Asset Transaction Rules of Southern United Assets & Equity Exchange

2019-10-21

Chapter I General Provisions

Article 1 These Rules are formulated for the purpose of regulating the asset transaction activities carried out at Southern United Assets & Equity Exchange (hereinafter referred to as “SUAEE”), safeguarding the legitimate rights and interests of all parties to the transaction, and maintaining the order of transaction activities.

Article 2 The asset mentioned herein refer to the real asset, construction in progress, land use right, production equipment, machinery and equipment, motor vehicle and any other transportation means, article, inventory, any other physical asset and creditor's right as well as intangible asset such as intellectual property, etc., owned by natural persons, legal persons and other organizations, except equity, non-corporate enterprise management right, lease right, etc., which are formed by various forms of capital contributions to enterprises.

Article 3 The asset transaction activities at SUAEE shall abide by these Rules. The act of submitting transaction application documents or other entrustment documents to SUAEE shall be deemed to endorse and accept these Rules.

Article 4 Asset transaction activities shall comply with the applicable laws, administrative regulations and departmental rules of the State. Any state-owned and state-owned holding enterprise or state-actually controlled enterprise that carries out asset transaction activities at SUAEE shall abide by the applicable state-owned assets management rules and regulations.

Article 5 Asset transactions shall follow the principles of openness, fairness, and justice, and shall not infringe on the legitimate rights and interests of others and harm the public interest.

Article 6 The transferor and the potential transferee of the asset transaction may entrust the members of SUAEE to conduct the transaction on their behalf.

Chapter II Application of Transfer Acceptance

Article 7 Where assigning assets, the transferor shall have the subject qualification to assign the subject matter, ensure that the subject matter can be legally transferred, and perform the relevant procedures such as internal decision, asset evaluation, etc. in accordance with the applicable laws, regulations and policies.

Article 8 Where the transferor entrusts a member of SUAEE as its agent to conduct asset transactions, it shall sign an entrustment contract with such member. The entrusted member shall provide relevant services in accordance with the contract.

Article 9 Where an asset transfer needs to be notified of the relevant right holder in accordance with the applicable laws or agreements, the transferor shall perform the corresponding notification obligation before filing the transfer application.

Where the right of preemption is involved, the notice shall generally include:

(i) whether the holder of the right of preemption waives the right of preemption;

(ii) the right holder who does not waive the right of preemption should exercise the right of preemption in accordance with the applicable provisions and agreements; and

(iii) the holder of the right of preemption should pay attention to SUAEE's website in time and look up the project announcement information.

Article 10 The transferor or the entrusted member shall submit the following documents to SUAEE:

(i) the Power of entrusted agent for Asset Transfer;

(ii) the subject qualification certificate of the transferor;

(iii) the ownership certificate;

(iv) the evidence proving that the transferor has fulfilled the notification obligation specified in Article 9 of these Rules;

(v) the written opinion issued by the relevant right holder obtained by the transferor after fulfilling the notification obligation stipulated in Article 9 of these Rules;

(vi) the relevant contract involved in the transfer of the subject matter;

(vii) the special legal opinion on the transfer the SUAEE may require the transferor to submit if the ownership of the subject matter is complicated; and

(8) any other document submitted by SUAEE.

If the transferor is a non-natural person, it shall also provide its internal decision documents; if the transfer subject matter involves the management of state-owned assets, it shall also submit the approval document from the competent transfer reviewing and approving authority, the asset evaluation report as well as the assessment, approval and the filing documents of the transfer subject matter.

Article 11 Where the transfer subject matter is real estate, the supporting documents for ownership the transferor shall submit include but are not limited to:

(i) the state-owned land use right certificate;

(ii) the house ownership certificate; and

(iii) other ownership documents and other legally binding documents.

Where the transfer subject matter is a motor vehicle, the subject matter shall be within the annual inspection period and shall have no taxes (including but not limited to fines for violation) outstanding. The ownership documents the transferor shall provide include but are not limited to:

(i) the motor vehicle license and the road worthiness certificate;

(ii) insurance documents, etc..

Article 12 Where the transfer subject matter is a creditor's right, the transferor shall provide the following ownership documents:

(i) the ownership certificate with legal effect, such as the relevant contract;

(ii) the contract of creditor's right transfer.

Article 13 The transferor shall submit all the transfer application documents to SUAEE, and shall be responsible for the authenticity, completeness, accuracy and legal validity of the contents filled in the information announcement and the submitted documents.

Where the transferor entrusts a member of SUAEE, such entrusted member shall conduct due diligence on the release of the transfer information of the agent, and verify the authenticity, completeness, accuracy, legal validity and compliance of the documents submitted by the transferor.

Article 14 In addition to the explicit requirements of the applicable national laws and regulations or rules, the transfer of the assets of state-owned and state-controlled enterprises and state-actually controlled enterprises shall not limit the qualifications of the transferee.

Article 15 The transferor may set the security deposit clause when submitting the transfer application. If the security deposit clause is set, it shall specify the amount of the security deposit, the time of payment, the method of payment, the guarantee and the disposal method, etc..

Article 16 Where the documents submitted by the transferor meet the requirements for completeness, SUAEE shall complete the normative review within five business days from the date of receipt of the "Power of entrusted agent for Asset Transfer" and the application documents. If the transfer application passes the normative review, SUAEE shall issue a notice of acceptance to the transferor and handle the transaction procedures such as information release, etc.. If the review fails, SUAEE shall promptly notify the transferor of the review opinion.

Chapter III Release of Transfer Information

Article 17 The transfer information shall be publicly released on the official website of SUAEE or its branches and cooperative institutions. If the transferor requests, the transfer information announcement can be released simultaneously with the auction announcement.

Article 18 The transferor may reasonably determine the term of the information announcement according to the conditions of the transfer subject matter, but in general, it shall not be less than 5 business days. Where the state-owned asset supervision system provides otherwise for the term for the release of asset transfer information, such provisions shall prevail. The term of the information announcement shall be calculated on the basis of business day, and the actual business days announced by the competent governmental authority shall be subject to the statutory holidays.

If the transfer information announcement and the auction announcement are issued simultaneously, both shall be released seven days before the auction day.

Article 19 Within the information announcement period, the transferor may not change the content published in the information announcement. If any reason not attributable to the transferor or any other force majeure factor may affect the judgment of the value of the transfer subject matter, the transferor shall promptly adjust the content of the supplementary information disclosed and extend the time for information disclosure accordingly.

Article 20 The transferor shall not cancel the released information without authorization in the term of the information announcement. If the transferor arbitrarily cancels the released information and causes losses to the potential transferee, SUAEE and its member, the transferor shall assume the reverse liquidated damages with the same amount as the security deposit set to the affected party. If the amount of the security deposit is insufficient to cover the losses caused by the default by the transferor, the affected party may recover the compensation from the transferor.

Article 21 In the term of the information announcement, the potential transferee may, after going through the confidentiality procedures, inspect the relevant transaction documents at SUAEE and conduct due diligence on the transfer subject matter. The transferor and its entrusted member shall assist the potential transferee in doing so.

Article 22 If no eligible potential transferees are solicited within the prescribed announcement term and the information announcement content is not changed, the transferor may extend the term of the information release in accordance with the information announcement, and each extension shall not be less than five business days. If the transfer of the assets of the state-owned and state-controlled enterprises and state-actually controlled enterprises does not solicit eligible transferees for more than 12 months from the date of the initial information announcement of the transfer subject matter, the transferor shall re-execute the asset transfer work procedures such as asset evaluation, information announcement, etc..

If no eligible potential transferees are solicited within the prescribed announcement term, and the transferor does not explicitly extend the information announcement term in the information announcement, the information announcement shall be terminated automatically.

Chapter IV Registration of Acceptance Intention

Article 23 The potential transferee shall file an application for transfer to SUAEE in the term of the information announcement. SUAEE shall register the application from an potential transferee.

Article 24 If an potential transferee entrusts the member to act as the agent for the transfer of the assets, it shall sign an entrustment contract with such member. Such member shall provide relevant services for the potential transferee in accordance with the contract.

Article 25 An potential transferee shall submit the Application for Asset Transfer and relevant attachments thereto to the SUAEE in accordance with the information announcement, pay the project security deposit or earnest money, confirm its full awareness of all the contents stated in the information announcement, accept all transaction conditions and undertake to comply with the transaction rules.

Article 26 The potential transferee or the entrusted member shall submit the following documents to SUAEE:

(i) the Application for Transfer of Assets;

(ii) the certificate of qualification of legal person or the identity certificate of natural person;

(iii) the relevant supporting documents required by the information announcement; and

(iv) other documents submitted by SUAEE.

Article 27 In the case of consortium transferees, all parties to the consortium shall meet the requirements of the qualifications for transferees, unless otherwise required in the announcement. The parties to the consortium shall sign a joint acquisition agreement to clarify their respective rights and obligations, and recommend one party to handle the transfer-related matters on behalf of all the parties to the consortium.

Article 28 The potential transferee shall be responsible for the authenticity, completeness, accuracy and legal validity of the contents of the Application for Accepting Transfer and the submitted documents. The entrusted member shall verify the authenticity, completeness, accuracy, legal validity and compliance of the documents submitted by the potential transferee and then issue a verification opinion.

Article 29 SUAEE shall review the Application for Accepting Transfer and the standardization of the documents to accept the transfer. If necessary, it may request the potential transferee to provide supplementary information. The potential transferee shall make corrections as required within two business days from the date following the receipt of the notice from SUAEE.

SUAEE shall register the potential transferee that meets the conditions and pays the security deposit on time (if the security deposit clause has been set) and shall issue a notice of acceptance. For the intending transfer who does not meet the conditions, SUAEE shall promptly inform it of the audit opinion.

Chapter V Organizing Transaction Signing

Article 30 If only one eligible transferee is produced by public solicitation, the transfer may be performed by agreement; if two or more eligible potential transferees are produced, the final transferee shall be determined by bidding.

Article 31 Where the holder of the right of preemption has not waived the right of preemption and has handled the application formalities at SUAEE to accept the transfer as required by the transfer information announcement, and at the same time other potential transferees as non-holders of the right of preemption (hereinafter referred to as "Other Potential transferees”) are solicited, the holder of the right of preemption must bid with other potential transferees in accordance with SUAEE's related transaction rules and regulations, bidding scheme, etc.. If the holder of the right of preemption and the other potential transferees are simultaneously the bidders offering the highest price, then the holder of the right of preemption shall be the final transferee. If any of the other potential transferees is the bidder offering the highest price and the holder of the right of preemption fails to offer the same price, then the holder of first refusal shall be deemed having waived the right of preemption, and the bidder offering the highest price shall be the final transferee.

Article 32 If the holder of the right of preemption has not waived the right of preemption and has handled the application formalities at SUAEE to accept the transfer as required by the transfer information announcement, the transferor shall notify the relevant right holder to exercise the right of preemption within 3 business days from the date of confirming the transaction result. The holder of the right of preemption shall reply in writing to the exercise of the right of preemption within 15 days from the date of receipt of the transferor's notice. If the holder of the right of preemption exercises the right of preemption, it shall submit the application for accepting the transfer and pay the security deposit to SUAEE within 15 days from the date of receipt of the transferor's notice. If the holder of the right of preemption fails to do so within the time limit, it shall be deemed as having given up the exercise of the right of preemption.

The notice shall include but not be limited to:

(i) the result of transaction the transfer subject matter at SUAEE;

(ii) whether the holder of the right of preemption exercises the right of preemption;

(iii) if the holder of the right of preemption exercises the right of preemption, it shall submit the application for accepting the transfer to SUAEE within the prescribed time and pay the security deposit in accordance with the security deposit clause set up in the transfer information announcement.

If the transaction is organized by way of agreement transfer, the date on which SUAEE issues the notice of acceptance to the potential transferee shall be the date of confirming the transaction result. If the transaction is organized by bidding, the date to sign the bidding result confirmation documents shall be the date of confirming the transaction result.

Article 33 Where there are other provisions in the applicable laws and regulations and relevant agreements on the exercise of the right of preemption by the relevant party, such other provisions shall prevail.

Article 34 The transferor and the transferee shall sign a transaction contract in accordance with the notice of SUAEE.

Article 35 When signing a transaction contract, the two parties to the transaction shall not make any changes to the terms of the transaction contract that are substantially different from the contents of the information announcement.

Article 36 SUAEE shall review the transaction contract in accordance with the applicable laws and regulations and on basis of the contents of the information announcement, the result of the bidding transaction, etc..

Chapter VI Settlement of Transaction Funds

Article 37 The parties to an asset transaction shall settle the transaction funds through SUAEE in accordance with the applicable regulations and the transaction contract.

Article 38 the transferee shall pay the transaction price to SUAEE's settlement account within the agreed time. The security deposit paid by the transferee may be converted into the transaction price according to the agreement. Where the transfer of the assets of state-owned and state-controlled enterprises and state-actually-controlled enterprises cannot be settled through SUAEE for special reasons, the written opinion from the transfer reviewing and approving authority and and the transferor's payment certificate shall be furnished to SUAEE.

Chapter VII issuance of Transaction Vouchers

Article 39 After the asset transaction contract comes into effect, SUAEE will announce the transfer result to the public on its website. The announcement shall include the name of the transfer subject matter, the evaluation result of the transfer subject matter, the listing price and the transfer price. The announcement term shall not be less than 5 business days.

Article 40 After both parties to the asset transaction sign a transaction contract, the transferee pays the asset transaction price to SUAEE's settlement account according to the contract, and both parties pay the service charges in full, SUAEE shall issue the asset transaction voucher within three business days.

Article 41 Before issuing the transaction voucher, SUAEE shall check the transaction contract and the settlement of the transaction fund. If the relevant documents are inconsistent with the transaction documents such as the information announcement, the parties to the transaction may be required to make a written explanation.

Article 42 After the issuance of the asset transaction voucher, if a relevant subject deems that the parties to the transaction have such violations in the process of asset transaction as illegal subject qualification, non-compliance with procedures, submission of false documents, etc., and, through verification, the preconditions for the issuance of the asset transaction voucher do not exist, SUAEE shall revoke the asset transaction voucher of the project through website announcement, etc..

Article 43 If the transfer of the ownership of the transaction subject matter needs to have change registration, the two parties to the transaction shall go through the formalities for change registration at the competent authority in accordance with the applicable national regulations.

Chapter VIII Miscellaneous

Article 44 The transferor shall be responsible for the preservation of the subject matter prior to transfer.

Article 45 In accordance with the applicable laws and regulations, the taxes involved in the transfer of the subject matter shall be borne by the parties to the transaction. If the transaction price involves value-added tax, the two parties to the transaction shall issue their own invoices, and SUAEE shall not issue receipts.

Article 46 In the process of asset transaction, if the system fails or any other force majeure factor occurs, SUAEE may suspend or terminate the transaction according to the specific circumstances.

Where a people's court or any other competent authority issues a notice to suspend or terminate the transaction according to law, the transaction shall be suspended or terminated.

The suspension or termination of asset transactions shall be implemented with reference to the Operational Rules for Transaction Suspension and Termination of Southern United Assets & Equity Exchange.

Article 47 When a dispute arises between the parties to the asset transaction and the relevant third party in the course of the transaction, the parties may apply to SUAEE for mediation. SUAEE shall carry out the mediation in accordance with the Operational Rules for the Mediation of Disputes of Southern United Assets & Equity Exchange.

If the transaction dispute is not resolved through negotiation or mediation, the parties may apply to the arbitration institution for arbitration or file a lawsuit with the people's court.

Article 48 If the transferor has any of the following acts in the course of asset transaction, the transferor shall, with the same amount as the security deposit set by it, reversely assume the liability for damages. If the security deposit is not be sufficient to make up for the losses caused by the transferor's default, the affected party or SUAEE can recover the losses from the transferor:

(i) the act to use false, fraudulent content or intentionally conceal important information;

(ii) the act to transact the subject matter with unclear ownership or ownership dispute;

(iii) the act to transact the subject matter forbidden to be transacted by the applicable laws and regulations;

(iv) the act to assign beyond the authority without authorization;

(v) the act to intentionally conceal assets, illegally transfer creditor's rights, evade the responsibility for debt settlement, or provide false information for the relevant intermediary;

(vi) the act to maliciously collude and privately transact with a third party;

(vii) the act to withdraw the application for transaction, change the terms of the transaction or refuse to advance the transaction procedures, refuse to deliver the subject matter or pay commissions and other related service charges without reasonable reasons;

(viii) the unfair competition act against other stakeholders or SUAEE's personnel, such as bribery, personal threat, etc., which affects the normal order of the transaction; or

(ix) other acts of manipulating transactions or disrupting the order of transactions.

Article 49 If the potential transferee has the any of following acts when participating in the transaction, SUAEE may deduct the security deposit on its own initiative or on the basis of the application of the transferor or the stakeholder:

(i) the act to provide false or inaccurate information resulting in the loss of the transferor and SUAEE;

(ii) the act to lower the transfer price or hinder fair transaction and damage the legitimate rights and interests of the State, the collective or others by adopting means such as coercive fraud, concealing information, and malicious collusion; or the act to lower (raise) the price through malicious collusion the price or makes a private transaction with the transferor;

(iii) the act to exert influence on the transferor, SUAEE or other relevant personnel, disrupt the normal order of transaction activities and affect the fairness of transaction activities;

(iv) the act not to advance the transaction or give up the transfer without cause;

(v) the act in violation of laws and regulations, which causes losses to the transferor; or

(vi) any other act resulting in the confiscation of the security deposit as stipulated in the transfer information announcement.

Article 50 The audits conducted by SUAEE in accordance with these Rules are all normative, and SUAEE shall not bear all the responsibilities in relation to the aspects including, but not limited to, guaranteeing the qualification of the transaction subject, completeness of transaction authority, innocence of transaction, and the objectivity, authenticity, completeness, accuracy, legal validity and compliance of the representations and undertakings made by and the documentations provided by the parties to the transaction. Both parties to the transaction shall bear the risks of transaction on their own.

Article 51 The relevant documents for asset transactions shall be filed by SUAEE.

Chapter IX Supplementary Provisions

Article 52 These Rules shall prevail in respect of the specific transaction procedures involved in asset transaction such as Application of Transfer Acceptance , release of transfer information, registration of intention to accept transfer, security deposit, bidding, organizing transaction signing, settlement of transaction funds, issuance of transaction vouchers, suspension and termination of transactions, mediation of transaction disputes, etc.. Any matter not provided for herein shall be implemented with reference to the General Transaction Rules of Southern United Assets & Equity Exchange and the applicable rules of SUAEE.

Article 53 Where the national laws and regulations and relevant governmental authorities have special provisions on asset transactions, such provisions shall prevail.

Article 54 Any other transaction procedures not covered by these Rules may be implemented with reference to the applicable rules and regulations of SUAEE.

Article 55 These Rules shall be interpreted by SUAEE.

Article 56 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 57 These Rules shall come into force on January 1, 2017. The Asset Transaction Rules of Southern United Assets & Equity Exchange (Amendment 2014) shall be abolished from the implementation date of these Rules.

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