Operational Rules for Transaction Suspension and Termination of Southern United Assets & Equity Exch

2019-10-21

Article 1 These Rules are formulated in accordance with the Measures for the Supervision and Administration of the Transaction of the State-owned Assets of Enterprises, the Operational Rules for the Transaction of State-owned Properties of Enterprises, the General Transaction Rules of Southern United Assets & Equity Exchange and the other applicable rules and regulations in order to maintain the normal transaction order of the exchange market of Southern United Assets & Equity Exchange (hereinafter referred to as "SUAEE").

Article 2 These Rules shall apply to the suspension or termination of the transaction of the properties of state-owned and collective enterprises handled at SUAEE. The suspension and termination of other types of transaction may be carried out with reference to these Detailed Rules.

Article 3 The term "Suspension" herein refers to the act of SUAEE to suspend the transaction under way when the circumstance that hinders the transaction and seriously affects the normal implementation of the transaction in accordance with the prescribed procedures occurs.

The term "Termination" herein refers to the act of SUAEE to terminate the transaction under way when the circumstance that hinders the transaction and seriously affects the normal implementation of the transaction in accordance with the prescribed procedures occurs and is determined unable to be removed after investigation and verification.

Article 4 SUAEE may suspend or terminate the transaction upon the application of the transaction subject or the stakeholder or the notice of the competent authority. If the transaction subject or the stakeholder does not make an application or the competent authority does not deliver a notice but SUAEE thinks necessary to suspend or terminate the transaction, SUAEE may directly make the decision to suspend or terminate the transaction.

SUAEE shall have the right to conduct an investigation and a verification, organize a mediation in the process of accepting an application, making a suspension or termination decision, and in the suspension period, in order to maintain the normal transaction order of the transaction market.

Article 5 In the course of the transaction, where the transaction subject or the relevant stakeholder finds that the counterpart to the transaction or other related parties of the transaction has any of the following circumstances, resulting in damage to its own interest, it may apply to SUAEE to make a decision to suspend or not. Decide; and SUAEE may also directly decide to suspend the transaction in any of the following circumstances:

(i) Where the ownership of the transfer subject matter is unclear or under dispute;

(ii) Where the target enterprise conceals assets, and the audit or evaluation results are inaccurate or the asset status, financial status, and business conditions of the target enterprise have undergone major changes affecting the continuance of the transaction;

(iii) Where the transferor or the target enterprise fails to perform or fails to perform as required the corresponding internal decision procedures, the review procedures of the employee resettlement plan, the disposition procedures of the creditor's rights and debts, the transfer review and approval procedures, etc., but assigns the subject matter without authorization;

(iv) Where subject qualification of the transferor or the target enterprise is faulty or the information provided by it is false, inaccurate or incomplete;

(v) Where state-owned property of the enterprise is assigned to its management, the transfer information announcement fails to disclose the information as required, and the management has direct responsibility for the decline of the business performance of the enterprise or the source of the fund for the transfer violates the relevant regulations;

(vi) Where, in the process of participating in the transfer, the potential transferee violates regulations or agreements, resorts to fraud or has malicious collusion in order to influence on the transferor, SUAEE staff or other relevant personnel, disrupt the normal order of the bidding transaction, and affects the fairness of the bidding;

(vii) Where the transferor or the transferee does not advance the transaction process for no reason, and it does not act yet after SUAEE;s urging;

(viii) Where the transaction subject or any other stakeholder files an application for termination, and SUAEE considers it necessary to suspend the transaction first;

(ix) Any other circumstance resulting in the suspension of the transaction.

Article 6 In addition to the circumstances listed in Article 5 hereof, after the transfer information announcement, the transferor shall not require suspending or terminating the transaction without justifiable reasons. If it is necessary to cancel the information announcement or suspend or terminate the transaction for special reasons, it shall be approved by the transfer reviewing and approving authority.

Article 7 If the transferor or the potential transferee has entrusted the member to act as an agent, the application for suspension shall be submitted through the member; any other stakeholder may entrust the member to submit the application for suspension.

Article 8 The transaction subject and the stakeholder shall provide relevant evidence and explanation when submitting the application for suspension. The stakeholder shall be responsible for the authenticity, completeness, accuracy and legal validity of the content of the application for suspension and the relevant documents submitted by it. If the application is submitted by a member of SUAEE, such entrusted member shall verify the application documents and provide the stakeholder with the services in accordance with these Rules in connection with the proposal and coordination of the application for suspension.

Article 9 After receiving the application for suspension, SUAEE shall review the application documents and the circumstance resulting in the proposed suspension, and make a decision to suspend or not to suspend the transaction within 5 business days from the date of accepting the application for suspension.

If deciding to suspend the transaction, SUAEE shall issue a letter of suspension decision, determine the suspension term and publish the same on its website. If deciding not to suspend the transaction, SUAEE shall explain to the applicant in writing the reason therefor.

Article 10 The transaction shall be suspended from the date on which the letter of suspension decision is made. The suspension term shall be determined by SUAEE according to the specific circumstance of the transaction, and generally it shall not exceed 30 days. If the circumstance resulting in the suspension has not been eliminated after the expiration of the suspension term, SUAEE may extend the suspension term as required by the parties.

Article 11 If an applicant disagrees with the suspension decision made by SUAEE, it may file an objection application with the competent regulatory authority. If any other transaction subject has an objection to the suspension decision made by SUAEE, it may file an objection to SUAEE in the suspension term.

Article 12 Within the suspension term of the transaction, SUAEE shall investigate the suspension or organize the parties to mediate the dispute. SUAEE may verify the authenticity of the violation through the competent authority or an entrusted intermediary. If a party claims from the other party or oppose the claim of the other party, it shall provide evidence.

Within the suspension term, SUAEE may, in accordance with the applicable regulations and investigation and mediation results, make such written decisions as requesting corrections within the specified time, disqualifying the transferee, deducting the security deposit, etc..

Article 13 After the suspension of the transaction, if the circumstance resulting in the failure of the transaction to be carried out in accordance with the normal procedures is eliminated, SUAEE shall resume the transaction as soon as possible and deliver a written opinion. After the transaction is resumed, the term of the announcement for continuing the transaction shall not be less than 10 business days, and the cumulative announcement term on the website of SUAEE shall be no less than 20 business days.

After the expiration of the suspension term, if the circumstance resulting in the suspension has not been eliminated, SUAEE may make a decision to terminate the transaction.

Article 14 If the transaction subject or the stakeholder believes that the transaction counterpart or any other party related to the transaction has the act that hinders the transaction, seriously affects the normal implementation of the transaction in accordance with the prescribed procedures and damages its legitimate rights and interests, it may file an application for termination with SUAEE. SUAEE may make a decision to terminate or not to terminate the transaction, or directly make a decision to terminate the transaction in any of the following circumstances:

(i) Where the transfer subject matter is destroyed or lost;

(ii) Where the transferor or the target enterprise is dissolved, canceled or enters the bankruptcy liquidation procedure after submitting the application for the release of the property transfer information;

(iii) Where the transferor or the transferee does not advance the transaction process for no reason, and does not act yet after SUAEE's urging;

(iv) Where, after the expiration of the suspension term, the circumstance causing the suspension is eliminated; or

(v) Any other circumstance that has been confirmed to prevent the transaction from continuing to be implemented.

Article 15 If the transferor or the potential transferee has entrusted a member of SUAEE for transaction on its behalf, the application for termination shall be submitted through the entrusted member; any other stakeholder may entrust the member to submit the application for termination.

When a party submits the application for termination, it shall provide relevant evidence and explanation of the cause. The parties shall be responsible for the authenticity, completeness, accuracy and legal validity of the content of the application for termination and the relevant documents submitted. If the application is submitted through the member of SUAEE, such entrusted member shall verify the application and provide corresponding services for the client.

Article 16 After receiving the application for termination, SUAEE shall promptly notify the transaction subject. If the transaction subject has any objection, it shall submit such objection within 3 business days from the date of receipt of the notice. SUAEE shall review the competent documents and decide whether to terminate the transaction within 15 business days from the date of accepting the application for termination. If SUAEE decides to terminate the transaction, it shall promptly inform the relevant parties and make an announcement on its website.

Article 17 If the transaction is suspended or terminated due to the violation of the transaction subject, the transaction subject that causes the loss to the relevant parties shall bear the corresponding economic and legal responsibility arising therefrom.

If the violation of the transaction subject violates causes the loss of the counterpart of the transaction, the party with fault shall bear the responsibility for violation of the rules; if both parties are at fault, they shall bear the responsibility according to the severity of the fault.

The entrusted member of SUAEE shall bear the corresponding responsibility if it fails to promptly discover the act and dissuade the client to stop such act in the event that the client has any of the circumstances as mentioned herein resulting in the suspension or termination of the transaction, which violates the transaction rules or disturbs the transaction order.

Article 18 These Rules shall be interpreted by SUAEE.

Article 19 These Rules shall be filed with the Office of Guangdong Provincial Government Joint Meeting on the Construction of Market of Equities and shall be subject to the supervision and guidance of Guangdong Provincial Government Joint Meeting on the Construction of Market of Equities and its Office.

Article 20 These Rules shall come into force on January 1, 2017, and the Operational Rules for Transaction Suspension and Termination of China Southern United Assets & Equity Exchange (Amendment 2014) shall be abolished from the implementation date of these Detailed Rules.

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