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Operating Rules for Transactions of Enterprises’ State-owned Property Rights

  Article 1 The Rules were formulated based on the Law of the People’s Republic of China on the State-Owned Assets of Enterprises, the Interim Measures for the Supervision and Administration of State-Owned Assets of the Enterprises (Decree No. 378 of the State Council), the Interim Measures for the Management of the Transfer of the State-owned Property Right of Enterprises (Decree No. 3 of the SASAC and the Ministry of Finance) and related rules and regulations.

   

  Article 2 The Rules are applicable to transactions of state-owned property rights of enterprises conducted by the property rights transaction agencies selected by SASAC above provincial-level (hereinafter referred to as the transaction agencies).

   

  Article 3 The transactions of enterprises’ state-owned property rights as specified in the Rules refer to activities of the main body for transfer of the enterprises’ state-owned property rights (hereinafter called as the transferor) to release property right transfer information through the transaction agencies and transfer enterprises’ state-owned property rights through public listing and price competition after performing related decisions and approval procedures.

   

  Article 4 Transactions of enterprises’ state-owned property rights shall follow the principles of equal value exchange, transparency, fairness, justice and competition. The transaction agencies shall organize the transactions of enterprises’ state-owned property rights in accordance with the Rules, voluntarily accept the supervision of the state-owned assets supervision and management institutes, enhance self-discipline and management, maintain market order, and ensure the normal process of equity exchange activities.

   

  Chapter II    Advancing the Transfer Application

   

  Article 5 The transaction agencies shall be responsible for advancing work of the property rights transfer application. Transaction agencies that implement membership system shall release the list of its members on its website for free selection of the transferors and establishment of agency relationships.

   

  Article 6 The transferor shall submit the materials as required in the property right transfer notice to the transaction agencies, and shall be responsible for faithfulness, integration and validity of the materials submitted. The transferor shall perform the corresponding record filing procedures for transfer projects that need property rights transfer information record filing before release of the information in line with related regulations.

   

  Article 7 The transaction agencies shall accept and register for the application of transferors whose materials submitted comply with the requirements on completeness.

   

  Article 8 The transaction agencies shall establish the review system of public notice on information of transfer enterprises’ state-owned property rights to review the accuracy and integrity of information disclosure regarding the transfer objects, the fairness and rationality of transaction conditions and qualifications of transferees as well as election of price competition mode. The transaction agencies shall accept the applications for transactions that comply with the information disclosure requirements and issue the acceptance notice to the transferors. For applications of transactions that don’t comply with the information disclosure requirements, the transaction agencies shall inform the reviewing opinions to the transferors in written form.

   

  Article 9 The transferors shall disclose the basic information of transfer objects, transaction conditions, qualifications of transferees, information that may have great influences on property rights transactions, selection of price competition mode and setup of transaction deposit in the public notice on transaction of property rights.

   

  Article 10      The notice on transfer of property rights shall disclose the basic information of the transferors and the transfer objects, which include but not limited to:

  (1) Name of the transferors, transfer objects and commissioned members;

  (2) Nature, foundation date, registration place, industry, main business, registered capital and number of employees of the transfer objects;

  (3) Nature of the transferors and their investment proportion in the transfer objects;

  (4) Name and investment proportion of top 10 investors of the transfer objects;

  (5) Main financial figures in audit report of the latest year and the latest financial reports of the transfer objects, such as owners’ equities, liabilities, operating revenue and net profits;

  (6) Filing or approval of assets appraisal of the transfer objects (enterprises of the transfer objects), appraisal value of total assets, total liabilities and net assets in the assets appraisal report and audited book values correspondingly;

  (7) Internal decisions and approval conditions of property rights transferring behaviors.

   

  Article 11      The transferors shall clearly specify, in the notice on transfer of property rights, the main transaction conditions need to be accepted by the transferees. These include but not limited to:

  (1) Listing price of the transfer objects, payment method and time limit;

  (2) Are there any requirements on continuous employment of employees in the transfer objects;

  (3) Requirements on disposal of creditors’ rights and liabilities involved in the transfer of property rights;

  (4) Requirements on continuous development of the transfer objects.

   

  Article 12      The transferors can, based on practical situations of the transfer objects, set up qualifications of the transferees reasonably. The qualifications of the transferees can include main body qualifications, management ability and asset scale, but shall not include the contents that have definite direction or may violate fair competition. Thetransaction agencies, when deem as necessary, can require the transferors to provide written explanation or detailed descriptions to judging standards for qualifications of the transferees, and can release such standards in the notice on transfer of property rights.

   

  Article 13      The transferors shall fully disclose related information that may have key influences on property rights transaction in the notice on transfer of property rights. The information shall include but not limited to:

  (1) Whether the audit reports or the appraisal reports have qualified opinions or important cues;

  (2) If the members of the management team or its correlated parties are to be involved in the transfer, information such as their shareholding proportion of the transfer object, list of persons or companies to be involved in the transfer of state-owned property rights, and the proportion of shares to be transferred.

  (3) Whether other shareholders of the limited liability companies or other parties of the joint venture had given up the right of preemption.

   

  Article 14      The notice on transfer of property rights shall clearly indicate that what kind of fair price competition mode to be adopted when there are two or more qualified interested transferees. If the bidding mode is selected, the bid assessing methods and standards shall also be disclosed.

   

  Article 15      The transferors can put forward the requirements on payment of transaction deposit in the notice on transfer of property rights. The transaction agencies shall clearly specify the disposal method of the deposit.

   

  Chapter III   Release of transfer information

   

  Article 16      The information on transfer of enterprises’ state-owned property rights shall be released publicly on websites of the transaction agencies as well as economic or financial newspapers and magazines above provincial level issued publicly. The information on transfer of property rights of central SOEs shall be released publicly in the newspapers and magazines jointly selected by both sides and their respective websites, and shall be released in economic and financial newspapers and magazines with wider coverage in the registration place of the transfer objects or locations of key assets of the transfer objects.

   

  Article 17 The transferors shall clearly specify the information release time limit of the notice on transfer of property rights. The time limit for first information release shall be no less than 20 working days, and shall start from the first information release day on the newspapers and magazines above the provincial level.

   

  Article 18 The information release period shall be calculated by the working days. In case there are statutory holidays, it shall be calculated by the actual working days released by related governmental departments. The date for information release on websites of the transaction agencies shall be no later than the information release date of the newspapers and magazines.

   

  Article 19      The contents and conditions in the notice on transfer of property rights shall not be changed randomly during the information release period. If contents of the notice need to be changed due to special reasons, the property rights transaction approval institutes shall issue the documents, and the transaction agencies shall issue the notice via original information release channels. The information release period shall be calculated correspondingly.

   

  Article 20      If no qualified interested transferees are recruited within the notice period and contents of information release notice are not changed, the transferors can extend the information release period in line with the terms and conditions of the notice on transfer of the property rights. Each time, the time limit shall be extended for no less than five working days. The information release notice shall become invalid automatically if the extension on information release period is not specified in the notice on transfer of property rights.

   

  Article 21      The listing price in the first information release notice on transfer of enterprises’ state-owned property rights shall be no lower than the assets appraisal results of the transfer objects recorded or approved. The transferors shall re-set the new listing price and issue a notice correspondingly within the scope of no less than 90% of the appraisal results if no interest transferees are recruited within the notice period. If the newly-set listing price is lower than 90% of the appraisal results, the transferors shall re-obtain the approval of the property rights transfer approval institutes and issue the notice on transfer of property rights again.

   

  Article 22      If the circumstances that may affect the normal transactions or the parties involved submit the written application on termination of information release and related materials within the information release period, the transaction agencies can make the decision on termination of information release.

   

  Article 23      The termination period of the information release notice shall be determined by the transaction agencies based on the practical situations, and shall be no more than one month. The transaction agencies shall investigate and verify the application subjects or disputes within the determination period, or ask related departments to investigate and verify the cases, so as to make the decision on recovery or termination of the information release notice. If the recovery of information release is determined, the accumulated information release period on official websites of the transaction agencies shall be no less than 20 working days, and the continued release time limit shall be no less than 10 working days.

   

  Article 24      If the circumstances that may affect the normal transactions appear within the information release period, and it is determined that the circumstances can’t be eliminated after investigation and verification, the transaction agencies can make the decision on termination of the information release.

   

  Chapter IV   Registration of transfer intension

   

  Article 25      The interested transferees shall, within the information release period, shall apply for transfer of property rights to the transaction agencies and shall submit related materials. The transaction agencies shall register the interested transferees one by one.

   

  Article 26      The interested transferees shall consult the related information and materials of the transfer objects at the transaction agencies.

   

  Article 27      The transaction agencies shall check the completeness and law-compliance of the applications and materials submitted by the interested transferees, and shall inform the transferors the registration conditions and the qualification confirmation opinions in written form within five working days upon inspiration of the information release period.

   

  Article 28      The transferors shall make a written reply within five working days after receiving the qualification confirmation opinions from the transaction agencies. If the transferors have any doubts on the qualifications of the transferees, the transferors shall specify the reasons in the written opinions and shall submit related proving materials.

   

  Article 29      The transaction agencies, after consulting for opinions of the transferors, shall inform the interested transferees the qualification confirmation opinions in written form, and shall make a copy for the transferors.

   

  Article 30      In case that the transferors have any doubts on the qualifications of the interested transferees confirmed by the transaction agencies, they shall negotiate with the transaction agencies. When necessary, the transferors shall ask for opinions of the state-owned assets supervision and administration institutions about related doubts.

   

  Article 31      The interested transferees that obtained the qualification confirmation shall pay the deposit to the transaction agencies within the pre-determined time limit (the time when the deposit arrives at the designated account of the transaction agencies shall be taken as valid and binding), after which, the interested transferees shall obtain the qualification to take part in the price competition transaction. The interested transferees that failed to pay the deposit within the time limit shall be deemed as waiver of the transfer intentions.

   

  Chapter V    Transaction and signature

   

  Article 32      Upon the inspiration of the information release period for transfer of property rights, if two or more qualified interested transferees are generated, the transaction agencies shall organize the opening price competition in line with the price competition methods as specified in the notice. If only one qualified interested transferee is generated, the transaction agencies shall organize the both sides of the transactions to sign the agreements directly at the higher one of the listing price and the quoting price of the seller. In case that other shareholders of the transfer objects involved shall enjoy the right of preemption under same conditions in line with the laws, related laws and regulations shall be followed.

   

  Article 33      The opening price competition methods include auction, tendering and bidding, online price competition and other price competition methods.

   

  Article 34      The transaction agencies shall organize both sides of the transactions to sign the agreement for transactions of property rights within three working days since the next day on which the transferees are determined.

   Article 35      The agreements for transaction of property rights shall include but not limited to following terms and conditions:

  (1) Name and locations of both sides of the transactions;

  (2) Basic information of the transfer objects;

  (3) Property rights transfer methods;

  (4) Whether there are continued employment matters of staff of the transfer objects and how to deal with the matters;

  (5) Disposal of liabilities and debuts of transfer objects;

  (6) Transfer price, payment methods and payment period;

  (7) Property right transaction matters;

  (8) Effective conditions of the agreements;

  (9) Settlement methods of the disputes on the agreements;

  (10) Liabilities for breach of contracts of both sides;

  (11) Conditions for alteration and termination of the contracts.

   Article 36      The transaction agencies shall review the contracts for transaction of property rights in accordance with the contents and price competition results as specified in the notice on transfer of property rights and in accordance with related provisions of the laws and regulations.

   Article 37      In case that the transactions of property rights involve qualifications reviews of the main objects and anti-monopoly reviews, and effectiveness of the transactions of property rights shall be approved by related governmental departments, both sides of the transactions shall submit the contracts for transactions of property rights and related materials to the related governmental departments. The transaction agencies shall issue the certification documents needed in approving procedures of related governmental departments.

   Chapter XI   Settlement of capitals

   Article 38      Capitals for property rights transactions shall include transaction deposits and property rights transaction prices, which are usually calculated by Renminbi. The transaction agencies shall adopt uniform settlement system of transaction capitals, open separate settlement accounts, organize collection and payment of property rights transaction capitals and ensure the safety of transaction capitals in the settlement accounts and shall not embezzle capitals for other purposes.

   Article 39      The transferees shall, within the time limit set in the contracts for transfer of property rights, pay the prices of the transactions to the settlement accounts of the transaction agencies. The transaction deposits paid by the transferees shall be changed into prices for transactions of the property rights in line with related terms and conditions. In case that the agreed payment method specified in the contracts for transactions of property rights is installment, the amount of the first payment shall be no less than 30% of the transaction amounts.

   Article 40      The transaction agencies shall issue the receiving vouchers to the transferees after the transferees paid the transaction prices to the settlement accounts of the transaction agencies. The transaction agencies shall timely transfer the transaction prices to the transferors for capitals that meet the conditions for allocation of transaction prices. The transferors shall issue the receiving vouchers to the transaction agencies after receiving the transaction prices.

   Article 41      If both parties of the transactions are belonging to the same controller, the transaction capitals can be settled outside the transaction agencies after verification of the transaction agencies.

   Article 42      The charging standards of the property rights transactions shall comply with the related rules and regulations of the commodity price departments of the local government, and shall be released publicly at the working venues and information platform of the transaction agencies. Both sides of the transaction shall pay the service fees of the transaction in line with the charging standards of the transaction agencies, and the transaction agencies, upon receiving the service fees, shall issue the receiving vouchers.

   Chapter VII  Issuance of transaction certificates

   Article 43      After both sides of the transactions signed the contracts for transactions of property rights, the transferees pay the transaction prices to the capital settlement accounts of the transaction agencies in line with the contracts, and after both sides of the transactions pay the service fees, the transaction agencies shall issue the certificates for transactions of property rights within three working days.

   Article 44      In case that the transactions of property rights involve qualifications reviews of the main objects and anti-monopoly reviews, the transaction agencies shall issue certificates for transactions of property rights after the transaction behaviors get approval of related governmental departments.

   Article 45      The certificates for transactions of property rights shall indicate the serial No. of the project, signing date, commencement and ending date of the listing, whole name of the transferors, whole name of the transferees, whole name of the transfer objects, transaction methods, appraisal results of the transfer objects, transfer prices, transaction price payment method and reviewing results of the transaction agencies.

   Article 46      The certificates for transactions of property rights shall be printed in uniform form and shall not be written or altered.

  Chapter VIII Supplementary articles

   Article 47      If any disputes arose in the property rights transaction processes, the parties involved can apply for intermediation to the transaction agencies. If the disputes involve the transaction agencies, the parties involved shall apply for intermediation to the supervision institutes of the transaction agencies, or apply for arbitration to the arbitration institutes in line with the agreements or bring lawsuits to the people’s court.

   Article 48      If the transactions of state-owned property rights are suspected of infringing the legal rights and interests of the state-owned assets, the state-owned assets supervision and management institutes can require the transaction agencies to terminate the transactions.

   Article 49      In case that the transactions of property rights are paused or terminated, the cases shall be released publicly in websites of the transaction agencies.

   Article 50      The Rules will take effects as of July 1, 2009.