PRC Property Rights Law (the “Law”) was promulgated by the National People’s Congress on March 16, 2007 and takes effect as of October 1, 2007. The key
features of the Law are as follows:

1. Emphasis on equal protection of the property right of the state, the collective and individual and strengthening protection of state-owned property. The property right of the state, the collective, individual or any other right holder shall be under the protection of the Law. The Law provides that no entity or individual may acquire ownership of the state-owned property and anyone causing loss to state-owned property due to unlawful activities shall bear legal responsibility.

2. Provision of advance notice registration of real estate. The parties entering into real estate purchase agreement may apply for advance notice registration to guarantee the realization of the property right. Any disposal of such registered real estate shall be invalid without the consent of the registered right holder.

3. Detailed provision on compensations for land expropriation. The social welfare fees for the farmers of collectively-owned land expropriated shall be arranged and the housing conditions of the owners of the resident’s house expropriated shall be safeguarded.

4. Provision of ownership of public use property in the building zone. Roads and greenbelt in the building zone shall be collectively owned by all the owners in principle. The parking space and garages within the building zone shall be used to satisfy the needs of the owners in the first place. The other public places, common facilities and houses used for property management services located in the building zone shall be collectively owned by all the owners.

5. Respect of the owner’s choice relating to building property management. The owners of a building may manage the building and its affiliated facilities on their own or by way of entrusting a building property management enterprise or any other manager.

6. Automatic renewal of the right to use construction land for dwelling houses without additional fees. The Law provides that the term of the right to use construction land for dwelling houses shall be automatically renewed after the initial term of 70 years has been elapsed.

7. Payment for lost-and-found objects. The owner of the lost-and-found objects shall pay such necessary expenses as safekeeping costs to the finding person or relevant department and shall fulfill his obligation as he promises if he offers a reward for finding the lost objects.

8. Excluding lost-and-found objects from acquisition in good faith. The owner is entitled to recover the lost objects. Where the lost property is possessed by any other person through transfer, the owner is entitled to ask the person untitled to dispose of the property to make compensations for damages, or, within 2 years since the date when he knows who is the assignee, ask the assignee to return the original property.

9. Transformation of right to the contracted management of land into property right. The holder of right to the contracted management of land may continue to fulfill the contract after its expiration.

10. Adoption of floating charge and extension of scope of properties used for security. The Law provides that manufacturing facilities, raw materials, semi-manufactured goods and products has already been owned or is going to be wned can be mortgaged. Buildings, vessels and aircraft under construction can be used for mortgage. Transferable fund shares and account receivables can be used for pledge.