关于进一步促进境外上市公司规范运作和深化改革的意见 Further Standardizing Operations and Intensifying Reform of Companies List

ged during the term of office for their position as specified in the Company's articles of association. If there is a change, the statutory formalities and procedures must be carried out, and the change must be disclosed publicly and reported to the China Securities Regulatory Commission for the record. In Companies performing especially well, replacement of the chairman of the board and the general manager shall be comparatively rare.

　　The board of directors and the management of a Company shall have a balanced knowledge structure. Posts in such organizations shall be held by persons specialized in such areas as development strategy, finance, marketing, technological development and law. The chairman of the board of directors, the manager, the chief financial officer and the secretary of the board of directors shall attend China Securities Regulatory Commission approved training courses on knowledge about foreign listings and pass professional qualification examinations. Companies shall select and engage the best financial, market development, technology development and other such senior management personnel from skilled personnel on both the domestic and foreign labour markets.

　　6. Progressively establish sound external director and independent director systems

　　Companies shall increase the ratio of external directors. When the board of directors is changed at the end of its term, the external directors shall comprise one half or more of the board and there shall be two or more independent directors (hereafter "independent directors" refers to directors who are independent from the shareholders of the Company and do not hold a position within the Company). An external director shall have sufficient time and the necessary knowledge and ability to perform the responsibilities of his office. When an external director is performing the responsibilities of his office, the Company must provide him with the necessary information and documentation. The opinions expressed by an independent director shall be clearly recorded in the board's resolutions. The Co

mpany's transactions with its affiliates must be endorsed by an independent director before they can become effective. Two or more independent directors may propose the convening of an interim shareholders' general meeting. Independent directors may directly report circumstances to the shareholders' general meeting, the China Securities Regulatory Commission and other relevant authorities.

　　7. Strengthen Companies' supervisory boards

　　A Company must unceasingly strengthen the functions of its supervisory board, specify its responsibilities and powers, formulate its specific work rules and procedural rules, and forestall it becoming a mere formality. The primary responsibility of a Company's supervisory board is investigating the Company's finances. It has the right to become acquainted with and investigate the business circumstances of the Company, it may demand that the secretary of the board of directors and the finance department provide it with relevant materials in accordance with prescribed procedures, and it has a corresponding obligation to maintain confidentiality. The supervisory board may make proposals concerning the accounting firm to be hired by the Company and, when necessary, in the Company's name appoint another accounting firm to independently investigate the Company's finances. The supervisory board may directly report circumstances to the China Securities Regulatory Commission and other relevant authorities. The relevant State authorities may commission the supervisory board of a Company to carry out an investigation of a specific matter. Companies shall increase the ratio of external supervisors (hereafter "external supervisors" refers to supervisors who do not hold a position in the Company). If a Company's supervisory board is changed at the end of its term, the external supervisors shall comprise one half or more of the supervisory board and it shall have two or more independent supervisors (hereafter "independent supervisors" refers to supervisors who are independent from the Company's shareholders and who do not hold a position in the Company). A Company's external supervisors shall independently report to the shareholders' general meeting on the senior management personnel's performance in respect of their fiduciary obligation and duty of due diligence.

　　8. Give full play to the functions of the secretary of the board of directors

　　The secretary of a Company's board of directors shall be appointed by the board of directors and, upon authorization by the board of directors, be in charge of coordinating and organizing information disclosure by the Company and liaising with investors, securities regulatory authorities and the media. The board of directors and the management of a Company shall pay attention to increasing the transparency of the Company, actively support the secretary of the board of directors in the performance of his official duties and ensure that he has the necessary understanding of the Company's organization chart and key personnel.

　　9. Explore methods to motivate the senior management personnel of Companies

　　In concert with the special traits of its business operations, a Company may link the material benefits accruing to senior management personnel with the performance of the Company. In line with the principles of disclosing earnings and increasing transparency, each Company may design its own unique distribution and incentive methods. With the consent of the shareholders' general meeting, the Company may adopt an appropriate method to reward senior management personnel and extraordinary contributions by personnel whose positions involve technical innovation, great business risk and major challenges and whose achievements are easily assessable.

　　10. Intensify the internal reform of Companies

　　Companies shall prevent and change the tendency to place importance on raising funds and shall increase the emphasis o

n restructuring. They shall organize their production and business activities, intensify internal reforms, restructure their operating mechanism and establish scientific and efficient management systems in response to the needs imposed by market competition.

　　Companies may autonomously decide on the establishment of their internal organizations and the requirements, method, and time for recruiting personnel and the numbers to be hired. Companies may implement economically motivated employee cutbacks and terminate the labour contracts with their staff and workers in accordance with laws and regulations and their own articles of association. They may dismiss and fire staff and workers.

　　Companies shall abolish the use of the terms "cadre" and "worker" and eliminate the status demarcation line and the occupational demarcation line drawn between "cadre" and "worker", and they may not indiscriminately adopt the administrative ranks used by governmental authorities. Management personnel shall compete for their posts and be removed from office if a more competent person becomes available for the post.

　　Companies shall autonomously decide upon their aggregate annual payroll and the method for allocating it internally.

　　Companies must implement housing system reform in accordance with the relevant State regulations and cease the allocation of housing to staff and workers as a benefit. Companies must participate in the reform of the social insurance system and carry out the procedures for old age, unemployment, medical and other such insurance for their staff and workers in accordance with the relevant State regulations.

　　11. Separate government and enterprise, and standardize the capital contribution relationship between shareholders and Companies

　　In cutting the administrative affiliation between Companies and government departments, Companies shall thoroughly separate such facets as their assets, finances and personnel management from those of the government departments to which they were subordinate. Government departments may not interfere in the production and business management of Companies and may not collect any type of administrative fee or supervisory fee from Companies.

　　Entities which exercise State-share shareholder rights in a Company or the shareholder representatives appointed by organizations which are holders of a Company's legal person State-shares shall participate in shareholders' general meetings in accordance with statutory procedure and exercise their rights in accordance with the law. No shareholding organizations or representatives appointed thereby may bypass the shareholders' general meeting to interfere in the production and business management of a Company or appoint or dismiss senior management personnel of the Company, nor may they perform approval procedures for personnel election resolutions of the Company's shareholders' general meeting or personnel appointment resolutions of the board of directors

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