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2009-11-19 14:57:24

 

（Decree No.189 of the State Council of the People's Republic of China, Promulgated on December 25, 1995)

Article 1 These Provisions are hereby formulated in accordance with relevant provisions in the “Company Law of the People's Republic of China” (hereinafter referred to as the Company Law) for the purpose of standardizing the issuance and trading of the domestic listed foreign shares by companies limited by shares and safeguarding the legitimate rights and interests of investors. 

Article 2 With the approval of the Securities Commission of the State Council (the Commission), companies limited by shares (hereinafter referred to as companies) could issue foreign shares for domestic listing. However, if the total face value of domestic listed foreign shares planned to be issued exceeds US$30 million, the Commission shall report to the State Council for approval.

The domestic listed foreign shares to be issued by companies as referred to in the preceding paragraph include those to be issued by companies established through public share offer and issued by companies’ capital increase. The total amount of issuance of domestic listed foreign shares approved by the Commission shall be controlled within the total size prescribed by the state. 

Article 3 Domestic listed foreign shares issued by companies shall be registered shares denominated in RMB. They shall be subscribed for and marketed in foreign currency, and be listed and traded at domestic stock exchanges.

If companies that issue domestic listed foreign shares issue shares to domestic investors (hereinafter referred to as domestic shares), the domestic shares shall be in the form of nominative shares. 

Article 4 Investors for domestic listed foreign shares shall be limited to:

I. natural persons, legal persons and other organizations from abroad;

II. natural persons, legal persons and other organizations from Hong Kong, Macao and Taiwan of China;

III. any Chinese national living abroad; and

IV. other investors for domestic listed foreign shares prescribed by the Commission.

Investors for domestic listed foreign shares shall produce valid instruments as testimony to their identity and qualification as investors when conducting subscription for and trading of domestic listed foreign shares. 

Article 5 Shareholders of domestic listed foreign shares and domestic shares holding the same type of shares shall enjoy the equal rights and fulfill the equal obligations based on the Company Law.

Companies can write into its Articles of Association specific stipulations on special issues concerning the exercise of rights and performance of obligations by its shareholders. 

Article 6 The Articles of Association shall be binding on the company, its shareholders, directors, supervisors, managers and other members of senior management.

Directors, supervisors, managers and other members of senior management shall have a duty of credibility and diligence to the company.

Other members of senior management as referred to in the 1st and 2nd paragraphs of this Article include the company’ finance chief, secretary to directorate and other staff prescribed by the Articles of Association. 

Article 7 The Commission and its supervisory and executive body the China Securities Regulatory Commission (CSRC) shall carry out administration and regulation on the issuance, trading and relevant businesses of domestic listed foreign shares in accordance with provisions of laws and administrative regulations.

Article 8 Companies which are established by public share offer and apply for issuance of domestic listed foreign shares shall comply with the following requirements:

I. the usage of raised funds shall conform to the state industry policies;

II. state provisions on initiation of fixed assets investment shall be complied with;

III. state provisions on foreign capital utilization shall be complied with;

IV. the total issued shares subscribed for by promoters shall be not less than 35% of the total shares planned to be issued by companies;

V. the total contribution amount from promoters shall be not less than RMB0.15 billion;

VI. the shares planned to be issued to the public shall reach more than 25% of the company’s total issued shares, or the proportions of the total shares planned to be issued to the public shall exceed 15% if the total issued shares planned to be issued exceed RMB0.4 billion;

VII. an enterprise which has been reorganized to establish a company or the stated-owned enterprise as the major promoter of the company shall have no history of major illegal activities over the last 3 years;

VIII. an enterprise which has been reorganized to establish a company or the stated-owned enterprise as the major promoter of the company shall remain profitable for the last three consecutive years; and　 

IX. other requirements prescribed by the Commission. 

Article 9 Companies which increase their capital and apply for issuance of domestic listed foreign shares shall comply with the following conditions apart from those stipulated in Item I, II and III of Article 8 of these Provisions:

I. the company shall have sufficient raised funds at last issuance; the usage of raised funds shall conform to the usage confirmed at the time of offerings, and the usage of the capital shall have resulted in good economic benefits;

II. the net assets value of the company shall be not less than RMB0.15 billion in total;

III. the company shall not have major illegal activities during the period from the last shares issuance to the current application;

IV. the company shall remain profitable for the last three consecutive years; for the company which was reorganized to establish a company or the stated-owned enterprise as the major promoter of the company, their profits may be taken into successive calculation; and

V. other conditions prescribed by the Commission; the company established by promoters’ subscription for all issued shares shall also comply with provisions of Item 6 of Article 8 of these Provisions for initial capital increase and application for issuance of domestic listed foreign shares. 

Article 10 Applicants for issuance of domestic listed foreign shares shall go through the following procedures:

I. the promoter or the company shall make an application to the people’s governments of province, autonomous region and municipality under the central government, or to the State Council’s relevant departments in charge of enterprises, which may then recommend it to the Commission;

II. the Commission shall hold a consultation with relevant departments of the State Council to select out qualified companies for issuance of domestic listed foreign shares;

III. the selected company shall submit the documents listed in Articles 11 and 12 of these Provisions to the CSRC for examination and approval; and

IV. A company considered by the CSRC to meet requirements shall then be reported to the Commission for approval or to the State Council according to the stipulations of the first paragraph of Article 2 of these Provisions before issuance of domestic listed foreign shares. 

Article 11 For the application for issuance of domestic listed foreign shares by companies which are established through public share offer, the following documents shall be submitted to the CSRC:

I. an application report;

II. the name of the promoter, subscription amount for shares by the promoter, contribution category and investment verification certificate;

III. the resolution of publicly issuing domestic listed foreign shares approved at the Promoters’ Meeting;

IV. the document for establishing the company approved by departments empowered by the State Council or the people’s governments of province, autonomous region and municipality directly under the central government;

V. the recommendation from the people’s governments of province, autonomous region and municipality directly under the central government or the State Council’s relevant departments in charge of enterprises;

VI. the “Notice of Advance Verification and Approval of Enterprise Name” issued by the company registration authority;

VII. the draft of Articles of Association;

VIII. the prospectus;

IX. the feasibility report on capital usage; if the raised funds used for projects invested by fixed assets is subject to examination and approval, the approval documents for fixed assets investment from relevant authorities shall also be submitted;

X. the financial reports of the original enterprise or the state-owned enterprise as the company’s major promoter over the last three years audited by the registered accountant and the firm to which the accountant is attached; and the audit reports signed and stamped by at least two registered accountants and the firm to which the accountants are affiliated;

XI. the assets appraisal reports signed and stamped by at least 2 professional appraisers and the office to which the appraisers are attached; the confirmation document and the approval document of state-owned shares issued by the state-owned assets administration authorities shall also be submitted if involving the state-owned assets;

XII. the legal opinions on relevant issues signed and stamped by at least two lawyers and the firm to which the two lawyers are affiliated;

XIII. the underwriting scheme and agreement on shares issuance; and

XIV. other documents required by the CSRC.  

Article 12 Companies that increase capital to apply for issuance of domestic listed foreign shares shall submit the following documents to the CSRC:

I. an application report;

II. the agreement on public issuance of domestic listed foreign shares approved at the Shareholders’ Meeting;

III. the document for issuing new shares through capital increase approved by departments empowered by the State Council or the people’s governments of province, autonomous region and municipality directly under the central government;

IV. the recommendation from the people’s governments of province, autonomous region and municipality directly under the central government or the State Council’s relevant departments in charge of enterprises;

V. the Business License issued by the company registration authority;

VI. the Articles of Association;

VII. the prospectus;

VIII. the feasibility report on capital usage; if the raised funds used for projects invested by fixed assets is subject to examination and approval, the approval documents for fixed assets investment from relevant authorities shall also be submitted;

IX. the company’s financial reports over the last three years audited by the registered accountant and the firm to which the accountant is attached; and the audit reports signed and stamped by at least two registered accountants and the firm to which the accountants are affiliated;

X. the legal opinions on relevant issues signed and stamped by at least two lawyers and the firm to which the lawyers are affiliated;

XI. the underwriting scheme and agreement on shares issuance; and

XII. other documents required by the CSRC. 

Article 13 The interval between the company’s issuance of domestic listed foreign shares and domestic shares could be less than 12 months.

Article 14 Companies shall engage qualified registered accountants and their affiliated firm to audit or review their financial reports. 

Article 15 Companies shall conduct accounting calculation and compilation of financial reports according to relevant state regulations.

Companies that make corresponding adjustments to financial reports released to investors of domestic listed foreign shares so as to adapt to the accounting standards of other countries or regions shall make remarks on any discrepancy. 

Article 16 Companies that issue domestic listed foreign shares shall release information to the public according to laws, and make specific provisions on issues including where and how to release the information in its Articles of Association. 

Article 17 Documents of information disclosure by companies that issue domestic listed foreign shares shall be written in Chinese; if the foreign version is necessary, it shall be in a commonly used foreign language. In case of any discrepancy, the Chinese version shall prevail. 

Article 18 Companies that issue domestic listed foreign shares shall entrust the domestic securities institutions established with the approval of the People's Bank of China according to law and accepted by the CSRC as the leading underwriter or one of the leading underwriters.   

Article 19 Companies that issue domestic listed foreign shares shall open a foreign exchange account in domestic banks with qualification of engaging in all kinds of foreign exchange operations. To open a foreign exchange account, companies shall go through provisions of foreign exchange administration outlined by the state.

The leading underwriter of domestic listed foreign shares shall, within the term stipulated in the underwriting agreement, transfer the raised amounts to the foreign exchange account of the company issuing domestic listed foreign shares. 

Article 20 Commission purchase and sale business of domestic listed foreign shares shall be handled by securities institutions established with the approval of the People's Bank of China according to law and accepted by the CSRC. 

Article 21 Shareholders of domestic listed foreign shares could entrust the agent with fulfillment of shareholders’ rights; the agent shall provide valid instruments proving his agency qualification when exercising shareholders’ rights. 

Article 22 Equity owners of domestic listed foreign shares could register their shares under the name of nominal holders.

Equity owners of domestic listed foreign shares shall disclose its information about shareholding change in accordance with laws. 

Article 23 The transaction, custody, liquidation and delivery, transfer and registration of domestic listed foreign shares shall comply with laws and administrative regulations and relevant provisions of the Commission. 

Article 24 Subject to approval of the Commission, the domestic listed foreign shares and their derivatives could be transferred out of China.

The above-mentioned derivatives are referred to as the subscription warrants and overseas depository receipt. 

Article 25 The stock dividends and other amounts paid by companies to shareholders of domestic listed foreign shares shall be priced and declared in RMB and paid in foreign currency. The management of capital in foreign currency raised by companies and the foreign currency needed for payment of stock dividends and other amounts shall be handled based on provisions of foreign exchange administration outlined by the state. If it is stipulated in the Articles of Association that other institutions act in agency of foreign currency conversion and payment to shareholders, it shall be done in accordance with the Articles of Association.　
Article 26 Stock dividends of domestic listed foreign shares and other income could be remitted abroad subject to tax payment according to law. 

Article 27 The Commission could, on the basis of these Provisions, formulate detailed implementation rules.  

Article 28 These Provisions shall come into effect from the promulgation day onwards. Both the “Procedures for the Administration of RMB Special Stocks in Shanghai” promulgated by the People's Bank of China and the Shanghai Municipal People's Government on November 22, 1991, and the “Interim Procedures for the Administration of RMB Special Stocks in Shenzhen” promulgated by the People's Bank of China and the Shenzhen Municipal People's Government on December 5, 1991 are henceforth abolished.

 

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