Measures for the Administration of Strategic Investments in Listed Companies by Foreign Investors

(Promulgated by the Ministry of Commerce, the China Securities Regulatory Commission, the State Administration of Taxation, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange on December 31 2005 and effective 30 days from the date of promulgation.)

Order of the Ministry of Commerce, the China Securities Regulatory Commission, the State Administration of Taxation, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange [2005] No.28

Article 1: These Measures have been formulated in accordance with the requirements of theGuiding Opinions on the Reform Regarding the Separation of Equity Ownership and Trading Rights of Listed Companies and pursuant to state laws and regulations on foreign investment and the regulation of listed companies and the Tentative Provisions for the Acquisition of Domestic Enterprises by Foreign Investors in order to regulate strategic investments in A-share listed companies (Listed Companies) by foreign investors after the reform regarding the separation of equity ownership and trading rights (Reform), maintain order in the securities market, attract advanced management expertise, technology and funds from abroad, improve the governance structure of Listed Companies and protect the lawful rights and interests of Listed Companies and shareholders.

Article 2: These Measures shall apply to medium and long-term strategic acquisition investments of a certain size (Strategic Investments) made by foreign investors (Investors) in Listed Companies that have completed the Reform and companies newly listed after the Reform and the obtaining of A-shares of such companies as a result of such investments.

Article 3: Subject to the approval of the Ministry of Commerce, Investors may make Strategic Investments in Listed Companies in accordance with these Measures.

Article 4: A Strategic Investment shall conform with the following principles:

(1) compliance with state laws, regulations and relevant industrial policies, and not harming national economic security or the public interest;

(2) upholding the principles of transparency, impartiality and fairness, protecting the lawful rights and interests of the Listed Company and its shareholders and being subject to the supervision of the government and the public and the judicial and arbitration jurisdiction of China;

(3) encouragement of medium and long-term investment, maintaining the normal order of the securities market, and not engaging in speculation; and

(4) not hindering fair competition, or resulting in excessive concentration or the elimination or restriction of competition in the market for the relevant product in China.

Article 5: When an Investor wishes to make a Strategic Investment, it shall comply with the following requirements:

(1) obtaining the A-shares of the Listed Company through a transfer by agreement, private placement with the new shareholder by the Listed Company or other method specified in state laws and regulations;

(2) for an investment made in stages, the percentage of shares held after the initial investment may not be lower than 10% of the outstanding shares of the Listed Company, unless otherwise provided by special provisions for particular industries or approved by the relevant competent department;

(3) the A-shares of the Listed Company obtained may not be transferred for a period of three years;

(4) for industries in respect of which laws and regulations expressly provide for the shareholding percentage that may be accounted for by foreign investment, the percentage of shares held by an Investor in such industry shall comply with relevant provisions; an Investor may not invest in a Listed Company in a sector in which laws or regulations prohibit foreign investment; and

(5) if a holder of state-owned shares of a Listed Company is involved, provisions on the administration of state-owned assets shall be complied with.

Article 6: An Investor shall satisfy the following requirements:

(1) being a foreign legal person or other organization established and operating in accordance with the law, with stable finances, good creditworthiness and mature management expertise;

(2) having total actual assets abroad of not less than US$100 million or managing total actual assets abroad of not less than US$500 million; or its parent company having total actual assets abroad of not less than US$100 million or managing total actual assets abroad of not less than US$500 million;

(3) having a sound governance structure, good internal control systems and compliant business operations; and

(4) not having been subject to a major penalty imposed by the regulatory authorities in China or abroad during the most recent three years (including its parent company).

Article 7: A Strategic Investment made by way of a private placement by a Listed Company shall be handled in accordance with the following procedure:

(1) passage of a resolution by the board of directors of the Listed Company on the private placement of new shares with the Investor and the draft amended articles of association of the company;

(2) passage of a resolution by the shareholders' general meeting of the Listed Company on the private placement of new shares with the Investor and the amended articles of association of the company;

(3) execution of a private placement contract by the Listed Company and the Investor;

(4) submission by the Listed Company to the Ministry of Commerce of relevant application documents in accordance with Article 12 hereof (if there are special provisions, such provisions shall apply);

(5) after obtaining the official reply granting approval in principle from the Ministry of Commerce in respect of the Investor's Strategic Investment in the Listed Company, the Listed Company will submit to the China Securities Regulatory Commission the application documents for the private placement and the China Securities Regulatory Commission will examine and approve it in accordance with the law;

(6) once the private placement is completed, the Listed Company will collect its foreign-invested enterprise approval certificate from the Ministry of Commerce and then carry out the procedures for amendment of its registration with the administration for industry and commerce on the strength of the approval certificate.

Article 8: A Strategic Investment made by way of a transfer by agreement shall be handled in accordance with the following procedure:

(1) passage of a resolution by the board of directors of the Listed Company on the Investor making a Strategic Investment by way of a transfer by agreement;

(2) passage of a resolution by the shareholders' general meeting of the Listed Company on the Investor making a Strategic Investment by way of a transfer by agreement;

(3) execution of a share transfer agreement by the transferor and the Investor;

(4) submission by the Investor to the Ministry of Commerce of relevant application documents in accordance with Article 12 hereof (if there are special provisions, such provisions shall apply);

(5) if the Investor takes an equity stake in the Listed Company, once it has obtained the aforementioned approval, it will carry out with the stock exchange the procedures for the confirmation of the share transfer, then carry out with the securities depository and clearing institution the procedures for registration and transfer of ownership and report the same to the China Securities Regulatory Commission for the record; and

(6) once the transfer by agreement is completed, the Listed Company will collect its foreign-invested enterprise approval certificate from the Ministry of Commerce and then carry out the procedures for amendment of its registration with the administration for industry and commerce on the strength of the approval certificate.

Article 9: If the transfer by agreement contemplated by the Investor would give it de facto control of the Listed Company, after obtaining approval following Items (1), (2), (3) and (4) of Article 8, it shall submit to the China Securities Regulatory Commission a Listed Company takeover report and relevant documents. Following the examination without objection of the China Securities Regulatory Commission, it shall carry out with the stock exchange the procedures for confirmation of the share transfer and, with the securities depository and clearing institution, the procedures for registration and transfer of ownership. Once it has completed the foregoing procedures, it shall carry out the procedures specified in Item (6) of Article 8.

Article 10: When an Investor makes a Strategic Investment in a Listed Company, it shall perform its reporting, announcement and other statutory obligations in accordance with the Securities Law and the relevant provisions of the China Securities Regulatory Commission.

Article 11: Further Strategic Investments by an Investor in a Listed Company in which it already holds shares shall be handled by the method and in accordance with the procedures specified in these Measures.

Article 12: The Listed Company or the Investor shall submit the following documents to the Ministry of Commerce:

(1) a Strategic Investment application (see Appendix 1 for the format);

(2) a Strategic Investment plan (see Appendix 2 for the format);

(3) the private placement contract or share transfer agreement;

(4) the opinion of the sponsor (in the case of a private placement) or legal opinion;

(5) the Investor's undertaking that it will continue to hold the shares;

(6) a declaration by the Investor that it has not been subjected to a major penalty imposed by regulatory authorities in China or abroad, and a statement on whether it has been subjected to other, non-major penalties;

(7) the proof of registration of the Investor and the proof of identity of the legal representative or authorized representative notarized and certified in accordance with the law;

(8) the balance sheets of the Investor for the last three years audited by a certified public accountant;

(9) all of the documents in Items (1), (2), (3), (5) and (6) above shall be signed by the Investor's legal representative or authorized representative, and if they have been signed by an authorized representative, the power of attorney signed by the legal representative and the relevant notarization and certification documents shall additionally be submitted; and

(10) other documents specified by the Ministry of Commerce.

With respect to the documents specified in the preceding paragraph, the original Chinese language versions of those specified in the items other than Items (7) and item (8) must be submitted, and the originals and a Chinese translation of those in Items (7) and (8) must be submitted.

The Ministry of Commerce shall issue its official reply of approval in principle within 30 days of receipt of all of the aforementioned documents, which shall be valid for 180 days.

Article 13: A foreign company (the Parent Company) that satisfies the provisions of Article 6 hereof may make its Strategic Investment via a wholly owned subsidiary abroad (the Investor). In such case, the Investor shall submit to the Ministry of Commerce an irrevocable undertaking from its Parent Company that it will bear joint and several liability for the acts of the Investor, in addition to the documents specified in Article 9 hereof.

Article 14: The Investor shall open a foreign exchange account in accordance with the provisions on acquisitions made by foreign investors within 15 days of the date of the official reply granting approval in principle of the Ministry of Commerce. The Investor shall, in accordance with relevant provisions on foreign exchange control, apply to the foreign exchange bureau of the place where the Listed Company is located to open a foreign investor's dedicated foreign exchange account (acquisition type) for the foreign exchange funds that it is to remit into China to make the Strategic Investment. The procedures for the foreign exchange settlement of the funds in the account and for the closing of the account shall be carried out with reference to relevant foreign exchange control provisions.

Article 15: An Investor may carry out relevant procedures with the securities depository and clearing institution on the strength of the approval document from the Ministry of Commerce for the Strategic Investment in the Listed Company by the Investor and a valid proof of identity.

The securities depository and clearing institution may open a securities account for the Investor's non-tradable shares obtained prior to the Listed Company's Reform or the shares held by it prior to the Listed Company's initial public offering pursuant to an application by the Investor.

The securities depository and clearing institution shall formulate commensurate provisions based on these Measures.

Article 16: An Investor shall initiate its Strategic Investment within 15 days of the date of settlement of its foreign exchange funds, and complete the same within 180 days from the date of the official reply granting approval in principle.

If an Investor fails to complete its Strategic Investment based on its Strategic Investment plan within the prescribed period of time, the official reply granting approval in principle of the examination and approval authority shall automatically become void. The Investor shall, subject to the approval of the foreign exchange bureau, purchase foreign exchange for the renminbi proceeds obtained from the settlement of foreign exchange and remit the same out of China within 45 days of the date of the official approval becoming void.

Article 17: Once a Strategic Investment is completed, the Listed Company shall collect its foreign-invested enterprise approval certificate from the Ministry of Commerce on the strength of the documents set forth below within 10 days:

(1) an application;

(2) the official reply from the Ministry of Commerce granting approval in principle;

(3) the shareholding certificate issued by the securities depository and clearing institution;

(4) the Listed Company's business licence and the proof of identity of its legal representative; and

(5) the Listed Company's articles of association.

Within five days of the date of receipt of all of the aforementioned documents, the Ministry of Commerce shall issue the foreign-invested enterprise approval certificate bearing the notation "foreign-invested company limited by shares (A-share acquisition)".

If the Investor has obtained at least 25% of a single Listed Company and undertakes to maintain its shareholding at at least 25% for 10 years, the Ministry of Commerce shall add the following notation to the foreign-invested enterprise approval certificate it issues, "foreign-invested company limited by shares (A-share acquisition, at least 25%)".

Article 18: Within 30 days of the date of issuance of the foreign-invested enterprise approval certificate, the Listed Company shall carry out with the administration for industry and commerce the procedures for the registration of a change in company type and submit the following documents:

(1) the application for the change signed by the legal representative of the company;

(2) the foreign-invested enterprise approval certificate;

(3) the shareholding certificate issued by the securities depository and clearing institution;

(4) the notarized and certified lawful certificate of commencement of business of the Investor; and

(5) other documents that the State Administration for Industry and Commerce specifies be submitted.

Once the change has been approved, the administration for industry and commerce shall note in the box for enterprise type on the business licence the words "foreign-invested company limited by shares (A-share acquisition)" or, if the Investor, through the Strategic Investment, has obtained at least 25% of the shares of a single Listed Company and has undertaken to maintain its shareholding at at least 25% for 10 years, the administration for industry and commerce shall note the words "foreign-invested company limited by shares (A-share acquisition, at least 25%)" in the aforementioned box.

Article 19: Within 30 days of the date of the issuance of a business licence of a foreign-invested enterprise, the Listed Company shall carry out the relevant procedures with the tax department, customs department, foreign exchange control department, etc. The foreign exchange control department shall note the words "foreign-invested company limited by shares (A-share acquisition)" on the foreign exchange registration certificate it issues. If the Investor, through the Strategic Investment, has obtained at least 25% of the shares of a single Listed Company and has undertaken to maintain its shareholding at at least 25% for 10 years, the foreign exchange control department shall note the words "foreign-invested company limited by shares (A-share acquisition, at least 25%)" on the foreign exchange registration certificate.

Article 20: An Investor may not buy or sell securities (with the exception of B-shares), except in the following circumstances:

(1) it may sell the A-shares of the Listed Company it obtained through the Strategic Investment once the term for which it has undertaken to hold the shares has expired;

(2) if, pursuant to relevant provisions of the Securities Law, the Investor is required to make a takeover offer, during the offer period it may purchase the shares sold by the holders of the Listed Company's A-shares;

(3) once the Listed Company's Reform is complete and the lock-up period has expired, the Investor may sell the non-tradable shares it had held prior to the Reform;

(4) once the lock-up period has expired, the Investor may sell the shares it had held prior to the Listed Company's initial public offering; or

(5) if the Investor, due to such special circumstances as bankruptcy, liquidation, mortgage, etc., is required to transfer its shares before the term for which it has undertaken to hold the shares expires, it may do so subject to the approval of the Ministry of Commerce.

Article 21: If a divestment by an Investor causes the shareholding percentage in the Listed Company accounted for by foreign investment to fall below 25%, the Listed Company shall, within 10 days, report the same to the Ministry of Commerce for the record and carry out the relevant procedures for amendment of the foreign-invested enterprise approval certificate.

If the divestment by the Investor causes the shareholding percentage in the Listed Company accounted for by foreign investment to fall below 10%, and the Investor is not the single largest shareholder, the Listed Company shall, within 10 days, report the same to the examination and approval authority for the record and carry out the relevant procedures for cancellation of the foreign-invested enterprise approval certificate.

Article 22: If a divestment by an Investor causes the shareholding percentage in the Listed Company accounted for by foreign investment to fall below 25%, the Listed Company shall, within 30 days of the date of the amendment of its foreign-invested enterprise approval certificate, carry out the procedures for the amendment of its registration with the administration for industry and commerce. The administration for industry and commerce shall revise the notation in the box for enterprise type on the business licence to "foreign-invested company limited by shares (A-share acquisition)". Within 30 days of the date of the amendment of its business licence, the Listed Company shall carry out the procedures for the amendment of its foreign exchange registration with the foreign exchange control department. The foreign exchange control department shall note the words "foreign-invested company limited by shares (A-share acquisition)" on the foreign exchange registration certificate.

If the divestment by the Investor causes the shareholding percentage in the Listed Company accounted for by foreign investment to fall below 10%, and the Investor is not the single largest shareholder, the Listed Company shall carry out the procedures for the amendment of its registration with the administration for industry and commerce within 30 days of the date of cancellation of its foreign-invested enterprise approval certificate, and its enterprise type shall be changed to joint stock limited company. The Listed Company shall carry out the procedures for the cancellation of its foreign exchange registration with the foreign exchange control department within 30 days of the date of amendment of its business licence.

Article 23: If a Parent Company has made a Strategic Investment via a wholly owned subsidiary abroad and the investment has been completed on time and it wishes to transfer the aforementioned subsidiary, it shall report to the Ministry of Commerce before doing so and submit an application in accordance with the procedures set forth in these Measures. The transferee shall satisfy the conditions specified in these Measures, assume all of the rights and obligations in the Listed Company of the Parent Company and its subsidiary and perform the obligations of reporting to the China Securities Regulatory Commission, announcement and other statutory obligations.

Article 24: If an Investor sells the shares of the Listed Company that it holds on the A-share market, it may apply to the foreign exchange bureau of the place where the Listed Company is registered to purchase foreign exchange and remit the same out of China on the strength of the following documents:

(1) a written application;

(2) the approval document of the foreign exchange bureau approving foreign exchange settlement in respect of the funds in the foreign investor's dedicated foreign exchange account (acquisition type) opened for the purpose of the Strategic Investment;

(3) the official reply issued by the Ministry of Commerce on the change in the equity structure of the Listed Company; and

(4) the document issued by the securities broker evidencing the relevant securities transactions.

Article 25: The borrowing of foreign debt by Listed Companies the percentage of whose shares held by Investors is less than 25% shall be handled in accordance with relevant provisions on the borrowing of foreign debt by domestic Chinese-invested enterprises.

Article 26: The working personnel of the relevant government agencies must be devoted in their duties, perform their duties and responsibilities in accordance with the law and may not use the advantages of their positions to seek improper gain. Additionally, they shall bear an obligation of confidentiality with respect to the trade secrets that they learn.

Article 27: The Strategic Investments by investors from the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan shall, mutatis mutandis, be handled in accordance with these Measures.

Article 28: These Measures shall be effective 30 days after the date of promulgation.

Appendix 1

Strategic Investment Application

1. Name of the investor

2. Name of target listed company

3. Investment purpose

(Signature/seal of the investor and authorized representative)

Date:

Appendix 2

Strategic Investment Plan

1. Name and profile of the investor (where a parent company is making a strategic investment via a wholly-owned subsidiary abroad, the relevant materials on the parent company should also be submitted)

2. The target listed company's name and scope of business, the proposed specific method by which the company's shares are to be obtained, the proposed number of shares to be obtained and the percentage of the listed company's outstanding shares that they will account for after they are obtained and the deadline for the strategic investment

3. The term for which the shares are to be held

4. An explanation of the affiliated relationship between the investor and the controlling shareholder of the listed company

(Signature/seal of the investor and authorized representative)

Date: