(Effective Date:1993.04.22--Ineffective Date:)

CONTENTS

CHAPTER ONE GENERAL PROVISIONS CHAPTER TWO ISSUING OF STOCKS CHAPTER THREE TRADING OF STOCKS CHAPTER FOUR BUY OUT CHAPTER FIVE SAFEKEEPING, SETTLEMENT AND TRANSFER CHAPTER SIX INFORMATION REVEALED BY LISTED COMPANIES CHAPTER SEVEN INVESTIGATION AND PUNISHMENT CHAPTER EIGHT ARBITRATION OF DISPUTES CHAPTER NINE SUPPLEMENTARY PROVISIONS

CHAPTER ONE GENERAL PROVISIONS

Article 1. This set of provisions is formulated with a view to meeting the needs of the development of the socialist market economy and the establishment and development of a unified and highly-efficient national stock market, protecting the legitimate rights and interests of investors and the social and public interests and promoting the development of the national economy.

Article 2. The issuing and trading of stocks and related activities within the territory of the People's Republic of China shall abide by the provisions.

The provisions apply to securities which have the same nature and functions as stocks.

Article 3. The issuing and trading of stocks shall observe the principle of being open, fair, honest and trustworthy.

Article 4. The issuing and trading of stocks shall not impinge the State owned property to safeguard and ensure the principal position of the socialist public ownership.

Article 5. The Securities Committee of the State Council (SCSC) is the principal organization to exercise unified management and control of the stock markets in the whole country according to law and provisions. The China Securities Supervision and Management Committee (CSSMC) is the managing hand of the SCSC to exercise supervision and control of the issuing and trading of stocks according to law and regulations.

Article 6. The provisions for the issuing and trading of special stocks in Renminbi shall be formulated separately.

Issuing and listing of stocks abroad through direct or indirect means by enterprises within the territory of the People's Republic of China shall be examined by and get approval from the SCSC. Specific provisions in this regard shall be worked out separately.

CHAPTER TWO ISSUING OF STOCKS

Article 7. Issuers of stocks shall be limited liability companies which have been qualified to issue stocks.

The limited liability companies mentioned above include those which have been already established and which have got the approval to establish.

Article 8. In establishing a limited liability company and applying for issuing stocks to the public, the following requirements shall be met:

1. The production and management shall conform to the industrial policies of the State;

2. Only one kind of common stocks to be issued, with equal rights for equal shares;

3. The promoter's stock shall constitute not less than 35 percent of the total stock capital planned to be issued by the company;

4. Of the total stock capital to be issued by a company, the promoter's share shall not be less than RMB30 million, except otherwise provided for by the State;

5. The part to be issued to the public shall not be less than 25 percent of the total stock capital to be issued and the part to be issued to the staff members and workers of the company shall not exceed 10 percent of the amount to be issued to the public. If the total amount of stocks planned to be issued exceeds RMB400 million, the CSSMC may reduce the proportion to be issued to the public according to provisions, but the minimum proportion shall not be less than 10 percent of the total stocks;

6. The promoter commits no major acts against the law within the last three years; and

7. Other requirements as provided for by the SCSC. Article 9. Apart from the requirements listed above, an enterprise must also meet the following conditions when applying for changing into a limited liability company and issuing of stocks:

1. The net assets account for no less than 30 percent of the total assets and the intangible assets account for no higher than 20 percent of the net assets at the end of the year prior to the stock issuing except otherwise provided for by the SCSC;

2. The company has been making profits for three years running prior to the stock issuing.

When a State-owned enterprise is restructured into a limited liability company and applies for issuing stocks publicly, the proportion of shares to be owned by the State in the total stock shall be provided for separately by the State Council or a department authorized by the State Council.

Article 10. For an increase of equity, a limited liability company must conform to the following conditions apart from those listed in the preceding articles of 8 and 9:

1. The proceeds from the previous stock issue are used profitably in full compliance with what is provided for in the prospectus concerned;

2. The interval from the previous stock issue shall be no less than 12 months;

3. The company has committed no major violations of the law since its previous stock issue; and

4. Other requirements as provided for by the SCSC.

Article 11. In raising stocks for fixed purposes, the following conditions shall be met apart from the ones listed in Articles 8 and 9:

1. The proceeds from the fund raising are use profitably in full compliance with what is provided for in the prospectus concerned;

2. The interval from the previous stock issue shall be no less than 12 months;

3. The company has committed no major violations of the law since its previous stock issue;

4. Stock options for staff members and workers of the company shall have been issued according to the prescribed scope and put in the trusteeship of security organizations designated by the State; and

5. Other requirements provided for by security organizations.