Questions Relevant to Foreign-funded Companies Limited by Shares Circular

(Issued by the General Office of the Ministry of Foreign Trade and Economic Cooperation on 17 May 2001.)

To the Commissions (Departments) of Foreign Trade and Economic Cooperation of all provinces, autonomous regions, municipalities directly under the central government and municipalities with independent development plans:

This Circular on the questions set forth below is issued in order to regulate the listings of foreign-funded companies limited by shares:

1. The establishment of foreign-funded companies limited by shares and applications to convert existing foreign-funded limited liability companies into foreign-funded companies limited by shares must comply with the requirements of the Certain Questions on the Establishment of Foreign-funded Companies Limited by Shares Tentative Provisions and submitted to the Ministry of Foreign Trade and Economic Cooperation for examination and approval in accordance with the prescribed procedures.

2. Existing foreign-funded companies limited by shares that apply to issue A shares or B shares shall obtain the written consent of the Ministry of Foreign Trade and Economic Cooperation and satisfy the following conditions:

(1) foreign-funded companies limited by shares that apply to list and those that are listed shall comply with the policies for foreign investment in the relevant industry;

(2) foreign-funded companies limited by shares that apply to list shall be enterprises that were established or reorganized in accordance with provisions and procedures;

(3) the proportion of the unlisted foreign investment shares of a listed foreign-funded company limited by shares shall not be less than 25% of its total capital stock; and

(4) compliance with other conditions required by laws and regulations concerning listed companies.

3. Companies that, prior to the listing, are B share companies in the form of Sino-foreign equity joint ventures and that apply for the listing and floating of their unlisted foreign investment shares shall submit such applications to the China Securities Regulatory Commission after obtaining the written consent of the Ministry of Foreign Trade and Economic Cooperation, in accordance with the requirements of the Questions Relevant to the Listing and Floating of the Unlisted Foreign Investment Shares of Companies That Have Issued Foreign Investment Shares Listed in China (B Shares) Circular. The application for the listing and floating of the unlisted foreign investment shares shall satisfy the following conditions:

(1) after the issue of the B shares, the unlisted foreign investment shares of the foreign-funded company limited by shares shall account for not less than 25% of the total capital stock;

(2) the unlisted foreign investment shares to be listed and floated shall have been in existence for more than one year;

(3) the succeeding holders of the unlisted foreign investment shares that have been converted into floating shares shall be able to perform the obligations and responsibilities of the pre-listing holders of the said shares as stipulated in the company's articles of association;

(4) compliance with other conditions required by laws and regulations concerning listed companies.

Unlisted foreign investment shares held by foreign-funded investment companies may, for the moment, not be converted into floating shares.

You are requested to handle matters in accordance with the above.