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.