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Pilot Reform of Equity Division Kicks off

As approved by the State Council, China Securities Regulatory Commission (CSRC) issued the "Notice on Related Problems about Experimental Reform of Equity Division" on Friday, announcing to kick off the experimental reform of the equity division and the notice to be put into practice as from the very day onwards.

According to a responsible person concerned the equity division refers to part of the shares of the listed company that will be put into circulation in the stock market with the rest to be temporarily kept off from the market. This is incurred by many historical factors.

In accordance with the regulations, to keep the stock market stable and protect the lawful rights of investors, especially the public investors CSRC will, in line with the intention for reform of the shareholders of listed companies and the recommendation of recommending organs, determine on the basis of consultation the companies for the experimentation of reform. The solution plan for equity division is going to be decided by shareholders of the listed company themselves.

According to the regulations, the listed company for experimentation should perform the duty of information release on time and do it in a truthful, accurate and complete way and do well the application work for the suspension and re-issuance of the shares. Whichever company is determined to be the company for experimentation should make the release of information the first thing of the day and apply for the suspension of the trading.

The listed company for experimentation should, calling an interim meeting of shareholders, work up a relevant arrangement for the shareholders of the circulative shares to exercise their powers when taking part in the meeting of the shareholders. The board of directors of the listed company as recommended for experimentation should invite the recommending organs to help mete out the equity division plan.

The shareholders holding the non-circulative shares of the listed company for experimentation should make promises step by step for listing and perform the duty of releasing related information if they are going to sell their shares approved for the listing through the security exchange.

(People's Daily May 1, 2005)

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