Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof

(Promulgated by the China Securities Regulatory Commission on May 17 2006 and effective as of May 18 2006.)

Order of the CSRC No.32

PART ONE: GENERAL PROVISIONS

Article 1: These Measures have been formulated pursuant to the Securities Law and the Company Law in order to regulate initial public offerings of shares and the listing thereof and to protect the lawful rights and interests of investors and the public interest.

Article 2: These Measures shall govern initial public offerings of shares and the listing thereof in the People's Republic of China.

These Measures shall not apply to shares of companies in China that are subscribed for and traded in a foreign currency.

Article 3: Initial public offerings of shares and the listing thereof shall comply with the offering conditions of the Securities Law, the Company Law and these Measures.

Article 4: The information disclosed by issuers in accordance with the law must be true, accurate, complete and free of false or misleading statements and material omissions.

Article 5: Sponsors and sponsors' representatives shall comply with the principles of due diligence, honesty and good faith in duly performing their obligation of prudential checking and guidance, and shall be liable for the truthfulness, accuracy and completeness of the offering sponsorship letters issued by them.

Article 6: The securities service institutions and personnel that issue relevant documents for securities offerings shall strictly perform their statutory duties and responsibilities in accordance with the common business and ethical standards of their industries and be liable for the truthfulness, accuracy and completeness of the documents issued by them.

Article 7: The approval of the initial public offering of an issuer by the China Securities Regulatory Commission (CSRC) does not mean that it makes a substantive judgement or warranty as to the investment value or the returns to investors of such shares. Investors shall themselves bear the investment risks arising from changes in the issuer's operations or earnings after the shares have been issued in accordance with the law.

PART TWO: OFFERING CONDITIONS

Section One: Qualifications of Entities

Article 8: The issuer shall be a company limited by shares established in accordance with and existing under the law.

With the approval of the State Council, a limited liability company, when converting into a company limited by shares in accordance with the law, may adopt the method of establishment by way of a share offering and make a public offering of shares.

Article 9: The issuer shall have been continuously in business for at least three years after its establishment as a company limited by shares, unless otherwise approved by the State Council.

In the case of a limited liability company that is converted into a company limited by shares, by a conversion into shares at the original book value of its net assets, its period of continuously being in business may be counted from the date on which the limited liability company was established.

Article 10: The issuer's registered capital shall have been paid in in full, the procedures for the transfer of ownership to the assets contributed as capital by the promoters or shareholders shall have been completed and the issuer's main assets shall not be encumbered by a major dispute over ownership.

Article 11: The issuer's production and operations shall be in compliance with laws, administrative regulations, the company's articles of association and state industrial policy.

Article 12: No major change shall have occurred in the issuer's core business or directors or senior management personnel during the most recent three years, and no change shall have occurred in its de facto controller.

Article 13: The equity interests in the issuer shall be clear and there shall not be any major dispute over ownership of the shares of the issuer held by the controlling shareholder and by the shareholders controlled by the controlling shareholder or de facto controller.

Section Two: Independence

Article 14: The issuer shall have an integral business system and an independent capacity to operate in the market.

Article 15: Integrity of the issuer's assets. A production enterprise shall have the production system, auxiliary production system and ancillary facilities related to its production and operations, own or lawfully have the right to use the land, factory buildings, machinery, equipment, trademarks, patents and non-patented technologies related to its production and operations and have independent systems for the procurement of raw materials and sale of its products; a non-production enterprise shall have the business system and assets related to its operations.

Article 16: Independence of the issuer's personnel. The issuer's senior management personnel, such as its general manager, deputy general manager(s), chief financial officer and board secretary, may not serve in a capacity other than as a director or supervisor with the controlling shareholder, de facto controller or other enterprises controlled by the controlling shareholder or de facto controller or draw a salary from the controlling shareholder, de facto controller or other enterprises controlled by the controlling shareholder or de facto controller. The issuer's financial personnel may not serve concurrently with the controlling shareholder, de facto controller or other enterprises controlled by the controlling shareholder or de facto controller.

Article 17: Independence of the issuer's financial affairs. The issuer shall have independent finance and accounting systems, be capable of making financial decisions independently, have legally compliant financial and accounting rules and regulations and rules and regulations for the financial management of branches and subsidiaries. The issuer may not use the same bank accounts as its controlling shareholder, de facto controller or other enterprises controlled by the controlling shareholder or de facto controller.

Article 18: Independence of the issuer's organization. The issuer shall have a sound internal operation and management organization that independently exercises operating and management functions and powers, and there may not be a mixing of its organization with that of the controlling shareholder, de facto controller or other enterprises controlled by the controlling shareholder or de facto controller.

Article 19: Independence of the issuer's business. The issuer's business shall be independent from that of its controlling shareholder, de facto controller and other enterprises controlled by the controlling shareholder or de facto controller, and there may not be intra-industry competition between the issuer and its controlling shareholder, de facto controller and other enterprises controlled by the controlling shareholder or de facto controller or affiliated transactions between them conducted on a less than arm's length basis.

Article 20: The issuer's independence shall not be impaired by other serious defects.

Section Three: Legally Compliant Operation

Article 21: The issuer shall have established sound shareholders' general meeting, board of directors, supervisory board, independent director and board secretary systems that enable the relevant organizations and persons to perform their duties and responsibilities in accordance with the law.

Article 22: The issuer's directors, supervisors and senior management personnel shall have an understanding of the laws and regulations relating to the issue and listing of shares and be familiar with the statutory obligations and responsibilities of listed companies and their directors, supervisors and senior management personnel.

Article 23: The issuer's directors, supervisors and senior management personnel shall have the qualifications for their positions as specified in laws, administrative regulations, and rules and may not be characterized by any of the following circumstances:

(1) having measures prohibiting them from access to stock markets taken by the CSRC and the period of such prohibition has not yet expired;

(2) having been subjected to administrative penalties by the CSRC during the most recent 36 months or publicly censured by a stock exchange during the most recent 12 months; or

(3) having had a case opened for investigation against them by the judicial authorities for a suspected criminal offence or by the CSRC for a suspected violation of laws or regulations, and no clear conclusion has yet been reached.

Article 24: The issuer's internal control system shall be sound, have been effectively implemented and can reasonably ensure the reliability of the company's financial reports, the lawfulness of its production and business and the efficiency and results of its operations.

Article 25: An issuer may not be characterized by any of the following circumstances:

(1) during the most recent 36 months it publicly offered or publicly offered in a disguised form securities without the approval of the statutory authority; or, although the relevant violation of the law was committed more than 36 months previously, it is presently still continuing;

(2) during the most recent 36 months it committed a violation of industry and commerce, tax, land, environmental protection, customs or other laws or administrative regulations for which it was subjected to administrative penalties, and the circumstances were serious;

(3) during the most recent 36 months it submitted an offering application to the CSRC but the offering application documents that it submitted contained false or misleading statements or material omissions; or it did not satisfy offering conditions but used fraudulent means to fraudulently obtain approval for its offering; or it used improper means to interfere with the review work of the CSRC and its public offering review committee; or it forged or altered its or its directors', supervisors' or senior management personnel's signatures or seals;

(4) the application documents submitted for the contemplated offering contain false or misleading statements or material omissions;

(5) a case has been opened for investigation against it by the judicial authorities for a suspected criminal offence and no clear conclusion has yet been reached; or

(6) it has committed another act that seriously harms the lawful rights and interests of investors or the public interest.

Article 26: The issuer's articles of association shall expressly specify the examination and approval authority and the review procedure for the provision of security for third parties, and it has not provided security for its controlling shareholder, de facto controller or other enterprise controlled by the controlling shareholder or de facto controller in violation of provisions.

Article 27: The issuer shall have a stringent fund management system and may not be characterized by a situation where its funds have been appropriated by its controlling shareholder, de facto controller or other enterprise controlled by the controlling shareholder or de facto controller by way of a loan, undischarged debt, advanced amount or otherwise.

Section Four: Financial Affairs and Accounting

Article 28: The quality of the issuer's assets shall be good, its asset-liability structure reasonable, its profitability relatively strong and its cash flow normal.

Article 29: The issuer's internal controls shall be effective in all materials aspects, and a certified public accountant shall have issued an unqualified authentication report in respect of its internal controls.

Article 30: The issuer's basic accounting work shall be legally compliant, the preparation of its financial statements shall comply with enterprise accounting standards and related accounting rules and regulations and, in all material aspects, fairly reflect the issuer's financial position, business results and cash flow, and a certified public accountant shall have issued an audit report expressing an unqualified opinion.

Article 31: The issuer shall prepare its financial statements on the basis of actual transactions or events; when carrying out accounting certification, valuation and reporting, it shall maintain the necessary prudence; and in respect of identical or similar economic matters, it shall adopt consistent accounting policies that it may not change arbitrarily.

Article 32: The issuer shall disclose affiliated relationships completely and appropriately disclose affiliated transactions in accordance with the principle of importance. Pricing in affiliated transactions shall be on an arm's length basis and no attempt shall have been made to manipulate profits through affiliated transactions.

Article 33: The issuer shall comply with the following conditions:

(1) its net profit in each of the most recent three financial years shall have been positive and, in the aggregate, exceed Rmb30 million; the basis for calculating net profit shall be the lower of the figures before and after deducting non-recurring gains and losses;

(2) its net cash flow generated from business activities during the most recent three financial years shall, in the aggregate, exceed Rmb50 million, or its operating revenue in the most recent three years shall, in the aggregate, exceed Rmb300 million;

(3) its total share capital before the offering shall not be less than Rmb30 million;

(4) its intangible assets (minus leaseholds, aquaculture rights and mining rights) shall account for less than 20% of its net assets as at the end of the most recent period; and

(5) it shall have no undistributed deficit as at the end of the most recent period.

Article 34: The issuer shall have paid taxes in accordance with the law and its tax privileges shall comply with relevant laws and regulations. The issuer's business results shall not be heavily reliant on its tax privileges.

Article 35: The issuer shall not be facing major debt discharge risks nor shall there be any major contingent events that could have an effect on its continued operations, such as guarantees, lawsuits or arbitration proceedings.

Article 36: The documents submitted by the issuer may not be characterized by any of the following circumstances:

(1) deliberately omitted or fabricated transactions, events or other important information;

(2) abuse of accounting policies or accounting estimates; or

(3) manipulation, falsification or alteration of the accounting records or related vouchers on which preparation of the financial statements was based.

Article 37: The issuer may not be characterized by any of the following circumstances that would affect its continued profitability:

(1) its business model, or the mix of its products or services has undergone or will undergo a major change that has or will have a material adverse effect on the issuer's continued profitability;

(2) its position in its industry or the business environment of its industry has undergone or will undergo a major change that has or will have a material adverse effect on the issuer's continued profitability;

(3) its operating revenue or net profit during the most recent financial year was overly reliant on affiliated parties or on customers characterized by a high degree of uncertainty;

(4) its net profit for the most recent financial year was mainly derived from investment returns off its consolidated financial statements;

(5) there is a risk of a material adverse change to the acquisition or use of such major assets or technologies as trademarks, patents, proprietary technologies or franchise rights used by it; or

(6) another circumstance that could have a material adverse effect on its continuing profitability.

Section Five: Application of Proceeds

Article 38: There shall be a clear use for the proceeds, which, in principle, shall be for the issuer's core business.

Except in the case of financial enterprises, the project to which the proceeds are to be applied may not be a financial type investment whose purpose is to hold tradable financial assets or saleable financial assets, to lend to another, entrusted financial management, etc. and such proceeds may not be used to directly or indirectly invest in a company whose core business is the buying and selling of negotiable securities.

Article 39: The amount of the proceeds and the project they are to be invested in shall be consistent with the issuer's existing production and business scale, financial position, technical level and management capabilities.

Article 40: The project in which the proceeds are to be invested shall comply with state industrial policy, investment management, environmental protection, land administration and other laws, regulations and rules.

Article 41: The board of directors of the issuer shall duly analyze the feasibility of the project in which the proceeds are to be invested, be certain that the investment project has relatively good market prospects and profitability, effectively guard against investment risks and improve the effectiveness with which the proceeds are used.

Article 42: The implementation of the project in which the proceeds are to be invested will not give rise to intra-industry competition or adversely affect the independence of the issuer.

Article 43: The issuer shall establish a dedicated deposit system for the proceeds and such proceeds shall be deposited into the dedicated account decided on by the board of directors.

PART THREE: OFFERING PROCEDURE

Article 44: The board of directors of the issuer shall pass resolutions in accordance with the law on the specific plan for the contemplated share offering, the feasibility of the use of the proceeds from the contemplated offering and other matters that need to be clearly specified, and submit the same to the shareholders' general meeting for approval.

Article 45: The resolutions on the contemplated share offering passed by the shareholders' general meeting of the issuer shall, at minimum, cover the following matters:

(1) the type and quantity of shares to be offered;

(2) the targets of the offering;

(3) the price range or price determination method;

(4) the purpose of the proceeds;

(5) the plan for the distribution of the accumulated profits existing prior to the offering;

(6) the term of validity of the resolutions;

(7) the authorization of the board of directors to handle specific matters relating to the contemplated offering; and

(8) other matters that need to be specified.

Article 46: The issuer shall prepare the application documents in accordance with the relevant provisions of the CSRC, which shall be sponsored and submitted to the CSRC by the sponsor.

Issuers in certain industries shall submit the relevant opinions of the administrative department.

Article 47: The CSRC shall render its decision on whether or not to accept the application within five workings days of receipt of the application documents.

Article 48: After the CSRC accepts the application documents, they shall be subjected to a preliminary examination by the relevant functional departments and reviewed by the public offering review committee.

Article 49: During the preliminary examination process, the CSRC will seek the opinions of the provincial level people's government of the place where the issuer is registered, on whether it consents to the issuer offering shares, and the opinions of the National Development and Reform Commission, on whether the project in which the proceeds are to be invested by the issuer complies with state industrial policy, and investment management provisions.

Article 50: The CSRC shall render its decision on whether or not to approve the issuer's offering application based on the statutory conditions and issue the relevant document.

The issuer shall make the share offering within six months of the date on which the CSRC approved the offering. If the issuer fails to make the offering within such time, the approval document shall become null and void and it may only make the offering after approval anew by the CSRC.

Article 51: If a major event occurs on the part of the issuer between the approval of the offering application and completion of the share offering, the issuer shall delay or suspend the offering, report the same to the CSRC in a timely manner and simultaneously perform its information disclosure obligation. If such event affects the conditions of the offering, the approval procedure shall be carried out anew.

Article 52: If the share offering application is not approved, the issuer may submit another share offering application six months after the date of the decision by the CSRC to withhold its approval.

PART FOUR: INFORMATION DISCLOSURE

Article 53: The issuer shall prepare and publish the prospectus in accordance with relevant provisions of the CSRC.

Article 54: The guidelines on the contents and format of a prospectus are the minimum information disclosure requirements. Regardless of whether the guidelines expressly address the same, all information that would have a material effect on the investment decisions of investors shall be disclosed.

Article 55: The issuer and all of its directors, supervisors and senior management personnel shall sign and seal the prospectus and guarantee that it is true, accurate and complete. The sponsor and sponsor's representatives shall conduct a check of the truthfulness, accuracy and completeness of the prospectus and sign and stamp their comments on the check.

Article 56: The financial statements cited in the prospectus shall be valid for a period of six months from the end of the most recent period. Under special circumstances, the issuer may apply for an appropriate extension, but such extension shall not exceed one month. The cut-off date of the financial statements shall be year end, half-year end or quarter end.

Article 57: The prospectus shall be valid for six months counting from the date of its last signature before the CSRC approved the offering application.

Article 58: The issuer shall publish its prospectus (submission version) in advance on the CSRC's website (www.csrc.gov.cn) during the period between the acceptance of its application documents and the review by the public offering review committee. The issuer may post its prospectus (submission version) on its corporate website, provided that the disclosed information is completely identical and that such posting is not done earlier than the publication on the CSRC's website.

Article 59: The issuer and all of its directors, supervisors and senior management personnel shall guarantee that the prospectus (submission version) published in advance is true, accurate and complete.

Article 60: The prospectus (submission version) published in advance is not an official document for the issuer's share offering, may not contain pricing information and the issuer may not make its share offering on the basis thereof.

The issuer shall state in a prominent location in its prospectus (submission version) published in advance, "The company's offering application has yet to be approved by the China Securities Regulatory Commission. This prospectus (submission version) does not have the legal validity on which a share offering may be based, and is provided solely for the purpose of advance disclosure. Investors should base their investment decisions on the full text of the officially published prospectus."

Article 61: Prior to the offering, the issuer shall publish an abstract of the prospectus approved by the CSRC in at least one newspaper designated by the CSRC, publish the entire prospectus on the website designated by the CSRC and make it available for review by the public at the issuer's domicile, the stock exchange where the listing is to be made and the domiciles of the sponsor, lead underwriter and other underwriters.

Article 62: The offering sponsorship letter issued by the sponsor and the relevant documents issued by the securities service institutions, as reference documents for the prospectus, shall be disclosed on the website(s) designated by the CSRC and made available for review by the public at the issuer's domicile, the stock exchange where the listing is to be made and the domiciles of the sponsor, lead underwriter and other underwriters.

Article 63: The issuer may publish an abstract of its prospectus, the entire prospectus and the relevant reference documents in other newspapers or on other websites, provided that the disclosed information is completely identical and such publication is not done earlier than the publication in the newspapers or websites designated by the CSRC.

PART FIVE: REGULATION AND PENALTIES

Article 64: If the offering application documents submitted to the CSRC by an issuer contain false or misleading statements or material omissions, the issuer does not satisfy the offering conditions but uses fraudulent means to fraudulently obtain approval for its offering, the issuer uses improper means to interfere with the review work of the CSRC and its public offering review committee, or the issuer's or its directors', supervisors' and/or its senior management personnel's signatures or seals are forged or altered, the CSRC shall, in addition to imposing penalties in accordance with the relevant provisions of the Securities Law, take the regulatory measures of terminating the review and not accepting the issuer's share offering applications for a period of 36 months.

Article 65: If a sponsor issues an offering sponsorship letter containing false or misleading statements or material omissions, uses improper means to interfere with the review work of the CSRC and its public offering review committee, the sponsor's or its relevant signatory's signature or seal is forged or altered or the sponsor fails to perform other statutory duties and responsibilities, the matter shall be handled in accordance with the relevant provisions of the Securities Law and sponsorship rules and regulations.

Article 66: If a securities service institution fails to act with due diligence, resulting in the documents prepared and issued by it containing false or misleading statements or material omissions, the CSRC shall, in addition to imposing penalties in accordance with the Securities Law and relevant laws, administrative regulations, and rules, take the regulatory measures of not accepting the specialist documents for securities offerings issued by it for a period of 12 months and not accepting the specialist documents for securities offerings issued by the relevant signatory for a period of 36 months.

Article 67: If an issuer, sponsor or securities service institution prepares or issues documents that fail to comply with requirements, modifies without authorization a document that has been submitted or refuses to respond to relevant questions posed by the CSRC in the course of its review, the CSRC shall, depending on the circumstances, take such regulatory measures against the relevant institution and the responsible persons as giving them a regulatory lecture, ordering them to rectify the matter, etc., record the same in the good faith file and publish the same. If the circumstances are particularly serious, it shall issue a warning.

Article 68: If an issuer discloses an earnings forecast and the actual profit figure fails to reach 80% of the earnings forecast, its legal representative and the certified public accountant who signed the earnings forecast audit report shall explain the same and apologize to the shareholders' general meeting and in newspapers designated by the CSRC, unless such failure was due to force majeure. The CSRC may give the legal representative a warning.

If the actual profit figure fails to reach 50% of the earnings forecast, the CSRC will not accept further applications for the public offering of securities by such company for a period of 36 months, unless such failure was due to force majeure.

PART SIX: SUPPLEMENTARY PROVISIONS

Article 69: The measures for the administration of initial public offerings of shares in the People's Republic of China without the subsequent listing of such shares will be formulated separately by the CSRC.

Article 70: These Measures shall be effective as of May 18 2006. The Circular on Several Provisions Concerning Share Offerings (Zhen Jian [1996] No.12), the Circular on Duly Carrying Out the Work Associated With Share Offerings in 1997 (Zheng Jian [1997] No.13), the Supplementary Circular on Several Issues Concerning Share Offerings (Zheng Jian [1998] No.8), the Circular on Investigations of the Restructuring of Enterprises That Intend to Offer and List Shares (Zheng Jian Fa Zi [1998] No.259), the Circular on Investigations of the Restructuring and Operation of Companies That Intend to Offer Shares to the Public (Zheng Jian Fa [1999] No.4), the Circular on Such Issues as the Engagement of Audit Firms, Etc. by Companies That Intend to Offer Shares (Zheng Jian Fa Xing Zi [2000] No.131) and the Circular on Further Regulating the Work Associated With the Initial Offering and Listing of Shares (Zheng Jian Fa Xing Zi [2003] No.116) shall be repealed simultaneously.