Opinions on Further Promoting the Reform of the System for Offering of New Shares

(1) Bringing further forward the time for the advance disclosure of the prospectus and enhancing monitoring by the public: once the submission version of the issuer's prospectus is officially accepted, it will be disclosed on the China Securities Regulatory Commission's (CSRC's ) website.

(2) Once the prospectus has been disclosed in advance, the information on the issuer and financial data may not be changed at leisure. If, in the course of the review, the CSRC discovers that there are contradictions in the information provided in the issuer's application materials, or in different places there are different representations of the same fact that are substantially different, it will suspend the review and will not accept offer applications recommended by the relevant sponsor representative for a period of 12 months. If it is suspected that the offer application documents or related legal documents submitted by the issuer or an intermediary firm contains false records, misleading statements or material omissions, the case will be handed over to the enforcement bureau for investigation and handling, and if a case is opened following the investigation, the acceptance of offer applications recommended by the relevant intermediary firm will be suspended. If the allegations are proved to be true after investigation, share offer applications from the issuer in question will not be accepted for a period of 36 months from the date of confirmation, and the liability of the intermediary firms and relevant parties will be pursued in accordance with the law.

(3) Information disclosure is the core of share offer reviews

As the party with the primary responsibility for disclosing information, the issuer shall provide to the intermediary firms true, complete and accurate financial accounting information and other information in a timely manner, and fully cooperate with the intermediary firms in carrying out their due diligence investigations.

The sponsor shall strictly perform its statutory duties, comply with business rules and industry codes, carefully check the issuer's application documents and information disclosure documentation, guide the issuer in operating in a compliant manner, check the professional opinions issued by other intermediary firms, make a professional determination as to whether the issuer has the capacity for sustained profitability and whether it satisfies the statutory offer conditions and ensure that the issuer's information disclosure documentation, such as its application documents and prospectus, are true, accurate, complete and timely.

Securities service firms such as accounting firms, law firms and asset valuation firms and their personnel must strictly perform their statutory duties, comply with the business standards and practice codes of their industries, check and verify the issuer's relevant business documentation and ensure the truthfulness, accuracy, completeness and timeliness of the relevant professional documents that they issue.

The CSRC's Department of Public Offering Supervision and Public Offering Review Committee will conduct reviews of the lawfulness and compliance of the offer application documents and disclosed information in accordance with the law, but will not make any judgement as to the issuer's profitability or investment value. If they discover any violations of laws or regulations in the application documents or disclosed information, the liability of the relevant parties will be strictly pursued.

Investors shall earnestly read the information publicly disclosed by the issuer, and make the judgement as to the investment value of the enterprise themselves, make the investment decision themselves and solely bear the risks arising from changes in the issuer's operations and earnings after the shares have been offered in accordance with the law.

(4) The CSRC will render its decision to grant approval, suspend the review, terminate the review or withhold approval based on the statutory conditions and the statutory procedure within three months from the date of acceptance of the securities offer application documents.

(5) When an issuer makes an initial public offering of new shares, the existing shareholders who have held shares for at least three years are encouraged to transfer a portion of the old shares to investors, thereby increasing the percentage of tradable shares of the new listed company. The transfer of old shares may not cause a change in the de facto controller of the company. The specific plan for the transfer of old shares shall be publicly disclosed in the company's prospectus and offer announcement.

The issuer shall determine the quantity of new shares to be offered based on the amount of offer proceeds required for the investment project, and if the quantity of new shares is insufficient to satisfy the statutory listing conditions, the quantity of shares offered to the public may be increased by transferring old shares. Where proceeds from the offer of new shares exceed the target, the holding of old shares shall be reduced proportionally.

(6) An enterprise undergoing review of its application for an initial public offering of shares may apply to first offer corporate bonds. Enterprises are encouraged to meet their financing needs through a combination of shares and bonds.

(7) Once the issuer has passed the Public Offering Review Committee and performed the post-committee event procedures, the CSRC will approve the offering. The time at which the new shares will be offered will be determined by the issuer at its own discretion.

(8) The period of validity of the approval document for an initial public offering of shares is increased to 12 months.

During the period between the date of securing the approval document and the making of the public offering, the issuer shall refer to the information disclosure requirements for the regular reports of listed companies and revise the contents of its information disclosure documents, supplement the relevant figures in its financial accounting reports and update its prospectus disclosed in advance in a timely manner. In the event of the occurrence of a material post-committee event, the issuer shall report the same and provide an account thereof to the CSRC in a timely manner; and the sponsor and relevant intermediary firms shall continue to perform their due diligence obligations. When a material post-committee event occurs, the CSRC will decide, based on the review procedure, whether the offering needs to be re-submitted to the Public Offering Review Committee for review.

II. Strengthening of the obligation of good faith of responsible entities such as the issuer and its controlling shareholder

(1) Strengthening market discipline on relevant responsible entities

1. The issuer's controlling shareholder and directors and senior management personnel who hold shares in the issuer shall undertake in the public offering and listing documents that if they reduce their shareholdings during the two years after the expiration of the lockup period, the price at which they reduce their holdings will not be less than the offer price. If, during the six months after the listing of the company, the closing price for its shares is below the offer price for 20 consecutive trading days, or if the closing price is lower than the offer price at the end of the six month period after the listing, the lockup period for the company shares held by them will automatically be extended for at least six months.

2. The issuer, its controlling shareholder and its directors and senior management personnel shall propose, in the public offering and listing documents, a contingency plan to stabilise the company's share price in the event that its share price is less than the net asset value per share during the three years after the listing. The contingency plan shall cover the specific conditions for triggering the share price stabilisation measures, the specific measures that may be taken, etc. The specific measures may include a buyback of company shares by the issuer, an increase in the holding of company shares by the controlling shareholder, company directors and senior management personnel, etc. The aforementioned persons shall announce in advance the specific implementation plan before the share price stabilisation measures are initiated.

3. The issuer and its controlling shareholder shall publicly undertake in the public offering and listing documents that if the issuer's prospectus contains false records, misleading statements or material omissions that have a material and substantive impact on judging whether the issuer satisfied the offer conditions specified in laws, they will buy back, in accordance with the law, all of the new shares offered in the initial public offering and the controlling shareholder of the issuer will buy back the original restricted shares that were transferred. Relevant responsible entities such as the issuer and its controlling shareholder, de facto controller, directors, supervisors and senior management personnel shall publicly undertake in the public offering and listing documents that if investors incur losses in securities trading due to the issuer's prospectus containing false records, misleading statements or material omissions, they will compensate investors for such losses in accordance with the law.

Securities service firms such as the sponsor and accounting firm shall publicly undertake in the public offering and listing documents that if investors incur a loss due to the documents prepared or issued by them in connection with the issuer's initial public offering containing false records, misleading statements or material omissions, they will compensate investors for such losses in accordance with the law.

(2) Enhancing the transparency of the shareholding intention of the major shareholders of the company: the issuer shall disclose in the public offering and listing documents the shareholding intentions and holding reduction intentions of shareholders holding at least 5% of the shares before the public offering. When a shareholder holding at least 5% of the shares wishes to reduce its holding, it must announce the same three trading days in advance.

(3) Strengthening the binding force of matters undertaken by relevant responsible entities: when responsible entities such as the issuer and its controlling shareholder, directors and senior management personnel publicly undertake to do certain things, they shall additionally propose binding measures in the event that they cannot perform their undertakings, disclose the same in the public offering and listing documents and subject themselves to monitoring by the public. The securities exchange shall strengthen its monitoring and restraint of the performance by relevant parties of their public undertakings, and, in a timely manner, take regulatory measures in respect of failures to perform such undertakings.

III. Further enhancing the degree of market determination of the pricing of new shares

(1) Reforming the method of pricing new share offerings: pursuant to Article 34 of the Securities Law, the offer price shall be determined through consultations between the issuer and the underwriting securities companies themselves. The issuer shall determine the pricing method in consultations with the underwriters and disclose the same in the offer announcement.

(2) After the quotes from offline investors, the issuer and lead underwriter shall first eliminate the highest quotes from the total purchase quantity, with the eliminated purchase quantity not being less than 10% of the total purchase quantity, and determine the offer price through consultations based on the remaining quotes and purchase situation. The eliminated purchase shares may not participate in the offline placement.

If the quantity of publicly offered shares is to be less than 400 million, the number of investors providing valid quotes shall not be less than 10, but may not be more than 20. If the quantity of publicly offered shares is to be at least 400 million, the number of investors providing valid quotes shall not be less than 20, but may not be more than 40. If the total proceeds from the offline offering of shares is to exceed Rmb20 billion, the number of investors providing valid quotes may be appropriately increased, but may not be more than 60. If the number of parties submitting valid quotes is insufficient, the offering shall be suspended.

Leveraging the role of individual investors participating in offer pricing: the issuer and lead underwriter shall permit qualified individual investors to participate in the offline pricing and offline placement. Securities companies with underwriting qualifications shall formulate in advance the conditions that the aforementioned individual investors are required to satisfy, and publicly announce the same.

(3) Strengthening of information disclosure requirements during pricing process: the issuer and lead underwriter shall prepare the information disclosure documents for the pricing process and results, and publicly disclose the same. Before the online purchase, the issuer and lead underwriter shall disclose in detail the quote particulars of each offline investor, including the names, purchase price and corresponding purchase quantities of the investors, the median and weighted mean of the quotes of all of the offline investors, the median and weighted mean of the quotes of the securities investment funds established by public offering, the determined offer price and corresponding price-to-earnings ratio.

If the price to earnings ratio of the proposed offer price (or the upper limit of the offer price range) is higher than the average price-to-earnings ratio of listed companies in the same industry on the secondary market, the issuer and lead underwriter shall, before the online purchase, issue a special investment risk announcement expressly stating that the price in question may pose a risk of loss to investors due to an overly high valuation and remind investors to pay attention to the same. The announcement shall include, at minimum, the following:

1. a comparative analysis of the difference between the issuer and listed companies in the same industry and the effect thereof on the offer price; and draw the attention of the investors to the difference existing between the set price and the quotes of the offline investors; and

2. drawing the attention of investors to the investment risks and reminding them to carefully consider the reasonableness of the offer price and make their investment decision on a rational basis.

IV. Reforming the method of placing new shares

(1) Introduction of a lead underwriter discretionary placement mechanism: in the offline offering of shares, the lead underwriter will select the investors for the private placement at its own discretion from among the investors that provided valid quotes. The issuer shall determine the offline placement principles and method in consultations with the lead underwriter and disclose the same in the offer announcement. The underwriters shall carry out the private placement in accordance with the placement principles announced in advance.

(2) Among the shares placed offline, at least 40% shall be placed on a priority basis with securities investment funds established by public offering and social security funds managed by social security fund investment managers. If the valid quantity purchased by the aforementioned investors is insufficient, the issuer and lead underwriter may place the shares with other investors.

(3) Adjustment of offline placement percentages and strengthening of offline quote restraint mechanism: if the company's share capital is less than Rmb400 million, the offline placement percentage may not be less than 60% of the number of shares to be offered in the contemplated public offering; but if the company's share capital exceeds Rmb400 million, the offline placement percentage may not be less than 70% of the number of shares to be offered in the contemplated public offering. The remainder will be sold to online investors. If the subscriptions for the predetermined offline placement portion are insufficient, the offering shall be suspended, and the issuer and lead underwriter may not claw back the shares and offer them online.

(4) Adjustment of offline to online clawback mechanism: if the valid over-subscription multiple of the online investors is at least 50 times but less than 100 times, a clawback from offline to online shall be carried out at a clawback percentage of 20% of the number of shares to be offered in the contemplated public offering; or if the valid over-subscription multiple of the online investors is at least 100 times, the clawback percentage will be 40% of the number of shares to be offered in the contemplated public offering.

(5) Improvement of online placement method: only those investors holding a certain quantity of unrestricted shares may participate in the online purchase. In the assignment of placement numbers and the drawing of lots for the online placement, the market value of the unrestricted shares held by the investors and the purchase amounts shall be comprehensively considered.

The securities exchange and the securities depository and clearing corporation shall formulate the implementing rules for online placements, so as to regulate such placements. The issuer and lead underwriter shall formulate the specific online placement plan based on the relevant rules and announce the same. The plan must expressly specify the upper limit on the online purchase quantity of each investor, which upper limit may not exceed 0.1% of the number of shares to be offered in the contemplated online initial offering.

(6) Strengthening information disclosure requirements during the share placement process: the issuer and lead underwriter shall prepare the information disclosure documents for the placement process and results, and publicly disclose the same. The issuer and the lead underwriter shall disclose in the offer announcement the conditions for the participation of the investors in the discretionary placement and the placement principles. Once the discretionary placement is completed, the placement results shall be disclosed, including the names and quotes of the investors that secured the placement, the number of shares purchased and the placement amount, and the lead underwriter shall state whether the discretionary placement results comply with the placement principles published in advance. The issuer and lead underwriter shall list in a table in the placement results the investors that provided a valid quote but did not participate in the purchase or whose actual purchase quantity was markedly less than their proposed purchase quantity at the time of the quote.

If an agreement or arrangement exists among the issuer, lead underwriter, investors who took part in the offline placement and relevant interested parties to maintain the stability of the price of the company's shares after the listing, the issuer shall disclose the same in the listing announcement.

V. Intensifying regulation and law enforcement, and duly upholding the three principles of transparency, fairness and impartiality

(1) After the sponsor and issuer have executed an offer and listing-related guidance agreement, the progress in the guidance of the issuer shall, in a timely manner, be disclosed on the sponsor's website and the website of the securities regulatory office of the place where the issuer is registered. Once the guidance is concluded, the guidance process, and the details and the effectiveness thereof shall be summarised and disclosed on the aforementioned websites.

(2) Further enhancement of the quality of information disclosures: taking the needs of investors in making their decisions as the guide, the contents and format of information disclosures will be improved, the disclosed key points highlighted and the requirements in respect of the disclosure of information that has a material impact on the investment decisions of investors, such as the issuer's main business and business model, external market environment, business performance and main risk factors strengthened. Simple and clear language will be used to enhance the readability of disclosed information so as to facilitate reading and monitoring by small and medium investors.

(3) Before the meeting of the Public Offering Review Committee, the CSRC will do a random check of the working papers and the due diligence in their work performance of the relevant intermediary firms, such as the sponsor, accounting firm and law firm.

(4) Strengthening of the offer regulation and investigation/law enforcement linkage mechanism: once the application documents are administratively accepted, the issuer, its directors, supervisors and senior management personnel, and the relevant intermediary firms shall bear the attendant legal liability in respect of the truthfulness, accuracy and completeness of the application documents. If a suspected violation of laws or regulations or a material issue is discovered in the course of the review, the case will immediately be handed over to the enforcement bureau for investigation.

(5) Strengthening of process regulation, act regulation and after-the-fact accountability of new share offerings: the issuer and underwriters may not place shares with the issuer, its directors or senior management personnel, the underwriters or the affiliated persons of the aforementioned parties. The issuer and underwriters may not manipulate the price of the new shares, engage in black-box operations or commit other acts that violate the principles of transparency, fairness and impartiality; may not induce offline investors to drive up their quotes but not place shares with them; and may not channel benefits to, or seek improper benefits for, other related interested entities by means such as holding shares on their behalf or holding shares in trust for them by way of the discretionary private placement. The China Securities Association shall formulate self-regulation rules, regulate acts such as roadshow promotions, disclosure of investment value analysis reports and discretionary private placements by underwriters and strengthen administration of industry self-regulation.

(6) The securities exchange shall further improve the mechanism for determining the opening price on the first day of the listing of new shares and the mechanism for the initial trading of newly listed shares, establish a mechanism for the suspension of trading on the first day of listing that takes the offer price of the new shares as the comparative benchmark and strengthen the restraints against speculation on new shares.

(7) After the issuer has listed, the sponsor shall perform its ongoing guidance duties in strict accordance with the law, procure the performance by the issuer of the obligations of a listed company of compliant operation, abiding by undertakings and information disclosure and review the issuer's information disclosure documents and the other documents submitted by the issuer to the CSRC and the securities exchange. During the ongoing guidance period, the sponsor shall publicly disclose regular tracking reports in accordance with provisions; and if a material mishap or event involving the issuer occurs, the sponsor shall publicly disclose an ad hoc report in accordance with provisions. Within 20 working days after the conclusion of the ongoing guidance period, the sponsor shall prepare a guidance work report, disclose the same on the websites designated by the CSRC and make arrangements for the outstanding matters remaining after the guidance work. If the ongoing guidance responsibilities were not duly carried out, the liability of the sponsor will be pursued in accordance with the law.

(8) If the operating profit of the issuer for the listing year is less than 50% or more of that of the preceding year or the issuer goes into deficit in the listing year, the CSRC will immediately suspend the acceptance of offering applications recommended by the relevant sponsor from the confirmation date, and transfer the case to the enforcement bureau for investigation and handling, except if the issuer expressly and specifically warned of the risk of the aforementioned drop in results in its prospectus, or another circumstance under which liability is statutorily exempted exists.

If a listed company is suspected of having listed in a fraudulent manner, at the time of opening of the case and the investigation and handling thereof, measures will be taken to freeze the issuer's dedicated offer proceeds account.

(9) Further intensification of the regulation/law enforcement and self-regulation of the issuer's information disclosure responsibilities and sponsorship and underwriting practice acts of the intermediary firms: information sharing and interconnection between the CSRC's sponsorship integrity regulatory system, the China Securities Association's self-regulation management system for business personnel and the securities exchange's information disclosure system will be established and improved to facilitate participation in monitoring by the public and strengthen the restraint function of the external reputation and good faith mechanism. If the issuer and its directors, supervisors and senior management personnel fail to perform their information disclosure obligations in good faith, an information disclosure is in serious violation of regulations or commit fraud in financial affairs, or if a relevant intermediary firm, such as the sponsor, accounting firm or law firm fails to act with due diligence, stringent sanctions will be imposed in accordance with the law.