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Rules for accepting the application for transfer

Article 1 The rules are prepared in accordance with the Rules for State-owned Equity Transactions of Enterprises to regulate the application for and acceptance of enterprise state-owned equity transfer information release.

Article 2 The equity transaction institution adopts principal-agent system. The transferor may independently choose broker members from the list of members published by the equity transaction institution on its website, sign principal-agent contract, and establish principal-agent relationship.

Article 3 The transferor shall, through a broker member, submit to the equity transaction institution the application for equity transfer information dissimilation, equity transfer information dissimilation application, equity transfer announcement, and other related appendixes to entrust the equity transaction institution to publish equity transfer information.

Where transfer projects are required to register transfer information contents according to relevant provisions before information is published, the transferor shall fulfill relevant registration procedures.

Article 4 Application for equity transfer information dissimilation shall specify such contents as the right and obligation relationship between the transferor and its entrusted broker member and the equity transaction institution, and corresponding liabilities for violations and breach.

Article 5 The transferor shall be responsible for the authenticity, integrity, and validity of the contents of the Application for equity transfer information dissimilation and Equity transfer announcement, as well as the appendixes thereto.

Article 6 The broker member of the transferor shall conduct due diligence of the equity transfer information release matters, and verify the authenticity, integrity, validity, and compliance of the materials submitted by the transferor, including in general:

(A) Authenticity and integrity of the disclosed information, significant omissions, false records or misleading statements;

(B) Consistency between the contents of information release and related appendixes;

(C) Validity and compliance of the appendixes to the information release materials, and compliance of relevant regulations on enterprise state-owned equity transfer.

Article 7 Where the Application for equity transfer information dissimilation and relevant appendixes submitted by the transferor are complete, the equity transaction institution shall register and accept, and issue the Receipt of the application materials for equity transfer information dissimilation; in case of failure to meet the requirement for completeness, the equity transaction institution may require the transferor to make up for the materials or re-submit them through a broker member.

Article 8 The equity transaction institution shall, within three working days starting from the following day of receipt of the application materials for information dissimilation, review the compliance of the Application and appendixes, with focus on the examination of the adequacy and accuracy of information disclosure involving the transfer target in the equity transfer announcement, the justness and fairness in setting transaction conditions and transferee eligibility, and the selection of ways of auction. For transferor in compliance with information announcement requirements, the equity transaction institution shall issue acceptance notice on the application for equity transfer information dissimilation, and issue the announcement on equity transfer; in case of failure to meet the information announcement requirements, the equity transaction institution shall promptly give written review comments to the transferor.

Article 9 The transferor shall, in accordance with the equity transfer plan based on the internal decision-making and approval, disclose in the transfer announcement the basic information of the transfer target, transaction conditions, transferee eligibility, relevant information having significant impact on equity transactions, selection of auction ways, and transaction deposit setting.

Article 10 Equity transfer announcement shall disclose the basic information of the transfer target, including but not limited to:

(A) Names of the transferor, target, and entrusted broker members;

(B) Enterprise ownership, date of establishment, place of registration, industry, core business, registered capital, and number of employees of the transfer target;

(C) Enterprise ownership of the transferor and contribution ratio in the transfer target enterprise;

(D) Top 10 contributors and contribution ratios of the transfer target enterprise;

(E) Major financial indicator data, including the owner’s equity, liabilities, business revenue, and net profit etc. in the target enterprise’s audit report for the recent one year and the financial statements for recent one period.

(F) Record of asset appraisal or approval information of the transfer target (or transfer target enterprise), valuation of total assets, total liabilities, and net assets in the asset appraisal reports, and the corresponding book values upon audit;

(G) Internal decision-making and approval status relevant to equity transfer.

Article 11 The transferor shall specify in the equity transfer announcement the major transaction conditions to be accepted by the transferee to reach the transactions, including but not limited to:

(A) Listed price, price payment method and time limit requirements of the transfer target;

(B) Whether there are requirements for continuity in employment of employees of the transfer target enterprise;

(C) Requirements for disposal of creditor’s rights and debts involved in the transfer;

(D) Requirements for the target enterprise’s survival.

Article 12 Transferor may, according to the actual situation of the target enterprise, reasonably set the transferee eligibility. Transferee eligibility may include transferee qualifications, management capabilities, and asset scale etc, but there shall be no contents with clear directivity or in violation of fair competition. Where necessary, the equity transaction institution may request the transferor to provide written explanation or specific remarks on the criteria for determining the qualifications of the transferees, and shall publish in the equity transfer announcement after reviewed and approved by the said institution.

Article 13 The transferor shall, in the equity transfer announcement, fully disclose relevant information having significant impact on the equity transactions, including but not limited to:

(A) Whether there are qualified opinions or important prompts in the audit reports and appraisal reports;

(B) Where the management and its related parties intend to accept, they shall disclose the ratio of equity of the target enterprise that they hold at present, the name of the transferee or transferee company intending to accept the state-owned equity, and the intended transferee ratio;

(C) Whether other shareholders of limited liability companies or other parties of Sino-foreign joint ventures waive pre-emptive right.

Article 14 The transferor shall specify in the equity transfer announcement which open outcry transaction ways will be adopted to determine transferee when there are two or more eligible intended transferees. Where bidding method is adopted, bid evaluation methods and standards shall be disclosed at the same time.

Article 15 The transferor may, in the equity transfer announcement, propose relevant matters pertinent to the payment of transaction deposit. Deposit shall in general not be more than 305 of the listed price of the transfer target.

Article 16 The rules come into force as of the date of promulgation.

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