Administration of the Takeover of Listed Companies Measures

Article 2: For the purposes of these Measures, the term "takeover of listed companies" refers to a purchaser's gaining or possibly gaining actual control of a listed company by virtue of having obtained a certain percentage of shares in such company through securities transactions conducted on a stock exchange or by having obtained a certain degree of control of the company's shares through lawful activities other than securities transactions conducted on a stock exchange.

Article 3: The purchaser may carry out the takeover of a listed company, and gain the power to actually control the same, by means of takeover by agreement, takeover by offer or centralized trading at competing prices on a stock exchange.

When engaging in the takeover of listed companies, purchasers shall observe the provisions hereof regarding the rules for takeover and perform reporting and announcement obligations in accordance with these Measures in a timely manner.

Article 4: Activities related to the takeover of listed companies shall comply with the principles of transparency, equitability and fairness. The relevant parties shall act in good faith and, on their own initiative, safeguard the order of the securities market.

Article 5: The information reported and announced by the relevant parties involved in activities related to the takeover of a listed company must be true, accurate and complete and may not contain falsehoods, misleading statements or major omissions.

No person shall use the takeover of a listed company to disseminate false information, disturb the market order or engage in any other fraudulent activities.

Article 6: The takeover of listed companies may be performed using cash, legally negotiable securities and other payment methods provided for by laws or administrative regulations.

Article 7: The purchaser may not use the takeover of the listed company to prejudice the legitimate rights and interests of the target company or its shareholders.

Purchasers lacking the ability to actually perform on takeover obligations are prohibited from engaging in the takeover of listed companies. Takeover targets may not provide any financial assistance to their purchasers.

Article 8: The controlling shareholders and other persons with actual control of listed companies owe a fiduciary duty to the company they control and the other shareholders thereof.

Purchasers owe a fiduciary duty to the listed target company and its shareholders and shall provide an adequate and effective performance bond in respect of their specific undertakings.

Article 9: The directors, supervisors and senior management of listed companies owe a fiduciary duty to the company they serve and the shareholders thereof.

If one or more of the directors of a target company is replaced or resigns during the takeover, the company shall explain the reason therefor and make an announcement thereof.

Article 10: The China Securities Regulatory Commission (CSRC) will oversee the activities relating to the takeover of listed companies in accordance with the law.

Stock exchanges and securities registration and clearing institutions shall carry out routine oversight of activities related to the takeover of listed companies in accordance with the duties delegated by the CSRC and their rules for operation.

Article 11: The CSRC may establish a special committee comprised of professionals to put forward opinions on whether a specific transaction constitutes takeover of a listed company, how parties should perform their relevant obligations, whether the specific particulars of a transaction prejudice the target company's continued listing, and other relevant substantive and procedural matters.

PART TWO: RULES FOR TAKEOVER BY AGREEMENT

Article 12: A purchaser engaging in takeover of a listed company by agreement shall, on the day following the arrival at the takeover agreement, submit a listed company takeover report to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and publish a warning containing a summary of the takeover report.

If the CSRC has not raised objections to the takeover report within 15 days of the receipt thereof, the purchaser may announce the takeover report and perform the takeover agreement.

Article 13: For takeovers by agreement, if the percentage of the listed company's shares held or controlled by the purchaser has reached 30% of the company's issued shares and the purchaser wishes to continue increasing its shareholding or control, it shall use the takeover-by-offer method and tender an offer to all shareholders of such company offering to acquire their entire shareholdings. In circumstances conforming to those set out in Part Four hereof, the purchaser may apply to the CSRC for exemption. If an exemption is obtained, the purchaser may employ the takeover-by-agreement method.

Article 14: For takeovers by agreement, if the percentage of the listed company's shares that the purchaser intends to hold or control exceeds 30% of the company's issued shares, it shall use the takeover-by-offer method and tender an offer to all shareholders of such company offering to acquire their entire shareholdings. In circumstances conforming to those set out in Part Four hereof, the purchaser may apply to the CSRC for exemption. If an exemption is obtained, the purchaser may employ the takeover-by-agreement method.

Article 15: After the target company receives the purchaser's notice, the board of directors of the target company shall express an opinion, in a timely manner, on the effects on the company that the takeover might create. While participating in the formulation of the opinion of the board of directors, independent directors shall also express their individual opinions. If the board of directors considers it necessary, it may engage an independent financial consultant or other such professional organization to provide a consultative opinion. The opinions of the board of directors and the independent directors of the target company, as well as the opinion of the professional organization, shall be announced together.

In the case of takeover of a listed company by its management and staff, the independent directors of the target company shall express their opinions on the effects on the company that the takeover might create. The independent directors shall require that the company engage an independent financial consultant or other such professional organization to provide a consultative opinion. The consultative opinion and opinions of the board of directors shall be announced together. The financial consultant's fee shall be borne by the target company.

Article 16: For transactions involving the transfer of shares held by State-authorized organizations or shares the transfer of which is subject to administrative approval, the relevant parties in the takeover by agreement shall obtain approval from the relevant competent department prior to performing the takeover agreement.

Article 17: The relevant parties involved in a takeover by agreement shall apply for share transfer and registration of the change in ownership in accordance with the business rules and requirements of the stock exchange and securities registration and clearing institution.

If reporting and announcement obligations have not been performed or application has not been submitted in accordance with provisions, the stock exchange and the securities registration and clearing institution shall not process the share transfer and registration of the change in ownership.

Article 18: For takeovers of listed companies by agreement, the relevant parties shall entrust the securities registration and clearing organization to take temporary custody of the shares to be transferred and shall deposit the cash to be used for payment in the bank account designated by the securities registration and clearing institution.

Article 19: If the listed shares of a listed company are to be transferred by the method of takeover by agreement, resulting in the transferee gaining or possibly gaining actual control of such company, the following Measures shall be carried out:

(1) after announcement of the listed company takeover report, the relevant parties shall entrust a securities company to apply for share transfer and registration of change in ownership; the entrusted securities company shall apply to the stock exchange and the securities registration and clearing institution to suspend trading in the shares to be transferred and for temporary custody thereof. If trading is suspended and temporary custody effected, an announcement shall be made thereof;

the stock exchange may decide to suspend trading in the target company's listed shares based on market administration needs;

(2) the transferee shall announce the transfer agreement and the name of the entrusted securities company, and notify the listed company, on the day following the submission of the application to transfer shares;

(3) the stock exchange shall complete its examination and shall make a decision whether to confirm or not to confirm the transfer of shares applied for within three working days of its receipt of the application for transfer of shares;

(4) if the stock exchange confirms the transfer of shares applied for, the entrusted securities company shall, on behalf of both parties to the transfer, apply to the securities registration and clearing institution for registration of the change in ownership; the transferee shall make an announcement within two working days of the completion of the Measures for registration of the change in ownership;

if the stock exchange does not confirm the transfer of shares, the entrusted securities company shall, on the date of receipt of the stock exchange's notice, notify the two parties to the transfer and the target company of the non-confirmation decision and, on behalf of the two parties to the transfer, apply to the securities registration and clearing institution to release the relevant portion of the stocks from temporary custody; the transferor shall make an announcement within two working days of its gaining knowledge of the non-confirmation decision;

(5) after the completion of the Measures for the transfer of the shares and the registration of the change in ownership, the entrusted securities company shall, on behalf of the transferee, apply to the securities registration and clearing institution to release the relevant portion of the stocks from temporary custody, and the assignee shall make an announcement within two working days of the submission of the application to terminate custody, whereupon trading in the relevant portion of the shares on the stock exchange shall resume.

Article 20: When the controlling shareholder or another person with actual control of a listed company intends to transfer its actual control of the company, if such person has not yet discharged all of its liabilities to the company, or if the security that the company has provided for the person's debt(s) has not yet been released or if such person has otherwise prejudiced the interests of the company, the board of directors of the target company shall engage an auditing firm for the company to perform a special examination of the relevant matters and issue an examination report, and shall require that the controlling shareholder or other person with actual control proposes a feasible solution. The board of directors and the independent directors shall independently express their opinions as to whether the proposal is feasible. The examination report, the proposed solution and the opinions of the board of directors and the independent directors shall be announced together by the target company.

If the controlling shareholder or the other person with actual control mentioned in the preceding paragraph refuses to propose a solution, the board of directors and the independent directors shall take adequate and effective legal measures to safeguard the company's interests.

Article 21: If after obtaining the agreement of the CSRC and the stock exchange, shareholders of a listed company wish to sell their shares through public solicitation, they shall entrust a securities company to handle the matter on their behalf, and the specific Measures and requirements shall be governed by the business rules of the stock exchange.

Article 22: A purchaser's gaining or possible gaining of actual control of a listed company by virtue of its becoming a holder or gaining control of the shares of the company by lawful means such as administrative transfer of State-owned shares, court ruling, succession or gifting shall be handled pursuant to this part.

PART THREE: RULES FOR TAKEOVER OFFERS

Article 23: When the percentage of the shares of a listed company held or controlled by the purchaser reaches 30% of the issued shares of the company, the purchaser shall, on the day after such fact arises, submit a listed company takeover report to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and make an announcement. If the purchaser has failed to perform its reporting and announcement obligations in accordance with these Measures, it may not continue increasing its shareholding or control.

If the purchaser mentioned in the preceding paragraph continues to increase its shareholding or control, it shall use the takeover-by-offer method and tender an offer to all shareholders of the company offering to acquire their entire shareholdings. In circumstances conforming to those set out in Part Four hereof, the purchaser may apply to the CSRC for exemption.

If the purchaser mentioned in the preceding paragraph has already submitted and announced the listed company takeover report prior to the shares of the listed company that it holds or controls reaching 30% of the issued shares of said company, the purchaser may limit its submission and announcement to the sections of the current report that differ from those of the previous report.

Article 24: If a purchaser that holds or controls less than 30% of a listed company's listed shares uses the takeover by offer method to increase its holding, the percentage of shares scheduled for takeover may not be less than 5% and after the completion of the takeover, the percentage of shares held or controlled may not exceed 30%. If the percentage of shares scheduled for takeover exceeds 30%, the purchaser shall tender an offer to all shareholders of such company offering to acquire their entire shareholdings; in circumstances conforming to those set out in Part Four hereof, the purchaser may apply to the CSRC for exemption.

Article 25: A purchaser engaging in takeover of a listed company by means of takeover by offer shall submit a takeover-by-offer report to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and publish a warning containing a summary of the takeover-by-offer report.

The stock exchange may decide to suspend trading in the target company's listed shares based on market administration needs.

Article 26: The takeover-by-offer report shall contain the following particulars:

(1) the name and domicile of the purchaser;

(2) the decision of the purchaser concerning the takeover;

(3) the name of the listed company targeted;

(4) the purpose of the takeover;

(5) a detailed description of the shares to be acquired and the number of shares scheduled to be acquired;

(6) the time limit for and price of the takeover;

(7) the amount and guaranteed availability of the funds required for the takeover;

(8) the ratio between the total number of issued shares of the target company and the number of shares in such listed company held at the time of submission of the takeover-by-offer report;

(9) the follow-up plan for the period after completion of the takeover; and

(10) other particulars that the CSRC requires to be included.

Article 27: The purchaser shall state in the report whether it intends to delist the target company after completion of the takeover. If the purchaser intends to delist the target company, it shall make a special note of the fact in a conspicuous location within the takeover-by-offer report.

The purchaser shall state in the takeover-by-offer report whether the change in the distribution of the equity in the target company will prejudice the continuation of the company's listing. If it will prejudice the company's continued listing, the purchaser shall propose a specific plan for maintaining the company's listing.

Article 28: The purchaser shall retain a lawyer to examine and issue a written legal opinion on the truthfulness, accuracy and completeness of its takeover-by-offer report.

The purchaser shall engage a financial consultant or other such professional organization to assess the actual ability of the purchaser to perform the takeover obligations. The professional opinion of the financial consultant shall be announced.

Article 29: If the purchaser applies to cancel the takeover plan after submitting the takeover-by-offer report to the CSRC and prior to issuing the takeover offer, it may not engage in activities to acquire the same listed company within 12 months of the date of submission to the CSRC of the written application to cancel the takeover plan.

Article 30: If the CSRC has not raised objections to the takeover-by-offer report within 15 days of its receipt thereof, the purchaser may announce its takeover offer documents. If the CSRC raises objections, the purchaser shall rectify or supplement the relevant particulars. The time that the purchaser spends on rectification or supplementation will not be counted in the above-mentioned time.

Article 31: The board of directors of the target company shall engage, on the company's behalf, an independent financial consultant or other such professional organization to analyze the financial position of the target company and to provide professional opinions as to whether the terms of the takeover offer are fair and reasonable, the possible effects of the takeover on the company and other such matters, and shall announce the same.

In the case of takeover of a listed company by its management and staff, the independent directors of the target company shall engage, on the company's behalf, an independent financial consultant to analyze the financial position of the target company and to provide professional opinions as to whether the terms of the takeover offer are fair and reasonable, the possible effects of the takeover on the company and other such matters. The financial consultant's fee shall be borne by the target company.

Article 32: The board of directors of the target company shall submit the report of the target company's board of directors together with the independent financial consultant's professional opinions to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange and announce the same within 10 days of the issuance of the takeover offer by the purchaser.

The report by the board of directors of the target company shall provide advice to the shareholders as to whether to accept the takeover offer; the independent directors of the target company shall express their views separately and both the advice and the opinions shall be announced together.

If the purchaser makes major amendments to the terms of the takeover offer, the board of directors of the target company shall submit a supplementary report on the amendments; the independent directors shall express supplementary opinions and both the report and the opinions shall be announced together.

Article 33: The decisions made and measures taken by the directors, supervisors and senior management of the target company with respect to the takeover activities may not prejudice the legitimate rights and interests of the company or its shareholders.

After the purchaser publishes a warning, the board of directors of the target company may not propose the following matters, except in the course of continuing the performance of executed contracts and the implementation of adopted resolutions of the shareholders' general meeting:

(1) issuance of shares;

(2) issuance of convertible corporate bonds;

(3) repurchase of listed company shares;

(4) amendment of the company's articles of association;

(5) conclusion of contracts that could have a major effect on the company's assets, liabilities, rights, interests or business results, except in the company's ordinary course of business; or

(6) disposal or purchase of major assets or changes to the company's main business, except business or asset reorganization carried out when the company is facing major financial difficulties.

Article 34: The purchaser shall observe the following principles when determining the price of the takeover offer:

(1) the price for listed shares of the same class that are the subject of the takeover offer shall not be less than the higher of the following prices:

(a) the highest price that the purchaser paid for the target company's listed shares of that class during the six months prior to the date of publication of the warning;

(b) 90% of the arithmetic mean of the daily weighted average prices of the target company's listed shares of that class for 30 trading days prior to the date of publication of the warning.

(2) the price for non-listed shares that are the subject of the takeover offer shall not be less than the higher of the following:

(a) the highest price that the purchaser paid for non-listed shares of the target company during the six months prior to the date of publication of the warning;

(b) the target company's audited net asset value per share for the most recent period.

If under special circumstances there is a need to adjust the above-mentioned pricing principles, the purchaser shall obtain approval from the CSRC in advance. If the takeover price proposed by the purchaser is manifestly unfair, the CSRC may require the purchaser to make adjustment.

Article 35: If the purchaser is to make payments in cash, it shall, at the same time as publishing the warning, deposit and cause to be frozen a performance bond of not less than 20% of the total takeover amount into a bank account designated by the securities registration and clearing institution.

If the purchaser is to make payments by means of legally negotiable securities, it shall, at the same time as publishing the warning, deliver all the securities to be used for payment into the custody of the securities registration and clearing institution, with the exception of those that, according to the business rules of the securities registration and clearing institution, do not fall under the scope of custody.

If the purchaser cancels the takeover plan and no misconduct investigation is involved, it may apply to release the freeze on the performance bond or to release the securities from custody.

Article 36: The term of the takeover offer shall be no less than 30 days and may not exceed 60 days, unless a competing offer is made.

The purchaser may not revoke the takeover offer within the period thereof.

Article 37: If the purchaser wishes to amend the terms of the takeover offer during the period thereof, it must first file a written report with the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, and notify the target company; the purchaser may make the amendments only after approval of the CSRC and must make an announcement thereof.

Article 38: The purchaser may not amend the takeover offer less than 15 days prior to the expiration thereof, unless a competing offer is made.

If a competing offer is made and the initial offeror amends the terms of its takeover offer less than 15 days prior to the expiration thereof, the period shall be extended. The extended period may not be less than 15 days and may not continue past the date of expiration of the last competing offer.

Article 39: If there is a major change in any of the basic facts disclosed in the takeover-by-offer report, the purchaser shall submit a written report to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and make an announcement thereof within two working days of the occurrence of such change.

Article 40: The purchaser shall entrust a securities company to apply to the securities registration and clearing institution for temporary custody of the share certificates in respect of which the offer has been preliminarily accepted.

The share certificates in respect of which the offer has been preliminarily accepted that are in the temporary custody of the securities registration and clearing institution may not be negotiated in any way during the term of the takeover offer.

Article 41: Shareholders that have preliminarily accepted the offer have the right to withdraw their preliminary acceptance prior to the expiration of the offer. The securities registration and clearing institution shall release the share certificates in respect of which the offer has been preliminarily accepted from temporary custody based on the applications by the shareholders that preliminarily accepted the offer in respect of those shares.

The purchaser shall announce the number of shares in respect of which the offer has been preliminarily accepted and the number of shares in respect of which preliminary acceptance has been withdrawn on the stock exchange's website each day during the term of the takeover offer.

Article 42: Upon the expiration of the term of the takeover offer, the purchaser shall purchase, on the terms of the takeover offer, all the shares in respect of which the offer has been preliminarily accepted. If the quantity of shares in respect of which the offer has been preliminarily accepted exceeds the quantity of shares scheduled to be acquired, the purchaser shall acquire the shares in respect of which the offer has been preliminarily accepted in equal proportions.

Within three working days after expiration of the takeover offer, the entrusted securities company shall apply to the securities registration and clearing institution for share transfer settlement and change of ownership registration and for release of the shares in excess of the number scheduled to be acquired from temporary custody.

Article 43: The purchaser shall submit a written report on the takeover to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and make an announcement within three working days of the expiration of the takeover offer.

Article 44: From the time of publication of the warning until the expiration of the takeover offer, the purchaser may not buy or sell target company shares in a manner other than through the takeover offer or on terms beyond those of the offer.

Article 45: If competing offers are made, the board of directors of the target company shall treat all takeover offerors fairly.

Article 46: If a purchaser intends to issue a competing offer, it shall submit a takeover-by-offer report to the CSRC, submit duplicates thereof to the CSRC agency of the place where the listed company is located and the stock exchange, notify the target company and publish a warning containing a summary of the takeover-by-offer report no later than five days prior to the expiration of the initial offer. If the CSRC has not raised objections to the takeover-by-offer report within 15 days of the receipt thereof, the purchaser may announce its takeover offer documents.

Article 47: If a purchaser intends on an ongoing basis to publicly request to purchase the shares held by the shareholders of the same listed company, thereby causing such listed company's shares held or controlled by the purchaser upon completion of such purchases to reach or exceed 5% of the company's issued shares, such purchases constitute a takeover by offer and the purchaser shall observe the takeover-by-offer rules of these Measures.

PART FOUR: EXEMPTION FROM TAKEOVER-BY-OFFER OBLIGATIONS

Article 48: In situations conforming with Article 49 or Article 51 hereof, the purchaser may apply to the CSRC for the following exemptions.

(1) exemption from the obligation to increase its shareholding by means of the takeover-by-offer method;

(2) exemption from the obligation to issue a takeover offer to all shareholders of the target company;

(3) exemption from the obligation to offer for all the shares of the target company.

Article 49: The purchaser may apply to the CSRC for exemption in any of the following situations:

(1) listed company shares are transferred between different entities that are actually controlled by the same person, the person actually controlling the listed company after the share transfer remains unchanged and the transferee has undertaken to perform the sponsor obligations;

(2) the listed company is facing serious financial difficulties, and the purchaser is taking over the company to rescue it and has proposed a feasible restructuring plan;

(3) the listed company is issuing new shares according to the resolution of its shareholders' general meeting, resulting in the percentage of shares held or controlled by the purchaser exceed to 30%;

(4) the transfer of shares is applied for on the basis of a court ruling and results in the percentage of shares held or controlled by the purchaser exceeding 30% of the listed company's issued shares; or

(5) other situations determined by the CSRC in order to meet the needs of the development of and changes in the securities market and the need to protect the legitimate rights and interests of investors.

Article 50: When a purchaser applies to the CSRC for exemption, if the application conforms with the stipulated requirements and the purchaser has performed the information disclosure obligations in accordance with provisions, the CSRC will decide to accept the application. If the application does not conform with the stipulated requirements or the purchaser has not performed the information disclosure obligations, the CSRC will not accept the application.

The CSRC will make a decision whether to grant the specific exemptions applied for by the purchaser within three months of its receipt of the application. Applicants that obtain exemption may continue increasing their shareholdings or control.

Article 51: The relevant party may submit exemption application documentation to the CSRC:

(1) if it is a shareholder that lawfully holds or controls not less than 50% of the shares of a listed company and intends to increase its shareholding or control, where the total shares held or controlled after the increase will not exceed 75%;

(2) if the decrease of a listed company's share capital has caused the party to hold or control more than 30% of the company's issued shares;

(3) if it is a securities company whose engagement in normal underwriting business has caused its holding of a listed company's issued shares to exceed 30% but the securities company does not act or intend to actually control the company and it has proposed a solution in the form of transferring the excess shares to one or more non-affiliated parties within a reasonable time;

(4) if it is a bank whose engagement in normal banking business has caused its holding of a listed company's issued shares to exceed 30% but there is no action or intent to actually control the company and the bank has proposed a solution in the form of transferring the excess shares to one or more non-affiliated parties within a reasonable time;

(5) if the administrative transfer of State-owned shares has caused the party to hold or control more than 30% of a listed company's issued shares;

(6) if lawful succession has caused the party to hold or control more than 30% of a listed company's issued shares; or

(7) in other situations determined by the CSRC in order to meet the needs of the development of and changes in the securities market and the need to protect the legitimate rights and interests of investors.

If the CSRC has not raised any objections within five working days of the date of its receipt of the application documents conforming to the provisions, the party may apply to the stock exchange and the securities registration and clearing institution for share transfer and change of ownership registration.

Article 52: The takeover offer issued by the purchaser shall apply to all shareholders of the target company, but the purchaser may apply to the CSRC for exemption if there are restrictions in terms of the qualifications to act as a party or in terms of the class of shares, or if there are other special circumstances stipulated by laws, administrative regulations or rules.

Article 53: If the purchaser is applying for exemption, it shall engage a law firm to issue a written legal opinion on the specific exemptions applied for. If the purchaser is applying for exemption pursuant to Item (2) or (3) of Article 49 hereof, it shall engage a financial consultant or other such professional organization to issue a professional opinion.

PART FIVE: SUPERVISORY MEASURES AND LEGAL LIABILITY

Article 54: If a purchaser holds or controls more than 30% of the issued shares of a listed company in violation of these Measures, it shall rectify the matter on its own initiative. If it fails to make rectifications, the stock exchange shall handle the matter according to its business rules. If the purchaser refuses to make rectifications, the CSRC will order it to rectify the matter. Prior to making rectifications, the purchaser may not appoint directors, supervisors or members of the senior management of the target company. During the time that the rectifications are being made, the CSRC will not accept documents issued for the purchaser by any professional organization.

Article 55: If the purchaser has failed to perform reporting and announcement obligations pursuant to these Measures, it shall rectify the matter on its own initiative. If it fails to make rectifications, the stock exchange shall handle the matter according to its business rules. If the purchaser refuses to make rectifications, the CSRC will order it to rectify the matter and suspend the takeover activities. Prior to making rectifications, the purchaser may not appoint directors, supervisors or members of the senior management of the target company. During the time that the rectifications are being made, the CSRC will not accept documents issued for the purchaser by any professional organization. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

Article 56: If a report, announcement or other such document of the purchaser contains any falsehoods, misleading statements or major omissions, the purchaser shall rectify the matter on its own initiative. If it fails to make rectifications, the stock exchange shall handle the matter according to its business rules. If the purchaser refuses to make rectifications, the CSRC will order it to rectify the matter and suspend the takeover activities. Prior to making rectifications, the purchaser may not appoint directors, supervisors or members of the senior management of the target company. During the time that the rectifications are being made, the CSRC will not accept documents issued for the purchaser by any professional organization. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

Article 57: When the controlling shareholder or another person with actual control of a listed company intends to transfer its actual control of the company, if it has not yet discharged all of its liabilities to the company, or if the security that the company has provided for it has not yet been released or if it has not rectified any other prejudice it has caused to the interests of the company, it shall rectify the matter on its own initiative. If it fails to make rectifications, the board of directors and the independent directors of the target company shall take adequate and effective legal measures to cause it to make the rectifications, and the stock exchange shall handle the matter according to its business rules. If the shareholder or other person refuses to make rectifications, the CSRC will order it to rectify the matter and suspend the takeover activities. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

If the board of directors and/or the independent directors fail to take the measures specified in the preceding paragraph, the stock exchange shall handle the matter according to its business rules. If the board of directors and/or the independent directors refuse to take measures, the CSRC will order it or them to make rectifications. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

Article 58: If a document issued or provided for a listed company by a professional organization or a professional that issues documents such as asset appraisal reports, audit reports, legal opinions and documents providing financial consultant's advice for purposes of listed company takeovers, contains falsehoods, misleading statements or major omissions, such organization or professional shall rectify the matter on its or his own initiative. If the organization or professional fails to make rectifications, the stock exchange shall handle the matter according to its business rules. If the organization or professional refuses to make rectifications, the CSRC will order it or him to rectify the matter. During the time that the rectifications are being made, the CSRC will not accept documents issued by them. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

Article 59: If any employee with information on the takeover of a listed company discloses the takeover information, buys or sells the listed company's securities or advises others to buy or sell the listed company's securities before information on the takeover is made public according to law, or uses the takeover of a listed company to spread false information or to engage in fraudulent activities, his legal liability shall be pursued according to law.

If the takeover of a listed company is used to engage in other improper activities, the parties shall rectify the matter on their own initiative. If the parties fail to make rectifications, the stock exchange shall handle the matter according to its business rules. If the parties refuse to make rectifications, the CSRC will order them to rectify the matter. If the matter constitutes illegal securities activity, legal liability shall be pursued according to law.

PART SIX: SUPPLEMENTARY PROVISIONS

Article 60: The number of a listed company's issued shares held or controlled by a person holding or controlling shares, or persons acting in concert, that is or are engaged in the takeover of such company shall be calculated collectively.

Article 61: A purchaser shall be considered to have actual control of a listed company:

(1) if it is the largest shareholder in the listed company's register of shareholders, unless there is evidence to the contrary;

(2) if it is able to exercise or control more voting rights in the listed company than the largest shareholder in the company's register of shareholders;

(3) if the percentage of shares or voting rights in the listed company held or controlled by it reaches or exceeds 30%, unless there is evidence to the contrary;

(4) if it is able to decide the election of more than half of the members of the board of directors by means of exercising its voting rights; or

(5) in other circumstances determined by the CSRC.

Article 62: For the purposes of these Measures, the following terms have the meanings ascribed to them below:

(1) "Takeover offer" means a declaration of intent issued publicly by the purchaser to shareholders of the target company, in which it expresses its willingness to purchase their shares in the target company on the terms of the offer.

(2) "Preliminary acceptance" means an offeree's preliminary declaration of his intent to agree to accept the offer, and does not constitute acceptance until the expiration of the offer.

(3) The terms "shareholders", "persons controlling shares" and "persons acting in concert" have the meanings ascribed thereto in the Administration of Disclosure of Information on the Change of Shareholdings in Listed Companies Measures.

Article 63: The formats and contents of listed company takeover reports, takeover-by-offer reports, target company's board of directors' reports and application documents for exemption from takeover-by-offer will be determined separately by the CSRC.

Article 64: These Measures shall be implemented from December 1 2002.