Circ- Prop. A Share Issue-Pt1
Air China Ld
15 February 2006
PART 1
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION
If you are in doubt as to any aspect of this circular, you should consult your
stockbroker or other registered dealer in securities, bank manager, solicitor,
professional accountant or other professional adviser.
If you have sold or transferred all your shares in Air China Limited, you should
at once hand this circular and the accompanying form of proxy and the notice of
attendance to the purchaser or the transferee or to the bank, stockbroker or
other agent through whom the sale or transfer was effected for transmission to
the purchaser or transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this circular.
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 753)
(1) PROPOSED A SHARE ISSUE
(2) PROPOSED AMENDMENTS TO THE ARTICLES
(3) PROPOSED APPOINTMENT OF NEW INDEPENDENT
NON-EXECUTIVE DIRECTOR
It is important to note that the purpose of distributing this circular is to
provide the shareholders of the Company with information on the proposed issue
of A Shares by the Company, so that the shareholders of the Company may make an
informed decision on voting in respect of certain resolution(s) to be tabled at
the extraordinary general meeting of the Company. This circular does not
constitute, or form part of, an offer or invitation, or solicitation or
inducement of an offer, to subscribe for or purchase any of the A Shares or
other securities of the Company, nor is this circular calculated to invite
offers for any shares or other securities of the Company.
A letter from the Board is set out on pages 3 to 12 of this circular.
Notices convening Foreign Shareholders Class Meeting (as appropriate) of the
Company to be held on 28 March 2006 at 2:00 p.m., and the EGM at 2:30 p.m. (or
immediately after the conclusion or adjournment of the Foreign Shareholders
Class Meeting) at The Conference Room, 29/F, Air China Building, 36 Xiaoyun
Road, Chaoyang District, Beijing, PRC, together with the notice of attendance
and form of proxy are enclosed herein.
Whether or not you intend to attend the Class Meetings or the EGM, you are
requested to complete and return the form of proxy in accordance with the
instruction printed thereon. If you intend to attend the respective meetings,
you are required to complete and return the notice of attendance to
Computershare Hong Kong Investor Services Limited for holders of H Shares at
Rooms 1712-1716, Hopewell Centre, 183 Queen's Road East, Hong Kong or to the
address of the Company's Board Secretariat for holders of Domestic Shares and
Non-H Foreign Shares on or before 8 March 2006. For holders of H Shares, the
proxy form should be returned to Computershare Hong Kong Investor Services
Limited and for holders of Domestic Shares and Non-H Foreign Shares, the proxy
form should be returned to the address of the Company's Board Secretariat not
less than 24 hours before the time appointed for the meetings or any adjourned
meetings thereof.
Completion and return of the form(s) of proxy will not preclude you from
attending and voting in person at the meetings or at any adjourned meetings
should you so wish.
13 February 2006
CONTENTS
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Proposed A Share Issue . . . . . . . . . . . . . . . . . . . . . . . 4
C. Proposed amendments to Articles . . . . . . . . . . . . . . . . . . 9
D. Rules and procedures of meetings and other systems . . . . . . . . 10
E. Appointment of new independent non-executive Director . . . . . . . 10
F. Increase in number of Directors . . . . . . . . . . . . . . . . . . 11
G. Class Meetings and the EGM . . . . . . . . . . . . . . . . . . . . 11
H. Procedures for demanding a poll . . . . . . . . . . . . . . . . . . 12
I. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Notice of Foreign Shareholders Class Meeting . . . . . . . . . . . . . . . . 13
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Appendix I - Proposed amendments to Articles of Association . . . . . . . . . 20
Appendix II - Proposed Rules and Procedures for Shareholders'
General Meetings . . . . . . . . . . . . . . . . . . . . . . . 75
Appendix III - Proposed Rules and Procedures for Board Meeting . . . . . . . 108
Appendix IV - Proposed Rules and Procedures for Meetings of Supervisors . . 126
Appendix V - Proposed Connected Transaction Decision Making System . . . . . 134
DEFINITIONS
In this circular, unless otherwise indicated in the context, the following expressions have
the meaning set out below:
'A Share Issue' the proposed issue of not more than 2.7 billion A Shares
by the Company to qualified institutional investors as
approved by CSRC and placees through online offering
based on market share value and subscribers allowed by
the regulatory bodies and by the applicable laws and
regulations at the time of the A Shares Issue, which
are proposed to be listed on the Shanghai Stock Exchange
'A Shares' the Domestic Shares which are proposed to be allotted
and issued by the Company to qualified institutional
investors as approved by CSRC and placees through
online offering based on market share value and subscribers
allowed by the regulatory bodies and by the applicable
laws and regulations at the time of the A Shares Issue and
listed on the Shanghai Stock Exchange
'Articles' the articles of association of the Company from time to
time
'Board' the board of Directors of the Company
'Class Meetings' the Domestic Shareholders Class Meeting and the
Foreign Shareholders Class Meeting to be held on 28
March 2006 to approve, inter alia, the A Share Issue
'Company' AIR CHINA LIMITED (Air China Limited), a joint
stock limited company incorporated in the PRC, with
primary listing on The Stock Exchange of Hong Kong
Limited with stock code 753 and secondary listing on the
Official List of the UK Listing Authority
'CSRC' China Securities Regulatory Commission
'Directors' the directors of the Company
'Domestic Shareholders Class the class meeting for holders of Domestic Shares to be
Meeting' held on 28 March 2006 to approve, inter alia, the A Share
Issue
'Domestic Shares' the ordinary shares of RMB1.00 each issued by the
Company, which are subscribed for in Renminbi or
credited as fully paid up by PRC nationals
'EGM' the extraordinary general meeting of the Company to be
held immediately after the conclusion or adjournment of
the H Shareholders Class Meeting on 28 March 2006 to
approve, inter alia, the A Share Issue
'Foreign Shares' both Non-H Foreign Shares and H Shares
'Foreign Shareholders Class the class meeting for holders of H Shares and Non-H
Meeting' Foreign Shares to be held on 28 March 2006 at 2:00 p.m.
to approve, inter alia, the A Share Issue
'Group' the Company and its subsidiaries and joint ventures
'H Shares' overseas listed foreign shares of RMB1.00 each in the
share capital of the Company which are listed on the
Hong Kong Stock Exchange and traded in Hong Kong
dollars and admitted to the Official List of the UK Listing
Authority and are admitted for trading on the market for
listed securities of the London Stock Exchange
'Hong Kong Stock Exchange' The Stock Exchange of Hong Kong Limited
'Listing Rules' the Rules Governing the Listing of Securities on the
Hong Kong Stock Exchange
'Non-H Foreign Shares' the ordinary shares of RMB1.00 each in the share capital
of the Company which as at the date of this circular are
held by China National Aviation Corporation (Group)
Limited, a company incorporated in Hong Kong
'PRC' the People's Republic of China, excluding, for the
purpose of this circular only, Hong Kong, Macau and
Taiwan
'Price Consultation Period' the period commencing from the date the Company
makes the preliminary offer document
relating to the A Share Issue publicly available and
ending on the date on which the bookbuilding process
with the institutional investors is completed.
'RMB' Renminbi, the lawful currency of the PRC
'SFO' Hong Kong Securities and Futures Ordinance
'Shareholders' holders of Domestic Shares, Non-H Foreign Shares and H
Shares
'Shares' Domestic Shares, H Shares, Non-H Foreign Shares and A
Shares
LETTER FROM THE BOARD
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 753)
Executive Directors: Registered office:
Mr. Ma Xulun 9th Floor, Blue Sky Mansion
Mr. Cai Jianjiang 28 Tianzhu Road Zone A
Mr. Fan Cheng Tianzhu Airport Industrial Zone
Shunyi District
Non-executive Directors: Beijing
Mr. Li Jiaxiang PRC
Mr. Kong Dong
Mr. Wang Shixiang Principal place of business
Mr. Yao Weiting in Hong Kong:
5th Floor, CNAC House
Independent non-executive Directors: 12 Tung Fai Road
Mr. Hu Hung Lick, Henry Hong Kong International Airport
Mr. Wu Zhipan Hong Kong
Mr. Zhang Ke
13 February 2006
To the Shareholders
Dear Sir or Madam,
(1) PROPOSED A SHARE ISSUE
(2) PROPOSED AMENDMENTS TO THE ARTICLES
(3) PROPOSED APPOINTMENT OF NEW INDEPENDENT
NON-EXECUTIVE DIRECTOR
A. INTRODUCTION
The Company announced on 9 February 2006 that, subject to Shareholders'
approval at the EGM and the separate Class Meetings, the Company will apply to
the relevant authorities in the PRC for regulatory approval for the allotment
and issue of not more than 2.7 billion A Shares to institutional and public
investors in the PRC and for the listing of such A Shares on the Shanghai Stock
Exchange. The A Share Issue is subject to approvals from (a) Shareholders to be
sought at separate Class Meetings and the EGM; and (b) the relevant PRC
authorities.
The Company intends to use the net proceeds from the A Share Issue for the
purchase of certain aircraft, and certain project on expansion of existing
operating support facilities, details of which are set out below in this
circular.
In order to comply with the relevant requirements applicable to PRC listed
issuers, the Board also proposes to make certain amendments to the Articles and
to adopt certain rules and procedures for corporate meetings.
In addition, at the board meeting held on 5 September 2005, the Board resolved
to propose that Mr. Jia Kang be appointed as an additional independent
non-executive Director, which appointment is subject to shareholders'
approval. In light of such appointment, a special resolution to amend the
Articles so that the number of members of the Board be increased from 11 to 12
members will also be proposed at the EGM as well. Further information on the
proposed appointment of Mr. Jia Kang as a Director and this particular proposed
amendment to the Articles is set out in the announcement made by the Company
dated 6 September 2005.
The purpose of this circular is to give you details of, among other things, the
proposed A Share Issue, amendments to the Articles, the appointment of new
independent non-executive Director and the increase in number of Directors.
B. PROPOSED A SHARE ISSUE
1. General
Subject to Shareholders' approval at the EGM and the separate Class Meetings,
the Company will apply to the relevant authorities in the PRC for regulatory
approval for the allotment and issue of not more than 2.7 billion A Shares to
institutional and public investors in the PRC and for the listing of such A
Shares on the Shanghai Stock Exchange. It is expected that such investors will
not include connected persons (as defined under the Listing Rules) of the
Company. If any of such investors includes any connected persons of the Company,
the Company will take steps to comply with the relevant connected transaction
requirements under the Listing Rules. At present, the Company has its H Shares
listed on the main board of the Hong Kong Stock Exchange and are admitted for
trading on the market for listed securities on the London Stock Exchange.
The proposed A Share Issue and the listing application are subject to approval
by the Shareholders at the EGM and the separate Class Meetings to be held on 28
March 2006. As at the date of this circular, no application has been made by the
Company to any PRC authorities in relation to the A Share Issue. It is expected
that the listing application will be made around the end of March 2006.
2. Structure of the A Share Issue
The structure of the proposed A Share Issue is set out below:
Type of securities to be issued: RMB denominated ordinary shares (i.e. A
Shares).
Number of A Shares to be issued: Not more than 2.7 billion A Shares,
representing approximately 28.62% of the
existing issued share capital of the Company
and approximately 22.25% of the enlarged
issued share capital of the Company
immediately after completion of the proposed
A Share Issue, assuming no other changes to
the share capital of the Company.
Nominal value: RMB1.00 each.
Rights attached to A Share: The A Shares to be issued are listed Domestic
Shares and, except as otherwise provided for
in the Articles, will rank pari passu with the
existing Domestic Shares, H Shares and
Non-H Foreign Shares in all respects.
Target subscribers: Qualified institutional investors as approved
by CSRC and the placees through online
offering based on market share value, and
subscribers allowed by the regulatory bodies
and by the applicable laws and regulations at
the time of A Shares Issue.
Basis for determining the The issue price will not be lower than 90% of
issue price: the average closing price of the Company's H
Shares on the Hong Kong Stock Exchange
during the Price Consultation Period of the A
Share Issue. The issue price for the proposed A
Share Issue will be determined based on the
PRC securities market conditions at the time
when the A Share Issue takes place and in
accordance with the applicable CSRC
regulations. Thus the amount to be raised from
the A Share Issue cannot be ascertained as at
the date of this circular.
Use of proceeds: It is intended that the net proceeds from the A
Share Issue would be used to part finance the
purchase of 20 Airbus A330-200 aircraft, 15
Boeing 787 aircraft and 10 Boeing 737-800
aircraft and Air China's project relating to the
expansion of existing operating support
facilities at the Beijing Capital International
Airport ('Proposed Projects').
It will be proposed to the Shareholders at the
EGM that the Company be authorised to apply
the proceeds from the A Share Issue to any
payment due in relation to the Proposed
Projects or to repay any outstanding bank loan
in relation to the Proposed Projects that
occurred before the completion of the A Share
Issue; after above prescribed use of the
proceeds, any balance of it shall be applied to
the working capital of the Company.
3. Information on the Proposed Projects
Investment amount
It is intended the net proceeds from A Share Issue will be used to part finance
the Company's purchase of 20 Airbus A330-200 aircraft, 15 Boeing 787 aircraft
and 10 Boeing 737-800 aircraft and Air China's project relating to the
expansion of existing operating support facilities at the Beijing Capital
International Airport. The total purchase amount for these aircraft will be less
than the aggregate catalog price of US$5.68 billion, and the total investment
amount for the project relating to the expansion of existing operating support
facilities will be approximately RMB600 million.
Benefit for the Proposed Projects
Pursuant to a purchase agreement dated 26 January 2005 between the Company, Air
China Group Import and Export Trading Co., and Airbus S.A.S, the Company has
agreed to purchase 20 Airbus A330-200 aircraft from Airbus S.A.S.. The Company
also entered into a purchase agreement with Boeing Company on 8 August 2005 and
17 January 2006, pursuant to which the Company has agreed to purchase 15 Boeing
787 aircraft and 10 Boeing 737-800 aircraft, respectively. Further information
on the purchases of the 20 Airbus A330-200 aircraft, the 15 Boeing 787 aircraft
and the 10 Boeing B737-800 aircraft is set out in the announcements made by the
Company dated 26 January 2005, 8 August 2005 and 10 February 2006, respectively.
The purchases of aircraft will expand the fleet capacity of the Company and the
aircraft from the purchases will principally serve the routes to international
destinations in Europe, Australia, North America and certain key domestic
destinations such as Lhasa. The aircraft from the purchases are expected to
replace certain aircraft in the existing fleet of the Company. The purchase of
the Boeing 737-800 aircraft will also reinforce Beijing's position as a
transportation hub and increase frequency of flights, departing originally from
Beijing, of a number of key domestic flight courses. The purchases of aircraft
will enable the Company to provide more cost-efficient and comfortable services
to the passengers.
The Company obtained approval from the National Development and Reform
Commission of the People's Republic of China in September 2005 to commence a
project relating to the expansion of the existing operating support facilities
at the Beijing Capital International Airport. The total investment amount of the
project is approximately RMB600 million. The project involves the expansion of
various operating support facilities including the acquisition of a piece of
land with an area of approximately 1 million square metres and the expansion of
ground services facilities and other facilities.
4. Shareholders' approval and other approvals
The Class Meetings and the EGM will be held on 28 March 2006 to consider and, if
thought fit, approve, among other things, the A Share Issue. It should be noted
that the A Share Issue, upon the approval by the Shareholders at the separate
Class Meetings and the EGM, is still subject to the approval by the CSRC and
other PRC government authorities, if necessary. In addition, the approval by the
Shanghai Stock Exchange as to the listing of and dealings in the A Shares on the
Shanghai Stock Exchange is also required. Upon obtaining the requisite
Shareholders' approval at the Class Meetings and the EGM, it is expected that
the listing application will be made around the end of March 2006.
5. Reasons for and benefits of the A Share Issue
The Company believes that the A Share Issue will establish a new financing
platform for the Company and will broaden the Company's access to different
securities markets. This will enable the Company to enhance the development of
its operations and to further improve its competitiveness. The Company believes
that the A Share Issue will provide the financial resources required to part
finance the development of the Proposed Projects. The Company expects that after
the completion of the Proposed Projects, the carrying capacity of the Group will
be further enhanced. Furthermore, the Company also believes that the capital
raised from the A Share Issue will result in improvements in its debt-to-equity
ratio and accordingly, will lower its operating risks.
The Directors believe that the A Share Issue will benefit the Company and the
Shareholders as a whole.
6. Effect of the A Share Issue on the Company's shareholding structure
Set out below is the shareholding structure of the Company as at the date of
this circular and immediately upon completion of the A Share Issue assuming that
an aggregate of 2.7 billion new A Shares will be issued under the A Share Issue
and no other changes to the share capital of the Company:
Immediately after
As at the Date of completion of the
this circular A Share Issue
Number of Number of
Shares % Shares %
(1) Non-Listed Domestic 4,826,195,989 51.16 4,826,195,989 39.78
Shares
(2) Non-H Foreign Shares 1,380,482,920 14.64 1,380,482,920 11.38
(3) Listed Shares
- H Share 3,226,532,000 34.20 3,226,532,000 26.59
- A Share - - 2,700,000,000 22.25
Total number of 3,226,532,000 34.20 5,926,532,000 48.84
Listed Shares
(4) Total number of 9,433,210,909 100 12,133,210,909 100
Shares
As advised by the Company's PRC counsel, Haiwen & Partners ('Haiwen'), the
Company is not required to implement the share conversion reform in the PRC as
it is not an existing A Share company that is currently listed on the Shanghai
Stock Exchange. As set out in the table above, the shareholding structure of the
Company immediately after the completion of the A Share Issue under existing
laws and regulations is currently expected to comprise non-listed Domestic
Shares, non-H Foreign Shares, H Shares and A Shares, although certain new
developments as set out below are expected.
According to the Guidelines on Share Conversion Reform of Listed Companies
issued by the CSRC and other relevant authorities and committees in 2005,
companies seeking an A Share listing in the PRC will no longer have both
tradeable shares and non-tradeable shares. As the laws and regulations relating
to the conversion of non-tradeable shares into tradable shares upon listing (the
'New Rules') have not been promulgated, the CSRC has temporarily suspended
giving final approvals for A Share offerings.
It is expected that CSRC will only approve new A Share listing after the New
Rules have been promulgated. Although the conversion procedures under the New
Rules are still uncertain at this stage, it is expected that under the New
Rules, the existing non-listed Domestic Shares may be converted into tradeable
shares eligible for listing and thus become A Shares, which will carry the same
rights as the other A Shares issued by the Company. It is expected that the
conversion of non-listed Domestic Shares into A Shares (if approved) will not
involve any payment of compensation by the holders of the non-listed Domestic
Shares to the holders of A Shares and will also not require approval by
Shareholders at separate Class Meetings.
C. PROPOSED AMENDMENTS TO ARTICLES
To accommodate the A Share Issue, the Company will, when proceeding with the A
Share Issue, make proposed amendments to the Articles in compliance with all
relevant and applicable PRC legal and regulatory requirements. Such amendments
are proposed in accordance with laws and regulations prescribed by the relevant
PRC authorities including the CSRC, stipulating provisions mandatory or
recommended for inclusion in articles of association of PRC listed companies.
The proposed amended Articles will be adopted for use by the Company after
completion of the A Share Issue.
The proposed amendments to be made to the Articles primarily aimed to enhance
the corporate governance of the Company and, in accordance with the relevant PRC
laws and regulations, deal with matters relating to different areas such as
protection of public shareholders' rights, shareholders' meetings,
independent directors and certain other related matters. Further details of
those proposed amendments are set out in Appendix I to this circular.
Such amendments are made on the basis of the existing Articles. The amended
Articles will comply with the relevant laws and regulations applicable to
companies with listed H Shares and A Shares and will safeguard the interest of
both the holders of H Shares and holders of A Shares.
The proposed amendments to the Articles are subject to approval by way of a
special resolution by the Shareholders at the EGM, and are conditional upon
obtaining any approval, endorsement or registration as may be necessary from the
relevant PRC authorities.
D. RULES AND PROCEDURES OF MEETINGS AND OTHER SYSTEMS
Under the listing requirements of the PRC, the Company has to lay down certain
rules and procedures of meetings as well as other decision systems, some of
which require Shareholders' approval at the EGM. Special resolutions to
consider, approve and adopt the following rules and procedures will be proposed
at the EGM: (a) the Rules and Procedures for Shareholders' General Meetings;
(b) the Rules and Procedures for Board Meetings; and (c) the Rules and
Procedures for Meetings of Supervisors. Ordinary resolution to consider, approve
and adopt the Connected Transaction Decision Making System will be proposed at
the EGM. The unofficial English translations of each of the above rules and
procedures and systems are set out in Appendices II, III, IV and V to this
circular.
E. APPOINTMENT OF NEW INDEPENDENT NON-EXECUTIVE DIRECTOR
In order to comply with the requirement of the relevant PRC laws and regulations
in respect of corporate governance of listed issuers in the PRC, at the board
meeting held on 5 September 2005, the Board resolved to propose that Mr. Jia
Kang be appointed as an additional independent non-executive Director. An
announcement was made by the Company on 6 September 2005. An ordinary resolution
to consider and approve the appointment of Mr. Jia will be proposed at the EGM.
Mr. Jia Kang, aged 52, is the head of Fiscal Science Research Institute of
Ministry of Finance. Mr. Jia holds a Doctor's Degree of Economic and works as
vice chairman of China Public Finance Society and a director of China Tax
Association and National Debt Association of China. Mr. Jia is also the visiting
professor of China Renmin University, National Institute of Administration and
Xiamen University. Mr. Jia has participated in the researches relating to state
economic planning and is the author of a large number of economic publications.
Mr. Jia does not have any relationship with any other Directors, senior
management, substantial shareholders (as defined in the Listing Rules), or
controlling shareholders (as defined in the Listing Rules) of the Company.
Mr. Jia does not have any interests in shares of the Company within the meaning
of Part XV of the SFO.
The director's fee of Mr. Jia, if any, will be determined subsequent to the
EGM by reference to the current emoluments of other independent non-executive
Directors. Announcement will be made by the Company in due course when the
director's fee or other emolument of Mr. Jia is determined. The term of his
office shall commence on the date of approval of the amendments to Article 93
relating to the number of directors by the relevant government authorities and
shall end on the expiry of the term of the current session of the Board.
F. INCREASE IN NUMBER OF DIRECTORS
In light of the appointment of Mr. Jia Kang, the total number of the Directors
shall be increased from eleven to twelve members. An announcement was made by
the Company on 6 September 2005. A special resolution to consider and approve
the amendment of the Article so that the number of Directors be increased from
eleven to twelve members will also be proposed in the EGM. The appointment of
Mr. Jia Kang will become effective when that special resolution is passed at the
EGM and approval of the same by PRC government authorities is obtained.
G. CLASS MEETINGS AND THE EGM
Special resolutions to approve, among other matters, the proposed A Share Issue
and the proposed amendments to the Articles will be proposed at the EGM.
Ordinary resolutions to approve, among other matters, the appointment of the new
independent non-executive Director and the adoption of the Connected Transaction
Decision Making System will also be proposed at the EGM.
In addition, special resolution to approve the A Share Issue will be proposed at
the Domestic Shareholders Class Meeting and the Foreign Shareholders Class
Meeting. At the Foreign Shareholders Class Meeting, the votes of all holders of
Foreign Shares and the holders of overseas listed foreign shares, that is,
holders of H Shares, in respect of the special resolution to be proposed at the
Foreign Shareholders Class Meeting will be counted separately. The Company will
treat the special resolution of the Foreign Shareholders Class Meeting to be
passed if it attains a two-thirds majority of the voting rights of holders of
Foreign Shares and that of holders of H Shares attending the meeting. As advised
by Haiwen, this arrangement does not contravene any PRC laws, and the special
resolution, if passed, would be valid. As advised by Haiwen, the separate
counting of the votes of the holders of H Shares is valid.
No Shareholder is required to abstain from voting in connection with the matters
to be resolved at the separate Class Meetings and the EGM.
Notices convening Foreign Shareholders Class Meeting (if applicable) and the
EGM, together with the notice of attendance and form of proxy are enclosed in
this circular.
Whether or not you intend to attend the Class Meetings or the EGM, you are
requested to complete and return the form of proxy in accordance with the
instruction printed thereon. If you intend to attend the respective meetings,
you are required to complete and return the notice of attendance to
Computershare Hong Kong Investor Services Limited for holders of H Shares at
Rooms 1712-1716, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong
or to the address of the Company's Board Secretariat for holders of Domestic
Shares and Non-H Foreign Shares on or before 8 March 2006. For holders of H
Shares, the proxy form should be returned to Computershare Hong Kong Investor
Services Limited and for holders of Domestic Shares and Non-H Foreign Shares,
the proxy form should be returned to the address of the Company's Board
Secretariat not less than 24 hours before the time appointed for the holding of
the meetings or any adjourned meetings thereof.
Completion and return of the form(s) of proxy will not preclude you from
attending and voting in person at the meetings or at any adjourned meetings
should you so wish and completion and return of the notice of attendance do not
affect the right of a Shareholder to attend the respective meeting. However, a
failure to return the notice of attendance may result in an adjournment of the
respective meeting, if the number of Shares carrying the right to vote
represented by the Shareholders proposing to attend the relevant meeting by the
notice of attendance does not reach more than half of the total number of Shares
of the Company carrying the right to vote at the relevant meeting.
H. PROCEDURES FOR DEMANDING A POLL
Pursuant to Article 72 of the existing Articles, at any general meeting, a
resolution put to the vote of the meeting shall be decided on a show of hands
unless a poll is (before or after any vote by the show of hands) demanded:
(i) by the chairman of the meeting;
(ii) by at least two shareholders present in person or by proxy for the time
being entitled to vote at the meeting; or
(iii) by any shareholder or shareholders (including proxy) holding individually
or holding in aggregate of 10% or more of the shares carrying the right to vote
at the meeting.
I. RECOMMENDATION
The Directors consider that the A Share Issue, the proposed amendments to the
Articles, the proposed appointment of the additional independent non-executive
Director and the increase in number of the Directors are in the best interests
of the Company and its Shareholders.
Accordingly, the Directors recommend the Shareholders to vote in favour of the
resolutions which will be proposed at the Class Meetings and the EGM.
Yours faithfully, For and on behalf of
Air China Limited
Li Jiaxiang
Chairman
NOTICE OF FOREIGN SHAREHOLDERS CLASS MEETING
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 753)
NOTICE IS HEREBY GIVEN that the class meeting for holders of Foreign Shares
(including H Shares and Non-H Foreign Shares) ('Foreign Shareholders Class
Meeting') of Air China Limited ('Company') will be held at The Conference
Room, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC
at 2:00 p.m. on 28 March 2006 to consider and, if thought fit, to pass the
following resolution. Unless otherwise indicated, capitalised terms used herein
shall have the same meaning as those defined in the announcement of the Company
dated 9 February 2006 (the 'Announcement'):
Special Resolution:
'THAT, conditional upon the approval of the same by the Domestic Shareholders
Class Meeting and by shareholders of the Company at the extraordinary general
meeting to be convened, the public offering of not more than 2.7 billion A
Shares by the Company in the PRC be and is hereby approved.'
By Order of the Board
Zheng Baoan Li Man Kit
Joint Company Secretaries
Beijing, the PRC
9 February 2006
Notes:
1. The votes of all holders of Foreign Shares and the holders of overseas
listed foreign shares, that is, holders of H Shares, in respect of this special
resolution will be counted separately. The Company will treat this special
resolution to be passed if it attains a two-thirds majority of the voting rights
of holders of Foreign Shares and that of holders of H Shares attending the
meeting. As advised by the Company's PRC counsel, Haiwen & Partners ('Haiwen'),
this arrangement does not contravene any PRC laws, and that this
special resolution, if passed, would be valid. As advised by Haiwen, the
separate counting of the votes of the holders of H Shares is valid.
2. The proposed A Share Issue and the Company's proposed plan in
relation to the use of proceeds from the A Share Issue
Shareholders are reminded to read carefully details of the proposed A Share
Issue as well as the relevant content of the proposal made by the Company in
relation to the use of proceeds from the A Share Issue as contained in the
Circular to be despatched to the Shareholders.
3. Closure of register of members and eligibility for attending the Foreign
Shareholders Class Meeting
Holders of H Shares of the Company are advised that the register of members of
the Company will close from 27 February 2006 to 28 March 2006 (both days
inclusive), during which time no transfer of H Shares of the Company will be
effected and registered. In order to qualify for attendance at the Foreign
Shareholders Class Meeting, instruments of transfer accompanied by share
certificates and other appropriate documents must be lodged with the Company'
s H share registrar, Computershare Hong Kong Investor Services Limited, by 4:00
p.m. on 24 February 2006.
Holders of H Shares of the Company whose names appear on the register of members
of the Company maintained in Hong Kong on 24 February 2006 are entitled to
attend the Foreign Shareholders Class Meeting.
Holder of Non-H Foreign Shares of the Company whose name appears on the register
of members of the Company maintained in Hong Kong on 24 February 2006 is
entitled to attend the Foreign Shareholders Class Meeting.
4. Notice of attendance
Shareholders who intend to attend the Foreign Shareholders Class Meeting should
complete and lodge the accompanying notice of attendance and return it to for
holders of H Shares, the Company's H share registrar and for holders of Non-H
Foreign Shares, the Company's Board Secretariat, on or before 8 March 2006.
The notice of attendance may be delivered by hand, by post or by fax to the
Company's H share registrar, or to the address of the Company's Board
Secretariat (as may be applicable). Completion and return of the notice of
attendance do not affect the right of a Shareholder to attend the Foreign
Shareholders Class Meeting. However, a failure to return the notice of
attendance may result in an adjournment of the Foreign Shareholders Class
Meeting, if the number of Shares carrying the right to vote represented by the
Shareholders proposing to attend the Foreign Shareholders Class Meeting by the
notice of attendance does not reach more than half of the total number of
Foreign Shares of the Company carrying the right to vote at the Foreign
Shareholders Class Meeting.
5. Proxy
Every Shareholder who has the right to attend and vote at the Foreign
Shareholders Class Meeting is entitled to appoint one or more proxies, whether
or not they are members of the Company, to attend and vote on his behalf at the
Foreign Shareholders Class Meeting.
A proxy shall be appointed by an instrument in writing. Such instrument shall be
signed by the appointer or his attorney duly authorised in writing. If the
appointer is a legal person, then the instrument shall be signed under a legal
person's seal or signed by its director or an attorney duly authorised in
writing. The instrument appointing the proxy shall be deposited at the Company's
H share registrar for holders of H Shares or at the address of the Company's
Board Secretariat for holders of Domestic Shares and Non-H Foreign Shares
not less than 24 hours before the time appointed for the holding of the Foreign
Shareholders Class Meeting. If the instrument appointing the proxy is signed by
a person authorised by the appointer, the power of attorney or other document of
authority under which the instrument is signed shall be notarised. The notarised
power of attorney or other document of authority shall be deposited together and
at the same time with the instrument appointing the proxy at the Company's H
share registrar or the address of the Company's Board Secretariat (as may be
applicable).
6. Other businesses
(i) The Foreign Shareholders Class Meeting is expected to last for half an hour.
Shareholders and their proxies attending the meeting shall be responsible for
their own traveling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is:
Room 1712-1716 Hopewell Centre 183 Queen's Road East Wanchai Hong Kong Tel
No.: (852) 2862 8628 Fax No.: (852) 2865 0990
(iii) The address of the Company's Board Secretariat is:
Secretariat of the Board Air China Limited South Terminal
Beijing Capital International Airport Chaoyang District, Beijing 100621 PRC
Tel No.: (86 10) 6458 0753 Fax No.: (86 10) 6458 5095 Contact Person: Mr. Zhou
Wu
NOTICE OF EGM
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 753)
NOTICE IS HEREBY GIVEN that an extraordinary general meeting ('EGM') of Air
China Limited ('Company') will be held at The Conference Room, 29/F, Air
China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC at 2:30 p.m. on
28 March 2006 (or immediately after the conclusion or adjournment of the Foreign
Shareholders Class Meeting) to consider and, if thought fit, to pass the
following resolutions. Unless otherwise indicated, capitalised terms used herein
shall have the same meaning as those defined in the announcement of the Company
dated 9 February 2006 ('Announcement'):
Special Resolutions:
1. 'THAT the public offering of A Shares by the Company in the PRC ('A
Share Issue') and each of the following terms and conditions for the A Share
Issue be and are hereby approved one by one:
(1) Class of Shares: RMB denominated ordinary shares (i.e. A Shares);
(2) Nominal value: RMB1.00 each;
(3) Total number of A Shares to be issued: not more than 2,700,000,000 A Shares;
(4) Target subscribers: qualified institutional investors as approved by CSRC
and the placees through online offering based on market share value, and
subscribers allowed by the regulatory bodies and by the applicable laws and
regulations at the time of A Shares Issue;
(5) Issue price: The issue price shall be determined based on the PRC securities
market conditions at the time when the A Share Issue takes place and in
accordance with the applicable regulations;
(6) Place of listing: Shanghai Stock Exchange;
(7) The existing and new Shareholders of the Company after completion of the A
Share Issue whose names appear on the register of members of the Company shall
be entitled to sharing the Company's undistributed retained profits
immediately prior to the completion of the A Share Issue;
(8) The Board of Directors of the Company shall be and is authorized to
determine and deal with at its discretion and with full authority, the matters
in relation to the A
Share Issue (including but not limited to the specific timing of issue, number
of A Shares to be issued, offering mechanism, pricing mechanism, issue price,
target subscribers and the number and proportion of A Shares to be issued to
each subscriber);
(9) The Board of Directors of the Company shall be and is authorized to at its
discretion and with full authority sign or execute all necessary documents
(including but not limited to the preliminary prospectus, the prospectus,
underwriting agreement, listing agreement and any related announcement), effect
and carry out necessary formalities (including but not limited to procedures for
listing of the A Shares on Shanghai Stock Exchange), and take all other
necessary actions in connection with the A Share Issue, as well as to handle all
registration requirements in relation to changes in the registered capital of
the Company following the completion of the A
Share Issue;
(10) This Special Resolution 1, conditional upon the approval of the A Share
Issue by the Domestic Shareholders Class Meeting and Foreign Shareholders Class
Meeting, respectively, shall be effective for a period of 12 months from the
date of the approval by the EGM, Domestic Shareholders Class Meeting and Foreign
Shareholders Class Meeting whichever is the last.'
The implementation of this Special Resolution 1 is subject to the approval by
the China Securities Regulatory Commission ('CSRC').
2. 'THAT subject to the passing of the above Special Resolution 1, the
proceeds from the A Share Issue be and is hereby approved to be used for the
purchase of 20 Airbus A330-200 aircraft, 15 Boeing 787 aircraft and 10 Boeing
737-800 aircraft and Air China's project relating to expansion of existing
operating support facilities at the Beijing Capital International Airport, by
applying to any payment due in relation to the projects above or to repay any
outstanding bank loan in relation to the projects above occurred before the
completion of the A Share Issue; after above prescript use of the proceeds, any
balance of it shall apply to the working capital of the Company, and the Board
of Directors of the Company shall, subject to the scope of use of proceeds set
out in this Special Resolution 2, be and is hereby authorized to determine and
adjust with full authority the projects, the priority and the actual project
investment amounts and bank loan repayment amounts to which the proceeds from
the A Share Issue shall be applied.'
The implementation of this Special Resolution 2 is subject to the approval by
the CSRC.
3. 'THAT subject to the passing of the above Special Resolution 1 and
conditional upon the completion of the A Share Issue, the amendments to the
Articles of Association as set out in Appendix I to the Circular be and are
hereby approved and the Board be and is hereby authorised to make further
amendments which in its opinion may be necessary, desirable and expedient in
accordance with the mandatory requirements of the applicable laws and
regulations, and as government authorities of the PRC may require, and to apply
for approvals from the relevant government authorities after the completion of
the A Share Issue.'
The amended Articles of Association referred to in this Special Resolution 3
will come into effect after approvals from the relevant authorities are
obtained.
4. 'THAT, subject to the passing of the above Special Resolution 1 and
conditional upon the completion of the A Share Issue, the Rules and Procedures
for Shareholders' General Meetings, Rules and Procedures for Board Meetings
and Rules and Procedures for Meetings of Supervisors, as amended, details of
which are set out in Appendices II, III, and IV to the Circular, be and are
hereby approved and adopted as part of the Articles of Association and shall
come into effect upon the effectiveness of the amendments to the Articles of
Association covered in above Special Resolution 3.'
5. 'THAT the amendment to the Articles of Association in respect of number of
Directors be and is hereby approved as follows:
Article 93 of existing Article of Association which provides that '...the
Company shall have a Board of Directors which is composed of 11 Directors...'
shall be amended to read as '...the Company shall have a Board of Directors
which is composed of 12 Directors...'.
The effectiveness of this Special Resolution 5 is subject to the approval of PRC
government authorities.
Ordinary Resolutions:
6. 'THAT, subject to Special Resolution 5 being passed at the EGM and
approved by PRC government authorities, the appointment of Mr. Jia Kang as an
independent non-executive Director for a term from the date of approval of the
amendments to Article 93 relating to the number of directors by the relevant
government authorities to the expiry date of the term of the current session of
the Board be and is hereby approved and the Board be and is hereby authorized to
fix Mr. Jia Kang's emoluments.'
7. 'THAT the Connected Transaction Decision Making System, details of which
are set out in Appendix V to the Circular be and is hereby approved and adopted
and that Connected Transaction Decision Making System shall come into effect
upon the effectiveness of the amendments to the Articles of Association covered
in above Special Resolution 3.'
By Order of the Board
Zheng Baoan Li Man Kit
Joint Company Secretaries
Beijing, the PRC
9 February 2006
Notes:
1. Corporate governance documents
Details of (a) the Rules and Procedures of the Shareholders' General Meeting;
(b) Rules and Procedures for Board Meetings; and (c) Rules and Procedures for
Meetings of Supervisors are set out in Appendices II to IV respectively to the
Circular and are also available for inspection on the website of The Stock
Exchange of Hong Kong Limited (http://www.hkex.com.hk).
2. Appointment of independent non-executive director
Brief biographical details of Mr. Jia Kang are set out in the paragraph headed
'Appointment of new independent non-executive Director' of the Circular to be
despatched to the Shareholders and the announcement of the Company dated 6
September 2005.
3. The proposed A Share Issue and the Company's proposed plan in
relation to the use of proceeds from the A Share Issue
Shareholders are reminded to read carefully details of the proposed A Share
Issue as well as the relevant content of the proposal made by the Company in
relation to the use of proceeds from the A Share Issue as contained in the
Announcement and the Circular to be despatched to the Shareholders.
4. Amendments to Articles
Details of the proposed amendments are set out in Appendix I to the Circular to
be despatched to the Shareholders and are also available for inspection on the
website of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk).
5. Closure of register of members and eligibility for attending the EGM
Holders of H Shares of the Company are advised that the register of members of
the Company will close from 27 February 2006 to 28 March 2006 (both days
inclusive), during which time no transfer of H Shares of the Company will be
effected and registered. In order to qualify for attendance at the EGM,
instruments of transfer accompanied by share certificates and other appropriate
documents must be lodged with the Company's H share registrar, Computershare
Hong Kong Investor Services Limited by 4:00 p.m. on 24 February 2006.
Shareholders of the Company whose names appear on the register of member of the
Company at the close of business on 24 February 2006 are entitled to attend the
EGM.
6. Notice of attendance
Shareholders who intend to attend the EGM should complete and lodge the
accompanying notice of attendance and return it to, for holders of H Shares, the
Company's H share registrar, or for holders of Domestic Shares and Non-H
Foreign Shares, the Company's Board Secretariat, on or before 8 March 2006.
The notice of attendance may be delivered by hand, by post or by fax to the
Company's H share registrar, or to the address of the Company's Board
Secretariat (as may be applicable). Completion and return of the notice of
attendance do not affect the right of a Shareholder to attend the EGM. However,
a failure to return the notice of attendance may result in an adjournment of the
EGM, if the number of shares carrying the right to vote represented by the
shareholders proposing to attend the EGM by the notice of attendance does not
reach more than half of the total number of shares of the Company carrying the
right to vote at the EGM.
7. Proxy
Every Shareholder who has the right to attend and vote at the EGM is entitled to
appoint one or more proxies, whether or not they are members of the Company, to
attend and vote on his behalf at the EGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall be
signed by the appointer or his attorney duly authorised in writing. If the
appointer is a legal person, then the instrument shall be signed under a legal
person's seal or signed by its director or an attorney duly authorised in
writing. The instrument appointing the proxy shall be deposited at the Company's
H share registrar for holders of H Shares or at the address of the Company's
Board Secretariat for holders of Domestic Shares and Non-H Foreign Shares
not less
than 24 hours before the time appointed for the holding of the EGM. If the
instrument appointing the proxy is signed by a person authorised by the
appointer, the power of attorney or other document of authority under which the
instrument is signed shall be notarised. The notarised power of attorney or
other document of authority shall be deposited together and at the same time
with the instrument appointing the proxy at the Company's H share registrar
or the address of the Company's Board Secretariat (as may be applicable).
8. Other businesses
(i) The EGM is expected to last for two hours. Shareholders and their proxies
attending the meeting shall be responsible for their own traveling and
accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is:
Room 1712-1716 Hopewell Centre 183 Queen's Road East Wanchai Hong Kong Tel
No.: (852) 2862 8628 Fax No.: (852) 2865 0990
(iii) The address of the Company's Board Secretariat is:
Secretariat of the Board Air China Limited South Terminal
Beijing Capital International Airport Chaoyang District, Beijing 100621 PRC
Tel No.: (86 10) 6458 0753 Fax No.: (86 10) 6458 5095 Contact Person: Mr. Zhou
Wu
APPENDIX I PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION
EXPLANATIONS FOR APPLICABLE ARTICLES OF ASSOCIATION (DRAFT) UPON COMPLETION OF
ADDITIONAL ISSUE OF A SHARES
The Company, currently as a H share company, plans to apply for additional issue
of A shares. Pursuant to relevant requirements specified by the CSRC, during the
application for A share issue, the articles of association (draft) shall be
prepared for adoption upon completion of the additional issue in accordance with
relevant provisions applicable to A share companies.
The relevant requirements applicable to the aforesaid A share companies mainly
include 'Company Law of the People's Republic of China' (the 'Company
Law'), 'Securities Law of the People's Republic of China' (the
'Securities Law'), 'Guide to Articles of Association of Listed Companies'
(the 'Guide to Articles of Association'), 'Standards for the Governance of
Listed Companies' (the 'Standards for Governance'), 'Regulatory Opinions
on General Meetings of Listed Companies' ('Regulatory Opinions on General
Meetings'), 'Guiding Opinions on the Setting Up of a System of Independent
Directors for Listed Companies' ('Guiding Opinions on Independent Directors
System'), 'Provisions on Strengthening the Protection of the Interests of
Public Shareholders' ('Protection of the Public Shareholders'), and
'Notice on the Regulation of the External Guarantees by Listed Companies'
('Notice on the Regulation of the External Guarantees').
With reference to the requirements of the aforesaid documents and the latest
requirements promulgated in Hong Kong, in view of, inter alia, the changes in
the shareholders, registered capital and shareholding structure of the Company
upon completion of additional issue of A shares as well as the change of the
Company into an A share company, the Company has made the necessary supplements
and amendments to the clauses of the prevailing Articles of Associations to
compile the new Articles of Association (draft) for adoption upon completion of
the additional issue.
Details of amendments are as follows (appropriate consequential changes to the
numbering and sequence of the relevant chapter, article, paragraph and
sub-paragraph will be made, if required, which will not be specifically
described herein):
I. GENERAL AMENDMENTS TO REFERENCE
1. All references to 'security supervision organization of the State
Council', 'security committee of the State Council' and 'security
management department of the State Council' appearing in the Articles of
Association are all proposed to be uniformly amended to read as 'securities
regulatory authority of the State Council'.
2. All references to 'president and other senior officers' are all
proposed to be uniformly amended to read as 'president, deputy president and
other senior management personnel'.
II. SPECIFIC AMENDMENTS
1. The first paragraph of Article 6 of the Original Articles of Association
provides that:
'In accordance with the provisions of the Company Law, the Special
Regulations and the Mandatory Provisions for Articles of Association of
Companies Listing Overseas (the 'Mandatory Provisions') and other applicable
PRC laws and administrative regulations, the Company amended the original
Articles of Association of the Company (the 'Original Articles of Association
') and adopt these Articles of Association (the 'Articles of Association' or
'these Articles of Association').'
This paragraph is proposed to be amended to read as follows:
'In accordance with the relevant provisions of the Company Law, the Special
Regulations and the Mandatory Provisions for Articles of Association of
Companies Listing Overseas (the 'Mandatory Provisions'), Instructions of
Articles of Association of Listed Companies (hereinafter to be referred to as
the Instructions of Articles of Association'), Administrative Guidelines for
Listed Companies (hereinafter to be referred to as the 'Administrative
Guidelines') and other applicable PRC laws and administrative regulations, the
Company held the general meeting of shareholders on (28 March) 2006, to amend
the original Articles of Association of the Company (the 'Original Articles
of Association') and adopt these Articles of Association (the 'Articles of
Association' or 'these Articles of Association').'
2. The second paragraph of Article 8 of the Original Articles of Association
provides that:
'Subject to Chapter 22 of these Articles of Association, a shareholder may
take action against the Company pursuant to the Company's Articles of
Association, and the Company may take action against its shareholders pursuant
to the Company's Articles of Association. A shareholder may also take action
against another shareholder, and may take action against the directors,
supervisors, president and other senior officers of the Company pursuant to the
Company's Articles of Association.'
This paragraph is proposed to be amended to read as follows:
'Subject to Chapter 23 of these Articles of Association, a shareholder may
take action against the Company pursuant to the Company's Articles of
Association. The Company may take action against shareholders, directors,
supervisors, president, deputy president and other senior officers of the
Company pursuant to the Company's Articles of Association. A shareholder may
also take action against another shareholder, and may take action against the
directors, supervisors, president, vice presidents and other senior officers of
the Company pursuant to the Company's Articles of Association.'
3. Article 9 of the Original Articles of Association provides that:
'The Company may invest in other limited liability companies or joint stock
limited companies. The Company's liability thereto shall be limited to the
amount of its capital contribution to the invested company.
Subject to the approval of the companies approving department authorized by the
State Council, the Company may, as required by its operation and management,
operate as a holding company as specified in paragraph 2 of Article 12 of the
Company Law.'
This paragraph is proposed to be amended to read as follows:
'The Company may invest in any other enterprise. However, unless otherwise
stipulated by law, the Company shall not become a contributor with joint
liability on the debts of such enterprise.'
4. A new paragraph, reading as follows, is proposed to be added to the
Original Articles of Association as the third paragraph of Article 17 thereof:
'The domestic shares of the Company are centrally deposited with the Shanghai
Branch of China Securities Depository and Clearing Corporation Limited in its
custody. The overseas listed foreign shares of the Company are principally
deposited with Hong Kong Securities Clearing Company Limited in its custody.'
5. Article 19 of the Original Articles of Association provides that:
'Subject to the approval of the companies approving department authorized by
the State Council, the Company may issue a total of 9,433,210,909 ordinary
shares, of which 6,500,000,000 shares were issued to the promoters of the
Company upon the Company's establishment.'
This paragraph is proposed to be amended to read as follows:
'Subject to the approval of the companies approving department authorized by
the State Council, the Company shall issue a total of 9,433,210,909 ordinary
shares, of which 6,500,000,000 shares were issued to the promoters of the
Company upon the Company's establishment. Details of the contribution by the
promoters upon the Company's establishment are as follows:
Number of
shares Date of
Name of the promoter subscribed Method of contribution contribution
China National Aviation 5,054,276,915 Capital contribution of 9 September
Holding Company RMB560,782,100 in the 2004
form of currency,
contribution of
RMB6,451,765,800 in the
form of the assets and
liabilities of its
subsidiaries relating to
their major businesses of
air passenger and cargo
transportation
China National Aviation 1,445,723,085 Equity contribution of 9 September
Corporation (Group) RMB2,005,866,000 2004
Limited
6. The following paragraphs are proposed to be added to the Original
Articles of Association as the third and fourth paragraphs of Article 20
thereof:
'After the aforesaid issue of the Company's overseas listed foreign
shares, with the approvals of the general meeting, class meetings of domestic
shareholders and foreign shareholders by way of respective special resolutions
as well as the approvals of the approving department authorized by the State
Council, the Company has issued (i') domestic shares listed in the PRC (A
shares). Upon the aforesaid capital increase by issuing A shares, the Company's
share capital structure is as follows:
The Company has issued a total of (i') ordinary shares, of which China National
Aviation Holding Company holds 4,826,195,989 domestic shares, representing
approximately
(i')% of the total share capital of the Company; China National Aviation
Corporation (Group) Limited holds 1,380,482,920 foreign shares, representing
approximately (i')% of the total share capital of the Company; other holders of
overseas listed foreign shares (H shares) hold 3,226,532,000 shares,
representing approximately (i')% of the total share capital of the Company and
holders of domestic shares listed in the PRC hold (i') shares, representing
(i') % of the total ordinary shares in issue of the Company.'
7. Article 23 of the Original Articles of Association provides that: 'The
registered capital of the Company shall be RMB9,433,210,909.00.' This Article is
proposed to be amended to read as follows:
'The registered capital of the Company shall be RMB9,433,210,909.00. (The
registered capital shall be adjusted accordingly after A share issue.)'
8. The following is proposed to be added as sub-paragraph (4) of the second
paragraph of Article 24 of the Articles of Association:
'The Company may increase its capital in the following ways:
...
(4) by capitalizing the common reserve fund;
...'
9. The second paragraph of Article 27 of the Original Articles of
Association provides that:
'The Company shall notify its creditors within ten (10) days of the date of
the Company's resolution for reduction of capital and shall publish an
announcement in newspaper at least three (3) times within thirty (30) days of
the date of such resolution. A creditor has the right within thirty (30) days of
receipt of the notice or, in the case of a creditor who does not receive such
notice, within ninety (90) days of the date of the first public announcement, to
require the Company to repay its debts or to provide a corresponding guarantee
for such debt.'
This paragraph is proposed to be amended to read as follows:
'The Company shall notify its creditors within ten (10) days of the date of
the Company's resolution for reduction of capital and shall publish an
announcement in newspaper within thirty (30) days of the date of such
resolution. A creditor has the right within thirty (30) days of receipt of the
notice or, in the case of a creditor who does not receive such notice, within
forty-five (45) days of the date of the first public announcement, to require
the Company to repay its debts or to provide a corresponding guarantee for such
debt.'
10. A new sub-paragraph, reading as follows, is proposed to be added to Article
29 of the Original Articles of Association as sub-paragraph (4) of this Article
thereof:
'The Company may repurchase shares in one of the following ways, with the
approval of the relevant governing authority of the State:
...
(4) by other means which are permitted by law, administrative regulations and
securities regulatory authority of the State Council.'
11. The first paragraph of Article 31 of the Original Articles of Association
provides that:
'Shares which have been lawfully repurchased by the Company shall be
cancelled within the period prescribed by law and administrative regulation, and
the Company shall apply to the original companies registration authority for
registration of the change in its registered capital.'
This paragraph is proposed to be amended to read as follows:
'Shares which have been lawfully repurchased by the Company shall be
cancelled or transferred within the period prescribed by law, administrative
regulation and relevant listing rules, and in the case of cancellation, the
Company shall apply to the original companies registration authority for
registration of the change in its registered capital.'
12. The Article 38 of the Original Articles of Association provides that:
'Share certificates of the Company shall be signed by the chairman of the
board of directors. ...'
This Article is proposed to be amended to read as follows:
'Share certificates of the Company shall be signed by the legal
representative. ...'
13. The following Article is proposed to be added to the Original Articles of
Association as Article 39 thereof:
'The Company shall not accept its shares being held as security under a
pledge.'
14. The following Article is proposed to be added to the Original Articles of
Association as Article 40 thereof:
'During their term of office, the directors, supervisors, president, deputy
presidents and other senior officers of the Company shall report periodically to
the Company their shareholdings in the Company and any changes thereto. Transfer
of shares by the aforesaid persons shall be conducted in accordance with the
provisions of laws, regulations and/or relevant listing rules.'
15. The following Article is proposed to be added to the Original Articles of
Association as Article 41 thereof:
'All profits derived by directors, supervisors, president, deputy presidents
and other senior officers of the Company and any shareholder holding more than
5% of the voting shares in the Company, through selling his shares in the
Company within a period of six months following the purchase of such shares or
through repurchasing shares issued by the Company within a period of six months
following the sale of his shares, shall belong to the Company.
The provisions of the preceding paragraph shall apply to senior officers,
including but not limited to the directors, supervisors, president, deputy
president and other senior officers, as specified in the Articles of Association
of the Company's legal person shareholders with more than 5% of the voting
rights in the Company.'
16. Article 43 of the Original Articles of Association shall be renumbered as
Article 46.
The fourth paragraph of Article 43 of the Original Articles of Association
provides that:
'The directors, supervisors, president, deputy presidents and other senior
officers of the Company shall report to the Company their shareholdings in the
Company, and shall not transfer their shares in the Company during their terms
of office.'
This paragraph is proposed to be amended to read as follows:
'The directors, supervisors, president, vice presidents and other senior
officers of the Company shall report to the Company their shareholdings in the
Company and any changes thereto.'
17. Article 47 of the Original Articles of Association shall be renumbered as
Article 50.
The second paragraph of the Article 47 of the Original Articles of Association
provides that:
'Application by a holder of domestic shares, who has lost his share
certificate, for a replacement share certificate shall be dealt with in
accordance with Article 150 of the Company Law.'
This paragraph is proposed to be amended to read as follows:
'Application by a holder of domestic shares, who has lost his share
certificate, for a replacement share certificate shall be dealt with in
accordance with Article 144 of the Company Law.'
18. Article 51 of the Original Articles of Association will be renumbered as
Article 54, with sub-paragraphs (2) and (4) of this Article proposed to be
amended, a new sub-paragraph proposed to be added as sub-paragraph (6) of the
paragraph (5)2 thereof, and a new paragraph added as paragraph (7) thereof, to
read as follows.
Sub-paragraphs (2) and (4) of this Article of the Original Articles of
Association provide that:
'The ordinary shareholders of the Company shall enjoy the following rights:
...
(2) the right to attend or appoint a proxy to attend shareholders' general
meetings and to vote thereat;
...
(4) the right to transfer shares in accordance with laws, administrative
regulations and provisions of the Articles of Association;
...'
Sub-paragraphs (2) and (4) are proposed to be amended, a new sub-paragraph
proposed to be added as sub-paragraph (6) of the paragraph (5)2 thereof, and a
new paragraph added as paragraph (7) thereof, to read as follows:
'The ordinary shareholders of the Company shall enjoy the following rights:
...
(2) the right to attend or appoint a proxy to attend shareholders' general
meetings and to vote thereat in accordance with the number of shares held;
...
(4) the right to transfer, bestow or pledge his shares in accordance with laws,
administrative regulations and provisions of the Articles of Association;
(5) the right to obtain relevant information in accordance with the provisions
of the Articles of Association, including:
1. obtaining a copy of the Articles of Association after payment of costs; 2.
inspecting and copying after payment of a reasonable fee: ...
(6) Counterfoils of company debt securities, resolutions of board meetings,
meetings of supervisory committee and financial and accounting reports.
...
(7) the right to bring a suit to the people's court against acts which are
detrimental to company interests or infringe on the lawful interests of
shareholders, and to claim the relevant interests pursuant to the Company Law or
other laws and administrative regulations;
...'
19. Article 54 of the Original Articles of Association will be renumbered as
Article 57, and the following paragraph is proposed to be added thereto as the
second paragraph thereof:
'Acting in concert' in this Article shall refer to two or more persons
reaching a consensus by way of an agreement (whether verbal or written) to gain
or consolidate their control over the Company through any of them acquiring the
voting right of the Company.'
20. The following paragraph is proposed to be added to the Original Articles of
Association as Article 58 thereof:
'The controlling shareholder and the effective controlling person of the
Company shall have fiduciary duty to the Company and the public shareholders of
the Company. The controlling shareholder shall exercise its right strictly under
the law as a capital contributor. The controlling shareholder shall not damage
the legal rights of the Company and its public shareholders through connected
transactions, profit distribution, asset restructuring, external investment,
fund appropriation and loan guarantee, nor the interests of the Company and its
public shareholders through its controlling position.'
21. Article 56 of the Original Articles of Association will be renumbered as
Article 60, sub-paragraph (13) thereof is proposed to be amended, and two
sub-paragraphs are proposed to be added as sub-paragraphs (14) and (15), to read
as follows.
Sub-paragraph (13) thereof provides that: 'The shareholders' general
meeting shall have the following functions and powers: ...
(13) to consider motions raised by shareholders who represent 5 % or more of the
total number of voting shares of the Company;
...'
Sub-paragraph (13) thereof is proposed to be amended, and two sub-paragraphs are
added as (14) and (15), to read as follows:
'The shareholders' general meeting shall have the following functions and
powers:
...
(13) to consider motions raised by the supervisory committee or shareholders who
represent more than 3% of the total number of voting shares of the Company;
(14) to resolve on the Company's transactions involving purchase and disposal
of substantial assets within one year, whose amounts exceed 30% of the total
assets of the Company;
(15) to resolve on the Company's external guarantees which shall be approved
by a general meeting as provided by laws, administrative regulations and the
Articles of Associations;
...'
22. The following paragraph is proposed to be added to the Original Articles of
Association as Article 61 thereof:
'Any external guarantee of the Company shall be considered and passed by the
board of directors. The following matters shall be approved by the general
meeting after being considered by the board of directors:
1. Any provision of guarantee by the Company or its controlled subsidiaries
made after the total amount of external guarantees have exceeded 50% of the
latest audited net assets;
2. provision of guarantee to anyone whose liability-asset ratio exceeds 70%;
3. provision of a single guarantee, amount of which exceeds 10% of the latest
audited net assets;
4. provision of guarantee to shareholders, actual controllers and their related
parties;
5. external guarantees made by the Company within a year, amount of which
exceeds 30% of total assets of the Company;
6. other matters that shall be approved by the general meeting as stipulated by
laws and regulations and the Articles of Associations.
The matter of the aforesaid fifth sub-paragraph shall be passed by votes
representing more than two-thirds of the voting rights of the shareholders
(including their proxies) present at the general meeting.
If the directors, president, deputy presidents and other senior officers of the
Company have committed any violations of the laws, administrative regulations or
their authorities of approval and examination procedures for the external
guarantees prescribed in the Articles of Association, they shall be liable for
any losses suffered by the Company arising therefrom, and the Company may
institute legal proceedings against them by law.'
23. The following paragraph is proposed to be added to the Original Articles of
Association as Article 62 thereof:
'Matters subject to decision by general meetings as required by law,
administrative regulations and the Company's Articles of Association shall be
considered by general meetings for the purpose of protecting the right of
shareholders to decide on such matters. Where necessary and reasonable, any
matter which is relevant to matters subject to resolution but unable to be
decided immediately at a general meeting may be, with the authority granted by
the general meeting, decided by the board of directors within the scope
authorized by the general meeting.
Where the authority granted by the general meeting to the board of directors is
related to a matter subject to an ordinary resolution, such resolution shall be
passed by votes exceeding one-half (excluding one-half) of the voting rights of
the shareholders present at the general meeting (including proxies); where it is
related to a special resolution, such resolution shall be passed by a vote
representing more than two-thirds of the voting rights of the shareholders
present at the general meeting (including proxies). The substance of the
authorization shall be clear and specific.'
24. Article 58 of the Original Articles of Association will be renumbered as
Article 64 thereof.
Sub-paragraphs (2), (3) and (5) of the second paragraph thereof provide that:
'The board of directors shall convene an extraordinary general meeting within
two (2) months of the occurrence of any one of the following events:
...
(2) where the unrecovered losses of the Company amount to one-third of the total
amount of its share capital;
(3) where shareholder(s) holding 10 % or more of the Company's issued and
outstanding voting shares request(s) in writing for the convening of an
extraordinary general meeting;
...
(5) whenever two or more independent directors so request.'
These sub-paragraphs are proposed to be amended to read as follows:
'The board of directors shall convene an extraordinary general meeting within
two (2) months of the occurrence of any one of the following events:
...
(2) where the unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital;
(3) where shareholder(s) individually or jointly holding more than 10 % of the
Company's issued and outstanding voting shares (excluding a proxy/proxies)
request(s) in writing for the convening of an extraordinary general meeting;
...
(5) whenever independent directors reaching the quorum of the meeting so
request.
The number of the shares held by the shareholder(s) referred to in the preceding
sub-paragraph (3) shall be calculated as at the date on which the relevant
written request is made.'
25. Article 60 of the Original Articles of Association will be renumbered as
Article 66 thereof.
This Article provides that:
'When the Company convenes a shareholders' annual general meeting,
shareholder(s) holding 5% or more of the total voting shares of the Company
shall have the right to propose new motions in writing, and the Company shall
place such proposed motions on the agenda for such annual general meeting if
they are matters which fall within the functions and powers of shareholders in
general meetings.'
This Article is proposed to be amended to read as follows:
'If the Company convenes the shareholders' general meetings, the
supervisory committee and the shareholders who individually or jointly holding
more than 3% of shares in the Company may propose extempore motions 10 days
prior to the general meetings and submit them in writing to the board of
directors. The board of directors shall notify other shareholders of such
motions within 2 days after receiving the motions, and submit such extempore
motions to the general meetings for consideration and approval. The contents of
the extempore motions shall fall within the terms of reference of the general
meeting and have specified subjects and specific resolutions.'
26. Article 61 of the Original Articles of Association shall be renumbered as
Article 67.
Paragraph 2 of Article 61 of the Original Articles of Association is proposed to
be deleted:
Paragraph 2 of Article 61 of the Original Articles of Association provides that:
'An extraordinary general meeting shall not resolve on any matter not stated
in the notice for the meeting.'
27. The following paragraph is proposed to be added to the Original Articles of
Association as Article 68 thereof:
'Matters considered and decided by general meetings shall be subject to
confirmation in accordance with the Company Law and the Company's Articles of
Association. General meetings may decide on any matters required by the
Company's Articles of Association.
A general meeting shall not resolve on any matter not stated in the notice
convening the meeting as stipulated in Article 65 and Article 66 of the Articles
of Association.'
28. The following paragraph is proposed to be added to the Original Article of
Association as Article 69 thereof:
'Any resolution proposed at a general meeting shall be a specific resolution
in connection with matters required to be considered at the general meeting.
Such resolution at the general meeting shall meet the following conditions:
(1) The substance of the proposed resolution shall not be in contravention with
the law, administrative regulations and the Company's Articles of Association
and shall fall within the business scope of the Company and the terms of
reference of the general meeting;
(2) The subject of the proposed resolutions shall be definite with a specific
matter for resolution;
(3) The proposed resolutions shall be put forward or delivered to the board of
directors in writing.'
29. The following paragraph is proposed to be added to the Original Articles of
Association as Article 78 thereof:
'When any general meeting considers connected transactions, the connected
shareholder shall not participate in the vote and the number of voting shares
that it represents shall not be counted as part of the total number of valid
votes. The announcement of the resolution of the general meeting shall fully
disclose the votes of the non-connected shareholders. In the event that the
connected shareholder cannot abstain from voting under special circumstances,
the Company may, with the prior approval of the relevant authorities, carry out
the vote in accordance with the normal procedure and provide a detailed
explanation on the issue in the announcement of the resolution made by the
general meeting.
The aforesaid connected shareholder refers to any shareholder being a connected
person or, if not a connected person, a person who are materially interested in
the transaction to be voted or his associate as defined by the listing rules
from time to time.'
30. The following paragraph is proposed to be added to the Original Articles of
Association as Article 79 thereof:
'If a proxy attends a shareholders' general meeting on behalf of an
individual shareholder, that proxy should produce his identification
documentation and the letter of authorization signed by the shareholder
appointing the proxy. If the legal representative of a corporate shareholder
appoints a proxy to attend the meeting, that proxy should produce his
identification documentation and the letter of authorization signed by the
relevant legal representative appointing the proxy. If a corporate shareholder
appoints a proxy as is authorized by the resolution of its board of directors or
other equivalent governing body to attend the meeting on the shareholder's
behalf, the proxy should produce his identification documentation and the power
of attorney, issued by the relevant board of directors or governing body,
bearing the seal of the relevant corporation. All relevant letters of
appointment shall specify the date on which it is issued.'
31. The following paragraph is proposed to be added to the Original Articles of
Association as Article 80 thereof:
'The board of directors, independent directors and certain qualifying
shareholders (as determined under the criteria made by relevant regulatory
authorities from time to time) of the Company may canvass the Company's
shareholders for votes at shareholders' general meetings. Public canvass for
votes shall be made in accordance with regulations of relevant regulatory
authorities and the securities exchange(s) on which the Company's shares are
listed.'
32. Article 70 of the Original Articles of Association will be renumbered as
Article 81.
The second paragraph of this Article thereof provides that:
'An ordinary resolution shall be passed by votes representing more than
one-half of the voting rights represented by the shareholders (including
proxies) present at the meeting.'
This paragraph is proposed to be amended to read as follows:
'An ordinary resolution shall be passed by votes exceeding one-half
(excluding one-half) of the voting rights of the shareholders (including
proxies) present at the meeting.'
33. Article 71 of the Original Articles of Association will be renumbered as
Article 82.
This Article thereof provides that:
'A shareholder (including a proxy), when voting at a shareholders' general
meeting, may exercise such voting rights as are attached to the number of voting
shares which he represents. Each share shall have one (1) vote.
Where a shareholder is, under the applicable listing rules, required to abstain
from voting on any particular resolution or to vote only for or only against any
particular resolution, any votes cast by or on behalf of such shareholder or his
proxy in contravention of such requirement or restriction shall not be counted.'
This Article is proposed to be amended to read as follows:
'A shareholder (including a proxy), when voting at a shareholders' general
meeting, may exercise such voting rights as are attached to the number of voting
shares which he represents. Except for the accumulated voting mechanism for
electing directors as stipulated in Article 108 of the Articles of Association,
each share shall have one (1) vote.
Where a shareholder is, under the applicable listing rules as amended from time
to time, required to abstain from voting on any particular resolution or to vote
only for or restricted to only vote against any particular resolution, any votes
cast by or on behalf of such shareholder or his proxy in contravention of such
requirement or restriction shall not be counted.'
34. Article 76 of the Original Articles of Association will be renumbered as
Article 87 thereof, and a new sub-paragraph, reading as follows, is proposed to
be added thereto as sub-paragraph (5) thereof:
'The following matters shall be resolved by an ordinary resolution at a
shareholders' general meeting:
...
(5) Appointment, removal and non-reappointment of an accounting firm;
...'
35. Article 79 of the Original Articles of Association will be renumbered as
Article 90 thereof.
This Article provides that:
'Shareholders who request for the convening of an extraordinary general
meeting or a class meeting shall comply with the following procedures:
(1) Two (2) or more shareholders holding in aggregate 10 % or more of the shares
carrying the right to vote at the meeting sought to be held shall sign one (1)
or more counterpart requisitions stating the object of the meeting and requiring
the board of directors to convene a shareholders' extraordinary general
meeting or a class meeting thereof. The board of directors shall as soon as
practicable proceed to convene the extraordinary general meeting of shareholders
or a class meeting thereof after receipt of such requisition(s). The amount of
shareholdings referred to above shall be calculated as at the date of deposit of
the requisition(s).
(2) If the board of directors fails to issue a notice of such a meeting within
thirty (30) days from the date of receipt of the requisition(s), the
requisitionists may themselves convene such a meeting (in a manner as similar as
possible to the manner in which shareholders' meetings are convened by the
board of directors) within four (4) months from the date of receipt of the
requisition(s) by the board of directors.
Any reasonable expenses incurred by the requisitionists by reason of failure by
the board of directors to duly convene a meeting shall be borne by the Company
and any sum so repaid shall be set-off against sums owed by the Company to the
defaulting directors.'
This Article is proposed to be amended to read as follows:
'The supervisory committee or shareholders who request for the convening of
an extraordinary general meeting or a class meeting shall comply with the
following procedures:
(1) The supervisory committee or two (2) or more shareholders individually or
jointly holding in aggregate more than 10 % of the shares carrying the right to
vote at the meeting sought to be held shall sign one (1) or more counterpart
requisitions stating the object of the meeting and requiring the board of
directors to convene a shareholders' extraordinary general meeting or a class
meeting thereof. The board of directors shall as soon as practicable proceed to
convene the extraordinary general meeting of shareholders or a class meeting
thereof after receipt of such requisition(s). The amount of shareholdings
referred to above shall be calculated as at the date of deposit of the
requisition(s).
(2) If the board of directors fails to issue a notice of such a meeting within
thirty (30) days from the date of receipt of the requisition(s), the supervisory
committee or the requisitionists may themselves convene such a meeting (in a
manner as similar as possible to the manner in which shareholders' meetings
are convened by the board of directors) within four (4) months from the date of
receipt of the requisition(s) by the board of directors.
Any reasonable expenses incurred by the supervisory committee or the
requisitionists by reason of failure by the board of directors to duly convene a
meeting shall be borne by the Company and any sum so repaid shall be set-off
against sums owed by the Company to the defaulting directors.'
36. Article 80 of the Original Articles of Association will be renumbered as
Article 91 thereof.
This Article provides that:
'The shareholders' general meeting shall be convened and chaired by the
chairman of the board of directors. If the chairman is unable to attend the
meeting for any reason, the vice-chairman of the board of directors shall
convene and chair the meeting. If both the chairman and vice-chairman of the
board of directors are unable to attend the meeting, then the board of directors
may designate a director to convene and chair the meeting. If no chairman of the
meeting has been so designated, shareholders present shall choose one (1) person
to act as the chairman of the meeting. If for any reason, the shareholders shall
fail to elect a chairman, then the shareholder (including a proxy) holding the
largest number of shares carrying the right to vote thereat shall be the
chairman of the meeting.'
This Article is proposed to be amended to read as follows:
'The general meeting shall be convened by the board of directors, and the
chairman of the board shall preside over and act as the chairman of the
meetings. If the chairman is unable or has failed to perform his duties, the
deputy chairman shall preside over and act as the chairman of the meetings. In
the event that the deputy chairman is unable or has failed to perform his
duties, a director shall be elected by a simple majority of directors to preside
over and act as the chairman of the meetings. If the board of directors is
unable or fails to perform its duties of convening the general meeting, the
supervisory committee shall convene, preside over and act as the chairman of the
meetings in a time manner. In the event that the supervisory committee does not
convene and preside over the meeting, the shareholder(s) who individually or
jointly holds or hold more than 10% shares in the Company for over ninety (90)
days may convene or preside over such meeting at his/their own discretion,
shareholders present shall choose one (1) person to act as the chairman of the
meeting. If for any reason, the shareholders shall fail to elect a chairman,
then any shareholder (including a proxy) holding the largest number of shares
carrying the right to vote thereat shall be the chairman of the meeting.'
37. Article 81 of the Original Articles of Association will be renumbered as
Article 92 thereof.
This Article provides that:
'The chairman of the meeting shall be responsible for determining whether a
resolution has been passed. His decision, which shall be final and conclusive,
shall be announced at the meeting and recorded in the minute book.'
This Article is proposed to be amended to read as follows:
'The chairman of the meeting shall be responsible for determining whether a
resolution has been passed. His decision, which shall be final and conclusive,
shall be announced at the meeting and recorded in the minute book. The Company
shall announce the resolution of shareholders' general meetings in accordance
with applicable laws and the relevant regulations of the securities exchange(s)
on which the Company's shares are listed.'
38. Article 83 of the Original Articles of Association will be renumbered as
Article 94 thereof.
The second and third paragraph thereof provide that:
'The Company's secretary shall produce the minutes of the shareholders'
general meeting, which shall be signed by directors present at the meeting.
Resolutions adopted by a shareholders' general meeting shall be included in
the minutes of the meeting. The record and minutes of the meeting shall be in
Chinese. Such record and minutes, shareholders' attendance lists and proxy
forms shall be kept at the Company's place of residence.'
This paragraph is proposed to be amended to read as follows:
'The Company's secretary shall produce the minutes of the shareholders'
general meeting, which shall be signed by the person in charge (chairman of the
meeting) and directors present at the meeting.
Resolutions adopted by a shareholders' general meeting shall be included in
the minutes of the meeting. The record and minutes of the meeting shall be in
Chinese. Such record and minutes, shareholders' attendance lists and proxy
forms shall be permanently kept at the Company's place of residence.'
39. Article 89 of the Original Articles of Association will be renumbered as
Article 100 thereof, and the following paragraph is proposed to be added thereto
as the second paragraph thereof:
'Where a shareholder is, under the applicable listing rules as amended from
time to time, required to abstain from voting on any particular resolution of
any class meeting or to vote only for or against any particular resolution of
any class meeting, any votes cast by or on behalf of such shareholder or his
proxy in contravention of such requirement or restriction shall not be counted.'
40. Article 92 of the Original Articles of Association will be renumbered as
Article 104 thereof.
The sub-paragraph 2 of the second paragraph thereof provides that:
'where the Company's plan to issue domestic shares and overseas listed
foreign shares at the time of its establishment is carried out within fifteen
(15) months from the date of approval of the securities commission of the State
Council.'
This sub-paragraph is proposed to be amended to read as follows:
'where the Company's plan to issue domestic shares and overseas listed
foreign shares at the time of its establishment is carried out within fifteen
(15) months from the date of approval of the regulatory securities authority of
the State Council.'
41. Article 93 of the Original Articles of Association will be renumbered as
Article 105 thereof.
The first paragraph thereof provides that:
'The Company shall have a board of directors. The board of directors shall
consist of 12* directors, more than half of which shall be outside directors
(hereinafter referred to those who do not hold offices in the Company), and of
which more than three shall be independent directors (hereinafter referred to
directors who are independent from the
Company's shareholders and do not hold offices in the Company). At least one
independent director shall have appropriate professional qualification, or
expertise in accounting or related financial management.'
This paragraph is proposed to be amended to read as follows:
'The Company shall have a board of directors. The board of directors shall
consist of 12 directors, more than half of which shall be outside directors
(hereinafter referred to those who do not hold offices in the Company), and of
which more than four shall be independent directors (hereinafter referred to
directors who are independent from the Company's shareholders and do not hold
offices in the Company). At least one independent director shall have
appropriate professional qualification, or expertise in accounting or related
financial management.'
* Note: This assumes that the amendment to Articles 93 relating to the
changes in the number of directors has been approved.
42. Article 94 of the Original Articles of Association will be renumbered as
Article 106, with the first, second and seventh paragraphs thereof being
proposed to be amended, a new paragraph added thereto as the second paragraph,
and the original third and fourth paragraphs thereof deleted.
This Article has seven paragraphs:
'Directors shall be elected at the shareholders' general meeting each for
a term of three (3) years. At the expiry of a director's term, the term is
renewable upon re-election. (Note: first paragraph)
A written notice of the intention to nominate a person for election as a
director and a notice in writing by that person indicating his acceptance of
such nomination shall be given to the Company seven (7) days before the date of
such shareholders' general meeting. (Note: second paragraph)
Subject to compliance with all relevant laws and administrative regulations, the
shareholders' general meeting may by extraordinary resolution remove any
director before the expiration of his term of office. However, the director's
right to claim for damages which arises out from his removal shall not be
affected thereby. (Note: third paragraph)
The chairman and the deputy chairman shall be elected and removed by more than
one-half of all of the members of the board of directors. The term of office of
each of the chairman and the deputy chairman is three (3) years, which term is
renewable upon re-election. (Note: fourth paragraph)
The outside directors shall have sufficient time and necessary knowledge and
ability to perform their duties. When an outside director performs his duties,
the Company must provide necessary information and independent directors may
directly report to the shareholders' meeting, the securities regulatory
authority under the State Council and other relevant departments thereon. (Note:
fifth paragraph)
The executive directors shall handle matters as authorized by the board of
directors. (Note: sixth paragraph)
The Directors shall not be required to hold shares in the Company. (Note:
seventh paragraph)'
After the first, second and seventh paragraphs amended, a new paragraph added as
the second paragraph, and the original third and fourth paragraphs deleted, the
amended Article has six paragraphs:
'Directors shall be elected at the shareholders' general meeting each for
a term of three (3) years (from the election date until the date on which the
new board of directors has been elected by a general meeting). At the expiry of
a director's term, the term is renewable upon re-election, but any
independent director may not serve in this position for a consecutive period of
over six years. (Note: first paragraph, amended)
The list of director candidates shall be submitted as a motion to the
shareholders' general meeting for resolution. The candidates other than those
for independent directors shall be nominated by the board of directors, the
supervisory committee or shareholder(s) individually or jointly holding more
than 5% of the total number of the Company's shares carrying voting rights
and be elected by the shareholders' general meeting. (Note: second paragraph,
added)
A written notice of the intention to nominate a person for election as a
director and a notice in writing by that person indicating his acceptance of
such nomination shall be given to the Company seven (7) days before the date of
such shareholders' general meeting. The minimum length of the period for
submission of such notices shall be seven (7) days. (Note: third paragraph)
The outside directors shall have sufficient time and necessary knowledge and
ability to perform its duties. When an outside director performs his duties, the
Company must provide necessary information and independent directors may
directly report to the shareholders' meeting, the securities regulatory
authority of the State Council and other relevant departments thereon. (Note:
fourth paragraph)
The executive directors shall handle matters as authorized by the board of
directors. (Note: fifth paragraph)
Directors are natural persons who shall not be required to hold shares in the
Company. (Note: sixth paragraph, amended)'
43. The following paragraph is proposed to be added to the Original Articles of
Association as Article 107 thereof:
'The following procedures shall have been carried out prior to the election
of any non-independent director:
(1) The party nominating any non-independent director candidate shall have
obtained the nominee's consent prior to the nomination, and shall be fully
aware of such particulars of the nominee in terms of his occupation, academic
background, professional title, detailed work experience and all information
regarding his positions held concurrently and be responsible for providing to
the Company written materials in relation to such particulars. The candidate
shall undertake to the Company in writing that he agrees to accept the
nomination, and that the disclosed information about him is true and complete.
He shall also warrant to conscientiously perform his responsibilities as a
director upon being elected.
(2) If the nomination of a non-independent director candidate occurs before the
meeting of the board of directors, the written materials pertaining to the
particulars of the nominee described in sub-paragraph (1) of this Article shall,
if required under applicable laws, regulations and/or relevant listing rules, be
announced together with the resolution of the board of directors in accordance
with such requirements.
(3) If an extempore motion proposed for the election of any non-independent
director is put forward by shareholder(s) who, individually or jointly, hold(s)
more than 5% of the total number of shares of the Company carrying the voting
right, or by the supervisory committee, the following documents shall be
submitted to the Company sixteen (16) days before the annual general meeting:
the intent to nominate a director candidate , the written notice of the nominee
expressing his willingness to accept the nomination, and the written materials
pertaining to the particulars of the nominee and the nominee's undertakings
as mentioned in the preceding subparagraph (1) of this Article. Such notices
shall not be submitted before the day following the delivery of notice of the
relevant meeting for the election of directors and shall be submitted no later
than seven (7) days before the date of the relevant general meeting'
44. The following paragraph is proposed to be added to the Original Articles of
Association as Article 108 thereof:
'If the controlling interest of the Company's controlling shareholder
exceeds 30%, and when a vote is held at the shareholders' general meeting on
a resolution to elect a director, an accumulated voting mechanism shall be
adopted such that when more than two directors are being elected at a general
meeting of the shareholders, each of the shares held by the shareholders
participating in the vote shall carry voting rights equal in number to the
number of director candidates; a shareholder may cast all of his votes on one
candidate or may split his votes and cast them on more than one candidate.'
45. A new Article is proposed to be added to the Original Articles of
Association by re-scheduling the fourth paragraph of Article 94 thereof as
Article 109.
46. Article 95 of the Original Articles of Association will be renumbered as
Article 110 thereof, with sub-paragraph (12) of the first paragraph and the
second paragraph thereof being proposed to be amended, two new sub-paragraphs
added thereto as sub-paragraphs (8) and (9) of the first paragraph and one new
paragraph added thereto as the third paragraph.
Sub-paragraph (12) of the first paragraph and the second paragraph thereof
provide that:
'The board of directors is accountable to the shareholders in general meeting
and exercises the following functions and powers:
...
...
(12) to exercise any other powers conferred by the shareholders in general
meetings and these Articles of Associations.
Other than the board of directors' resolutions in respect of the matters
specified in sub-paragraphs (6), (7) and (11) of this Article which shall be
passed by the affirmative vote of more than two-thirds of all the directors, the
board of directors' resolutions in respect of all other matters may be passed
by the affirmative vote of a simple majority of the directors.'
Sub-paragraph (12) of the first paragraph and the second paragraph thereof are
proposed to be amended to read as follows (of which sub-paragraph (12) to be
re-numbered as sub-paragraph (14)), two new sub-paragraphs are proposed to be
added thereto as sub-paragraphs (8) and (9) thereof, and one paragraph added
thereto as the third paragraph:
'The board of directors is accountable to the shareholders in general meeting
and exercises the following functions and powers:
...
(8) to decide on other matters of external guarantee other than those requiring
approval of the shareholders' general meeting, in accordance with the
provisions of laws, administrative regulations and Articles of Associations;
(9) to decide on the general investment, risky investment, connected
transactions, charge on asset and other matters of guarantee within the
authorization by the shareholders' general meeting;
......
(14) to exercise any other powers as provided by laws, regulations or this
Articles of Association and conferred by the shareholders in general meetings.
Other than the board resolutions in respect of the matters specified in
sub-paragraphs (6), (7) and (13) of this Article and matters of external
guarantee which shall be passed by the affirmative vote of more than two-thirds
of all the directors, the board resolutions in respect of all other matters may
be passed by the affirmative vote of exceeding one-half of all of the directors.
If any director is associated with the enterprises that are involved in the
matters to be resolved by the board meetings, he shall not exercise his voting
rights for such matters, and shall not exercise voting rights on behalf of other
directors. Such board meetings shall be convened with more than half of the
directors who are not connected, and the decisions made by the board meetings
shall be passed by more than half of the directors who are not connected. The
aforesaid matters to be passed by more than two-thirds of the directors shall be
passed by votes of more than two-thirds of the directors who are not connected.
If the number of directors attending the board meetings is no less than three,
such matters shall be submitted to the Company's general meeting for
approval.......'
47. The following paragraph is proposed to be added to the Original Articles of
Association as Article 111 thereof:
'With the authorization of the board of directors, the chairman of the board
is entitled to exercise some of the functions and powers of the board of
directors while the board is not in session. The substance of the authorization
of the board of directors shall be clear and specific.'
48. Article 96 of the Original Articles of Association is proposed to be
renumbered as Article 112 thereof.
The first paragraph thereof provides that:
'The board of directors shall not, without the prior approval of shareholders
in a general meeting, dispose of or agree to dispose of any fixed assets of the
Company where the aggregate of the amount or value of the consideration for the
proposed disposal, and the amount or value of the consideration for any such
disposal of any fixed assets of the Company that has been completed in the
period of four (4) months immediately preceding the proposed disposal, exceeds
33 % of the value of the Company's fixed assets as shown in the latest
balance sheet which was tabled at a shareholders' general meeting.'
This paragraph is proposed to be amended to read as follows:
'The board of directors shall not, without the prior approval of shareholders
in a general meeting, dispose of or agree to dispose of any fixed assets of the
Company where the aggregate of the amount or value of the consideration for the
proposed disposal, and the amount or value of the consideration for any such
disposal of any fixed assets of the Company that has been completed in the
period of four (4) months immediately preceding the proposed disposal, exceeds
33 % of the value of the Company's fixed assets as shown in the latest
balance sheet which was tabled at a shareholders' general meeting. Should
there be any inconsistency between the preceding requirements and provisions of
the securities exchange on which the Company's shares are listed in respect
of the issue, the latter shall prevail.'
49. The following paragraph is proposed to be added to the Original Articles of
Association as Article 113 thereof:
'The board of directors shall be entitled to make decisions on the investment
(including risky investment) or acquisition within the authorization granted by
the general meeting, unless otherwise stated in applicable laws, regulations and
/or relevant listing rules. The board of directors, however, shall organize
experts and professionals to review any significant investment or acquisition
beyond the authorization granted by the board of directors, and submit them to
the general meeting for approval.'
50. Article 97 of the Original Articles of Association will be renumbered as
Article 113 thereof, with three new sub-paragraphs being proposed to be added
thereto as subparagraph (4), (5) and (6) of the first paragraph thereof, and the
second paragraph thereof being proposed to be amended:
The second paragraph thereof provides that:
'When the chairman is unable to exercise his powers, such powers shall be
exercised by another director who has been designated by the chairman to
exercise such powers on his behalf.'
Three new sub-paragraphs are proposed to be added thereto as sub-paragraph (4),
(5) and (6) of the first paragraph thereof, and the second paragraph is proposed
to be amended, to read as follows:
'The chairman of the board of directors shall exercise the following powers:
...
(4) to sign important documents of the board of directors and other documents
which should be signed by the legal representative of the Company;
(5) to exercise the functions and powers of the legal representative;
(6) in any emergent force majeure events such as natural disasters, to exercise
his special right of disposition in accordance with law and in the interests of
the Company, and report to the board of directors and the general meeting of the
Company thereafter;
The deputy chairman shall assist the chairman in performing his duties. If the
chairman is unable or fails to perform his duties, such duties shall be
performed by the deputy chairman; in the event that the deputy chairmen is
unable or fails to perform their duties, a director shall be elected jointly by
a simple majority of the directors to perform such duties.'
51. Article 98 of the Original Articles of Association will be renumbered as
Article 115 thereof.
The first paragraph thereof provides that:
'Meetings of the board of directors shall be held at least twice every year
and shall be convened by the chairman of the board of directors. All of the
directors should be notified of the meeting ten (10) days beforehand. Where
there is an urgent matter, an extraordinary meeting of the board of directors
may be held if it is so requested by more than one-third of the directors, the
chairman of the board of directors or the Company's president, without being
subject to the provisions of Article 99 on notice of the meetings.'
This paragraph is proposed to be divided into the first and second paragraphs
with amendments to read as follows:
'Meetings of the board of directors shall be held at least twice every year
and shall be convened by the chairman of the board of directors. All of the
directors and supervisors should be notified of the meeting fourteen (14) days
beforehand.
The chairman of the board of directors shall, without being subject to the
period of notification, convene an extraordinary meeting of the board of
directors within ten (10) days in any of the following circumstances:
(1) shareholder(s) representing more than 10% of the voting rights so
request(s);
(2) the chairman of the board of directors considers necessary;
(3) more than one-third of the directors so request jointly;
(4) more than half of independent directors so request jointly;
(5) the supervisory committee so requests;
(6) the president of the Company so requests.'
52. Article 99 of the Original Articles of Association will be renumbered as
Article 116 thereof.
The second and third paragraphs thereof provide that: 'Notice of board
meetings shall be given by the following methods: ...
(2) For meetings of the board of directors of which the time and venue have not
been decided by the board of directors beforehand, the chairman of the board of
directors shall notify the directors of the time and venue of such meeting 10
days in advance by telex, by telegram, by facsimile, by express service or by
registered mail or by hand, unless otherwise provided for in Article 98.
(3) The notice shall be written in Chinese and where necessary, may include an
English version, and shall contain the meeting agenda. Any director may waive
his right to receive notice of the board meeting.'
This paragraph is proposed to be amended to read as follows: 'Notice of board
meetings shall be given by the following methods: ...
(2) For meetings of the board of directors of which the time and venue have not
been decided by the board of directors beforehand, the chairman of the board of
directors shall notify the directors and supervisors of the time and venue of
such meeting 14 days in advance by telex, by telegram, by facsimile, by express
service or by registered mail or by hand, unless otherwise provided for in
Article 115.
(3) The notice shall be written in Chinese and where necessary, may include an
English version. Any director may waive his right to receive notice of the board
meeting.'
53. Article 101 of the Original Articles of Association will be renumbered as
Article 118 thereof.
This Article provides that:
'A board meeting shall only be convened if more than half of the board of
directors are present (including any directors appointed in writing pursuant to
Article 102 to attend the meeting as the representatives of other directors).
Each director has one vote. Any resolution requires the affirmative votes of
more than half of all the board of directors in order to be passed. In the case
of equal division of votes, the chairman of the board of directors is entitled
to a casting vote.'
This Article is proposed to be amended to read as follows:
'A board meeting shall only be convened if a majority of the board of
directors are present (including any directors appointed in writing pursuant to
Article 119 to attend the meeting as the representatives of other directors).
Each director has one vote. Any resolution requires the affirmative votes of
more than half of all the board of directors in order to be passed. In the case
of equal votes, the chairman of the board of directors is entitled to a casting
vote.'
54. Article 102 of the Original Articles of Association will be renumbered as
Article 119 thereof, with a new paragraph, reading as follows, being proposed to
be added thereto as the third paragraph thereof:
'In case a director has failed to be present in person at any two consecutive
board meetings, nor authorized another director to be present at the board
meeting on his behalf, he shall be considered unable to fulfill his
responsibilities as a director, and the board of directors shall accordingly
suggest the shareholders' general meeting making a replacement.'
55. Article 104 of the Original Articles of Association will be renumbered as
Article 121, with the first paragraph being proposed to be amended and the
second paragraph deleted.
The first paragraph thereof provides that:
'The board of directors shall keep minutes of resolutions passed at meetings
of the board of directors in Chinese. Opinions of the independent
(non-executive) directors shall be clearly stated in the resolutions of the
board of directors. The minutes of each board meeting shall be provided to all
the directors promptly. Directors who wish to amend or supplement the minutes
shall submit the proposed amendments to the chairman in writing within one week
after receipt of the meeting minutes. The minutes shall be signed by the
directors present at the meeting and the person who recorded the minutes after
they are finalised. The minutes of board meetings shall be kept at the premises
of the Company in the PRC and a complete copy of the minutes shall be promptly
sent to each director.'
This is proposed to be amended to read as follows:
'The board of directors shall keep minutes of resolutions passed at meetings
of the board of directors in Chinese. Any director present at a meeting is
entitled to request for an explanation of his comments made at the meetings to
be noted in the minutes. Opinions of the independent (non-executive) directors
shall be clearly stated in the resolutions of the board of directors. The
minutes of each board meeting shall be provided to all the directors promptly.
Directors who wish to amend or supplement the minutes shall submit the proposed
amendments to the chairman in writing within one week after receipt of the
meeting minutes. The minutes shall be signed by the directors present at the
meeting and the person who recorded the minutes after they are finalised. The
minutes of board meetings shall be permanently kept at the premises of the
Company in the PRC and a complete copy of the minutes shall be promptly sent to
each director.'
56. The following paragraph is proposed to be added to the Original Articles of
Association as Article 122 thereof:
'Any written resolution by the directors but not signed in accordance with
the statutory procedure shall have no legal effect as a resolution of the
meeting of the board of directors even if each director has expressed his
opinion by different means.
Any directors who have voted for a resolution passed at a board meeting which is
however in violation of the law, administrative regulations, the Company's
Articles of Association or any resolutions of a general meeting shall be
directly liable. If it can be proved that a director has voted against such a
resolution and that such objection was recorded in the minutes of the meeting,
such director may be released from any liability. Any director who has cast
abstention vote, or who has been absent at the meeting and has not authorized
another person to be present on his behalf at the meeting, may not be released
from such liability. Similarly, any director who has clearly expressed his
opposition during the discussion but has not voted against the relevant
resolution may not be released from liability.'
57. A new Article is added to the Original Articles of Association by
re-scheduling the third paragraph of Article 94 thereof as Article 123 thereof.
58. A new Article, reading as follows, is proposed to be added to the Original
Articles of Association as Article 124 thereof:
'A director may resign before his term of office expires. Any director who
intends to resign shall submit a written letter of resignation to the board of
directors. In addition to this, any independent director who intends to resign
shall explain the issues and circumstances related to his resignation or any
other issues or circumstances that he considers necessary to be brought to the
attention of the Company's shareholders or creditors.
If a director's resignation results in the then number of members of the
board of directors to fall below the minimum required quorum of the board of
directors, that director's resignation shall not come into effect until the
vacancy resulting from his resignation is filled by his successor. Other
directors shall convene an extraordinary shareholder's general meeting to
elect a new director therefor as soon as possible. Before such a shareholders'
general meeting makes its resolution on the election, the functions and the
powers of the relevant director who has tendered his resignation and those of
the other members of the board of directors shall be subject to reasonable
restrictions.
If an independent director's resignation results in the proportion of the
then remaining independent directors to the total number of directors in the
board being less than minimum ratio required by any relevant regulatory
authorities, that independent director's resignation shall not come into
effect until his vacancy is filled by his successor.'
59. A new Chapter of 'Independent Directors' is proposed to be added the
Original Articles of Association as Chapter XI thereof, which comprises Articles
125 to 131 being proposed to read as follows:
Article 125 An independent director candidate of the Company shall be nominated
by the board of directors, the supervisory committee, or shareholder(s)
individually or jointly holding more than 1% of the total number of shares
carrying the right to vote, and shall be elected by a shareholders' general
meeting of the Company.
(1) The party nominating any independent director candidate shall have obtained
the nominee's consent prior to the nomination, and shall be fully aware of
such particulars of the nominee in terms of his occupation, academic background,
professional title, detailed work experience and all information regarding his
positions held concurrently and be responsible for providing to the Company
written materials in relation to such particulars. The candidate shall undertake
to the Company in writing that he agrees to accept the nomination, and that the
disclosed information about him is true and complete. He shall also warrant to
conscientiously perform his responsibilities as a director upon being elected.
(2) The party nominating any independent director shall give his opinions as to
the nominee's qualification and independency as an independent director. If
required under any applicable laws, regulations and/or the applicable listing
rules, the nominee shall make a public announcement in accordance with such
requirements stating that there exists no relationship between the Company and
him that affects his independent and objective judgment.
(3) If the nomination of an independent director candidate occurs before the
meeting of the board of directors, the written materials pertaining to the
particulars of the nominee described in paragraphs (1) and (2) of this Article
shall, if required under applicable laws, regulations and/or relevant listing
rules, be announced together with the resolution of the board of directors in
accordance with such requirements.
(4) If an extempore motion proposed at a general meeting for the election of any
independent director is put forward by shareholder(s) who, individually or
jointly, hold(s) more than 5% of the total number of shares of the Company
carrying the voting right, or by the supervisory committee, the following
documents shall be submitted to the Company sixteen (16) days before the annual
general meeting: the intent to nominate a director candidate , the written
notice of the nominee expressing his willingness to accept the nomination, and
the written materials pertaining to the particulars of the nominee and the
nominee's undertakings as mentioned in the preceding paragraphs (1) and (2)
of this Article.
(5) Before the shareholders' general meeting for the election of the
independent director, if required under any applicable laws, regulations and/or
the relevant listing rules, the Company shall submit the relevant materials
concerning the
nominee to the securities regulatory authority of the State Council, relevant
local official agencies of the securities regulatory authority of the State
Council in the area in which the Company is located, and the stock exchange(s)
and relevant regulatory authorities on which the Company's shares are listed.
If the board of directors disputes the particulars pertaining to the nominee, it
shall also submit its written opinions to the relevant authorities. If the
securities regulatory authority of the State Council objects to a nominee, such
person may not be an independent director candidate. When the shareholders'
general meeting is convened for the election of the independent director, the
board of directors of the Company shall explain whether the securities
regulatory authority of the State Council objects to the relevant nominee.
Article 126 The independent director shall meet the following basic
requirements:
(1) He shall be qualified to take the position of a director in accordance with
the law, administrative regulations and other relevant requirements;
(2) He shall be independent as is required by applicable laws, administrative
regulations, departmental provisions and the relevant listing rules;
(3) He shall have basic knowledge of the operation of a listed company, and is
familiar with relevant laws, administrative regulations, provisions and rules
(including but not limited to accounting principles);
(4) He shall have more than five (5) years' legal or economic working
experience or other working experience necessary for the discharge of the duties
of an independent director;
(5) He shall meet other conditions provided for under the Company's Articles
of Association.
Article 127 The independent director shall be independent. Unless otherwise
provided for under applicable laws, regulations and/or the relevant listing
rules, the following persons shall not be the Company's independent
directors:
(1) Staff of the Company or its subsidiaries, their lineal relatives or persons
who have a significant social relationship with any of them (lineal relatives
referring to persons being spouse, parents and children; and significant social
relationship being relationship of brothers and sisters, parents-in-law,
children-in-law, spouse of brothers and sisters, and the spouse's brothers
and sisters);
(2) Any natural person who directly or indirectly holds more than 1% of the
Company's shares in issue, or any natural person shareholder who is among the
ten largest shareholders of the Company, and his lineal relatives;
(3) Any employee of any corporate shareholder that directly or indirectly holds
more than 5% of the Company's shares in issue, or any employee of any of the
five largest corporate shareholders of the Company, and his lineal relatives;
(4) Any person who was a person mentioned in any of the aforesaid three
categories during the last one year;
(5) Any person who provides financial, legal or advisory services to the Company
or to its subsidiaries;
(6) Any person who has been determined as being improper to serve as an
independent director by the securities regulatory authority of the State
Council.
Article 128 The board of directors shall propose to the shareholders' general
meeting to dismiss or replace the independent director who has not been present
in person for three times consecutively at board meetings. Except for the
persons mentioned above and those stipulated under the Company Law as being
improper to serve as an independent director, the independent director shall not
be dismissed until the expiry of his term of office without reason. The Company
shall disclose the early dismissal as a matter of special disclosure item, while
the independent director concerned who believes that his dismissal has been
unreasonably made may make a public announcement.
Article 129 In addition to the functions and powers stipulated by the Company
Law, other relevant laws, administrative regulations and regulations and the
Articles of Association, the independent directors shall have the following
specific functions and powers:
(1) In respect of major connected transactions (as determined by the criteria
announced by the competent regulatory authority from time to time) that shall be
considered at the shareholders' general meeting as required by the law,
regulations and applicable listing rules, and in respect of appointment and
removal of the Company's accounting firm (if required under applicable laws,
regulations and/or applicable listing rules), the relevant requirements shall be
observed; and if more than half of the independent directors approve the
relevant matters, it shall be put forward to the board of directors for review.
The resolution of the board of directors in respect of the Company's
connected transactions shall not become effective until each independent
director has signed for the resolution. Before any independent director arrives
at his decision, he may employ agency firms to provide an independent financial
report as the basis of his decision;
(2) Independent directors shall propose to the board of directors in respect of
proposals to retain or dismiss an accounting firm;
(3) Independent directors may request the board of directors to convene
extraordinary shareholders' general meetings;
(4) Independent directors shall propose to convene board meetings;
(5) Independent directors shall appoint external auditors and consulting
advisors;
(6) Independent directors may publicly canvass for votes from shareholders prior
to shareholders' general meetings;
(7) Independent directors may directly report to the shareholders' general
meeting, the securities regulatory authority of the State Council, and other
relevant authorities.
Independent directors shall obtain the consent from more than half of the total
number of independent directors in the exercise of their functions and powers
provided for under sub-paragraphs (2), (3), (4), (6) and (7) of this Article,
and from all of the independent directors in the exercise of their functions and
powers provided for under sub-paragraph (5) of this Article.
Article 130 In addition to exercising the above-mentioned functions and powers,
the independent directors shall provide independent opinions to the board of
directors or the shareholders' general meetings concerning the following
issues:
(1) Nomination, appointment and dismissal of directors;
(2) Appointment or dismissal of any member of the Company's senior
management;
(3) Remuneration of directors and members of the Company's senior management;
(4) Issues that the independent directors consider possible to impair on the
rights and interests of minority shareholders;
(5) Important capital transfers between the Company and the shareholders or
between the Company and its connected enterprises;
(6) Distribution plans of the cash profits that the board of directors has not
made;
(7) Other issues regulated by applicable laws, regulations and the Articles of
Association.
Each of the independent directors shall provide his comments on the above issues
by way of: either agreeing to the relevant proposal; reserving his opinion with
reasons; objecting to the relevant proposal with reasons; or expressing his view
as not being able to provide his comments and his difficulties thereof.
Article 131 The independent directors shall submit their annual report of the
work undertaken to the shareholders' general meeting of the Company
accounting for their performance of duties.'
60. Article 105 of the Original Articles of Association shall be renumbered as
Article 132.
Sub-paragraph 3 of the second paragraph of the Original Articles of Association
provide that:
'The Strategy and Investment Committee shall be accountable to the board of
directors and exercise the following functions:
...
(3) determine the establishment, merger and demerger of the subsidiaries of the
Company; ...' This paragraph is proposed to be amended to read as follows:
'The Strategy and Investment Committee shall be accountable to the board of
directors and exercise the following functions:
...
(3) determine the establishment, merger and demerger of the material
subsidiaries of the Company;
...'
61. Article 109 of the Original Articles of Association will be renumbered as
Article 136 thereof.
Sub-paragraph (10) of the second paragraph thereof provides that: 'The main
responsibilities of the secretary of the board of directors include: ...
(10) to exercise other powers and duties authorized by the board of directors
and other powers and duties required in the overseas listing jurisdiction.'
This sub-paragraph is proposed to be amended to read as follows: 'The main
responsibilities of the secretary of the board of directors include: ...
(10) to exercise other powers and duties authorized by the board of directors
and other powers and duties required under the law of jurisdiction in which the
Company's shares are listed or relevant provisions of the securities exchange
located therein.'
62. Article 110 of the Original Articles of Association will be renumbered as
Article 137 thereof.
This Article provides that:
'A director or other senior officer of the Company may also act as the
secretary of the board of directors. The certified public accounting firm which
has been appointed by the Company to act as its auditors shall not act as the
secretary of the board of directors.'
This is proposed to be amended to read as follows:
'A director or other senior officer of the Company (excluding the president
and financial controller) may also act as the secretary of the board of
directors. The certified public accounting firm which has been appointed by the
Company to act as its auditors shall not act as the secretary of the board of
directors.'
63. Article 112 of the Original Articles of Association will be renumbered as
Article 139, with a new paragraph, reading as follows, being proposed to be
added thereto as the third paragraph thereof:
'A director may also act as the president, deputy president or other senior
officer. However, directors who do so shall not exceed half of the total number
of directors.'
64. The following paragraph is proposed to be added to the Original Articles of
Association as Article 140 thereof:
'The term of office of the president shall be three years and renewable upon
re-election.'
65. Article 113 of the Original Articles of Association will be renumbered as
Article 141 thereof, with two new sub-paragraphs, reading as follows, being
proposed to be added thereto as sub-paragraphs (10) and (11) thereof:
'The president shall be accountable to the board of directors and shall
exercise the following functions and powers:
...
(10) to propose the salary, welfare, awards and punishment for the staff of the
Company and to make decision on employment or dismissal of the staff of the
Company; and
(11) to propose to convene extraordinary meetings of the board of directors;
...'
66. The following paragraph is proposed to be added to the Original Articles of
Association as Article 142 thereof:
'The president shall report to the board of directors, or report at the
request of the supervisory committee, the signing, execution, capital operation
and profit and loss of the Company's major contracts. The president shall
ensure the authenticity of the report.'
67. The following paragraph is proposed to be added to the Original Articles of
Association as Article 143 thereof:
'The president shall in advance consult the employees before making decisions
on issues related to their own interests such as salary, welfare, production
safety and work, labor insurance and termination of appointment (or dismissal).'
68. Article 117 of the Original Articles of Association will be renumbered as
Article 147.
The first paragraph thereof provides that:
'The supervisory committee shall comprise five (5) supervisors including
outside supervisors (hereinafter meaning supervisors who do not hold office in
the Company) who shall constitute more than half of the supervisory committee.
The supervisory committee shall have one (1) chairman. Each supervisor shall
serve for a term of three (3) years, which term is renewable upon re-election
and re-appointment.'
This is proposed to be amended to read as follows:
'The supervisory committee shall compose of five (5) supervisors including
outside supervisors (hereinafter meaning supervisors who do not hold office in
the Company) who shall constitute more than half of the supervisory committee.
The number of supervisors who are employee representatives shall constitute no
less than one-third of the members of the supervisory committee. The supervisory
committee shall have one (1) chairman. Each supervisor shall serve for a term of
three (3) years, which term is renewable upon re-election and re-appointment.'
69. The Article 118 of the Original Articles of Association will be renumbered
as Article 148.
The first paragraph thereof provides that:
'The supervisory committee shall include four (4) supervisors who shall
represent the shareholders (hereinafter including qualified outside supervisors)
and one (1) supervisor who shall represent the employees. Supervisors who
represent the shareholders shall be elected or removed by the shareholders in
general meetings, and the supervisor who represents employees shall be elected
or removed by the employees democratically.'
This paragraph is proposed to be amended to read as follows:
'The supervisory committee shall include three (3) supervisors who shall
represent the shareholders (all of which are outside supervisors) and two (2)
supervisors who shall represent the employees. Supervisors who represent the
shareholders shall be elected or removed by the shareholders in general
meetings, and the supervisor who represents employees shall be elected or
removed by the employees democratically.'
70. The following paragraph is proposed to be added to the Original Articles of
Association as Article 149 thereof:
'The list of supervisor candidates representing the shareholders shall be
submitted as a motion to the shareholders' general meeting for resolution.
Such supervisor candidates shall be nominated by the board of directors, the
supervisory committee and the shareholder(s) individually or jointly holding
more than 5% of the total number of shares of the Company carrying voting
rights. The election and removal of such supervisors shall be determined at the
shareholders' general meeting of the Company.'
71. Article 120 of the Original Articles of Association will be renumbered as
Article 151 thereof.
This Article provides that:
'Meetings of the supervisory committee shall be held at least once every
year, and shall be convened by the chairman of the supervisory committee.'
This is proposed to be amended to read as follows:
'Meetings of the supervisory committee shall be held at least once every six
months, and shall be convened and chaired by the chairman of the supervisory
committee. If the chairman of the supervisory committee is unable or has failed
to perform his duties, a supervisor shall be elected by a simple majority of
supervisors to convene and chair meetings of the supervisory committee. Notices
convening meetings of the supervisory committee shall be delivered to all
supervisors no less than 10 days before the meeting is convened.'
72. The following paragraph is proposed to be added to the Original Articles of
Association as Article 152 thereof:
'If any supervisor fails to attend meetings of the supervisory committee in
person twice consecutively, nor appoints another supervisors to be present on
his behalf, he shall be deemed incapable of performing his responsibilities and
the shareholders' general meeting or the employee representatives' meeting
shall remove that supervisor.'
73. The following paragraph is proposed to be added to the Original Articles of
Association as Article 153 thereof:
'If supervisors have not been re-elected in time when the terms of service of
the current supervisors have expired, or any supervisor's resignation before
his term of service expires causes the number of supervisors to be less than the
required quorum, the supervisors whose terms have just expired shall continue to
perform their duties in accordance with the provisions of the laws,
administrative regulations and articles of association until the vacancy has
been filled by another elected supervisor.'
74. Article 121 of the Original Articles of Association will be renumbered as
Article 154.
(1) Sub-paragraph (7) of the first paragraph thereof is proposed to be
re-scheduled as sub-paragraph (9) and amended, with two new sub-paragraphs (5)
and (7) to be added thereto.
The first paragraph thereof provides that:
'The supervisory committee shall be accountable to the shareholders in a
general meeting and shall exercise the following functions and powers in
accordance with law:
...
(7) other functions and powers specified in the Articles of Association.'
This paragraph is proposed to be amended to read as follows:
'The supervisory committee shall be accountable to the shareholders in a
general meeting and shall exercise the following functions and powers in
accordance with law:
...
(5) to propose an extempore motion at the general meeting;
...
(7) to propose to convene an extraordinary board meeting;
...
(9) other functions and powers specified in the law, administrative regulations
and the Articles of Association and provided by the shareholders' general
meeting.'
(2) The second paragraph thereof provides that:
'The supervisory committee may make recommendations on the appointment of
accounting firm by the Company, may appoint another accounting firm in the name
of the Company when necessary to examine financial affairs of the Company
independently, and may directly report relevant information to the securities
authorities of the State Council and other relevant authorities.'
This paragraph is proposed to be amended to read as follows:
'The supervisory committee may make recommendations on the appointment of
accounting firm by the Company, may appoint another accounting firm in the name
of the Company when necessary to examine financial affairs of the Company
independently, and may directly report relevant information to the securities
regulatory authority of the State Council and other relevant authorities.'
75. The following paragraph is proposed to be added as Article 155 of the
Articles of Association:
'The supervisory committee may request for the directors, president, deputy
president and other senior officers, internal and external accounting officers
to attend meetings of the supervisory committee and answer to the questions
raised by the supervisory committee.'
76. The following paragraph is proposed to be added as Article 157 of the
Articles of Association:
'The supervisory committee shall produce minutes in respect of resolutions of
the meetings, and the supervisors and recorder(s) attending the meetings shall
sign the minutes. Each supervisor shall be entitled to request for an
explanation of his comments made at the meetings to be noted in the minutes.
Such minutes shall be kept well and permanently as important records of the
Company.'
77. Article 125 of the Original Articles of Association will be renumbered as
Article 160.
(1) Sub-paragraphs (3) of the first paragraph of this Article is proposed to be
amended and a new sub-paragraphs is proposed to be added thereto as
sub-paragraph (11) of the first paragraph thereof.
Sub-paragraphs (3) of the first paragraph of this Article provides that:
'A person may not serve as a director, supervisor, president, deputy
president or any other senior officer of the Company if any of the following
circumstances apply:
...
(3) a person who is a former director, factory manager or manager of a company
or enterprise which has been dissolved or put into liquidation as a result of
mismanagement and who was personally liable for the winding up of such company
or enterprise, where less than three (3) years have elapsed since the date of
completion of the insolvent liquidation of the company or enterprise;
...'
Sub-paragraph (3) of the first paragraph of this Article is proposed to be
amended and a new sub-paragraphs is proposed to be added thereto as
sub-paragraphs (11) of the first paragraph thereof:
'A person may not serve as a director, supervisor, president, deputy
president or any other senior officer of the Company if any of the following
circumstances apply:
...
(3) a person who is a former director, factory manager or manager of a company
or enterprise which has been dissolved or put into liquidation and who was
personally liable for the winding up of such company or enterprise, where less
than three (3) years have elapsed since the date of completion of the insolvent
liquidation of the company or enterprise;
...
(11) a person who has been prohibited from entering the market by the securities
regulatory authority of the State Council, where such prohibition has not been
removed.'
(2) The following paragraph is proposed to be added thereto as the second
paragraph thereof:
'In case any of the above circumstances occurs in respect of any director in
service, the board of directors shall terminate all functions and powers of that
director on the date on which the circumstance has become known to it and shall
suggest the shareholders' general meeting to remove that director. In case
any of the above circumstances occurs to the president in service, the board of
directors shall terminate all functions and powers of the president on the date
on which the circumstance has become known to it and shall convene a board
meeting to remove that president. In case any of the above circumstances occurs
to any supervisor in service, the supervisory committee shall terminate all the
functions and powers of that supervisor on the date on which the circumstance
has become known to it and shall suggest the shareholders' general meeting or
employee representatives' meeting to remove that supervisor.'
78. The following paragraph is proposed to be added to the Original Articles of
Association as Article 161 thereof:
'Unless otherwise stipulated under the Articles of Association or legally
authorized by the board of directors, any director shall not act on behalf of
the Company or the board of directors in his own name. When a director acts in
his own name, a third party could reasonably believe that he is acting on behalf
of the Company or the board of directors. Thus he shall first declare his
position and status.'
79. Article 128 of the Original Articles of Association will be renumbered as
Article 164.
This Article provides that:
'Each of the Company's directors, supervisors, president and other senior
officers owes a duty, in the exercise of his powers and in the discharge of his
duties, to exercise the care, diligence and skill that a reasonable and prudent
person would exercise in similar circumstances.'
This Article is proposed to be amended to read as follows:
'Each of the Company's directors, supervisors, president, deputy president
and other senior officers owes a duty, in the exercise of his powers and in the
discharge of his duties, to exercise the care, diligence and skill that a
reasonable and prudent person would exercise in similar circumstances, including
but not limited to such criteria and guidelines providing for the professional
ethics of the Company's staff as prescribed by the Company.'
80. Article 129 of the Original Articles of Association will be renumbered as
Article 165.
Paragraph (11) thereof provides that:
'not to misappropriate the Company's funds nor to lend such funds to any
person, not to use the Company's assets to set up deposit accounts in his own
name or in any name nor to use such assets to guarantee the debts of a
shareholder of the Company or any other personal liabilities;'
This paragraph is proposed to be amended to read as follows:
'not to misappropriate the Company's funds, not to use the Company's
assets to set up deposit accounts in his own name or in any other name nor to
lend the Company's funds to any person, nor use the Company's assets to
provide any guarantee for any person without prior consent of the general
meeting when aware of this matter;'
81. The following paragraph is proposed to be added to the Original Articles of
Association as Article 166 thereof:
'When the general meeting requires the directors, supervisors, president,
deputy presidents and other senior officers to attend the meeting, the
directors, supervisors, president, deputy presidents and other senior officers
shall so attend and answer shareholders' questions.
The directors, president, deputy presidents and other senior officers shall
provide the supervisory committee of true and relevant information and shall not
hamper the supervisory committee's performance of duties.'
82. Article 131 of the Original Articles of Association will be renumbered as
Article 168.
This Article provides that:
'The fiduciary duties of the directors, supervisors, president and other
senior officers of the Company do not necessarily cease upon termination of
their term of office. The duty of confidentiality in respect of trade secrets of
the Company survives the termination of their term of office. Other duties may
continue for such period as the principle of fairness may require depending on
the amount of time which has lapsed between the termination and the act
concerned and the circumstances and the terms under which the relationship
between the relevant director, supervisor, president and other senior officer on
the one hand and the Company on the other hand was terminated.'
This Article is proposed to be amended to read as follows:
'The fiduciary duties of the directors, supervisors, president, vice
president and other senior officers of the Company do not necessarily cease when
they resign or upon the termination of their term of office. Such officers shall
continue to observe their respective fiduciary duties at any time before the
resignation or expiry of term of office, as the case may be, becomes effective
and for a reasonable period thereafter. The duty of confidentiality in respect
of trade secrets of the Company survives the termination of their term of office
until such secrets become publicly known. Other duties may continue for such
period as the principle of fairness may require depending on the amount of time
which has lapsed between the termination and the act concerned and the
circumstances and the terms under which the relationship between the relevant
director, supervisor, president and other senior officer on the one hand and the
Company on the other hand was terminated.'
83. The following paragraph is proposed to be added to the Original Articles of
Association as Article 169 thereof:
'Any director, supervisor, president, deputy president or other senior
officer of the Company who has left his office without authorization before his
term of office expires and thereby caused the Company to incur a loss shall be
liable to the Company for compensation.'
84. Article 133 of the Original Articles of Association will be renumbered as
Article 171.
The second paragraph thereof provides that:
'Subject to the exceptions provided by these Articles of Association, a
director shall not vote at the relevant meeting of the board of directors in
respect of any contract, transaction or arrangement in which he, or his
associates (as defined by the applicable listing rules), are materially
interested and he shall not be counted as part of the quorum of such meeting.'
This paragraph is proposed to be amended to read as follows:
'Subject to the exceptions provided by these Articles of Association, a
director shall not vote at the relevant meeting of the board of directors in
respect of any contract, transaction or arrangement in which he, or his
associates (as defined by the applicable listing rules which may be revised from
time to time), are materially interested and he shall not be counted as part of
the quorum of such meeting.'
85. The following paragraph is proposed to be added to the Original Articles of
Association as Article 178 thereof:
'Subject to the approval of the shareholders' general meeting, the Company
may purchase liability insurance for its directors, supervisors, president,
deputy president and other senior officers, except for liabilities arising from
the violation of laws, administrative regulations or the Articles of Association
of the Company.'
86. Chapter XVI of the Original Articles of Association will be renumbered as
Chapter XVII thereof, with its title being proposed to be changed from
'Financial and Accounting System and Profit Distribution' to 'Financial
Accounting System, Profit Distribution and Auditing'.
87. Article 144 of the Original Articles of Association will be renumbered as
Article 183.
The third paragraph thereof provides that:
'At the end of each fiscal year, the Company shall prepare a financial report
which shall be audited and verified in a manner prescribed by law.'
This paragraph is proposed to be amended to read as follows:
'At the end of each fiscal year, the Company shall prepare a financial report
which shall be audited and verified by an accounting firm in a manner prescribed
by law.'
88. Article 149 of the Original Articles of Association will be renumbered as
Article 188.
This Article provides that:
'The Company shall publish its financial reports twice every fiscal year,
that is, the interim financial report shall be published within sixty (60) days
after the expiration of the first six (6) months of each fiscal year; the annual
financial report shall be published within one hundred and twenty (120) days
after the expiration of each fiscal year.'
This Article is proposed to be amended to read as follows:
'The Company shall publish its financial reports four times every fiscal
year, that is, the first quarterly financial report shall be published within
thirty (30) days after the expiration of the first three (3) months of each
fiscal year; the interim financial report shall be published within sixty (60)
days after the expiration of the first six (6) months of each fiscal year; the
third quarterly financial report shall be published within thirty (30) days
after the expiration of the first nine (9) months of each fiscal year; the
annual financial report shall be published within one hundred and twenty (120)
days after the expiration of each fiscal year.'
89. The following paragraph is proposed to be added to the Original Articles of
Association as Article 189 thereof:
'The Company's annual financial report and interim report for any mid-year
profit distribution should include the following:
(1) Balance sheet;
(2) Income statement;
(3) Statement of profit distribution; (4) Cash flow statement; (5) Notes to
financial statements.
If the Company does not make a mid-year profit distribution, the interim report
shall include the above-mentioned financial statements and notes except that set
out in the preceding sub-paragraph (3).'
90. The following paragraph is proposed to be added to the Original Articles of
Association as Article 191 thereof:
'The Company shall adopt initiative methods of profit distribution and pay
attention to investors' reasonable investment return.
The Company's board of directors shall announce in the periodical report the
reasons if no plan of cash profit distribution is made and the independent
directors shall give independent opinions.
If the shareholder improperly appropriates the Company's capital, the Company
should deduct the cash bonus distributed to the shareholder so as to reimburse
the appropriated capital.'
91. Article 151 of the Original Articles of Association will be renumbered as
Article 192.
This Article provides that:
'When distributing its after-tax profits in a given year, the Company shall
contribute 10% of the profits to the Company's statutory common reserve fund
and 5% to 10% to the Company's statutory common welfare fund. Where the
accumulated amount of the statutory common reserve fund reaches 50% or more of
the registered capital of the Company, no further contribution is required.
Where the statutory common reserve fund is insufficient to make up for the
losses of the Company in the previous year, before making contribution to the
statutory common reserve fund and the statutory common welfare fund, the profits
made in the current year shall be used to make up for the losses first.
After making contribution to the statutory common reserve fund from its
after-tax profits, the Company may, subject to resolutions adopted at a general
meeting, make contributions to discretionary common reserve funds.
After making up for the losses and making contributions to the common reserve
fund and the statutory common welfare fund, any remaining profits shall be
distributed to the shareholders in proportion to their respective shareholdings.
'
This Article is proposed to be amended to read as follows:
'When distributing its after-tax profits in a given year, the Company shall
contribute 10% of the profits, based on the net profits of the Company
calculated in accordance with the accounting principles adopted in the People's
Republic of China, to the Company's statutory common reserve fund. Where
the accumulated amount of the statutory common reserve fund reaches 50% or more
of the registered capital of the Company, no further contribution is required.
Where the statutory common reserve fund is insufficient to make up for the
losses of the Company in the previous years, before making contribution to the
statutory common reserve fund, the profits made in the current year shall be
used to make up for the losses first.
After making contribution to the statutory common reserve fund from its
after-tax profits, the Company may, subject to resolutions adopted at a general
meeting, make contributions from its after-tax profits to discretionary common
reserve funds.
After making up for the losses and making contributions to the common reserve
fund, any remaining profits shall be distributed to the shareholders in
proportion to their respective shareholdings. Such profit distribution shall not
be applied to shares held by the Company.'
92. Article 154 of the Original Articles of Association will be renumbered as
Article 195.
This Article provides that:
'The common reserve funds (including the statutory common reserve fund,
discretionary common reserve fund and capital surplus fund) of the Company shall
only be applied to make up for losses, expanding the Company's production and
operation or capitalization.
If a general meeting of the Company resolves to capitalize any common reserve
fund, the Company shall issue new shares to the existing shares in proportion to
their respective shareholdings or increase the par value of each share provided
that when capitalizing the statutory common reserve fund, the balance of such
fund shall not be less than 25% of the registered capital.'
This Article is proposed to be amended to read as follows:
'The common reserve funds (including the statutory common reserve fund,
discretionary common reserve fund and capital surplus fund) of the Company shall
only be applied to make up for losses, expanding the Company's production and
operation or capitalization. However, the capital surplus fund may not be
applied for making up for losses.
When capitalizing the statutory common reserve fund, the balance of such fund
shall not be less than 25% of the registered capital before the capitalization.'
93. The following paragraph is proposed to be added to the Original Articles of
Association as Article 197 thereof:
'The Company's board of directors must complete the distribution of
dividends (in cash or in kind in the form of shares) within two months after the
shareholders' meeting resolution approving the relevant profit distribution
proposal.'
94. The following paragraph is proposed to be added to the Original Articles of
Association as Article 204 thereof:
'The Company shall implement an internal audit system and appoint full time
auditors to carry out internal auditing and supervision of the Company's
financial income and expenses and economic activities.'
95. The following paragraph is proposed to be added to the Original Articles of
Association as Article 205 thereof:
'The Company's internal auditing system and the responsibilities of the
auditing personnel should be carried out after obtaining approval by the board
of directors. The auditor-in-chief shall be accountable and respond to the board
of directors.'
96. Article 162 of the Original Articles of Association will be renumbered as
Article 206.
The first paragraph thereof provides that:
'The Company shall appoint an independent firm of accountants which is
qualified under the relevant regulations of the State to audit the Company's
annual report and review the Company's other financial reports.'
This paragraph is proposed to be amended to read as follows:
'The Company should appoint an independent accounting firm which complies
with the relevant requirements of the People's Republic of China to audit its
annual accounts, review its other financial reports, carry out net asset
verifications and provide other related consulting services.'
97. Article 163 of the Original Articles of Association will be renumbered as
Article 207.
This Article provides that:
'The accounting firm appointed by the Company shall hold office from the
conclusion of the annual general meeting of shareholders at which they were
appointed until the conclusion of the next annual general meeting of
shareholders.'
This Article is proposed to be amended to read as follows:
'The term of office of an accounting firm appointed by the Company shall be
one year, commencing from the conclusion of the annual general meeting and
expires at the conclusion of the next annual general meeting. At the expiry of
such term, the relevant accounting firm may be re-appointed.'
98. Article 168 of the Original Articles of Association will be renumbered as
Article 212:
The first paragraph thereof provides that:
'The Company's appointment, removal or non-reappointment of an accounting
firm shall be resolved by the shareholders in a general meeting. Such resolution
shall be filed with the securities authority of the State Council.'
This paragraph is proposed to be amended to read as follows:
'Decisions to appoint, remove or not to renew the services of an accounting
firm shall be made by the shareholders in general meetings and shall, if
required under applicable laws and regulations and/or relevant listing rules and
in accordance with such requirements, be disclosed in the relevant newspapers.
When necessary, the reason for the change shall be stated. Further, any such
decision shall be filed with the securities regulatory authority of the State
Council and the Institute of Certified Public Accountants of the People's
Republic of China'
99. Article 169 of the Original Articles of Association will be renumbered as
Article 213.
The first paragraph thereof provides that:
'Prior notice should be given to the accounting firm if the Company decides
to remove such accounting firm or not to renew the appointment thereof. Such
accounting firm shall be entitled to make representations at the shareholders'
general meeting. Where the accounting firm resigns from its position, it
shall make clear to the shareholders in a general meeting whether there has been
any impropriety on the part of the Company.'
This paragraph is proposed to be amended to read as follows:
'If the Company dismisses or does not continue with the re-appointment of its
accounting firm, it should advice the accounting firm ten days in advance, and
the accounting firm
shall have the right to present its views at the shareholders' general
meeting. When the accounting firm considers that the grounds on which the
Company decided to dismiss its service or not to renew its appointment are
unjustified, it may file a complaint with the securities regulatory authority of
the State Council and the Institute of Chartered Public Accountants of the
People's Republic of China. If an accounting firm resigns, it shall be under
an obligation to inform the shareholders in general meetings as to whether or
not there is any impropriety with the Company's affairs.'
100. Article 170 of the Original Articles of Association will be renumbered as
Article 214. The first paragraph thereof is proposed to be amended and two new
paragraphs are proposed to be added as the second and third paragraphs thereof.
The first paragraph thereof provides that:
'In the event of the merger or demerger of the Company, a plan shall be
presented by the Company's board of directors and shall be approved in
accordance with the procedures stipulated in the Articles of Association. The
Company shall then go through the relevant approval process. A shareholder who
objects to the plan of merger or demerger shall have the right to demand the
Company or the shareholders who consent to the plan of merger or demerger to
acquire such dissenting shareholders' shareholding at a fair price.'
The first paragraph is proposed to be amended and two new paragraphs are
proposed to be added as the second and third paragraphs thereof as follows:
'The Company shall be merged or divided in accordance with the law. The
merger or division of the Company shall be carried out in accordance with the
following procedures:
(1) The board of directors proposes an agenda for the merger or division of the
Company;
(2) The shareholders in general meetings shall pass a resolution in accordance
with the provisions under the Articles of Association;
(3) The relevant parties shall enter into an agreement for the merger or
division;
(4) The relevant examination and approval procedures shall be carried out in
accordance with the law;
(5) The various merger or division matters, such as creditors' rights and
debts and the disposal of claims, etc., shall be carried out;
(6) The registration of dissolution or registration of the change shall be
carried out.
When the Company is merged or divided, the board of directors shall take
necessary measures to safeguard the legitimate rights and interests of the
shareholders who oppose the Company's merger or division proposal.
Shareholders who oppose the Company's merger or division proposal are
entitled to require the Company or the shareholders who agree to the Company's
merger or division proposal to purchase their shares at a fair price.'
101. Article 171 of the Original Articles of Association will be renumbered as
Article 215.
The second paragraph thereof provides that:
'In the event of the Company's merger, the merging parties shall execute a
merger agreement and prepare a balance sheet and an inventory of properties. The
Company shall notify its creditors within 10 days from the date of the Company's
merger resolution and shall publish a public notice in a newspaper at least
3 times within 30 days of the date of such resolution.'
The paragraph is proposed to be amended to read as follows:
'In the event of the Company's merger, the merging parties shall execute a
merger agreement and prepare a balance sheet and an inventory of properties. The
Company shall notify its creditors within 10 days from the date of the Company's
merger resolution and shall publish a public notice in a newspaper within
30 days of the date of such resolution.'
102. Article 172 of the Original Articles of Association will be renumbered as
Article 216.
The second and third paragraphs thereof provide that:
'In the event of demerger of the Company, the parties to such demerger shall
enter into a demerger agreement and prepare a balance sheet and an inventory of
properties. The Company shall notify its creditors within ten (10) days of the
date of the Company's demerger resolution and shall publish a public notice
in a newspaper at least three (3) times within thirty (30) days of the date of
the Company's demerger resolution.
Debts of the Company prior to demerger shall be assumed by the companies arising
from the demerger in accordance with the agreement of the parties.'
The paragraphs are proposed to be amended to read as follows:
'In the event of demerger of the Company, the parties to such demerger shall
enter into a demerger agreement and prepare a balance sheet and an inventory of
properties. The Company shall notify its creditors within ten (10) days of the
date of the Company's demerger resolution and shall publish a public notice
in a newspaper within thirty (30) days of the date of the Company's demerger
resolution.
The debts of the Company prior to demerger shall be assumed as joint liability
by the companies arising from the demerger, except for those which written
agreement has been reached with the creditor in respect of repayment of the
debts prior to the demerger.'
103. Article 174 of the Original Articles of Association will be renumbered as
Article 218.
The fourth paragraph thereof provides that:
'The Company shall be dissolved and liquidated upon the occurrence of any of
the following events:
...
(4) the Company is ordered to close down pursuant to laws because of its
violation of laws and administrative regulations.'
The fourth paragraph is proposed to be amended to read as follows, and a fifth
paragraph, reading as follows, is proposed to be added:
'The Company shall be dissolved and liquidated upon the occurrence of any of
the following events:
...
(4) the business licence of Company is suspended, ordered to close down or is
revoked;
(5) there is severe difficulty in the operation and management of the Company,
the subsisting of the Company will incur substantial damage to the shareholders'
interests, it may not be solved by other means, shareholders holding over
10% of the total voting rights of shareholders of the Company request the
People's court to dissolve the company, and the People's Court dissolves the
Company according to laws.'
104. Article 175 of the Original Articles of Association will be renumbered as
Article 219. The first paragraph thereof is proposed to be amended, a new
paragraph is proposed to be added as the second paragraph thereof and the third
paragraph thereof is proposed to be deleted:
The first and third paragraphs thereof provide that:
'A liquidation committee shall be set up within fifteen (15) days of the
Company being dissolved pursuant to sub-paragraph (1) of the preceding Article,
and the composition of the liquidation committee of the Company shall be
determined by an ordinary resolution of shareholders in a general meeting. If
the Company fails to set up the liquidation committee within the time limit, the
creditors may apply to the People's Court for appointment of relevant persons
to form a liquidation committee and carry out liquidation.
...
Where the Company is dissolved under sub-paragraph (4) of the preceding Article,
the relevant governing authorities shall organise the shareholders, relevant
organisations and professional personnel to establish a liquidation committee to
carry out the liquidation.'
This first paragraph thereof is proposed to be amended, a new paragraph is
proposed to be added as the second paragraph thereof and the third paragraph
thereof is proposed to be deleted, reading as follows:
'A liquidation committee shall be set up within fifteen (15) days of the
Company being dissolved pursuant to sub-paragraph (1), (4) and (5) of the
preceding Article, and the composition of the liquidation committee of the
Company shall be determined by an ordinary resolution of shareholders in a
general meeting. If the Company fails to set up the liquidation committee within
the time limit, the creditors may apply to the People's Court for appointment
of relevant persons to form a liquidation committee and carry out liquidation.
Where the Company is dissolved under the condition of sub-paragraph (2) of the
preceding Article, all relevant parties to merger or demerger shall handle the
liquidation in accordance with the agreement of merger or demerger reached
between them.
...'
105. Article 177 of the Original Articles of Association will be renumbered as
Article 221.
This Article provides that:
'The liquidation committee shall, within ten (10) days of its establishment,
send notices to creditors and shall, within sixty (60) days of its
establishment, publish a public announcement in a newspaper at least three (3)
times. The registration of creditors' rights shall be conducted by the
liquidation committee.'
This Article is proposed to be amended to read as follows:
'The liquidation committee shall, within ten (10) days of its establishment,
send notices to creditors and shall, within sixty (60) days of its
establishment, publish a public announcement in a newspaper. The registration of
creditors' rights shall be conducted by the liquidation committee. During the
period of the claim for creditors' rights, the liquidation committee shall
not repay the creditors.'
106. Article 178 of the Original Articles of Association will be renumbered as
Article 222.
The second and fourth paragraphs thereof provide that:
'During the liquidation period, the liquidation committee shall exercise the
following functions and powers:
...
(2) to notify the creditors or to publish public announcements;
...
(4) to pay all outstanding taxes;
...'
The paragraphs thereof are proposed to be amended to read as follows:
'During the liquidation period, the liquidation committee shall exercise the
following functions and powers:
...
(2) to notify the creditors and to publish public announcements;
...
(4) to pay all outstanding taxes and to the taxes incurred during the
liquidation process; ...' 107. Article 179 of the Original Articles of
Association will be renumbered as Article 223.
The second and fourth paragraphs thereof provide that:
'...
After the payment of liquidation expenses with priority, the Company's assets
shall be distributed in accordance with the following sequence: (i) salaries and
labour insurance expenses of employees of the Company; (ii) outstanding taxes;
(iii) bank loans, debt securities of the Company and other debts of the Company.
...
During the liquidation period, the Company shall not commence any new business
activities.'
The paragraphs thereof are proposed to be amended to read as follows:
'...
After the payment of liquidation expenses with priority, the Company's assets
shall be distributed in accordance with the following sequence: (i) salaries of
employees of the Company; (ii) social insurance fees and statutory compensation;
(iii) outstanding taxes; (iv) bank loans, debt securities of the Company and
other debts of the Company.
...
During the liquidation period, the Company shall not commence any new business
activities not related to liquidation.'
108. The following paragraph is proposed to be added to the Original Articles of
Association as Article 227 thereof:
'Any amendment to the Articles of Association shall be made in accordance
with the following procedures:
(1) The board of directors shall pass any resolution in accordance with the
Articles of Association, prepare any resolution on amendments to the Articles of
Association in accordance with the Articles of Association. Alternatively, the
shareholders may propose a resolution on amendment to the Articles of
Association;
(2) The shareholders shall be notified of the proposed amendments, and a
shareholders' general meeting shall be convened for voting;
(3) Any content of the amendments submitted to the shareholders' general
meeting for voting shall be passed by a special resolution.'
109. A new Article, reading as follows, is proposed to be added to the Original
Articles of Association as Article 228 thereof:
'The Articles of Association of the Company shall be amended upon the
occurrence of any of the following events:
(1) After any amendment to the Company Law of the People's Republic of China
or other relevant laws and administrative regulations, any provision under the
Articles of Association conflicts with the provisions of the amended law or
regulations;
(2) A change occurs to the Company resulting in an inconsistency with the
Articles of Association;
(3) The Company's shareholders in general meetings decide to amend the
Articles of Association of the Company.'
110. Article 184 of the Original Articles of Association will be renumbered as
Article 230:
This Article provides that:
'Where amendments of the Articles of Association involve the registered
particulars of the Company, procedures for alteration of registration shall be
handled in accordance with the law.'
This Article is proposed to be amended to read as follows:
'Where amendments of the Articles of Association involve the registered
particulars of the Company, procedures for alteration of registration shall be
handled in accordance with the law. Any amendment to the Articles of Association
involving items which are required under laws or administrative regulations to
be disclosed shall be published by way of a public announcement.'
111. Chapter XXI of the Original Articles of Association will be renumbered as
Chapter XXII thereof, with its title being proposed to be changed from 'Notices'
to 'Notice and Public Announcement'.
112. A new Article, reading as follows, is proposed to be added to the Original
Articles of Association as Article 231 thereof:
'The Company's notices shall be delivered by the following means: (1) by
designated person; (2) by mail; (3) by way of public announcement; (4) by other
means in accordance with the Articles of Association.
The Company's notices delivered by way of public announcement are deemed to
be received by all relevant parties as soon as the public announcement is
published, provided that such announcement shall be published in the designated
newspapers.'
113. The following paragraph is proposed to be added to the Original Articles of
Association as Article 233 thereof:
'When a notice is delivered by a designated person, the date on which the
recipient signs (or seals) on the acknowledgement of receipt is deemed to be the
date on which the notice is delivered;
When the notice is delivered by way of public announcement, the date on which
the public announcement is first published is deemed to be the date on which the
notice is delivered.'
114. The following paragraph is proposed to be added as Article 235:
'Unless otherwise provided, any notice or report that is required or
permitted to be issued by the Company by way of public announcement under the
Articles of Association must be published in at least one newspaper with
national circulation designated by the securities regulatory authority of the
State Council and in other newspapers in China designated by the board of
directors, and must simultaneously be published on the same day in the English
and Chinese languages, respectively, in at least one major English newspaper and
one major Chinese newspaper in Hong Kong.'
115. The following paragraph is proposed to be added to the Original Articles of
Association as Article 240 thereof:
'The phrases 'more than', 'within' and 'below' herein for the
numbers include the numbers indicated themselves, while the phrases 'majority',
'fall short', 'beyond' and 'exceed' exclude the numbers indicated
themselves.'
APPENDIX II PROPOSED RULES AND PROCEDURES FOR SHAREHOLDERS' GENERAL MEETINGS
EXPLANATIONS FOR RULES AND PROCEDURE FOR GENERAL MEETINGS OF AIR CHINA COMPANY
LIMITED (DRAFT)
The Company, currently as an H share company, has an intention to make a public
issue of A shares. Pursuant to the related requirements of the CSRC, after the
completion of the issuance of A shares, the Company will be required to make
amendments in accordance with the laws, regulations and standard documents
applicable to domestic listed companies such as 'Company Law of the People's
Republic of China', 'Mandatory Provisions for the Articles of
Association of Companies to be Listed Overseas', 'Guide to Articles of
Association of Listed Companies', 'Standards for the Governance of Listed
Companies', 'Regulatory Opinions Regarding General Meetings of Listed
Companies', 'Notice on the Standardization of the External Guarantees for
Listed Companies', as well as the amended Articles of Association of the Company
based on the requirements for domestically listed companies, to 'Rules of
Procedure for General Meetings' which shall be an appendix to the Articles of
Associations and take effect with the amended Articles of Association
simultaneously. The amendments are made to the original Rules and Procedure,
mainly covering the functions and powers of the general meetings, the
authorization of the general meetings to the board of directors and the working
committee of president, the nomination procedures of directors and supervisors,
the proposal of extraordinary resolutions to the general meetings, registration
of the general meetings, the convening and presiding procedures of the general
meetings, the proposals and convening procedures of the extraordinary general
meetings, the cumulative voting systems for the election of directors, etc. For
the details, please refer to 'Rules and Procedure for General Meetings'
(Draft) contained in the Appendix.
This information is provided by RNS
The company news service from the London Stock Exchange
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