Company Law of the People's Republic of China (revised in 2005)

(Adopted at the Fifth Session of the Standing Committee of the Eighth National People's Congress on December 29, 1993. Revised for the first time on December 25, 1999 in accordance with the Decision of the Thirteenth Session of the Standing Committee of the Ninth People's Congress on Amending the Company Law of the People's Republic of China. Revised for the second time on August 28, 2004 in accordance with the Decision of the 11th Session of the Standing Committee of the 10th National People's Congress of the People's Republic of China on Amending the Company Law of the People's Republic of China. Revised for the third time at the 18th Session of the 10th National People's Congress of the People's Republic of China on October 27, 2005)

Chapter V Issuance and Transfer of Shares of a Joint Stock Limited Company

Section 1 Issuance of Shares

Article 126 The capital of a joint stock limited company shall be divided into shares, and all the shares shall be of equal value.
The shares of the company are represented with stocks. A stock is a certificate issued by the company to certify the share held by a shareholder.

Article 127 The issuance of shares shall comply with the principle of fairness and impartiality, and the shares of the same class shall have the same rights and benefits. The stocks issued at the same time shall be equal in price and shall be subject to the same conditions. The price of each share purchased by any organization or individual shall be the same.

Article 128 The stocks may be issued at a price equal to or above the par value, but not below the par value.

Article 129 The stocks shall be in paper form or in other forms prescribed by the securities
regulatory institution of the State Council. A stock shall state the following major items:
(1) the company name;
(2) the date of establishment of the company;
(3) the class and par value of the stock, as well as the number of shares it represents; and
(4) the serial number of the stock.
The stock shall bear the signature of the legal representative and the seal of the company.
The stocks held by the initiators shall be marked with the words "initiators' stocks".

Article 130 The stocks issued by a company may be registered stocks or unregistered stocks. The stocks issued to initiators or juridical persons shall be registered stocks, which shall state the names of such initiators or juridical persons, and shall not be registered in any other person's name or the name of any representative.

Article 131 A company that issues registered stocks shall prepare a register of shareholders, which shall state the following:
(1) the name and domicile of every shareholder;
(2) the number of shares held by each shareholder;
(3) the serial numbers of the stocks held by every shareholder; and
(4) the date on which every shareholder acquired his shares. A company issuing unregistered stocks shall record the amount, serial numbers and issuance date of the stocks.

Article 133 After a joint stock limited company is established, it shall formally deliver the stocks to the shareholders. No company may deliver any stock to the shareholders prior to its establishment.

Article 134 Where a company intends to issue new stocks, it shall, under its articles of association, make a resolution on the following matters through the shareholders' meeting or the board of directors:
(1) the class and amount of new stocks;
(2) the issuing price of the new stocks;
(3) the beginning and ending dates for the issuance of the new stocks; and
(4) the class and amount of the new stocks to be issued to the original shareholders.

Article 135 When a company publicly issues new stocks upon approval of the securities regulatory institution of the State Council, it shall publish a new stock prospectus and its financial reports, and shall make a stock subscription form. The provisions of Articles 88 and 89 of this Law shall apply to the public offering of new stocks of a company.

Article 136 When a company issues new stocks, it may make a pricing plan in light of its business operation and financial status.

Article 137 After a company raises enough capital, it shall go through the modification registration in the company registration authority, and make an public announcement.

Section 2 Transfer of Shares

Article 138 The shares held by the stockholders may be transferred according to law.

Article 139 Where a stockholder intends to transfer its shares, it shall transfer its shares in a lawfully established stock exchange or by any other means as prescribed by the State Council.

Article 140 The transfer of a registered stock shall be effected by the stockholder's endorsement or by any other 1means stipulated by relevant laws or administrative regulations. After the transfer, the company shall record the name and domicile of the transferee in the register of shareholders. Within 20 days before a meeting of shareholders is held, or within 5 days prior to the benchmark date decided by the company for the distribution of dividends, no modification registration may be made to the register of shareholders as mentioned in the preceding paragraph. However, if any law otherwise provides for the modification registration of the register of shareholders of listed companies, the latter shall prevail.

Article 141 The transfer of an unregistered stock becomes valid as soon as the stockholder delivers the stock to the transferee.

Article 142 The shares of a company held by the initiators of this company shall not be transferred within 1 year as of the day of establishment of the company. The shares issued before the company publicly issues shares shall not be transferred within 1 year as of the day when the stocks of the company get listed and are traded in a stock exchange. The directors, supervisors and senior managers of the company shall declare to the company the shares held by them and the changes thereof. During the term of office, the shares transferred by any of them each year shall not exceed 25% of the total shares of the company he holds. The shares of the company held by the aforesaid persons shall not be transferred within 1 year as of the day when the stocks of the company get listed and are traded in a stock exchange. After any of the aforesaid persons is removed from his post, he shall not transfer the shares of the company he holds. The articles of association may have other restrictions on the transfer of shares held by the directors, supervisors and senior managers.

Article 143 A company shall not purchase its own shares, except for any of the following circumstances:
(1) to decrease the registered capital of the company;
(2) to merge with another company holding shares of this company;
(3) to award the employees of this company with shares; or
(4) It is requested by any shareholder to purchase his shares because this shareholder raises objections to the company's resolution on merger or split-up made at a session of the meeting of shareholders. Where a company needs to purchase its own shares for any of the reasons as mentioned in Items (1) through (3) of the preceding paragraph, it shall be subject to a resolution of the shareholders' meeting. After the company purchases its own shares according to the provisions of the preceding paragraph, it shall, under the circumstance as mentioned in Item (1) , write them off within 10 days after the purchase; while under the circumstance as mentioned either in Item (2) or (4) , shall transfer them or write them off within 6 months.
The shares purchased by the company according to Item (3) of the preceding paragraph shall not exceed 5% of the total shares already issued by this company. The funds used for the share acquisition shall be paid from the aftertax profits of the company. The shares purchased by the company shall be transferred to the employees within 1 year. No company may accept any subject matter taking the stocks of this company as a pledge.

Article 144 In case any registered stocks are stolen, lost or destroyed, the shareholder may request the people's court to declare these stocks invalid in light of the public notice procedure prescribed in the Civil Procedural Law of the People's Republic of China. After the people's court has invalidated these stocks, the shareholder may file an application to the company for issuance of new stocks.

Article 145 The stocks of a listed company shall get listed and traded according to relevant laws, administrative regulations, as well as the dealing rules of the stock exchange.

Article 146 A listed company shall, in light of laws and administrative regulations, publicize its financial status, business operation and important lawsuits, and shall publish its financial reports once every six months in each fiscal year.

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