Further Regulation of Work Related to Initial Public Offerings and Listings Circular

1. From January 1 2004, Issuers shall apply for an initial public offering and listing no less than three years from the date of establishment of a company limited by shares.

Companies limited by shares established following the overall restructuring of a State-owned enterprise, companies limited by shares established following lawful, overall changes in a limited liability company, or Issuers approved by the State Council to be exempt from the time limit prescribed in the preceding paragraph, may be exempt from the time limit restrictions prescribed in the preceding paragraph.

2. Issuers that apply for an initial public offering and listing must have continued operation in the same business during the past three years without experiencing changes in the actual controlling party or major changes in the management. Where an Issuer's business has undergone major changes due to a major purchase, sale, asset replacement, company merger or division, major increase or decrease in investment or other major asset reorganization activity, the Issuer may apply for an offering and listing only after three years following completion of the relevant activity.

3. In addition to complying with the requirements of the Investigation of the Restructuring of an Enterprise Planning an Offering and Listing Circular (Zheng Jian Fa Zi [1998] No.259) and achieving personnel independence, asset integrity and financial independence, Issuers that apply for an initial public offering and listing must also comply with the following requirements:

(1) they do not compete in the same industry with the controlling shareholder (or actual controlling party) or its wholly-owned enterprises or enterprises in which it holds a controlling interest;

(2) they have the capacity to independently operate directly in the market and, in the past year or recent period, the trading volume in terms of product (or service) sales or raw material (or service) purchases of the Issuer and the controlling shareholder (or actual controlling party) and its wholly-owned enterprises or enterprises in which it holds a controlling interest has accounted for a ratio of no more than 30% of the Issuer's revenue from the main businesses or the amount for purchase of raw materials (or services) from outside parties;

(3) they have a complete business system and, in the past year or recent period, the amount of product (or service) sales or raw material (or service) purchases of the controlling shareholder (or actual controlling party) and its wholly-owned enterprises or enterprises in which it holds a controlling interest entrusted by the Issuer has accounted for no more than a ratio of 30% of the Issuer's revenue from the main businesses or the amount for purchase of raw materials (or services) from outside parties;

(4) they have the assets necessary for carrying out production and operation and, in the past year or recent period, the revenue generated from production and operation by contracting, entrusted operation, leasing or other similar methods, in reliance on the assets of the controlling shareholder (or actual controlling party) and its wholly-owned enterprises or enterprises in which it holds a controlling interest, has not exceeded 30% of the revenue from their main businesses;

(5) the chairman and deputy chairman of the board of directors, the general manager and deputy general manager, the person responsible for finances and the secretary of the board of directors have not served in an administrative post, other than director, in a controlling shareholder (or actual controlling party) nor received a salary from a controlling shareholder (or actual controlling shareholder); and

(6) there are no other serious drawbacks with respect to their independence.

4. Issuers must establish an independent director system with reference to the Establishment of Independent Director Systems by Listed Companies Guiding Opinion. When applying for an initial public offering and listing, at least one third of the members of the board of directors must include independent directors, including at least one accounting professional ("accounting professional" means a person with a senior title or registered accountant qualification.)

5. Issuers must have a clear purpose for the use of the funds raised in an initial public offering, must carefully discuss investment projects, and the amount of funds raised must not exceed twice the Issuer's audited net asset value at the end of the previous year.

6. The related requirements for relevant listed companies shall be formulated separately.

This Circular is effective as of October 1 2003 and is not applicable to Issuers examined and verified by the Public Offering and Listing Review Committee of the China Securities Regulatory Commission prior to October 1 2003.