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| 2001032820010328The China Securities Regulatory CommissionOrder of the China Securities Regulatory CommissionNo.1Measures for the Administration of the Listed Company Issuing New Shares is promulgated and shall enter into force as of the date of promulgation.The President of CSRC Zhou XiaochuanFebruary 25, 2001epdf/e02408.pdfIlisted company, new shares, issuee02408Measures for the Administration of the Listed Company Issuing New SharesChapter I General ProvisionsArticle 1 These measures are formulated for the purpose of regulating the listed company's issuing new shares, in accordance with the regulations provided in the Corporation Law of the People's Republic of China (hereinafter referred to as the corporation law), the Securities Law of the People's Republic of China (hereinafter referred to as the securities law) as well as other relative laws and regulations.Article 2 These measures will apply to issuing the new shares to the public by the listed company."Issuing the new shares to the public by the listed company" mentioned in these measures refers to rationing the shares among existing shareholders (hereinafter referred to as "shares ration") and to issuing shares to the public (hereinafter referred to as " issue more shares").Article 3 The said new shares issued by the listed company shall be subscribed in cash on the basis of the same price for the same share.Article 4 The funds raised by the listed company through issuing the new shares shall not be used to invest in such financial institutions as the commercial bank and the securities company.Article 5 When the listed company applies for issuing new shares, the securities company qualified as main underwriter shall act as the recommender and the main underwriter.Article 6 China Securities Regulatory Commission (hereinafter referred to as "CSRC") shall exercise supervision and administration over the activities concerning the listed company's issuing new shares.Article 7 The specific measures for regulating the listed company issuing new shares by other means will be formulated otherwise.Chapter II Conditions and noteworthy Matters for Issuing New SharesArticle 8 The conditions specified in the corporation law and the securities law shall be met when the listed company applies for issuing new shares.Article 9 The following requirements also shall be met when the listed company applies for issuing new shares:1.Being a perfect legal person, the listed company shall be separate from other legal person or organization and/or affiliated enterprise by which it is actually controlled in personnel, assets and financial affairs, in order to assure the independence of its personnel and finance and the integration of its assets;2.Its articles of association shall be in accordance with the corporation law and the Guidelines for the Articles of Association of the Listed Company;3.The notice, the convening form, the voting formula and the contents of the resolutions concerning the shareholders' meeting shall conform to the corporation law and the relative regulations.4.The purpose of the funds raised through issuing new shares this time shall be in keeping with the state industrial policy;5.The amount raised through issuing new shares this time shall not be over that approved by the shareholders' meeting necessarily for the proposed investment project;6.The funds and assets are not possessed by any individual or legal person or other organization, or the affiliated persons hereto, by which it is actually controlled, and there is no other major affiliated transaction that will injure its rights and interests;7.Its major purchase or sale of the assets shall be in accordance with the relative regulations of CSRC;8.Other requirements specified by CSRC.Article 10 The listed company will not be granted by CSRC to issue new shares in any of the following cases:1.The company has committed major illegal acts for the last 3 years;2.The company changes the purpose of the raised funds as described in the prospectus without authorization and fails to correct it, or the action failed to obtain the approval of the shareholders' meeting;3.The company's accounting documents for the last 3 years contains any falsehoods, misleading statements or major omissions; or the accounting documents about the assets obtained from its reorganization and those after the reorganization contains falsehoods, misleading statements or major omissions;4.The prospectus contains any falsehoods, misleading statements or major omissions;5.The company offers guaranty for the shareholder's debt for the debt of his related company or individual;6.Other cases specified by CSRS.Article 11 As the main underwriter, the securities company shall pay special attention to the following matters, which shall be explained in its investigation report:1.Affiliated transactions, which can seriously affect its operational capability and earnings;2.Compared with other companies of the same nature, its main financial index such as the receivable turnover and the inventory turnover are abnormal and likely to cause serious risks;3.Its incremental cash flow is less than zero and so is the aggregate cash flow arising from the operational activities, which may cause the payment difficult.4.The utilization of the raised funds by the company didn't conform to its promise made in the prospectus, and the inputting directions were changed frequently and the utilizing effect didn't reach the level it had disclosed;5.Its financing plan through issue does not match the funds demand of the investment project and the utilizing turnover, and the investment project lacks of adequate demonstration;6.After the previous issue was finished, the listed company's return dropped sharply; or the realized profit didn't reach 80% of that predicted;7.It hasn't distributed dividend for the past three years and the board of directors hasn't made reasonable explanation hereby.8.The company lacks the safe accounting policy;9.Most of its funds are idle, the funds are lent and lodged without a safe and effective control, or the management of the funds is entrusted to others;10.The assets-liabilities ratio is too low to finance by capital stock, which otherwise may cause its financial structure more unreasonable; or it has financial surplus for lacking of definite investment directions;11.The company has a large amount of contingent liability, and serious risks exist;12.The company is involved in significant arbitrations or lawsuits;13.The company's internal control system has major defects;14.The company may not have potential for sustainable development and there exist great uncertainties in its operation.15.The company has been publicly criticized by CSRC, or been publicly condemned by the stock exchange, for its violations of its obligation of information disclosure or its failure to report for the last year;16.The board of directors fails to perform its promise made to all the shareholders;17.The company failed to finish the rectification and reform in the specified period according to the requirements in the notice issued by CSRC and its agencies.Chapter III Procedure of Issue and Matters Needing Exanimation and ApprovalArticle 12 The appointment of the main underwriter shall be determined by the board of directors of the listed company. After the investigation with duty care has been completed, the main underwriter shall consult the plan for issuing the new shares with the board of directors and agree to recommend the company to CSRC hereby.Article 13 When the listed company applies for issuing new shares, it shall make resolutions in respect of the following matters according to the requirements herein:1.The board of directors shall make resolutions on such matters as whether or not this issue conforms to the measures herein, the exact plan of issue, the feasibility of utilization of the raised funds, and how the funds raised last time is utilized, then the board shall submit the resolutions to the shareholder's meeting for approval.2.The shareholders' meeting shall, case by case, take votes on such matters as the quantity issued, pricing method or price (including the price flexibility), object issued, the purpose and the amount of raised funds, the effective period of the resolution, and the special authorization given to the board of the directors for handling the issuance etc..Article 14 During the time period from the listed company filing the application for issuing new shares to the issue, if any of the significant incidents provided in article 62 of the Securities Law and the noteworthy matter provided in article 11 of this Measures occurs, the listed company shall timely notify the main underwriter, and shall report the said circumstances to CSRC and to the stock exchange within 2 working days. At the same time, it shall modify the documents concerning issue application. If an approval of the shareholders' meeting is needed, the board of directors shall convene the shareholders' meeting in time.Article 15 In case of applying for issuing new shares, the listed company shall compose certain documents for issue application according to the requirements of CSRC.Article 16 If the listed company's financial statements for the past three years are audited by the certified public accountants and thus auditor's standard reports without reservation are issued, the listed company shall provide the said reports audited for the past three years in the application documents; if the issue application is filed in the second half of the year, its interim financial statement promulgated in that year is also needed.If the certified public accountant has issued non-standard audit report without reservation in respect of its financial statement for the past three years, it shall be deemed that the matters concerned have no substantial effect on the company or the effect has been eliminated, and the matters contrary to the legality and the fairness and the consistence have been rectified; the company shall, in the application documents, provide the audited financial statement for the past three years and the supplemented view issued, at the time of application, by the certified public accountant in respect of whether the matters related to the said audit report have been eliminated or corrected; in case that the issue application is filed in the second half of the year, its interim financial statement of the current year is also needed; in case that the issue application is filed in the first half of the year while it is predicted that the shares will be issued at the second half of the year, its interim financial statement audited of the current year shall be supplemented after the promulgation of the interim report.The listed company, whose listing is no more than three years or whose significant reorganization is no more than one accounting year from the reorganization to the time of this issue, shall provide the financial statement according to the second paragraph in this article.Article 17 The commission for authorizing issue will examine the application for issuing new shares, and CSRC will make the decision of approval on the basis of the said commission's opinion.Article 18 After the issue application is approved by CSRC, the listed company shall consult such matters as the listing time of the new shares and registration with the stock exchange.Article 19 The specific operation of the listed company's issuing more shares shall be conducted according to the relative regulations of CSRC. Before determining the issuing price of the shares, the listed company may send the letter of intent, which shall read:" all the contents in the said letter of intent will constitute irrevocable part of the prospectus and have the same legal effect as the prospectus."The main underwriter and the listed company shall compose the prospectus after determining the issuing price according to the investors' underwriting intents, and then they shall report it to CSRC for record.Article 20 The listed company, whose issue application is not approved, will not be allowed to file the same application again within 6 months as of the date on which CSRC dismisses its application.Article 21 The listed company and the main underwriter shall issue an letter of guarantee, in which they shall guarantee that they will keep secret before the information on the said issue is made public, and shall not provide any finical aid to or make any compensation for those organizations involving rationing shares during the issuing of more shares.Chapter IV Disclosure of InformationArticle 22 When the listed company has decide to issue new shares, it shall disclose information concerned according to the following requirements:1.The resolution about the issue shall be submitted to the stock exchange within 2 working days after it is passed by the board of directors for announcing the notice on convening the shareholders' meeting.The said notice shall contain the following contents: the resolution by the board of directors, the special plan needed to be voted at the shareholders' meeting, the statement of the board of directors concerning the use of the last funds raised, the certified public accountant's special report on the use of the last funds raised, and shall contain the words" the resolution is still to be submitted to CSRC after it has been voted by the shareholder's meeting".2.The board of directors shall, at least 5 working days before the convocation of the shareholder's meeting, announce the assessment report of the purchased assets, if the raised funds are used to purchase the assets (including rights and interests); if the listed company will actually control the purchased enterprise or a consolidated statement is needed after finishing the purchase, it also shall announce the purchased enterprise's financial statements audited over the last accounting year, and undertake that the said purchase will not deprive the listed company of its independence.The board of directors of the listed company shall, in the announcement, guarantee that the affiliated transactions related to the said issue will maximally conform to the company's interests, and will not damage the related shareholder's interests nor will cause horizontal competition;3.Within 2 working days after the shareholders' meeting has passed the issue plan, the listed company shall announce the shareholder's resolution, in which the words "the plan is still to be reported to CSRC for examination and approval". In addition, it shall announce those contents of the said plan changed by the shareholders' meeting.Article 23 Within 2 days after its receipt of CSRC's authorization, the listed company shall announce that it has been approved to issue new shares.The listed company, whose issue application is not granted, shall announce that it hasn't been approved to issue new shares, within 2 days after its receipt of CSRC's notice.Article 24 The listed company may announce its statement of shares ration or its letter of intent after it received the notice of CSRC authorizing it to issue new shares.The listed company, which is authorized to ration the shares, shall, at least 5 working days before the date of registering the stock equity, announce the statement of shares ration. During the time period from the date of announcing the statement of shares rationing to stoppage of payment, the listed company shall announce, at least once again, the depositary place of the said statement and the website designated by CSRC.After the issue price is determined, the listed company, which is authorized to issue more shares, shall announce the result of the issue and shall indicate the depositary place of the share prospectus and the website designated by CSRC for the investors to consult.Article 25 The statement of shares ration and the letter of intent announced by the listed company shall conform to those submitted to CSRC for authorization. Only with CSRC's approval before the announcement, can the said instruments be amended.Article 26 If the listed company discloses the profitability when it issues more shares, it shall cautiously make such foresight and shall make them audited by the certified public accountant qualified to practice securities, if there are uncertainty factors affecting the profits predict, the listed company shall provide relative analysis and explanation in respect of the said factors.If the listed company doesn't predict the profitability when it issues more shares, it shall mark the warnings at the striking positions in the letter of intent and in the announcement and in the prospectus.Article 27 After it has finished issuing the new shares, the listed company shall, in the annual reports for the past three years, continuously disclose the effectiveness of the project invested by the funds raised this time.Chapter V Legal LiabilityArticle 28 If the intermediary organization, which provides the service to the listed company in respect of issuing new shares, fails to perform its obligation of diligence according to the regulations of CSRC, it shall be criticized publicly by CSRC and ordered to rectify and reform in the specified period, during which CSRC will postpone accepting its documents issued.Article 29 If the securities company is ordered to be rectified and reformed in the specified period for its failure to establish the internal control system according to Guideline for Internal Control System of the Securities Company, CSRC will defer to accept its letter of recommendation in respect of the listed company's issuing new shares during the said period.Article 30 If the listed company or the main underwriter divulges information concerned before the issue information is made public, CSRC will give them public criticism and order the listed company to make an announcement of explanation.Article 31 If the listed company and the main underwriter provide financial aid to, or, make compensation for the institution investor involving the shares ration during the issuing of more shares, CSRC shall give them public criticism and order them to rectify immediately.Article 32 After the listed company finishes issuing more shares, if its realized profits don't reach the predicted amount for the reasons that are beyond the managing personnel's predict and control, its chief director, the certified public accountant hired by the company, the legal representative of the securities company acting as the main underwriter, the operating officer and the person in charge of the project shall make public explanation at the shareholders' meeting as well as in the newspapers and periodicals designated; if the realized profits fail to reach 80% of the predicted amount, the said persons shall, if there is no reasonable explanation, apologize publicly in the newspapers and periodicals designated ; if the realized profits fail to reach 80% of the predicted amount, CSRC will give public criticism to the listed company and will not accept its application for issuing new shares within 2 years after the criticism is made.Article 33 If the listed company's weighted average ratio return on net assets fails to reach the rate of bank deposit interest for the same period, its chief director, the legal representative of the securities company acting as the main underwriter, the operating officer and the person in charge of the project shall make public explanation at the shareholders' meeting as well as in the newspapers and periodicals designated; if there is no reasonable explanation, the said persons shall apologize publicly in the newspapers and periodicals designated, and CSRC will give public criticism to the listed company; if the listed company runs at a loss in the share-rationing year, CSRC will not accept its application for issuing new shares within 2 years after the criticism is made.Article 34 If the listed company which is not of an financial character invests the raised funds in such finical institutions as commercial bank, securities company, CSRC shall criticize it publicly and order it to made rectification immediately.Chapter VI Supplementary ProvisionsArticle 35 In principle, the said Measures shall be applicable to the issue of B shares in the territory of the People's Republic of China by the companies domestically listed B shares in foreign currencies.Article 36 The Measures shall enter into force as of the date of promulgation. At the same time, the Circular Concerning the Questions of the Listed Company's Rationing Shares (ZhengJianFa [1999] No.12), Supplementary Circular Concerning the Questions of the Listed Company's Rationing Shares (ZhengJianGongSiZi [2000] No.21), Provisional Measures for the Listed Company's Raising Capital from the Public (ZhengJianGongSiZi [2000] No.42) and Provisional Measures for the Company Domestically Listed B Shares in Foreign Currencies Issuing B Shares (ZhengWeiFa [1998] No.5) shall be nullified. |
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