Chapter 1    General Provisions

Article 1    These Detailed Rules are formulated according to the relevant provisions of the Measures for the Administration of Issuance of Securities by Listed Companies (Decree No. 30 of China Securities Regulatory Commission, hereinafter referred to as the "Measures") for the purpose of regulating listed companies' non-public issuance of stocks.    

Article 2    The non-public issuance of stocks by listed companies shall help reduce affiliated transactions, avoid intra-business competition, increase independence, and shall also help in the improvement of the asset quality and financial conditions and strengthen the sustained profit-making ability.    

Article 3    The directors, supervisors, senior management personnel, sponsors, and underwriters of a listed company, the professionals who issue special documents for the issuance and their respective institutions, as well as the controlling shareholders, actual controllers, and insiders of the listed company shall abide by relevant laws, regulations, and rules, and be diligent and conscientious, and shall not make use of the listed company's non-public issuance of stocks to seek illegitimate benefits. They are prohibited from divulging insider information or making use of any insider information to trade securities or manipulate the prices of securities trading.    

Article 4    The controlling shareholders and actual controllers of a listed company and the issuance targets of the present issuance shall, according to the relevant provisions, provide information to the listed company in a timely manner, and cooperate with the listed company in performing the information disclosure obligation truthfully, accurately and completely.    

Article 5    Sponsors and listed companies shall, while selecting the issuance targets of the non-public issuance of stocks and determining the issuance price, comply with the principles of fairness and justice, and represent the maximum benefits of the listed companies and all the shareholders.    

Article 6    Where an issuance scheme involves any major assets reorganization prescribed by the China Securities Regulatory Commission ("CSRC"), the supporting financing shall be handled in accordance with the current relevant regulations.    

Article 7    For the purposes of the Measures, the term "base day for price fixing" shall refer to the base day when the bottom issue price is calculated. The base day for price fixing may be the day when the resolution of the board of directors or the resolution of the general meeting of shareholders on the involved non-public issuance of stocks is announced after adoption, or the first day of the issuance period. The listed company shall offer stocks at a price not lower than the bottom issue price.

For the purposes of the Measures, the formula for calculating the "average stock trading price for the 20 trading days prior to the base day for price fixing" shall be: the average stock trading price for the 20 trading days prior to the base day for price fixing = the total stock trading amount for the 20 trading days prior to the base day for price fixing/ the total stock trading volume for the 20 trading days prior to the base day for price fixing.    

 

Chapter 2    Issuance Targets and Conditions for Subscription

Article 8    For the purposes of the Measures, the term "not more than ten issuance targets" shall refer to the requirement that there shall not be more than ten legal persons, natural persons, or other lawful investment organizations that subscribe and obtain the stocks in the present non-public issuance.

Where a securities investment fund management company subscribes stocks with two or more kinds of funds it manages, it shall be deemed as one issuance target.

A trust company shall, when serving as an issuance target, subscribe for the stocks only with its own funds.    

Article 9    Where an issuance target falls under any of the following circumstances, the specific issuance target and the subscribing price thereof or the price fixing principles shall be determined by the listed company's board resolution adopted on the non-public issuance of stocks, and shall be subject to the approval of the general meeting of shareholders; the subscribed shares shall not be transferred within 36 months as of the end of the issuance:

(1) Being the listed company's controlling shareholder, actual controller, or controlled affiliated party;

(2) Being an investor that obtains the listed company's actual controlling right by subscribing for the shares of the present issuance; or

(3) Being a domestic or overseas strategic investor that the board of directors intends to introduce.    

Article 10    Where an issuance target falls outside the circumstances prescribed in Article 9 of these Detailed Rules, the listed company shall, after obtaining the certification and approval document for the issuance, determine the issuance price and the issuance targets by way of bidding according to these Detailed Rules. The shares subscribed by the issuance target shall not be transferred within 12 months as of the end of the issuance.    

 

Chapter 3    Resolutions of Board of Directors and General Meeting of Shareholders

Article 11    A listed company that applies for non-public issuance of stocks shall, according to the relevant provisions of the Measures, convene board meetings and general meeting of shareholders, and disclose information according to the relevant provisions in a timely manner.    

Article 12    Where a board resolution has determined the specific issuance targets, the listed company shall, on the day when the board meeting is convened or one day prior, conclude with the corresponding issuance targets the share subscription contracts which shall become effective upon fulfillment of the attached conditions.

The subscription contract mentioned in the preceding paragraph shall set forth the quantity or quantity range of the shares to be subscribed by the issuance targets, the subscription price or the price fixing principles, and the restricted stock trade period, and shall meanwhile stipulate that once the present issuance is approved by the listed company's board of directors and the general meeting of shareholders and verified and approved by the CSRC, the contract shall take effect.    

Article 13    A listed company's board of directors shall, when making a resolution on non-public issuance of stocks, conform to the following provisions:

(1) It shall, according to the Measures, select and determine the base day for price fixing for the present issuance, and submit the same to the general meeting of shareholders for approval.

(2) If the board resolution has determined the specific issuance targets, it shall meanwhile determine the names of the specific issuance targets, the subscription price or the price fixing principles, the quantity or quantity range for subscription, and the restricted stock trade period; the share subscription contracts effective upon fulfillment of the attached conditions, concluded between the issuance targets and the company, shall be subject to the approval of the board of directors.

(3) If the board resolution has not yet determined the specific issuance targets, it shall specify the scope and qualifications of the issuance targets, the price fixing principles, and the restricted stock trade period.

(4) If the quantity of the present non-public issuance of stocks is uncertain, the board resolution shall specify the quantity range (including the upper limit and lower limit). The board resolution shall also specify whether the issuance quantity and the bottom issue price shall be subject to a corresponding adjustment if ex-right or ex-dividend adjustment is made on the listed company's stocks during the period between the base day for price fixing and the issuance day.

(5) The board resolution shall specify the upper limit of the amount of the funds raised through this issuance, the total amount of funds necessary for investment in the project, the amount of funds raised through this issuance to be invested, and the channels for raising the remaining funds. If the raised funds are used to supplement liquidity or to repay bank loans, it shall state the specific amount of the supplemented liquidity or repaid bank loans; if the raised funds are used to acquire assets, it shall specify the opposite trading party, the underlying assets, and the price fixing principles, etc.    

Article 14    After a board resolution is adopted, the listed company shall make a disclosure within two trading days.

The board of directors shall, according to the requirements in the No. 25 on the Content and Format of Information Disclosure by Companies Publicly Offering Securities – Pre-arranged Planning on Non-public Issuance of Stocks and Report on Issuance Information of the Listed Companies, work out the pre-arranged planning on non-public issuance of stocks, and publish it along with the board resolution as an annex.    

Article 15    Where the present issuance involves audit or evaluation of assets or profit forecast of the listed company, the results of audit and evaluation of assets and the reviewed profit forecast report shall, at the latest, be announced along with the notice for convening the general meeting of shareholders.    

Article 16    After a board resolution on non-public issuance of stocks is announced, and a board meeting needs to be convened anew due to any of the following circumstances, the board of directors shall re-determine the base day for price fixing of the present issuance:

(1) The valid term of the resolution of the general meeting of shareholders on the present non-public issuance of stocks has expired;

(2) The scheme of the present issuance has been altered; and

(3) Other circumstances that have material effect upon the price fixing of the present issuance.    

Article 17    The decisions made by the general meeting of shareholders of a listed company on the non-public issuance of stocks shall at least include the matters that shall be submitted to the general meeting of shareholders for approval according to the Measures and these Detailed Rules.

For the purposes of the Measures, the term "certain shareholders and their affiliated persons" that shall withdraw from the voting shall refer to shareholders that have been determined by the board resolution as issuance targets of the present issuance and their affiliated persons.    

 

Chapter 4    Verification and Approval and Issuance

Article 18    After the general meeting of shareholders has approved the present issuance, the listed company may submit to the CSRC the application documents for the issuance.

The application documents shall be prepared according to the relevant provisions of the Catalogue of Application Documents for Non-public Issuance of Stocks of Listed Companies, which is Annex 1 to these Detailed Rules.    

Article 19    Lawyers of the sponsor and the issuer shall perform their respective duties, be diligent and conscientious, and prudentially carry out the due diligence investigation on the compliance of the application for the present non-public issuance of stocks.

The letter of issuance sponsorship issued by the sponsor and the legal opinion issued by the issuer's lawyer shall present specific conclusive opinions item by item by contrasting with the CSRC's provisions, and shall state the verification process and factual basis of each conclusion.    

Article 20    The CSRC shall examine and verify the applications for non-public issuance of stocks pursuant to the procedures prescribed in the Measures.

After a listed company has received from the Issuance Examination and Verification Committee of the CSRC the result on whether the application for the present issuance is approved or not, it shall announce the result on the next trading day, and simultaneously make a statement in the announcement that once the company has received CSRC's decision of approval or disapproval, it shall make a separate announcement of that decision.    

Article 21    After a listed company has obtained the verification and approval documents, it shall, within the valid term of the verification and approval documents, issue stocks according to relevant provisions of the Measures on the Administration of Securities Issuance and Underwriting (Decree No. 37 of the CSRC).

A listed company shall publicize the sponsor of the present issuance in the announcement made after receiving the verification and approval decision of the CSRC, and the person designated by the listed company and the sponsor to take charge of the present issuance, and his/her effective way of contact.

Where a listed company or a sponsor recommends non-public issuance of stocks or provides specific issuance targets with an investment value study report, it shall not adopt any public means, and shall not do so earlier than the day when the resolution of the listed company's board of directors on the non-public issuance of stocks is announced.    

Article 22    Where a board resolution has determined the specific issuance targets, the listed company shall, after obtaining the verification and approval document, issue stocks according to Article 9 of these Detailed Rules and the subscription contracts.    

Article 23    Where a board resolution has not yet determined the specific issuance targets, the listed company and the sponsor shall, after obtaining the CSRC's verification and approval documents, select the issuance time within the valid term of the approval documents; the sponsor shall, one day before the beginning of the issuance period, provide the qualified specific issuance targets with the invitation letter for subscription.    

Article 24    The name list of the issuance targets, to which the invitation letter for subscription shall be sent, shall be jointly determined by the listed company and the sponsor.

The name list of the issuance targets, to which the invitation letter for subscription shall be sent, shall, in addition to the investors that have submitted the letters of subscription intent after the board resolution is announced and the top 20 shareholders of the company, also include the following targeted price inquirers that meet the conditions prescribed in the Measures for the Administration on Securities Issuance and Underwriting:

(1) At least twenty securities investment fund management companies;

(2) At least ten securities companies; and

(3) At least five insurance institutional investors.    

Article 25    An invitation letter for subscription shall, according to the principles of justice and transparency, set forth in advance the working rules on the selection of issuance targets, determination of the subscribing price, and distribution of the subscription quantity, etc.

The invitation letter for subscription and its form of price quotation for subscription shall be prepared with reference to the templates of Annex 2 to these Detailed Rules, affixed with the company seal of the listed company, and signed by the sponsorship representative.    

Article 26    After an invitation letter for subscription has been sent, the listed company and the sponsor shall, within the time agreed upon in the invitation letter for subscription, collect the forms of price quotation for subscription signed by certain investors.

During the period of price quotation for subscription, the listed company and the sponsor shall guarantee that none of the staff will divulge information on price quotations of the issuance targets for subscription, and the process of price quotation for subscription shall be witnessed by the issuer's lawyer on site.   

Article 27    After the price quotation for subscription has been completed, the listed company and the sponsor shall prepare cumulative statistics on the effective subscription on the basis of the quoted prices, and reasonably determine the issuance targets, the issuance price, and the number of issued shares according to the principle of price priority.    

Article 28    After the issuance result has been determined, the listed company shall conclude formal subscription contracts with the issuance targets, and the issuance targets shall make the payment according to the contracts.

The subscription funds of the issuance targets shall firstly be transferred into the special account opened by the sponsor for the present issuance, and shall, after the completion of the capital verification, be transferred into the issuer's special deposit account for raising funds, with relevant fees deducted.    

Article 29    On the next trading day after the completion of the capital verification, the listed company and the sponsor shall submit to the CSRC the record-filing materials prescribed in Article 50 of the Measures for the Administration of Securities Issuance and Underwriting.

The issuance report shall be formulated according to the requirements of the No. 25 on the Content and Format of Information Disclosure by Companies Publicly Offering Securities – Pre-arranged Planning on Non-public Issuance of Stocks and Report on Issuance Information of the Listed Companies.    

Article 30    A sponsor's report on the process of the present issuance and the compliance of subscribers shall record the whole process of the present issuance in detail, list the price quotations and placement of the issuance targets for subscription, and shall issue opinions on whether the issuance result is fair and impartial and whether it conforms to the relevant provisions on the non-public issuance of stocks.

Where a specific issuance target who quotes a price higher than the issuance price fails to obtain any placement or the quantity of his placement is reduced, the sponsor shall explain the reasons thereof to the specific issuance target, and state this fact in the sponsor's report.    

Article 31    The report of the issuer's lawyer on the process of the present issuance and the compliance of the subscribers shall certify the whole process of the present issuance in detail, and issue specific opinions on the compliance of the issuance process, the fairness and impartiality of issuance result and whether conformity to the relevant provisions on non-public issuance of stocks has been observed.

The issuer's lawyer shall witness the invitation letter for subscription, the form of price quotation for subscription, the duly executed share subscription contracts, and other relevant legal documents, and shall confirm in the report that the relevant legal documents are lawful and effective.   

 

Chapter 5    Supplementary Provisions

Article 32    These Detailed Rules shall take effect as of the date of promulgation.    

Article 33    The annexes of these Detailed Rules shall include the Catalogue of Application Documents for Non-public Issuance of Stocks of the Listed Company and the Templates of the Invitation Letter for Subscription and the Price Quotation for Subscription.