1. classified into related legal persons and

1.  The legal framework of regulating related party transaction in Chinese listed company

In accordance with chapter 9 and 10 of Rules Governing the listing of Stocks on Shanghai Stock Exchange1 and Rules Governing the listing of Stocks on Shenzhen Stock Exchange2, a related party transaction is defined as transfer assets or resources between the listed company or its controlled subsidiary and its related party. As to the forms of the related party transactions, the majority of them can be illustrated as follow: (i) Buying or selling assets; (ii) External investment (including entrust finance, entrusted loans); (iii) Providing financial support; (iv) Offering guarantee; (v) Leasing into or out of assets; (vi) Entrust or the entrusted management of assets and business; (vii) donating assets or accepting donating; (viii) Restructuring creditor’s rights and debt; (ix) Signing a licensing agreement; (x) Transferring or obtaining research and development projects; (xi) Purchasing raw materials, fuels and impetus; (xii) Selling products and commodities; (xiii) Providing or accepting labor services; (xiv) Consigning sales or trusting sales; (xv) Making saving and loans from a related party’s financial company; (xvi) Joint investment with a related party. Meanwhile, a related party can be classified into related legal persons and natural persons. It is worth to note that the majority situations both applied to legal persons and natural persons as well. The Rules Governing the listing of Stocks on Shanghai Stock Exchange has classified the main situations could happen when either regarding a related legal person or a natural person. For the related legal persons, the main situations could be: (i) The listed company is directly or indirectly controlled by the legal person or other organization; (ii) In excess of 5% shares of listed company are owned by the legal person or other organization; (iii) The listed company and its controlled subsidiaries are controlled directly or indirectly by a natural person who belongs to other legal person or other organization, the listed company and its controlled subsidiaries are controlled directly or indirectly by a natural person who is a director or senior officer of other legal person or other organization. As to the related natural persons, the main situations could be: (i) In excess of 5% shares of listed company is owned by the natural persons; (ii) The director, supervisor and senior officer of the listed company; (iii) The director, supervisor and senior officer of the related legal persons; (iv) The person is a close family member of the person who is applied to first and second subsection of this paragraph.

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1 Rules Governing the listing of Stocks on Shanghai Stock Exchange, issued by Shanghai Stock Exchange, became effective in January 1998, the latest amendment was effective in December 2013

2 Rules Governing the listing of Stocks on Shenzhen Stock Exchange, issued by Shenzhen Stock Exchange, , became effective in January 1998, the latest amendment was effective in July 2012