Rules on the Listing of Corporate Bonds Shanghai Stock Exchange

On September 18, 2007, the Shanghai Stock Exchange issued its "Revised
Rules on the Listing of Corporate Bonds" (2007) (hereinafter as "the
Rules"). The Rules, which were effective immediately, replaced
regulations contained in "The Shanghai Stock Exchange's Rules on the
Listing of Enterprise Bonds."
The Rules are broader than the "The Shanghai Stock Exchange's Rules on
the Listing of Enterprise Bonds" but narrower than the provisions
contained in "The Trial Measure for the Issuance of Corporate
Bonds"(discussed above). Under the Rules, corporate bonds must have a
term of more than one year; also, corporate bond issues must be valued
at a minimum 50 million yuan; and, lastly, bond issues must be reviewed
by a credit agency and receive an "above average" rating.
The Rules also impose strict disclosure requirements for the issuers of
listed corporate bonds. Issuers will now be expected to file regular and
interim disclosure reports. Furthermore, where information for public
disclosure involves finance and accounting, law, asset evaluation, credit
rating and certain other items, it must be verified by certified

accountants experienced in securities related business and, as necessary,
other professional intermediary institutions (e.g. law firms, asset
evaluation firms, and credit rating institutions) and accompanied by a
formal written opinion from the reviewing institution.
If after the bonds are listed for trading the issuing company: commits
grave illegal acts, changes greatly and no longer comports with the
bonds' listing conditions, uses the capital raised through the issuance
in a manner that is inconsistent with the approved usage, fails to fulfill
the obligations on time in accordance with the measures for bonds
collections, or incurred a loss within the previous two years, the
Shanghai Stock Exchange shall stop trading and issue an opinion within
7 workdays as to whether to suspend future trading.
The Rules aim to perfect the listing process for corporate bonds and lower
the threshold listing requirements, thereby raising the frequency and
scale of corporate bond issuances in the future.

the formal start of chinese corporate debt issuance

The Trial Measure for the Issuance of Corporate Bonds
On August 2007, the China Securities Regulatory Commission
implemented a Measure for the Issuance of Corporate Bonds
terms on a number of points including:
issuance mode, issuance conditions, issuance procedures, supervision and
protecting bondholder rights and interests.
The Trial Measure's more innovative provisions include: removing the
requirement that issuers must provide a guarantee; removing the
requirement that financing capital be used for fixed asset investment
projects; allowing the price of corporate bonds to be fixed by the issuers
and the sponsors through a "Request for Quotation"; and allowing listed
companies to apply for approval of a phased issue.
The Trial Measure also imposes requirements on firms seeking to issue
corporate bonds. First, the firm's average annual profit in the last
three fiscal years cannot be less than the annual interest owed on the
bond issue; Second, after the issuance, the issuer's cumulative balance
of outstanding corporate bonds should not exceed 40% of its recent net
asset value; finally, financial firms should use methods relevant to the
financial industry to calculate the cumulative balance of their
outstanding corporate bonds.
The Trial Measure also provides special protections for bondholders
including: requiring the issuer to disclose relevant information
completely, timely and fairly; utilizing trustees to guard bondholder
interests; and requiring an issuer to convene a bondholder meeting when
situations arise that may affect important bondholder rights.
The Trial Measure is a very significant step. Among other benefits, its
provisions are expected to promote the development of China's overall
bond market, broaden channels of enterprise financing, enhance the level
of domestic direct financing activity and foster the evolution of a multi-level capital market.

The Chinese stock market shares type

Chinese firms typically have multiple classes of shares. One possibility is to distinguish shares
according to geographical locations: shares which can be traded by domestic investors (A-shares),
shares denominated in foreign currencies and reserved to foreign investors4 (B-shares) and shares of
companies listed or cross-listed overseas (H-shares, for those listed in Honk Kong). It is worth
noticing the residual role played by B-shares, whose market capitalization was about 3% of the capitalization of A-shares at the beginning of 2005
second is to distinguish shares according to the trading status, given that some shares
are nontradeable. NTS can be either State shares or restricted institutional shares and can only be sold privatelyState shares and individual shares.
At the beginning of 2006, NTS accounted for about 63% of the total number of shares outstanding.
NTS have the same cashflow and voting rights as tradeable shares in china.

what is H-shares and a-shares in China stock market

The China equity market is made up of several categories - red chips, H-shares, B-
shares and A-shares. Red chips refers to companies incorporated and listed in Hong
Kong with has at least 30% shareholding directly held either: mainland entities that
include state-owned organisations, provincial or municipal authorities in mainland China,
or companies that are controlled by mainland entities. Typically these businesses have
significant activities in China. H-shares are companies incorporated in mainland China
and listed on the Hong Kong Stock Exchange and other foreign stock exchanges. The B-
share market is made up of companies incorporated in mainland China that are traded in
the mainland B-share markets (Shanghai and Shenzhen). B shares are quoted in foreign
currencies. In the past, only foreigners were allowed to trade B shares, but since March
2001, mainlanders too can trade B shares. Finally, A-shares refers to companies
incorporated in mainland China that are traded in the mainland A-share markets. The
prices of A shares are quoted in Renminbi, and currently only mainlanders and Qualified Foreign Institutional Investors (QFII) are allowed to trade A shares

Chinese stock market Opening Price and Closing Price

The opening price of a security on a trading day is the first execution price of
such security on that day.

The opening price of a security is generated from a call auction. In case no
opening price is generated therefrom, the opening price will be generated from the
continuous auction.

The closing price of a security is the trading volume-weighted average price of
all the trades of such security during the one minute before the last trade (including
the last trade) on that day. In the absence of any trade on a trading day, the previous
closing price shall be taken as the closing price of that day.

Learn chinese Stock Market Trading mechanism Basics

Since December 16, 1996, an increase ceiling and decrease floor of 10% applies
to every stock during one-day trading. This practice says that the maximum stock

price during a trading day is 110% of the previous closing price; the minimum
stock price is 90% of the previous closing price.

(2) An A share applies a T+1 settlement policy
(3) For every trade of A-share stock, the minimum investment is 100 shares. The

actual number of shares purchased/sold for every trading is the integer times 100
shares. When the investment is less than Yuan 30 million, the maximum number

of shares traded is less than 100,000 shares. When the investment is more than

Yuan 30 million and less than Yuan 100 million, the maximum number of shares
traded is less than 200,000 shares. For every trade of B-share stock, the minimum

investment is 1000 shares. The actual number of shares purchased/sold for every
trading is the integer times 1000 shares. There is no maximum investment limit

for B-share stock.

(4) For A shares, the commission is smaller than or equal to 0.3% of the stock value,
and the minimum is Yuan 5. The stamp tax is 0.2% of the stock value. There is a

stock transfer fee, which is equal to 0.1% of the stock value. For B shares, the
commission is smaller than or equal to 0.3% of the stock value, and the minimum

is 1 U.S. dollar. The stamp tax is 0.2% of the stock value. There is a settlement

fee, which is equal to 0.05% of the stock value. For both A and B shares, there is
no income tax, such as a capital gains tax.

the increase ceiling and decrease floor of china stock Markets

Since December 16, 1996, an increase ceiling and decrease floor of 10% applies
to every stock during one-day trading. This practice says that the maximum stock

price during a trading day is 110% of the previous closing price; the minimum stock price is 90% of the previous closing price.