Provisions on Several Issues Concerning the Regulation of Material Assets Reorganization by Listed Companies
Article 1 Where the listed company plans to execute material assets reorganization, all the directors shall perform the obligation of good faith, keep the information secret and do a good job in the suspension and resumption of trading of stocks.
After the first decision of the board of directors regarding material assets reorganization is made by voting, the listed company shall in the non-trading hours on the same day of the decision or the next workday apply to the stock exchange for public announcement. The board of directors shall compile a material assets reorganization preplan or report according to the Measures for Administration of Material Assets Reorganizations by Listed Companies (Order No.53 of China Securities Regulatory Commission) and relevant information disclosure guidelines, and make public announcement on the preplan or report together with the decision of the board of directors as the latter’s appendix.
The dealing party of the material assets reorganization shall be committed to guaranteeing the authenticity, accuracy and integrity of the information it provides, ensuring that there are no falsified description, misleading statements or major omissions, and shall declare to assume individual and joint legal responsibilities. Such commitment and declaration shall be announced together with the decision of the board of directors of the listed company.
Article 2 For the listed company that holds the meeting of the board of directors for the first time to discuss the material assets reorganization, a conditional transaction contract shall be signed with the relevant dealing party on the same day of the board meeting or the previous day. The transaction contract shall stipulate that it will take effect immediately after the assets reorganization is approved by the board of
directors of the listed company, the general meeting of shareholders and China Securities Regulatory Commission.
If the material assets reorganization involves the purchase of assets through issuing shares, the transaction contract shall set forth quantity or quantity interval, purchase price or price setting principles and limited sales period for the intentional purchase of shares by specified parties, also clauses including basic information of the target assets, transaction price or price setting principles, ownership transfer of the assets or delivery time arrangement and default responsibility.
Article 3 After the public announcement of the first decision of the board of directors regarding the purchase of assets through issuing shares, if the board of directors does not issue notice to call a general meeting of shareholders within six months, the listed company shall have another meeting of the board of directors to review the purchase of assets through issuing shares, and use the announcement day of the decision of this board meeting as the base day for price setting for the issuance of shares.
In the event that the purchase of assets through issuing shares submitted to the general meeting of shareholders for discussion is not approved, if the board of directors of the listed company makes another decision to purchase assets through issuing shares, the announcement day of the decision of such board meeting shall be used as the base day for price setting for the issuance of shares.
Article 4 Where the listed company intends to conduct material assets reorganization, the board of directors should make prudent judgment regarding whether the transaction meets the following requirements, and record accordingly in the meeting minutes of the board of directors:
（1）If the target assets of the transaction involve approval that needs to be obtained for project authorization, environmental protection, industry access, land usage, planning and construction, relevant permit or approval documents of competent
authorities should be obtained before the public announcement of the first decision of the board of directors regarding the transaction; if the transaction activities are related to the application of certain approvals, progress of the approval application and procedure of what still needs to be submitted for approval shall be disclosed in details in the material assets reorganization preplan and report, and special note should be given with regards to the risk of possible failure to obtain the approval.
（2） Where the listed company intends to acquire assets, the selling party should have already legally owned the complete right of the target assets and there should not be any restriction or prohibition on the transfer.
If the assets that listed company intends to acquire are enterprise equity, the financial contribution of the enterprise should not be overrated and there should not be circumstances that would affect the legal continuation of the enterprise; if the listed company becomes a shareholding company after the transaction is completed, the enterprise equity as the main target assets should become the controlling equity.
If the target assets the listed company intends to acquire are rights to resources such as land use right and the right of mining, they should have had obtained relevant certificate of ownership right and have relevant conditions for development and mining.
（3） Acquisition of assets by the listed company should be conducive to improving the integrity of the assets of the listed company (including obtaining intangible assets such as trademark right, patent, non patented technology and franchise license that are necessary for production and operation), and should help the listed company to keep independent in aspects such as personnel, purchase, production, sales and intellectual property.
（4）The transaction should help the listed company to improve its financial position, to enhance its capability of sustainable profit making, and to focus on its core business and increase its ability to resist risks; it should also help the listed company
to enhance its independence, reduce transactions with affiliates and to avoid horizontal competition.
Article 5 Where the listed company intends to conduct Material Assets reorganization, the board of directors, the dealing party, the securities service organs and relevant personnel should strictly abide by relevant provisions of the Notice on Regulating Information Disclosure and Behaviors of Related Parties (Securities Regulatory Company No. [2007]128 and perform the obligation and follow the procedure of information disclosure.
After the public announcement of the first decision of the board of directors regarding Material Assets reorganization, if the board of directors of the listed company and the dealing party cancel or discontinue the reorganization scheme or make substantive changes (including but not limited to changing the key dealing party or changing the key target assets) to the reorganization scheme without a legitimate reason, China Securities Regulatory Commission will take regulatory measures against the listed company, the dealing party, securities service organs and relevant personnel in accordance with relevant provisions, and will investigate and affix legal responsibilities.