Section 3 Continuous Disclosure of Information

Article 63 The information disclosed by an issuer or a listed company pursuant to law must be truthful, accurate and complete and shall not contain any false entries, misleading statements or major omissions.

Article 64 Once public issuance of shares pursuant to law is examined and approved by the securities regulatory authority under the State Council, or public issuance of corporate bonds pursuant to laws is examined and approved by the department authorized by the State Council, the prospectus of share offering or the method for raising funds through issuance of corporate bonds shall be released. Where new shares or corporate bonds are to be issued publicly pursuant to laws, the financial statements of the issuer shall also be released.

Article 65 A listed company and a company whose corporate bonds are listed for trading shall, within two months immediately following the end of the first half of each fiscal year, submit to the securities regulatory authority under the State Council and the stock exchange its interim report containing the following contents and release the same:

(1) the financial statements and state of business of the company;

(2) any major litigation involving the company;

(3) any changes in the shares or corporate bonds issued by the company;

(4) any important matters presented for consideration to the shareholders general assembly of the company; and

(5) such other matters as may be so prescribed by the securities regulatory authority under the State Council.

Article 66 A listed company and a company whose corporate bonds are listed for trading shall, within four months immediately following the end of each fiscal year, submit to the securities regulatory authority under the State Council and the stock exchange its annual report containing the following contents and release the same:

(1) the general situation of the company;

(2) the financial statements and state of business of the company;

(3) a brief introduction to the directors, supervisors and senior managers of the company and their respective shareholdings in the company;

(4) the shares or corporate bonds already issued by the company, including the name list of the top 10 shareholders of the company and their respective shareholdings;

(5) the persons in practical control of the company; and

(6) such other matters as may be so prescribed by the securities regulatory authority under the State Council.

Article 67 If a major event occurs that may have a considerable effect on the share trading price of a listed company and such event has not become known to investors, the listed company shall immediately submit a provisional report about the situation of such event to the securities regulatory authority under the State Council and the stock exchange and release the same, explaining the causes, current status and possible legal consequences of such event.

One of the following circumstances shall constitute a major event referred to in the preceding paragraph:

(1) a major change in the company’s business policy or scope of business;

(2) a decision made by the company concerning a major investment or asset purchase;

(3) an important contract concluded by the company which may have a significant effect on the assets, liabilities, rights and interests, or business results of the company;

(4) the incurrence of significant debts by the company, or its default on significant debts at maturity through its breach of contract;

(5) the incurrence by the company of a major deficit or a major loss;

(6) a major change in the external conditions relating to the production or business operation of the company;

(7) replacement of the directors, one-third or more of the supervisors or managers of the company;

(8) a considerable change relating to the respective shareholdings of the persons who hold 5% or more of the shares of the company, or to the control of the company by the persons in practical control;

(9) a decision made by the company to reduce its share capital, to merge, to divide, to dissolve or to apply for bankruptcy;

(10) a major litigation in which the company is involved, or a resolution made by the shareholders general assembly or the board of directors of the company is rescinded or nullified pursuant to law;

(11) the initiation of an investigation by a judiciary organ on grounds of a suspected crime involving the company, or the imposition of a compulsory measure by a judiciary organ on grounds of a suspected crime involving a director, supervisor or senior manager of the company; and

(12) such other events as may be so prescribed by the securities regulatory authority under the State Council.

Article 68 The directors and/or senior managers of a listed company shall sign off their written opinions to confirm the periodical reports of the company.

The board of supervisors of a listed company shall review the periodical reports of the company prepared by the boards of directors and provide its written opinions after review.

The directors, supervisors and senior managers of a listed company shall ensure the truthfulness, accuracy and completeness of the information disclosed by the company. Article 69 Where there are false entries, misleading statements or major omissions in the prospectus of share offering, the method for raising funds through issuance of corporate bonds, the financial statements, the listing submission documents, the annual reports, the interim reports, the provisional reports and other materials for information disclosure released by an issuer or a listed company, thus causing losses to investors in securities trading, the issuer or listed company shall be liable for compensation; the directors, supervisors, senior managers and other directly accountable persons of the issuer or listed company as well as the sponsors and securities companies engaged for underwriting shall be jointly and severally liable for compensation together with the issuer or listed company, unless one can establish a lack of fault on one’s part; the controlling shareholders or persons in practical control of the issuer or listed company at fault shall be jointly and severally liable for compensation together with the issuer or listed company.

Article 70 The information which must be disclosed pursuant to law shall be released through the media designated by the securities regulatory authority under the State Council, and shall be placed simultaneously at the domicile of the company and stock exchange for public information. Article 71 The securities regulatory authority under the State Council shall exercise supervision in respect of the annual reports, interim reports, provisional reports of listed companies and the release thereof, in respect of their allocation or placement of new shares, and in respect of the activities of the controlling shareholders of listed companies and the persons who are obligated to disclose information.

Before release which must be made by a company in accordance with laws or administrative regulations, the securities regulatory authorities, stock exchanges, sponsors, securities companies engaged for underwriting and the persons concerned shall not disclose the contents thereof.

Article 72 Where a stock exchange decides to suspend or terminate the listing and trading of a security, it shall make an announcement thereof in a timely manner and report such decision to the securities regulatory authority under the State Council for records.

Section 4 Prohibited Trading Activities

Article 73 Persons possessing inside information relating to securities trading and persons obtaining such information unlawfully are prohibited from making use of such inside information in securities trading activities.

Article 74 Persons possessing inside information relating to securities trading include:

(1) the directors, supervisors and senior managers of an issuer;

(2) the shareholders holding 5% or more of the shares of a company and the directors, supervisors and senior managers of such shareholders, as well as the persons in practical control of a company and the directors, supervisors and senior managers of such persons;

(3) a company held by an issuer and the directors, supervisors and senior officers of such company;

(4) the persons with access to the relevant inside information by virtue of their positions in a company;

(5) the staff members of the securities regulatory authorities and other persons who perform their statutory administrative duties in respect of the issuance and trading of securities;

(6) the relevant staff members of the sponsors, securities companies engaged for underwriting, stock exchanges, securities registrar and clearance institutions and securities service institutions; and

(7) such other persons as may be so prescribed by the securities regulatory authority under the State Council.

Article 75 In the course of securities trading, any unpublished information relating to the business or financial position of a company, or carrying significant effect on the market price of the securities of a company, shall constitute inside information.

All of the following information falls into the category of inside information:

(1) the major events specified in the second paragraph of Article 67 of this Law;

(2) a company’s plan for profit distribution or capital increase;

(3) a major change in the share capital structure of a company;

(4) a major change in the surety for debts of a company;

(5) any pledge, disposition or retirement of a principal business asset of a company, the value of a single transaction of which exceeds 30 percent of the total value of such asset;

(6) potential liability for major losses to be assumed in accordance with law as a result of the activities of a director, supervisor or senior manager of a company;

(7) the plans relating to the acquisition of a listed company; and

(8) such other important information having an obvious effect on the trading price of securities as may be so defined by the securities regulatory authority under the State Council.

Article 76 Persons possessing inside information relating to securities trading and persons obtaining inside information unlawfully shall not, prior to the publication of such inside information, purchase or sell the securities of the company concerned, or disclose such information, or suggest other persons trade in such securities.

Where, with respect to the acquisition of the shares of a listed company by a natural person, legal person or other organization that holds 5% or more of the shares of the company individually or jointly with others through agreements or other arrangements, there are other provisions under this Law, such other provisions shall govern.

Where insider trading causes losses to investors, the traders shall be held liable for the losses pursuant to law.