Trading Regulations in China Forestry Exchange

(For Trial Implementation)

Article One 
        The Regulations are formulated in accordance with the General Principles of The Civil Law of The People's Republic of China, Property Law of the People's Republic of China, Company Law of The People's Republic of China, Forest Law of The People's Republic of China, the Law of Land Administration of the People's Republic of China, Law of the Peoples Republic of China on Land Contract in Rural Areas, the Organic Law of the Villagers Committee of The People's Republic of China, the Interim Provisions on the Transfer of State-owned Property Rights of Enterprises to the Management Staff and other relevant laws, regulations and policies, with the purpose of standardizing trading behaviors, protecting legal interests of the parties involved and preserving healthy trading orders in China Forestry Exchange (hereinafter referred to as “CFEX”).

Article Two  
        Exchanges in the Regulations hereinto refer to transfers of all or part of equity concerning forest, timber, forestland and other forestry resource or other property equity (hereinafter all referred to as “Equity") made by legal persons, natural persons and other economic organizations in CFEX.

Article Three  
        People shall trade in conformity with provisions in laws, regulations and policies and shall follow the principles of voluntariness, equality, fairness, honesty and openness. No violation of the others’ legitimate rights or public interests is allowed. Legal rights and interests of the trading parties are protected by law.
        Transaction are not subject to regions, industries, affiliation, ownership restrictions, except as otherwise provided by law.

Article Four  
        Transactions could be taken in the forms as follows
        1.    Auction & Bidding
        2.    Negotiation
        3.    Other forms prescribed by national laws and regulations.

Article Five  
        Transactions shall be taken by brokers. Both assignors and assignees shall entrust the trade to their representative brokers, who have membership certified by or registered in CFEX.

Article Six  
        To entrust those brokers to trade, assignors shall sign commission contracts with the brokers hereinto. The brokers shall provide services according to the contracts.

Article Seven  
        Assignors who intend to make equity transfer must have corresponding qualifications and perform relevant procedures.
        Before applying to CFEX for equity transfer, assignors who intend to transfer state-owned equity shall perform relevant procedures including concluding feasibility research, internal decision-making, auditing, assets evaluation, getting assets evaluation result approved or filed, getting Legal Opinion Letter, submitting for approval, etc.
        For collective equity transfer, please refer to state-owned equity transfer procedures.

Article Eight  
        Assignors shall fill out equity transfer application and entrust the brokers to submit the application and relevant documents to CFEX.

Article Nine  
        CFEX will register the transfer application received, check the compliance of the application documents and issue notification of acceptance if the files have passed the verification.

Article Ten  
        CFEX will disclose the information of the accepted equity transfer projects according to the application documents provided by the assignors.

Article Eleven  
        During the information disclosure period, assignors and their entrusted brokers shall accept inquires from intended assignees.

Article Twelve  
        Any party that is willing to acquire the project to be transferred shall deliver to CFEX application and relevant documents to via its entrusted brokers within the disclosure period.

Article Thirteen  
        CFEX will register the application from the intended assignees, who will be subject to qualification verifications done by CFEX and the assignors according to the trading conditions disclosed and relevant national regulations. Notification of acceptance will be issued if the qualification has been approved.

Article Fourteen  
        As the disclosure period expires, where there is only one qualified intended assignee, the transfer could be carried out via negotiation; if there are more than one qualified intended assignees, the final assignee shall be determined via auction & bidding.

Article Fifteen  
        As the assignee is confirmed, the assignor and the assignee shall sign equity transfer contract according to relevant laws, regulations and policies and submit to CFEX for filing.
        After the assignee and the trading conditions have been confirmed where the assigner is a company of limited liabilities or a Sino-foreign joint venture which intends to make equity transaction while other its shareholders haven’t abandoned their rights of first refusal, it shall first go to its other shareholders for opinions following prescribed procedure in Company Law before signing the “Forest/Forestland Trading Contract”.

Article Sixteen  
        The assignors and the assignees should carry out the equity transaction and price settlement via CFEX.

Article Seventeen  
        The transaction service fees shall be afforded by the assigner and the assignee respectively according to relevant rules.

Article Eighteen  
        Vouchers will be issued by CFEX to both parties of a transaction after the assignee has paid a due amount of money according to the contract. Then the two parties could register the equity change in relevant authorities with the vouchers.

Article Nineteen   
        During the proceeding of a transaction, if people’s court or other entitled authorities inform relevant parties to terminate the transaction, the transaction shall be terminated.

Article Twenty  
        In case of disputes aroused during the transaction, relevant parties could apply to CFEX for mediation. They can also choose to apply for arbitration or summit the dispute to court that has the jurisdiction over the matter.

Article Twenty-one  
        The national laws and regulations shall prevail if there include exceptional provisions over equity transactions.

Article Twenty-two  
        The Regulations shall be submitted to relevant authorities for filing.

Article Twenty-three  
        The right of interpretation and revision of the Regulations shall go to CFEX.

Article Twenty-four  
        The Regulations takes effect as of November 23, 2009.