspending the Listing

Article 5

If a company suffers from a deficit for three consecutive years, the stock exchange shall, within 10 days after the company discloses its annual financial statement, decide to suspend the listing of the stocks of the said company.

The preceding paragraph shall not be applicable to the circumstance when the company suffers from a deficit for three consecutive years as a result of the readjustment of relevant state policies concerning accounting.

Article 6

Where the stock exchange decides to suspend the listing of the stocks of the company, it shall, within 2 working days, inform the company and make a public announcement.

Article 7

The company shall, within 2 working days after the stock exchange makes the decision of suspending the listing of its stocks, publish a "Public Notice of Suspending the Listing of Stocks" on the newspapers and websites designated by the CSRC and the websites designated by the stock exchange concerning the following contents:

1.

The types, short title and code number of the stock whose listing has been suspended and the day when the suspension starts;

2.

Major contents of the decision made by the stock exchange concerning the suspension;

3.

Other contents as required by the stock exchange.

Article 8

The company shall, during the period of suspending the listing of the stocks thereof, disclose at least one time per month the specific measures taken for resuming the listing of the stocks; in case the company fails to take any important measures, it shall also disclose.

Article 9

The company shall, during the suspension of the listing, continue to perform its obligations of information disclosure.

Chapter III Resuming the Listing

Article 10

After the suspension of the listing of stocks, the company may, if it meets the conditions as mentioned below, apply for resuming the listing of stocks within 5 working days after disclosing its first semi-annual statement.

1.

Disclosing its first semi-annual financial statement within the statutory time limit after the suspension;

2.

The semi-annual financial statement shows that the company is having a favorable balance.

If the auditing report for the semi-annual financial statement is attached with an explanatory note by the certified accountant such as qualified opinions, unqualified opinions, negative opinions or refusal to express opinions, etc, the stock exchange may make investigations over the truthfulness of the financial statement concerning the favorable balance. The time for investigation shall not be included in the period of examination and approval as provided in Article 12 of the present Measures.

Article 11

To apply for resuming listing, the company shall hire a recommender that has the qualifications as a major underwriter and that satisfies the requirements of the stock exchange for recommendations.

Article 12

The stock exchange shall, within 5 working days after the company files an application for resuming the listing of its stocks, decide whether to accept the application or not.

After the stock exchange accepts the application, it shall decide whether to approve the application for resuming the listing within 30 working days.

Article 13

The company shall, after receiving the decision of the stock exchange on resuming the listing of stocks, publish a "Public Announcement of Resuming the Listing of Stocks" on the newspapers and websites designated by the CSRC and the websites designated by the stock exchange within 2 working days concerning the following contents:

1.

The types, short title and code number of the stock whose listing is resumed;

2.

Major contents of the decision made by the stock exchange on resuming the listing;

3.

Specifications made by the board of directors of the company about the measures taken for resuming the listing;

4.

Other contents as required by the stock exchange.

Article 14

The listing of the stocks of the company shall be resumed 5 days after the company publishes the "Public Announcement of the Listing of Stocks".

The stock exchange shall deal with the stocks of the company in a special way during the period after the listing of the stocks of the company is resumed and the disclosure of its first annual financial statement subsequent to the resuming of listing.

Chapter IV Termination of Listing

Article 15

In case the company fails to disclose its first semi-annual financial statement after the expiration of the statutory time limit, the stock exchange shall decide to terminate the listing of the stocks of the company within 10 working days after the expiration of the statutory time limit.

Where the company has disclosed its first semi-annual financial statement during the statutory time limit after the suspension of listing but fails to file an application within 5 working days after the disclosure or the application is not accepted by the stock exchange, the stock exchange shall decide to terminate the listing of the stocks within 15 working days after the disclosure.

Article 16

If, after accepting the application of the company for resuming the listing, the stock exchange believe, upon examination, that the company does not satisfy the requirements for resuming the listing, it shall decide to terminate the listing within 30 working days after accepting the application.

Article 17

If, after the listing of the stocks of the company is suspended and the shareholders meeting decides to terminate the listing, the company shall inform the stock exchange with 2 working days, and the stock exchange shall decide to terminate the listing of the company's stocks within 5 working days after receiving the notice.

Article 18

If, after the listing of the company's stocks is resumed, the company fails to disclose its first annual financial statements after the expiration of the statutory time limit, the stock exchange shall decide to terminate the listing of the company's stocks within 10 working days after the expiration of the statutory time limit.

If, after the listing of the company's stocks is resumed, the company has disclosed its first annual financial statement within the statutory time limit after resuming the listing but the company suffers from a deficit, the stock exchange shall decide to terminate the listing of the company's stocks within 30 working days after the disclosure of the annual financial statement.

If the auditing report for the company's annual financial statement is attached with an explanatory note such as qualified opinions, unqualified opinions, negative opinions or refusal to express opinions, the stock exchange may make investigations over the financial statement of the company concerning the truthfulness of having a favorable balance, and the time for investigation shall be calculated in the time for making the decision of terminating the listing as provided in the preceding paragraph.

Article 19

The company shall, within 2 working days after receiving the decision of the stock exchange to terminate the listing of stocks, publish a "Public Announcement of Terminating of Listing of Stocks" on the newspapers and websites designated by the CSRC and the websites as designated by the stock exchange concerning the following contents:

1.

The types, short title and code number of the stock and the day when the listing is terminated;

2.

Major contents of the decision made by the stock exchange concerning the termination of listing;

3.

The registration, transfer and management of its stocks after the listing is terminated;

4.

Other contents as required by the stock exchange.

Article 20

The company shall, within one month after the listing of its stocks is terminated, publish a public announcement on the newspapers and websites as designated by the CSRC and the websites as designated by the stock exchange to specify the reasons for terminating the listing of stocks, the financial status of during the past years, the serious violations of the senior management personnel, the important credits and debts at the present time, the litigations in process, etc.

Article 21

If the company fails to perform the obligation as provided in the preceding paragraph during the statutory time limit, the shareholders may demand the company to perform the above-mentioned obligations according to law.

Article 22

The company whose listing of stocks has been terminated may, according to the relevant provisions and the agreement concluded with the stock exchanges upon the approval of the China Securities Society, entrust the stock exchanges to handle the transfer of the stocks.

Chapter V Supplementary Provisions

Article 23

The present Measures shall be applicable to the companies listed at the Shanghai Stock Exchange and Shenzhen Stock Exchange.

Article 24

The present Measures shall take effect as of January 1, 2002. the Rules for Implementation of for Suspending and Terminating the Listing of Stocks of Failing Companies(ZhengJianFa [2001] No.25) which was promulgated by the CSRC on February 22, 2001 shall be concurrently repealed.