CONTINUING CONNECTED TRANSACTION AND NOTICE OF EGM
If you are in doubt as to any aspect of this circular or as to what action to take in relation to this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Air China Limited, you should at once hand this circular and the accompanying form of proxy and the notice of attendance to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 00753)
CONTINUING CONNECTED TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
A letter from the Board is set out on pages 4 to 21 of this circular.
A notice convening the EGM to be held at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC, is set out in Appendix I to this circular. Whether or not you are able to attend the EGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for convening the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment should you so wish.
2 November 2018
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DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
1 |
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LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
4 |
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I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
4 |
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II. Continuing Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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III. EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
20 |
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IV. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
21 |
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APPENDIX I NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . |
22 |
In this circular, the following expressions have the following meanings, unless the context requires otherwise:
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"2015 Circular" |
the circular issued by the Company on 7 November 2015 to its Shareholders in respect of certain continuing connected transactions |
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"2015 EGM" |
the Company's extraordinary general meeting held on 22 December 2015 |
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"Articles of Association" |
the articles of association of the Company, as amended from time to time |
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"associate(s)" |
has the meaning ascribed to it by the Hong Kong Listing Rules |
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"Board" |
the board of Directors of the Company |
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"CNACD" |
China National Aviation Construction and Development Company, a wholly-owned subsidiary of CNAHC |
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"CNACG" |
China National Aviation Corporation (Group) Limited, a wholly-owned subsidiary of CNAHC |
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"CNAHC" |
China National Aviation Holding Corporation Limited, a state-owned enterprise incorporated under the laws of the PRC and the controlling shareholder of the Company |
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"CNAHC Group" |
CNAHC, its subsidiaries and its associates (excluding the Group) |
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"CNAMC" |
China National Aviation Media Co., Ltd., a wholly-owned subsidiary of CNAHC |
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"Company" |
Air China Limited, a company incorporated in the PRC, whose H shares are listed on the Stock Exchange as its primary listing venue and have been admitted to the Official List of the UK Listing Authority as its secondary listing venue, and whose A shares are listed on the Shanghai Stock Exchange |
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"Comprehensive Services Framework Agreement" |
the comprehensive services framework agreement entered into between the Company and CNAHC on 30 October 2018 |
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"connected person" |
has the meaning ascribed to it by the Hong Kong Listing Rules |
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"Construction Project Management Framework Agreement" |
the framework agreement for assigning management of basic construction project entered into between the Company and CNACD on 30 October 2018 |
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"CSRC" |
the China Securities Regulatory Commission |
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"Director(s)" |
the director(s) of the Company |
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"EGM" |
the extraordinary general meeting of the Company to be held at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC |
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"Government Charter Flight Service Framework Agreement" |
the government charter flight service framework agreement entered into between the Company and CNAHC on 30 October 2018 |
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"Group" |
the Company and its subsidiaries |
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"H Shareholders" |
holders of the H Shares |
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"H Share(s)" |
the overseas listed foreign share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Stock Exchange as its primary listing venue and have been admitted to the Official List of the UK Listing Authority as its secondary listing venue |
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"Hong Kong" |
Hong Kong Special Administrative Region of the PRC |
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"Hong Kong Listing Rules" |
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
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"Hong Kong Stock Exchange" |
The Stock Exchange of Hong Kong Limited |
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"Independent Shareholders" |
the Shareholders of the Company other than CNAHC and its associate(s) |
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"Latest Practicable Date" |
30 October 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein |
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"Media Services" |
including but not limited to the operation, design, creation, planning, production, promotion, and dissemination in relation to aviation-related all-media business sectors such as in-flight entertainment system, in-flight network platform, brand management, media publicity management, advertisement management, all-media platform management, media cooperation management, and copyright management |
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"Media Services Framework Agreement" |
the media services framework agreement entered into between the Company and CNAMC on 30 October 2018 |
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"Percentage Ratio" |
has the meaning ascribed to it by the Hong Kong Listing Rules |
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"Properties Leasing Framework Agreement" |
the properties leasing framework agreement entered into between the Company and CNAHC on 30 October 2018 |
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"RMB" |
Renminbi, the lawful currency of the PRC |
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"Sales Agency Companies" |
certain subsidiaries of CNAHC acting as the Company's sales agents pursuant to the Sales Agency Services Framework Agreement |
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"Sales Agency Services Framework Agreement" |
the sales agency services framework agreement entered into between the Company and CNAHC on 30 October 2018 |
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"Shanghai Listing Rules" |
the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange |
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"Shareholder(s)" |
the shareholders of the Company |
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"substantial shareholder" |
has the meaning ascribed thereto under the Hong Kong Listing Rules |
Directors:
Non-Executive Directors:
Mr. Cai Jianjiang (Chairman)
Mr. Xue Yasong
Mr. John Robert Slosar
Executive Director:
Mr. Song Zhiyong (President)
Independent Non-Executive Directors:
Mr. Wang Xiaokang
Mr. Liu Deheng
Mr. Hui Hon-chung, Stanley
Mr. Li Dajin
Registered Address:
Blue Sky Mansion
28 Tianzhu Road
Airport Industrial Zone
Shunyi District Beijing,
the PRC
Principal Place of Business in Hong Kong:
5th Floor, CNAC House
12 Tung Fai Road
Hong Kong International Airport
Hong Kong
2 November 2018
To the Shareholders
Dear Sirs or Madams,
CONTINUING CONNECTED TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
I. INTRODUCTION
Reference is made to the announcement of the Company dated 30 October 2018 in relation to, among other things, certain continuing connected transactions of the Company. The purpose of this circular is to provide you with further information on the abovementioned matters so that you can make an informed decision on voting in respect of the relevant resolution at the EGM.
II. CONTINUING CONNECTED TRANSACTIONS
1. Introduction
Reference is made to the 2015 Circular in relation to, among others, the continuing connected transactions of the Company. At the 2015 EGM, the Independent Shareholders approved certain continuing connected transactions of the Company and their relevant annual caps for the three years ending 31 December 2018 that are required by the Shanghai Listing Rules to be approved by the Independent Shareholders. The Company expected certain continuing connected transactions set out in the 2015 Circular will continue to be conducted after 31 December 2018, therefore the Company will continue to comply with Chapter 14A of the Hong Kong Listing Rules for such continuing connected transactions to be conducted in the next three years (i.e. from 1 January 2019 to 31 December 2021).
On 30 October 2018, the Board approved the continuing connected transactions set out in this circular and the relevant annual caps for each of them for the three years ending 31 December 2021.
2. Parties and Connections of the Parties
The Company, whose principal business activity is air passenger, air cargo and related services, conducts continuing connected transactions with the following parties:
‧ CNAHC
CNAHC is a substantial shareholder of the Company and is therefore a connected person of the Company as defined under the Hong Kong Listing Rules. CNAHC is primarily engaged in managing its state-owned assets and its equity interest in investees, charter of aircraft and maintenance of aviation equipment.
‧ CNAMC
CNAMC is a wholly-owned subsidiary of CNAHC and is therefore a connected person of the Company as defined under the Hong Kong Listing Rules. CNAMC is primarily engaged in media and advertising business.
‧ CNACD
CNACD is a wholly-owned subsidiary of CNAHC and is therefore a connected person of the Company as defined under the Hong Kong Listing Rules. CNACD is primarily engaged in businesses such as entrusted asset management, real estate development, and implementation and supervision of construction projects.
3. Continuing Connected Transactions
3.1. Government Charter Flight Services
The Company entered into the Government Charter Flight Service Framework Agreement with CNAHC on 30 October 2018.
Description of transaction: Pursuant to the Government Charter Flight Service Framework Agreement, CNAHC shall resort to the Company's charter flight services so as to fulfill the government charter flight assignment. The Company's hourly rate of the charter flight service fee will be calculated on the basis of the following formula:
Hourly rate = Total cost per flight hour × (1 + 6.5%)
Total cost per flight hour includes direct costs and indirect costs.
The initial term of the Government Charter Flight Service Framework Agreement is from 1 January 2019 to 31 December 2021. Upon expiration of the initial term, the Government Charter Flight Service Framework Agreement may be automatically renewed for successive terms of three years each, subject to the satisfaction of the requirements of the Hong Kong Listing Rules/Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/Shanghai Listing Rules. Upon expiry of the Government Charter Flight Service Framework Agreement, the Board will re-assess the terms and conditions of the Government Charter Flight Service Framework Agreement, and the Company will re-comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Government Charter Flight Service Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for the transaction: As the national flag carrier of China, the Company has historically provided charter flights for government related travel services to State leaders, government delegations, national sports teams and cultural envoys. The Company has gained significant brand recognition by being the designated government charter flight carrier. Based upon the hourly rate formula under the Government Charter Flight Service Framework Agreement, it is expected that the Company will generate good revenue from such transaction.
Historical Amounts and Proposed Caps:
Set forth below is a summary of the historical annual caps, the actual amounts and the proposed annual caps for the total amount payable by CNAHC to the Company under the Government Charter Flight Service Framework Agreement:
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Historical Annual Caps |
Historical Actual Amounts |
Proposed Annual Caps |
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Transaction |
Annual cap for the year ended 31 December 2016 |
Annual cap for the year ended 31 December 2017 |
Annual cap for the year ended 31 December 2018 |
Actual annual amount for the year ended 31 December 2016 |
Actual annual amount for the year ended 31 December 2017 |
Unaudited historical amount for the period from 1 January to 30 June 2018 |
Estimated annual amount for the year ending 31 December 2018 |
Annual cap for the year ending 31 December 2019 |
Annual cap for the year ending 31 December 2020 |
Annual cap for the year ending 31 December 2021 |
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Total amount payable by CNAHC to the Company in accordance with the Government Charter Flight Service Framework Agreement |
RMB900 million |
RMB900 million |
RMB900 million |
RMB518 million |
RMB441 million |
RMB178 million |
RMB500 million |
RMB900 million |
RMB900 million |
RMB900 million |
Basis for such caps:
In arriving at the above caps, the Directors have considered the historical and estimated transaction amounts for the same type of transactions as set out in the table above and the following factors:
‧ given the growing influence of China in the world, the government's visiting trips are expected to continue to increase during the period from 2019 to 2021; and
‧ uncertainties such as the future jet fuel price could lead to an increase in flight-related costs.
3.2. Sales Agency Services
The Company entered into the Sales Agency Services Framework Agreement with CNAHC on 30 October 2018.
Description of transaction: Pursuant to the Sales Agency Services Framework Agreement, the Sales Agency Companies will:
‧ procure purchasers for the Group's air tickets and cargo spaces on a commission basis; or
‧ purchase air tickets (other than domestic air tickets) and cargo spaces from the Group and resell such air tickets and cargo spaces to end customers.
As for the air passenger agency services, the Group will consult with the Sales Agency Companies on a fair and voluntary basis and determine the agency service fee standards. In addition, the Group and the Sales Agency Companies may agree on specific sales targets and the corresponding incentive plans for achieving such targets to the extent permitted by law and in accordance with the industry practice.
As for the air cargo agency services, the Group and the Sales Agency Companies will discuss and determine the applicable transportation prices, which shall be no less favourable than the prices offered by independent third parties in the PRC air cargo transportation market for transporting such products, with reference to prices charged by air cargo agencies of the same scale and type, as well as the specific product types and required transportation time. The Sales Agency Companies may formulate the transportation prices charged to their customers (including the prices for extended services offered to their customers) based on the aforesaid transportation prices, with differences to be retained as commissions. In addition, the Group and the Sales Agency Companies may agree on specific sales targets and the corresponding price discounts for achieving such sales targets in accordance with the industry practice.
The initial term of the Sales Agency Services Framework Agreement is from 1 January 2019 to 31 December 2021. Upon expiration of the initial term, the Sales Agency Services Framework Agreement may be automatically renewed for successive terms of three years each, subject to the satisfaction of the requirements of the Hong Kong Listing Rules/Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/Shanghai Listing Rules. Upon expiry of the Sales Agency Services Framework Agreement, the Board will re-assess the terms and conditions of the Sales Agency Services Framework Agreement, and the Company will re-comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Sales Agency Services Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for the transaction: The Group has entered into similar transactions with various parties including both connected persons and independent third parties in its ordinary course of business. Air transportation sales agency is a highly marketized business. In view of the long-term amicable sales agency cooperation relationship between the Group and the Sales Agency Companies as well as the rich experience and sizable customer base of the latter in the air transportation agency business, the Group is willing to continue working with the Sales Agency Companies to provide air transportation sales agency services.
For each of the three years ending 31 December 2019, 2020, and 2021, the aggregate annual amount of sales of airline tickets and cargo space by the Group to CNAHC Group and the aggregate annual amount of agency commission payable by the Group to CNAHC Group under the Sales Agency Services Framework Agreement are expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules; therefore, the above transaction will be exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules for continuing connected transactions.
3.3. Comprehensive Services
The Company entered into the Comprehensive Services Framework Agreement with CNAHC on 30 October 2018.
Description of transaction: Pursuant to the Comprehensive Services Framework Agreement:
‧ CNAHC Group will be appointed as one of the providers of ancillary production and supply services of the Group. The primary services provided by CNAHC Group (provided that its relevant members have obtained the relevant qualifications and certifications) to the Group include but are not limited to:
(1) supply of various items for in-flight services;
(2) property management services in areas including Beijing, Chengdu, Chongqing, Shanghai, Hangzhou and Guangzhou;
(3) hotel accommodation and staff recuperation;
(4) airline catering services; and
(5) printing of air tickets and other publications.
‧ The Company accepts the commission of CNAHC and will provide welfare- logistics services for CNAHC's retired employees.
‧ The prices of airline catering services to be provided by CNAHC Group to the Group will be determined by the parties based on the prices for the same type of catering services available from independent third parties with reference to relevant factors as mentioned below. A department or an officer designated by the two parties will be responsible for verifying market price for the same type of catering services available from independent third parties. In general, inquires on prices and terms will be made to at least two independent third parties by e-mail, facsimile or telephone. The transaction price will be determined by the two parties after comparison and taking into consideration certain factors including
cost of raw materials and labour costs. When products change according to service demands, appropriate adjustment will be made upon negotiation between the two parties based on the variation in cost of raw materials or CPI index.
‧ The prices of property management services to be provided by CNAHC Group to the Group will be determined by the parties based on the price for the same type of property management services available from independent third parties with reference to relevant factors as mentioned below. A department or an officer designated by the two parties will be responsible for verifying the prices and terms of the same type of property management services available from independent third parties. In general, inquiries on prices and terms will be made to at least two independent third parties by e-mail, facsimile or telephone. The price of property management services will be determined by the two parties after comparison and taking into consideration certain factors including quality, scope and type of property management services and specific needs of the parties.
‧ The prices of hotel accommodation and staff recuperation services to be provided by CNAHC Group to the Group shall be no less favourable than the prices for the same type of guest room products or services available from independent third parties of the same level in the area of the hotel. A department or an officer designated by the Company will be responsible for verifying the prices and terms for the same type of products and services available from independent third parties. In general, inquires on prices and terms will be made to at least two independent third parties by e-mail, facsimile or telephone. The prices will be determined by the two parties after comparison and taking into consideration certain factors including quality of products and services, seasonal demand in the hotel industry, location of hotel and specific needs of the parties.
‧ For supply of items for in-flight services, printing and other services to be provided by CNAHC Group to the Group, CNAHC Group as a supplier of the Group shall provide such services in accordance with the bidding management requirements of the Group. The prices of such services shall be no less favourable than the prices of similar products or services available from independent third parties.
‧ The management charges payable by CNAHC to the Company for the welfare logistics services shall be settled at a rate of 4% of the actual aggregate welfare expense paid to such retired employees as confirmed by CNAHC.
The initial term of the Comprehensive Services Framework Agreement is from 1 January 2019 to 31 December 2021. Upon expiration of the initial term, the Comprehensive Services Framework Agreement may be automatically renewed for successive terms of three years each, subject to the satisfaction of the requirements of the Hong Kong Listing Rules/ Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/Shanghai Listing Rules. Upon expiry of the Comprehensive Services
Framework Agreement, the Board will re-assess the terms and conditions of the Comprehensive Services Framework Agreement, and the Company will re-comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Comprehensive Services Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for the transaction: For the services to be provided by CNAHC Group, the Directors believe that CNAHC Group has special strengths that independent parties do not possess, including (i) knowledge of the aviation industry; (ii) a proven track record of quality and timely service; and (iii) the sites, where services are provided by CNAHC Group, are generally near to the site of the Group, and therefore CNAHC Group is in a position to offer efficient services. In light of these factors, the Directors believe that it is in the best interest of the Group to enter into the above transactions with CNAHC Group.
Historical Amounts and Proposed Caps:
Set forth below is a summary of the historical annual caps, the actual amounts and the proposed annual caps of the total amount payable by the Group to CNAHC Group in accordance with the Comprehensive Services Framework Agreement:
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Historical Annual Caps |
Historical Actual Amounts |
Proposed Annual Caps |
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Transaction |
Annual cap for the year ended 31 December 2016 |
Annual cap for the year ended 31 December 2017 |
Annual cap for the year ended 31 December 2018 |
Actual annual amount for the year ended 31 December 2016 |
Actual annual amount for the year ended 31 December 2017 |
Unaudited historical amount for the period from 1 January to 30 June 2018 |
Estimated annual amount for the year ending 31 December 2018 |
Annual cap for the year ending 31 December 2019 |
Annual cap for the year ending 31 December 2020 |
Annual cap for the year ending 31 December 2021 |
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Amount payable by the Group to CNAHC Group in accordance with the Comprehensive Services Framework Agreement |
RMB1,375 million |
RMB1,513 million |
RMB1,664 million |
RMB1,251 million |
RMB1,285 million |
RMB711 million |
RMB1,500 million |
RMB2,100 million |
RMB2,500 million |
RMB3,000 million |
For each of the three years ending 31 December 2019, 2020 and 2021, the aggregate annual amount payable by CNAHC to the Company for the provision of welfare-logistics services to the retired employees is expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules, therefore such transaction will be exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules for continuing connected transactions.
Basis for such caps:
In arriving at the above caps, the Directors have considered the historical transaction amount for the same type of transactions and have taken into account the expected growth of the Group's air passenger services in the next few years. As the Group has been continually expanding its fleet size and increasing its transportation capacity, the demand for ancillary production and supply services such as supply of items for in-flight services, airline catering services and aviation ground services will continue to grow and the transaction amount under the Comprehensive Services Framework Agreement is expected to increase accordingly. In addition, the increase in labour cost in the future will result in the increase in transaction amount. In light of the above factors, based on the annual cap of 2018 and the annual growth rate of approximately 20%, it is expected that the amount payable by the Group to CNAHC Group in 2019 in accordance with the Comprehensive Services Framework Agreement will not exceed RMB2,100 million, and will increase at an annual rate of 20% afterwards.
3.4. Property Leasing
The Company entered into the Properties Leasing Framework Agreement with CNAHC on 30 October 2018.
Description of transaction: Pursuant to the Properties Leasing Framework Agreement, CNAHC Group agreed to lease part of its properties to the Group for uses as its business premises, offices and storage housing; and the Group also agreed to lease to CNAHC Group part of its properties for the same uses.
The rent payable under the Properties Leasing Framework Agreement will be determined by the two parties based on the prices for leasing services available from independent third parties for the same type of properties in close proximity to the properties with reference to relevant factors as mentioned below. A department or an officer designated by the two parties will be responsible for verifying the prices and terms for the same type of properties and related services available from independent third parties. In general, inquires on prices and terms will be made to at least two independent third parties by e-mail, facsimile or telephone. The property leasing prices will be determined by the two parties after comparison and taking into consideration certain factors including property service quality, location and district of properties and specific needs of the parties, and specific property leasing agreements will be entered into.
The initial term of the Properties Leasing Framework Agreement is from 1 January
2019 to 31 December 2021. Upon expiration of the initial term, the Properties Leasing Framework Agreement may be automatically renewed for successive terms of three years each,
subject to the satisfaction of the requirements of the Hong Kong Listing Rules/Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/Shanghai Listing Rules. Upon expiry of the Properties Leasing Framework Agreement, the Board will re-assess the terms and conditions of the Properties Leasing
Framework Agreement, and the Company will re-comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Properties Leasing Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for such transaction: In the ordinary course of business, the Group has entered into similar property leasing transactions with various parties including both connected persons and independent third parties.
Historical Amounts:
Set forth below is the historical annual caps and the actual amounts of the rent payable by the Group to CNAHC Group under the properties leasing framework agreement entered between the Company and CNAHC on 29 October 2015:
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Historical Annual Caps |
Historical Actual Amounts |
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Transaction |
Annual cap for the year ended 31 December 2016 |
Annual cap for the year ended 31 December 2017 |
Annual cap for the year ended 31 December 2018 |
Actual annual amount for the year ended 31 December 2016 |
Actual annual amount for the year ended 31 December 2017 |
Unaudited historical amount for the period from 1 January to 30 June 2018 |
Estimated annual amount for the year ending 31 December 2018 |
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Rent payable by the Group to CNAHC Group |
RMB155 million |
RMB178 million |
RMB200 million |
RMB104 million |
RMB107 million |
RMB52 million |
RMB117 million |
Proposed Caps:
As IFRS 16 "Lease" will take effect from 1 January 2019 and be applicable to financial years starting on or after 1 January 2019, pursuant to the requirements of the Hong Kong Stock Exchange, the annual caps for the continuing connected transactions of property leasing with the Group as the lessee for the years 2019, 2020 and 2021 will be set based on the total value of right-of-use assets relating to the leases to be entered into by the Group, as detailed in the table below:
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Proposed Annual Caps |
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Annual cap for the year ending 31 December 2019 |
Annual cap for the year ending 31 December 2020 |
Annual cap for the year ending 31 December 2021 |
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Total value of right-of- use assets relating to the leases to be entered into by the Group acting as lessee in accordance with the Properties Leasing Framework Agreement |
RMB500 million |
RMB550 million |
RMB620 million |
The aggregate annual amount of rent payable by CNAHC Group to the Group for each of the three years ending 31 December 2019, 2020 and 2021 are expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules, and therefore such transaction will be exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules for continuing connected transactions.
Basis for such caps:
In arriving at the above caps, the Directors have considered (i) the historical transaction amount for the same type of transactions; (ii) the future growth of rent (estimated to be approximately 5% per year) payable by the Group to CNAHC Group and the increase in the leasing of the Group (estimated to be approximately 10% per year) arising from business development of the Group; (iii) the estimated future total annual rents to be paid by the Group to CNAHC Group by taking the above factors into consideration, the amount of which for the years 2019, 2020 and 2021 is estimated to be not exceeding RMB135 million, RMB155 million and RMB179 million, respectively; and (iv) the value of right-of-use assets calculated by discounting the estimated total annual rents of the future years using the incremental borrowing rate of the Group as the discount rate.
3.5. Media Services
The Company entered into the Media Services Framework Agreement with CNAMC on 30 October 2018.
Description of transaction: Pursuant to the Media Services Framework Agreement, CNAMC will provide Media Services to the Group. Of which, the Company grants CNAMC an exclusive right to distribute in-flight reading materials of the Company. Based on business
needs, CNAMC and the Company will enter into relevant business execution agreements under which the Company shall be responsible for the standards, budgets, and appraisal of business execution while CNAMC shall be responsible for the actual implementation of business execution. Where CNAMC provides Media Services for the subsidiaries of the Company, the parties thereto will enter into relevant business execution agreements based on the principles under the Media Services Framework Agreement.
‧ In respect of Media Services provided by CNAMC to the Company, the Company shall pay CNAMC relevant service fees as per the market price. In general, inquires by e-mail, facsimile or telephone on prices and terms will be made by the Company to at least two independent third parties, and the transaction price will be determined by the two parties after comparison and taking into consideration certain factors including specific needs of the parties to the transaction and the service quality.
‧ In respect of the Company's media resources used by CNAMC in operating the Company's media business, CNAMC shall pay the Company an annual media resource charge of RMB13.8915 million for each of the three years of 2019, 2020, and 2021 as per the comparable market prices of the media resources.
The initial term of the Media Services Framework Agreement is from 1 January 2019 to
31 December 2021. Upon expiration of the initial term, the Media Services Framework Agreement may be automatically renewed for successive terms of three years each, subject to the satisfaction of the requirements of the Hong Kong Listing Rules/Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/ Shanghai Listing Rules. Upon expiry of the Media Services Framework Agreement, the Board will re-assess the terms and conditions of the Media Services Framework Agreement, and the Company will re-comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Media Services Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for such transaction: The Directors believe that it is in the best interest of the Company to enter into above transaction with CNAMC because:
‧ media and advertising business is not the core competency of the Company while CNAMC has extensive experience in in-flight advertising operation and has a proven network of advertising sponsors to draw upon; and
‧ as a company having engaged in the aviation media business for a long time, CNAMC possesses professional qualifications and team and has a profound understanding of the corporate culture and brand of the Company as well as advantages in aviation media business sectors such as entertainment programmes production and advertising agency.
Historical Amounts and Proposed Caps:
Set forth below is a summary of the historical annual caps, the actual amounts and the proposed annual caps for the amount payable by the Group to CNAMC under the Media Services Framework Agreement:
|
|
Historical Annual Caps |
Historical Actual Amounts |
Proposed Annual Caps |
|
|
|
|
|
|
Transaction |
Annual cap for the year ended 31 December 2016 |
Annual cap for the year ended 31 December 2017 |
Annual cap for the year ended 31 December 2018 |
Actual annual amount for the year ended 31 December 2016 |
Actual annual amount for the year ended 31 December 2017 |
Unaudited historical amount for the period from 1 January to 30 June 2018 |
Estimated annual amount for the year ending 31 December 2018 |
Annual cap for the year ending 31 December 2019 |
Annual cap for the year ending 31 December 2020 |
Annual cap for the year ending 31 December 2021 |
|
|
||||||||||
|
Amount payable by the Group to CNAMC in accordance with the Media Services Framework Agreement |
RMB270 million |
RMB297 million |
RMB326.7 million |
RMB208 million |
RMB158 million |
RMB80 million |
RMB290 million |
RMB550 million |
RMB700 million |
RMB750 million |
The annual amount payable by CNAMC to the Group under the Media Services Framework Agreement for each of the three years ending 31 December 2019, 2020 and 2021 is expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules, and therefore such transaction will be exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules for continuing connected transactions.
Basis for such caps:
In arriving at the above caps, the Directors have considered the historical and estimated transaction amounts for the same type of transactions as set out in the table above and the following factors:
Firstly, as the Group expands its fleet size, the need of the Group for aviation media businesses such as entertainment programmes and advertising agency will increase accordingly. Secondly, the Company's service development strategy requires the continuous enhancement of its service quality. Therefore, the Company will
continuously increase its investment in the purchase, production, promotion, and dissemination of aviation media business, and commission CNAMC to provide more Media Services. As a result of the above factors, it is expected that the transaction amount from 2019 to 2021 will increase. Based on the estimated transaction amount to
be paid by the Group to CNAMC in 2018 and given the above business growth, it is expected that the transaction amount will not exceed RMB550 million in 2019, and will not exceed RMB700 million and RMB750 million in 2020 and 2021, respectively.
3.6. Construction Project
The Company entered into the Construction Project Management Framework Agreement with CNACD on 30 October 2018.
Description of transaction: Pursuant to the Construction Project Management Framework Agreement, CNACD is commissioned by the Company to serve as the manager of the construction projects and establish project headquarters. It shall provide management services for the Company's projects based on project characteristics using its industry expertise and professional skills. The management work includes the management at the early stage, management during the implementation of the project, and management at the late stage.
CNACD receives service fees from the Company based on the audited amounts in the financial settlement of specific commissioned projects in accordance with the commissioned management contract. The service fees shall be calculated as 3% of the audited amount in the financial settlement of the investment relating to the management contents provided by CNACD as commissioned by the Company, with the rewards and penalties agreed by both parties based on the project management progress and the balance and the particulars to be specified in individual project commissioned management contracts. Alternatively, CNACD may receive service fees from the Company as per the commissioned management contents based on the size of or investment in the projects to be commissioned, and the service fees shall be calculated as per the full-labor cost (including management fee) based on the human resources and materials invested by CNACD, with the rewards and penalties agreed by both parties based on the project management progress and the balance and the particulars to be specified in relevant agreements. If the actual settlement price of the project exceeds the investment amount agreed upon by both parties due to reasons not caused by the Company, the government and force majeure, CNACD shall pay the excess settlement price.
The initial term of the Construction Project Management Framework Agreement is from 1 January 2019 to 31 December 2021. Upon expiration of the initial term, the Construction Project Management Framework Agreement may be automatically renewed for successive terms of three years each, subject to the satisfaction of the requirements of the Hong Kong Listing Rules/Shanghai Listing Rules and the performance of the approval procedures required by the Hong Kong Listing Rules/Shanghai Listing Rules. Upon expiry of the Construction Project Management Framework Agreement, the Board will re-assess the terms and conditions of the Construction Project Management Framework Agreement, and the Company will re- comply with the relevant rules governing connected transactions under the Hong Kong Listing Rules/Shanghai Listing Rules. During the term of the Construction Project Management Framework Agreement, either party may terminate the agreement on any 31 December by giving the other party at least three months' written notice.
Reasons for such transaction: The Directors believe that it is in the best interest of the Group to enter into the above transaction with CNACD because:
‧ CNACD specializes in construction projects relating to the aviation industry, has extensive experience in construction project management relating to the aviation industry, and cooperated well with the Company in the past; and
‧ Commissioned management is a management model commonly used in large infrastructure construction projects. Outsourcing construction project management enables the Company to concentrate its management resources on the operation of core businesses.
Historical amount and proposed caps:
Set forth below is a summary of the historical annual caps, the actual amount and the proposed annual caps for the amount payable by the Company to CNACD under the Construction Project Management Framework Agreement:
|
|
Historical Annual Caps |
Historical Actual Amount |
Proposed Annual Caps |
|
|
|
|
|
|
|
|
|
|
|
Transaction |
Annual cap for the year ended 31 December 2016 |
Annual cap for the year ended 31 December 2017 |
Annual cap for the year ended 31 December 2018 |
Actual annual amount for the year ended 31 December 2016 |
Actual annual amount for the year ended 31 December 2017 |
Unaudited amount for the period from 1 January to 30 June 2018 |
Estimated annual amount for the year ending 31 December 2018 |
Annual cap for the year ending 31 December 2019 |
Annual cap for the year ending 31 December 2020 |
Annual cap for the year ending 31 December 2021 |
|
|
||||||||||
|
Amount payable by the Company to CNACD in accordance with the Construction Project Management Framework Agreement |
Below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules |
RMB4 million |
RMB1 million |
RMB5 million |
RMB27 million |
RMB120 million |
RMB130 million |
RMB130 million |
||
Basis for such caps: As its business develops, the Company expects an increase in demand for new, rebuilding and expansion, and maintenance projects over the next three years. Meanwhile, for construction projects that have been planned but not started, it is expected that the progress will be accelerated in the future as the Company's urgency for using the construction projects has intensified, and project expense will increase accordingly. Therefore, it is expected that the transaction amount from 2019 to 2021 will increase compared with that of the past. It is estimated that the total amount payable by the Company to CNACD under the Construction Project Management Framework Agreement will not exceed RMB120 million in 2019, and will not exceed RMB130 million in 2020 and 2021.
4. INTERNAL CONTROL
The Company has adopted the following measures to ensure that the above continuing connected transactions will be conducted on normal commercial terms and in accordance their respective framework agreements and the pricing policies of the Company:
• Before entering into the above connected transactions, the Finance Department, the Legal Department, the Asset Management Department (which has a dedicated sub- division responsible for management of connected transactions) and if applicable, certain other relevant departments of the Company will review the proposed terms for the individual transactions and discuss with the relevant business department of the Group to ensure that such transactions are conducted on normal commercial terms and terms of applicable framework agreements and in compliance with the pricing policies of the Group before these relevant departments approve the finalized transaction agreements according to their authority within the Group.
• The Asset Management Department of the Company is responsible for supervising connected transactions. The Asset Management Department will regularly monitor and collect detailed information on relevant continuing connected transactions (including but not limited to the implementation of the pricing policies, payment arrangement, and actual transaction amounts of the above continuing connected transactions) to ensure that such transactions are conducted in accordance with applicable framework agreements for continuing connected transactions. In addition, the Asset Management Department will be responsible for reviewing and evaluating the actual transaction amount and cap balance of the above continuing connected transactions on a monthly basis. If the relevant cap is expected to be exceeded, the Asset Management Department will report to the management of the Company and take appropriate measures in accordance with the relevant requirements of the Hong Kong Listing Rules and/or the Shanghai Listing Rules.
• The Internal Audit Department of the Company is responsible for carrying out annual assessment on the internal control procedures of the Group, including but not limited to information relating to the management of continuing connected transactions. In addition, the Internal Audit Department is responsible for preparing the annual assessment report on internal control and will submit the same to the Board for review and approval.
• The independent auditor and the independent non-executive Directors of the Company will conduct annual review on the non-exempt continuing connected transactions.
5. HONG KONG LISTING RULES IMPLICATIONS
As each of the applicable Percentage Ratios (other than the profits ratio) of the continuing connected transactions (excluding the de minimis continuing connected transactions) set out above, on an annual basis, is higher than 0.1% and less than 5.0%, they therefore fall under Rule 14A.76(2)(a)
of the Hong Kong Listing Rules. Accordingly, these continuing connected transactions are subject to the reporting, announcement and annual review requirements under Chapter 14A of the Hong Kong Listing Rules, but are exempted from the Independent Shareholders' approval requirement.
Mr. Cai Jianjiang, Mr. Song Zhiyong, and Mr. Xue Yasong are considered to have a material interest in each of the continuing connected transactions set out above and therefore have abstained from voting in the relevant board resolution in respect of the continuing connected transactions. Save as disclosed above, none of the Directors have a material interest in any of the continuing connected transactions and hence no other Director is required to abstain from voting in the relevant board resolution.
6. PRC LAW IMPLICATIONS
Pursuant to the Shanghai Listing Rules, the following agreements shall be approved or ratified by the Independent Shareholders at the extraordinary general meeting of the Company:
(1) Government Charter Flight Service Framework Agreement;
(2) Sales Agency Services Framework Agreement;
(3) Comprehensive Services Framework Agreement;
(4) Properties Leasing Framework Agreement;
(5) Media Services Framework Agreement.; and
(6) Construction Project Management Framework Agreement.
III. EGM
The Company will convene an EGM at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC. Votes on the resolution to be considered at the EGM shall be taken by way of poll. The notice of EGM is reproduced in Appendix I to this circular. A form of proxy and a notice of attendance are also enclosed herein and published on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (http:// www.airchina.com.cn).
Pursuant to Rule 14A.36 of the Hong Kong Listing Rules, any Shareholder with a material
interest in the continuing connected transactions described in Section II of this circular is required to abstain from voting on the relevant resolution at the EGM. As at the Latest Practicable Date, CNACG is a wholly-owned subsidiary of CNAHC. Therefore, CNAHC and CNACG are required to abstain from voting on the resolution in respect of the above continuing connected transactions. As at the Latest Practicable Date,
CNAHC and CNACG held an aggregate of 7,508,571,617 shares of the Company (representing approximately 51.70% of the issued share capital of the Company), control or are entitled to control over the voting right in respect of their shares in the Company. To the best knowledge, information and belief of
the Directors, having made all reasonable enquiries, save as disclosed above, no Shareholder has a material interest in the above resolution or should be required to abstain from voting on the relevant resolution at the EGM.
The Company will close its register of members and suspend the registration of transfer of shares from Sunday, 18 November 2018 to Tuesday, 18 December 2018 (both days inclusive) in order to determine the list of holders of the Company who will be entitled to attend and vote at the EGM. Shareholders of the Company whose names appear on the register of members of the Company on Sunday, 18 November 2018 may attend the EGM after completing the registration procedures. In order to qualify for attendance at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, by 4:30 p.m. on Friday, 16 November 2018.
Whether or not you intend to attend the EGM, you are requested to complete and return the form of proxy in accordance with the instruction printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for convening the EGM or any adjournment thereof. If you intend to attend the EGM, you are required to complete and return the notice of attendance to the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, on or before Wednesday, 28 November 2018. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof should you so wish and completion and return of the notice of attendance do not affect the right of a shareholder to attend the meeting.
Pursuant to Shanghai Listing Rules, the related shareholders (as defined in Shanghai Listing Rules) of the Company are required to abstain from voting on the relevant resolution at the EGM. Therefore, CNAHC and CNACG are required to abstain from voting on the resolution in respect of the Government Charter Flight Service Framework Agreement, the Sales Agency Services Framework Agreement, the Comprehensive Services Framework Agreement, the Properties Leasing Framework Agreement, the Media Services Framework Agreement, and the Construction Project Management Framework Agreement.
IV. RECOMMENDATION
The Board (including the independent non-executive Directors) considers that the terms and conditions of the continuing connected transactions set out in Section II of this circular are fair and reasonable. Such continuing connected transactions are on normal commercial terms or better and in the ordinary and usual course of business of the Company, and are in the interests of the Company and its Shareholders as a whole. The Board also considers that the annual caps for each of the three years ending 31 December 2019, 2020 and 2021 for the abovementioned continuing connected transactions are fair and reasonable. The Board recommends the Shareholders to vote in favour of the resolution which will be proposed at the EGM.
By Order of the Board
Cai Jianjiang
Chairman
Beijing, the PRC
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the "EGM") of Air China Limited (the "Company") will be held at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC to consider and, if thought fit, to pass the following resolution. Unless otherwise indicated, capitalised terms used herein shall have the same meaning as those defined in the circular of the Company dated 2 November 2018.
ORDINARY RESOLUTION
1. To consider and approve the following continuing connected transaction agreements, the transactions contemplated thereunder and their respective annual caps:
(1) The Government Charter Flight Service Framework Agreement entered into between the Company and CNAHC on 30 October 2018;
(2) The Sales Agency Services Framework Agreement entered into between the Company and CNAHC on 30 October 2018;
(3) The Comprehensive Services Framework Agreement entered into between the Company and CNAHC on 30 October 2018;
(4) The Properties Leasing Framework Agreement entered into between the Company and CNAHC on 30 October 2018;
(5) The Media Services Framework Agreement entered into between the Company and CNAMC on 30 October 2018; and
(6) The Construction Project Management Framework Agreement entered into between the Company and CNACD on 30 October 2018.
By Orders of the Board
Air China Limited
Cai Jianjiang
Chairman
Beijing, the PRC, 2 November 2018
As at the date of this notice, the directors of the Company are Mr. Cai Jianjiang, Mr. Song Zhiyong, Mr. Xue Yasong, Mr. John Robert Slosar, Mr. Wang Xiaokang*, Mr. Liu Deheng*, Mr. Stanley Hui Hon- chung* and Mr. Li Dajin*.
* Independent non-executive director of the Company Notes:
1. Closure of register of members and eligibility for attending and voting at the EGM
Holders of H Shares of the Company are advised that the register of members of the Company will be closed from Sunday, 18 November 2018 to Tuesday, 18 December 2018 (both days inclusive), during which time no transfer the Company will be effected and registered. In order to qualify for attendance and voting at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-16, 17/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, by 4:30 p.m. on Friday, 16 November 2018.
H Share Shareholders of the Company whose names appear on the register of members of H shares of the Company on Sunday, 18 November 2018 are entitled to attend and vote at the EGM.
2. Notice of Attendance
Holders of H Shares of the Company who intend to attend the EGM should complete and lodge the accompanying notice of attendance and return it to the Company's H Share registrar on or before Wednesday, 28 November 2018. The notice of attendance may be delivered by hand, by post or by fax to the Company's H Share registrar. Completion and return of the notice of attendance do not affect the right of a shareholder to attend and vote at the EGM. However, the failure to return the notice of attendance may result in an adjournment of the EGM, if the number of shares carrying the right to vote represented by the shareholders proposing to attend the EGM by the notice of attendance does not reach more than half of the total number of shares of the Company carrying the right to vote at the EGM.
3. Proxy
Every shareholder who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his/her behalf at the EGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointor or his attorney duly authorised in writing. If the appointor is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company's H Share registrar for holders of H Shares not less than 24 hours before the time specified for the holding of the EGM or any adjournment thereof. If the instrument appointing the proxy is signed by a person
authorised by the appointor, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company's H Share registrar.
4. Other business
(i) The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be responsible for their own traveling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is: 17M Floor
Hopewell Centre
183 Queen's Road East Wanchai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990
FORM OF PROXY FOR EXTRAORDINARY GENERAL MEETING
Number of shares to which this form of proxy relates (Note 1) I/We (Note 2) of being the registered holder(s) of (Note 3) H Shares in the share capital of Air China Limited (the "Company") HEREBY APPOINT (Note 4) the chairman of the meeting and/or (Note 4) of as my/our proxy/proxies: (a) to act for me/us at the extraordinary general meeting (or at any adjournment thereof) of the Company to be held at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC (the "Meeting") for the purpose of considering and, if thought fit, passing the resolution (the "Resolution") as set out in the notice convening the Meeting (the "Notice"); and (b) at the Meeting (or at any adjournment thereof) to vote for me/us and in my/our name(s) in respect of the Resolution as hereunder indicated or, if no such indication is given, as my/our voting proxy thinks fit.
|
ORDINARY RESOLUTION |
FOR(Note 5) |
AGAINST(Note 5) |
ABSTAIN(Note 5) |
||
|
1. |
To consider and approve the following continuing connected transaction agreements, the transactions contemplated thereunder and their respective annual caps: |
|
|||
|
(1) |
The Government Charter Flight Service Framework Agreement entered into between the Company and CNAHC on 30 October 2018; |
|
|
|
|
|
(2) |
The Sales Agency Services Framework Agreement entered into between the Company and CNAHC on 30 October 2018; |
|
|
|
|
|
(3) |
The Comprehensive Services Framework Agreement entered into between the Company and CNAHC on 30 October 2018; |
|
|
|
|
|
(4) |
The Properties Leasing Framework Agreement entered into between the Company and CNAHC on 30 October 2018; |
|
|
|
|
|
(5) |
The Media Services Framework Agreement entered into between the Company and CNAMC on 30 October 2018; and |
|
|
|
|
|
(6) |
The Construction Project Management Framework Agreement entered into between the Company and CNACD on 30 October 2018. |
|
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|
|
Notes:
1. Please insert the number of shares registered in your name(s) to which this proxy form relates. If no number is inserted, this form of proxy will be deemed to relate to all shares registered in your name(s).
2. Full name(s) and address(es) to be inserted in BLOCK CAPITALS.
3. Please insert the total number of shares registered in your name(s).
4. A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies of his own choice to attend and vote instead of him. A proxy need not be a member of the Company. If any proxy other than the chairman of the Meeting is preferred, please strike out the words "the chairman of the meeting and/or" and insert the name(s) and address(es) of the proxy/proxies desired in the space provided. In the event that two or more persons (other than the chairman of the Meeting) are named as proxies and the words "the chairman of the meeting and/or" are not deleted, those words and references shall be deemed to have been deleted.
5. IMPORTANT: IF YOU WISH TO VOTE FOR THE RESOLUTION, TICK IN THE BOX MARKED "FOR". IF YOU WISH TO VOTE AGAINST THE RESOLUTION, TICK IN THE BOX MARKED "AGAINST". IF YOU WISH TO VOTE ABSTAINED, TICK THE APPROPRIATE BOX MARKED "ABSTAIN". Failure to complete the boxes will entitle your voting proxy to cast his vote at his discretion. A member is entitled to one vote for every fully-paid share held and a member entitled to more than one vote need not use all his votes in the same way. A tick in the relevant box indicates that the votes attached to all the shares stated above as held by you will be cast accordingly. The total number of shares referred to in the three boxes for the same resolution cannot exceed the number of Shares stated above as held by you. Any abstain vote will be counted in the calculation of the required majority.
6. This form of proxy must be signed by you or your attorney duly authorised in writing, or in the case of a corporation, must be either under seal or under the hand of a director or attorney duly authorised. If this form of proxy is signed by your attorney, the power of attorney or other document of authorisation must be notarised.
7. In order to be valid, this form of proxy, together with the notarised copy of the power of attorney or other document of authorisation (if any) under which it is signed, for holders of H Shares, must be delivered to the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, not less than 24 hours prior to the time appointed for holding the Meeting (or any adjournment thereof).
8. Completion and delivery of a form of proxy will not preclude you from attending and/or voting at the Meeting (or any adjournment thereof) if you so wish.
9. ANY ALTERATION MADE TO THIS FORM OF PROXY MUST BE INITIALLED BY THE PERSON(S) WHO SIGN(S) IT.
10. To attend and represent the shareholder(s) at the Meeting, the proxy so appointed must produce beforehand his identification document and any power of attorney duly signed by his appointor(s) or the legal representative(s) of his appointor(s). The power of attorney must state the date of issuance.
EXTRAORDINARY GENERAL MEETING NOTICE OF ATTENDANCE
To: Air China Limited (the "Company")
I/We (Note 1) of , being the registered holder of (Note 2) H Shares in the share capital of the Company hereby inform the Company that I/we intend to attend the extraordinary general meeting to be held at 11:30 a.m. on Tuesday, 18 December 2018 at The Conference Room C713, No. 30, Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC or to appoint proxies to attend on my/our behalf.
Signature:
Date: 2018
Notes:
1. Please insert the full name(s) and address(es) of the shareholder(s) as it is recorded in the register of members of the Company in BLOCK CAPITALS.
2. Please insert the number of shares registered in your name(s).
3. Please duly complete and sign this Notice of Attendance, and deliver it to, for holders of H Shares, the Company's H Shares registrar, Computershare Hong Kong Investor Services Limited on or before Wednesday, 28 November 2018.
Address of Computershare Hong Kong Investor Services Limited
17M Floor Hopewell Centre
183 Queen's Road East Wan Chai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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