Nearly 80 shareholders voted at an extraordinary general meeting Saturday, with only those attending allowed voting rights on the plan to accept 10 new shares for every 10 held in exchange for making the stock tradable, the company said in a statement on its Web site.

Of those attending, shareholders representing 61.91 percent of tradable shares held approved the plan, falling short of the minimum approval requirement of two-thirds.

About 301.6 million shares, or 52.48 percent of outstanding shares, held by the controlling shareholders of the Beijing-based company are not traded.

Nontradable shares include stock held by municipal, provincial and the central government, and so-called ``legal person'' shares held mostly by state-owned companies.

Through these holdings, the government controls most of the 1,378 companies that have gone public by selling shares to private investors.

China's plans for selling state shares contributed to a four-year market slump that sent the Shanghai benchmark to half its 2001 high.

The government twice scrapped plans to sell its holdings after concerns of a deluge of stock triggered market declines.

Four companies were picked by the government for trial sales of the state shares, which are nontradable.

The other three companies are Sany Heavy Industry, a construction equipment maker, Shanghai Zi Jiang Enterprise Group, a maker of packaging materials, and Hebei Jinniu Energy Resources, a coal producer.

Holders of tradable stock shares will be offered compensation in the form of share dispersals and cash to approve the conversion of the state's nontradable stock.

Sany's shareholders approved the plan to sell nontradable stock, company spokesman Li Yi said.

The government plans to expand the program after monitoring results of the trial sales, Shang Fulin, chairman of the China Securities Regulatory Commission, said on May 28.

Under rules announced by the securities regulator on April 30, holders of state-owned stock will not be allowed to sell for at least one year once the shares become tradable, and then can trade their stakes only in stages.

Tsinghua Tongfang's statement contradicts a report from Xinhua news agency, which said the plan was approved by 93.4 percent of shareholders of the tradable stock at the meeting.