Circ- Prop. A Share Issue-Pt2
Air China Ld
15 February 2006
PART 2
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to protect the legitimate interests of Air China
Limited (hereinafter referred to as the 'Company') and its shareholders, to
specify the duties and authority of the general meetings, to ensure the proper,
efficient and smooth operation of the general meetings and to ensure the general
meetings exercise their functions and powers legally, these Rules are formulated
in accordance with laws and regulations such as the 'Company Law of the
People's Republic of China' (hereinafter referred to as the 'Company Law'),
'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' and 'Regulatory Opinions
Regarding General Meetings of Listed Companies' and provisions of the Articles
of Association of Air China Limited (hereinafter referred to as the 'Articles
of Association').
Article 2 These Rules apply to the general meetings of the Company and
shall be binding on the Company, shareholders, authorized proxies of the
shareholders attending the meeting, and directors, supervisors and other
relevant personnel present at the meeting.
Article 3 The Company shall maximize the presence of shareholders at
any general meeting by whatever means including the use of modern communication
channels to the full extent, on condition that the general meeting shall be held
legally and validly. Selection of time and place for any general meeting shall
allow as many shareholders as possible to be present at the meeting.
Article 4 The board of the Company shall strictly comply with the
provisions of the relevant laws and regulations and the Articles of Association
regarding the convening of general meetings when organizing the general
meetings. The directors of the Company shall not obstruct the lawful exercise of
powers by a general meeting.
Article 5 Any shareholder who holds the shares of the Company legally
and validly is entitled to personally or authorize a proxy to attend a general
meeting, and shall have various rights including the right to be informed of the
Company's affairs, the right to speak, the right to raise questions and the
right to vote pursuant to law.
CHAPTER 2 SYSTEM OF SHAREHOLDERS' GENERAL MEETINGS
Article 6 Shareholders and their proxies attending a general meeting
shall comply with the provisions of the relevant laws and regulations, Articles
of Association and these Rules, and shall take initiatives to maintain the order
of the meeting and shall not infringe the legitimate rights and interests of
other shareholders.
Article 7 The secretariat of the Company's board of directors is
responsible for all works of preparation and organization for holding of the
general meetings.
Article 8 In convening a general meeting, the principle of cost-saving
and simplicity shall be adhered to. No extra benefits shall be given to the
shareholders (or their proxies) present at the meeting.
Article 9 The general meeting is classified into the annual general
meeting (hereinafter referred to as 'AGM') and extraordinary general
meetings.
All shareholders are entitled to attend the AGMs and extraordinary general
meetings.
In the circumstances specified in the Articles of Association, the Company shall
convene a class meeting. Holders of different classes of shares are class
shareholders. Except other classes of shareholders, holders of domestic shares
and those of foreign shares are deemed to be shareholders of different classes,
and holders of foreign share shall be deemed to be the same class shareholders.
Article 10 AGMs shall be held by the board once every year and convened
within six months from the end of the previous financial year. In the event that
the Company is unable to convene an AGM within the period of time mentioned
above for any reason, the Company shall explain to the stock exchange and make a
public announcement.
Article 11 Under any of the following circumstances, the board shall
convene an extraordinary general meeting within two months from the date upon
which the circumstance occurs:
(1) The number of directors falls short of the minimum number required by the
Company Law or is less than two-thirds of the number required by the Articles of
Association;
(2) The unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital;
(3) Shareholder(s) individually or jointly holding more than 10% (excluding
proxy voting rights) of the Company's issued and outstanding shares carrying
voting rights request(s) in writing the convening of an extraordinary general
meeting;
(4) It is deemed necessary by the board;
(5) It is proposed by the supervisory committee;
(6) It is proposed by a sufficient number of independent directors as required;
(7) Any other circumstance so specified by the Articles of Association occurs.
The amount(s) of shareholding mentioned in (3) above is calculated as on the day
when the shareholder(s) in question make(s) the request(s) in writing.
In any event of (1), (2), (3) or (5) of this Article and if the board fails to
convene an extraordinary general meeting within the specified period,
shareholder(s) who fulfill(s) the requirement or the supervisory committee may
convene an extraordinary general meeting in accordance with the Articles of
Association and provisions hereof.
Article 12 To vary or abrogate the rights of the class shareholders,
the Company must approve it by a special resolution in a general meeting and it
must also be approved by the holders of shares of that class at a separate
meeting in accordance with the Articles of Association.
Article 13 Voting by correspondence may be taken at a general meeting
when necessary, except for AGMs and the extraordinary general meetings proposed
by shareholders or the supervisory committee. Any matter specified in Article 73
hereof to be approved at an extraordinary general meeting shall not be voted by
correspondence.
Article 14 The board, independent directors and qualified shareholders
(in accordance with the standards issued by competent regulatory authorities
from time to time) may collect voting rights from shareholders of the Company at
a general meeting. The voting rights shall be collected with nil consideration,
voting rights collected at a consideration are void. The person who collects
voting rights shall fully disclose relevant information to the person whose
voting rights are collected.
Article 15 The chairman of a general meeting may require any of the
following persons to retire from the meeting:
(1) any person who is not qualified to be present at the meeting; (2) any person
who causes a disorderly meeting; (3) any person who is dressed improperly or
immorally; (4) any person who carries dangerous objects;
(5) any other circumstance which warrants such retirement from the meeting.
If any of the aforesaid persons disobey the order of retirement, the chairman
may take necessary action to enforce the retirement from the meeting.
Article 16 The board of the Company shall engage a lawyer to attend the
shareholders' general meeting in accordance with the applicable law. The
lawyer shall provide legal opinion and publish an announcement on the following
issues:
(1) Whether the convocation and procedures for convening the shareholders'
general meeting comply with the requirements of laws and regulations and the
Articles of Association;
(2) Whether the attending persons are eligible to attend the meeting;
(3) Whether the shareholders proposing new motions at the general meeting are
eligible to do so;
(4) Whether the voting procedures of the shareholders' general meeting are
valid;
(5) Legal opinion on other matters upon request by the Company.
The board of the Company may also engage a notary to attend the shareholders'
general meeting.
CHAPTER 3 FUNCTIONS AND POWERS OF THE SHAREHOLDERS' GENERAL MEETING
Article 17 The powers exercisable by a general meeting are as follows:
(1) to decide on the Company's business policy and investment plans;
(2) to elect and replace directors and to decide on matters relating to the
remuneration of directors;
(3) to elect and replace supervisors who are representatives of shareholders and
to decide on matters relating to the remuneration of supervisors;
(4) to examine and approve the reports of the board;
(5) to examine and approve the reports of the supervisory committee;
(6) to examine and approve the Company's proposed annual budgets and final
accounts;
(7) to examine and approve the Company's profit distribution proposals and
loss recovery proposals;
(8) to resolve on the proposals for increase or reduction of the Company's
registered capital;
(9) to resolve on the proposals for merger, demerger, dissolution and
liquidation of the Company;
(10) to resolve on the proposal for issue of the Company's debt securities;
(11) to resolve on the proposal for appointment, removal or non-reappointment of
the Company's accounting firm;
(12) to amend the Articles of Association;
(13) to consider motions raised by the supervisory committee or shareholder(s)
who represent(s) more than 3% of the total number of shares of the Company with
voting rights;
(14) to resolve on the Company's transaction of purchase or sale of major
assets within one year with the transaction amount exceeding 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 Association;
(16) to resolve on other matters which, in accordance with the laws,
administrative regulations and Articles of Association, must be approved by a
general meeting.
A general meeting shall exercise its powers within the scope stipulated by the
Company Law and the Articles of Association and shall not interfere with the
decisions of shareholders regarding their own rights.
Article 18 Any external guarantee of the Company under any of the
following circumstances shall be approved by the general meeting after being
considered and passed by the board of directors:
(1) Any provision of guarantee, where the total amount of external guarantees
provided by the Company or its controlled subsidiaries exceeds 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 whose amount exceeds 10% of the latest
audited net assets;
(4) provision of guarantee to shareholders, actual controllers and their related
parties;
(5) the amount of external guarantees of the Company within a year 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 Association.
The matter of the fifth sub-paragraph above 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.
Article 19 Matters which, in accordance with the provisions of the
laws, administrative regulations and the Articles of Association, are required
to be approved by the general meeting must only be considered at such meetings
so as to protect the decision-making power of the shareholders of the Company on
such matters.
Under necessary and reasonable circumstances, the general meeting may authorize
the board to decide, within the scope of authorization granted by the general
meeting, specific issues relating to matters to be resolved on by the general
meeting which may not be decided upon immediately at a general meeting.
With regard to an authorization granted by a general meeting to the board, if
the matter is within the scope of the ordinary resolution, it shall be passed by
votes representing a majority of the voting rights held by the shareholders
(including their proxies) present at the meeting; and if it is within the scope
of the special resolution, it shall be passed by votes representing more than
two-thirds of the voting rights held by the shareholders (including their
proxies) present at the meeting. The contents of the authorization shall be
specific and detailed.
Article 20 Authorization to be granted by a general meeting to the
board shall be in accordance with the following principles:
(1) to focus on the operation and development of the Company, to make good use
of market opportunities and to ensure smooth and efficient operation of the
Company;
(2) to be flexible and pragmatic, to avoid excessive formalities on condition
that it is not against the Articles of Association, and to ensure the business
decision of the Company is made in a timely manner;
(3) not to harm the interests of the Company and shareholders as a whole,
especially the legal interests of minority shareholders.
Article 21 The Company's decision-making and approval process in
respect of investment projects shall be subject to the following terms of
reference for the purposes of ensuring a prudent investment policy for the
Company and enhancing the efficiency of its daily operations:
(I) Scope of the board's authority
1. General transactions (including investments and acquisitions). The board
shall have the authority to approve any transaction which fulfills the following
conditions:
(1) based on the ratio tests specified in the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited (the 'Listing Rules of
the Stock Exchange'), any of the assets ratio, profit ratio, revenue ratio,
consideration ratio and equity capital ratio of the transaction is less than
25%; and
(2) each of the following five ratios applicable to the transaction is less than
50%: total asset value of the transaction (the higher of the book value and the
appraised value, if applicable) to the latest audited total asset value of the
Company; the transaction amount (including the debts and costs assumed) to the
latest audited net asset value of the Company; profit from the transaction to
the audited net profit of the Company for the latest financial year; revenue
generated from the main business under the subject of the transaction (such as
equity interests) for the latest financial year to the audited revenue from the
main business of the Company for the latest financial year; and relevant net
profit generated under the subject of the transaction (such as equity interests)
for the latest financial year to the audited net profit of the Company for the
latest financial year; and in addition, the total amount of purchases or sales,
in which such transaction is included, of major assets (including connected
transactions) within one year is less than 30% of the total assets of the
Company (absolute values shall be taken if the above values are negative).
2. Connected transactions. The board shall have the authority to approve any
connected transaction which fulfills the following conditions:
(1) any of the assets ratio, revenue ratio, consideration ratio and equity
capital ratio of the transaction specified in the Listing Rules of the Stock
Exchange is less than 2.5%; and
(2) the transaction amount represents less than 5% of the latest audited net
asset absolute value of the Company, and the total amount of purchases or sales,
in which such transaction is included, of major assets (including general
transactions) within one year is less than 30% of the total assets of the
Company.
3. Risk investments (representing futures contracts such as aircraft fuel
prices hedging contracts and other derivatives). Subject to Clause (I)1 of
Article 21 herein, the board of directors shall have the authority to examine
and approve the projects with an investment amount of less than 15% of the
Company's latest audited net asset; the projects exceeding the aforesaid
limit shall be approved by a general meeting.
4. External Guarantee. The board of directors shall have the authority to
approve external guarantees, except those required to be approved by the general
meetings in accordance with applicable domestic and overseas laws and
regulations, regulatory documents and the Articles of Association.
(II) Scope of the management's authority
1. General transactions (including investments and acquisitions). The
working committee of the president shall have the authority to approve any
transaction which fulfills the following conditions: based on the ratios tests
specified in the Listing Rules of the Stock Exchange, any of the assets ratio,
profit ratio, revenue ratio, consideration ratio and equity capital ratio is
less than 3%; and the total amount of purchases or sales, in which such
transaction is included, of major assets (including connected transactions)
within one year is less than 30% of the total assets of the Company.
2. Connected transactions. The working committee of the president shall have
the authority to approve any transaction which fulfills the following
conditions: based on the ratio tests specified in the Listing Rules of the Stock
Exchange, any of the assets ratio, revenue ratio, consideration ratio and equity
capital ratio is less than 0.1%; and the total amount of purchases or sales, in
which such transaction is included, of major assets (including general
transactions) within one year is less than 30% of the total assets of the
Company.
Article 22 In disposing of fixed assets, where the sum of the expected
value of the consideration for a fixed asset to be disposed of and the amounts
generated from all completed disposals of fixed assets of the Company during a
period of four (4) months prior to the proposed disposal does not exceed 33% of
the value of the Company's fixed assets as shown in the latest balance sheet
reviewed at a shareholders' general meeting, the board is authorized by the
general meeting to examine and approve the disposal of fixed assets. If the
percentage described above is less than 0.2%, the working committee of the
president is authorized by the shareholders' general meetings to examine and
approve the disposal of the fixed assets. However, the working committee of the
president shall not decide on the disposals of airplanes, engines and
infrastructures. Should there be any inconsistency between the preceding
requirements and provisions of the stock exchange on which the Company's
shares are listed in respect of the issue, the latter shall prevail.
Disposals of the fixed assets include transfer of some asset interests, but not
include guarantee provided by pledge of fixed assets.
CHAPTER 4 MOTIONS IN THE SHAREHOLDERS' GENERAL MEETING
Article 23 Motions in a general meeting refers to specific motions
regarding issues which shall be discussed in a general meeting, and general
meetings shall resolve on specific motions.
Motions in a general meeting shall meet the following requirements:
(1) Contents of motions shall comply with provisions of the laws, regulations
and the Articles of Association and shall fall within the scope of business of
the Company and terms of reference of a general meeting;
(2) Motions shall cover a specific subject with specific issues to be resolved;
(3) Motions shall be submitted or delivered to the board of directors in written
form.
Article 24 Before the issuance of a notice by the board of directors
regarding the convening of a shareholders' general meeting, the secretary to
the board of directors may collect motions from shareholder(s) holding more than
3% of the Company's voting shares, supervisors and independent directors and
submit the same to the board of directors for examination and approval and
subsequently submit the same as motions to the shareholders' general meeting
for consideration.
Article 25 The supervisory committee and the shareholders individually
or jointly holding more than 3% of the total voting shares of the Company may
propose provisional motions in a general meeting in accordance with the relevant
procedures as provided in applicable laws and regulations.
If a provisional motion represents a new item not listed in the notice of a
Board meeting, the proposer shall submit the motion to the board 10 days prior
to the general meeting, the board shall notify other shareholders within two
days upon receipt of the motion, and submit the provisional motion for approval
at a general meeting.
Article 26 The board shall not propose any new motion which is not
included in the notice of general meeting after the notice has been issued. Any
amendment to the existing motions shall be announced 15 days prior to the
general meeting.
Otherwise, the date of the meeting shall be postponed accordingly to ensure that
the amendment is announced at least 15 days prior to the general meeting.
Article 27 The board shall review and approve provisional motions
proposed by the supervisory committee and shareholders individually or jointly
holding more than 3% of the Company's voting shares at a general meeting in
accordance with the following principles:
(1) Relevance. The board shall review the motions and where issues involved in
the motion are directly related to the Company and fall within the scope of the
functions of a general meeting as stipulated by the laws, regulations and the
Articles of Association, the motion shall be submitted to the general meeting
for discussion, failing which no such submission shall be effected.
(2) Procedures. The board may decide on procedural issues relating to the
motion. Where a motion needs to be divided into different motions or merged with
other motions to be voted on, the consent of the person(s) proposing the
original motion is required. Where such person(s) does not agree with the
change, the chairman of the general meeting may request the general meeting to
decide on the procedural issues and conduct the discussion in accordance with
the procedures decided on by the general meeting.
Article 28 Where it decides not to include any of motions proposed to
the shareholders' general meeting in the agenda thereof, the board of
directors shall give an explanation at the meeting and announce the contents of
such motion and explanation of the board, together with the resolutions of the
shareholders' general meeting after the conclusion of the meeting. Any
shareholder proposing a motion who disagrees with the exclusion by the board of
directors of his motion from the agenda of the shareholders' general meeting
may, according to the provisions in the Articles of Association these Rules,
request the convening of an extraordinary general meeting.
Article 29 Where shareholder(s) individually or jointly holding 10% or
more of the Company's voting shares propose(s) to convene an extraordinary
general meeting or a class general meeting, the shareholder(s) shall sign one or
more written request(s) in identical form requiring the board to convene an
extraordinary general meeting or a class shareholders' general meeting and
stating the subject of the meeting, and at the same time submit motions
complying with the requirements of these Rules to the board.
Article 30 Motions in a general meeting regarding the following shall
be deemed to be a variation or abrogation of the rights of certain class
shareholder and the board shall submit the same to a class shareholders'
general meeting for review:
(1) to increase or decrease the number of shares of such class, or to increase
or decrease the number of shares of a class having voting rights, distribution
rights or other privileges equal or superior to those of the shares of such
class;
(2) to change all or part of the shares of such class into shares of another
class or to change all or part of the shares of another class into shares of
that class or to grant relevant conversion rights;
(3) to cancel or reduce rights to accrued dividends or cumulative dividends
attached to shares of such class;
(4) to reduce or cancel rights attached to the shares of such class to
preferentially receive dividends or to receive distributions of assets in a
liquidation of the Company;
(5) to add, cancel or reduce share conversion rights, options, voting rights,
transfer rights, pre-emptive placing rights, or rights to acquire securities of
the Company attached to the shares of such class;
(6) to cancel or reduce rights to receive payments made by the Company in a
particular currency attached to the shares of such class;
(7) to create a new class of shares with voting rights, distribution rights or
other privileges equal or superior to those of the shares of such class;
(8) to restrict the transfer or ownership of the shares of such class or to
impose additional restrictions;
(9) to issue rights to subscribe for, or to convert into, shares of such class
or another class;
(10) to increase the rights and privileges of the shares of another class;
(11) to restructure the Company in such a way as to cause shareholders of
different classes to bear liabilities disproportionately during the
restructuring;
(12) to amend or abrogate the provisions of Chapter 9 of the Articles of
Association 'Special Procedures for Voting by a Class of Shareholders'.
Article 31 Resolutions in relation to investment, disposal of assets,
acquisition and merger shall be proposed with sufficient details, including the
amount involved, consideration (or basis of calculation thereof), book value of
assets, impact on the Company, status of approval and whether connected
transactions are involved. The board shall announce the results of assets
valuation, results of audit or independent financial report, if required in
accordance with the applicable regulations, at least five days prior to the date
on which the shareholders' general meeting is to be held.
Article 32 Where the board proposes motions to change the use of
proceeds, it shall state the reasons thereof, the status of new projects and
effects on the prospects of the Company in the notice convening the
shareholders' general meeting.
Article 33 For matter related to issuance of new shares and convertible
bonds which are subject to approval by securities compliance institution, it
shall be proposed as a specific motion.
Article 34 The board, after approving an annual report, shall resolve
on the proposal of profit distribution and make it a motion for AGM. When the
board makes a motion of capitalizing the capital reserve, it shall state the
reason in detail and disclose it in an announcement. When making an announcement
about shares distribution or proposal of capitalizing the capital reserve, the
board shall disclose the earnings per share and net asset per share before and
after such distribution or capitalization, as well as the impact on the
Company's future development.
Article 35 The engagement of an accounting firm shall be proposed as a
motion by the board of directors and is subject to the approval of the
shareholders' general meeting. Where the board proposes the removal or
discontinuation of re-appointment of an accounting firm, prior notice shall be
given to the accounting firm and the reasons for such proposal shall be given at
the shareholders' general meeting. The accounting firm shall have the right
to give opinions at the meeting.
During the recess period, the board may if reasonably required, appoint another
accounting firm temporarily to fill the vacancy arising from the due removal of
the existing accounting firm. However, such temporary appointment shall be
rectified at the next shareholders' general meeting. Where the accounting
firm tenders its resignation, the board shall explain the reason thereof at the
next shareholders' general meeting. The resigning accounting firm is obliged
to give an explanation in writing or in person by a representative attending the
shareholders' general meeting of whether there is any improper matter
involved with the Company.
Article 36 List of nominations for directors or supervisors are
submitted by way of motion to be resolved by general meeting.
Shareholders individually or jointly holding more than 5% of the issued and
outstanding voting shares of the Company may make a motion of nominations for
directors (excluding independent directors and the same shall apply
hereinafter). Such motion shall be submitted to the board for review and
announcement.
Shareholders individually or jointly holding more than 5% of the issued and
outstanding voting shares of the Company may make a motion of nominations for
non-staff representative supervisors. Such motion shall be reviewed by
supervisory committee and passed to the board for announcement.
The proposer shall provide the board with the brief biographies, background
information and relevant evidence of the nominees, which shall be reviewed by
the board or the supervisory committee. Motions which comply with the laws and
regulations and the Company's Articles of Association shall be submitted to
general meeting for consideration. Motions which are not in compliance with the
aforesaid requirement and which are not submitted to the general meeting for
consideration shall be explained and accounted for at the general meeting.
The board or the supervisory committee shall provide shareholders with the brief
biographies and background information of the nominees for directorship or
supervisorship.
Article 37 Procedures for nomination of independent directors are as
follows:
(1) An independent director candidate 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.
(2) 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
qualification, professional title, detailed work experience and all information
regarding his positions held concurrently and be responsible for providing to
the Company his opinions in relation to the nominee's qualification as a
independent director and independence. 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. Before the general meeting is convened for election of
independent directors, the Company shall announce the abovementioned in
accordance with the relevant requirements.
(3) Before the shareholders' general meeting for the election of the
independent director, the Company shall submit the relevant materials concerning
the nominee to the regulatory securities authority of the State Council and/or
its external authority and the stock exchange(s) 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.
(4) The above regulatory securities authorities will verify the qualifications
and degrees of independence of the nominees for independent directors within the
periods of time as required by them. Any of such nominees objected by the
regulatory securities authorities may be treated as a nominee for executive
director instead of independent director. When a general meeting is convened to
nominate independent directors, the board shall make a statement on whether the
regulatory securities authorities have any objection against the nominations.
Article 38 The board shall, in regard to the agenda items of a general
meeting, provide a set of documentary materials including the agenda,
resolutions and the relevant background information to attending shareholders
and proxies, directors, supervisors, president, deputy presidents and other
senior officers, for the purpose of ensuring that all the parties present at the
meeting shall have an understanding of the matters to be considered at the
meeting. For any general meeting legally convened by the supervisory committee
or shareholders, the documentary materials shall be provided by the convener of
the meeting in accordance with the aforesaid requirement.
CHAPTER 5 NOTICE OF THE SHAREHOLDERS' GENERAL MEETING
Article 39 Where the Company convenes a general meeting, a written
notice shall be given 45 days prior to the date of the meeting to notify all the
shareholders recorded in the register of shareholders of the issues to be
considered at the meeting, and the date and venue of the meeting.
The notice of a general meeting shall be delivered to shareholders (whether or
not they are entitled to vote at the general meeting) by hand or by pre-paid
mail to their addresses as shown in the register of shareholders. For holders of
domestic shares, the notice of the meeting may be issued in the form of public
notices.
Public notices referred to in the preceding paragraph shall be published in one
or more newspaper(s) designated by the regulatory securities authority of the
State Council during the period between 45 days to 50 days prior to the date of
the meeting. Once the announcement is made, holders of domestic shares shall be
deemed to have received the notice of the relevant general meeting.
Unless otherwise required by applicable laws, the duration of 45 days aforesaid
is inclusive of the date upon which the notice is issued and exclusive of the
date upon which the general meeting is convened.
Article 40 The notice of a class general meeting shall be delivered
only to shareholders entitled to vote at such meeting.
Article 41 The notice of a general meeting shall meet the following
requirements: (1) be in written form; (2) specifies the venue, date and time of
the meeting; (3) states matters to be discussed at the meeting;
(4) provides shareholders with such information and explanation as necessary to
enable them to make an informed decision on issues to be discussed. Such
principle includes (but is not limited to) where a proposal is made to merge the
Company, to repurchase shares of the Company, to reorganize its share capital or
to make any other reorganization of the Company, and detailed conditions of the
proposed transaction shall be provided together with contracts (if any) and the
cause and effect of any such proposal shall also be properly explained;
(5) contains a disclosure of the nature and extent of the material interests of
any director, supervisor, president, deputy presidents and other senior officers
in relation to the issue to be discussed. Where the effect of the issue to be
discussed on any director, supervisor, president, deputy presidents and other
senior officers in their capacity as shareholders is different from the effect
on other class shareholders, the difference shall be clearly explained;
(6) contains the full text of any special resolution to be proposed at the
meeting;
(7) contains a clear statement that a shareholder entitled to attend and vote at
such meeting is entitled to appoint one or more proxies to attend and vote at
such meeting on his behalf and that such proxy needs not be a shareholder;
(8) specifies the time and venue for lodging proxy forms for the meeting.
Article 42 In order to convene a general meeting, the board shall issue
a notice stating the issues to be discussed at the meeting and fully disclose
the contents of any motions proposed by the board. Where there is any change to
issues covered by resolutions passed by the previous general meeting, full
details of the motion, and not just the contents of the change, shall be stated.
Items included under 'other business' without specific contents shall not be
deemed as a motion and the same shall not be voted on at a general meeting.
Article 43 The board shall specify in the notice issued to shareholders
that shareholders and authorized proxies intending to attend a general meeting
shall deliver to the Company their written replies concerning their attendance
at such meeting 20 days prior to the date of the meeting.
The Company shall, based on the written replies received from shareholders 20
days prior to the date of the general meeting, calculate the number of voting
shares held by shareholders intending to attend the meeting. Where the number of
voting shares represented by shareholders intending to attend the meeting
amounts to more than one-half of the Company's voting shares, the Company may
convene the general meeting; if not, the Company shall, within 5 days, notify
shareholders again of the issues to be reviewed, date and venue of the meeting
in the form of public notices. The Company may then convene the general meeting
after the publication of such notices.
Article 44 After a notice convening the general meeting is issued by
the board, the general meeting shall not be convened before the date announced,
nor shall it be postponed with no reason. If, for any special reason, the
Company must delay the convening of the general meeting, the board shall issue a
notice of postponement at least five working days prior to the original date of
general meeting. The board shall explain in the notice of postponement the
reason and announce the new convening date.
Any postponement in convening a general meeting of the Company shall not cause
any change to the originally scheduled date of determining the eligibility of
attending the general meeting (or the record date).
Article 45 The board, after receiving a proposal in writing of
convening an extraordinary general meeting by the supervisory committee, shall
issue a notice convening the general meeting within 15 days from the date of
receiving the proposal in writing. If the board does not issue the notice in
time as aforesaid, the supervisory committee may, after informing the board in
writing and filing the case for record in accordance with the requirements of
the regulatory securities authorities and the stock exchange, convene the
extraordinary general meeting within four months from the date of the board
receiving the proposal in writing.
Procedures of convening the meeting shall follow the procedures of convening
general meeting by the board. Costs incurred shall be borne by the Company.
Article 46 After receiving a motion in writing from an independent
director, the board shall consider whether the motion is in line with the
Company's arrangement and decide whether to convene an extraordinary general
meeting, and shall revert such decision to the independent director within 15
days from receipt of the motion in writing. Notice of convening the
extraordinary general meeting shall be issued as soon as possible thereafter. If
the board dissents from convening the extraordinary general meeting, the board
shall revert to the independent director and disclose the relevant circumstances
and reasons.
Article 47 Where the board accepts a request from shareholders
individually or jointly holding more than 10% of the Company's voting shares
and agrees to convene an extraordinary general meeting, it shall issue a notice
to convene the same.
Where there is any alteration to the original motion of the proposing
shareholders to be stated in the notice, consents shall be sought from the
relevant shareholders. Once the notice is issued, the board shall not propose
new motions or change or postpone the holding of the general meeting without the
consent of the proposing shareholders.
Article 48 Where the board fails to issue a notice convening a general
meeting within 30 days upon receipt of a written request from shareholders
individually or jointly holding more than 10% of the Company's voting shares,
the proposing shareholders may convene an extraordinary general meeting within
four months after the board has received such request. Where the proposing
shareholders decide to convene such a meeting by themselves, they shall notify
the board in writing in advance, report to the responsible organization of
securities authorities of the State Council and the stock exchange in the place
where the Company is located, for reference and issue a notice convening the
meeting. The notice of the meeting shall comply with general requirements for
notices of meetings and shall also meet the following requirements:
(1) new contents shall not be added to a motion, otherwise the proposing
shareholders must resubmit the request to convene a general meeting to the
board;
(2) the meeting shall be held at the address of the Company.
CHAPTER 6 REGISTRATION FOR THE SHAREHOLDERS' GENERAL MEETING
Article 49 A shareholder may attend the general meeting in person or
appoint a proxy to attend and vote on his behalf.
Article 50 Where a shareholder intends to appoint a proxy to attend and
vote on his behalf, a written proxy form shall be duly completed. Such written
proxy form shall state the following:
(1) the name of the authorized proxy of the shareholder;
(2) the number of shares held by the principal represented by the authorized
proxy;
(3) whether or not the proxy has any voting right(s);
(4) direction(s) to vote for or against each and every issue included in the
agenda of the general meeting;
(5) whether or not the proxy has any voting right(s) in respect of provisional
motions which may be included in the agenda of the AGM; and, if the proxy has
such voting right(s), specific instructions as to the exercise of those voting
rights;
(6) the proxy form shall state clearly that the proxy shall be entitled to vote
or not at his discretion in the absence of specific instructions from the
shareholder;
(7) the date of issue and validity period of the proxy form.
The proxy form shall be signed by the principal or its agent acting under a
written power of attorney, where the principal is a legal person the proxy form
shall bear its seal or be signed by its director or a proxy duly appointed.
Where a shareholder appoints more than one proxy to attend and vote on his
behalf, he shall specify the number of shares represented by each proxy in the
proxy form.
Article 51 The proxy form shall be lodged at the Company's premises
or such other venue as specified in the notice convening the meeting at least 24
hours prior to the time of the relevant meeting, or 24 hours prior to the
scheduled voting time.
Where the proxy form is signed by a person authorized by the principal, the
power of attorney stating the authorization shall be notarized. The notarized
power of attorney together with the proxy form shall be lodged at the Company's
premises or such other venue as specified in the notice convening the
meeting.
Article 52 Shareholders and proxies who intend to be present at a
general meeting shall be registered on the date and at the venue specified in
the notice of the meeting, and shall produce the relevant documents, evidence or
certificates (or copies) in accordance with the following requirements:
(1) where a corporate shareholder is represented by its legal representative at
the general meeting, the legal representative shall produce his identification
card, certificate certifying his capacity of the legal representative and
shareholding certificate;
(2) where a corporate shareholder is represented by a proxy other than its legal
representative, the proxy shall produce his identification card, proxy form
signed and sealed with the common chop of the legal representative and
shareholding certificate;
(3) where an individual shareholder attends the general meeting in person, he
shall produce his identification card and shareholding certificate; where an
individual shareholder is represented by a proxy at the general meeting, the
proxy shall produce a copy of the identification card, shareholding certificate
of the principal and proxy form signed by the principal;
(4) shareholders and the proxies to be present at the meeting shall produce or
submit the originals or copies of the aforesaid documents, evidences or
certificates to the registry for the purpose of the meeting.
Article 53 The eligibility of an attendee of the general meeting shall
be deemed invalid if the evidence produced involves one of the following
conditions:
(1) the identification card of principal or attendee of the general meeting is
found to be forged or expired or has been altered or does not comply with the
residential identification card regulation;
(2) the information on the identification card produced by the principal or
attendee of the general meeting is illegible;
(3) where multiple proxies shall have been appointed by the shareholder and the
signatures on the instrument of authorization are inconsistent;
(4) the signature on the instrument of authorization faxed in for registration
and that on the original copy of instrument of authorization produced when
attending the general meeting are inconsistent;
(5) lack of signature or seal on the instrument of authorization;
(6) the relevant evidence produced by the principal or his proxy attending the
general meeting contravenes the relevant provisions of laws, regulations,
Articles of Association and these Rules.
Article 54 Where the principal or his proxy is ineligible for attending
the general meeting as a result of irregularities of the principal's
authorization or the fact that documents evidencing the legitimate identity of
the principal or the authorization do not comply with the laws, regulations or
provisions of the Articles of Association, the legal consequences so arising
shall be borne by the principal or his proxy.
Article 55 The Company shall be responsible for preparing an attendance
register to be signed by those attending the meeting. The attendance register
shall state the names (or names of the corporations), identification document
number and the address of the attendee, the number of voting shares held or
represented, names of the principal (or names of the corporations) and so on.
Article 56 Shareholders and proxies shall enter the meeting place
before the meeting starts. If they enter the meeting place after registration is
over, they may only sit in on the meeting, and the shares held by them will not
be counted towards the total number of voting shares present at the meeting.
Voting shares held by those shareholders and proxies who have not filled in the
votes due to retirement in the middle of the meeting or other reasons, are still
to be counted and will not affect the total number of voting shares present at
the meeting.
Article 57 The board shall take necessary measures to ensure the
solemnity and proper order of the general meeting. The Company shall have the
right to reject persons, other than shareholders (or proxies), directors,
supervisors, secretary to the board, senior officers, lawyer(s) engaged and
persons invited by the board, to enter the meeting venue. The Company shall take
actions to stop anyone from provoking a quarrel, making trouble or infringing
the lawful interests of other shareholders and refer the case to relevant
authorities for settlement in time.
CHAPTER 7 REVIEW AND VOTING IN THE SHAREHOLDERS' GENERAL MEETING
Article 58 The general meeting shall be convened by the chairman of 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 fails 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 fails 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 timely 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 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.
Article 59 For an extraordinary general meeting separately convened by
shareholders individually or jointly holding more than 10% of the total number
of the Company's voting shares for over ninety (90) days, the board and its
secretary shall perform their duties by due diligence. Directors and supervisors
may attend the meeting while the secretary to the board shall attend the meeting
to ensure the normal order of the meeting. Reasonable expenses of the meeting
shall be borne by the Company.
The chairman of the meeting shall be subject to the provisions of Article 58
hereof. The shareholders making such proposal shall engage a lawyer to give
legal advice at the general meeting in accordance with the relevant
requirements. The legal fees shall be borne by such shareholders. The
shareholders may also engage a notary to give notarial advice at the meeting and
the charge shall be borne by them. The secretary to the board shall perform his
duties practically and other convening procedures shall be in compliance with
relevant provisions of the Articles of Association.
Article 60 The chairman of the meeting shall declare the commencement
of the meeting at the appointed time, but the meeting may be declared to have
commenced after the appointed time if any of the circumstances arises:
(1) directors and supervisors have not yet arrived;
(2) there exists any other significant causes.
Article 61 After announcing the formal commencement of the meeting, the
chairman of the meeting shall first declare that the number of the shareholders
present at the meeting and the number of shares they represent comply with the
statutory requirements and provisions of the Articles of Association of the
Company, and then announce the meeting agenda stated in the notice, and inquire
whether the people who are present at the meeting have objections over the
sequence of voting on motions.
Where the board or the chairman of the meeting does not include provisional
motions proposed by the supervisory committee or shareholder(s) into the agenda
of an AGM, explanations and comments shall be made at the AGM.
Article 62 The chairman of the meeting shall read the motions after
announcing the agenda of the general meeting and require the party proposing the
motion to make explanation when necessary:
(1) where the party proposing the motion is the board, chairman of the board, or
other directors or secretary to the board entrusted by the chairman shall make
explanation on the motion;
(2) where the party proposing the motion is not the board, the party or its
authorized proxy shall make explanation on the motion.
Article 63 For items included in the agenda of the meeting, the
chairman of the meeting may, by reference to the actual situation, adopt an
approach of general reporting first, followed by considering and voting on each
item, or single out more complicated items for reporting and then considering
and voting on each of them.
Article 64 At an AGM, the board shall report and announce to the
meeting the implementation status of issues which shall be conducted by the
board in accordance with resolutions of the general meetings since the last AGM.
Article 65 At an AGM, the supervisory committee shall deliver special
reports relating to supervision in the previous year, including:
(1) verification of the financial information of the Company;
(2) performance of duties by directors and senior officers of the Company and
implementation of the relevant laws, regulations, the Articles of Association
and resolutions of the general meeting;
(3) other material events to be reported to the general meeting as deemed
necessary by the supervisory committee.
The supervisory committee may, if it thinks necessary, comment on motions
reviewed by the general meeting, and file an independent report accordingly.
Article 66 Pursuant to the relevant laws and regulations, Articles of
Association or other system of the Company, independent directors shall express
their opinions on matters requiring their views. If it is required under
applicable laws and regulations, independent directors shall submit their yearly
work reports at the AGM and make a statement on their fulfillment of duties.
Article 67 Where a certified public accountant includes explanatory
statements, qualified opinion, rejection to give opinion, or adverse opinion on
the financial statement of the Company in its audit report, the board shall make
an explanation to the general meeting for relevant issues which led the
accountant to express the aforesaid comments and the effect on the financial and
operating condition of the Company. Where such issues have direct impact on the
profit for the current accounting period, the board shall determine the plans on
profit distribution or capitalization of reserve funds on a 'whichever-is-lower'
basis.
Article 68 For motions to be resolved and included in the agenda of a
general meeting, reasonable discussion time shall be granted for each motion
before voting.
Article 69 Any shareholder or proxy may request to make a statement at
a general meeting. A statement at any general meeting may take a written or
verbal form.
Request for making a statement shall be subject to permission by the chairman of
the meeting. The chairman of the meeting may arrange for statements to be made
by reference to the progress of the meeting. In general, each shareholder or
proxy may not make more than two statements for each motion, and each statement
may not exceed 10 minutes in principle. The statement of a shareholder or proxy
shall not interrupt any of the reporting sessions or other participants'
speeches at the meeting.
Article 70 Only shareholders and proxies have the right to make a
statement at a general meeting when motions are under consideration. Any of them
wishing to make a statement shall raise his or her hand to seek the permission
of the chairman.
Article 71 Shareholders or proxies may inquire about or make suggestion
to a resolution, the chairman of the meeting shall by himself or appoint any of
the directors, supervisors or other appropriate persons who are present at the
meeting, to provide an answer or explanation in response to the inquiries. The
chairman of the meeting may refuse to answer any inquiries under any of the
following circumstances provided that he shall state the reason:
(1) the statement is irrelevant to the subject;
(2) matters inquired about is subject to investigation;
(3) trade secrets of the Company are involved, which may not be disclosed at the
general meeting;
(4) answering the inquiry will significantly harm the common interests of
shareholders;
(5) there exists other important reasons.
Article 72 In reviewing the motions included in the notice of an
extraordinary general meeting, no alteration shall be made to the relevant
motions in respect of the following matters:
(1) increase or reduction of the registered capital of the Company;
(2) issue of debt securities of the Company;
(3) demerger, merger, dissolution and liquidation of the Company;
(4) amendment to the Articles of Association;
(5) profits distribution plans and loss recovery plans of the Company;
(6) appointment and removal of a member of the board of directors and the
supervisory committee;
(7) change of the use of proceeds from a share offer;
(8) the entering into of a connected transaction which requires the approval of
the shareholders in general meetings;
(9) acquisition or sale of assets which requires the approval of the
shareholders in general meetings;
(10) change of the accounting firm engaged.
Any alteration in respect of the contents of the above motions shall be deemed
to be a new motion and shall not be voted on at that shareholders' general
meeting.
Article 73 The general meetings shall resolve on all motions included
in the agenda separately, and shall not for any reason cause delay in voting on,
or failure to vote on, such motions. Where different motions for the same issue
are proposed at the AGM, such motions shall be voted on and resolved in the
order of time in which they are proposed.
Article 74 In reviewing motions on the election of directors and
supervisors at a general meeting, shareholders shall vote on candidates for the
office of directors or supervisors separately.
Article 75 Each shareholder or his authorized proxy shall exercise his
voting rights in accordance with the number of voting shares represented by him.
Besides the situations stipulated by Article 77 in these Rules, each share shall
carry one vote.
Article 76 On a poll, shareholders (including proxies) entitled to two
or more votes need not cast all his votes in the same way of affirmative votes
or dissenting votes.
In the event of an equality of votes, the chairman of the meeting shall be
entitled to an additional vote.
Article 77 Resolutions in respect of the election of directors shall be
passed by a way of cumulative voting at shareholders' general meeting in
accordance with the Articles of Association. The main procedures of the
cumulative voting system are as follows:
(1) where the number of directors to be elected is more than two, the cumulative
voting system must be adopted;
(2) where cumulative voting system is adopted, each of the shares held by a
shareholder shall carry the same number of votes as the number of directors to
be elected. All shareholders present at the general meeting for election of
directors may fully exercise their respective voting rights that the number of
votes they have shall be the number of their respective shares multiplying by
the number of director candidates;
(3) the notice of a shareholders' general meeting shall notify the
shareholders that a cumulative voting system will be adopted for the election of
directors. The conveners of the shareholders' general meeting shall prepare
ballots suitable for cumulative voting, and shall give descriptions and
explanations in writing regarding the cumulative voting system, the completion
method of the ballots and the methods of counting the votes;
(4) in casting his votes for the director candidates at a shareholders'
general meeting, a shareholder may exercise his voting rights by spreading his
votes evenly and cast for each of the candidates the number of votes
corresponding to the number of shares he holds; or he may focus on one
particular candidate and cast for that candidate the total number of votes
carried by all of his shares; or he may spread his votes over several candidates
and cast for each of them part of the total number of votes carried by the
shares he holds;
(5) upon the exercise of his voting rights by focusing all his votes on one or
several of the candidates of directors, a shareholder shall not have any right
to vote for any other candidates;
(6) where the total number of votes cast by a shareholder is in excess of the
number of votes carried by the total number of shares held by him, the votes
cast by the shareholder shall be invalid, and the shareholder shall be deemed to
have waived his voting rights. Where the total number of votes cast by a
shareholder is less than the number of votes carried by the total number of
shares held by such shareholder, the votes cast by the shareholder shall be
valid, and the voting rights attached to the shortfall between the votes
actually cast and the votes which the shareholder is entitled to cast shall be
deemed to have been waived by the shareholder;
(7) where the number of approval votes for a director candidate exceeds one-half
of the total voting rights (to be calculated in accordance with the total number
of shares if the cumulative voting is not adopted) represented by the
shareholders present at the shareholders' general meeting, the candidate
shall be the elected director. If the number of the elected director candidates
exceeds the total number of directors to be elected, those candidates who win
the largest number of approval votes shall be elected as directors (however, if
the elected directors whose approval votes are comparatively fewer win the same
number of approval votes, and the election of such candidates as directors will
give rise to the number of directors elected exceeding the number of directors
to be elected, such candidates shall be deemed as having not been elected); if
the number of directors elected at a shareholders' general meeting falls
short of the number of directors to be elected, a new round of voting shall be
carried out for the purpose of filling such directorship vacancies, until all
the directors to be elected are validly elected;
(8) where a new round of voting is carried out in accordance with the provisions
of paragraph (7) of this Article at the shareholders' general meeting, the
number of votes cast by the shareholders in the cumulative voting shall be
re-counted in accordance with the number of directors to be elected in the new
round of voting.
Article 78 When a connected transaction is considered at a general
meeting, connected shareholders shall not vote, and the voting shares held by
them shall not be counted in the total number of shares with voting rights
present at the meeting.
The voting result of non-connected shareholders shall be adequately disclosed in
the announcement of the resolutions at the general meeting.
Article 79 The votes on each matter under consideration at any general
meeting shall be counted by two proxies and one supervisor and the voting
results shall be announced on the spot by the representative of the persons who
have counted the votes. Connected shareholders shall not participate in the
counting of votes for any connected transaction under consideration.
Article 80 If any shareholder who is present in person or by proxy has
any doubt as to the result of a resolution which has been put to vote at a
shareholders' general meeting, he may have the votes counted. If the chairman
of the meeting has not counted the votes, any shareholder who is present in
person or by proxy and who objects to the result announced by the chairman of
the meeting may, immediately after the declaration of the result, demand that
the votes be counted and the chairman of the meeting shall have the votes
counted immediately. Shareholders and proxies of shareholders who object to the
results of voting may check the votes, and the results shall be final and
conclusive. Any objection after the meeting shall be invalid.
Article 81 The chairman of the meeting shall be responsible for
determining whether a resolution has been passed pursuant to results of votes.
His decision, which shall be final and conclusive, shall be announced at the
meeting and recorded in the minutes. The Company shall announce the resolutions
of the shareholders' general meetings in accordance with applicable laws and
the relevant provisions of the stock exchange on which the shares in the Company
are listed.
Article 82 Any vote shall be invalid if it is not completed in
accordance with the instructions set out in the ballot or is deliberately
stained or damaged on the surface thereof.
Article 83 Resolutions of a general meeting shall be divided into
ordinary resolutions and special resolutions.
(I) Ordinary resolutions
Ordinary resolutions shall be passed by votes exceeding one-half of voting
rights represented by shareholders (including proxies) attending the general
meeting.
The following issues shall be approved by ordinary resolutions at a general
meeting:
(1) working reports of the board and the supervisory committee;
(2) profit distribution plans and loss recovery plans formulated by the board;
(3) appointment and removal of the members of the board and the supervisory
committee, their remuneration and the method of payment thereof;
(4) annual budgets, final accounts, balance sheets and profit and loss accounts
and other financial statements of the Company;
(5) appointment, removal or non-reappointment of an accounting firm;
(6) other issues, except for those required by laws, administrative regulations
or the Articles of Association to be passed by special resolutions.
(II) Special resolutions
Special resolutions shall be passed by votes representing more than two-thirds
of voting rights represented by shareholders (including proxies) attending the
general meeting.
The following issues shall be approved by special resolutions at general
meetings:
(1) increase or reduction in share capital of the Company and the issue of
shares of any class, warrants and other similar securities;
(2) issue of debt securities of the Company;
(3) demerger, merger, dissolution and liquidation of the Company;
(4) amendments to the Articles of Association;
(5) any other issue confirmed by an ordinary resolution at a general meeting
that it may have material impact on the Company and accordingly shall be
approved by special resolutions.
Article 84 Where issues specified in sub-paragraphs (2) to (8), (11) to
(12) of Article 30 of these Rules are involved, the affected class shareholders,
whether or not they are entitled to vote at general meetings originally, shall
have the right to vote at class meetings. However, interested shareholder(s)
shall not be entitled to vote at such class meetings.
'Interested shareholder(s)' as specified in the preceding paragraph refers
to:
(1) in the event of a repurchase of shares by the Company by way of a general
offer to all shareholders of the Company or by way of public transactions on a
stock exchange pursuant to Article 29 of the Articles of Association, an
'interested shareholder' is a controlling shareholder within the meaning of
Article 57 of the Articles of Association;
(2) in the event of a repurchase of shares by the Company by an off-market
agreement pursuant to Article 29 of the Articles of Association, an
'interested shareholder' is a shareholder related to the agreement;
(3) in the event of a reorganization of the Company, an 'interested
shareholder' is a shareholder who assumes a relatively less proportion of
obligation than that of any other shareholder of that class or who has an
interest different from that of any other shareholder of that class.
Article 85 Resolutions of a class general meeting shall be approved by
votes representing more than two-thirds of the voting rights of shareholders of
that class present at the meeting who, in accordance with Article 84, are
entitled to vote at the meeting.
Pursuant to the applicable rules governing listing of securities as revised from
time to time, when any shareholder is obliged to abstain from voting on a motion
at a class meeting or when any shareholder is restricted to vote in favour of or
against a motion at a class meeting, any vote of such shareholder or its proxy
which violates the relevant requirement or restriction shall not be counted in
the voting result.
Special voting procedures for class shareholders shall not apply in the
following circumstance:
(1) with the approval by special resolutions in a general meeting, the Company
issues and plans to issue, at one or more occasions, a total number of shares
not exceeding 20% of each of its existing issued and outstanding domestic shares
and overseas listed foreign shares in every 12 months;
(2) the Company's plan to issue domestic shares and overseas listed foreign
shares at the time of its establishment is completed within 15 months from the
date of approval of the regulatory securities authorities of the State Council.
Article 86 Under the circumstances stipulated in the preceding Article,
after announcing the notice of shareholders' general meeting, the Company
shall announce the notice of shareholders' general meeting once again within
3 days after the day on which the share certificates are registered.
CHAPTER 8 CLOSING AND ADJOURNMENT OF THE MEETING
Article 87 The chairman of the meeting shall have the power to declare
the adjournment of the meeting in accordance with the arrangement and progress
of the meeting. The chairman of the meeting may also declare the adjournment of
the meeting when it is deemed necessary.
Article 88 The chairman of the meeting shall declare the meeting closed
after the motions have been passed at the general meeting without objection from
any shareholders or proxies.
CHAPTER 9 RESOLUTIONS AND MINUTES OF THE MEETING
Article 89 A shareholders' general meeting should pass resolutions
for the motions which are listed in the agenda of the meeting.
Article 90 Minutes of a general meeting shall be kept. The minutes
shall record the following information:
(1) the number of voting shares represented by shareholders present at the
meeting, and the percentage of such shares in the total number of shares in the
Company;
(2) the date and venue of the meeting;
(3) the name of the chairman of the meeting and the agenda of the meeting; (4)
the summary of each attendee's opinion on motions; (5) the voting result of
each issue voted on;
(6) the inquiries and suggestions of shareholders and the answers or explanation
made by the board and the supervisory committee;
(7) other issues that shall be recorded in the minutes in accordance with
opinions of the general meeting and provisions of the Articles of Association.
Article 91 Resolutions and minutes of a general meeting shall be signed
by directors attending the meeting and the minutes recorder, while minutes of
the meeting shall be signed by the person in charge (the chairman of the
meeting), and be kept by the secretary to the board as the Company's
permanent record.
Article 92 The secretary to the board shall be responsible for keeping
such written information as the register of attendees, power of attorney,
photocopy of identification documents, voting statistics sheet, minutes of the
meeting and resolutions of a general meeting.
CHAPTER 10 DISCLOSURE OF INFORMATION
Article 93 The board of the Company shall strictly comply with the
laws, regulations and requirements of the stock exchange on which the Company's
share are listed and transacted in relation to the disclosure of the
Company's information. It shall ensure that matters examined and/or
resolutions passed at the board meeting are disclosed truly, accurately,
thoroughly and in a timely manner.
CHAPTER 11 SUPPLEMENTARY PROVISIONS
Article 94 These Rules are an appendix to the Company's Articles of
Association. They are prepared by the board and shall come into effect, together
with the Company's Articles of Association amended in accordance with the
requirement for domestically listed companies, upon approval of a shareholders'
general meeting by passing a special resolution. Any amendment to these
Rules shall be proposed by the board in form of an amendment proposal, and shall
come into effect upon approval of a shareholders' general meeting by passing
a special resolution.
Article 95 The shareholders' general meeting authorizes the board to
interpret these Rules.
Article 96 Where any matter is not covered by these Rules or where
these Rules fail to comply with the laws, administrative regulations, other
relevant regulatory documents and provisions of the Articles of Association,
those laws, administrative regulations, other relevant regulatory documents and
provisions of the Articles of Association shall prevail.
Article 97 The phrases 'more than' and 'less than' herein for the
numbers includes the numbers indicated themselves while 'majority' and 'exceed'
excludes the numbers indicated themselves.
APPENDIX III PROPOSED RULES AND PROCEDURES FOR BOARD MEETING
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to regularize the operational procedure of the
board of directors of Air China Limited (hereinafter referred to as the
'Company') and to ensure the working efficiency and the scientific strategic
decision-making of the board of directors, these Rules are formulated in
accordance with the 'Company Law of the People's Republic of China'
(hereinafter referred to as the 'Company Law'), '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' and other relevant laws and regulations and the 'Articles
of Association of Air China Limited' (hereinafter referred to as the
'Articles of Association').
Article 2 As authorized by the general meeting, the board of directors
shall be responsible for the operation and management of the Company's
assets, and acts as central business decision-making body that is accountable to
the general meeting.
CHAPTER 2 FORMATION AND COMMITTEES OF THE BOARD
Article 3 The board of directors shall be established in accordance
with the Articles of Association, with the appropriate proportion of independent
directors and outside directors.
Article 4 Directors shall be elected or replaced at the shareholders'
general meeting each for a term of three (3) years. The term of a director
is renewable by re-election after its expiry. However, the term of an
independent director re-elected shall not exceed six (6) years. The director,
before his term of office is expired, shall not be removed by the general
meeting without any reason. The term of a director shall be calculated from the
date of passing the resolution at the general meeting to the expiry of that
session of the board.
Article 5 When the term of office of all directors are expired, in the
event that the new board of directors has not been elected, the former directors
shall continue to perform their responsibilities until the new board of
directors is formed.
Article 6 The board shall include one chairman and two vice-chairmen,
who are elected and removed by a majority of directors.
The chairman of the board of directors shall exercise the following functions
and powers:
(1) to preside over shareholders' general meetings and to convene and preside
over meetings of the board of directors;
(2) to examine the implementation of resolutions passed by the board of
directors at board meetings;
(3) to sign the securities certificates issued by the Company;
(4) to sign important documents of the board of directors and other documents
which should be signed by the legal representative;
(5) to exercise powers of the legal representative;
(6) in any emergent force majeure event such as natural disasters, to exercise
his special right of disposal to the business of the Company in compliance with
laws, regulations and in the interests of the Company, and to report to the
board of directors and the general meeting of the Company afterwards.
(7) to exercise other powers conferred by the board of directors;
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 he deputy chairmen is unable
or fails to perform their duties, a director shall be elected jointly by more
than a half of the directors to perform such duties.
Article 7 The Company shall have a secretary to the board who shall be
nominated by the chairman of the board of directors and employed or dismissed by
the board of directors. The secretary shall be accountable to the board. The
main duties of the secretary to the board include:
(1) organizing and arranging for the board meetings and shareholders' general
meetings; preparing meeting materials, handling relevant meeting affairs; making
minutes of the meetings and ensuring their accuracy; keeping meeting documents
and minutes; taking initiative to monitor the progress of the implementation of
relevant resolutions; reporting any important issues occurring during the
implementation to the board and giving relevant advice to the board.
(2) ensuring the material matters decided by the board of the Company to be
carried out strictly in accordance with the procedures stipulated; at request of
the board, participating in the arrangement of consultation on and analysis of
the matters to be decided by the board and offering relevant opinions and
suggestions; handling the day-to-day affairs of the board and its committees as
entrusted.
(3) acting as the liaison officer of the Company with the regulatory securities
authorities, responsible for organizing, preparation and timely submission of
the documents required by the regulatory authorities as well as accepting and
organizing the implementation of any assignment from the regulatory authorities.
(4) coordinating and organizing the Company's disclosure of information;
establishing and improving the information disclosure system; participating in
all of the Company's meetings involving the disclosure of information; and
keeping informed of the Company's material operation decisions and related
information in a timely manner.
(5) keeping the Company's price-sensitive information confidential and
establishing effective confidentiality systems and measures; in case of any of
the Company's price-sensitive information divulged due to any reason, taking
necessary remedial measures, timely explaining and clarifying it, and making
relevant reports to the regulatory authorities in overseas jurisdictions where
the shares of the Company are listed and the CSRC.
(6) coordinating and organizing marketing activities; coordinating reception of
visitors, handling the investor relations; keeping in touch with investors,
intermediaries and news media; coordinating replies to inquiries from the
public; and ensuring investors to obtain the information disclosed by the
Company in a timely manner; organizing and preparation of the Company's
domestic and overseas marketing and promotion activities; preparing conclusive
reports on marketing and important visits; and organizing matters about the
submission of the reports to the CSRC.
(7) handling and keeping the materials in relation to information on
shareholders register, directors register, amount of shares held by major
shareholders and records of directors' shares, and the list of beneficiaries
of outstanding bonds of the Company.
(8) assisting directors and the president in duly implementing the domestic and
foreign laws, regulations, the Articles of Association and other related
provisions during exercising their functions and powers; upon becoming aware
that the Company has passed or may pass resolutions which may breach the
relevant provisions, being liable for immediately reminding the board and being
entitled to report such facts to the CSRC and other regulatory authorities.
(9) coordinating the provision of relevant information necessary for the
Company's supervisory committee and other regulatory authorities to discharge
their duties; assisting in carrying out due diligence on the chief financial
officer, directors and the general manager of the Company of their fiduciary
duties.
(10) exercising other functions and powers as conferred by the board, as well as
other functions and powers as required by laws in any jurisdiction where the
shares of the Company are listed and the stock exchanges.
Article 8 The board shall establish special committees such as
strategy and investment committee, audit and risk management committee, and
management personnel training and remuneration committee in accordance with
related resolutions of the shareholders' general meeting. These special
committees shall consider specific matters and give their opinions and advice
for the board's decision-making based on the proposals made by the board of
directors, the chairman of the board and the president.
The majority of members of audit and risk management committee and management
personnel training and remuneration committee shall be independent non-executive
directors, and the persons in charge of the committees shall be acted by
independent non-executive directors. The audit and risk management committee
shall have at least one independent nonexecutive director who shall have
relevant professional qualifications, or shall have professional specialty in
audit or related financial management. Such special committees shall formulate
relevant working rules which shall be come into effect upon receiving approval
by the board of directors.
CHAPTER 3 FUNCTIONS AND POWERS OF THE BOARD
Article 9 The board shall be responsible to the shareholders'
general meeting and exercise the following functions and powers:
(1) to be responsible for convening shareholders' general meetings and report
on its work to the shareholders' general meetings;
(2) to implement the resolutions passed at the shareholders' general
meetings;
(3) to determine the Company's business plans and investment plans;
(4) to formulate the Company's annual budgets and final accounts;
(5) to formulate the Company's profit distribution proposals and loss
recovery proposals;
(6) to formulate the proposals for increase or reduction of the Company's
registered capital, and proposals for issue of the Company's bonds;
(7) to formulate the proposals for merger, demerger or dissolution of the
Company;
(8) to decide on the general investment, risk investment, connected
transactions, assets pledged and other guaranteed affairs of the Company within
the authority granted by the shareholders' general meeting;
(9) according to laws, administrative regulations and the Articles of
Association, to decide on other external guarantees that require the approval of
the general meetings;
(10) to decide on the establishment of the Company's internal management
bodies;
(11) to appoint or remove the Company's president, secretary to the board of
directors; to appoint or remove the Company's senior officers such as deputy
president and person in charge of finance according to the proposals of the
president and determine their remunerations, rewards and punishment;
(12) to formulate the Company's fundamental management system;
(13) to formulate the proposals for any amendment to the Articles of
Association;
(14) to manage matters of disclosure of information on the Company;
(15) to make proposal of any employment or replacement of the accounting firm
which audits the Company's accounts at the shareholders' general meeting;
(16) to receive the work report of the president of the Company and examine on
the president's work;
(17) to exercise other functions and powers as stipulated by laws,
administrative regulations or the Articles of Association and granted by the
shareholders' general meeting.
Article 10 Any external guarantee of the Company shall be considered
and passed by the board of directors. Matters fulfilling any of the following
conditions shall be approved by the general meeting after being considered by
the board of directors:
(1) Any provision of guarantee, provided after amount of external guarantees
provided by the Company or its controlled subsidiaries exceeds 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 whose amount exceeds 10% of the latest
audited net assets;
(4) provision of guarantee to shareholders, actual controllers and their
connected parties;
(5) the amount of external guarantees of the Company within a year 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.
Article 11 Limits of the board's right to approve the Company's
investment projects are specified as follows:
(1) General transactions (including investments and acquisitions). The board
shall have the authority to approve any transaction which fulfills the following
conditions:
1. Based on the ratio tests specified in the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited (the 'Listing Rules of
the Stock Exchange'), each of the assets ratio, profit ratio, revenue ratio,
consideration ratio and equity capital ratio of the transaction is less than
25%; and
2. each of the following five ratios applicable to the transaction is less
than 50%: total asset value of the transaction (the higher of the book value and
the appraised value, if applicable) to the latest audited total asset value of
the Company; the transaction amount (including the debts and costs assumed) to
the latest audited net asset value of the Company; profit from the transaction
to the audited net profit of the Company for the latest financial year; revenue
generated from the main business under the subject of the transaction (such as
equity interests) for the latest financial year to the audited revenue from the
main business of the Company for the latest financial year; and relevant net
profit generated under the subject of the transaction (such as equity interests)
for the latest financial year to the audited net profit of the Company for the
latest financial year; and in addition, the total amount of purchases or sales,
in which such transaction is included, of major assets (including connected
transactions) within one year is less than 30% of the total assets of the
Company (absolute values shall be taken if the above values are negative).
(2) Connected transactions. The board shall have the authority to approve any
connected transaction which fulfills the following conditions:
1. any of the assets ratio, revenue ratio, consideration ratio and equity
capital ratio of the transaction specified in the Listing Rules of the Stock
Exchange is less than 2.5%; and
2. the transaction amount represents less than 5% of the latest audited net
asset absolute value of the Company, and the total amount of purchases or sales,
in which such transaction is included, of major assets (including general
transactions) within one year is less than 30% of the total assets of the
Company.
(3) Risk investments (representing futures contracts such as aircraft fuel
prices hedging contracts and other derivatives). Subject to Clause (1) of
Article 11 in the rules, the board of directors shall have the authority to
examine and approve the projects with the investment amount of less than 15% of
the Company's latest audited net asset; the projects exceeding the aforesaid
limit shall be examined and approved by a general meeting.
(4) External Guarantee. The board of directors shall have the authority to
approve external guarantees, except those required to be approved by the general
meetings according to applicable domestic and overseas laws and regulations,
regulatory documents and stipulations of the Articles of Association.
Article 12 Limits of the board's right to approve the disposals of
the Company's fixed assets:
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, unless the sum of the expected value of the consideration for a fixed
asset to be disposed of and the amounts generated from all completed disposals
of fixed assets of the Company during a period of four (4) months prior to the
proposed disposal does not exceed 33 % of the value of the Company's fixed
assets as shown in the latest balance sheet tabled at a shareholders' general
meeting, in such a case the board of directors shall have the authority to
approve. Should there be any inconsistency between the preceding requirements
and provisions of the stock exchange on which the Company's shares are listed
in respect of the issue, the latter shall prevail.
Disposals of the fixed assets include transfer of some asset interests, but not
include guarantee provided by pledge of fixed assets.
The effectiveness of the Company's disposal of the fixed assets shall not be
affected by any breach of the forgoing provisions in Clause 1 of this Article.
In the event that the board of directors make decisions on market development,
mergers and acquisitions, and investments in new areas, for the projects with
the investment amounts or mergers and acquisitions of up to certain percentage
of the Company's total assets (such percentage shall be decided by the
general meetings), a public consultant institutions shall be retained to provide
professional advice as the important basis for the board's decision-making.
Article 13 During the recess of the board meeting, the chairman of the
board, with authorization from the board, may perform partial duties of the
board.
The chairman shall be authorized by the board in accordance with the following
principles:
(1) to focus on the operation and development of the Company, to make good use
of market opportunities and to ensure smooth and efficient operation of the
Company;
(2) to be flexible and pragmatic, to avoid excessive formalities on condition
that it is not against the Articles of Association, and to ensure the business
decision of the Company is made in a timely manner;
(3) not to harm the interests of the Company and shareholders as a whole,
especially the legal interests of minority shareholders.
CHAPTER 4 RULES FOR BOARD MEETINGS
Article 14 The board meetings include regular board meetings and
extraordinary board meetings. Regular board meetings include: annual meetings,
interim meetings, first-quarter meetings and third-quarter meetings.
(1) Regular board meetings
1. Annual board meetings
Annual meetings shall be convened within 120 days from the end of the financial
year of the Company, or other time which is considered as appropriate by the
board. The directors shall discuss motions to be submitted at the general
meeting for approval. The time of an annual board meeting shall be determined to
ensure that the annual general meeting of the shareholders may be convened
within 6 months from the close of the financial year of the Company.
2. Interim board meetings
The interim board meetings shall be convened within 60 days from the expiry of
the first six months of the financial year of the Company, or other time which
is considered as appropriate by the board. The directors shall mainly examine
and approve the Company's interim reports and deal with other relevant
matters at such meetings.
3. First-quarter and third-quarter meetings
The meetings shall be held in the first month of each of the second and fourth
quarter of the calendar year. The directors shall mainly examine and approve the
Company's quarterly reports for the preceding quarters at such meetings.
(2) Extraordinary board meetings.
If any of the following circumstances occurs, the chairman of the board of
directors shall issue a notice convening an extraordinary board meeting within
ten (10) days which shall not be limited by the notice period prescribed in
Article 24 hereof:
1. Shareholder(s) representing more than 10% of the voting rights
consider(s) it necessary;
2. The chairman of the board of directors considers it necessary;
3. More than one-third of the directors jointly propose it;
4. More than one-half of the independent directors jointly propose it;
5. The supervisory committee proposes it;
6. The president proposes it.
Article 15 The board meetings may be held on-site, by conference call
or by written resolutions.
The board meetings may be held by conference call or other similar communication
equipment, provided that the attending directors are able to hear clearly other
directors' speech at the meeting and communicate among themselves. All
attending directors shall be considered as being present at the meetings. In the
event that the attending directors are unable to sign on the resolutions on
site, they shall express their opinions orally during the meeting and complete
the signing procedures as soon as possible.
When the board of directors accepts discussion on any motion in written form
instead of holding a board meeting, the draft of the motion must be sent to each
director by hand, post, telegraph or facsimile transmission. In addition, when
the number of the directors signed on the draft satisfies the quorum required by
laws, regulations and the Articles of Association, and the motion has been sent
to secretary to the board by foregoing methods, such motion shall be deemed as
the board resolution, then no further board meeting will be necessary. However,
regular board meetings shall not resolve on any motion in such a way of written
motions. Furthermore, if the board considers that any major shareholder or
director has any material conflict of interests in any motion to be resolved at
a board meeting (as defined by applicable domestic and overseas regulations) or
director, such motion shall not be resolved in such a way of written motions.
Article 16 A board meeting shall be convened and chaired by the
chairman of the board.
If the chairman of the board is unable or fails to convene and chair the
meetings, the deputy chairman shall convene and chair the meetings; if the
deputy chairman of the board is unable or fails to convene and chair the
meetings, a director shall be jointly elected by a simple majority of directors
to convene and chair the meetings.
Article 17 The quorum of board meetings shall be formed by a majority
of directors.
Article 18 Directors shall attend the board meetings in person. Where a
director is unable to attend a meeting for any reason, he may authorize another
director in writing to attend the meeting as his proxy. The written
authorization shall set out the name of the attorney as well as the subject,
limit and validity of such authorization, and shall be signed or sealed by the
principal.
Article 19 The board of directors shall propose to the shareholders'
general meeting to replace any independent director who has not been present in
person for three times consecutively at board meeting.
In the event that any other director has twice consecutively failed to be
present in person at any board meeting, 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.
CHAPTER 5 PROPOSED RESOLUTIONS OF BOARD MEETINGS
Article 20 Resolutions shall be proposed to the board meetings in the
following circumstances:
(1) The chairman of the board of directors propose it; (2) More than one-third
of the directors jointly propose it; (3) The supervisory committee proposes it;
(4) Any special committee of the board proposes it; (5) The president proposes
it;
(6) More than one-half of the independent directors jointly propose it;
(7) other circumstances so stipulated by laws, regulations and the Articles of
Association.
Article 21 The secretary to the board shall be responsible for
compiling the proposed resolutions to be considered at the meeting. Any person
proposing the resolution shall submit such proposed resolutions and the relevant
explanatory materials to the secretary to the board 5 days before the date of
notice convening the board meeting. Proposed resolutions in relation to major
connected transactions (as determined on the criteria promulgated by the
relevant regulatory authorities from time to time) in relation to the
appointment and removal of accounting firm, which are subject to approval by the
board or the shareholders at the general meeting and proposed resolutions of
appointment or dismissal of accounting firms shall first be approved by more
than one-half of the independent directors. The relevant materials shall be
submitted to the chairman of the board or the convener of the board meeting
after such materials being compiled by the secretary to the board who shall set
out the time, place and agenda of the meeting.
Article 22 The secretary of the board shall be responsible for
communication and liaison with all directors during the period from the issue of
notice convening the board meeting to the holding of the meeting, and make a
timely supplement of the documents as required by the directors for making
decisions on the resolution.
Where more than one-fourth of the directors or more than two independent
directors consider the materials provided insufficient or uncertain, they may
jointly make a proposal in written form to adjourn the board meeting or the
discussion on part of the proposed resolutions. The board shall accept such
proposal. Unless such proposal is put forward during the meeting, the secretary
to the board shall give a notice to the directors, supervisors and other persons
attending the meeting upon receiving a written joint request from the relevant
directors to adjourn the meeting or discussion on part of the proposed
resolutions.
CHAPTER 6 NOTICE OF MEETINGS
Article 23 A notice of a board meeting shall be given to all the
directors, supervisors or other persons attending the meeting before the date of
such meeting, and shall be signed and issued by the convener of the board
meeting.
The notice of such meeting shall set out the following: (1) the time and place
of the meeting; (2) the duration of the meeting;
(3) the agenda, relevant reasons, subject matter and the relevant materials;
(4) the date of the notice.
Article 24 The notice of the board meetings shall be given in
accordance with the following requirements:
(1) If the time and place of regular board meeting has been stipulated by the
board, the board may not give any notice unless the time and place of regular
board meeting are changed. The agenda and relevant documents of the meeting
shall be given to all directors, supervisors and other persons attending the
meeting at least 3 days in advance;
(2) If the time and place of regular board meeting are not stipulated by the
board, the secretary to the board shall inform all directors at least 14 days in
advance of the time, place and agenda of the meeting by facsimile transmission,
courier, registered post or hand;
(3) The notice shall be written in Chinese and if necessary, be accompanied by
an English version.
Article 25 Any director, upon receipt of the notice, shall notify the
secretary of the board within two days prior to the meeting whether he will
attend the meeting.
A director may waive his right to receive the notice of the board meeting.
If any director has been present in the meeting, and he does not claim before
his arrival or claim at the meeting that no such notice is received by him, it
shall be deemed that the notice of meeting has been served on him.
Article 26 If any adjournment or cancellation of the meeting for any
reason, a notice shall be given to the attendees one day before the original
date of the meeting.
CHAPTER 7 CONSIDERING AND VOTING ON PROPOSED RESOLUTIONS
Article 27 The chairman of the board meeting shall call the meeting as
scheduled.
Article 28 The meeting shall be chaired by the chairman of the meeting.
The person proposing a resolution or relevant persons shall elaborate the
proposed resolutions to the board.
Article 29 Meetings of the board shall be conducted in a democratic way
and views of its members shall be duly respected.
Article 30 When reviewing the relevant motions and items, in order to
understand the main points and situations in detail, the board may require heads
of the relevant departments to attend the meeting to answer relevant questions.
If any proposal being considered at the meeting is found unclear or infeasible
to be fully discussed, the board shall adjourn the discussion on that subject.
Article 31 Attending personnel shall have the right to speak but no
right to vote.
Resolutions of the board shall be made after due consideration of their
opinions.
Article 32 The independent directors shall give their independent
opinions to the board or the general meeting on the following matters:
(1) the nomination, appointment and removal of any director;
(2) the appointment and dismissal of any senior officer;
(3) the remuneration of the directors and senior officers of the Company;
(4) the existing or new loans granted by the Company to its shareholders, actual
controller or related enterprises, or other funds transferred from the Company,
with the total amount exceeding $3 million or 5% of the latest audited net asset
value, and whether the Company has taken effective measures to recover such
debts;
(5) Distribution plans of the cash profits that the board of directors has not
made;
(6) Issues that the independent directors consider possible to impair on the
rights and interests of minority shareholders;
(7) other matters so stipulated by laws, regulations, regulatory documents or
the Articles of Association.
An independent director shall provide his comments by way of: agreeing;
reserving his opinion with reasons; objecting with reasons; or expressing his
view as not being able to provide his comments and his difficulties thereof.
When the relevant issues are of those required to be disclosed, opinions of
independent directors shall be notified in public by the Company. In addition,
if the independent directors have different opinions and cannot come to an
agreement, their opinions shall be disclosed respectively by the board.
Article 33 In reviewing the proposed resolutions at the board meeting,
all directors present at meetings shall declare their affirmative, dissenting
votes or abstaining opinions. The proposal may be voted by show of hands or by a
poll, which shall be decided by the chairman of the board meeting.
The directors who are acting as proxies shall exercise the voting rights within
the scope of such authorization.
Article 34 If a director fails to attend a board meeting in person or
by proxy, he shall be deemed to have waived his rights to vote at the meeting.
Article 35 Any resolutions of the board with respect to any of the
following matters shall be passed by more than two-thirds of the directors while
other resolutions of the board shall be passed by a majority of the directors:
(1) formulation of proposals for the increase or reduction of the registered
capital of the Company; (2) formulation of proposals for the issue of the debt
securities of the Company; (3) making proposals for merger, demerger or
dissolution of the Company; (4) formulation of proposals for amendments to the
Articles of Association; (5) external guarantee; and (6) other matters so
stipulated by laws, regulations or the Articles of Association.
Article 36 Each director has one vote. In the case of equal division of
affirmative and dissenting votes, the chairman of the board of directors is
entitled to a casting vote.
Article 37 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, nor shall he exercise voting rights on behalf of
other directors. Such board meetings shall be convened by a majority of the
directors present thereat who not connected. Decisions made by the board
meetings shall be passed by a majority of the directors that are not connected.
The matters provided in Article 35 hereof to be passed by more than two-thirds
of the directors shall be passed by votes of more than two-thirds of the
directors that are not connected. If the number of non-connected directors
attending the board meetings falls short of three, such matters shall be
submitted to the Company's general meeting for approval.
Article 38 If any director of the Company or its associates (as defined
by the applicable securities listing rules as amended from time to time) has/
have direct or indirect material interest in the contract, transaction or
arrangement entered into or contemplated by the Company (except for employment
contracts between the Company and directors, supervisors, president, deputy
presidents and other senior officers), whether an approval from the board of
directors is required for the relevant matters under normal circumstances, he
shall disclose to the board of the nature and amount of his interest as soon as
practicable.
In respect of the contract, arrangement or proposal in which the relevant
director or his associates has/have substantial interests, the relevant director
shall not vote at the relevant board meeting, nor shall he be counted in the
quorum.
CHAPTER 8 RESOLUTIONS AND MINUTES OF THE MEETINGS
Article 39 In general, resolutions shall be made in respect of all
matters considered at the board meeting.
Article 40 A resolution of the board on the Company's connected
transaction shall not be valid until it is approved by the independent directors
in writing.
Article 41 A written resolution of the board which is signed by the
directors shall not take legal effect as a resolution of the board if it has not
been passed in accordance with the prescribed procedures, notwithstanding all
the directors have already expressed their opinions in different ways.
Article 42 The minutes of the board meeting shall record in detail the
matters discussed by the directors. The minutes shall state the following:
(1) the date and place of the meeting, and the names of convener and chairman of
the meeting;
(2) the names of the directors attending the meeting in person or by proxy and
the names of their proxies;
(3) the agenda of the meeting;
(4) the summary of the directors' opinions (for a meeting by written
resolution, the directors' opinions in writing shall prevail) (including any
doubts or objections of the directors);
(5) the voting method and result of each proposed resolution (the result of the
voting shall set out the respective number of the votes of assenting, dissenting
or abstention).
Article 43 The minutes of each board meeting shall be given to all
directors as soon as practicable. Directors who wish to amend or supplement the
minutes shall submit a written report setting out his comments to the chairman
of the board within one week after the receipt of the minutes circulated.
Article 44 Directors and recorder(s) present at meetings shall sign the
minutes. Each director 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
properly and permanently kept as important documents of the Company in the
premises thereof.
Article 45 Any director who votes for a resolution in violation of any
laws, administrative regulations, the Articles of Association or resolutions of
general meeting shall be directly liable for all losses arising therefrom. Any
director who votes against the resolution and who has been proved as having
expressed dissenting opinions on the resolution that are recorded in the minutes
of the meeting may be exempted from such liability. Any director who abstains
from voting or who fails to attend the meeting in person or by proxy shall not
be exempted from such liability. Any director who explicitly expresses his
objection in the course of discussion but fails to cast an objection vote shall
not be exempted from such liability.
CHAPTER 9 IMPLEMENTATION OF THE RESOLUTIONS OF
THE BOARD MEETING AND FEEDBACKS
Article 46 The board of the Company shall strictly comply with the
laws, regulations and requirements of the stock exchange on which the Company's
share are listed and transacted in relation to the disclosure of the
Company's information. It shall ensure that matters examined and/or
resolutions passed at the board meeting are disclosed truly, accurately,
thoroughly and in a timely manner.
Article 47 Prior to disclosure of any resolution of the board through
normal channels, any attendee shall by no means disclose it in any form or
acquire any interest for himself thereby.
CHAPTER 10 IMPLEMENTATION OF THE RESOLUTIONS OF
THE BOARD MEETING AND FEEDBACKS
Article 48 The following matters shall not be carried out until they
are examined and approved by the board and submitted to and approved by the
general meeting:
(1) to formulate the Company's annual budget and final accounts;
(2) to formulate the Company's profit distribution proposals and loss
recovery proposals;
(3) to formulate the proposals for increase or reduction of the Company's
registered capital;
(4) to formulate the proposals for issue of Company's debt securities;
(5) to formulate the proposals for merger, demerger or dissolution of the
Company;
(6) to formulate the proposals for any amendment to the Articles of
Associations;
(7) to make proposal of any employment or replacement of the accounting firm
which audits the Company's accounts at the shareholders' general meeting.
Article 49 The president shall fully implement the resolutions passed
by a board meeting within the scope of his duties or as authorized by the board
and report to the board on the implementation of such resolutions. Other matters
shall be organized and implemented by related departments arranged by the board,
which shall receive and consider the report of these departments. The secretary
to the board shall be responsible for transfer of the reporting material
abovementioned in written form to the board.
Article 50 The chairman of the board shall have the power to, or
authorize the deputy chairman or other directors to, supervise the
implementation of the resolutions of the meeting.
Article 51 At each board meeting, the president or other related
departments shall report on the implementation of the resolutions passed by the
board during the last meeting to the board in written form. The board shall
evaluate the implementation of such resolutions.
Article 52 Under the direction of the board and the chairman, the
secretary to the board shall take initiatives to obtain information about the
progress on the implementation of the resolutions, and shall, in a timely
manner, report to and submit proposals to the board and the chairman thereof in
relation to the important issues in implementation.
CHAPTER 11 SUPPLEMENTARY ARTICLES
Articles 53 These Rules are an appendix to the Company's Articles of
Association. They are prepared by the board and shall come into effect, together
with the Company's Articles of Association amended in accordance with the
requirement for domestically listed companies, upon approval of a shareholders'
general meeting by passing a special resolution. Any amendment to these
Rules shall be proposed by the board in form of an amendment proposal, and shall
come into effect upon approval of a shareholders' general meeting by passing
a special resolution.
Article 54 The shareholders' general meeting authorizes the board to
interpret these Rules.
Article 55 Where any matter is not covered by these Rules or where
these Rules fail to comply with the laws, regulations and other relevant
regulatory documents and provisions of the Articles of Association and Rules of
Procedure for General Meetings, those laws, regulations, other relevant
regulatory documents and provisions of the Articles of Association and Rules of
Procedure for General Meetings shall prevail.
Article 56 The phrase 'more than' herein for the numbers includes
the numbers indicated themselves while 'majority' excludes the numbers
indicated themselves.
APPENDIX IV PROPOSED RULES AND PROCEDURES FOR MEETINGS OF SUPERVISORS
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to regularize the operation of the supervisory
committee of Air China Limited (hereinafter referred to as the 'Company') and
to ensure the supervisory committee to perform its obligations granted by all
shareholders, these Rules shall be formulated according to laws, regulations and
regulatory documents such as the 'Company Law of the People's Republic of
China' (hereinafter referred to as the 'Company Law'), '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', and provisions of the Articles of Association
of Air China Limited (hereinafter referred to as the 'Articles of Association').
Article 2 The supervisory committee of the Company shall report to the
shareholders' general meeting and monitor the legal and procedural compliance
of the Company's financial undertakings and the discharge of duties of its
directors, president, deputy president and other officer(s) in order to
safeguard the legal interests of the Company and its shareholders.
CHAPTER 2 ORGANIZATION OF THE SUPERVISORY COMMITTEE
Article 3 The supervisory committee shall be established with proper
proportions of staff representatives and external supervisors in accordance with
the Articles of Association.
Article 4 In addition to satisfying the requirements set out in the
Company Law and the Articles of Association, supervisors shall also have legal
and accounting-related professional knowledge and work experience.
Article 5 There shall be one chairman on the supervisory committee.
The chairman shall be appointed or removed by more than two-thirds of the
members of the supervisory committee.
The chairman of the supervisory committee shall preside over the business of the
supervisory committee and exercise the following powers:
1. to convene and preside over meetings of the supervisory committee;
2. to arrange for formulation of working plans of, and implementation of
resolutions of the supervisory committee;
3. to execute documents in relation to the supervisory committee;
4. to report, on behalf of the supervisory committee, to the shareholders'
general meeting on its work;
5. to oversee and examine the implementation of resolutions of the supervisory
committee;
6. to exercise other powers stipulated in relevant laws and regulations and the
Articles of Association or delegated by the supervisory committee.
In the event that the chairman of the supervisory committee is unable to perform
his duties, he shall appoint a supervisor to act on his behalf.
Article 6 The term of office for supervisors shall be three years.
Upon expiration of his term, a supervisor may be re-elected for a successive
term.
If a new supervisory committee is not elected during re-election, the members of
the existing supervisory committee shall perform their duties until a new
session of the supervisory committee is formed.
Supervisors may resign from their office prior to expiration of their term of
office. In the event that the number of supervisors falls short of the quorum of
the supervisory committee as a result of such resignation, the resignation shall
not become effective until the vacancy resulting from the resignation is filled
up by a succeeding supervisor.
CHAPTER 3 FUNCTIONS AND POWERS OF THE SUPERVISORY COMMITTEE
Article 7 The supervisory committee is accountable to the shareholders
in general meeting and exercise the following functions and powers in accordance
with the laws:
(1) to examine the Company's financial undertakings and authorize, on behalf
of the Company, accounting firms to independently review the same of the
Company, whenever necessary;
(2) to oversee the Company's directors, president, deputy president and other
officers during the discharge of their duties to the Company, and to propose the
removal of the directors, president, deputy president and other senior officers
for any violations of the laws, administrative regulations, Articles of
Association or any resolutions of shareholders' general meeting;
(3) if any act of the Company's directors, president, deputy president and
other officers damages the interests of the Company, to require them to rectify
such act accordingly;
(4) to verify financial information such as financial reports, business reports
and profit distribution plans as proposed by the board of directors to be tabled
at the shareholders' general meeting, and if in doubt, to appoint any
registered accountant or practicing auditors in the name of the Company to
assist in reviewing them;
(5) to review any agreement governing major connected transactions, examine
execution of such agreement and report to the shareholders' general meeting
and, if necessary, give specific opinions on such major connected transactions;
(6) to review revised projects financed by raised proceeds and give opinion;
(7) to propose the extraordinary motions for the shareholders' general
meeting;
(8) to propose the convening of extraordinary general meetings and, in case the
board of directors does not perform the obligations to convene and chair the
shareholders' general meetings in accordance with the requirements of the
laws, administrative regulations and Articles of Association, to convene and
chair the shareholders' general meetings;
(9) to propose the convening of extraordinary meetings of the board of
directors;
(10) to attend any meeting(s) of the board of directors and oversee such issues
as the validity of convening its meeting(s) or as whether connected directors'
abstaining from voting thereat and its resolutions comply with the laws and
regulations and Articles of Association or are in line with the actual needs of
the Company;
(11) to represent the Company in negotiation with or taking an action against a
director;
(12) to exercise such other powers as delegated by the laws, regulations,
Articles of Association and shareholders' general meeting.
Supervisors shall attend meeting(s) of the board of directors.
Article 8 At the annual general meeting, the supervisory committee
shall deliver the supervision report of the Company for the previous year,
including:
(1) examination of financial undertakings of the Company;
(2) performance of directors, president, deputy president and other senior
officers of the Company for complying with the relevant laws, regulations,
Articles of Association and resolutions of the shareholders' general meeting;
(3) other material issues to be reported to the shareholders' general meeting
as deemed necessary by the supervisory committee.
The supervisory committee may, if it thinks necessary, comment on motions
proposed at the shareholders' general meeting, and file an independent report
accordingly.
Article 9 To exercise its supervisory powers, the supervisory
committee shall, in case that the Company's financial undertakings are in
violation of the laws or regulations, and that the Company's directors,
president, deputy president or other senior officers act in violation of the
laws or regulations or Articles of Association, report to the board of directors
and the shareholders' general meeting or directly to the regulatory
securities authorities under the State Council and other relevant authorities.
Article 10 To excise its powers, the supervisory committee may, if
necessary, retain legal or accounting firms to provide professional assistance
at reasonable expenses which shall be borne by the Company.
Article 11 In exercise of its supervisory powers, the supervisory
committee shall not perform the duties in lieu of the board of directors or the
president, nor undertake any operations on behalf of the Company.
Article 12 In exercise of its/their supervisory powers, the supervisory
committee or supervisors shall comply with the applicable laws and Articles of
Association and perform its supervisory powers honestly and diligently to
protect the lawful interests of shareholders and the Company. Supervisors shall
not use their office and authority to serve their own interests, nor shall they
disclose trade secrets or other confidential information on the Company's
operation and management.
CHAPTER 4 RULES FOR MEETINGS OF THE SUPERVISORY COMMITTEE
Article 13 The supervisory committee shall hold at least one meeting
every six (6) months. Upon the proposal made by the chairman of the supervisory
committee or more than two-thirds of its members, the supervisory committee may
hold an extraordinary meeting.
Article 14 The chairman of the supervisory committee shall issue notice
of its meeting, while its liaison officers shall inform any relevant party to
prepare for such meeting.
Any notice of meeting of the supervisory committee shall include the date and
place of the meeting, subject of discussion and the issue date thereof.
Such notice of meeting shall be given to all supervisors and related parties to
be present or in attendance at the meeting ten (10) days prior to the date
appointed for holding of such meeting, either by facsimile, courier, registered
post or by hand. A notice of an extraordinary meeting may be served three (3)
days prior to the date thereof.
Any notice of delay or cancellation of such meeting due to any reason shall be
served on the attendees one (1) day prior to the scheduled date.
Article 15 Motions of the supervisory committee are put forward
primarily based on the matters considered by the board of directors or proposed
by the supervisory committee.
Any proposal required to be submitted to the supervisory committee by
supervisors and other relevant personnel for examination, discussion and/or
decision shall be submitted in advance to its liaison officers. After
compilation of proposals by its liaison officers, the chairman shall decide
whether the proposal should be included in the agenda.
In principle, any proposal submitted shall be included in the agenda; otherwise
the chairman shall specify reasons in writing to the proposer. The chairman
shall not withhold it from discussion or without response; otherwise the
proposer shall have the right to report it to the relevant regulatory
authorities.
Proposals together with the notice of the meeting shall be served on all members
of the supervisory committee and those who are due to attend the meeting.
Article 16 At any meeting of supervisory committee prior to a annual
general meeting, the supervisory committee shall examine its supervision report
in relation to the Company for the previous year under Article 8 hereof.
Article 17 The chairman of the supervisory committee shall be
responsible for convening and holding its meetings. 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. The quorum of the supervisory
committee meetings shall be formed by more than two-thirds of the supervisors.
The supervisory committee may, whenever necessary, require the directors,
president, deputy presidents and other senior officers, internal and external
auditors to attend its meetings to answer any questions that pose concern to it.
Article 18 Supervisors shall be present at meetings of the supervisory
committee. If they fail to do so for any reason, they may authorize in writing
other supervisors to act as proxies and vote on their behalf. Such written
authorization shall include the name of the proxies, the matters in question,
their authority and the period of validity, and shall bear the signature or seal
of the person appointing the proxy. Should supervisors neither be present at
meetings of the supervisory committee nor appoint proxies to attend the same on
their behalf, they shall be deemed to abstain their voting rights at such
meetings.
Any written authorization as such shall be made in writing together with its
details and description of the authority of proxy, and be served on the liaison
officers of the supervisory committee one (1) day prior to the holding of its
meeting. The liaison officers of the supervisory committee shall be responsible
for registration of proxy and announce it at the opening of meetings.
The written authorisation may be prepared in standard format by the liaison
officers of the supervisory committee and be served on supervisors together with
any notice of meetings.
Article 19 If any supervisor fails to attend meetings of the
supervisory committee in person twice consecutively, nor appoints another
supervisors to be present on their behalf, he shall be deemed incapable of
performing his responsibilities and the shareholders' general meeting or the
employee representatives' meeting shall replace that supervisor.
Article 20 The chairman shall call a meeting of the supervisory
committee as scheduled.
Subject to the unanimous agreement on the agenda of meetings among supervisors
present, any proposed motions shall be considered separately.
Article 21 Meetings of the supervisory committee shall be conducted in
a democratic way and views of its members shall be duly respected while any
views, though diverse, shall also be kept upon making any decision. Supervisors
holding different views or with objections shall abide by and implement any
lawful resolutions of the supervisory committee. They shall not interfere
therein or act out of their personal will; otherwise, the supervisory committee
has the right to propose to the shareholders' general meeting to remove them
from office.
Article 22 For any agenda item to be considered by the supervisory
committee, the proposer or any supervisor appointed shall speak on this,
elaborating its main ideas, cause and effect, and overriding points of the
motion. For any significant motion, relevant personnel shall be organized to
conduct a prior investigation and verification and make report thereon in
writing for all supervisors' consideration.
Article 23 Any supervisor that is in connection with a motion shall
withdraw and abstain from voting.
Article 24 Relevant personnel shall attend any meeting(s) of the
supervisory committee only during consideration of matters that concern them,
and withdraw from it in respect of other matters. Attending personnel shall has
the right to speak but no right to vote. Resolutions of the supervisory
committee shall be made after due consideration of their opinions.
Article 25 Voting on resolutions at a meeting of the supervisory
committee shall be conducted by registered poll or a show of hands. However, a
registered poll shall be adopted if more than two supervisors so request.
Supervisors shall cast a vote each.
Article 26 All supervisors present at meetings shall declare their
affirmative, dissenting votes or abstaining opinions. The attending supervisors
acting as proxies shall exercise the rights within the power of attorney.
Resolutions of the supervisory committee shall come into effect subject to the
approval by more than two-thirds of its members.
Article 27 In principle, the supervisory committee shall make
resolutions regarding the matters considered. Resolutions passed at the meetings
shall be announced prior to the close of meetings and signed by all members
present.
Article 28 Minutes shall be kept for meetings of the supervisory
committee. The minutes shall include the date and place of the meeting; the name
of the presider; the names of the present supervisors and those of the
appointors and their proxies; agenda of meetings; the main points of the
supervisors' speeches; and the voting modes and results of each motion (the
voting results shall include the number of affirmative votes, dissenting votes
and abstention votes).
Supervisors and recorder(s) present at 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 properly and
permanently kept as important documents of the Company.
CHAPTER 5 INFORMATION DISCLOSURE OF MEETINGS OF THE SUPERVISORY COMMITTEE
Article 29 The chairman of the supervisory committee shall oversee and
examine implementation of resolutions of the supervisory committee. The Company
shall file and/or publish an announcement on such resolutions of the supervisory
committee in accordance with applicable laws and the relevant requirements
specified by the stock exchange(s) on which the Company's shares are listed.
Article 30 Prior to disclosure of any resolution of the supervisory
committee through normal channels, any attendee shall by no means disclose it in
any form or acquire any interest for himself thereby.
CHAPTER 6 EXECUTION OF RESOLUTIONS OF THE SUPERVISORY COMMITTEE
Article 31 For resolutions which involve suggestions on the Company's
operations and management or require responses from the board of directors and
the management, the supervisory committee shall designate supervisor(s), who
shall be responsible for negotiation with the board of directors and the
president for implementation of the resolutions, and file a written report to
the supervisory committee in respect of implementation of the resolutions.
Article 32 Any significant matter required to be dealt with or
rectified under resolutions of the supervisory committee shall be arranged and
implemented by the board of directors in accordance with resolutions passed by
in shareholders' general meetings. The general and specific matters shall
directly vest with the president for arrangement and implementation. Results of
the implementation shall be reported to shareholders' general meetings and
circulated among supervisors.
Article 33 The chairman of the supervisory committee shall appoint
supervisors to examine implementation of matters required to be dealt with or
rectified under resolutions and may give evaluation opinions thereon.
CHAPTER 7 SUPPLEMENTARY ARTICLES
Articles 34 These Rules are an appendix to the Company's Articles of
Association. They are prepared by the supervisory committee and shall come into
effect, together with the Company's Articles of Association amended in
accordance with the requirement for domestically listed companies, upon approval
of a shareholders' general meeting by passing a special resolution. Any
amendment to these Rules shall be proposed by the supervisory committee in form
of an amendment proposal, and shall come into effect upon approval of a
shareholders' general meeting by passing a special resolution.
Article 35 The shareholders' general meeting authorizes the
supervisory committee to interpret these Rules.
Article 36 Where any matter is not covered by these Rules or where
these Rules fail to comply with the laws, regulations and other relevant
regulatory documents and provisions of the Articles of Association and Rules of
Procedure for General Meetings, those laws, regulations, other relevant
regulatory documents and provisions of the Articles of Association and Rules of
Procedure for General Meetings shall prevail.
Article 37 The phrase 'more than' herein for the numbers includes
the numbers indicated themselves.
APPENDIX V PROPOSED CONNECTED TRANSACTION DECISION MAKING SYSTEM
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to regularize the connected transactions of Air
China Limited (hereinafter referred to as the 'Company'), to ensure the
fairness of such connected transactions, to protect the benefits of investors
with minority interests, to improve the management level of the Company, these
Rules are formulated in accordance with relevant laws, regulations and
regulatory documents currently applicable in China such as the 'Company Law
of the People's Republic of China', 'Securities Law of the People's
Republic of China', and related listing rules of securities or shares of any
stock Exchange on which the Company's shares are listed (including but not
limited to the Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange,
hereafter referred to as 'Stock Exchange' and 'Shanghai Stock Exchange'
respectively) (hereafter referred to as the 'Listing Rules'), and the
Articles of Association of Air China Limited (hereafter referred to as the
'Articles of Association').
Article 2 This system is applicable to the connected transactions
between the Company and its connected party. The Company's connected
transactions shall be in compliance with the relevant provisions of both the
Listing Rules of the Stock Exchange and of the Shanghai Stock Exchange. Should
there be any inconsistency between these two sets of rules, the stricter shall
prevail.
Article 3 Any connected transaction between the Company and a
connected party shall be examined in accordance with the provisions hereof and
be disclosed domestically and overseas at the same time, unless the transaction
is exempted from compliance with the examination and disclosure requirements on
connected transactions under the Listing Rules of the Shanghai Stock Exchange
and of the Stock Exchange.
CHAPTER 2 THE BASIC PRINCIPLES OF CONNECTED TRANSACTIONS
Article 4 Connected transactions of the Company shall be conducted in
accordance with the following basic principles:
(1) the principles of integrity and credibility, equality, voluntariness, fair
value and transaction for consideration;
(2) the pricing principles of equality, justice and fairness;
(3) the operational principles of market-led orientation and openness;
(4) being in the interests of the Company's shareholders as a whole;
(5) If a connected party (or if not a connected party, a person or his associate
who has a material interest in the transaction to be voted (see the definition
set out in Listing Rules of the Stock Exchange) as defined by the Listing Rules
of Stock Exchange under special circumstances) has right to vote at the general
meeting, he shall abstain from voting. The voting of this general meeting shall
be carried out in written form;
(6) If there is a relationship of interests between any director and the
connected person, the director shall abstain from voting at the board meeting in
respect of the connected transaction;
(7) The board of directors of the Company shall evaluate if the connected
transaction is in the interest of the Company on an objective basis. If
necessary, the board shall retain a professional valuation firm or independent
financial adviser to provide their opinion thereon;
(8) The connected transactions shall be in compliance with the applicable laws
and regulations and the provisions of the Listing Rules of the Shanghai Stock
Exchange and the Stock Exchange.
Article 5 The Company shall adopt effective measures to prevent
connected parties from interfering the Company's operations and damage the
benefits of the Company through monopolizing the channels of the purchasing and
sales business. The principle for determining the price or fee of a connected
transaction shall be comparable to the price or fee of such kind of transaction
made with any independent third party in the market. The Company shall disclose
completely the criteria for setting the price of a connected transaction.
Article 6 The Company shall adopt effective measures to prevent
shareholders and their connected persons from transferring the Company's
capitals, assets and other resources in any way.
CHAPTER 3 CONNECTED PARTY AND CONNECTED TRANSACTION
Article 7 The connected parties of the Company, including the
Company's connected legal persons, connected natural persons and potential
connected parties, basically include all kinds of legal and natural persons
specified by the Listing Rules of the Shanghai Stock Exchange and the Stock
Exchange.
Article 8 The connected transactions as stated in this system is
mainly referred to the transactions between the Company or its controlled
subsidiaries and the Company's connected parties, which basically include the
types of transactions specified by the Listing Rules of Shanghai Stock Exchange
and the Stock Exchange.
CHAPTER 4 LIMITS FOR APPROVING CONNECTED TRANSACTION
Article 9 Any connected transaction fulfilling one of the following
conditions shall be subject to the examination and approval by the shareholders'
general meeting(s):
(1) after testing the transaction, any of the assets ratio, revenue ratio,
consideration ratio and equity capital ratio specified in the Listing Rules of
the Stock Exchange is more than 2.5%; or
(2) the transaction amount represents more than 5% of the latest audited net
asset absolute value of the Company; or
(3) the amount of purchases or sales, in which such transaction is included, of
major assets (including general transactions) within one year exceeds 30% of the
total assets of the Company.
Article 10 The board shall have the authority to approve any connected
transaction which fulfills the following conditions:
(1) based on the ratio tests specified in the Listing Rules of the Stock
Exchange, any of the assets ratio, revenue ratio, consideration ratio and equity
capital ratio of the transaction is less than 2.5%; and
(2) the transaction amount represents less than 5% of the latest audited net
asset absolute value of the Company; and
(3) the total amount of purchases or sales, in which such transaction is
included, of major assets (including general transactions) within one year is
less than 30% of the total assets of the Company.
Article 11 The working committee of the president has the power to
examine and approve any connected transaction fulfilling the following two
conditions:
(1) after testing the transaction, any of the assets ratio, revenue ratio,
consideration ratio and equity capital ratio specified in the Listing Rules of
the Stock Exchange is less than 0.1%; and
(2) the amount of purchases or sales, in which such transaction is included, of
major assets (including general transactions) within one year is less than 30%
of the total assets of the Company.
CHAPTER 5 PROCEDURES FOR APPROVING CONNECTED TRANSACTIONS
Article 12 Any connected transactions between the Company and its
connected parties shall be concluded by signing of a written agreement.
Necessary avoidance measures shall be made for entering into such agreement
between them:
(1) any individual may only represent one of the parties when entering into a
connected transaction agreement;
(2) A connected party shall not interfere with the Company's decision in any
manner;
Article 13 The shareholders' general meetings, the board of
directors and the working committee of the president of the Company are the
authorities for approving connected transactions, they examine and approve the
connected transactions within their respective authority limits.
Article 14 Any connected director shall not exercise his voting right
on any connected transaction under examination by the board of directors of the
Company, nor shall he exercise the voting right on behalf of any other director.
The quorum at such board meeting consists of a majority of non-connected
directors. Any resolution made in the board meeting shall be passed by a
majority of non-connected directors. According to provisions of the Articles of
Association, the matters required to be passed by affirmative votes of more than
two-thirds of the directors shall be required to be passed by affirmative votes
of more than two-thirds of the non-connected directors. If the number of
non-connected directors present falls short of three, the matter shall be
submitted to the shareholders' general meeting of the Company for discussion.
The definition of the connected director referred to in the preceding paragraph
is subject to the Listing Rules of the Shanghai Stock Exchange and the Stock
Exchange, it shall include but not limit to any director under any of the
following circumstances:
(1) being a party to the transaction(s);
(2) being a person who has direct or indirect control over the party to the
transaction(s);
(3) being employed by a party to the transaction(s) or by a body corporate able
to be directly or indirectly controlled the party to the transaction(s);
(4) being a close family member of a party to the transaction(s) or of a person
who directly or indirectly controls over the party to the transaction(s) (the
scope is detailed in the relevant definition of the Listing Rule of Shanghai
Stock Exchange);
(5) being a close family member of any director, supervisor or senior officer of
a party to the transaction(s) or of a person who directly or indirectly controls
over the party to the transaction(s) (the scope is detailed in the relevant
definition of the Listing Rule of Shanghai Stock Exchange) ;
(6) being the other director specified by the domestic and overseas regulatory
body, the Shanghai Stock Exchange, the Stock Exchange or their Listing Rules;
(7) being a director whose independent commercial judgement may be affected as
determined by the domestic and overseas regulatory body, the Shanghai Stock
Exchange, the Stock Exchange or the Company based on other reasons.
Article 15 To be valid, voting on connected transaction(s) by the board
of directors shall be passed by non-connected directors and be subject to
signing of the Company's independent director(s).
Article 16 Unless the connected director(s) have made disclosure to the
board of directors and the connected director(s) abstained from voting on such
transaction and such connected director(s) are also not counted in the quorum,
the Company shall have the right to request such connected director(s) or other
enterprises where such connected director(s) assume offices to cancel the
relevant contracts, transactions or arrangements, save that such connected
director(s) or other enterprises where they assume offices are bona fide third
parties.
Article 17 Where the amount of the connected transaction(s) between the
Company and the connected party(s) accounts for 5% or more of the absolute value
of the Company's audited net assets for the latest period, the Company shall,
apart from making timely disclosure, appoint an intermediary with qualifications
for execution of securities and futures related business to audit or evaluate
the subject of the transaction(s) and shall submit such transaction(s) to the
shareholder's general meeting(s) for examination.
Article 18 Where any connected transaction is required to be proposed
for examination and approval at the shareholders' general meeting, it shall
be submitted for examination for approval by the board of directors after
obtaining authorization from the independent directors.
After the judgement of independent directors, an intermediary may be appointed
to issue an independent financial advisor report for the basis of the judgement.
Article 19 When any general meeting considers connected transactions,
the connected shareholder shall not participate and shall abstain from voting.
The number of voting shares that the connected shareholder represents shall not
be counted as part of the total number of valid votes. In the event that the
connected shareholder cannot abstain from voting under special circumstances,
the Company may carry out the vote in accordance with the normal procedure and
provide a detailed explanation on the general meeting. The Company shall comply
statistics on the election situations of non-connected shareholders, and
disclose the information in announcement of the resolution.
The definition of the connected shareholder referred to in the preceding
paragraph is subject to the Listing Rules of the Shanghai Stock Exchange and the
Stock Exchange, it shall include but not limit to any shareholder under any of
the following circumstances:
(1) being a party to the transaction(s);
(2) being a person who has direct or indirect control over the party to the
transaction(s);
(3) being under direct or indirect control of the party to the transaction(s);
(4) being under direct or indirect common control of the same legal person(s) or
natural person(s) as the party to the transaction(s);
(5) being a shareholder whose voting rights are restricted and affected due to
any outstanding share transfer agreement or any other agreement entered into
with the party to the transaction or its connected party;
(6) being the other shareholder specified by the domestic and overseas
regulatory body, the Shanghai Stock Exchange, the Stock Exchange or their
Listing Rules;
(7) being the other shareholders who may make use of the Company for their own
interests as determined by the domestic and overseas regulatory body, the
Shanghai Stock Exchange or the Stock Exchange.
Article 20 To be valid, voting on connected transaction(s) by the
shareholders' general meeting(s) shall be deemed valid if it is duly passed
by the shareholders representing the voting rights exceeding a half of the
voting rights of the shareholders present at the general meeting(s) other than
the connected shareholders.
Article 21 Independent director(s) shall have the right to give their
independent opinion to the board of directors or the shareholders' general
meeting(s) in respect of the Company's existing or new significant loans or
other capital transaction(s) with its shareholders, the actual controller(s) and
the connected party(s), and in respect of whether the Company has taken
effective actions to recover the accounts receivable.
CHAPTER 6 SUPPLEMENTARY ARTICLES
Article 22 This system is formulated by the board and shall come into
effect, together with Articles of Association of the Company revised by the
Company in accordance with Domestic Listing Requirement upon the approval by a
general meeting.
Article 23 The board is responsible for interpreting this system.
Article 24 Where any matter is not covered by these Rules, the laws,
regulations and other relevant regulatory documents, Listing Rules of Shanghai
Stock Exchange and Stock Exchange and provisions of the Articles of Association
shall prevail.
Article 25 The phrase 'more than' and 'less than' herein for the
numbers include the numbers indicated themselves while the phrases of 'majority'
and 'exceed' exclude the numbers indicated themselves.
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