Measures for the Administration of Material Asset Restructurings by Listed Companies

(Promulgated by the China Securities Regulatory Commission on October 23 2014 and effective as of November 23 2014.)

Order of the CSRC No.109

Part One: General provisions

Article 1: These Measures have been formulated pursuant to laws and administrative regulations such as the Company Law and Securities Law in order to regulate material asset restructurings by listed companies, protect the lawful rights and interests of listed companies and investors, promote the continuous improvement in the quality of listed companies and safeguard the order in the securities market and the public interest.

Article 2: These Measures shall govern asset transactions by listed companies and by the companies in which they have a controlling interest or which they control that involve the purchase or sale of assets outside the normal course of business activities or asset transactions carried out by other means and that reach a prescribed percentage and, as a result, cause a material change in the core business, assets and/or revenue of the listed companies (Material Asset Restructuring).

The issuance of shares by a listed company to purchase assets shall comply with these Measures.

When a listed company uses the proceeds of a share offering to purchase assets or make an investment outside the company in line with the purpose of such proceeds as disclosed in the securities offering documents approved by the China Securities Regulatory Commission (the CSRC), these Measures shall not apply.

Article 3: No work unit or individual may exploit a Material Asset Restructuring to prejudice the lawful rights and interests of a listed company and its shareholders.

Article 4: When a listed company is to carry out a Material Asset Restructuring, all relevant parties must disclose or provide information in a timely and fair manner and warrant that the information disclosed or provided is true, accurate, complete and does not contain false records, misleading statements or material omissions.

Article 5: The directors, supervisors and senior management personnel of a listed company shall, in the course of Material Asset Restructuring activities, act in good faith and with due diligence, safeguard the security of the company's assets and protect the lawful rights and interests of the company and of all of its shareholders.

Article 6: Securities service institutions and personnel who provide services for Material Asset Restructurings shall abide by laws, administrative regulations and relevant CSRC provisions, comply with business standards and ethical standards generally recognised in the industry, strictly perform their duties and be liable for the truthfulness, accuracy and completeness of the documents that they prepare and issue.

The securities service institutions and personnel mentioned in the preceding paragraph may not incite, assist or collude with the client in preparing or disclosing report or announcement documents that contain false records, misleading statements or material omissions, engage in unfair competition or take advantage of the Material Asset Restructuring of the listed company to seek illegitimate gains.

Article 7:Work units and individuals that are privy to information on a Material Asset Restructuring shall bear an obligation of confidentiality in respect thereof until such information has been disclosed in accordance with the law.

Units and individuals are prohibited from using information on a Material Asset Restructuring to engage in insider trading, manipulate the stock market or engage in other such illegal activity.

Article 8: The CSRC shall oversee the Material Asset Restructurings of listed companies in accordance with the law.

When reviewing applications from listed companies for Material Asset Restructurings or offerings of shares to purchase assets, the CSRC may make differentiated and transparent regulatory system arrangements and conditionally reduce the review information and stages depending on such listed companies' compliant operation and integrity status, the practice capabilities and practice quality of their financial advisors and in light of state industrial policy and the type of restructuring transaction.

Article 9:The participation by lawfully established merger and acquisition funds, equity investment funds, venture capital funds, industry investment funds and other such investment institutions in the mergers, acquisitions and restructurings of listed companies is encouraged.

Article 10: The CSRC shall establish a Committee for the Review of the Merger, Acquisition and Restructuring of Listed Companies in its Public Offering Review Committee (the M&A and Restructuring Committee), which shall vote on the applications for Material Asset Restructurings or offerings of shares to purchase assets submitted to it for deliberation and give its opinions thereon.

Part Two: Principles and criteria governing material asset restructurings

Article 11: When carrying out a Material Asset Restructuring, a listed company shall provide sufficient explanations that the contemplated transaction satisfies the following requirements and shall disclose the same:

(1) complying with state industrial policy, and laws and administrative regulations on environmental protection, land administration, anti-monopoly, etc.;

(2) not causing the listed company to be disqualified for the listing of its shares;

(3) the pricing of the assets involved being fair and there not being a circumstance that would prejudice the lawful rights and interests of the listed company or its shareholders;

(4) the title to the assets involved being clear, there not being any legal obstacle to the change in ownership or transfer of the assets, and the handling of the relevant claims and debts being lawful;

(5) being conducive to the strengthening of the listed company's capacity as a going concern and there not being a circumstance that could result in the listed company's principal assets post-restructuring being cash or its not having any actual business;

(6) being conducive to the maintenance of independence by the listed company from its de facto controller and other affiliated parties in terms of its business, assets, finances, personnel, organisations, etc. and complying with relevant CSRC provisions on the independence of listed companies; and

(7) being conducive to the creation or maintenance by the listed company of a sound and effective corporate governance structure.

Article 12:A Material Asset Restructuring shall be constituted when the purchase or sale of assets by a listed company and by the companies in which it has a controlling interest or that it controls reaches any of the following benchmarks:

(1) the total value of the assets to be purchased or sold accounts for at least 50% of the listed company's total asset value at period end on its audited consolidated financial accounting report for the most recent financial year;

(2) the operating revenue during the most recent financial year generated by the assets to be purchased or sold accounts for at least 50% of the listed company's operating revenue on its audited consolidated financial accounting report for the same period; or

(3) the net value of the assets to be purchased or sold accounts for at least 50% of the listed company's net asset value at period end on its audited consolidated financial accounting report for the most recent financial year and the amount thereof exceeds Rmb50 million.

If the assets to be purchased or sold do not reach any of the benchmarks specified in the preceding paragraph, but the CSRC discovers major issues that could prejudice the lawful rights and interests of the listed company or its shareholders, it may, based on the principle of prudential regulation, order the listed company to disclose additional relevant information in accordance herewith, suspend the transaction, engage an independent financial consultant or other securities service institution to conduct an additional review, and disclose the professional opinions thereon.

Article 13:If, following the date on which the change in control occurs, the total assets purchased by a listed company from the acquirer and its affiliated parties reach at least 100% of the period-end total assets on its audited consolidated financial accounting report for the financial year preceding the change in control in the listed company, not only shall the requirements of Articles 11 and 43 hereof be complied with, the business entity corresponding to the assets purchased by the company, in the case of one listed on the main board (including the small and medium enterprise board), shall be a company limited by shares or limited liability company as well as satisfying the other offering conditions set forth in the Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof (Order of the CSRC No.32); the CSRC shall specify otherwise for assets purchased by listed companies that fall in specific industries such as finance and venture capital.

A company listed on the Growth Enterprise Market may not carry out a transaction as specified in the preceding paragraph.

Article 14: When calculating the percentages specified in Article 12 or 13 hereof, the following principles shall be complied with:

(1) if the asset to be purchased is equity, the higher of (i) the product of the total asset value of the investee enterprise and the percentage of the equity accounted for by the investment or (ii) the transaction amount shall be the total asset value; the operating revenue shall be the product of the operating revenue of the investee enterprise and the percentage of the equity accounted for by the investment; the higher of (i) the product of the net asset value of the investee enterprise and the percentage of the equity accounted for by the investment or (ii) the transaction amount shall be the net asset value; if the asset to be sold is equity, the total asset value, operating revenue and net asset value shall be the product of the total asset value, operating revenue or net asset value of the investee enterprise respectively and the percentage of the equity accounted for by the investment;

if the equity purchase would result in the listed company acquiring a controlling interest in the investee enterprise, the higher of either the total asset value of the investee enterprise or the transaction amount shall be the total asset value; the operating revenue shall be the operating revenue of the investee enterprise; the higher of either the net asset value of the investee enterprise or the transaction amount shall be the net asset value; if the equity sale would result in the listed company losing its controlling interest in the investee enterprise, the total asset value, operating revenue and net asset value shall be the total asset value, operating revenue and net asset value of the investee enterprise respectively;

(2) if the assets to be purchased are non-equity assets, the higher of either the book value of the assets or the transaction amount shall be the total asset value; the higher of either (i) the difference between the book value of the relevant assets and liabilities or (ii) the transaction amount shall be the net asset value; if the assets to be sold are non-equity assets, the book value of the assets and the difference between the book value of the relevant assets and liabilities shall be the total value of the assets and the net value of the assets respectively; if no liabilities attach to the non-equity assets, the benchmark for the net asset value specified in Item (3) of the first paragraph of Article 12 shall not apply;

(3) if a listed company is to simultaneously purchase and sell assets, the relevant percentages for the assets to be purchased and sold shall be calculated separately, and the higher of the two percentages shall apply; and/or

(4) if a listed company purchases or sells identical or related assets for a continuous period of 12 months, the pertinent figures shall be calculated separately using the aggregate figures. With the exception of cases specified in Article 13 hereof, asset transactions of which a Material Asset Restructuring report has been formulated and disclosed in accordance herewith need not be included in the aggregate calculation.

If the subject assets of a transaction are owned or controlled by the same transaction counterparty or fall within an identical or similar scope of business or if another circumstance recognised by the CSRC applies, they may be recognised as identical or related assets.

Article 15: For the purposes of Article 2 hereof, the phrase “asset transaction carried out by other means” includes:

(1) the establishment of a new enterprise with a third party, or the increase or reduction of the capital of an existing enterprise;

(2) entrusted operation or leasing of the assets of another enterprise, or entrustment of the operation or leasing of operating assets to a third party;

(3) acceptance of an asset bestowal to which obligations attach or donation of assets to a third party; or

(4) another circumstance as determined by the CSRC in accordance with the principle of prudential regulation.

If any of the aforementioned asset transactions substantively constitutes an asset purchase or sale, and any relevant percentage calculated in relation to the benchmarks specified herein reaches at least 50%, relevant obligations and procedures shall be performed in accordance herewith.

Part Three: Procedure for a material asset restructuring

Article 16:When a listed company and the transaction counterparty conduct initial negotiations on matters relating to a Material Asset Restructuring, they shall take necessary and sufficient confidentiality measures, formulate a stringent and effective confidentiality system and restrict the scope of persons that are privy to relevant sensitive information. If the listed company and transaction counterparty engage a securities service institution, they shall promptly execute a confidentiality agreement with such securities service institution.

If relevant information is broadcast in the media or unusual fluctuations occur in the trading of the listed company's shares before the board resolution on the Material Asset Restructuring is announced, the listed company shall promptly announce the relevant plan, proposal or the current status of relevant matters as well as related developments and risk factors, etc. and carry out other relevant matters in accordance with relevant information disclosure rules.

Article 17: The listed company shall engage securities service institutions, such as an independent financial consultant, law firm, and accounting firm with relevant securities business qualifications, etc. to issue opinions on the Material Asset Restructuring.

The independent financial consultant and law firm shall carefully verify whether the Material Asset Restructuring constitutes an affiliated transaction and, based on the facts confirmed through the verification, issue a clear opinion. If the Material Asset Restructuring involves an affiliated transaction, the independent financial consultant shall issue a clear opinion on the effect that the contemplated restructuring would have on the non-affiliated shareholders of the listed company.

If the pricing of the asset transaction is to be based on the outcome of an asset appraisal, the listed company shall engage an asset appraisal firm with relevant securities business qualifications to issue an asset appraisal report.

If a securities service institution incorporates the professional opinions of other securities service institutions or personnel in the opinion that it issues, it shall nevertheless conduct a due diligence investigation, carefully verify the contents of the professional opinions used and bear liability for the conclusions derived from the professional opinions of the other securities service institutions and personnel that it used.

Article 18: After the listed company and the transaction counterparty have executed an engagement contract with a securities service institution, they may not replace such firm without a legitimate reason. If there is a legitimate reason making the replacement of the securities service institution necessary, the specific reason for the replacement and the statement and comments of the securities service institution shall be disclosed.

Article 19:In the management discussion and analysis section of its Material Asset Restructuring report, the listed company shall provide a detailed analysis of the effect of the contemplated transaction on financial and non-financial metrics such as its capacity as a going concern, future growth prospects and earnings per share for the year in question.

Article 20:Where the results of an asset appraisal serve as the pricing basis for the assets involved in a Material Asset Restructuring, the asset appraisal firm shall carry out its practice activities in accordance with asset appraisal related rules and codes. The board of directors of the listed company shall issue a clear opinion on the independence of the appraisal firm, the reasonableness of its appraisal assumptions, the correlation of the appraisal methods and appraisal objectives and the fairness of the appraisal-based pricing.

Where the results of an asset appraisal do not serve as the pricing basis for the relevant assets, the listed company shall provide in the Material Asset Restructuring report a detailed analysis and explanation of the method of, and parameters for, the valuation of the relevant assets and other metrics and factors that affect the valuation results. The board of directors of the listed company shall express a clear opinion on the independence of the valuation firm, the reasonableness of the valuation assumptions and the correlation of the valuation method and valuation objective, and, in light of the price of the relevant assets in comparable market transactions, the price-earnings ratio or price-to-book ratio of listed companies in the same industry and other such generally accepted metrics, provide a detailed analysis of the fairness of the pricing of the contemplated transaction in the Material Asset Restructuring report.

In the circumstances set forth in the preceding two paragraphs, the appraisal firm or valuation firm shall, in principle, conduct its appraisal or valuation using two or more methods. The independent directors of the listed company shall attend the meeting of the board of directors and issue an independent opinion on the independence of the appraisal or valuation firm, the reasonableness of the appraisal or valuation assumptions and the fairness of the pricing of the transaction and disclose the same separately.

Article 21: When a listed company is to carry out a Material Asset Restructuring, the board of directors shall adopt a resolution thereon in accordance with the law and submit the same to the shareholders' general meeting for approval.

The board of directors of the listed company shall issue a clear judgement as to whether the Material Asset Restructuring constitutes an affiliated transaction and disclose the same as a matter on which the board of directors has adopted a resolution.

The independent directors of the listed company shall issue their independent opinion on the Material Asset Restructuring on the basis of a solid understanding of relevant information. If the Material Asset Restructuring constitutes an affiliated transaction, the independent directors may separately engage an independent financial consultant to issue an opinion on the effect that the contemplated transaction would have on the non-affiliated shareholders of the listed company. The listed company shall actively cooperate with the independent directors in retrieving relevant materials and provide them the necessary support and conveniences to perform their duties, such as by arranging for an onsite investigation and arranging for the securities service institutions to give their reports to them.

Article 22: The listed company shall disclose at least the documents set forth below on the working day following the adoption of the resolution on the Material Asset Restructuring by the board of directors:

(1) the resolution of the board of directors and the opinions of the independent directors; and

(2) the listed company's preliminary plan for the Material Asset Restructuring.

The Material Asset Restructuring report for the contemplated restructuring, the independent financial consultant's report, the legal opinion, and the audit report and asset appraisal or valuation report relating to the restructuring shall be announced no later than simultaneously with the notice convening the shareholders' general meeting. If a listed company is to disclose a profit forecast report voluntarily, the same shall have been reviewed by an accounting firm with the relevant securities business qualifications and be announced at the same time as the Material Asset Restructuring report.

The contents and formats of the information disclosure documents specified in Item (2) of the first paragraph and the second paragraph of this Article shall be specified separately.

The listed company shall announce the board's resolution and the opinion of the independent directors in at least one newspaper or periodical designated by the CSRC and disclose in full the Material Asset Restructuring report and its abstract as well as the reports or opinions of the relevant securities service institutions on the stock exchange's website.

Article 23: The resolution on the Material Asset Restructuring adopted by the shareholders' general meeting shall at minimum contain the following details:

(1) the method of the contemplated Material Asset Restructuring, the subject matter of the transaction and the transaction counterparty;

(2) the transaction price or price range;

(3) the pricing method or pricing basis;

(4) in whom the gains and losses from the relevant assets during the period between the pricing reference date and the closing date shall vest;

(5) the contractual obligations for carrying out the transfer of title to the relevant assets and liability for breach of contract;

(6) the period of validity of the resolution;

(7) the specific authorisation of the board of directors to carry out the matters relating to the contemplated Material Asset Restructuring; and

(8) other details that need to be specified.

Article 24: The resolution on the Material Asset Restructuring before the shareholders' general meeting of the listed company shall require at least two-thirds of the voting rights held by the shareholders in attendance for adoption.

If a shareholder of the company or an affiliated party thereof has an affiliation with the listed company's Material Asset Restructuring, such affiliated shareholder shall recuse itself from the vote by the shareholders' general meeting on matters of the Material Asset Restructuring.

If the transaction counterparty has reached an agreement or tacit understanding with the controlling shareholder of the listed company on acquisition of equity of the listed company or on the recommendation of directors of the listed company, and such agreement or tacit understanding could result in a change in the de facto control of the listed company, the controlling shareholder of the listed company and its affiliated parties shall recuse themselves from the vote.

When the listed company convenes a shareholders' general meeting on the Material Asset Restructuring, such meeting shall be held in person, and internet voting and other such lawful method shall be provided to make participation in the shareholders' general meeting by shareholders convenient. The outcome of the votes of the shareholders other than the listed company's directors, supervisors, senior management personnel and shareholders who alone or together hold at least 5% of the shares of the listed company shall be counted separately and disclosed.

Article 25:The listed company shall announce the resolution on a Material Asset Restructuring adopted by its shareholders' general meeting on the working day immediately following adoption thereof together with a legal opinion issued by a law firm on matters such as the meeting's convening procedure, the qualifications of the convener and the persons present, the voting procedure and the voting results.

If the transaction circumstances set forth in Article 13 hereof are involved, the listed company shall additionally engage an independent financial consultant in accordance with CSRC provisions to submit an application to the CSRC within three working days after the adoption of the resolution.

Article 26: All of the listed company's directors, supervisors and senior management personnel shall announce an undertaking warranting that the information disclosure and application documents of the Material Asset Restructuring do not contain false records, misleading statements or material omissions.

The counterparty to the Material Asset Restructuring shall announce an undertaking to provide to the listed company relevant information on the contemplated restructuring in a timely manner and warrant that the information provided is true, accurate and complete and that if the listed company or investors incur a loss due to the information it provided containing false records, misleading statements or material omissions, it shall be liable for compensation in accordance with the law.

The entities and individuals specified in the preceding two paragraphs shall announce an additional undertaking that if there is suspicion that the information provided or disclosed by them contains false records, misleading statements or material omissions, resulting in the judicial authority or CSRC opening a case and launching an investigation, they will suspend transferring the shares of the listed company in which they have an interest until a definite conclusion has been reached in the case investigation.

Article 27: The CSRC shall render a decision on whether or not to approve an application of a listed company's transaction involving the circumstances specified in Article 13 hereof based on the statutory conditions and procedure.

If the CSRC, during the review period, issues a feedback opinion requiring the listed company to give a written explanation, the listed company shall give its written reply within 30 days from the date on which it received the feedback opinion, and the independent financial consultant shall cooperate with the listed company in giving such written reply. If the listed company fails to give its reply by the deadline, it shall announce details of the progress on the contemplated transaction, the specific reason why it could not provide its reply on time, etc. on the day following the expiration of the deadline.

Article 28: If the listed company wishes to make a change to the transaction counterparty, subject matter of the transaction, transaction price, etc. after the adoption of the resolution on the Material Asset Restructuring by its shareholders' general meeting, and such change would constitute a material revision of the original transaction plan, it shall submit the same anew to the shareholders' general meeting for deliberation after adoption by the board of directors through voting and, in a timely manner, announce the relevant documents.

If the listed company makes a material revision to the original transaction plan in accordance with the preceding paragraph during the review by the CSRC, it shall additionally submit an application anew to the CSRC in accordance herewith and simultaneously announce the relevant documents.

If the board of directors of the listed company resolves to withdraw the application during the review by the CSRC, the reason therefor shall be explained and an announcement shall be published; if the board of directors of the listed company resolves to terminate the contemplated transaction, the same shall additionally be submitted to the shareholders' general meeting for deliberation in accordance with the company's articles of association.

Article 29:If the Material Asset Restructuring of a listed company involves the transaction circumstances set forth in Article 13 hereof, it shall be submitted to the M&A and Restructuring Committee for review.

Article 30: Once the listed company receives notice from the CSRC concerning the convening of a meeting of the M&A and Restructuring Committee to review its application, it shall promptly announce the same and apply for the suspension of the trading of its shares during the meeting of the M&A and Restructuring Committee until the outcome of its vote is disclosed.

On the working day following receipt of the notice on the outcome of the vote of the M&A and Restructuring Committee on its application, the listed company shall announce the outcome and apply for the resumption of trading of its shares. The announcement shall specify that another announcement will be made when the company receives the decision rendered by the CSRC on whether or not to grant its approval.

Article 31: On the working day following receipt of the decision rendered by the CSRC on whether or not to approve its application, the listed company shall announce the same.

If the CSRC grants its approval, the listed company shall disclose additional relevant documents in accordance with relevant information disclosure rules simultaneously with its announcement of the approval decision.

Article 32: After the listed company has completed the relevant approval procedures for its Material Asset Restructuring, it shall implement its restructuring plan in a timely manner, prepare a report on its implementation of the plan within three working days from the date of completion of implementation, submit the written report to the stock exchange and announce the same.

The independent financial consultant and law firm engaged by the listed company shall review the compliance of, and the risks involved in, the Material Asset Restructuring implementation process, change of ownership of the assets and related follow-up matters and issue clear conclusive opinions. The opinions issued by the independent financial consultant and law firm shall be submitted and announced simultaneously with the report on the implementation of the plan.

Article 33:If implementation of the contemplated Material Asset Restructuring is not completed within 60 days from the date of completion of the relevant approval procedures, the listed company shall, on the working day following the expiration of the period, report on the progress of the implementation and announce the same. Thereafter, an announcement shall be made once every 30 days until implementation is completed.

If the transaction circumstances set forth in Article 13 or 44 hereof are involved, the approval document shall become null and void if implementation of the Material Asset Restructuring is not completed within 12 months from the date of receipt of the CSRC approval document.

Article 34: If, in the course of the implementation of the Material Asset Restructuring, a material event that laws and regulations require be disclosed occurs, the listed company shall make an announcement thereof in a timely manner. If such event causes a substantive change in the contemplated transaction, the transaction must be submitted anew to the shareholders' general meeting for deliberation. If the transaction circumstances set forth in Article 13 hereof are involved, the transaction shall additionally be submitted anew to the CSRC for approval.

Article 35: If the present earning value method, hypothetical development method or other such method based on a forecast of future earnings to appraise or valuate the assets to be purchased and the same was used as a pricing reference basis, the listed company shall, in the annual reports for the three years following completion of the implementation of the Material Asset Restructuring, separately disclose the discrepancy between the actual profit figure and the forecast profit figure of the relevant assets, and the accounting firm shall issue a review opinion thereon. The transaction counterparty shall execute with the listed company a clear and practicable indemnification agreement in respect of the circumstance where the actual profit figure for the relevant assets is less than the forecast profit figure therefor.

If it is anticipated that the contemplated Material Asset Restructuring will dilute the earnings per share of the listed company for the year in question, the listed company shall propose specific measures to make up the earnings per share and submit the relevant motion to the board of directors and the shareholders' general meeting for a vote. The relevant entity responsible for implementing the specific measures shall announce an undertaking to the effect that it warrants that it will duly perform its obligations and responsibilities.

If a listed company purchases assets from a specific party other than its controlling shareholder, de facto controller or an affiliated party controlled thereby without the same resulting in a change of control, the preceding two paragraphs of this Article shall not apply, and the listed company and transaction counterparty may, based on market principles, hold consultations at their own initiative as to whether to take performance compensation and earnings per share make-up measures and on the relevant specific arrangements.

Article 36: If either of the following circumstances arises in the course of the Material Asset Restructuring of a listed company, the independent financial consultant shall, in a timely manner, issue a review opinion and announce the same:

(1) before completing the relevant approval procedures, the listed company makes a change to the transaction counterparty, subject matter of the transaction, transaction price, etc. and such change constitutes a material revision of the original restructuring plan, or a substantive change in the original restructuring plan results after the occurrence of a material event; or

(2) after the listed company has completed the relevant approval procedures, a material event occurs in the course of the implementation of the restructuring plan, causing a substantive change in the original restructuring plan.

Article 37:An independent financial consultant shall, in accordance with relevant CSRC provisions, perform its ongoing guidance duties toward a listed company that has implemented a Material Asset Restructuring. The term of such ongoing guidance shall be not less than one financial year from the date on which the implementation of the Material Asset Restructuring is completed. If a Material Asset Restructuring as set forth in Article 13 hereof is implemented, the term of ongoing guidance shall not be less than three financial years from the date on which the CSRC approves the Material Asset Restructuring.

Article 38: While taking into consideration the reports of the listed company for the year in which the Material Asset Restructuring was carried out and the first financial year after completion of the implementation thereof, the independent financial consultant shall, within 15 days from the date of disclosure of the annual report, issue an ongoing guidance opinion on the following matters relating to the implementation of the Material Asset Restructuring and announce the same:

(1) details of the delivery or change in ownership of the transaction assets;

(2) performance by the parties to the transaction of their undertakings;

(3) the fulfilment of the announced earnings forecast or profit forecast;

(4) the development of the businesses as mentioned in the management discussion and analysis section;

(5) the company's governance structure and the operation thereof; and

(6) other matters with respect to which there is a discrepancy as compared to the published restructuring plan.

The independent financial consultant shall additionally, in light of the annual reports for the second and the third financial years after the completion of the implementation of the Material Asset Restructuring as specified in Article 13 hereof, issue an ongoing guidance opinion on the matters set forth in Items (2) to (6) of the preceding paragraph and announce the same within 15 days from the date of disclosure of the annual report.

Part Four: Management of information relating to a material asset restructuring

Article 39: When a listed company is planning and implementing a Material Asset Restructuring, relevant persons with an obligation to disclose information shall fairly disclose to all investors relevant information that could have a relatively large effect on the trading price of the listed company's shares (Price Sensitive Information), and may not selectively disclose the same early to specific parties.

Article 40: The listed company's shareholders, de facto controller, and other relevant organisations and persons involved in the planning, discussion, decision and other such stages of the Material Asset Restructuring shall, in a timely manner, accurately report relevant information to the listed company and cooperate with the listed company in accurately and completely disclosing the same. If the listed company learns of Price Sensitive Information, it shall, in a timely manner, apply to the stock exchange to suspend the trading of its shares and disclose such information.

Article 41: The listed company, its directors, supervisors and senior management personnel, the transaction counterparty involved in the Material Asset Restructuring and its affiliated parties, the directors, supervisors, senior management personnel or persons in charge of the transaction counterparty and its affiliated parties, the securities service institutions engaged by the parties to the transaction and their working personnel, relevant organisations and persons involved in the planning, discussion, decision, approval and other such stages of the Material Asset Restructuring and other relevant organisations and persons who are privy or could be privy to Price Sensitive Information due to an immediate family relationship, provision of services, business relationship, etc. shall bear an obligation of confidentiality until such Price Sensitive Information on the Material Asset Restructuring has been disclosed in accordance with the law. They are prohibited from using such information for insider trading purposes.

Article 42: When the listed company is planning the Material Asset Restructuring, it shall record in detail the progress of each specific stage in the planning process, including the specific times and places of the discussions on the relevant plan, the formation of the relevant intent and the execution of the relevant agreements or letters of intent, the organisations and persons involved, the substance of the discussions and resolutions, etc., prepare a written transaction progress memorandum and duly preserve the same. All persons involved at each stage shall promptly sign the memorandum in confirmation.

If the listed company estimates that it will be difficult to keep the planned Material Asset Restructuring secret or if the same has already been divulged, it shall apply to the stock exchange to suspend the trading of its shares in a timely manner until such time as it truthfully, accurately and completely discloses relevant information. During the suspension of the trading of its shares, the listed company shall issue an announcement on the progress of the event at least once each week.

If the trading price of the listed company's shares experiences unusual fluctuations due to market rumours of a Material Asset Restructuring, the listed company shall, in a timely manner, apply to the stock exchange to suspend the trading in its shares, verify whether there is a restructuring that would affect the trading price of its shares and clarify the same. The listed company may not fail to perform its information disclosure obligation on the grounds of uncertainty in the relevant matters.

Part Five: Issuance of shares to purchase assets

Article 43: An issuance of shares by a listed company to purchase assets shall comply with the following provisions:

(1) it is fully explained and disclosed that the contemplated transaction is conducive to enhancing the quality of the listed company's assets, improving its financial position and strengthening its capacity as a going concern; and it is conducive to reducing the listed company's affiliated transactions, avoiding inter-affiliate competition and strengthening its independence;

(2) the certified public accountant has issued unqualified audit reports on the listed company's financial accounting reports for the most recent year and most recent period; if an audit report with a qualified opinion, adverse opinion or disclaimer of opinion was issued, a special audit by a certified public accountant confirming that the material effect of the matters giving rise to the qualified opinion, adverse opinion or disclaimer of opinion has been eliminated or that it will be eliminated by virtue of the contemplated transaction;

(3) the listed company and its incumbent directors and senior management personnel have not had a case opened against them and been under investigation by the judicial authority for suspicion of having committed a criminal offence or have not had a case opened against them and been under investigation by the CSRC for a suspected violation of laws or regulations, unless three years have elapsed since the end of the suspected criminal offence or violation of laws or regulations, the transaction plan would be conducive to eliminating the adverse consequences that could be caused by the act in question and pursuit of the liability of the relevant authors of the act would not be affected;

(4) it is fully explained and disclosed that the assets purchased with the proceeds from the share offering by the listed company are operational assets the title to which is clear, and the procedures for the transfer of title thereto can be completed within the specified period of time; and

(5) other conditions as specified by the CSRC.

For the purpose of promoting the integration, transformation and upgrading of the industry, a listed company may offer shares to specific parties other than its controlling shareholder, de facto controller or other affiliated party controlled thereby to purchase the assets, provided that such offering would not result in a change in its control. If the assets to be purchased have no obvious synergy with the existing main business, the business development strategy and business management model as well as the risks that may be encountered in the transformation and upgrading of the business and the countermeasures thereto after the contemplated transaction shall be fully explained and disclosed.

If the specified party subscribes for the privately placed shares of the listed company in cash or with assets and if the listed company uses the proceeds from the private placement to purchase assets from the specified party, the same shall be deemed an issuance of shares by the listed company to purchase assets.

Article 44:Where a listed company offers shares to purchase assets, it may simultaneously make an offering to raise certain ancillary funds. The pricing method therefor shall be handled in accordance with current relevant provisions.

When offering shares to purchase assets, a listed company shall comply with the provisions on Material Asset Restructurings hereof, prepare a preliminary plan for the offering of shares to buy assets and a report for the offering of shares to buy assets, and submit an application to the CSRC.

Article 45:The price of the shares offered by a listed company may not be less than 90% of the market reference price. The market reference price shall be the average trading price of the company's stock for the 20 trading days, 60 trading days or 120 trading days preceding the date of the announcement of the resolution of the board of directors on the contemplated offering of shares to purchase assets. The resolution of the board of directors on the contemplated offering of shares to purchase assets shall provide an explanation of the basis for the choice of the market reference price.

The formula for calculating the average trading price mentioned in the preceding paragraph is as follows: the average trading price of the company's stock for the number of trading days preceding the date of the announcement of the resolution of the board of directors = total trading amount of the company's stock during the number of trading days preceding the resolution announcement date ÷ total trading volume of the company's stock during the number of trading days preceding the resolution announcement date.

The resolution of the board of directors on the contemplated offering of shares to purchase assets may specify that if, before the approval by the CSRC, there is a material change in the price of the listed company's stock as compared to the initially determined offer price, the board of directors may revise the offer price once based on the predetermined revision plan.

The plan for revising the offer price specified in the preceding paragraph shall be clear, specific and practicable, explain in detail whether the pricing of the assets to be purchased, the quantity of shares to be offered and the reasons therefor are to be revised accordingly, be fully disclosed at the time of the first announcement of the board resolution and be submitted to the shareholders' general meeting in accordance with regulations for deliberation. If the board of directors revises the offer price in accordance with the predetermined plan after adoption of the resolution by the shareholders' general meeting, the listed company shall not be required to submit an application anew to the CSRC in accordance with Article 28 hereof.

Article 46: Shares of a listed company subscribed for and obtained by a specified party with assets may not be transferred for a period of 12 months from the date on which the share issuance was completed. They may not be transferred for a period of 36 months if:

(1) the specified party is the listed company's controlling shareholder, de facto controller or an affiliated party controlled by it;

(2) the specified party obtained de facto control of the listed company through its subscription for the shares issued; or

(3) at the time the specified party obtained the shares issued, it had owned the rights and interests in the assets it used to subscribe for the shares for less than 12 months in succession.

Article 47: When a listed company applies to issue shares to purchase assets, its application shall be submitted to the M&A and Restructuring Committee for review.

Article 48: If the issuance of shares by a listed company to purchase assets results in the shares held or controlled by the specified party reaching a statutory percentage, the relevant obligations shall be performed in accordance with the Measures for the Administration of the Takeover of Listed Companies (Revised in 2014) (Order of the CSRC No.108).

If a listed company offers shares to its controlling shareholder, de facto controller or an affiliated party controlled thereby to purchase assets, or if the offering of shares to purchase assets would cause a change in the actual control of the listed company, the specific party that subscribes for the shares shall give a publicsev undertaking in the report for the offering of shares to purchase assets to the effect that if the closing price of the stock of the listed company is less than the offer price for 20 trading days in succession within the six months after completion of the contemplated transaction or the closing price is less than the offer price at the end of the six months after completion of the transaction, the lockup period for the company stock that it holds will automatically be extended for at least six months.

The specific party specified in the preceding paragraph shall additionally give a public undertaking in the report for the offering of shares to purchase assets to the effect that if the judicial authority or the CSRC opens a case and launches an investigation as a result of a suspicion that the information provided or disclosed by it contained false records, misleading statements or material omissions, it will not transfer the shares of the listed company in which it has an interest until a definite conclusion has been reached in the case investigation.

Article 49: Once the CSRC approves its application to issue shares to purchase assets, the listed company shall proceed with the same in a timely manner. Once ownership of the relevant assets purchased from the specified party has been changed to the listed company, the independent financial consultant and law firm engaged by the listed company shall check the compliance and risks of the change in ownership of the assets and relevant follow-up matters and issue clear opinions thereon. The listed company shall issue an announcement on the change of ownership of the relevant assets within three working days after completion of the change of ownership procedures. The announcement shall contain the conclusive opinions of the independent financial consultant and the law firm.

Once the listed company has completed the announcement and reporting tasks specified in the preceding paragraph, it may carry out the securities registration procedures with the stock exchange and the securities depository and clearing company for the specified party that subscribed for the shares.

Article 50:If a merger by absorption effected with a share swap involves a listed company, the pricing and offering of the listed company's shares shall be handled in accordance with this Part.

If a listed company offers preference shares to purchase assets or merge with another company and the CSRC provides otherwise in respect thereof, such provisions shall apply.

A listed company may, for the purpose of purchasing assets or merging with another company, offer to specific parties corporate bonds or privately placed warrants convertible into shares.

Part Six: Application for the offering of new shares or corporate bonds after a material asset restructuring

Article 51: Once the implementation of an approved Material Asset Restructuring that was reviewed by the CSRC has been completed and the listed company applies to make a public offering of shares or of corporate bonds and the following conditions are satisfied, a simulated calculation of the business results prior to the Material Asset Restructuring may be made at the time of the review:

(1) the asset that was incorporated into the listed company was a complete business entity;

(2) since the completion of the Material Asset Restructuring, the undertakings given by the parties to the restructuring have been performed on schedule, and the listed company's business has been stable and its operations good; and

(3) since the completion of the Material Asset Restructuring, the profits of the listed company and from the assets have reached the level forecast.

If the listed company did not satisfy the conditions for a public offering of shares specified by the CSRC before the Material Asset Restructuring or if the restructuring resulted in a change in the de facto controller of the listed company, at least one complete financial year shall have elapsed from the time of completion of the restructuring transaction before the listed company can apply for a public offering of new shares or corporate bonds.

Article 52:A “complete business entity” as mentioned herein shall satisfy the following conditions:

(1) the business it engages in and its operating assets are independent and complete, and no major change therein has occurred in the two most recent years;

(2) before incorporation into the listed company, it had been operated continuously for at least two years by the same de facto controller;

(3) before incorporation into the listed company, it practised independent accounting, or, if it did not practise independent accounting, the revenues and expenses relating to its business can be clearly separated out accounting-wise; and

(4) the listed company has executed engagement contracts with the principal members of the senior management personnel of the business entity or by other means has arrived at a suitable arrangement on the continued operation and management of the business entity after completion of the transaction.

Part Seven: Oversight and legal liability

Article 53: If a listed company fails to perform the relevant obligations or procedures in accordance herewith but nevertheless carries out a Material Asset Restructuring without authorisation, the CSRC shall order rectification, and may take regulatory measures such as giving a regulatory lecture and issuance of a written warning against it. If the circumstances are serious, the CSRC may order suspension or termination of the restructuring activities, issue a warning and impose a fine, and may take the measure to ban the relevant responsible persons from the market.

If the Material Asset Restructuring of a listed company prejudices the lawful rights and interests of the listed company and/or investors due to obviously unfair pricing, improper funneling of benefits or other such issue, the CSRC shall order rectification and may take regulatory measures such as giving a regulatory lecture and issuance of a warning letter. If the circumstances are serious, the CSRC may order suspension or termination of the restructuring activities, issue a warning and impose a fine, and may take the measure to ban the relevant responsible persons from the market.

Article 54: If a listed company or other party with an information disclosure obligation fails to submit a Material Asset Restructuring report in accordance herewith, or if the report submitted contains false records, misleading statements or material omissions, the CSRC shall order rectification and impose penalties in accordance with Article 193 of the Securities Law. If the circumstances are serious, the CSRC may order suspension or termination of the restructuring activities, and may take the measure to ban the relevant responsible persons from the market. If a criminal offence is suspected, the case shall, in accordance with the law, be transferred to the judicial authority for pursuit of criminal liability.

Article 55: If a listed company or other party with an information disclosure obligation fails to disclose information on a Material Asset Restructuring in accordance with provisions, or if the information it discloses contains false records, misleading statements or material omissions, the CSRC shall order rectification and impose penalties in accordance with Article 193 of the Securities Law. If the circumstances are serious, the CSRC may order suspension or termination of the restructuring activities, and may take the measure to ban the relevant responsible persons from the market. If a criminal offence is suspected, the case shall, in accordance with the law, be transferred to the judicial authority for pursuit of criminal liability.

If the transaction counterparty to a Material Asset Restructuring or offering of shares to purchase assets fails to provide in a timely manner information to the listed company or other party with an information disclosure obligation, or if the information that it provides contains false records, misleading statements or material omissions, matters shall be handled in accordance with the preceding paragraph.

Article 56:If it is suspected that a circumstance as set forth in Article 53, 54 or 55 hereof applies to a Material Asset Restructuring, the CSRC may order the listed company to provide a public explanation, engage an independent financial consultant or other securities service institution to conduct an additional review and disclose its professional opinion, and the listed company shall suspend the restructuring until the provision of the public explanation and disclosure of the professional opinion. If the judicial authority or CSRC has opened a case and launched an investigation as a result of the listed company being suspected of any of the aforementioned circumstances, the listed company shall suspend its restructuring until a definite conclusion has been reached in the case investigation.

If a circumstance as set forth in Article 54 or 55 hereof is suspected and the judicial authority or the CSRC has opened a case and launched an investigation, the relevant entities and individuals shall strictly comply with the undertakings that they have announced and they may not transfer the shares of the listed company in which they have an interest until a definite conclusion has been reached in the case investigation.

Article 57:If the directors, supervisors and senior management personnel of a listed company fail to perform their obligation of acting in good faith and with due diligence, or the shareholders and de facto controller of a listed company and their relevant persons in charge fail to perform their relevant obligations in accordance herewith, causing the restructuring plan to prejudice the interests of the listed company, the CSRC shall order rectification and may take regulatory measures such as giving a regulatory lecture and issuance of a warning letter. If the circumstances are serious, the CSRC shall issue a warning, impose fines and may take measures such as declaring the relevant persons persona non grata or banning them from the market. If a criminal offence is suspected, the case shall, in accordance with the law, be transferred to the judicial authority for pursuit of criminal liability.

Article 58:If a securities service institution that issues financial consultant reports, audit reports, legal opinions, asset appraisal reports, valuation reports or other professional documents for a Material Asset Restructuring and its personnel fail to perform their obligation of acting in good faith and with due diligence, breach industry codes or business rules, or fail to perform their reporting and announcement obligations or ongoing guidance obligations in accordance with the law, the CSRC shall order rectification and may take regulatory measures such as giving a regulatory lecture, issuing a warning letter, ordering the provision of a public explanation, ordering the participation in training, ordering the issuance of regular reports and declaring them persona non grata. If the circumstances are serious, the CSRC shall impose penalties in accordance with Article 226 of the Securities Law.

If the documents prepared or issued by a securities service institution and its professional personnel as mentioned in the preceding paragraph contain false records, misleading statements or material omissions, the CSRC shall order rectification and impose penalties in accordance with Article 223 of the Securities Law. If the circumstances are serious, the CSRC may take the measure to ban market access. If a criminal offence is suspected, the case shall, in accordance with the law, be transferred to the judicial authority for pursuit of criminal liability.

Where any of the circumstances set forth in the preceding two paragraphs applies, the acceptance of new business on mergers, acquisitions and restructurings of listed companies shall be prohibited until rectification as required by the CSRC is completed.

Article 59: If, after the completion of a Material Asset Restructuring, for a reason other than one that could not have been known in advance by the management of the listed company and was beyond their control after the fact, the profit realised from the assets purchased by the listed company fails to reach 80% of the forecast amount stated in the asset appraisal or valuation report, or there exists a relatively large discrepancy between the actual operating results and those stated in the management discussion and analysis section of the Material Asset Restructuring report, the listed company's chairman of the board, general manager and the accounting firm, financial consultant, asset appraisal firm and valuation firm that bear corresponding liability therefor and their professional personnel shall give an explanation and publicly apologise to investors in the same newspapers/periodicals at the same time that the listed company discloses its annual report. If the profit realised fails to reach 50% of the forecast amount, the CSRC may take regulatory measures such as giving a regulatory lecture, issuance of a written warning and ordering the submission of regular reports against the listed company, relevant firms and their responsible persons.

Article 60: If a person privy to information on a Material Asset Restructuring divulges such information before it is disclosed in accordance with the law, purchases or sells, or recommends to others to purchase or sell, securities of the relevant listed company, takes advantage of the Material Asset Restructuring to disseminate false information, manipulates the securities market or engages in fraudulent activities, the CSRC shall impose penalties against him/her in accordance with Article 202, 203 or 207 of the Securities Law. If a criminal offence is suspected, the case shall, in accordance with the law, be transferred to the judicial authority for pursuit of criminal liability.

Part Eight: Supplementary provisions

Article 61: These Measures shall be effective as of November 23 2014. The Measures for the Administration of Material Asset Restructurings by Listed Companies (Order of the CSRC No.73) promulgated on April 16 2008 and revised on August 1 2011 and the Supplementary Provisions for the Pricing of Shares Issued for Material Asset Restructurings of Listed Companies that are to Undergo Bankruptcy Reorganisation (CSRC Announcement [2008] No.44) shall be repealed simultaneously.