Handling of the Transfers of Non-tradable Shares of Listed Companies Rules1

The CSDCC shall be responsible for such activities related to share transfers as handling share inquiries, temporary custody and registration of ownership transfers. The CSDCC shall deal with the relevant shares in temporary custody by keeping them locked up.

Article 4: The parties to a share transfer may reach a non-tradable share transfer agreement by means of publicizing share transfer information. They may also reach an agreement through non-public means and carry out share transfer procedures in accordance with these Rules.

Where parties to a share transfer entrust a securities company to carry out share transfer procedures on their behalf, the entrusted securities company shall also submit the following documents to the Stock Exchange and the CSDCC respectively:

(1) a power of attorney issued by the entrusting party;

(2) a photocopy of the business licence of the securities company affixed with the company¡¯s seal;

(3) a power of attorney issued by the securities company; and

(4) the original and a photocopy of the identification certificate of the broker.

Article 5: Before a shareholder transfers its non-tradable shares, it shall submit to the CSDCC an application for making an inquiry about the shares intended to be transferred together with the following documents:

(1) a share inquiry application form;

(2) the original and a photocopy of the securities account card of the shareholder;

(3) the original and a photocopy of the valid identification certificate of the shareholder. Where a shareholder is a legal person, a duplicate and photocopy of the business licence must be submitted, as well as the power of attorney for the broker, and the original and a photocopy of the valid identification certificate of the broker; and

(4) other documents as required by the CSDCC.

In the case of a takeover involving a listed company where a shareholder transfers shares by means of public share transfer information, the shareholder shall also apply for temporary custody of the shares intended to be transferred.

Article 6: The CSDCC shall carry out verification regarding the formats of the aforementioned share inquiry and temporary custody application materials and if they comply with requirements, carry out an inquiry into and grant temporary custody of the corresponding shares (the interest incurred during the temporary custody period shall be excluded), and issue a share certificate and temporary custody confirmation letter.

During the temporary custody of the shares, the CSDCC shall no longer accept applications from the shareholder for pledges on its shares in temporary custody or for using the shares for other purposes.

Where a judicial authority takes judicial enforcement measures against all or part of the shares in temporary custody, the CSDCC shall, on the basis of the requirements of the relevant judicial enforcement document, release the corresponding shares from temporary custody and notify the Stock Exchange.

Article 7: After a share transfer agreement has been reached, the parties to the share transfer shall apply to the Stock Exchange for confirmation that their share transfer complies with regulations and shall submit the following documents:

(1) a share transfer confirmation application form;

(2) the original of the share transfer agreement;

(3) the original and a photocopy of the valid identification certificates of the parties to the share transfer; in the case of a legal person, it must provide a duplicate and photocopy of its business licence, the power of attorney for the broker and the original and a photocopy of the valid identification certificate of the broker;

(4) the share certificate and share temporary custody confirmation letter for the shares intended to be transferred issued by the CSDCC;

(5) the securities account cards of the parties to the share transfer;

(6) a public announcement on the current share transfer (applicable to shares transferred that reach 5% or more of the total share capital of a listed company);

(7) where there is a takeover by agreement, the takeover fund deposit certificate issued by the clearing bank of the CSDCC (the payment arrangements in the share transfer agreement shall prevail); and

(8) other documents as required by the Stock Exchange.

Article 8: The Stock Exchange shall carry out verification regarding the formats of the transfer application materials, and render a decision on whether or not to confirm the share transfer within three working days of receiving such application. Where supplementary documents are required from related parties, the time for the supplementary documents will not be calculated within the verification period.

Article 9: After obtaining a confirmation document for the share transfer from the Stock Exchange, the parties to the share transfer shall apply to the CSDCC to carry out procedures for ownership transfer registration in respect of the share transfer and registration of a change in the nature of the shares (if necessary), and shall submit the following documents:

(1) an application form for ownership transfer registration in respect of a share transfer;

(2) the original of the share transfer agreement;

(3) the share transfer confirmation issued by the Stock Exchange;

(4) the original and a photocopy of the valid identification certificates of the parties to the share transfer; in the case of a legal person, a duplicate and photocopy of the business licence must be provided, as well as the power of attorney for the broker and the original and a photocopy of the valid identification certificate of the broker;

(5) the original and a photocopy of the securities account cards of the parties to the share transfer;

(6) where there is a takeover by agreement, the takeover fund deposit certificate issued by the clearing bank of the CSDCC (the payment arrangements in the share transfer agreement shall prevail); and

(7) other documents required by the CSDCC for submission.

Article 10: Where there is a change in the nature of the shares held by a shareholder due to a restructuring, etc., the shareholder shall apply to the Stock Exchange and the CSDCC respectively to carry out procedures for confirmation of the change in nature of the shares and to change the registration; if the ratio of the shares involved reaches or exceeds 5% of the total share capital of the listed company, information disclosure obligations shall be performed.

Article 11: Where a shareholder transfers its non-tradable shares, and the following circumstances arise, the following documents shall be submitted to the Stock Exchange and the CSDCC when handling confirmation of the share transfer and registration of ownership transfer:

(1) where a sponsor¡¯s shares are involved, a photocopy of the listed company¡¯s business licence affixed with the listed company¡¯s seal must be provided;

(2) where state-owned shares are involved, an approval document from the state-owned assets supervision and administration authority must be provided;

(3) in case of a share transfer involving foreign investors, an approval document from the Ministry of Commerce and a foreign investor payment voucher must be provided;

(4) where there is a change in the shareholding of a shareholder of a banking-type listed company reaching or exceeding 10% of the total share capital, an approval document from the China Banking Regulatory Commission must be provided;

(5) where there is a change in the shareholding of a shareholder of an insurance-type listed company reaching or exceeding 10% of the total share capital, an approval document from the China Insurance Regulatory Commission must be provided;

(6) where there is a takeover of a listed company, a document of no objection from the CSRC must be provided, where an obligation for a takeover offer is triggered, a document exempting takeover offers or a document of no objection to the takeover offer from the CSRC shall be provided; and

(7) for other share transfers that require administrative approval, an approval document from the relevant competent department must also be provided.

Article 12: In case of a shareholder that intends to transfer shares by means of public share transfer information, regardless of whether it entrusts a securities company to submit or itself submits an application to the Stock Exchange, the Stock Exchange shall centrally arrange the publishing of the public share transfer information. The related information shall be disclosed through media designated by the Stock Exchange and approved by the CSRC.

When a holder of state-owned shares applies itself, or entrusts a securities company to apply, to the Stock Exchange to disclose public share transfer information, it shall submit the record filing document issued by the state-owned assets supervision and administration authority to the Stock Exchange.

Article 13: Share transfer information that is publicized shall include particulars such as the name of the listed company concerned with the shares intended to be transferred, the nature of the non-tradable shares intended to be transferred, the quantity of shares intended to be transferred, and the proportion of total share capital of the relevant listed company that the shares account for, the temporary custody period for the shares intended to be transferred and the deadline for submission of the application for accepting the transfer; where a securities company is entrusted to submit the application, it shall also provide the name and means of contacting the securities company; where a shareholder applies itself, communication shall be carried out through the Stock Exchange.

The contents of the publicized information on share transfers may not include the price conditions for the shares to be transferred.

Article 14: Information on the transfer of state-owned shares that is publicized shall be disclosed in accordance with the requirements of the state-owned asset supervision and administration authority, in addition to the preceding article.

Article 15: Where a securities company is entrusted to submit an application for accepting a transfer to the Stock Exchange, after the entrusted securities company has received such application, it shall assist the entrusting party to reach a share transfer agreement, and handle the procedures for confirmation of the share transfer and ownership transfer registration on its behalf in accordance with these Rules; where a shareholder applies itself, after the share transfer agreement has been reached, it shall handle the share transfer confirmation and ownership transfer registration procedures in accordance with these Rules.

Article 16: The temporary custody of the shares intended to be transferred shall be terminated upon completion of the ownership transfer registration in respect of the share transfer. Where the quantity on completion of the ownership transfer registration is less than the portion of shares in temporary custody, the completed portion shall be released from temporary custody and the remaining portion shall continue to be kept in temporary custody until the remaining portion of ownership transfer registration has been totally completed or the temporary custody period for the shares has expired.

Article 17: Shareholders may submit to the Stock Exchange, either through a securities company or by themselves, a cancellation or termination of their application for share transfer by means of public share transfer information, provided that they disclose the related particulars; within six months of the date on which the Stock Exchange agrees to such cancellation or termination of application, it will not accept the shareholder¡¯s application for a share transfer by means of public share transfer information.

Shareholders shall apply to the CSDCC to terminate the temporary custody of relevant shares on the strength of the document showing that the Stock Exchange has agreed to its application for cancellation or termination.

Article 18: Parties that undertake an obligation to disclose information in accordance with the law shall, after the procedures related to the share transfer have been completed or the share temporary custody period has expired, make an announcement in respect of the relevant circumstances.

When an entrusted securities company handles matters related to share transfers and publicizing information, it shall check the veracity and accuracy of the documents provided by the parties to the share transfer, and urge them to promptly perform the information disclosure obligations in accordance with the provisions.

Article 19: Where share transfer procedures are carried out in relation to the enforcement of a judicial ruling, the enforcement authority shall provide documents such as a judicial ruling and enforcement assistance document, and the Stock Exchange and the CSDCC shall handle the related procedures; however if the documents provided are incomplete or do not set out clearly the specific enforcement matters, the Stock Exchange and the CSDCC may carry out the share transfer procedures only when the documents are complete.

Where a transfer in share ownership arises due to an inheritance or gift or where a transfer of share ownership is carried out after the shareholder has lost its legal person status due to dissolution, bankruptcy or an order to close in accordance with the law, and, the applicant shall provide documents such as a valid share ownership certificate, and carry out the relevant procedures in accordance with the relevant provisions of the Stock Exchange and the CSDCC.

Article 20: The quantity of shares transferred or accepted for transfer for which a shareholder or transferee makes an application must not be lower than 1% of the total share capital of a listed company; where a shareholder whose shareholding is less than 1% submits a transfer application, it shall transfer all its shares to a single transferee. Where the total share capital of a listed company is Rmb1 billion or more, with the consent of the Stock Exchange, the aforementioned ratio may be appropriately reduced.

Within one month after the transfer of share ownership has been completed, the Stock Exchange and the CSDCC will not accept another application for a transfer from the same share transferee in respect of the same shares accepted from the transfer, unless laws, regulations, etc. provide otherwise.

Article 21: In case of share transfer applications that are not carried out in accordance with these Rules, the Stock Exchange has the right not to confirm such share transfers and the CSDCC has the right not to handle the procedures for registration of a change in the nature of the shares and registration of ownership transfer.

Article 22: Share transfer activities of listed companies shall comply with the principles of voluntariness, consideration and good faith. Entrusted securities companies that apply to handle matters related to share transfers and publicizing information at the Stock Exchange and the CSDCC may refer to current fee charging methods for securities industry investment consulting and the issue and distribution business and charge the entrusting parties reasonable fees.

Parties to share transfers shall pay procedural fees for share transfer and ownership transfer registration in accordance with the charge provisions related to share transactions of the Stock Exchange and the CSDCC and pay stamp tax in accordance with the relevant state regulations.

Article 23: Where a transfer of non-tradable shares of listed companies involves foreign investors, it shall be carried out in accordance with the provisions related to the transfer of state-owned shares and legal person shares of listed companies to foreign investors.

Article 24: These Rules shall be jointly interpreted by the Stock Exchange and the CSDCC.

Article 25: These Rules shall become effective following the approval of the CSRC, and likewise at the time of amendments hereto. These Rules are effective from January 1 2005.

1 Translated by A. Allen & Associates Ltd.