Circular of the MOFCOM on Relevant Issues of the B-share Circulation of the Unlisted Foreign Investment Shares of Foreign-invested Companies Limited

Shang Zi Han [2008] No.59

The commercial departments of provinces, autonomous regions, municipalities directly under the Central Government and separately planning cities,

For the purpose of promoting the sound development of domestic security market, relevant national departments have adjusted the approval procedures for the application of the circulation of unlisted foreign investment shares issued by a B-share company which was a Sino-foreign joint venture before listing (hereinafter referred to as B-share circulation of unlisted foreign investment shares). With a view to doing following-ups well after the adjustment of relevant policies and procedures, relevant issues are hereby notified as follows:

Ⅰ. The circulation of the unlisted foreign investment shares issued by a B-share foreign-invested company limited in the B-share market (hereinafter referred as B-share circulation of unlisted foreign investment shares) is permitted. The B-share circulation of unlisted foreign investment shares shall comply with the Some Opinions Relevant to Foreign Investment in Listed Companies (Wai Jing Mao Zi Fa [2001] No.538) promulgated by the former Ministry of Foreign Trade and Economic Cooperation and China Securities Regulatory Commission on Oct. 8, 2001.

Ⅱ. The foreign-invested company limited in the preceding paragraph refers to a foreign-invested company limited approved to be established by law. The unlisted foreign investment shares of an unapproved foreign-invested company limited shall not circulate in the B-share market.

Ⅲ. The B-share circulation of unlisted foreign investment shares shall meet the following conditions besides the requirements on the issuance of shares by a listed company by the State:

(1)    The applicant shall be a foreign-invested company limited which is established in accordance with provisions and procedures;

(2)    The applicant shall meet industrial policies for foreign investment;

(3)    Where any shareholder of the unlisted foreign investment shares to be circulated in B share market shall bear special obligations and responsibilities in accordance with requirements of the applicant’s articles of association, agreements of shareholders, other legal documents, laws and regulations (including but not limited to providing shareholder loan, financial guarantee, technology transfer and trademark license, etc.), it/he shall apply for the B-share circulation of unlisted foreign investment shares after having performed such obligations and responsibilities;

(4)    The applicant has passed the joint annual inspection on foreign-invested enterprises for two years before its application and engages in normal production or operation activities within the scope of businesses stated in its business license, and the trading of its corporate stock is normal;

(5)    The shareholder of the unlisted foreign investment shares to be circulated in B share market shall hold the said unlisted foreign investment shares for over one year; and

(6)    After the unlisted foreign investment shares are converted into circulating shares, their former shareholder shall continue to hold the said shares for over one year.

Ⅳ. The B-share circulation of unlisted foreign investment shares shall be handled in accordance with the following procedures:

(1)    The applicant shall file an application with the provincial commercial department at the place where it locates;

(2)    The provincial commercial department at the place where the applicant locates shall finish the primary review within 15 days upon receipt of the application. If the department approves the application, it shall submit the application to the MOFCOM for review; if it disapproves the application, it shall give a written explanation;

(3)    The MOFCOM shall notify the said department of its review opinion in a written form within 30 days upon receipt of the application materials;

(4)    If the MOFCOM approves the application, the applicant shall issue a relevant announcement and exchange for the Approval Certificate for Foreign-invested Enterprise in the MOFCOM after having handled all procedures in the exchange; and

(5)    The applicant shall apply for registration alteration to the administration for industry and commerce within 30 days after having received the Approval Certificate for Foreign-invested Enterprise.

Ⅴ. The application materials provided for in Item 3 of Article Ⅳ herein refer to

(1)    Application documents (including the primary review opinion) of the provincial commercial department at the place where the applicant locates;

(2)    The applicant’s application form on the B-share circulation of unlisted foreign investment shares;

(3)    The decision on the B-share circulation of unlisted foreign investment shares and the decision on the amendment of articles of association made by the general meeting of shareholders of the applicant;

(4)    The decision of the board of directors of the applicant;

(5)    The amended articles of association draft (original) and the former articles of association (copy) of the applicant;

(6)    The written statement of the shareholder of the unlisted foreign investment shares to be circulated in B share market on whether to bear special obligations and responsibilities. If it/he bears special obligations and responsibilities, it/he shall explain its/his performance of such obligations and responsibilities or commit to continuing to perform relevant obligations and responsibilities in a written form;

(7)    The certificates of joint annual inspection within two years before the application of the applicant;

(8)    The written document issued by the applicant which certifies the shareholder of the unlisted foreign investment shares to be circulated in B share market has hold the said shares for over one year;

(9)    The written commitment of the shareholder of the unlisted foreign investment shares to be circulated in B share market to commit continuing to hold the said unlisted foreign investment shares for over one year after they are converted into circulating shares; and

(10)The copies of the Approval Certificate for Foreign-invested Enterprise and Business License of the applicant.

Ⅵ. The Supplementary Circular on Relevant Issues of the B-Share Circulation of Unlisted Foreign Investment Shares (Wai Jing Mao Zi Yi Han [2002] No.902) shall be abolished as of the date of the promulgation of the Circular herein.

Ministry of Commerce

July 30, 2008