JC Master Legal News Issue 831

Key Takeaways for This Issue
The China Securities Regulatory Commission has approved the China Financial Futures Exchange to launch trading in 2-year Treasury bond futures.
The China Securities Regulatory Commission recently approved the China Financial Futures Exchange to launch trading in 2-year Treasury bond futures, with the contracts officially listed for trading on August 17, 2018.

The China Securities Regulatory Commission has imposed administrative penalties in four cases.
Recently, the China Securities Regulatory Commission imposed penalties, in accordance with the law, on Guosen Securities for violations of laws and regulations in its sponsorship business. The Commission ordered the office to make corrections, issued a warning, confiscated RMB 1 million in business income, and levied a fine of RMB 3 million. It also issued warnings to the directly responsible senior managers, Long Feihu and Wang Xiaojuan, and imposed fines of RMB 300,000 on each of them.

The Shenzhen Stock Exchange has launched the “Listing Connect” app, offering one-stop services to companies planning to go public.
Recently, the Shenzhen Stock Exchange officially launched the “Listing Connect” app, offering one-stop services to companies planning to go public. This marks another significant step by the Exchange to strengthen its market‑development support, enhance the functionality of its market‑development services, and drive the transformation and upgrading of these services.

The Shenzhen Stock Exchange issued six consecutive announcements condemning the senior executives of Changsheng Bio.
On August 3, the Shenzhen Stock Exchange issued six “Preliminary Notices of Disciplinary Action” to directors and senior management of Changsheng Bio‑Technology Co., Ltd., drawing widespread attention from the industry.

New developments have emerged in the suspension and resumption of trading for M&A and restructuring activities among Shenzhen-listed companies.
Since the beginning of this year, the Shenzhen Stock Exchange has steadily advanced reforms to its suspension and resumption regime, officely curbing practices such as arbitrary, indiscriminate, and prolonged suspensions. These efforts have effectively safeguarded investors’ rights to trade and to access information, among other legitimate interests. Thanks to the concerted efforts of all market participants, the number of listed companies on the Shenzhen market subject to stock suspensions has declined significantly in recent months, and new developments have emerged in the suspension and resumption of mergers and reorganizations.

Table of Contents
Table of Contents

Finance & Capital Markets
The China Securities Regulatory Commission has approved the China Financial Futures Exchange to launch trading in 2-year Treasury bond futures.
The China Securities Regulatory Commission has imposed administrative penalties in four cases.
Reducing fees and easing burdens to boost vitality: The Shanghai Stock Exchange has waived or reduced certain project fees.
The Shenzhen Stock Exchange has launched the “Listing Connect” app, offering one-stop services to companies planning to go public.
New developments have emerged in the suspension and resumption of trading for M&A and restructuring activities among Shenzhen-listed companies.

Corporate & Commercial
The China Securities Regulatory Commission has issued penalties to accounting offices; six such offices have been fined over the past year.
Guoxin Securities was fined and had its proceeds confiscated totaling RMB 28 million for its sponsorship and restructuring activities.
The Shenzhen Stock Exchange issued six consecutive announcements condemning the senior executives of Changsheng Bio.
A total of 3,668 projects have been successfully implemented in the National PPP Management Database.
Jiangsu’s major industrial projects have seen investment totaling RMB 99.3 billion, up 80% year on year.

Taxation
The individual income tax administration system has been upgraded in preparation for comprehensive tax collection.
China’s first refund of outstanding input VAT has been processed in Dalian.

Litigation & Arbitration
Localities are actively exploring and advancing the development of public legal service platforms.
The Jiangsu procuratorial organs have instituted public prosecution, in accordance with the law, against Gao Xuekun on suspicion of accepting bribes.

Other
In the fifth round of inspections, these provincial-level organs and regions have been designated for on-site visits, and contact information has been made public for the first time.
The State Administration for Market Regulation held a regulatory talk with Pinduoduo.
Finance & Capital Markets
The China Securities Regulatory Commission has approved the China Financial Futures Exchange to launch trading in 2-year Treasury bond futures.
The China Securities Regulatory Commission recently approved the China Financial Futures Exchange to launch trading in 2-year Treasury bond futures, with the contracts officially listed for trading on August 17, 2018.
The launch of two-year treasury bond futures is an important measure to implement the CPC Central Committee and the State Council’s decisions and arrangements on deepening financial reform and promoting the sound development of the capital market. It will help optimize the maturity structure and product lineup of treasury bond futures, further refine the treasury yield curve, and advance the reform of interest-rate marketization. Moreover, it will enhance the efficiency and liquidity of the treasury bond futures market, broaden investors’ risk-management tools, and foster the development of the treasury bond spot market.
The China Securities Regulatory Commission will urge the China Financial Futures Exchange to continue making all necessary preparations, ensuring the smooth launch and stable operation of the 2-year Treasury bond futures.

The China Securities Regulatory Commission has imposed administrative penalties in four cases.
Recently, the China Securities Regulatory Commission (CSRC) imposed penalties, in accordance with the law, on Guosen Securities for violations in its sponsorship business: it ordered the office to make corrections, issued a warning, confiscated RMB 1 million in business income, and levied a fine of RMB 3 million. The directly responsible senior managers, Long Feihu and Wang Xiaojuan, were also warned and each fined RMB 300,000. In addition, penalties were imposed on Guosen Securities for illegal and non-compliant conduct in its M&A and restructuring financial advisory business: the office was ordered to rectify its practices, had RMB 6 million in business income confiscated, and was fined RMB 18 million. The directly responsible senior managers, Zhang Miao and Cao Zhongyuan, received warnings and were each fined RMB 100,000. The Guangdong Securities Regulatory Bureau, acting in accordance with the law, penalized Yao Yiyu for trading stocks as a professional; it confiscated Yao Yiyu’s illegal gains totaling RMB 185,086.96 and imposed an additional fine of the same amount. The Shandong Securities Regulatory Bureau, likewise pursuant to the law, sanctioned Xu Kang for privately accepting client instructions to trade securities, ordering him to correct his conduct, issuing a warning, and imposing a fine of RMB 100,000. The Heilongjiang Securities Regulatory Bureau, in accordance with the law, imposed penalties on Heilongjiang Rongwei Securities Data Programmatic Co., Ltd. (hereinafter referred to as Rongwei Company) for violations, ordering the company to make corrections and fining it RMB 300,000. (For details of these administrative penalty decisions, please refer to the websites of the CSRC and the relevant securities regulatory bureaus.)
In the aforementioned case, Guoxin Securities, as the sponsor and financial advisor for the restructuring of Huaze Cobalt & Nickel’s relisting, failed to exercise due diligence in verifying the non‑operational misappropriation of funds by related parties and the status of notes receivable, as well as in appropriately assessing audit opinions. It did not give adequate attention to abnormal circumstances—such as substantial fluctuations in fund flows and rapid increases or decreases in notes receivable—at Huaze Cobalt & Nickel and its subsidiaries; it neglected to perform necessary verification procedures; and it failed to conduct a prudent review of audit opinions. As a result, it failed to detect the non‑operational misappropriation of funds by related parties and the use of invalid notes to conceal such misappropriation. Furthermore, its sponsorship materials and related reports contained false statements and material omissions. The sponsorship system and the independent financial advisor system are critical institutional frameworks in the capital market governing issuance, listing, and major asset restructurings. Their purpose is to enable securities offices and other market intermediaries to identify, deter, and prevent fraudulent practices through diligent, professional, and prudent due diligence, thereby ensuring that these intermediaries truly fulfill their “gatekeeper” responsibilities. Such responsibility constitutes both a legal obligation and a social duty, and it is also an essential prerequisite for intermediaries to pursue business growth and secure remuneration. In practice, however, certain market intermediaries exhibit weak compliance awareness and a lack of social responsibility, pursuing business scale at all costs while losing sight of their original mission as trustworthy “gatekeepers.” They neglect their duties, fail to act with due care, and disregard the legitimate interests of investors, rendering the gatekeeping framework largely ineffective and creating opportunities for fraudulent behavior. Experience has shown that achieving robust diligence and accountability among intermediaries depends on a multi‑faceted system of incentives and constraints, with stringent regulatory enforcement playing a pivotal role in holding entities accountable. Our Commission will continue to strengthen oversight and enforcement against intermediary institutions, imposing strict accountability upon detection of violations, and urging all types of securities service providers and their practitioners to uphold integrity, honesty, and due diligence, thereby effectively safeguarding the lawful rights and interests of small and medium‑sized investors.
As an investment consulting office duly authorized to engage in securities investment advisory services, Rongwei Company violated the provisions of the Interim Measures for the Administration of Securities and Futures Investment Advisory Services by promising investors investment returns. Even after its private fund manager qualification was revoked, it continued to tout its private‑fund registration certificate in public communications and disseminated false information claiming that Rongwei employed multiple licensed analysts—misleading investors in the process—and failed to provide investment advisory services with due care, honesty, and diligence. In recent years, the securities investment advisory industry has been plagued by widespread misconduct: some licensed entities have breached the fundamental principle of good faith, defrauding clients for improper gains; others have become accomplices to illegal practices such as market manipulation; and still others have engaged in investment advisory activities without authorization or through disguised means, masquerading as legitimate providers and exploiting regulatory gaps, thereby severely disrupting market order and undermining investor rights. In mature markets, securities investment advisory services have long been subject to stringent regulation; in China’s unique market environment, where small and medium‑sized investors constitute a significant share of participants, such oversight is all the more imperative. Our Commission will further intensify efforts to crack down on illegal and non‑compliant conduct in this sector, address the root causes of these problems, and effectively safeguard the lawful rights and interests of small and medium‑sized investors.

Reducing fees and easing burdens to boost vitality: The Shanghai Stock Exchange has waived or reduced certain project fees.
The Shanghai Stock Exchange issued a notice announcing that, effective August 1, it will continue to temporarily waive the initial listing fee and the annual listing fee for listed companies with a total share capital of 400 million shares or less. The temporary exemption period has been extended until December 31, 2020 (this policy also applies to preferred shares). Meanwhile, the fee for trading outstanding bonds will be standardized at 0.0001% of the transaction amount (on both sides), with a maximum cap of RMB 100 per trade.
Streamlining and standardizing enterprise‑related fees is an important measure to implement the central government’s policy of easing burdens and boosting domestic demand, directly affecting investors’ interests. The Shanghai Stock Exchange attaches great importance to this work and has been diligently implementing it. Under the existing fee‑charging policies, from August 1, 2015, to July 31, 2018, the Exchange temporarily waived the listing initiation fee for listed companies with a total share capital of 400 million shares or less; from January 1, 2016, to December 31, 2018, it also temporarily waived the annual listing fee for such companies. Over the past three years, the Exchange has cumulatively granted exemptions totaling RMB 82.05 million in listing initiation fees and RMB 50.875 million in annual listing fees. Given that these exemptions were set to expire in 2018, the current decision extends these preferential measures through the end of 2020. It is estimated that in 2018, the Exchange will grant approximately RMB 31.35 million in exemptions on listing initiation fees and about RMB 24.64 million in exemptions on annual listing fees, for a combined total of roughly RMB 55.99 million.
With respect to transaction fees for outstanding bond securities, the Shanghai Stock Exchange currently imposes a cap on such fees for both the Fixed Income Platform and the Bulk Trading Platform, with a maximum of RMB 100 per trade. Given that bond transactions on the auction‑matching platform are generally similar to bulk trades, the Exchange has decided to standardize the fee structure by levying a two‑way charge of 0.0001% of the transaction amount, capped at RMB 100 per trade.
While continuously cutting fees and easing burdens to support the development of small and medium-sized enterprises and the real economy, the Shanghai Stock Exchange has also adjusted A‑share transaction handling fee rates multiple times in recent years, thereby reducing trading costs for a broad base of investors. Effective June 1, 2012, the A‑share transaction handling fee was lowered from 0.011% of the transaction value to 0.0087%. On September 1, 2012, it was further reduced to 0.00696%. Then, starting August 1, 2015, it was cut once again to 0.00487%. At that point, the transaction handling fee rate had fallen by nearly 56% compared with the 2012 level. Following the full implementation of the business tax-to-VAT reform on May 1, 2016, and in order to achieve the goal of reducing taxes and fees for enterprises, the Shanghai Stock Exchange adopted a price‑tax separation approach—while keeping the total charge at or below the previous standard—thereby effectively lowering the A‑share transaction handling fee rate once more.

The Shenzhen Stock Exchange has launched the “Listing Connect” app, offering one-stop services to companies planning to go public.
To further expand its market service reach and enhance service efficiency, the Shenzhen Stock Exchange recently officially launched the “Listing Connect” app, offering one-stop services to companies planning to go public. This marks another significant step by the Exchange to strengthen its market‑development support, refine its related service capabilities, and drive the transformation and upgrading of its market‑building initiatives.
For a long time, the Shenzhen Stock Exchange has attached great importance to market‑development and investor‑education services, consistently engaging directly with market participants and proactively offering specialized, differentiated, and tailored support. In doing so, it has amassed extensive experience in supporting small and medium‑sized enterprises, particularly those driving technological innovation. In recent years, drawing on field visits and insights gained from serving companies preparing for an IPO, the Exchange has further identified and consolidated corporate needs, actively exploring effective solutions. With a focus on enhancing the professionalism, convenience, and timeliness of its services, the Exchange has leveraged mobile‑internet technologies to develop and launch the “Shangshitong” app. Designed to provide users with authoritative information and personalized advisory services, the app aims to help pre‑IPO companies address the myriad challenges they encounter throughout the listing process.
A relevant official from the Shenzhen Stock Exchange stated that the “Shangshitong” app aggregates capital market policy information from multiple sources, including central and local governments as well as the China Securities Regulatory Commission system. The content covers listing news, review‑process updates, local policies, market conditions, and training announcements. With authoritative sources and timely updates, the app helps companies stay fully informed with first‑hand insights. Leveraging big data and artificial intelligence, the app also provides round‑the‑clock automated responses to frequently asked questions from prospective listed companies and maintains an expert database, offering diversified one‑on‑one online services—including text, voice, and video. In addition, “Shangshitong” offers region‑specific customization; the initial release is the Shenzhen‑version of the app, featuring a dedicated Shenzhen capital markets section on the home page, with plans to roll out regional sections for other provinces, autonomous regions, and municipalities, thereby expanding the app’s reach nationwide.
Going forward, the Shenzhen Stock Exchange will continue to leverage its strengths in information, resources, and technology, further optimizing and enhancing the features of the “Listing Connect” app. It will also keep exploring innovative service models, integrate its existing mobile‑internet application platforms, and build a comprehensive, end‑to‑end mobile‑internet service system for enterprises, thereby continuously strengthening its market‑service capabilities and better supporting corporate innovation and development.

New developments have emerged in the suspension and resumption of trading for M&A and restructuring activities among Shenzhen-listed companies.
Since the beginning of this year, the Shenzhen Stock Exchange has steadily advanced reforms to its suspension and resumption regime, officely curbing practices such as arbitrary, indiscriminate, and prolonged suspensions. These efforts have effectively safeguarded investors’ rights to trade and to access information, among other legitimate interests. Thanks to the concerted efforts of all market participants, the number of listed companies on the Shenzhen market subject to stock suspensions has declined significantly in recent months, and new developments have emerged in the suspension and resumption of mergers and reorganizations.
As of August 3, the Shenzhen Stock Exchange had 77 listed companies suspended from trading, accounting for 3.64% of all listed offices. Among them, 15 were on the ChiNext board, representing just 2% of all ChiNext‑listed companies. Of these, 66 companies were suspended to plan major asset restructurings, making up 3.12% of all Shenzhen‑listed companies; the number of such restructurings was roughly half that of the same period last year. Approximately 64% of the stocks suspended for restructuring remained halted for less than two months, while 18% were suspended for 2–3 months. Only a handful of companies—due to the inclusion of unprecedented, highly complex issues in their restructuring plans—were suspended for more than six months. Compared with the same period last year, the number of stocks subject to long‑term suspensions has more than halved, and the share of those suspended for two months or less has risen sharply.
Since the issuance of the “Memorandum on Suspension and Resumption of Trading by Listed Companies,” Shenzhen‑listed companies have generally been able to disclose detailed information about the matters they are planning in their suspension announcements, rather than resorting to vague references such as “planning a material matter.” At the same time, when applying for a suspension due to a major asset restructuring, most listed companies explicitly set out in their suspension notices key details, including the target assets, the counterparty, the transaction structure, the principal terms of the preliminary restructuring framework agreement, and the names of the intermediary institutions. The improved quality of disclosure during restructuring‑related suspensions has, on the one hand, curbed market speculation and rumors, enabling investors to obtain timely information and form clear expectations regarding the suspension, thereby effectively safeguarding their right to know. On the other hand, it has reinforced the prudence of listed companies in seeking suspension and resumption of trading, reduced instances of prolonged suspensions, helped restore the suspension‑resumption regime to its original purpose, upheld fair market order, and effectively protected investors’ trading rights.
Influenced by factors such as the investor structure and trading practices, the A-share market’s suspension‑and‑resumption regime serves to prevent insider trading and stabilize stock prices. Over the past two years, thanks to sustained outreach and guidance, listed companies have increasingly embraced the practice of proceeding without suspending trading when planning non‑public offerings, transfers of control, or external investments. However, for matters involving major asset restructurings, some listed offices remain concerned that such announcements could trigger insider trading or abnormal price movements, thereby jeopardizing the deal’s successful completion, and thus continue to seek prolonged trading halts to mitigate these risks. This trend has improved markedly this year: on the Shenzhen Stock Exchange, 17 companies, when preparing for restructuring, chose not to request a trading halt, instead directly disclosing their restructuring plans or issuing preliminary notices, thereby advancing their restructuring initiatives in a steady and orderly manner.
As of the end of July 2018, among the 49 listed companies that had suspended trading, 19 had been off‑market for less than one month, while 20 had been suspended for two to three months. Unlike in the past, when companies typically waited until the maximum suspension period permitted by regulations had expired before seeking to resume trading, an increasing number are opting for shorter suspensions. Once they have clarified the nature and implications of their planned restructuring, they promptly apply to relist and proceed with the process, with disclosure in resumption announcements becoming increasingly detailed. More importantly, among these 49 companies that resumed trading to continue their restructurings, roughly 60% included share issuances in their plans; none sought prolonged suspensions solely to “lock in” share prices. This indicates that listed offices are gradually embracing market‑based pricing mechanisms and are no longer overly reliant on suspensions to fix issuance prices.
Going forward, the Shenzhen Stock Exchange will continue to refine the system for suspending and resuming trading of listed companies, strengthen its frontline regulatory functions, guide listed companies to exercise prudence in applying for trading suspensions, safeguard trading continuity and market liquidity, and fully protect the legitimate rights and interests of investors. Specifically: first, it will strictly enforce the procedures for filing suspension requests, addressing the issue at its source to effectively prevent “arbitrary suspensions”; second, it will enhance information‑disclosure oversight, requiring companies to provide detailed explanations of the reasons for and specific matters underlying each suspension in their announcements, and rigorously curbing inconsistencies between pre‑ and post‑suspension disclosures to curb “unjustified suspensions”; third, it will shorten suspension periods, urging companies to expedite due‑diligence and audit processes and complete requisite approval procedures, thereby helping to avoid “prolonged suspensions”; and fourth, it will require listed companies to strengthen internal‑information management, raise awareness of confidentiality among all relevant parties, and encourage them to reduce reliance on trading suspensions when planning major corporate events.

Commercial & Corporate
The China Securities Regulatory Commission has issued penalties to accounting offices; six such offices have been fined over the past year.
Regulators are stepping up oversight of securities service intermediaries; since last year, six prominent accounting offices have been sanctioned by the China Securities Regulatory Commission, with total fines and confiscations exceeding RMB 31 million.

The top‑ten accounting office, Dahua Accounting Office, provided financial statement audit services to Harbin‑listed Jiaodian Shares from 2013 to 2015, charging RMB 500,000 per engagement. Now, the China Securities Regulatory Commission has issued an administrative penalty order imposing total fines and confiscations of RMB 6 million. At the same time, the CSRC has issued warnings to the certified public accountants at Dahua who signed the aforementioned financial statement audit reports over those three years, and imposed fines ranging from RMB 80,000 to RMB 100,000 on each.
In May 2016, the China Securities Regulatory Commission initiated an investigation into alleged violations of laws and regulations by Dahuai Certified Public Accountants and other securities service institutions during the course of their professional practice. In June of this year, the Commission decided to suspend the acceptance of initial public offering and refinancing filings submitted by six accounting offices, including Dahuai, reportedly due to pending investigative matters.
In recent years, regulators have intensified oversight of securities‑related service intermediaries. According to an incomplete tally by a reporter from Securities Times China, since 2017 alone, six prominent accounting offices have been sanctioned by the China Securities Regulatory Commission, with total fines exceeding RMB 31 million.

Guoxin Securities was fined and had its proceeds confiscated totaling RMB 28 million for its sponsorship and restructuring activities.
Recently, the China Securities Regulatory Commission imposed administrative penalties in four cases, including one involving violations of laws and regulations in the sponsorship and restructuring activities of an intermediary institution, one concerning unauthorized trading of stocks by a practitioner, one in which a practitioner privately accepted clients’ instructions to trade securities, and one related to illegal and non-compliant conduct by a private equity office.
Among these cases, the China Securities Regulatory Commission imposed penalties in accordance with the law on Guosen Securities for violations in its sponsorship business, ordering it to make corrections, issuing a warning, confiscating RMB 1 million in business income, and imposing a fine of RMB 3 million. The directly responsible senior managers, Long Feihu and Wang Xiaojuan, were also issued warnings and each was fined RMB 300,000. Additionally, penalties were imposed on Guosen Securities for violations in its M&A and restructuring financial advisory business, requiring corrective measures, confiscating RMB 6 million in business income, and levying a fine of RMB 18 million. The directly responsible senior managers, Zhang Miao and Cao Zhongyuan, received warnings and were each fined RMB 100,000.
The Guangdong Securities Regulatory Bureau, in accordance with the law, imposed a penalty on Yao Yiyu for trading stocks as a professional, confiscating his illegal gains of RMB 185,086.96 and imposing an additional fine of RMB 185,086.96. The Shandong Securities Regulatory Bureau, pursuant to law, penalized Xu Kang for privately accepting clients’ instructions to trade securities, ordering him to make corrections, issuing a warning, and levying a fine of RMB 100,000. The Heilongjiang Securities Regulatory Bureau, in accordance with the law, sanctioned Heilongjiang Rongwei Securities Data Programmatic Co., Ltd. for violations of laws and regulations, requiring the company to rectify its conduct and imposing a fine of RMB 300,000.
Guoxin Securities, as the sponsor and financial advisor for the resumption of trading of Huaze Cobalt & Nickel and its major asset restructuring, failed to exercise due diligence in verifying the non‑operating fund occupation by related parties and notes receivable, as well as in relying on audit professional opinions. It did not give adequate attention to abnormal circumstances—such as substantial changes in funds and rapid increases or decreases in notes receivable—at Huaze Cobalt & Nickel and its subsidiaries; it failed to perform the necessary verification procedures; and it did not conduct a prudent review of the audit professional opinions. As a result, it failed to detect the non‑operating fund occupation by related parties and the use of invalid notes to record such occupation, thereby concealing the fact of fund misappropriation. Consequently, its sponsorship materials and related reports contained false statements and material omissions.
As an investment consulting office duly authorized to engage in securities investment advisory services, Rongwei Company violated the provisions of the Interim Measures for the Administration of Securities and Futures Investment Advisory Services by promising investors investment returns. Even after its private fund manager qualification was revoked, it continued to tout its private‑fund registration certificate in public communications and disseminated false information claiming that Rongwei employed multiple licensed analysts—misleading investors in the process—and failed to provide investment advisory services with due care, honesty, and diligence. In recent years, the securities investment advisory industry has been rife with misconduct: some licensed institutions have flouted the fundamental principle of good faith, defrauding clients for improper gains; others have become accomplices to illegal practices such as market manipulation; and still others have engaged in investment advisory activities without authorization or by circumventing regulatory requirements, masquerading as legitimate providers while engaging in shoddy practices and opportunistic behavior. Such conduct has severely disrupted market order and infringed upon investors’ rights. In mature markets, securities investment advisory services have long been subject to stringent regulation; in China’s unique market environment, where small and medium‑sized investors constitute a significant share of participants, such oversight is all the more critical. The China Securities Regulatory Commission will further intensify its efforts to crack down on illegal and non‑compliant conduct in this sector, address the root causes of these problems, and effectively safeguard the legitimate rights and interests of small and medium‑sized investors.

The Shenzhen Stock Exchange issued six consecutive announcements condemning the senior executives of Changsheng Bio.
On August 3, the Shenzhen Stock Exchange issued six “Preliminary Notices of Disciplinary Action” to directors and senior management of Changsheng Bio‑Technology Co., Ltd., drawing widespread attention from the industry. The notice served to Ms. Gao Junfang stated: Upon investigation, it was found that, during your tenure as a director and senior executive of Changsheng Bio‑Technology Co., Ltd., you engaged in conduct that violated provisions of the Shenzhen Stock Exchange’s Rules for Listing Stocks (revised in 2014), the Rules for Listing Stocks (revised in 2018), and other relevant regulations. In accordance with Article 17.3 of the Shenzhen Stock Exchange’s Rules for Listing Stocks (revised in 2018), the Exchange intends to impose a public censure as a disciplinary measure against you.
Our Exchange has already requested Changsheng Bio‑Technology Co., Ltd. to serve you with the “Preliminary Notice of Disciplinary Action” (SME Board Disciplinary Notice No. [2018] No. 37). As Changsheng Bio‑Technology Co., Ltd. has been unable to establish contact with you, we are now serving the relevant “Preliminary Notice of Disciplinary Action” by public notice. Please collect the “Preliminary Notice of Disciplinary Action” from our Exchange within ten trading days from the date of this notice. (Telephone: 0755‑88668686.)
In accordance with the provisions of this Exchange’s “Detailed Rules for the Implementation of Self-Regulatory Measures and Disciplinary Sanctions” and the “Detailed Rules on the Self-Regulatory Hearing Procedures of the Shenzhen Stock Exchange,” you are entitled to rights such as the right to make statements and present a defense.
If you fail to collect the “Notice of Preliminary Disciplinary Action” from this Exchange within ten trading days after the issuance of this announcement, you will be deemed to have waived your rights to make representations and defenses, and this Exchange will render a formal disciplinary decision in accordance with the relevant regulations.

A total of 3,668 projects have been successfully implemented in the National PPP Management Database.
According to the “Second Quarter 2018 Report of the Project Management Database on the National PPP Comprehensive Information Platform” released by the Ministry of Finance’s PPP Center, as of June 2018, the database had a cumulative total of 7,749 projects with a total investment of RMB 11.9 trillion. Among these, 3,668 projects had been successfully implemented, representing a total investment of RMB 6.0 trillion and an implementation rate of 47.3%. From January to June, the database added 939 newly implemented projects, with a total investment of RMB 1.4 trillion, bringing the implementation rate up by 9.1 percentage points.
By region, the top three in terms of quarter-on-quarter growth in the number of new projects in the second quarter were Shanxi, Guangdong, and Shandong (including Qingdao), with 92, 86, and 84 projects, respectively. The top three in quarter-on-quarter growth in total investment were Zhejiang, Hubei, and Guangdong, with RMB 119.3 billion, RMB 103.5 billion, and RMB 81.0 billion, respectively. In terms of the cumulative number of projects in the management database, the top three were Shandong (including Qingdao), Henan, and Hunan, with 693, 580, and 497 projects, respectively; the top three in cumulative investment were Guizhou, Hunan, and Zhejiang, with RMB 1.004 trillion, RMB 805.8 billion, and RMB 770.4 billion, respectively.
From an industry perspective, the top three sectors in terms of quarter-on-quarter growth in the number of new projects in the second quarter were municipal engineering, transportation, and ecological conservation and environmental protection, with 212, 67, and 33 projects, respectively. The top three sectors in terms of quarter-on-quarter growth in total investment for new projects were also municipal engineering, transportation, and ecological conservation and environmental protection, with RMB 202 billion, RMB 88.6 billion, and RMB 75.4 billion, respectively. In the managed project database, the top three sectors by cumulative project count were municipal engineering, transportation, and ecological conservation and environmental protection, accounting for 62.1% of the total; by cumulative investment, the top three were municipal engineering, transportation, and urban comprehensive development, together representing 74.1% of the total investment in implemented projects.
Based on the implementation of PPP demonstration projects, as of June 2018, there were a total of 1,009 projects across four batches, with a combined investment of RMB 2.3 trillion. Of these, 866 projects have been successfully launched, representing an investment of RMB 2.0 trillion and an implementation rate of 85.8%; among them, 450 projects have commenced construction, with a total investment of RMB 916.7 billion, yielding a commencement rate of 52.0%.

Jiangsu’s major industrial projects have seen investment totaling RMB 99.3 billion, up 80% year on year.
On July 31, the province-wide on-site promotion conference for major industrial projects was held in Nantong. This year, Jiangsu has scheduled 135 major industrial projects with a total investment of 1.4 trillion yuan and an annual planned investment of 224.3 billion yuan. With more than half of the year now behind us, how are these major industrial projects progressing?
Data show that in the first half of the year, 135 major provincial industrial projects secured investments totaling RMB 99.3 billion, up 80% year on year, with an investment completion rate of 44.3%—nearly three percentage points higher than in previous years. Among them, of the 91 projects newly launched this year, 58 were started in the first half, yielding a commencement rate of 63.7%. “Overall, progress on major provincial industrial projects has been smooth in the first half,” said Li Kan-zhen, Director of the Provincial Development and Reform Commission. Implementation has outpaced previous years, and project starts have exceeded expectations. As vehicles for transformation and upgrading, major industrial projects have garnered strong attention across the region. In Xuzhou, these projects have been assigned to the leadership teams of the four municipal committees, with dedicated oversight for 50 key initiatives, and end-to-end tracking services covering project approval, commencement, construction, and commissioning. Relevant departments, adhering to the principle of “act immediately,” have worked tirelessly to resolve issues and foster a favorable environment for project advancement.
However, Li Kan-zhen also acknowledged that, across the province, progress on major industrial projects has been mixed: in some areas, implementation has lagged behind; three prefecture-level cities have recorded investment completion rates below the provincial average; project commencement in certain regions has fallen short of expectations; and a small number of projects have been unable to proceed due to changes in the investors’ intentions.
Since adopting the development strategy of “building a strong industrial city,” Wuxi has seen its newly launched manufacturing projects demonstrate clear advantages. Over the past three years, 18 major manufacturing projects in Wuxi have collectively attracted RMB 82.5 billion in investment, placing the city first in the province in total investment scale and far ahead in average project size. This robust investment has helped lift Wuxi’s economic growth from 7.1% in 2015 to 7.5% in the first half of this year, underscoring the sound rationale behind the “strong industrial city” approach.
Investment is one of the three driving forces behind economic development. Under the framework of supply-side structural reform, boosting effective investment still hinges on industrial investment. Major industrial projects serve as both today’s sources of robust demand and tomorrow’s high-quality supply, making them a key lever for concerted efforts on both the demand and supply sides. To advance industrial investment, it is essential to officely focus on and prioritize large‑scale, high‑end industrial projects.
Nantong has reaped the benefits of major industrial projects. Since 2013, the number of such projects introduced to the city has risen year after year; in the past three years alone, 38 manufacturing projects have been brought in, placing Nantong at the top among all prefecture-level cities in terms of total project count. In the first half of the year, Nantong’s regional GDP grew 7.4% year on year, fixed‑asset investment increased by 8.8%, taxable industrial sales and electricity consumption rose by 20.8% and 8.9%, respectively, and newly built factory space in the manufacturing sector surged by 277%. “Nantong boasts a large number of high‑quality major industrial projects spanning information technology, advanced equipment, new materials, new energy, and other sectors,” said Shan Xiaoming, Executive Vice Mayor of Nantong. He added that these flagship projects are the linchpin of development: through initiatives such as high‑level briefings on the business environment, the city has attracted a wave of mega‑projects worth RMB 1 billion or more, with 47 ultra‑large industrial projects exceeding RMB 1 billion and 63 service‑sector projects over RMB 100 million breaking ground in the first half of the year—injecting fresh momentum into Nantong’s growth.

In line with Jiangsu’s “One Center, One Base” development goals, localities—whether attracting new projects or upgrading traditional industries—are striving to integrate into the broader industrial landscape, aiming to move up the value chain and advance toward technologies that are both independently controllable and cutting‑edge. Drawing on its strategic positioning as a pivotal hub for connecting east and west while driving growth across north and south, Changzhou is closely aligning itself spatially with initiatives to relieve non‑core functions from the capital and with industrial relocation projects from Shanghai and Shenzhen. At the same time, it is focusing on productive service‑sector projects and high‑end segments of industrial chains, actively attracting major projects that can lead industrial transformation, foster structural upgrading, and bolster long-term competitiveness. Through these efforts, Changzhou seeks to cultivate pillar industries under independent control and build a high‑quality, industrially advanced city.
Industry has long been the primary sector for major industrial projects. “Across the province, industrial investment and investment in technological upgrading are both on a steady upward trajectory, with structural optimization underway. Notably, investment in industrial technological upgrades now exceeds overall industrial investment and fixed‑asset investment—a highly encouraging trend that underscores the growing urgency of enterprises to embrace innovation and cutting‑edge technologies,” said Zhou Yibiao, Deputy Inspector of the Provincial Commission of Economy and Information Technology. Since the beginning of this year, Jiangsu has established a tiered, rolling pipeline of key industrial investment projects, focusing on priority areas such as intelligent transformation and upgrading, as well as green, safe, and low‑carbon development. Leveraging the industrial and information‑technology big‑data platform, the province also conducts online tracking and monitoring of selected major projects.
Taxation TAXATATION
The individual income tax administration system has been upgraded in preparation for comprehensive tax collection.
Reporters have learned that the Individual Income Tax Law is still undergoing revision, but the accompanying tax administration measures have already been upgraded in advance. Starting in August, the Golden Tax Project Phase III individual income tax withholding system has been upgraded to the “Natural Person Tax Administration System Withholding Client.” Tax authorities in Beijing, Guizhou, and other localities have issued relevant notices.
Unlike the previous system, which required submitting both individual registration information and withholding tax return forms simultaneously, the new system mandates first submitting the individual registration information and then the withholding tax return form. Additionally, a new identity verification feature has been introduced, which compares the registration data with the public security authorities’ identity information (ID number and name). If the verification fails, the taxpayer must conoffice and correct the information before filing the return.

China’s first refund of outstanding input VAT has been processed in Dalian.
“The state has continuously introduced favorable tax policies, consistently easing the burden on enterprises. This time, receiving a refund of 28.689 million yuan in outstanding input VAT credits has been truly a timely help, significantly alleviating our company’s current shortage of operating capital and providing strong impetus for in-depth R&D efforts,” said Sun Jian, CFO of Dalian Loulan Technology Co., Ltd., happily after completing the relevant procedures for the refund of outstanding input VAT credits at the Dalian High-Tech Industrial Park Tax Bureau of the State Taxation Administration on the afternoon of July 25. It is understood that this also marks the nation’s first successfully processed refund of outstanding input VAT credits.
On June 27, the Ministry of Finance and the State Taxation Administration jointly issued the “Notice of the Ministry of Finance and the State Taxation Administration on Tax Policies Related to the Refund of Input VAT Credit for Certain Industries in 2018,” which stipulated that, in 2018, the end-of-period input VAT credit would be refunded for certain sectors, including advanced manufacturing such as equipment manufacturing, modern services such as research and development, and power grid enterprises. This marks the full implementation of all three new measures under China’s deepened VAT reform.
Following the implementation of the new policy, the Dalian Municipal Tax Service of the State Taxation Administration promptly reported the relevant developments to the Dalian Municipal Party Committee and Municipal Government, actively coordinated with the finance department to determine the overall refund amount, and conducted in-depth field investigations into the basic circumstances of eligible enterprises. It then formulated a work plan for the carryforward VAT credit refund and, on the afternoon of July 24, convened an emergency video conference across the entire tax system to comprehensively deploy the implementation of the carryforward VAT credit refund.
As a Class-A taxpayer, Loulan Technology Co., Ltd. has achieved numerous breakthroughs over the years in cutting-edge automotive technologies such as vehicle-to-everything (V2X) connectivity and autonomous driving. The substantial input VAT credits generated from its early-stage R&D investments have, under the new policy, become a key source of funds for the company’s overall financial management.
Upon learning that they could avail themselves of the latest policy to obtain a refund of outstanding input VAT credits, Loulan Technology promptly submitted an application to the Dalian High-Tech Industrial Park Tax Bureau. After passing through five stages—counter‑service acceptance and data entry, preliminary review by the management department, re‑examination by the tax policy division, verification by the revenue accounting department, and final approval by the bureau chief—the treasury completed the refund process in just two hours, marking the successful completion of the first-ever approved refund of outstanding input VAT credits nationwide. At 10:00 a.m. on July 26, the company received a refund of RMB 2.8689 million.
“This policy implementation covers A‑ and B‑rated taxpayers across 18 industries, with approximately 3,600 entities in Dalian. By the end of September this year, we expect to complete, in phases, tax refunds totaling roughly RMB 800 million,” said Li Heming, Deputy Director of the Goods and Services Tax Division of the Dalian Municipal Tax Service Bureau of the State Taxation Administration. “The Dalian Municipal Tax Service Bureau will meticulously organize and efficiently execute the work, ensuring that the carryforward VAT refund program proceeds smoothly and in an orderly manner. We are committed to fully implementing the 2018 policy on refunding VAT credit balances for selected industries, thereby supporting Dalian’s high‑quality economic development.”

Litigation & Arbitration
Localities are actively exploring and advancing the development of public legal service platforms.
At present, as the principal social contradiction evolves and the practice of governing the country in accordance with the law deepens, the public’s demands in areas such as democracy, the rule of law, fairness, justice, security, and the environment are steadily increasing, placing new and higher expectations on the advancement of public legal services. To meet these emerging needs in the new era, localities have, in recent years, engaged in in-depth practical exploration tailored to their specific contexts, vigorously promoting the development of three major platforms—physical service centers, hotlines, and online platforms. A series of high-quality, efficient public legal services has further enhanced the sense of gain and satisfaction among the general public.
The development of a public legal services platform is a comprehensive undertaking, not merely the sum of its three constituent components—physical service centers, online platforms, and hotlines. Rather, it seeks to effectively meet the public’s demand for legal services by seamlessly integrating these three platforms, standardizing service delivery, ensuring consistency and coordination, and enabling one-stop, efficient processing of citizens’ needs.
The Guangdong Provincial Department of Justice has earnestly implemented the decisions and arrangements of the Ministry of Justice, treating the coordinated advancement of public legal service system construction and quality enhancement as a top-priority project. It has established a dedicated task force and vigorously promoted the integrated development of physical service outlets, online platforms, and hotline services, essentially establishing a public legal service ecosystem characterized by “30 seconds online and 30 minutes offline.” According to reports, Guangdong is committed to building a closed-loop service model featuring “unified acceptance, categorized referral, timely follow-up, unified feedback, real-time supervision, and random checks and return visits.” By advancing “five unifications”—unified service operations, unified resource allocation, unified service offerings, unified service branding, and unified service systems—the province has achieved seamless integration among the three major public legal service platforms, thereby ensuring multi-channel responsiveness to public needs, efficient workflow for handling matters, rational allocation of service resources, and comprehensive data sharing.
The Jiangxi Provincial Department of Justice, guided by practical considerations, has pooled resources to establish three major platforms—physical service centers, an online portal, and a hotline—and formulated a plan to advance the development of these public legal service platforms. Adhering to a dual‑track approach that integrates online and offline services, synchronizes physical and virtual operations, and coordinates front‑office and back‑office functions, the department has pursued the integrated construction of these three platforms. Building on this foundation, the department has drawn on the e‑commerce O2O model, leveraging an information‑based management system and collaborative working mechanisms to ensure seamless connectivity and intelligent interoperation among the physical, hotline, and online platforms, thereby enhancing the efficiency of public legal services. It has also established a provincial judicial administration data center and a disaster‑recovery system, encompassing ten major categories and 37 key databases—including prison and drug‑rehabilitation services, community corrections, lawyers, notarization, and legal aid—enabling centralized management, provincial‑level storage, and tiered sharing of big data across all judicial administrative functions. This has further facilitated comprehensive integration of business processes, promoting interoperability and resource sharing among various systems, and truly realizing the goal of “data traveling more while citizens travel less.”
In recent years, Zhejiang Province has leveraged three major platforms to deliver integrated services under the “one-window acceptance,” “one-stop online processing,” and “single‑line hotline” models. Citizens can apply in person at physical service centers, submit their requests by calling the 12348 hotline, or access services through provincial and municipal online platforms. Using these digital platforms as a connective hub, the Zhejiang Provincial Department of Justice has migrated offline legal service resources online, shared service resources between the hotline and online platforms, and facilitated cross‑platform referrals, thereby achieving the seamless integration of the three platforms and a comprehensive reengineering of legal service workflows.

The Jiangsu procuratorial organs have instituted public prosecution, in accordance with the law, against Gao Xuekun on suspicion of accepting bribes.
Recently, the case involving Gao Xuekun, former Chairman of the Chinese People’s Political Consultative Conference of Suzhou City, Jiangsu Province (at the level of a full‑bureau director), who is suspected of accepting bribes, has been assigned jurisdiction by the Jiangsu Provincial People’s Procuratorate and, in accordance with the law, has been prosecuted by the Zhenjiang Municipal People’s Procuratorate before the Zhenjiang Intermediate People’s Court.
During the review-and-prosecution stage, the procuratorial organ duly informed the defendant, Gao Xuekun, of his procedural rights and, in accordance with the law, interrogated him and heard the views of his appointed defense counsel. The indictment filed by the Zhenjiang Municipal People’s Procuratorate alleges that, taking advantage of his official positions—including Party Secretary of Chengbei Town in Kunshan City, Vice Mayor, Deputy Secretary of the Municipal Party Committee, Vice Mayor of Huai’an City, Secretary of the Party Working Committee of the Huai’an Economic Development Zone, Director of its Management Committee, Deputy Secretary of the Municipal Party Committee, and Mayor—Gao Xuekun sought benefits for others in matters such as land transfer, project contracting, real estate development, and personnel appointments, and accepted property from others in an especially large amount. Accordingly, he should be held criminally liable for the crime of accepting bribes in accordance with the law.
Other
In the fifth round of inspections, these provincial-level organs and regions have been designated for on-site visits, and contact information has been made public for the first time.
Recently, the fifth round of inspections by the 13th Jiangsu Provincial Party Committee has concluded its on-site visits to the first batch of nine provincial-level government departments: the Party Leadership Group of the Provincial Department of Education (under the Provincial Party Committee’s Education Commission), the Party Leadership Group of the Provincial Department of Water Resources, the Party Leadership Group of the Provincial Health and Family Planning Commission, the Party Leadership Group of the Provincial Administration of Government Affairs, the Party Leadership Group of the Provincial Department of Culture, the Party Leadership Group of the Provincial Price Bureau, the Party Leadership Group of the Provincial Administration for Industry and Commerce, the Party Leadership Group of the Provincial Bureau of Quality and Technical Supervision, and the Party Leadership Group of the Provincial Food and Drug Administration.
As scheduled, the deployment of inspection teams to the Party organizations of nine provincial-level government departments—including the Party Leadership Group of the Provincial Federation of Persons with Disabilities, the Party Leadership Group of the Provincial Civil Defense Bureau, the Party Leadership Group of the Provincial Overseas Chinese Affairs Office, the Provincial Party Committee’s 610 Office, the Party Leadership Group of the Provincial Government Legal Affairs Office, the Party Leadership Group of the Provincial Tourism Bureau, the Office of the Provincial Party Committee’s Rural Work Leading Group, the Party Leadership Group of the Provincial Taihu Water Pollution Prevention and Control Office, and the Party Leadership Group of the Provincial Coastal Area Development Office—will be announced separately.
The inspection period for both the first and second batches of provincial-level government departments is two months. During the inspection, the Provincial Party Committee Inspection Teams will maintain a dedicated hotline and a special postal mailbox (see the attached table), with telephone service available daily from 8:00 a.m. to 8:00 p.m.
In accordance with the Regulations on Inspection Work, inspection teams primarily handle letters, calls, and visits reporting issues concerning the leading bodies and members of the Party organizations being inspected, as well as the principal persons in charge of the leading bodies of lower-level Party organizations and leading cadres holding key positions. Priority is given to reports and complaints involving violations of political discipline, organizational discipline, integrity discipline, mass discipline, work discipline, and lifestyle discipline. Other petition matters that fall outside the scope of inspection jurisdiction shall be handled by the relevant localities and departments in accordance with applicable regulations.

The State Administration for Market Regulation held a regulatory talk with Pinduoduo.
According to a report by China National Radio’s “News and Newspaper Summary,” on the 2nd, the State Administration for Market Regulation held a meeting with Pinduoduo, urging the platform operator to strictly fulfill its principal responsibilities, strengthen oversight and review of merchants and products listed on the platform, actively cooperate with market regulation authorities at all levels in conducting inspections, and uphold fair competition. The company was also required to promptly provide information on the identities and business qualifications of online stores suspected of violating the law, as well as transaction records and promotional materials, and to intensify self‑inspection and rectification efforts to address illegal practices such as order‑boosting and fabricated credibility within the platform.
To effectively address the issue of intellectual property infringement and counterfeit goods on shopping platforms such as Pinduoduo, the National Intellectual Property Administration issued on the 3rd a “Notice on Deepening the Special Rectification Campaign for Intellectual Property Protection in the E‑commerce Sector.” The notice outlines measures to intensify enforcement in key regions, strengthen crackdowns and public disclosure of high‑profile cases, and enhance efforts to trace and combat counterfeiting at its offline sources. In addition, the administration will conduct spot checks on the progress of the special rectification campaign in priority e‑commerce areas and publicly disclose any identified problems.

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