Promulgating Institution: China Securities Regulatory Commission
Document Number: Order No. 97 of the China Securities Regulatory Commission
Promulgating Date: 03/21/2014
Effective Date: 03/21/2014

Chapter 1: General Provisions
  Article 1     With a view to regulating the issuance and trading of preference shares, and protecting the legitimate rights and interests of investors, these Measures are formulated pursuant to the Company Law, the Securities Law, the Guiding Opinions of the State Council on the Pilot Launch of Preference Shares, and other relevant laws and regulations.
  Article 2     For the purpose of these Measures, preference shares shall refer to the classes of shares prescribed otherwise by the Company Law apart from the ordinary class of shares under general provisions. Holders of preference shares shall enjoy priority over holders of ordinary shares in the distribution of the profits and remaining assets of the relevant company, but their rights to participate in the decision-making and management of the company are restricted.
  Article 3     A listed company may issue preference shares, while an unlisted public company may issue preference shares in a non-public manner.
  Article 4     The pilot scheme of preference shares shall comply with the Company Law, the Securities Law, the Guiding Opinions of the State Council on the Pilot Launch of Preference Shares and these Measures, follow the principles of openness, fairness and impartiality, and prohibit fraud, insider trading and market manipulation.
  Article 5     When participating in the pilot scheme of preference shares, securities companies and other securities service agencies shall comply with laws, regulations and relevant provisions of the China Securities Regulatory Commission ("CSRC"), abide by industry-recognized business standards and code of conduct, and uphold honesty, integrity and due diligence.
  Article 6     During the pilot period, it is not allowed to issue preference shares with different priorities in terms of the distribution of dividends and remaining assets, provided that preference shares with different entitlements on other clauses may still be issued.
The issuance by the same company of both preference shares with and without mandatory dividend distribution clauses shall not be deemed as the issuance of preference shares with different priorities in terms of dividend distribution.
  Article 7     Preference shares with the same clauses shall have equal rights. Where preference shares with the same clauses are issued at the same time, the issuance conditions, price and dividend coupon rate per share shall be the same, and any entity or individual shall pay the same price per share for the shares subscribed.
Chapter 2: Exercise of the Rights of the Holders of Preference Shares
  Article 8     In addition to formulating relevant clauses of its articles of association pursuant to the Guiding Opinions of the State Council on the Pilot Launch of Preference Shares, a company that intends to issue preference shares shall also specify relevant rights and obligations of the holders of preference shares in its articles of association pursuant to these Measures.
  Article 9     Where the holders of the preference shares of a company are entitled to participate in the distribution of remaining profits together with the holders of ordinary shares after being distributed dividends according to the pre-agreed dividend rate, the company's articles of association shall specify the percentage, conditions and other matters concerning the participation of the holders of preference shares in the distribution of remaining profits.
  Article 10     Under any of the following circumstances, a company shall, before holding the general meeting, notify the holders of its preference shares by following the procedures prescribed by the Company Law and its articles of association on notifying the holders of ordinary shares. The holders of preference shares shall be entitled to attend the general meeting, and vote on the following matters in a different class from the holders of ordinary shares. Each preference share held shall represent one vote, provided that the preference shares held by the company itself shall not carry any voting rights:
(1) To amend contents in the company's articles of association that are related to preference shares;
(2) To reduce the company's registered capital by more than 10% at one time or on a cumulative basis;
(3) To carry out merger, division or dissolution of the company or change the corporate form;
(4) To issue new preference shares; or
(5) Other circumstances prescribed by the company's articles of association.
Resolutions on the foregoing matters shall be adopted by at least two-thirds of the voting rights represented by the holders of ordinary shares who are present at the general meeting (including holders of preference shares whose voting rights are restored), and by at least two-thirds of the voting rights represented by the holders of preference shares who are present at the general meeting (excluding holders of preference shares whose voting rights are restored).
  Article 11     The general meeting of a company may authorize the board of directors to pay dividends on preference shares according to the articles of association. Where the company fails to pay dividends on preference shares as pre-agreed for three cumulative fiscal years or two consecutive fiscal years, the holders of preference shares shall, from the day immediately following the date of approval by the general meeting of the plan that profits shall not be distributed as pre-agreed in the very year, be entitled to attend the general meeting to vote on relevant matters together with the holders of ordinary shares, and each preference share held shall be entitled to a certain percentage of voting rights prescribed by the company's articles of association.
As regards preference shares for which dividends may be accumulated and carried forward to the next fiscal year, the voting rights represented by such preference shares shall be restored until full payment of the dividends owed by the company. As regards preference shares with non-cumulative dividends, the voting rights represented by such preference shares shall be restored until full payment of the dividends by the company in the very year. The company's articles of association may prescribe other circumstances under which the voting rights of preference shares shall be restored.
  Article 12     Holders of the preference shares of a company shall be entitled to inspect the company's articles of association, shareholder register, stubs of corporate bonds, minutes of general meetings, resolutions of the meetings of the board of directors, resolutions of the meetings of the board of supervisors, and financial and accounting reports.
  Article 13     Repurchase of preference shares by the issuer shall include two circumstances: i.e. where the issuer requests to redeem the preference shares, and where the investors request to sell back the preference shares. The specific conditions therefor shall be specified in the company's articles of association and prospectus documents. If the issuer requests to redeem the preference shares, it shall pay off the dividends owed in full, except for preference shares issued by a commercial bank to replenish capital. After the repurchase of preference shares, the total number of outstanding preference shares shall be written down accordingly.
  Article 14     The directors, supervisors and senior management personnel of a company shall declare to the company their respective holdings of the company's preference shares and the changes thereof, and the number of shares transferrable each year by any of the foregoing parties during his/her term of office may not exceed 25% of the total number of the company's preference shares held thereby. The company's articles of association may specify other restrictions on the transfer of their holdings of the company's preference shares by its directors, supervisors and senior management personnel.
  Article 15     Except for the matters prescribed by the Guiding Opinions of the State Council on the Pilot Launch of Preference Shares, ordinary shares and preference shares shall be separately counted for calculating the number of shareholders and their respective shareholding percentage.
  Article 16     Where the articles of association of a company specifies that its preference shares shall enjoy fixed dividend rates, the company may take the same fixed dividend rate throughout the duration of the preference shares, or make clear the fixed dividend rate of each year which may be varied on a yearly basis. Where the company's articles of association specifies that its preference shares shall be subject to floating dividend rates, the methods for calculating the dividend coupon rates throughout the duration of the preference shares shall be prescribed.
Chapter 3: Issuance of Preference Shares by Listed Companies
Section 1: General Provisions
  Article 17     A listed company that intends to issue preference shares shall be independent from its controlling shareholder or actual controller in terms of personnel, assets, financial matters, organization and business.
  Article 18     A listed company that intends to issue preference shares shall have sound internal control systems that can effectively ensure corporate operational efficiency, legal compliance and the reliability of financial reporting. The effectiveness of internal control shall not have major defects.
  Article 19     To issue preference shares, a listed company shall have, for the past three fiscal years, achieved average annual distributable profits not less than the one-year dividends payable by the preference shares.
  Article 20     The distribution of cash dividends by a listed company that intends to issue preference shares over the past three years shall be in compliance with its articles of association and relevant regulatory requirements of the CSRC.
  Article 21     A listed company that intends to issue preference shares shall be free from any major accounting irregularities during the reporting period. Where the listed company intends to publicly issue preference shares, the auditors' reports issued by certified public accountants ("CPA") on its financial statements of the past three years shall be standard auditors' reports or unqualified auditors' reports with explanatory paragraphs. Where the listed company intends to issue preference shares in a non-public manner, and its financial statements of the past year have been issued with a non-standard auditors' report by CPAs, the matters involved shall have no material adverse effect on the listed company or the material adverse effect thereof shall have been eliminated prior to the issuance.
  Article 22     The funds raised by a listed company from the issuance of preference shares shall have clear purposes which are in line with the listed company's business scope and size, and are in compliance with industrial policies of the state, and the provisions of laws and administrative regulations on environmental protection, land administration, etc.
Except where the listed company is a financial enterprise, the funds raised by the listed company from the issuance of preference shares shall not be used to hold financial assets for trading and financial assets available for sale, disburse loans to others and make other financial investments, and shall not be used to directly or indirectly invest in companies whose main business is to trade marketable securities.
  Article 23     The preference shares already issued by a listed company shall not exceed 50% of the total number of its ordinary shares, and the funds raised from the preference shares shall not exceed 50% of its net assets prior to the issuance, excluding preference shares that have been repurchased or converted into ordinary shares.
  Article 24     The preference shares issued by a listed company in the same issuance shall have the same clauses. The listed company may not issue new preference shares before the completion of each issuance of preference shares in progress.
  Article 25     A listed company shall not issue preference shares under any of the following circumstances:
(1) Where the application documents for this issuance contain false records, misleading statements or material omissions;
(2) Where the listed company has been subject to administrative punishments by the CSRC in the past 12 months;
(3) Where the listed company is put on file for investigation by judicial organs on suspicion of criminal offenses, or put on file for investigation by the CSRC on suspicion of illegalities and irregularities;
(4) Where the rights and interests of the listed company have been gravely damaged by the controlling shareholder or actual controller, and such damage has not been eliminated;
(5) Where the listed company and the companies attached thereto provide external guarantees in violation of relevant provisions, and such guarantees are not lifted yet;
(6) Where the listed company has guarantee, litigation, arbitration, major market questioning or other major matters that may seriously affect its operations as a going concern;
(7) Where the directors and senior management personnel of the listed company fail to meet the post-holding qualification requirements prescribed by laws, administrative regulations and rules; or
(8) Where the listed company falls under any other circumstances that gravely undermine the legitimate rights and interests of investors and public interests in general.
Section 2: Special Provisions on Public Offering
  Article 26     To publicly offer preference shares, a listed company shall meet one of the following requirements:
(1) Where its ordinary shares are the constituent stocks of the SSE 50 Index;
(2) Where the listed company intends to use the public offering of preference shares as a means of payment for the acquisition, or merger by absorption, of other listed companies; or
(3) Where the listed company buys back ordinary shares for the purpose of reducing the registered capital, it may publicly offer preference shares as a means of payment, or may, after the completion of the implementation of the repurchase scheme, publicly offer preference shares not in excess of the total amount of capital reduced by the repurchase.
The listed company may still proceed with this offering even if it no longer meets the requirements of Item (1) of this Article after the CSRC approves the public offering of preference shares.
  Article 27     A listed company that intends to publicly offer preference shares shall be profitable for the past three consecutive fiscal years. The basis of calculation shall be net profits after deduction of non-recurring gains and losses and net profits before such deduction, whichever is lower.
  Article 28     To publicly offer preference shares, a listed company shall specify the following matters in its articles of association:
(1) That fixed dividend rates shall be adopted;
(2) That the listed company is required to distribute dividends to holders of preference shares as long as it has distributable after-tax profits;
(3) That the shortfall by which the listed company fails to distribute dividends to holders of preference shares in full shall be accumulated and carried forward to the next fiscal year; and
(4) That holders of preference shares, after having been distributed dividends according to the pre-agreed dividend rate, shall no longer participate in the distribution of remaining profits with holders of ordinary shares.
Where a commercial bank issues preference shares to replenish capital, separate agreements may be reached for matters under Item (2) and Item (3).
  Article 29     When publicly offering preference shares, a listed company may place such shares to existing shareholders on a priority basis.
  Article 30     In addition to Article 25 herein, a listed company shall not publicly offer preference shares if it has been subject to administrative punishments within the past 36 months due to violations of the laws, administrative regulations or rules on industrial and commercial administration, taxation, land, environmental protection or customs, and the circumstances are grave.
  Article 31     Where a listed company intends to publicly offer preference shares, the listed company and its controlling shareholder or actual controller shall not have committed any activities in breach of the public commitments made to investors in the past 12 months.
Section 3: Other Provisions
  Article 32     The par value per preference share shall be RMB 100.
The issuance price and dividend coupon rate of preference shares shall be determined in a fair and reasonable manner that is not detrimental to the legitimate interests of shareholders or other stakeholders. The issuance price shall not be lower than the par value of the preference shares.
The price or dividend coupon rate of publicly-offered preference shares shall be determined by way of market price inquiry or other public means recognized by the CSRC. The dividend coupon rate of preference shares issued in a non-public manner shall not exceed the average annual weighted return on net assets of the issuer over the past two fiscal years.
  Article 33     A listed company may not issue preference shares convertible to ordinary shares. However, commercial banks may, pursuant to the capital regulatory requirements of commercial banks, issue, in a non-public manner, preference shares that will be mandatorily converted to ordinary shares upon the occurrence of trigger events, provided that they comply with relevant provisions.
  Article 34     A listed company shall issue preference shares in a non-public manner only to qualified investors prescribed herein. There shall be not more than 200 investors for each non-public issuance, and the cumulative number of investors in preference shares with the same clauses shall also not exceed 200.
Where the investors are foreign strategic investors, the provisions of relevant departments of the State Council shall also be complied with.
Section 4: Issuance Procedures
  Article 35     Where a listed company applies for the issuance of preference shares, the board of directors shall publicly disclose the plan for this issuance of preference shares in accordance with relevant provisions of the CSRC on information disclosure, make resolutions on the following matters pursuant to the law, and submit the same to the general meeting for approval:
(1) The plan for this issuance of preference shares;
(2) Where the preference shares will be issued in a non-public manner and the investors have been determined, the preference shares subscription contracts with conditions on effectiveness attached that are signed by and between the listed company and the corresponding investors shall be submitted. Such a subscription contract with an investor shall specify the number of preference shares to be subscribed by the investor, the subscription price or pricing principles, the dividend coupon rate or the principles for the determination thereof, and other necessary clauses. The subscription contract shall state that the investor shall not participate in the subscription by competitive bidding, and that the contract shall come into effect once the issuance is approved by the board of directors and the general meeting of the listed company, and is verified and approved by the CSRC; and
(3) Where the preference shares will be issued in a non-public manner and the investors are not yet determined, the resolutions shall cover the scope and eligibility of investors, pricing principles, and the number or the range of the number of preference shares to be issued.
Item (2) of the preceding paragraph shall apply if the controlling shareholder or actual controller of the listed company, or the affiliated parties under the control thereof participate in the subscription of the non-public issuance of preference shares.
  Article 36     The independent directors of a listed company shall state special opinions on the impact of this issuance of preference shares by the listed company on the rights and interests of all types of shareholders. Such special opinions shall be disclosed together with the relevant resolution of the board of directors.
  Article 37     The general meeting of a listed company shall deliberate on the issuance of preference shares, and vote on the following matters item by item:
(1) The type and quantity of the preference shares to be issued;
(2) Methods of issuance, investors and arrangements made for placing the preference shares to existing shareholders;
(3) The par value and issuance price of the preference shares, or the principles for the determination thereof;
(4) Ways for holders of the preference shares to participate in the distribution of profits, including: the dividend coupon rate or the principles for the determination thereof, conditions and ways of payment of dividends, whether dividends are cumulative, whether holders of the preference shares can participate in the distribution of remaining profits, etc.;
(5) Repurchase clauses, covering the conditions for repurchase, the repurchase period, the repurchase price and the principles for the determination thereof, the parties to exercise the option to repurchase (if any), etc.;
(6) Purposes of the funds raised;
(7) Preference shares subscription contracts with conditions on effectiveness attached, as signed by and between the listed company and the investors (if any);
(8) The validity period of each relevant resolution;
(9) The plans for amending relevant policy clauses of the articles of association of the listed company on the distribution of profits and remaining assets to holders of preference shares and holders of ordinary shares, restoration of the voting rights of preference shares, etc.;
(10) The authorization granted to the board of directors for handling specific matters of this issuance; and
(11) Other matters.
Resolutions on the foregoing matters shall be adopted by at least two-thirds of the voting rights represented by the holders of ordinary shares who are present at the general meeting (including holders of preference shares whose voting rights are restored), and by at least two-thirds of the voting rights represented by the holders of preference shares who are present at the general meeting (excluding holders of preference shares whose voting rights are restored), if preference shares have been previously issued. Where the listed company issues preference shares to specific shareholders and their affiliated parties, the affiliated shareholders shall abstain when votes are being casted on the issuance program at the general meeting.
  Article 38     When convening a general meeting for matters concerning the issuance of preference shares, a listed company shall make available the means of online voting, and may also facilitate shareholders to attend the general meeting by other means recognized by the CSRC.
  Article 39     The application by a listed company for issuance of preference shares shall be sponsored by a sponsor and be submitted to the CSRC, and the application, review, verification and approval, issuance and other relevant procedures shall be governed by reference to the Measures for the Administration of Issuance of Securities by Listed Companies and the Administrative Measures for Securities Issuance and Underwriting. The meeting of the Public Offering Review Committee shall review the issuance application according to the special procedures prescribed by the Measures for the Issuance Review Committee of the China Securities Regulatory Commission.
  Article 40     A listed company that intends to issue preference shares may adopt the model whereby it can issue preference shares at several times based on the application for a single approval, provided that the preference shares issued at different times shall have the same clauses except for different dividend coupon rates. The listed company shall conduct the first issuance of preference shares within six months from the date of issuance approval by the CSRC, and the remaining number of preference shares shall be fully issued within 24 months. The listed company shall apply for a new approval from the CSRC upon expiry of the approval documents. The number of preference shares offered in the first issuance shall account for at least 50% of the total number of preference shares to be issued, and the number of preference shares to be issued in each remaining issuance shall be decided by the listed company on its own. The listed company shall report relevant information to the CSRC for record-filing within five working days upon the completion of each issuance.
Chapter 4: Non-public Issuance of Preference Shares by Unlisted Public Companies
  Article 41     To issue preference shares in a non-public manner, an unlisted public company shall satisfy the following conditions:
(1) It shall engage in lawful and standardized operations;
(2) It shall have a sound corporate governance mechanism; and
(3) It shall fulfill information disclosure obligations in accordance with the law.
  Article 42     An unlisted public company that issues preference shares in a non-public manner shall comply with Article 23, Article 24, Article 25, Article 32 and Article 33 herein.
  Article 43     An unlisted public company shall issue preference shares in a non-public manner only to qualified investors prescribed herein. There shall be not more than 200 investors for each issuance, and the cumulative number of investors in preference shares with the same clauses shall also not exceed 200.
  Article 44     Where an unlisted public company intends to issue preference shares, the board of directors shall, in accordance with the law, make resolutions on the specific program, the impact of this issuance on the rights and interests of shareholders of different types, purposes of the issuance of preference shares, use of the funds raised and other matters that shall be specified, and submit the same to the general meeting for approval.
Where specific investors are determined in the relevant resolution of the board of directors, the said resolution shall determine the names of the specific investors, their subscription prices or pricing principles, the number of shares to be subscribed or the range thereof, etc., and share subscription contracts with conditions on effectiveness attached shall be signed with the corresponding investors before the meeting of the board of directors is held. Where specific investors are not determined in the relevant resolution of the board of directors, the said resolution shall specify the scope and eligibility of investors, pricing principles, etc.
  Article 45     Where the general meeting of an unlisted public company deliberates on the issuance of preference shares, Article 37 herein shall apply, mutatis mutandis, to the matters for voting. The resolution on the issuance of preference shares shall be adopted by at least two-thirds of the voting rights represented by the holders of ordinary shares who are present at the general meeting (including holders of preference shares whose voting rights are restored), and by at least two-thirds of the voting rights represented by the holders of preference shares who are present at the general meeting (excluding holders of preference shares whose voting rights are restored), if preference shares have been previously issued. Where the unlisted public company issues preference shares to specific shareholders and their affiliated parties, the affiliated shareholders shall abstain when votes are being casted on the issuance program at the general meeting, except where there are less than 200 holders of ordinary shares (excluding holders of preference shares whose voting rights are restored).
  Article 46     Application by unlisted public companies for issuance of preference shares, review of such applications (exemption from review), issuance and other relevant procedures shall be governed by the Measures for the Supervision and Administration of Unlisted Public Companies and other relevant provisions.
Chapter 5: Trading, Transfer, Registration and Settlement
  Article 47     After preference shares are issued, applications may be submitted for the trading or transfer thereof, and no sales moratorium shall be set.
Publicly-offered preference shares may be listed and traded on stock exchanges. Preference shares issued by listed companies in a non-public manner are transferable on stock exchanges, while preference shares issued by unlisted public companies in a non-public manner are transferable via the National Equities Exchange and Quotations ("NEEQ"), provided that the scope of transfer is limited to qualified investors. Specific measures for trading or transfer shall be separately formulated by the stock exchanges or the NEEQ.
  Article 48     The investor suitability standards applicable during the trading or transfer of preference shares shall be consistent with those applicable during issuance. After preference shares that are issued in a non-public manner and have the same clauses are traded or transferred, the number of investors may not exceed 200.
  Article 49     The China Securities Depository and Clearing Co., Ltd. shall provide registration, depository, settlement, delivery and other services related to preference shares.
Chapter 6: Information Disclosure
  Article 50     A company shall prepare the prospectus on preference shares or other information disclosure documents in accordance with relevant information disclosure rules of the CSRC, and perform the obligations of information disclosure pursuant to the law. Listed companies shall refer to the Measures for the Administration of Issuance of Securities by Listed Companies, the Detailed Implementation Rules on Non-public Issuance of Stocks of Listed Companies and relevant regulatory guidelines for relevant information disclosure procedures and requirements. Unlisted public companies shall refer to the Measures for the Supervision and Administration of Unlisted Public Companies and relevant regulatory guidelines for the information disclosure procedures and requirements on the non-public issuance of preference shares.
  Article 51     When disclosing periodic reports, a company that has issued preference shares shall disclose in a special section information on the preference shares issued, the list of the top ten holders of preference shares and the respective number of their holdings, distribution of profits to holders of preference shares, repurchase of preference shares, restoration of the voting rights of the holders of preference shares and the exercise of such rights, accounting treatment of preference shares and other circumstances relevant to preference shares. The specific contents and formats in this regard shall be prescribed by the CSRC.
  Article 52     In the event of the restoration of voting rights, the repurchase of ordinary shares and other matters that may have a greater impact on the trading or transfer prices of its ordinary or preference shares, a listed company that has issued preference shares shall submit interim reports, announce relevant information and perform other information disclosure obligations in accordance with Article 67 of the Securities Law and relevant provisions of the CSRC.
  Article 53     An unlisted public company that has issued preference shares shall perform daily information disclosure obligations pursuant to the Measures for the Supervision and Administration of Unlisted Public Companies and relevant regulatory guidelines.
Chapter 7: Repurchase, Merger and Acquisition, and Reorganization
  Article 54     A listed company may use the non-public issuance of preference shares as a means of payment to buy back ordinary shares from specific shareholders. The listed company shall repurchase the ordinary shares at fair and reasonable prices, and shall not prejudice the legitimate interests of shareholders or other stakeholders.
  Article 55     Where a listed company publicly offers preference shares to repurchase ordinary shares for the purpose of reducing its registered capital, or uses the non-public issuance of preference shares as a means of payment to buy back ordinary shares from specific shareholders, the listed company shall, in addition to the conditions and procedures for issuance of preference shares, also comply with the following provisions:
(1) The board of directors shall make a resolution on the repurchase of ordinary shares by the listed company in accordance with the law, and submit the same to the general meeting for approval;
(2) The resolution on the repurchase of ordinary shares made by the general meeting of the listed company shall cover the following matters: the price range for the repurchase of ordinary shares, the number and percentage of ordinary shares to be repurchased, the period for repurchase of ordinary shares, the validity period of the resolution, the specific authorization granted to the board of directors for handling matters related to the repurchase, and other relevant matters. Where the listed company uses the issuance of preference shares as a means of payment, the said resolution shall cover the total amount of preference shares to be used as payment and the percentage of payment. Where the listed company publicly offers preference shares within one year after the repurchase program is fully implemented, the said resolution shall include the total amount of the repurchase and the funding sources;
(3) The resolution on the repurchase of ordinary shares by the general meeting of the listed company shall be adopted by at least two-thirds of the voting rights represented by the holders of ordinary shares who are present at the general meeting (including holders of preference shares whose voting rights are restored);
(4) The listed company shall announce the resolution on the repurchase of ordinary shares made by the general meeting on the day immediately following the date of the said resolution; and
(5) The listed company shall notify the creditors in accordance with the law.
Matters not covered herein shall be governed by other provisions of the CSRC on the repurchase by listed companies.
  Article 56     The take-over offer made by a listed company shall apply to all shareholders of the target company, provided that it may contain different take-over conditions applicable to holders of preference shares and holders of ordinary shares.
  Article 57     A listed company may issue preference shares to buy assets pursuant to the conditions prescribed by the Measures for the Administration of Major Asset Reorganization of Listed Companies, and shall, at the same time, comply with Article 33, and Article 35 through to Article 38 herein, disclose relevant information pursuant to the law, and go through appropriate procedures.
  Article 58     A listed company that issues preference shares as a means of payment to buy assets may simultaneously raise supporting funds.
  Article 59     An unlisted public company shall comply with the provisions of the CSRC on major asset reorganization if its program for issuance of preference shares involves major asset reorganization.
Chapter 8: Regulatory Measures and Legal Liabilities
  Article 60     A company, its controlling shareholder or actual controller, its directors, supervisors, senior management personnel and other personnel subject to direct liabilities, relevant market intermediaries and personnel subject to liabilities, as well as other market participants of the pilot scheme of preference shares who are in violation of these Measures shall be dealt with in accordance with the Company Law, the Securities Law and relevant provisions of the CSRC. Where criminal offenses are suspected of, the cases shall be referred to judicial organs in accordance with the law for investigation of criminal liabilities.
  Article 61     Where a listed company or an unlisted public company, in violation of these Measures, fails to formulate relevant clauses of its articles of association as required, fails to convene a general meeting to restore the voting rights of the holders of preference shares as pre-agreed, or commits other acts detrimental to the rights and interests of the holders of preference shares and minority shareholders, the CSRC shall order the same to make correction, and may take appropriate administrative regulatory measures, and mete out administrative punishments, such as warning and a fine of up to RMB 30,000, against the listed company or the unlisted public company and its person-in-charge subject to direct liabilities and other personnel subject to direct liabilities.
  Article 62     Where a listed company violates Paragraph 2 of Article 22 herein, the CSRC may order the same to make correction, and shall refuse to accept the application for public offering of securities by the listed company for 36 months.
  Article 63     Where a listed company or an unlisted public company issues preference shares in a non-public manner to investors other than the qualified investors prescribed herein, the CSRC shall order the same to make correction, and may refuse to accept the application for issuance of preference shares by the listed company or unlisted public company for 36 months upon confirmation of the foregoing circumstance.
  Article 64     Where an underwriter, during the underwriting of a non-public issuance of preference shares, places the preference shares to investors that fail to meet the requirements herein on qualified investors, the CSRC may order the same to make correction, and shall refuse to accept the application by the underwriter for participation in securities underwriting for 36 months.
Chapter 9: Supplementary Provisions
  Article 65     For the purpose of these Measures, qualified investors shall include:
(1) Financial institutions established upon approval by relevant financial regulatory authorities, including commercial banks, securities companies, fund management companies, trust companies, insurance companies, etc.;
(2) Wealth management products issued by the aforesaid financial institutions to investors, including, among others, banking wealth management products, trust products, investment-linked insurance products, fund products, asset management products of securities companies, etc.;
(3) Enterprise legal persons whose paid-up capital or total paid-up share capital is not less than RMB 5 million;
(4) Partnership enterprises whose total paid-up capital contribution is not less than RMB 5 million;
(5) Qualified foreign institutional investors ("QFII"), RMB qualified foreign institutional investors ("RQFII"), and foreign strategic investors in compliance with the provisions of relevant departments of the State Council;
(6) Natural person investors, other than an issuer's directors and senior management personnel and their spouses, who hold total assets of not less than RMB 5 million under various types of securities accounts, fund accounts and asset management accounts under their names; and
(7) Other qualified investors recognized by the CSRC.
  Article 66     Where an unlisted public company issues preference shares in a non-public manner at the same time of its initial public offering of ordinary shares, its issuance of preference shares and the information disclosure thereof shall be in compliance with the provisions herein on the non-public issuance of preference shares by listed companies.
  Article 67     A Mainland-registered overseas listed company that intends to issue preference shares overseas shall comply with the provisions on overseas offering and listing of shares.
Where a Mainland-registered overseas listed company intends to issue preference shares within the Mainland, the provisions herein on the issuance of preference shares by unlisted public companies, the Measures for the Supervision and Administration of Unlisted Public Companies and other relevant provisions shall be referred to, and the preference shares issued by the said company are transferable via the NEEQ.
  Article 68     For the purpose of these Measures:
(1) Mandatory dividend distribution shall mean that a company is required to distribute dividends to holders of preference shares as long as it has distributable after-tax profits;
(2) Distributable after-tax profits shall refer to the retained profits to which the shareholders of an issuer are entitled pursuant to the law;
(3) Weighted average return on net assets shall refer to the weighted average return on net assets calculated pursuant to the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No. 9: Calculation and Disclosure of Rate of Return on Equity and Earnings per Share; and
(4) SSE 50 Index shall refer to the SSE 50 Index published by the China Securities Index Co., Ltd.
  Article 69     Where the same asset management institution uses two or more products under its management to subscribe to or accept the transfer of preference shares, the products involved shall be deemed as one investor for the purpose of calculating the number of qualified investors under these Measures.
  Article 70     These Measures shall come into effect on the date of promulgation.