Laws of the People's Republic of China

The China Securities Regulatory Commission Commission

Circular of the China Securities Regulatory Commission on Publicizing the Special Provisions on the Content and Format of Directions of Foreign-invested Companies by Stock in Raising Capital by Floating Shares ---Rule 17 on Information Disclosure by Companies Publicly Issuing Securities

ZhengJianFa [2002] No.17

March 19, 2002

Foreign-invested companies by stock planning to issue securities to the public:

In order to normalize the information disclosure behavior of foreign-invested companies by stock and protect the legitimate rights and interests of the investors, the Commission formulates the Special Provisions on the Content and Format of Directions of Foreign-invested Companies by Stock in Raising Capital by Floating Shares ---Rule 17 on Information Disclosure by Companies Publicly Issuing Securities, which is hereby publicized for implementation.

Attachment:Special Provisions on the Content and Format of Directions of Foreign-invested Companies by Stock in Raising Capital by Floating Shares ---Rule 17 on Information Disclosure by Companies Publicly Issuing Securities

Article 1

The Provisions are formulated in line with the Corporate Law of the People's Republic of China, the Security Law of the People's Republic of China among others in order to normalize the information disclosure behavior of the foreign-invested companies by stock and safeguard the legitimate rights and interests of the investors.

Article 2

When compiling the Directions of Fund-raising by floating shares for issuing shares to the public, the stock issuers shall follow both the general regulations of China Securities Regulatory Commission on the content and format of the directions, and the requirements of the Special Provisions.

Article 3

The stock issuers shall disclose the following risks that may possibly exist:

(i)

The risk of depending on the foreign raw material providers, foreign clients and foreign technical services.

(ii)

The risk of possible changes in China's laws, regulations and policies concerning tax preferences to enterprises with foreign investment.

(iii)

The risk of possible changes in the laws and regulations on investment in or technology transfer to China of the domicile countries or regions of the foreign stockholders or the company headquarters.

(iv)

The risk of exchange rate.

Article 4

The issuer shall disclose the laws and regulations on investment in and technology transfer to China of the domicile or headquarter countries or regions of foreign stockholders with 5% or more of the total stocks.

The issuer shall disclose such information as limitation on equity transfer by the articles of association of the company.

Article 5

The issuer shall disclose in detail information on affiliated trade with the stockholders, including but not limited to:

(i)

Whether the business and technology of the issuer depend on the foreign stockholders, and whether there are some limitations on the use of trademark, patent, and expertise. Measures to safeguard the public investors' interests shall be clarified, should the above circumstances exist.

(ii)

Information on the affiliated trade with foreign stockholders in the past three years, including but not limited to supply of raw material, product sales, collection of technology transfer fee, administration and sales expenses apportionment as well as pricing criteria, the opinions of the accounting firms auditing the issuance on the fairness and equitability of the affiliated trade, concrete measures to ensure the fairness and equitability of the affiliated trade. The total volume of next year's affiliated shall be announced in the discussions and analysis among the management. In case the issuer is a manufacturing company, sources of raw materials and product sales channels shall also be disclosed.

(iii)

The main content and the concrete implementation of the agreement on parting market signed by the issuer and other foreign stockers.

Article 6

The stock issuer shall disclose the nationalities, rights of permanent residence overseas of the directors and senior executives as well as their positions in other institutions both at home and abroad.

Article 7

The foreign investment companies by stock established in the mainland of China by investors from by the investors of Hong Kong, Macao and Taiwan regions shall also comply with this provision.

Article 8

The provision shall enter into force as of the date of promulgation.