* Segregation of company management and the controlling shareholders. Overseas listed companies and their controlling entities must maintain independent accounts and independently bear risks and liabilities. The controlling shareholder may exercise its shareholder rights through the shareholders' meeting in accordance with legal procedures; it may not use its rights to create a superior/subordinate relationship with any department of the listed company. All functions of the listed company not yet independent from the controlling shareholder must be separated before year-end 1999.
* Establishment of a clear decision-making process. In its articles of association, the overseas listed company must specify clear procedures concerning the company's decision-making process in accordance with legal procedures. The Opinion specifically states that a listed company may not use any forum other than the shareholders' or directors' meetings during the decision-making process.
The Opinion further requires that directors execute their duties in a specific manner and assume certain liabilities in the course of the decision-making process. All decisions made by the directors must be supported by proper board resolutions achieved in accordance with legal procedures and duly signed by the directors.
* Engagement of professional consultants and advisors. Before making decisions on matters such as market development, mergers and acquisitions or investment in a new field, the directors of a company listed overseas should engage an outside consultancy organization to provide a professional opinion on the matter. If the investment or merger/acquisition assets amount to 10 percent or more of the company's total assets, such professional opinion must be used as an important basis for the board of directors' decision.
* Improving the quality of senior management. The appointment of senior management personnel of a company listed overseas must be conducted in accordance with the relevant provisions of the PRC Company Law and the 1997 Guidelines for Listed Companies' Articles of Association. Senior management personnel may not be removed from office without just reason during their term of office. If a change occurs, it must be recorded with the China Securities Regulatory Commission ("CSRC") and must be disclosed publicly.
The Opinion thereafter outlines the general qualification requirements of senior management personnel. Posts in such listed companies should be held by individuals specialized in areas such as finance, development strategy, marketing, technological development and law. The chairman and secretary of the board of directors, the manager and the chief financial officer must attend CSRC-approved training courses on disciplines such as overseas listings and pass various qualification exams. Senior management personnel specialized in the above-mentioned fields should be selected from among both foreign and domestic individuals.
* Strengthening the role of external and independent directors, the supervisory board and company secretaries. Overseas listed companies must increase their ratio of external directors. The Opinion sets forth the powers and responsibilities of external directors and independent directors (i.e. independent from the shareholders and not holding a position within the listed company), including the duty to endorse all transactions between the company and its affiliates and the right convene an interim shareholders' general meeting to report certain matters.
The primary role of the supervisory board of a company listed overseas is to conduct ongoing investigation into the company's finances. The supervisory board may make recommendations regarding the business circumstances of the listed company, and may report circumstances directly to CSRC or other relevant authorities where deemed appropriate. Overseas listed companies must also increase the ratio of external supervisors to their supervisory board.
The secretary of the listed company's board of directors is responsible for coordinating and organizing all information disclosure. The company directors should work to support the efforts of the secretary and keep the secretary informed of all details necessary for performance of its duties and obligations.
* Segregation of companies listed overseas and government departments. Companies listed overseas must separate their assets, finances and personnel management from government departments to which they were formerly subordinate. Government departments may not interfere in the product and business management of such listed companies, and may not levy any administrative or supervisory fee therefrom.
