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	OPERATIVE MEASURES OF SUSPENSION AND TERMINATION OF LISTING SHARES OF LOSS-MAKING LISTED COMPANIES

	(Circular of the China Securities Regulatory Commission on Issuing Operative Measures of Suspension and Termination of listing Shares of Loss-making Listed Companies promulgated and come into force on February 22, 2001: Operative Measures of Suspension and Termination of Listing Shares of Loss-making Listed Companies (hereinafter referred to as Measures) is now issued for the purpose of promoting healthy development of securities market and protecting legal rights of investors. These measures shall take effect as of the day of promulgation. Operative measures of suspension and termination of listing shares of listed companies, unless under the circumstances stipulated in Measures, will be formulated separately under the other circumstances stipulated in article 157 or article 158 of Company Law. If companies have already been suspended in security exchanges (hereinafter referred to as companies), they shall conform to the following provisions for the restitution or termination of their shares: 1. Companies shall publicize their annual reports of 2000 before Apr 30, 2001. If they fail to do so, the listing of their shares shall be terminated by the China Securities Regulatory Commission (hereinafter referred to as CSRC). 2. If companies made a profit in 2000, they can apply for restitution in accordance with provisions stipulated in the third chapter of Measures and can restitute the listing of they shares according to the procedure stipulated in the third chapter of Measures after obtaining the approval of CSRC. Those without approval may apply to security exchanges for a six-month period of grace, calculating from the date on which they fail to obtain the approval. If companies do not apply for restitution within 45 days from the day they publicized annual reports, the listing of their shares shall be terminated by CSRC. 3. If companies made a loss in 2000 or certified public accountants disapproved their financial reports or refused to comment on their audit reports, they may apply for a six-month period of grace, calculating from the date on which they publicize their annual reports, within 45 days after publication, in accordance with the procedure stipulated in Article 9 of Measures. The listing of their shares shall be terminated, according to provisions stipulated in the fourth chapter of Measures, if they decide not to apply for the period of grace or they fail to submit application to security exchanges within 45 days. 4. Interim reports of 2001 of those companies with approval of period of grace, which are mentioned above in Article 2 or Article 3, must go through audit. Those who make a profit in medium-term can obtain a six-month period of grace calculating from the date on which the interim reports are publicized, according to the provisions stipulated in Article 2 of Measures. For those who make a loss, the listing of their shares shall be terminated in accordance with the provisions stipulated in the fourth chapter of Measures. Those who obtain the period of grace twice and make a profit in 2001 are entitled to apply for restitution in accordance with the provisions stipulated in the third chapter of Measures. Where companies make a loss in 2001 or certified public accountants disapproved their financial reports or refused to comment on their audit reports, the listing of their shares shall be terminated according to the provisions stipulated in the fourth chapter of Measures. 5. The other procedure concerning restitution and termination of listing shares shall conform to relevant provisions stipulated in Measures.)


SUBJECT : LISTING COMPANIES; LOSS-MAKING LISTED COMPANIES; SUSPENSION AND TERMINATION
ISSUING DEPARTMENT : CHINA SECURITIES REGULATORY COMMISSION
ISSUE DATE : 02/22/2001
IMPLEMENT DATE : 02/22/2001
LENGTH : 1,275 words
TEXT :

TABLE OF CONTENTS

CHAPTER I GENERAL PROVISIONS
CHAPTER II SUSPENSION
CHAPTER III RESTITUTION
CHAPTER IV TERMINATION
CHAPTER V SUPPLEMENTARY PROVISIONS

CHAPTER I GENERAL PROVISIONS

Article 1. These measures are formulated according to relevant provisions stipulated in Company Law and Securities Law for the purpose of promoting the healthy development of securities market and protecting legal rights of investors.

Article 2. If listed companies make a loss continuously, the suspension, restitution or termination of the listing of their shares shall be governed in accordance with these measures.

Article 3. The right to decide the suspension of continuously loss-making companies, which authorized by the China Securities Regulatory Commission (hereinafter referred to as CSRC), shall remain with security exchanges.

The application for restitution submitted by suspended companies shall be examined by the Issuance Examination Commission of CSRC (hereinafter referred to as IEC) and shall be approved finally by CSRC.

The right to terminate the listing of shares of suspended companies shall remain with CSRC.

CHAPTER II SUSPENSION

Article 4. If listed companies have made a loss continuously in the latest two years and have been estimated loss-making for the third year, their boards of directors shall make announcements of risk presentation in time and shall issue these announcements at least three times before publicizing annual reports, reminding investors of the investment risk.

Article 5. If listed companies have made a loss continuously for three years, security exchanges shall suspend their licenses from the day on which their annual reports of the third year are publicized (If companies do not publicize the annual reports, security exchanges shall suspend their licenses from the deadline of proclamation stipulated in Securities Law). Within 5 working days after suspension of licenses, security exchanges shall make decisions on whether to suspend the listing of the companies' shares or not. Security exchanges shall inform these companies, make announcements and submit decisions to CSRC for reference if it gives decisions of suspension.

Article 6. Listed companies shall publish suspension proclamation in newspapers and websites appointed by CSRS within 2 working days after receiving the decision of suspension by security exchanges. The content of the proclamation shall be as follows:

(1) the type, shortened form, security code and suspension period of the suspended shares;

(2) the main content of the decision of suspension by security exchanges;

(3) proposals on whether to apply for restitution or not and detailed measures for restitution by the board of directors as well as the attendance and voting result of the board of directors;

(4) the other content required by CSRC and security exchanges.

Article 7. Listed companies shall perform relevant duties during the suspension period.

Article 8. Companies may apply for the period of grace in order to prolong the suspension period within 45 days after being suspended. The period of grace shall be 12 months, calculating from the date of suspension.

Article 9. If companies plan to apply for the period of grace, they shall make formal decisions and submit applications to security exchanges, illustrating the possibilities of making a profit in the near future as well as detailed measures which will be taken by them.

Article 10. Security exchanges shall give a decision on whether to render period of grace to the company or not within 3 working days after receiving the application submitted by the company, and at the meanwhile it shall inform the company and publicize the decision. The company shall publicize the main content of the decision within 2 working days after receiving it.

Article 11. During the period of suspension, security exchanges may provide investors with special stock transfer services. The right to stipulate measures governing stock transfer shall remain with security exchanges.

CHAPTER III RESTITUTION

Article 12. If suspended companies make a profit in the first accounting year during period of grace, they may apply to CSRC for restitution after publicizing annual reports.

Article 13. After accepting applications for restitution submitted by companies, CSRC shall present them to IEC for examination and shall make decisions on whether to approve these applications or not within three months.

Article 14. While companies are applying for restitution, security exchanges shall suspend special transfer services of their shares and shall prolong their period of grace accordingly.

Article 15. Companies shall publish the Restitution Proclamation in appointed newspapers and websites within 2 working days after receiving decisions of restitution by CSRC. The content of the proclamation shall be as follows:

(1) the type, shortened form and security code of restituted shares;

(2) the main content of the decision of restitution by CSRC;

(3) analysis and prediction of the company's state of operation by the board of directors;

(4) the other content required by CSRC and security exchanges.

Article 16. The listing of shares of companies shall be restituted on the first business day after the Restitution Proclamation is published.

CHAPTER IV TERMINATION

Article 17. When suspended companies keep on loss-making in the first accounting year during period of grace or certified public accountants disapprove their financial reports or refuse to comment on their audit reports, the listing of their shares shall be terminated in accordance with decisions by CSRC. Transfer services of their shares shall be suspended by security exchanges as of the day on which they publicize annual reports.

Article 18. CSRC shall be capable of making a decision to terminate the listing of a company's shares under any of the following circumstances:

(1) The company decides not to apply for period of grace;

(2) The company fails to submit an application for period of grace within 45 days from the day on which the listing of its shares is suspended or its application is disapproved by security exchanges;

(3) The company mentioned in Article 17 fails to publicize its annual reports by the end of period of grace; or

(4) The application for restitution is disapproved by CSRC.

Article 19. When companies are predicted to be under the circumstances mentioned in Article 17, they shall make announcements of risk presentation in time and shall issue these announcements at least three times before publicizing annual reports, reminding investors of the investment risk. If the situation is confirmed by audit reports, companies shall report to CSRC and security exchanges and shall publicize the report within 2 working days from the day on which they receive annual audit reports.

Article 20. Companies shall publish the Termination Proclamation in appointed newspapers and websites within 2 working days after receiving decisions of termination by CSRC. The content of the proclamation shall be as follows:

(1) the type, shortened form, security code and the date of termination of terminated shares;

(2) the main content of decisions of termination by CSRC;

(3) matters concerning enrollment, transfer and regulation of their shares after being terminated.

Article 21. Companies shall publish proclamations in the appointed newspapers and websites within one month after being terminated, explaining their financial conditions of the past years, major illegal acts committed by the senior management persons, major credit, debt and litigation at present; The board of directors shall explicate the detailed causes of the situation, including especially relevant trades which result in a loss as well as the relevant credit and debt.

Article 22. If companies fail to perform obligations stipulated in the foregoing article within the prescribed time limit, their shareholders may require the performance of obligations mentioned above in accordance with law.

Article 23. The transfer of shares of terminated companies shall conform to provisions stipulated in Company Law, Securities Law and relevant laws and regulations.

CHAPTER V SUPPLEMENTARY PROVISIONS

Article 24. These measures shall take effect as of the day of promulgation. Detailed measures governing restitution and termination of listing of shares of companies already been suspended before the promulgation of the Measures shall be stipulated separately by CSRC.