Last checked at 9 Nov 2015 07:00
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
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 form of proxy and the notice of attendance to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
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.
AIR CHINA LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code:00753)
(1) CONTINUING CONNECTED TRANSACTIONS;(2) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION;(3) PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS ANDMEETINGS OF THE BOARD OF DIRECTORS;(4) PROPOSED ADOPTION OF SHAREHOLDERS' RETURN PLAN FOR THE THREE YEARS FROM 2015 TO 2017;ANDNOTICE OF EXTRAORDINARY GENERAL MEETING
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A letter from the Board is set out on pages 4 to 20 of this circular.
A notice convening the EGM to be held at 2:00 p.m. on Tuesday, 22 December 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC is set out in Appendix V of this circular. Whether or not you are able to attend and/or vote at the EGM, you are requested to complete and return the accompanying 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.
7 November 2015
CONTENTS
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Page |
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DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1 |
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4 |
I. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5 |
II. Continuing Connected Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5 |
III. Proposed Amendments to the Articles of Association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18 |
IV. Proposed Amendments to the Rules and Procedures of Shareholders' Meetings and the Meetings of the Board of Directors. . . . . . . . . . . . . . . . . . | 19 |
V. Proposed Adoption of the Shareholders' Return Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 19 |
VI. EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 19 |
VII. Recommendations of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 20 |
VIII. Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 20 |
APPENDIX I - PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | I-1 |
APPENDIX II - PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS. . . . . . . . . . . . . . . . . . | II-1 |
APPENDIX III - PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | III-1 |
APPENDIX IV - PROPOSED SHAREHOLDERS' RETURN PLAN FOR THE THREE YEARS FROM 2015 TO 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | IV-1 |
APPENDIX V - NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . | V-1 |
DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions have the following meanings:
"2012 Circular" | the circular issued by the Company on 4 December 2012 to its Shareholders in respect of certain continuing connected transactions |
"2012 EGM" | the Company's extraordinary general meeting held on 20 December 2012 |
"Articles of Association" | the articles of association of the Company |
"associates" | has the meaning ascribed thereto under the Listing Rules |
"Board" | the board of directors of the Company |
"CNACD" | China National Aviation Construction and Development Company, a wholly-owned subsidiary of CNAHC |
"CNAHC" | China National Aviation Holding Company, a substantial shareholder of the Company |
"CNAHC Group" | CNAHC, its subsidiaries and its associates (excluding the Company) |
"CNAMC" | China National Aviation Media and Advertisement Co., Ltd., a wholly-owned subsidiary of CNAHC |
"Company" | Air China Limited, a company incorporated in the People's Republic of China, whose H shares are listed on the Hong Kong Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue, and whose A shares are listed on the Shanghai Stock Exchange |
"Comprehensive Services Framework Agreement" | the comprehensive services framework agreement entered into between the Company (for itself and on behalf of its subsidiaries) and CNAHC (on behalf of CNAHC Group) on 29 October 2015 |
"connected person" | has the meaning ascribed thereto under the Listing Rules |
"Construction Project Management Framework Agreement" | the framework agreement for assigning management of basic construction project entered into between the Company and CNACD on 29 October 2015. The annual amount payable by the Company under the Construction Project Management Framework Agreement for each of the three years ending 31 December 2016, 2017 and 2018 is expected to fall below the de minimis threshold as stipulated under Rule 14A.76(1)(a) of the Hong Kong Listing Rules. Accordingly, such transaction will be fully exempt from the reporting, annual review, announcement and independent shareholders' approval requirements for continuing connected transactions |
"CSRC" | the China Securities Regulatory Commission |
"Directors" | the directors of the Company |
"EGM" | the extraordinary general meeting of the Company to be held at 2:00 p.m. on 22 December 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, the PRC |
"Government Charter Flight Service Framework Agreement" | the government charter flight service framework agreement entered into between the Company and CNAHC on 29 October 2015 |
"H Shareholders" | holders of the H Shares |
"H Share(s)" | the ordinary shares issued by the Company, with a par value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange |
"Hong Kong Listing Rules" | The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
"Hong Kong Stock Exchange" | The Stock Exchange of Hong Kong Limited |
"Independent Shareholders" | the shareholders of the Company, other than CNAHC and its associates |
"Media Services Framework Agreement" | the media services framework agreement entered into between the Company and CNAMC on 29 October 2015 |
"Percentage Ratios" | the percentage ratios set out in Rule 14.07 of the Hong Kong Listing Rules, i.e. "assets ratio", "profits ratio", "revenue ratio", "consideration ratio" and "equity capital ratio" |
"PRC" or "China" | the People's Republic of China, excluding, for the purpose of this circular only, Hong Kong, Macau and Taiwan |
"Properties Leasing Framework Agreement" | the properties leasing framework agreement entered into between the Company (for itself and on behalf of its subsidiaries) and CNAHC (on behalf of CNAHC Group) on 29 October 2015 |
"RMB" | Renminbi, the lawful currency of the PRC |
"Sales Agency Companies" | certain subsidiaries of CNAHC acting as the Company's sales agents pursuant to the Sales Agency Services Framework Agreement |
"Sales Agency Services Framework Agreement" | the sales agency services framework agreement entered into between the Company (for itself and on behalf of its subsidiaries) and CNAHC (on behalf of CNAHC Group) on 29 October 2015 |
"Shanghai Listing Rules" | the Rules Governing the Trading of Stocks on the Shanghai Stock Exchange |
"Shareholders" | the shareholders of the Company |
"Shareholders' Return Plan" | the proposed shareholders' return plan of the Company for the three years from 2015 to 2017 |
"substantial shareholder" | has the meaning ascribed thereto under the Listing Rules |
LETTER FROM THE BOARD
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code:00753)
Non-executive Directors:Mr. Cai JianjiangMs. Wang YinxiangMr. Cao JianxiongMr. Feng GangMr. John Robert SlosarMr. Ian Sai Cheung Shiu Executive Directors:Mr. Song ZhiyongMr. Fan Cheng Independent non-executive Directors:Mr. Fu YangMr. Pan XiaojiangMr. Simon To Chi KeungMr. Stanley Hui Hon-chung | Registered office:Blue Sky Mansion28 Tianzhu RoadAirport Industrial ZoneShunyi DistrictBeijingPRC Principal place of business in Hong Kong:5th Floor, CNAC House12 Tung Fai RoadHong Kong International AirportHong Kong
7 November 2015 |
To the Shareholders
Dear Sir or Madam,
(1) CONTINUING CONNECTED TRANSACTIONS;(2) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION;(3) PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS ANDMEETINGS OF THE BOARD OF DIRECTORS;(4) PROPOSED ADOPTION OF SHAREHOLDERS' RETURN PLAN FOR THE THREE YEARS FROM 2015 TO 2017;ANDNOTICE OF EXTRAORDINARY GENERAL MEETING
I. INTRODUCTION
Reference is made to the announcements of the Company dated 28 July 2015 and 29 October 2015 in relation to, among others, certain continuing connected transactions of the Company, the proposed amendments to the Articles of Association, the proposed amendments to the rules and procedures of Shareholders' meetings and meetings of the Board and the proposed adoption of the Shareholders' Return Plan. The purpose of this circular is to provide you with further information on the abovementioned matters so that you may make an informed decision on voting in respect of the relevant resolutions at the EGM.
II. CONTINUING CONNECTED TRANSACTIONS
1. INTRODUCTION
Reference is made to the 2012 Circular in relation to the continuing connected transactions of the Company. At the 2012 EGM, the Independent Shareholders approved certain continuing connected transactions of the Company and their relevant annual caps for the three years ending 31 December 2015 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 2012 Circular will continue to be conducted after 31 December 2015, 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 2016 to 31 December 2018).
On 29 October 2015, 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 2016, 2017 and 2018.
2. PARTIES AND CONNECTION 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 the state-owned assets of CNAHC and the equity it holds in various companies.
• 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.
3. CONTINUING CONNECTED TRANSACTIONS
3.1 Government Charter Flight Services
The Company entered into the Government Charter Flight Service Framework Agreement with CNAHC on 29 October 2015.
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 fulfil 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 x (1 + 6.5%)
Total cost per flight hour includes direct costs and indirect costs.
The term of the Government Charter Flight Service Framework Agreement is from 1 January 2016 to 31 December 2018.
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 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 total amount payable by CNAHC to the Company under the Government Charter Flight Service Framework Agreement:
Historical Annual Caps | Historical Actual Amount | Proposed Annual Caps | ||||||||||||||
Transaction | Annual cap for the year ended 31 December 2013 | Annual cap for the year ended 31 December 2014 | Annual cap for the year ending 31 December 2015 | Actual annual amount for the year ended 31 December 2013 | Actual annual amount for the year ended 31 December 2014 | Unaudited historical amount for the period from 1 January to 30 June 2015 | Estimated Annual amount for the year ending 31 December 2015 | Annual cap for the year ending 31 December 2016 | Annual cap for the year ending 31 December 2017 | Annual cap for the year ending 31 December 2018 | ||||||
Total amount payable by CNAHC to the Company in accordance with the Government Charter Flight Service Framework Agreement | RMB900 Million | RMB900 million | RMB900 million | RMB380 million | RMB421 million | RMB161 million | RMB600 million | RMB900 million | RMB900 million | RMB900 million |
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Basis for such caps:
In arriving at the above caps, the Directors have considered the historical and estimated transaction amount 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 2016 to 2018; 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 (for itself and on behalf of its subsidiaries) entered into the Sales Agency Services Framework Agreement with CNAHC (on behalf of CNAHC Group) on 29 October 2015.
Description of transaction: Pursuant to the Sales Agency Services Framework Agreement, the Sales Agency Companies will:
• procure purchasers for the Company's air tickets and cargo spaces on a commission basis; or
• purchase air tickets (other than domestic air tickets) and cargo spaces from the Company and resell such air tickets and cargo spaces to end customers.
As for the air passenger agency services, the Company will consult with the Sales Agency Companies on a fair and voluntary basis and determine the agency service fee standards. In addition, the Company 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 Company 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 Company 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 term of the Sales Agency Services Framework Agreement is from 1 January 2016 to 31 December 2018.
Reasons for the transaction: The Company 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 Company 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 Company is willing to continue working with the Sales Agency Companies to provide air transportation sales agency services.
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 sales of airline tickets and cargo space by the Company and its subsidiaries to CNAHC Group for resale to end customers in accordance with the Sales Agency Services Framework Agreement:
Historical Annual Caps | Historical Actual Amount | Proposed Annual Caps | ||||||||||
Transaction | Annual cap for the year ended 31 December 2013 | Annual cap for the year ended 31 December 2014 | Annual cap for the year ending 31 December 2015 | Actual annual amount for the year ended 31 December 2013 | Actual annual amount for the year ended 31 December 2014 | Unaudited historical amount for the period from 1 January to 30 June 2015 | Estimated annual amount for the year ending 31 December 2015 | Annual cap for the year ending 31 December 2016 | Annual cap for the year ending 31 December 2017 | Annual cap for the year ending 31 December 2018 | ||
Sales of airline tickets and cargo space by the Company and its subsidiaries to CNAHC Group in accordance with the Sales Agency Services Framework Agreement | RMB270 million | RMB324 million | RMB388.8 million | RMB84 million | RMB78 million | RMB39 million | RMB90 million | RMB138 million | RMB152 million | RMB167 million | ||
For each of the three years ending 31 December 2016, 2017 and 2018, the aggregate annual amount of agency commission to be paid by the Company and its subsidiaries to CNAHC Group 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 for continuing connected transactions.
Basis for such caps:
As such business is showing an overall downward trend due to, among others, national policy adjustments, the Company intends to lower the proposed annual caps for the next three years.
In light of the expected annual increase of 10% in the air passenger and cargo transportation capacity of the Company for the year 2016 to 2018, and the possible increase of air passenger and cargo transportation market price brought by the uncertainty of the future jet fuel cost, based on the estimated maximum sale revenue of airline tickets and cargo space by the Company and its subsidiaries to CNAHC Group for resale to end customers in 2015, it is expected that such sales revenue in 2016 will not exceed RMB138 million and will increase at an annual rate of 10% thereafter.
3.3 Comprehensive Services
The Company (for itself and on behalf of its subsidiaries) entered into the Comprehensive Services Framework Agreement with CNAHC (on behalf of CNAHC Group) on 29 October 2015.
Description of transaction: Pursuant to the Comprehensive Services Framework Agreement:
• Certain wholly-owned or controlled companies of CNAHC which are engaged in ancillary services in relation to air transportation business ("Specialised Companies") will be appointed as one of the providers of the ancillary services in relation to air transportation business of the Company. Such Specialised Companies, provided that they have obtained the relevant qualifications and certifications, will primarily provide the following services to the Company (including but not limited to):
(i) supply of various items for in-flight services;
(ii) properties management services in areas including Beijing, Chengdu, Chongqing, Shanghai, Hangzhou and Guangzhou;
(iii) hotel accommodation and staff recuperation;
(iv) airline catering services; and
(v) printing of air tickets and other publications.
• The Company is commissioned by CNAHC to provide welfare-logistics services for CNAHC's retired employees.
• The prices of airline catering services to be provided by the Specialised Companies to the Company will be determined by the parties based on the quotation 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 the quotation and market transaction price for the same type of catering services available from independent third parties. In general, inquires on quotation 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.
• The prices of property management services to be provided by the Specialised Companies to the Company will be determined by the parties based on the quotation 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 quotation and terms for the same type of property management services available from independent third parties. In general, inquires on quotation and terms will be made to at least two independent third parties by e-mail, facsimile or telephone. The prices of property management services will be determined by the two parties after comparison and taking into consideration certain factors including quotation, 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 the Specialised Companies to the Company shall be no less favourable than the quotation 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 two parties will be responsible for verifying the quotation and terms for the same type of products and services available from independent third parties. In general, inquires on quotation 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 quotation, quality of products and services, seasonal demand in the hotel industry, location of hotel and specific needs of the parties.
• For catering supplies, publications and other services to be provided by the Specialised Companies to the Company, the Specialised Companies as supplier of the Company shall provide such services in accordance with the bidding management requirements of the Company. The prices of such services shall be no less favourable than the quotation 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 term of the Comprehensive Services Framework Agreement is from 1 January 2016 to 31 December 2018.
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 Company, 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 Company to enter into the above transactions with CNAHC Group.
Historical amount and proposed caps:
Set forth below is a summary of the historical annual caps, the actual amount and the proposed annual caps of the total amount payable by the Company and its subsidiaries to CNAHC Group in accordance with the Comprehensive Services Framework Agreement:
Historical Annual Caps | Historical Actual Amount | Proposed Annual Caps | ||||||||||
Transaction | Annual cap for the year ended 31 December 2013 | Annual cap for the year ended 31 December 2014 | Annual cap for the year ending 31 December 2015 | Actual annual amount for the year ended 31 December 2013 | Actual annual amount for the year ended 31 December 2014 | Unaudited historical amount for the period from 1 January to 30 June 2015 | Estimated annual amount for the year ending 31 December 2015 | Annual cap for the year ending 31 December 2016 | Annual cap for the year ending 31 December 2017 | Annual cap for the year ending 31 December 2018 | ||
Amount payable by the Company and its subsidiaries to CNAHC Group in accordance with the Comprehensive Services Framework Agreement | RMB950 million | RMB1,045 million | RMB1,150 million | RMB805 million | RMB853 million | RMB521 million | RMB1,100 million | RMB1,375 million | RMB1,513 million | RMB1,664 million | ||
For each of the three years ending 31 December 2016, 2017 and 2018, the aggregate annual amount payable by CNAHC Group to the Company and its subsidiaries 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 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 Company's air passenger services in the next few years.
The transaction volume increased during the past three years primarily due to the expansion of the fleet size of the Company and the increase of its transportation capacity. Given the fact that the transaction amount of airline catering services accounts for more than 80% of transaction amount of the comprehensive services and the two companies in which Zhongyi Aviation Investment Co., Ltd. newly invested have started to provide catering services to the Company since 2015 as the Company has been continually increasing its transportation capacity, the transaction amount under the Comprehensive Services Framework Agreement is expected to increase accordingly. In addition, given CNACD's increasing capability in property management, the Company will be able to undertake more property management businesses in the next three years. It is expected that the actual transaction amount generated by the Company in respect of its businesses under the Comprehensive Services Framework Agreement in 2016 will not exceed RMB1,375 million, and will increase at an annual rate of 10% afterwards.
3.4 Property Leasing
The Company (for itself and on behalf of its subsidiaries) entered into the Properties Leasing Framework Agreement with CNAHC (on behalf of CNAHC Group) on 29 October 2015.
Description of transaction: Pursuant to the Properties Leasing Framework Agreement, the Company will lease from CNAHC a number of properties for various uses including as business premises, offices and storage facilities.
The Company will lease to CNAHC a number of properties.
The rent payable by the Company under the Properties Leasing Framework Agreement will be determined based on the quotation 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 quotation and terms for the same type of properties and related services available from independent third parties. In general, inquires on quotation 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 quotation, property service quality, location and district of properties and specific needs of the parties, and specific property leasing agreements will be entered into.
The term of the Properties Leasing Framework Agreement is from 1 January 2016 to 31 December 2018.
Reasons for such transaction: In the ordinary course of business, the Company has entered into similar property leasing transactions with various parties including both connected persons and independent third parties.
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 rent payable by the Company and its subsidiaries to CNAHC Group under the Properties Leasing Framework Agreement:
Historical Annual Caps | Historical Actual Amount | Proposed Annual Caps | ||||||||||
Transaction | Annual cap for the year ended 31 December 2013 | Annual cap for the year ended 31 December 2014 | Annual cap for the year ending 31 December 2015 | Actual annual amount for the year ended 31 December 2013 | Actual annual amount for the year ended 31 December 2014 | Unaudited historical amount for the period from 1 January to 30 June 2015 | Estimated annual amount for the year ending 31 December 2015 | Annual cap for the year ending 31 December 2016 | Annual cap for the year ending 31 December 2017 | Annual cap for the year ending 31 December 2018 | ||
Rent payable by the Company and its subsidiaries to CNAHC Group in accordance with the Properties Leasing Framework Agreement | RMB120 million | RMB138 million | RMB150 million | RMB84 million | RMB84 million | RMB60 million | RMB140 million | RMB155 million | RMB178 million | RMB200 million | ||
The annual aggregate amount of rent payable by CNAHC Group to the Company and its subsidiaries for each of the three years ending 31 December 2016, 2017 and 2018 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 for continuing connected transactions.
Basis for such caps:
As at the date hereof, the Company and its subsidiaries have leased an aggregate area of approximately 50,000 sq.m. from CNAHC Group. The Company expects that the rent level will rise in the next three years but there will be no significant change in the floor area to be leased from CNAHC Group.
In arriving at the annual caps, the Company and its subsidiaries have taken into account the possible 10% to 15% overall annual rental increase and made the calculation based on the estimated rental expenditure of RMB140 million for the year of 2015. It is estimated that the rental expenditure for 2016 will not exceed RMB155 million, and will increase at an annual rate of 10% to 15% afterwards.
3.5 Media and Advertising Services
The Company entered into the Media Services Framework Agreement with CNAMC on 29 October 2015.
Description of transaction: Pursuant to the Media Services Framework Agreement, CNAMC will have the following rights:
• an exclusive right to distribute in-flight reading materials of the Company;
• an exclusive operation right of certain media of the Company, including the boarding passes, in-flight entertainment programmes and flight schedules;
• a right to be commissioned to purchase in-flight entertainment programmes (which may include advertising contents) from independent third parties or produce such programmes on its own;
• a right to develop and use the media of the Company and receive effective support and assistance from the Company in the course of the sale of advertisements. CNAMC will develop new media for the Company and publish advertisements produced by CNAMC or for which CNAMC acts as agent. Such media include: (i) outdoor advertisements on properties owned by the Company; (ii) ground broadcasting programmes (at ticket offices and on airport shuttles); (iii) ticket envelopes (including air ticket envelopes and boarding pass envelopes); and (iv) the Company's official website, in-flight network, air-ground communications, etc. that can be used as media; and
• the right to act as operator of the Company's media business to provide the Company with services including: (i) design, production and publishing of advertisements; (ii) development and maintenance of certain online services on the website managed by e-commerce function of the Company; (iii) participation in the development of the Company's brand strategy and annual marketing plan, execution of promotional campaigns and production of advertising materials according to the Company's plan; and (iv) support and supply of certain contents on the Company's public accounts on WeChat and Weibo and the Company's mobile app.
As consideration, CNAMC agrees to:
• pay the Company RMB13,891,500 as media usage fee for each of the three years ending 31 December 2016, 2017 and 2018 in respect of the exclusive operation rights of the specific media of the Company, and according to the annual budget of the Company, provide the Company with sufficient in-flight media (other than in-flight entertainment programmes), including in-flight publications, boarding passes and flight schedules that meet the Company's requirements; and
• pay the Company 20% of any revenue from any new advertising media of the Company not mentioned in the Media Services Framework Agreement but proposed to be developed by CNAMC on a case by case basis.
The Company agrees to:
• pay the purchase price to CNAMC for the in-flight entertainment programmes purchased by CNAMC for the Company. In the event that the relevant entertainment programmes are produced by CNAMC at the request of the Company, the Company will pay the corresponding production costs to CNAMC; and
• pay advertising fees and service fees at market price to CNAMC in respect of advertising design, image promotion and other services conducted by CNAMC for the Company. In general, inquires by e-mail, facsimile or telephone or face-to-face consulting on quotation and terms will be made by the Company to independent third parties, and the advertising fees and service fees will be determined taking into consideration certain factors including quotation, service quality and specific needs of the parties.
The term of the Media Services Framework Agreement is from 1 January 2016 to 31 December 2018.
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
• CNAMC, being a company having engaged in the aviation media business for a long time, has a better understanding of the corporate culture and the brand of the Company and has certain advantages in entertainment programmes production and advertising agency business.
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 CNAMC under the Media Services Framework Agreement:
Historical Annual Caps | Historical Actual Amount | Proposed Annual Caps | ||||||||||
Transaction | Annual cap for the year ended 31 December 2013 | Annual cap for the year ended 31 December 2014 | Annual cap for the year ending 31 December 2015 | Actual annual amount for the year ended 31 December 2013 | Actual annual amount for the year ended 31 December 2014 | Unaudited historical amount for the period from 1 January to 30 June 2015 | Estimated annual amount for the year ending 31 December 2015 | Annual cap for the year ending 31 December 2016 | Annual cap for the year ending 31 December 2017 | Annual cap for the year ending 31 December 2018 | ||
Amount payable by the Company to CNAMC in accordance with the Media Services Framework Agreement | RMB138 million | RMB151.8 million | RMB167 million | RMB66 million | RMB111 million | RMB29 million | RMB160 million | RMB270 million | RMB297 million | RMB326.7 million | ||
The annual amount payable by CNAMC to the Company under the Media Services Framework Agreement for each of the three years ending 31 December 2016, 2017 and 2018 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 for continuing connected transactions.
Basis for such caps:
The Company's service development strategy aims at continuously enhancing its service quality. Therefore, the Company will gradually increase its investment in the purchase and production of entertainment programmes, and commission CNAMC to purchase more entertainment programmes. In addition, due to the increased number of aircraft of the Company, the need for entertainment programmes will increase correspondingly. On the marketing front, the Company will gradually increase its investment in advertising on an annual basis. CNAMC will participate more in the Company's advertising promotion work in the next three years.
Based on the estimated amount payable by the Company to CNAMC under the Media Services Framework Agreement for the year of 2015, it is estimated that such transaction amount for 2016 will not exceed RMB270 million, and will increase at an annual rate of 10% afterwards.
4. 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, Ms. Wang Yinxiang, Mr. Cao Jianxiong and Mr. Feng Gang 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 resolutions 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 resolutions.
5. 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) Construction Project Management Framework Agreement; and
(6) Media Services Framework Agreement.
III. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Over the recent two years, the CSRC issued the Guidance on the Articles of Association of Listed Companies (2014 Second Revision) (《上市公司章程指引（二零 一四年第二次修訂）》), the Rules Governing Shareholders' General Meeting of Listed Companies (2014 Second Revision) (《上市公司股東大會規則（二零一四年第二次修訂）》) and the Regulatory Guidance No. 3 of Listed Companies - Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號－上市公司現金分紅》), setting out further requirements on matters related to measures for protecting the interest of minority shareholders of listed companies and profit distribution. The Board has resolved to propose to the Shareholders certain amendments to the Articles of Association in accordance with these new requirements. The proposed amendments to the Articles of Association
are subject to approval by the Shareholders by way of special resolution at the EGM and will become effective upon approval by the relevant PRC government authorities. The full text of the proposed amendments to the Articles of Association is set out in Appendix I to this circular.
The proposed amendments to the Articles of Association are prepared in the Chinese language and the English version is therefore a translation only. In the event of any discrepancy between the English translation and the Chinese version of the Articles of Association, the Chinese version shall prevail.
IV. PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS AND THE MEETINGS OF THE BOARD OF DIRECTORS
In light of the proposed amendments to the Articles of Association, the Board has resolved to propose to the Shareholders certain amendments to the Rules and Procedures of Shareholders' Meetings and the Meetings of the Board of the Company, so as to align with relevant regulations and the Articles of Association and comply with requirements made by regulatory authorities. The proposed amendments to the Rules and Procedures of Shareholders' Meetings and the Meetings of the Board are subject to approval by the Shareholders by way of special resolutions at the EGM. The full texts of the proposed amendments to the Rules and Procedures of Shareholders' Meetings and the Meetings of the Board are set out in Appendices II and III respectively to this circular.
The proposed amendments to the Rules and Procedures of Shareholders' Meetings and the Meetings of the Board are prepared in the Chinese language and the English versions are therefore a translation only. In the event of any discrepancy between the English translation and the Chinese version, the Chinese version shall prevail.
V. PROPOSED ADOPTION OF THE SHAREHOLDERS' RETURN PLAN
Pursuant to the Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies (《關於進一步落實上市公司現金分紅有關事項的通知》) and the Regulatory Guidance No. 3 of Listed Companies - Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號-上市公司現金分紅》) issued by the CSRC and relevant requirements of the Articles of Association, the Board, having considered factors such as the Company's strategic development goals, profitability and capital requirements, formulated the Shareholders' Return Plan. For details of the factors considered by the Company when formulating the Shareholders' Return Plan, the principles and the specific rules for the shareholders' return, please refer to Appendix V to this circular. The Shareholders' Return Plan shall be effective from the date of its approval at the EGM.
The Shareholders' Return Plan is prepared in the Chinese language and the English version is therefore a translation only. In the event of any discrepancy between the English translation and the Chinese version of the Shareholders' Return Plan, the Chinese version shall prevail.
VI. EGM
The Company will convene the EGM at 2:00 p.m. on 22 December 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, the PRC. The notice of the EGM setting out the resolutions proposed is set out in Appendix IV to this circular.
Whether or not you intend to attend the EGM, you are requested to complete and return the proxy form in accordance with the instruction printed thereon. If you intend to attend the EGM, you are required to complete and return the notice of attendance to the H Share registrar of the Company on or before Wednesday, 2 December 2015.
Completion and return of the proxy form will not preclude you from attending and voting in person at the meetings or at any adjourned meetings should you so wish and completion and return of the notice of attendance do not affect the right of a shareholder to attend the respective meeting.
Pursuant to the Shanghai Listing Rules, any connected Shareholder (as defined in the Shanghai Listing Rules) of the Company is required to abstain from voting on the relevant resolution at the EGM. Accordingly, CNAHC and China National Aviation Corporation (Group) Limited are required to abstain from voting on the resolutions 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 Construction Project Management Framework Agreement and the Media Services Framework Agreement, respectively.
VII. RECOMMENDATIONS OF THE BOARD
The Board (including the independent non-executive Directors) considers that the terms and conditions of the continuing connected transactions set out in Part 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 the Shareholders as a whole. The Board also considers that the annual caps for each of the three years ending 31 December 2016, 2017 and 2018 for the abovementioned continuing connected transactions are fair and reasonable.
The Board also considers that the resolutions relating to (i) the proposed amendments to the Articles of Association; (ii) the proposed amendments to the Rules and Procedures of Shareholders' meetings and the meetings of the Board; and (iii) the proposed adoption of the Shareholders' Return Plan are in the interests of the Company and the Shareholders as a whole.
The Board recommends the Shareholders to vote in favour of the resolutions which will be proposed at the EGM.
VIII. ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in Appendices I to V to this circular.
By Order of the Board
Cai Jianjiang
Chairman
Beijing, the PRC
TO THE ARTICLES OF ASSOCIATION
Particulars of amendments to the Articles of Association are as follows, with the amendments underlined, where appropriate, just for easy reference.
No. | Existing Articles | Revised Articles | ||
Notes: For the purpose of the marginal notes contained in the Articles of Association, Co Law means the amended Company Law came into force on 1 January 2006; the Securities Law means the amended Securities Law came into force on 1 January 2006; MP means the Mandatory Provisions in the Articles of Association of Companies Listed Overseas jointly promulgated by the former State Securities Commission and the former State Restructuring Commission (SRC); LR means the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited; Hong Kong Clearing House Advices means the Advices of Hong Kong Clearing House promulgated by Hong Kong Securities Clearing Company Limited; Zheng Jian Hai Han means the Letter of Opinion on the Supplementary Amendment to Articles of Association of Companies Listed in Hong Kong promulgated by the Overseas Listing Division of the CSRC and the Production System Department of the State Commission for Restructuring the Economic System (Zheng Jian Hai Han [1995] No. 1); Opinion means the Opinion on Further Promoting the Standardized Operations and Deepening the Reform of Overseas Listed Companies jointly promulgated by State Economic and Trade Commission and China Securities Regulatory Commission; Secretary Guidance means the Guidance on the Works of the Secretary of the Board of Directors of an Overseas-Listed Company promulgated by the CSRC; and Guidance means the Guidance on the Articles of Association of Listed Companies, as amended in 2006; CG Standards mean the Standards on Corporate Governance for Listed Companies; GM Rules means Rules Governing Shareholders' General Meeting of Listed Companies; | Notes: For the purpose of the marginal notes contained in the Articles of Association, Co Law means the amended Company Law came into force on 1 January 2006; the Securities Law means the amended Securities Law came into force on 1 January 2006; MP means the Mandatory Provisions in the Articles of Association of Companies Listed Overseas (Zheng Wei Fa [1994] No. 21) jointly promulgated by the former State Securities Commission and the former State Restructuring Commission (SRC); LR means the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited; Hong Kong Clearing House Advices means the Advices of Hong Kong Clearing House promulgated by Hong Kong Securities Clearing Company Limited; Zheng Jian Hai Han means the Letter of Opinion on the Supplementary Amendment to Articles of Association of Companies Listed in Hong Kong promulgated by the Overseas Listing Division of the CSRC and the Production System Department of the State Commission for Restructuring the Economic System (Zheng Jian Hai Han [1995] No. 1); Opinion means the Opinion on Further Promoting the Standardized Operations and Deepening the Reform of Overseas Listed Companies (Guo Jing Mao Qi Gai [1999] No. 230) jointly promulgated by State Economic and Trade Commission and China Securities Regulatory Commission; Secretary Guidance means the Guidance on the Works of the Secretary of the Board of Directors of an Overseas-Listed Company (Zheng Jian Fa Xing Zi [1999] No. 39) promulgated by the CSRC; and Guidance means the Guidance on the Articles of Association of Listed Companies (CSRC Announcement [2014] No. 47); |
No. | Existing Articles | Revised Articles | ||
Public Shareholders means Certain Provisions Concerning Strengthening the Protection of the Interests of Public Shareholders; Guiding Advice means the Guiding Advice on Establishing Independent Directorship in Listed Companies; Security Notice means the Notice Regulating the Provision of Security by Listed Companies to Third Parties; Revising Certain Provisions on Cash Dividends means the Decision on Revising Certain Provisions on Cash Dividends by Listed Companies; Notice Regarding Cash Dividends Distribution means Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies, all of which are promulgated by the China Securities Regulatory Commission. | CG Standards mean the Standards on Corporate Governance for Listed Companies (Zheng Jian Fa [2002] No. 1); GM Rules means Rules Governing Shareholders' General Meeting of Listed Companies (CSRC Announcement [2014] No. 46); Public Shareholders means Certain Provisions Concerning Strengthening the Protection of the Interests of Public Shareholders (Zheng Jian Fa [2004] No. 118); Guiding Advice means the Guiding Advice on Establishing Independent Directorship in Listed Companies (Zheng Jian Fa [2001] No. 102); Security Notice means the Notice Regulating the Provision of Security by Listed Companies to Third Parties (Zheng Jian Fa [2005] No. 120); Revising Certain Provisions on Cash Dividends means the Decision on Revising Certain Provisions on Cash Dividends by Listed Companies (CSRC Decree No. 57); Notice Regarding Cash Dividends Distribution means Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies (Zheng Jian Fa [2012] No. 37); Regulatory Guidance No. 3 means Regulatory Guidance No. 3 of Listed Companies - Cash Dividends Distribution of Listed Companies (CSRC Announcement [2013] No. 43), all of which are promulgated by the China Securities Regulatory Commission. | |||
CHAPTER 1: GENERAL PROVISIONS | CHAPTER 1: GENERAL PROVISIONS | |||
1 | Article 1. Air China Limited (the "Company") is a joint stock limited company established in accordance with the Company Law of the People's Republic of China (the "Company Law"), the State Council's Special Regulations Regarding the Issue of Shares Overseas and the Listing of Shares Overseas by Companies Limited by Shares (the "Special Regulations") and other relevant laws and regulations of the State. | Article 1. Air China Limited (the "Company") is a joint stock limited company established in accordance with the Company Law of the People's Republic of China (the "Company Law"), the State Council's Special Regulations Regarding the Issue of Shares Overseas and the Listing of Shares Overseas by Companies Limited by Shares (the "Special Regulations") and other relevant laws and regulations of the State. |
No. | Existing Articles | Revised Articles | ||
The Company was established by way of promotion with the approval of the State-owned Assets Supervision and Administration Commission of the State Council on 30 September 2004, as evidenced by the approval document Guo Zi Gai Ge [2004] No.872. It was registered with and has obtained a business licence from the State Administration for Industry & Commerce of the People's Republic of China. The promoters of the Company are: China National Aviation Holding Company and China National Aviation Corporation (Group) Limited (registered in Hong Kong Special Administration Region). | The Company was established by way of promotion with the approval of the State-owned Assets Supervision and Administration Commission of the State Council on 30 September 2004, as evidenced by the approval document Guo Zi Gai Ge [2004] No. 872. It was registered with and has obtained a business licence from the State Administration for Industry & Commerce of the People's Republic of China. The promoters of the Company are: China National Aviation Holding Company and China National Aviation Corporation (Group) Limited (registered in Hong Kong Special Administration Region). | |||
2 | Article 8. The Articles of Association are binding on the Company and its shareholders, directors, supervisors, president, vice presidents and other senior officers; all of whom may, according to the Company's Articles of Association, assert their rights in respect of the affairs of the Company. Subject to Article 22 of these Articles of Association, a shareholder may take action against the Company pursuant to the Company's Articles of Association. The Company may take action against a shareholder, directors, supervisors, president, vice presidents and other senior officers of the Company pursuant to the Company's Articles of Association. A shareholder may also take action against another shareholder, and may take action against the directors, supervisors, president, vice presidents and other senior officers of the Company pursuant to the Company's Articles of Association. The actions referred to in the preceding paragraph include court proceedings and arbitration proceedings. | Article 8. The Articles of Association are binding on the Company and its shareholders, directors, supervisors, president, vice presidents and other senior officers; all of whom may, according to the Company's Articles of Association, assert their rights in respect of the affairs of the Company. Subject to Article 22 of these Articles of Association, a shareholder may take action against the Company pursuant to the Company's Articles of Association. The Company may take action against a shareholder, directors, supervisors, president, vice presidents and other senior officers of the Company pursuant to the Company's Articles of Association. A shareholder may also take action against another shareholder, and may take action against the directors, supervisors, president, vice presidents and other senior officers of the Company pursuant to the Company's Articles of Association. The actions referred to in the preceding paragraph include court proceedings and arbitration proceedings. |
No. | Existing Articles | Revised Articles | ||
The "other senior officers" referred to in these Articles of Association mean the board secretary, chief accountant and, chief pilot and other senior officers appointed by the board of directors of the Company. | The "other senior officers" referred to in these Articles of Association mean the board secretary, chief accountant, and chief pilot and other senior officers appointed by the board of directors of the Company. | |||
CHAPTER 3: SHARES AND REGISTERED CAPITAL | CHAPTER 3: SHARES AND REGISTERED CAPITAL | |||
3 | Article 24. The Company may, based on its operating and development needs, authorize the increase of its capital pursuant to the Articles of Association.The Company may increase its capital in the following ways: (1) by offering new shares for subscription by unspecified investors; (2) by placing new shares to its existing shareholders; (3) by issuing new shares to its existing shareholders; (4) by converting the common reserve into share capital; (5) by any other means which is prescribed by law and administrative regulations and approved by the CSRC. After the Company's increase of capital by means of the issuance of new shares has been approved in accordance with the provisions of the Articles of Association, the issuance thereof should be made in accordance with the procedures set out in the relevant State laws and administrative regulations. | Article 24. The Company may, based on its operating and development needs, authorize the increase of its capital pursuant to the Articles of Association.The Company may increase its capital in the following ways:
(1) by offering new shares for subscription by unspecified investors by public offering of shares; (2) by placing new shares to its existing shareholders by non-public offering of shares; (3) by issuing newbonus shares to its existing shareholders; (4) by converting the common reserve into share capital; (5) by any other means which is prescribed by law and administrative regulations and approved by the CSRC. After the Company's increase of capital by means of the issuance of new shares has been approved in accordance with the provisions of the Articles of Association, the issuance thereof should be made in accordance with the procedures set out in the relevant State laws and administrative regulations. |
No. | Existing Articles | Revised Articles | ||
CHAPTER 6: SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS | CHAPTER 6: SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS | |||
4 | Article 48. When the Company intends to convene a shareholders' general meeting, distribute dividends, liquidate and engage in other activities that involve determination of shareholding, the board of directors or the convener of the shareholders' general meeting shall decide on a date for the determination of shareholding. Shareholders whose names are registered on the share register after the closing of the market on such date shall be the Company's shareholders with the entitlement to the relevant rights. | Article 48. When the Company intends to convene a shareholders' general meeting, distribute dividends, liquidate and engage in other activities that involve determination of shareholding, the board of directors or the convener of the shareholders' general meeting shall decide on a date for the determinationrecord of shareholding. Shareholders whose names are registered on the share register after the closing of the market on such date shall be the Company's shareholders with the entitlement to the relevant rights. Should the Articles of Association have contrary requirements, the Company shall comply with such requirements. | ||
5 | Article 50. Any person who is a registered shareholder or who claims to be entitled to have his name (title) entered in the register of shareholders in respect of shares in the Company may, if his share certificate (the "original certificate") relating to the shares is lost, apply to the Company for a replacement share certificate in respect of such shares (the "Relevant Shares"). Application by a holder of A Shares, who has lost his share certificate, for a replacement share certificate shall be dealt with in accordance with Article 144 of the Company Law. Application by a holder of Overseas-Listed Foreign Shares, who has lost his share certificate, for a replacement share certificate may be dealt with in accordance with the law of the place where the original register of shareholders of holders of Overseas-Listed Foreign Shares is maintained, the rules of the stock exchange or other relevant regulations. | Article 50. Any person who is a registered shareholder or who claims to be entitled to have his name (title) entered in the register of shareholders in respect of shares in the Company may, if his share certificate (the "original certificate") relating to the shares is lost, apply to the Company for a replacement share certificate in respect of such shares (the "Relevant Shares"). Application by a holder of A Shares, who has lost his share certificate, for a replacement share certificate shall be dealt with in accordance with Article 1443 of the Company Law. Application by a holder of Overseas-Listed Foreign Shares, who has lost his share certificate, for a replacement share certificate may be dealt with in accordance with the law of the place where the original register of shareholders of holders of Overseas-Listed Foreign Shares is maintained, the rules of the stock exchange or other relevant regulations. |
No. | Existing Articles | Revised Articles | ||
The issue of a replacement share certificate to a holder of H Shares, who has lost his share certificate, shall comply with the following requirements: (1) The applicant shall submit an application to the Company in a prescribed form accompanied by a notarial certificate or a statutory declaration, stating the grounds upon which the application is made, the circumstances and evidence of the loss; and declaring that no other person is entitled to have his name entered in the register of shareholders in respect of the Relevant Shares. (2) The Company has not received any declaration made by any person other than the applicant declaring that his name shall be entered into the register of shareholders in respect of such shares before it decides to issue a replacement share certificate to the applicant. (3) The Company shall, if it intends to issue a replacement share certificate, publish a notice of its intention to do so at least once every thirty (30) days within a period of ninety (90) consecutive days in such newspapers as may be prescribed by the board of directors. | The issue of a replacement share certificate to a holder of H Shares, who has lost his share certificate, shall comply with the following requirements:
(1) The applicant shall submit an application to the Company in a prescribed form accompanied by a notarial certificate or a statutory declaration, stating the grounds upon which the application is made, the circumstances and evidence of the loss; and declaring that no other person is entitled to have his name entered in the register of shareholders in respect of the Relevant Shares. (2) The Company has not received any declaration made by any person other than the applicant declaring that his name shall be entered into the register of shareholders in respect of such shares before it decides to issue a replacement share certificate to the applicant. (3) The Company shall, if it intends to issue a replacement share certificate, publish a notice of its intention to do so at least once every thirty (30) days within a period of ninety (90) consecutive days in such newspapers as may be prescribed by the board of directors. |
No. | Existing Articles | Revised Articles | ||
(4) The Company shall, prior to publication of its intention to issue a replacement share certificate, deliver to the stock exchange on which its shares are listed, a copy of the notice to be published and may publish the notice upon receipt of confirmation from such stock exchange that the notice has been exhibited in the premises of the stock exchange. Such notice shall be exhibited in the premises of the stock exchange for a period of ninety (90) days. In the case of an application which is made without the consent of the registered holders of the Relevant Shares by an applicant who is not a registered shareholder of Relevant Shares and, the Company shall deliver by mail to such registered shareholder a copy of the notice to be published. (5) If, by the expiration of the 90-day period referred to in paragraphs (3) and (4) of this Article, the Company has not have received any objections from any person in respect of the issuance of the replacement share certificate, it may issue a replacement share certificate to the applicant pursuant to his application. (6) Where the Company issues a replacement share certificate pursuant to this Article, it shall forthwith cancel the original share certificate and document the cancellation of the original share certificate and issuance of a replacement share certificate in the register of shareholders accordingly. | (4) The Company shall, prior to publication of its intention to issue a replacement share certificate, deliver to the stock exchange on which its shares are listed, a copy of the notice to be published and may publish the notice upon receipt of confirmation from such stock exchange that the notice has been exhibited in the premises of the stock exchange. Such notice shall be exhibited in the premises of the stock exchange for a period of ninety (90) days. In the case of an application which is made without the consent of the registered holders of the Relevant Shares by an applicant who is not a registered shareholder of Relevant Shares and, the Company shall deliver by mail to such registered shareholder a copy of the notice to be published. (5) If, by the expiration of the 90-day period referred to in paragraphs (3) and (4) of this Article, the Company has not have received any objections from any person in respect of the issuance of the replacement share certificate, it may issue a replacement share certificate to the applicant pursuant to his application. (6) Where the Company issues a replacement share certificate pursuant to this Article, it shall forthwith cancel the original share certificate and document the cancellation of the original share certificate and issuance of a replacement share certificate in the register of shareholders accordingly.
|
No. | Existing Articles | Revised Articles | ||
(7) All expenses relating to the cancellation of an original share certificate and the issuance of a replacement share certificate shall be borne by the applicant and the Company is entitled to refuse to take any action until reasonable security is provided by the applicant therefore. | (7) All expenses relating to the cancellation of an original share certificate and the issuance of a replacement share certificate shall be borne by the applicant and the Company is entitled to refuse to take any action until reasonable security is provided by the applicant therefore. | |||
CHAPTER 8: SHAREHOLDERS' GENERAL MEETINGS | CHAPTER 8: SHAREHOLDERS' GENERAL MEETINGS | |||
6 | Article 65. Shareholders' general meetings are divided into annual general meetings and extraordinary general meetings. The annual general meetings shall be convened once every year and shall be held within six months from the end of the preceding financial year. Meeting venues shall be fixed for the shareholders' general meetings, and the shareholders' general meetings shall be convened in the on-site conference mode. The Company may facilitate the shareholders participating in the shareholders' general meetings through all practicable manners and means including providing modern information technological means such as voting platform through internet, provided that the legality and effectiveness of the shareholders' general meeting are ensured. Shareholders are deemed to be present in the shareholders' general meetings through the aforesaid means. | Article 65. Shareholders' general meetings are divided into annual general meetings and extraordinary general meetings. The annual general meetings shall be convened once every year and shall be held within six months from the end of the preceding financial year. Meeting venues shall be fixed for the shareholders' general meetings, and the shareholders' general meetings shall be convened in the on-site conference mode. The Company mayshall facilitate the shareholders participating in the shareholders' general meetings through all practicable manners and means and priority shall be given to including providing modern information technological means such as voting platform through internet, provided that the legality and effectiveness of the shareholders' general meeting are ensured. Shareholders are deemed to be present in the shareholders' general meetings through the aforesaid means. |
No. | Existing Articles | Revised Articles | ||
The Company shall convene an extraordinary general meeting within two months of the occurrence of any one of the following events: (1) where the number of directors is less than the minimum number stipulated in the Company Law or two-thirds of the number specified in the Articles of Association; (2) where the unrecovered losses of the Company amount to one-third of the total amount of its share capital; (3) where shareholders who separately or jointly holds more than 10% of the total Company's shares make such request in writing; (4) whenever the board of directors deems necessary or the supervisory committee so requests; (5) under other conditions as provided for by the laws, administrative regulations, departmental rules and regulations or the Articles of Association. The shareholding mentioned in sub-paragraph (3) above shall be calculated from the date on which a shareholder submits his/her request in writing. | The Company shall convene an extraordinary general meeting within two months of the occurrence of any one of the following events:
(1) where the number of directors is less than the minimum number stipulated in the Company Law or two-thirds of the number specified in the Articles of Association; (2) where the unrecovered losses of the Company amount to one-third of the total amount of its share capital; (3) where shareholders who separately or jointly holds more than 10% of the total Company's shares make such request in writing; (4) whenever the board of directors deems necessary or the supervisory committee so requests; (5) under other conditions as provided for by the laws, administrative regulations, departmental rules and regulations or the Articles of Association. The shareholding mentioned in sub-paragraph (3) above shall be calculated from the date on which a shareholder submits his/her request in writing. |
No. | Existing Articles | Revised Articles | ||
7 | Article 81. The board of directors, independent directors and shareholders who have satisfied certain conditions (which are determined based on such standards as promulgated from time to time by the relevant competent authorities) may solicit the voting rights from shareholders at a shareholders' general meeting. Any person who publicly solicits voting rights from the shareholders of the Company shall comply with provisions stipulated by the relevant competent authorities and the stock exchanges on which the shares of the Company are listed and traded. | Article 81. The Company's board of directors, independent directors and shareholders who have satisfied certain conditions (which are determined based on such standards as promulgated from time to time by the relevant competent authorities) may publicly solicit the voting rights from shareholders at a shareholders' general meeting. In soliciting voting rights of shareholders, information such as specific voting intention shall be sufficiently disclosed to the shareholders from whom voting rights are being solicited. Consideration or de facto consideration for solicitation of voting rights is prohibited. The Company may not propose any minimum shareholding restriction on the solicitation of voting rights. Any person who publicly solicits voting rights from the shareholders of the Company shall also comply with other provisions stipulated by the relevant competent authorities and the stock exchanges on which the shares of the Company are listed and traded. | ||
8 | Article 83. A shareholder (including a proxy), when voting at a shareholders' general meeting, may exercise such voting rights as are attached to the number of voting shares which he represents. Except otherwise provided for election of directors in Article 108 and election of supervisors in Article 146 of these Articles of Association in connection with the adoption of the cumulative voting system for election of directors, each share shall have one vote. The shares held by the Company itself shall not be attached with voting rights. Those shares shall not be counted as the total number of voting shares held by shareholders attending the shareholders' general meetings. | Article 83. A shareholder (including a proxy), when voting at a shareholders' general meeting, may exercise such voting rights as are attached to the number of voting shares which he represents. Except otherwise provided for election of directors in Article 108 and election of supervisors in Article 146 of these Articles of Association in connection with the adoption of the cumulative voting system for election of directors, each share shall have one (1) vote. The shares held by the Company itself shall not be attached with voting rights. Those shares shall not be counted as the total number of voting shares held by shareholders attending the shareholders' general meetings. |
No. | Existing Articles | Revised Articles | ||
Where a shareholder is, under the applicable listing rules as amended from time to time, required to abstain from voting on any particular resolution or to vote only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted. | Where material issues affecting the interests of small and medium investors are being considered in the shareholders' general meeting, the votes by small and medium investors shall be counted separately. The separate counting results shall be disclosed to the public in a timely manner. Where a shareholder is, under the applicable listing rules as amended from time to time, required to abstain from voting on any particular resolution or to vote only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted. | |||
CHAPTER 10: BOARD OF DIRECTORS | CHAPTER 10: BOARD OF DIRECTORS | |||
9 | Article 110. The board of directors is responsible to the shareholders' general meeting and shall exercise the following duties and powers: (1) to be responsible for the convening of the shareholders' general meeting and to report on its work to the shareholders in general meetings; (2) to implement the resolutions passed by the shareholders in general meetings; (3) to determine the Company's business plans and investment proposals; (4) to formulate the Company's preliminary and final annual financial budgets; (5) to formulate the Company's profit distribution proposal and loss recovery proposal; | Article 110. The board of directors is responsible to the shareholders' general meeting and shall exercise the following duties and powers:
(1) to be responsible for the convening of the shareholders' general meeting and to report on its work to the shareholders in general meetings; (2) to implement the resolutions passed by the shareholders in general meetings; (3) to determine the Company's business plans and investment proposals; (4) to formulate the Company's preliminary and final annual financial budgets; (5) to formulate the Company's profit distribution proposal and loss recovery proposal; |
No. | Existing Articles | Revised Articles | ||
(6) to formulate proposals for the increase or reduction of the Company's registered capital and for the issuance of the Company's debentures; (7) to draw up the Company's proposals for the merger, division, dissolution or change of the form of the Company; (8) to decide on other issues relating to the provision of guarantee in favor of a third party other than those must be approved at a shareholders' general meeting pursuant to the laws, administrative regulations and these Articles of Association; (9) to decide on the external investments, purchase and sale of assets, creation of mortgage over assets, entrusted asset management, connected transactions and other matters within the scope of authorization conferred by the shareholders' general meeting; (10) to decide on the Company's internal management structure; (11) to appoint or dismiss the president of the Company, secretary to the board of directors; and to appoint or dismiss, with reference to the nomination by the president, the vice presidents, chief accountant and chief pilot and determine their remunerations; (12) to formulate the basic management structure of the Company; (13) to manage matters relating to the disclosure of information by the Company; | (6) to formulate proposals for the increase or reduction of the Company's registered capital and for the issuance of the Company's debentures; (7) to draw up the Company's proposals for the merger, division, dissolution or change of the form of the Company; (8) to decide on other issues relating to the provision of guarantee in favor of a third party other than those must be approved at a shareholders' general meeting pursuant to the laws, administrative regulations and these Articles of Association; (9) to decide on the external investments, purchase and sale of assets, creation of mortgage over assets, entrusted asset management, connected transactions and other matters within the scope of authorization conferred by the shareholders' general meeting; (10) to decide on the Company's internal management structure; (11) to appoint or dismiss the president of the Company, secretary to the board of directors and determine their remunerations; and to appoint or dismiss, with reference to the nomination by the president, the vice presidents, chief accountant and, chief pilot and other senior officers and determine their remunerations; (12) to formulate the basic management structure of the Company; (13) to manage matters relating to the disclosure of information by the Company; |
No. | Existing Articles | Revised Articles | ||
(14) to make recommendations to the shareholders' general meetings on the appointment or change of the accounting firm which performs the audit work for the Company; (15) to hear from the Company's president reports on work performed and to inspect the work of the president; (16) to formulate proposals for any amendment of the Company's Articles of Association; and (17) to exercise any other powers conferred by the shareholders in general meetings and these Articles of Associations. Resolutions by the board of directors on matters referred to in the preceding paragraph may be passed by the affirmative vote of more than half of the directors (amongst which resolution on matters referred to in sub-paragraph (8) shall require the affirmative vote of more than two-thirds of the directors present at the board meeting) with the exception of resolutions on matters referred to in sub-paragraphs (6), (7) and (16) which shall require the affirmative vote of more than two-thirds of all the directors. | (14) to make recommendations to the shareholders' general meetings on the appointment or change of the accounting firm which performs the audit work for the Company; (15) to hear from the Company's president reports on work performed and to inspect the work of the president; (16) to formulate proposals for any amendment of the Company's Articles of Association; and (17) to exercise any other powers conferred by the shareholders in general meetings and these Articles of Associations. Resolutions by the board of directors on matters referred to in the preceding paragraph may be passed by the affirmative vote of more than half of the directors (amongst which resolution on matters referred to in sub-paragraph (8) shall require the affirmative vote of more than two-thirds of the directors present at the board meeting) with the exception of resolutions on matters referred to in sub-paragraphs (6), (7) and (16) which shall require the affirmative vote of more than two-thirds of all the directors. |
No. | Existing Articles | Revised Articles | ||
If any director is connected 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 are not connected. Resolutions made by the board meetings shall be passed by a majority of the directors that are not connected. The aforementioned matters that must be passed by two-thirds or more of the directors shall be passed by votes of two-thirds or more 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 shareholders' general meeting of the Company for approval. Resolutions made by the board of directors on the Company's connected transactions shall come into effect only after they are signed by the independent directors. | If any director is connected 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 are not connected. Resolutions made by the board meetings shall be passed by a majority of the directors that are not connected. The aforementioned matters that must be passed by two-thirds or more of the directors shall be passed by votes of two-thirds or more 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 shareholders' general meeting of the Company for approval. Resolutions made by the board of directors on the Company's connected transactions shall come into effect only after they are signed by the independent directors. | |||
10 | Article 111. Upon authorization by the board of directors, the Chairman may exercise part of the functions and powers of the board of directors when the board of directors is not in session. Particulars of the authorization of the board of directors shall be clear and specific. | Article 111. Upon authorization by the board of directors, the Chairman may exercise part of the functions and powers of the board of directors when the board of directors is not in session. Particulars of the authorization of the board of directors shall be clear and specific. Issues involving material interests of the Company shall be subject to collective decision by the board of directors. |
No. | Existing Articles | Revised Articles | ||
11 | Article 116. Meetings of the board of directors shall be held at least twice every year and shall be convened by the Chairman of the board of directors. All directors and supervisors shall be notified of the meeting fourteen days beforehand. The notice of the board meetings shall contain: (1) date, venue and duration of the meeting; (2) reasons and matters for discussion; (3) date of issuance of the notice. Extraordinary general meeting shall be convened by the Chairman within ten days of the occurrence of any of the following events and shall not be subject to the abovementioned period of notice:
(1) where shareholders representing more than 10% of the voting rights propose to do so; (2) where the chairman of the board of directors deems it necessary; (3) where one-third or more of the directors jointly propose to do so; (4) where one half or more of the independent directors jointly propose to do so; (5) where the supervisory committee proposes to do so; (6) where the president proposes to do so. | Article 116. Meetings of the board of directors shall be held at least twice every year and shall be convened by the Chairman of the board of directors. All directors and supervisors shall be notified of the meeting fourteen days beforehand. The notice of the board meetings shall contain:
(1) date, venue and duration of the meeting; (2) reasons and matters for discussion; (3) date of issuance of the notice. Extraordinary general meeting shall be convened by the Chairman within ten days of the occurrence of any of the following events and shall not be subject to the abovementioned period of notice:
(1) where shareholders representing more than 10% of the voting rights propose to do so; (2) where the chairman of the board of directors deems it necessary; (3) where one-third or more of the directors jointly propose to do so; (4) where one half or more of the independent directors jointly propose to do so; (5) where the supervisory committee proposes to do so; (6) where the president proposes to do so; |
No. | Existing Articles | Revised Articles |
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The meetings of the board of directors shall be conducted in Chinese and where necessary, may have an interpreter to provide Chinese and English translation during the meetings. | (7) where the securities regulatory authority requires to do so; and (8) where other circumstances specified in the Articles of Association of the Company occur. The meetings of the board of directors shall be conducted in Chinese and where necessary, may have an interpreter to provide Chinese and English translation during the meetings.
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CHAPTER 13: PRESIDENT
| CHAPTER 13: PRESIDENT |
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12 | Article 139. The president shall be accountable to the board of directors and shall exercise the following functions and powers:
(1) to be in charge of the Company's production, operation and management and to organize the implementation of the resolutions of the board of directors; (2) to organize the implementation of the Company's annual business plan and investment proposal; (3) subject to applicable laws and these Articles of Association, to decide on transactions, which are related to the Company's main business, and the value of which shall not exceed certain amount, or certain proportion of the Company's latest audited net assets (the said amount and proportion to be determined by the shareholders' meeting); (4) to sign contracts and agreements on behalf of the Company and sign and dispatch day-to-day administrative documents; | Article 139. The president shall be accountable to the board of directors and shall exercise the following functions and powers:
(1) to be in charge of the Company's production, operation and management and to organize the implementation of the resolutions of the board of directors; (2) to organize the implementation of the Company's annual business plan and investment proposal; (3) subject to applicable laws and these Articles of Association, to decide on transactions, which are related to the Company's main business, and the value of which shall not exceed certain amount, or certain proportion of the Company's latest audited net assets (the said amount and proportion to be determined by the shareholders' meeting); (4) to sign contracts and agreements on behalf of the Company in accordance with the authorization granted by the board of directors or the legal representative; and sign and dispatch day-to-day administrative documents; |
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No. | Existing Articles | Revised Articles | ||||||
(5) to draft plans for the establishment of the Company's internal management structure, and where necessary, make plans for general institutional adjustment; (6) to draft the Company's basic management system; (7) to formulate basic rules and regulations for the Company; (8) to propose the appointment or dismissal of the vice presidents, chief accountant and chief pilot of the Company; (9) to appoint or dismiss management personnel other than those required to be appointed or dismissed by the board of directors; (10) to propose to convene an extraordinary meeting of the board of directors; (11) other powers conferred by the Articles of Association and the board of directors.
| (5) to draft plans for the establishment of the Company's internal management structure, and where necessary, make plans for general institutional adjustment; (6) to draft the Company's basic management system; (7) to formulate basic rules and regulations for the Company; (8) to propose the appointment or dismissal of the vice presidents, chief accountant and chief pilot of the Company; (9) to appoint or dismiss management personnel other than those required to be appointed or dismissed by the board of directors; (10) to propose to convene an extraordinary meeting of the board of directors; (11) other powers conferred by the Articles of Association and the board of directors. | |||||||
13 | Article 141. In performing their duties and powers, the president, vice presidents, chief accountant and chief pilot shall act honestly and diligently in accordance with laws, administrative regulations and the Articles of Association. | Article 141. In performing their duties and powers, the president, vice presidents, chief accountant and, chief pilot and other senior officers shall act honestly and diligently in accordance with laws, administrative regulations and the Articles of Association. | ||||||
No. | Existing Articles | Revised Articles | ||
CHAPTER 15: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS, PRESIDENT, VICE PRESIDENTS AND OTHER SENIOR OFFICERS OF THE COMPANY | CHAPTER 15: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS, PRESIDENT, VICE PRESIDENTS AND OTHER SENIOR OFFICERS OF THE COMPANY | |||
14 | Article 156. A person may not serve as a director, supervisor, president, vice presidents or any other senior officers of the Company if any of the following circumstances apply: (1) a person who does not have or who has limited capacity for civil conduct; (2) a person who has been sentenced for corruption, bribery, infringement of property or misappropriation of property or other crimes which disrupt the social economic order, where less than five years have elapsed since the sentence was served, or a person who has been deprived of his political rights and not more than five years have elapsed since the sentence was served; (3) a person who is a former director, factory manager or manager of a company or enterprise which has been dissolved or put into liquidation and who was personally liable for the winding up of such company or enterprise, where less than three years have elapsed since the date of completion of the insolvent liquidation of the company or enterprise; (4) a person who is a former legal representative of a company or enterprise the business licence of which was revoked due to violation of law and who are personally liable therefor, where less than three years have elapsed since the date of the revocation of the business licence; | Article 156. A person may not serve as a director, supervisor, president, vice presidents or any other senior officers of the Company if any of the following circumstances apply:
(1) a person who does not have or who has limited capacity for civil conduct; (2) a person who has been sentenced for corruption, bribery, infringement of property or misappropriation of property or other crimes which disrupt the social economic order, where less than five years have elapsed since the sentence was served, or a person who has been deprived of his political rights and not more than five years have elapsed since the sentence was served; (3) a person who is a former director, factory manager or manager of a company or enterprise which has been dissolved or put into liquidation and who was personally liable for the winding up of such company or enterprise, where less than three years have elapsed since the date of completion of the insolvent liquidation of the company or enterprise; (4) a person who is a former legal representative of a company or enterprise the business licence of which was revoked due to violation of law and who are personally liable therefor, where less than three years have elapsed since the date of the revocation of the business licence; |
No. | Existing Articles | Revised Articles | ||
(5) a person who has a relatively large amount of debts which have become overdue; (6) a person who is currently under investigation by judicial organs for violation of criminal law; (7) a person who, according to laws and administrative regulations, cannot act as a leader of an enterprise; (8) a person other than a natural person; (9) a person who has been convicted by the competent authority for violation of relevant securities regulations and such conviction involves a finding that such person has acted fraudulently or dishonestly, where less than five years have elapsed since the date of such conviction; (10) a person who has been confirmed by the authority in charge of securities of the State Council as being prohibited from participating in the market or have not been released from such prohibition; (11) other contents as provided for by the laws, administrative regulations or departmental rules. | (5) a person who has a relatively large amount of debts which have become overdue; (6) a person who is currently under investigation by judicial organs for violation of criminal law; (7) a person who, according to laws and, administrative regulations or departmental rules, cannot act as a leader of an enterprise; (8) a person other than a natural person; (9) a person who has been convicted by the competent authority for violation of relevant securities regulations and such conviction involves a finding that such person has acted fraudulently or dishonestly, where less than five years have elapsed since the date of such conviction; (10) a person who has been confirmed by the authority in charge of securities of the State Council as being prohibited from participating in the market or have not been released from such prohibition; (11) other contents as provided for by the laws, administrative regulations or departmental rules.
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No. | Existing Articles | Revised Articles | ||
If any of the above circumstances occurs on the part of a director during his term of office, the board of directors shall, starting from the date on which they are aware thereof, forthwith cease the performance of duties by the relevant director and propose to remove such director at the shareholders' general meeting. If any of the above circumstances occurs on the part of the president during his term of office, the board of directors shall, starting from the date on which they are aware thereof, forthwith cease the performance of duties by the relevant president and convene a board meeting to dismiss such president. If any of the above circumstances occurs on the part of a supervisor during his term of office, the supervisory committee shall, starting from the date on which it is aware thereof, forthwith cease the performance of duties by the relevant supervisor and propose to remove such supervisor at the shareholders' general meeting or the employee representatives' meeting. | If any of the above circumstances occurs on the part of a director during his term of office, the board of directors shall, starting from the date on which they are aware thereof, forthwith cease the performance of duties by the relevant director and propose to remove such director at the shareholders' general meeting. If any of the above circumstances occurs on the part of the president during his term of office, the board of directors shall, starting from the date on which they are aware thereof, forthwith cease the performance of duties by the relevant president and convene a board meeting to dismiss such president. If any of the above circumstances occurs on the part of a supervisor during his term of office, the supervisory committee shall, starting from the date on which it is aware thereof, forthwith cease the performance of duties by the relevant supervisor and propose to remove such supervisor at the shareholders' general meeting or the employee representatives' meeting. | |||
15 | Article 160. Each of the Company's directors, supervisors, president, vice presidents and other senior officers owes a duty, in the exercise of his powers or in the discharge of his duties, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, including but not limited to the standards of the professional ethnics and code of conduct formulated by the Company. | Article 160. Each of the Company's directors, supervisors, president, vice presidents and other senior officers owes a duty, in the exercise of his powers or in the discharge of his duties, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, including but not limited to compliance with the standards of the professional ethnics and code of conduct formulated by the Company. |
No. | Existing Articles | Revised Articles | ||
CHAPTER 16: FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND AUDIT | CHAPTER 16: FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND AUDIT | |||
16 | Article 192. Specific dividends distribution policy of the Company: (1) The form of dividends distribution: The Company may distribute dividends in cash, shares or a combination of cash and shares or other methods permitted by the laws, administrative regulations, departmental rules and the regulatory rules of the jurisdictions in which the shares of the Company are listed. | Article 192. Specific dividends distribution policy of the Company:
(1) The form of dividends distribution: The Company may distribute dividends in cash, shares or a combination of cash and shares or other methods permitted by the laws, administrative regulations, departmental rules and the regulatory rules of the jurisdictions in which the shares of the Company are listed. The board of directors of the Company shall have comprehensive consideration of the factors, including its industry characteristics, development stage, operation mode, profitability level and whether there is any significant expenditure payment arrangement, make the differentiated cash bonus policy according to the procedures prescribed by the Articles of Association, and identify the proportion of the cash bonus in the profit distribution in the current year, with proportion in compliance with the relevant stipulations of laws, administrative regulations, normative documentation and stock exchanges. |
No. | Existing Articles | Revised Articles | ||
(2) Specific conditions and proportions for distributing cash dividends by the Company: Save as special circumstances, the dividends shall be distributed in cash by the Company provided that the distributable profits (i.e. the balance of profit after tax, after making up for the losses and making contributions to the common reserve fund in accordance with the provisions of these Articles of Association as well as deducting otherwise approved by the relevant national departments) realized for the current year in the financial statement of the parent company prepared in accordance with applicable domestic and overseas accounting standards and regulations are positive, and the cash dividends to be distributed each year shall not be less than 15% of the applicable distributable profits. The applicable distributable profits shall be the lower of the distributable profits in the financial statements of the parent company prepared by the Company in accordance with applicable domestic and overseas accounting standards and regulations. Special circumstances refer to the circumstances under which the aggregate capital expenditures within the next twelve months reach or exceed 40% of the latest audited net value of the Company. | (2) Specific conditions and, proportions and intervals for distributing cash dividends by the Company: Save as special circumstances, the dividends shall be distributed in cash by the Company provided that the distributable profits (i.e. the balance of profit after tax, after making up for the losses and making contributions to the common reserve fund in accordance with the provisions of these Articles of Association as well as deducting otherwise approved by the relevant national departments) realized for the current year in the financial statement of the parent company prepared in accordance with applicable domestic and overseas accounting standards and regulations are positive, and the cash dividends to be distributed each year shall not be less than 15% of the applicable distributable profits. The applicable distributable profits shall be the lower of the distributable profits in the financial statements of the parent company prepared by the Company in accordance with applicable domestic and overseas accounting standards and regulations. Special circumstances refer to the circumstances under which the aggregate capital expenditures within the next twelve months reach or exceed 40% of the latest audited net value of the Company the board of directors considers that cash dividend distribution may influence the Company's continuing operation and long-term development.
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No. | Existing Articles | Revised Articles | ||
When the aforesaid conditions of cash distribution are met, cash dividends shall be distributed once a year. The board of directors of the Company can propose an interim dividend distribution according to the Company's status of profitability and capital needs. | ||||
(3) Specific conditions under which the Company may issue shares in lieu of dividends: Where the Company is in a sound operating condition, and the board of directors considers that the Company's stock price does not reflect the Company's scale of capital, and issuing shares in lieu of dividends will be in the interests of all shareholders of the Company as a whole, a proposal for the issuance of shares in lieu of dividends may be proposed upon fulfillment of the above conditions concerning cash dividends. | (3) Specific conditions under which the Company may issue shares in lieu of dividends: Where the Company is in a sound operating condition, and the board of directors considers that the Company's stock price does not reflect the Company's scale of capital, and issuing shares in lieu of dividends will be in the interests of all shareholders of the Company as a whole, a proposal for the issuance of shares in lieu of dividends may be proposed upon fulfillment of the above conditions concerning cash dividends.
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No. | Existing Articles | Revised Articles | ||
17 | Article 194. Procedures for considering and approving the dividend distribution proposal of the Company: (1) The dividends distribution plan of the Company shall be drawn up by the management of the Company and submitted to the board of directors and the supervisory committee of the Company for consideration. The board of directors shall thoroughly discuss the rationality of the dividends distribution plan and the independent Directors shall explicitly express their opinions. A special resolution formulated by the board of directors shall be submitted to the Shareholders' general meeting for consideration. | Article 194. Procedures for considering and approving the dividend distribution proposal of the Company: (1) The dividends distribution plan of the Company shall be drawn up by the management of the Company and submitted to the board of directors and the supervisory committee of the Company for consideration. The board of directors shall thoroughly discuss the rationality of the dividends distribution plan and the independent Directors shall explicitly express their opinions. A special resolution formulated by the board of directors shall be submitted to the Shareholders' general meeting for consideration. The board of directors will also fully listen to the opinions of minority Shareholders. | ||
(2) Where the Company does not distribute cash dividends under the special circumstances as prescribed in the foregoing Article 192, the board of directors shall explain the specific reasons for not distributing cash dividends, the exact purpose for the retained profit and the estimated investment return. Such explanation, along with the opinions expressed by the independent directors, shall be submitted to the shareholders' general meeting for consideration and be disclosed on the designated media of the Company. | (2) When formulating specific plan for distribution of cash dividends by the Company, the board of directors shall study and identify with caution the timing, conditions and minimum proportion, conditions for adjustment and requirements for decision-making procedures involved in implementing the distribution of cash dividends, etc. Independent Directors shall explicitly express their opinions thereon. Independent Directors may collect opinions from minority shareholders for putting forward a profit distribution proposal which can be directly submitted to the board of directors for consideration.
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No. | Existing Articles | Revised Articles | ||
(3) Where the Company does not distribute cash dividends under the special circumstances as prescribed in the foregoing Article 192, the board of directors shall explain the specific reasons for not distributing cash dividends, the exact purpose for the retained profit and the estimated investment return. Such explanation, along with the opinions expressed by the independent directors, shall be submitted to the shareholders' general meeting for consideration and be disclosed on the designated media of the Company. | ||||
Subject to Article 63 and subparagraph (17) of the first paragraph of Article 110 of these Articles of Association, the board of directors may decide to distribute interim or special dividends. | Subject to Article 63 and subparagraph (17) of the first paragraph of Article 110 of these Articles of Association, the board of directors may decide to distribute interim or special dividends. |
PROCEDURES OF SHAREHOLDERS’ MEETINGS
Particulars of amendments to the Rules and Procedures of Shareholders' Meetings are as follows, with the amendments underlined, where appropriate, just for easy reference.
Article No. | Original Article | Revised Article | ||
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. | A conference venue shall be set up for the general meeting and the general meeting shall be convened in a live conference mode. 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, oOn 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., the Company shall adopt safe, economical and convenient network or other means to facilitate the shareholders to participate in the meeting as required by laws, administrative regulations, CSRC and the Articles of Association. The shareholders attending the meeting in such ways shall be deemed as being present at the meeting. | ||
Article 9 | In the circumstances specified in the Articles of Association, the Company shall convene a class meeting. Shareholders who hold a different class of shares are deemed to be different classes of 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 shares shall be deemed to be the same class of shareholders. | In the circumstances specified in the Articles of Association, the Company shall convene a class meeting. Shareholders who hold a different class of shares are deemed to be different classes of shareholders. Except other classes of shareholders, holders of domesticA shares and those of overseas-listed foreign shares are deemed to be shareholders of different classes, and holders of overseas-listed foreign shares shall be deemed to be the same class of shareholders. |
Article No. | Original Article | Revised Article | ||
Article 13 | The board of directors, independent directors and shareholders that meet certain conditions (in accordance with the standards issued by the relevant regulatory authorities from time to time) may collect voting rights from the shareholders of the Company at a general meeting. Public collection of the voting rights of shareholders by a collector shall be made in accordance with the regulations of relevant regulatory authorities and the stock exchange(s) on which the Company's shares are listed. | The board of directors, independent directors and shareholders that meet certain conditions (in accordance with the standards issued by the relevant regulatory authorities from time to time) may publicly collect voting rights from the shareholders of the Company at a general meeting. In soliciting voting rights of the shareholders, information such as specific voting intention shall be sufficiently disclosed to the shareholders from whom voting rights are being solicited in soliciting voting rights of shareholders. Solicitation of voting rights at any consideration, whether in direct or indirect form, is prohibited. The Company may not propose any minimum shareholding restriction on the solicitation of voting rights. Public collection of the voting rights of shareholders by a collector shall also be made in accordance with the regulations of relevant regulatory authorities and the stock exchange(s) on which the Company's shares are listed. | ||
Article 16 | 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; | 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; |
Article No. | Original Article | Revised Article | ||
(3) to elect and replace supervisors who are not employee representatives and to decide on matters relating to the remuneration of supervisors; (4) to examine and approve the reports of the board of directors; (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 the increase or reduction of the Company's registered capital; (9) to resolve on the proposals for merger, division, dissolution and liquidation and other matters of the Company; (10) to resolve on the proposal for issue of the Company's debt securities; | (3) to elect and replace supervisors who are not employee representatives and to decide on matters relating to the remuneration of supervisors; (4) to examine and approve the reports of the board of directors; (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 the increase or reduction of the Company's registered capital; (9) to resolve on the proposals for merger, division, dissolution, and liquidation, change of the corporate form and other matters of the Company; (10) to resolve on the proposal for issue of the Company's debt securities; |
Article No. | Original Article | Revised Article | ||
(11) to resolve on the proposal for appointment, removal of the Company's accounting firm or the proposal to not appoint any accounting firm; (12) to amend the Articles of Association; (13) to consider motions raised by the board of directors, supervisory committee or shareholder(s) who individually or collectively represent(s) 3% or more of the shares of the Company; (14) to resolve on any purchase or sale of major assets by the Company within one year where such transaction amount exceeds 30% of the latest audited total assets of the Company; (15) to resolve on the Company's external guarantees which shall be approved by a general meeting as required under laws, administrative regulations and the Articles of Association; (16) to consider and approve any change in the use of proceeds raised; (17) to consider any share incentive schemes; | (11) to resolve on the proposal for appointment, removal of the Company's accounting firm or the proposal to not appoint any accounting firm; (12) to amend the Articles of Association; (13) to consider motions raised by the board of directors, supervisory committee or shareholder(s) who individually or collectively represent(s) 3% or more of the shares of the Company; (14) to resolve on any purchase or sale of major assets by the Company within one year where such transaction amount exceeds 30% of the latest audited total assets of the Company; (15) to resolve on the Company's external guarantees which shall be approved by a general meeting as required under laws, administrative regulations and the Articles of Association; (16) to consider and approve any change in the use of proceeds raised; (17) to consider any share incentive schemes; |
Article No. | Original Article | Revised Article | ||
(18) to resolve on other matters which, in accordance with laws, administrative regulations, departmental rules 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. | (18) to resolve on other matters which, in accordance with laws, administrative regulations, departmental rules 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 No. | Original Article | Revised Article | ||
Article 20 | (I) Scope of the general meeting's authority 1. General transactions that are subject to the approval of the general meeting (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically:
(1) transactions that are subject to the approval of shareholders in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules of the Stock Exchange"), and specifically, in the size tests conducted on the transaction based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 25%; | (I) Scope of the general meeting's authority 1. General transactions that are subject to the approval of the general meeting (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically:
(1) transactions that are subject to the approval of shareholders in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules of the Stock Exchange"), and specifically, in the size tests conducted on the transaction based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 25%; or |
Article No. | Original Article | Revised Article | ||
(2) transactions that are subject to the approval of shareholders in accordance with the Rules Governing the Listing of Securities on the Shanghai Stock Exchange (the "Listing Rules of the Shanghai Stock Exchange"), and specifically, in the size tests conducted on the transaction (or related transactions calculated on an aggregated basis) based on total asset, transaction amount, profit, operating revenue and net profit of the transaction (specifics of the size tests shall be based on the Listing Rules of the Shanghai Stock Exchange), each of the ratios is equal to or more than 50%.
| (2) transactions that are subject to the approval of shareholders in accordance with the Rules Governing the Listing of Securities on the Shanghai Stock Exchange (the "Listing Rules of the Shanghai Stock Exchange"), and specifically, in the size tests conducted on the transaction (or related transactions calculated on an aggregated basis) based on total asset and the latest audited total asset of the Company, transaction amount and the latest audited net asset of the Company, profit and the audited net profit of the Company for the latest accounting year, operating revenue and the audited operating revenue of the Company for the latest accounting year, and net profit of the transaction and the audited net profit of the Company for the latest accounting year (specifics of the size tests shall be based on the Listing Rules of the Shanghai Stock Exchange), each of the ratios is equal to or more than 50%. |
Article No. | Original Article | Revised Article | ||
2. Connected transactions that are subject to the approval of the general meeting (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) including:
(1) connected transactions that are subject to the approval of the general meeting of the Company in accordance with the Listing Rules of the Stock Exchange (connected transactions shall be as defined under the Listing Rules of the Stock Exchange, as amended from time to time), and specifically, in the size tests conducted on the transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 2.5%, unless all of the above ratios are less than 25% and the transaction consideration is less than HK$10 million; | 2. Connected transactions that are subject to the approval of the general meeting (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) including:
(1) connected transactions that are subject to the approval of the general meeting of the Company in accordance with the Listing Rules of the Stock Exchange (connected transactions shall be as defined under the Listing Rules of the Stock Exchange, as amended from time to time), and specifically, in the size tests conducted on the transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 2.55%, unless all of the above ratios are less than 25% and the transaction consideration is less than HK$10 million; or |
Article No. | Original Article | Revised Article | ||
(2) transactions that are subject to the approval of shareholders in accordance with the Listing Rules of the Shanghai Stock Exchange (connected transactions shall be as defined under the Listing Rules of the Shanghai Stock Exchange, as amended from time to time), and specifically, the transaction amount of the transaction (or related transactions calculated cumulatively) accounts for 5% (or more than 5%) of the absolute value of the latest audited net asset of the Company. | (2) transactions that are subject to the approval of shareholders in accordance with the Listing Rules of the Shanghai Stock Exchange (connected transactions shall be as defined under the Listing Rules of the Shanghai Stock Exchange, as amended from time to time), and specifically, the transaction amount of the transaction (or related transactions calculated cumulatively) accounts for 5% (or more than 5%) of the absolute value of the latest audited net asset of the Company. |
Article No. | Original Article | Revised Article | ||
(II) Scope of the board authority 1. General transactions that are subject to the approval of the board of directors (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) include specifically: 2. (1) in the size tests conducted on the transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 3% but less than 25%; | (II) Scope of the board authority 1. General transactions that are subject to the approval of the board of directors (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) include specifically:
(1) in the size tests conducted on the transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 35% but less than 25%; or |
Article No. | Original Article | Revised Article | ||
(2) in the size tests conducted on the transaction (or related transactions calculated cumulatively) based on total asset, transaction amount, profit, operating revenue and net profit of the transaction (specifics of the size tests shall be based on the Listing Rules of the Shanghai Stock Exchange), each of the ratios is less than 50%, but the transaction does not fall within the scope of authority of the management. | (2) in the size tests conducted on the transaction (or related transactions calculated cumulatively) based on total asset and the latest audited total asset of the Company, transaction amount and the latest audited net asset of the Company, profit and the audited net profit of the Company for the latest accounting year, operating revenue and the audited operating revenue of the Company for the latest accounting year, and net profit and the audited net profit of the Company for the latest accounting year of the transaction (specifics of the size tests shall be based on the Listing Rules of the Shanghai Stock Exchange), each of the ratios is equal to or more than 10% but less than 50%, but the transaction does not fall within the scope of authority of the management. |
Article No. | Original Article | Revised Article | ||
2. Connected transactions that are subject to the approval of the board of directors (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically: 3. (1) in the tests conducted on the connected transactions (the definition of connected transactions shall be as defined under the Listing Rules of the Stock Exchange, as amended from time to time) based on assets ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 0.1% but less than 2.5%, unless the transaction consideration is less than HK$1 million; or each of the above ratios, although it is equal to or more than 2.5%, is less than 25% and the transaction consideration is less than HK$10 million; | 2. Connected transactions that are subject to the approval of the board of directors (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically:
(1) in the tests conducted on the connected transactions (the definition of connected transactions shall be as defined under the Listing Rules of the Stock Exchange, as amended from time to time) based on assets ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 0.1% but less than 2.55%, unless the transaction consideration is less than HK$1 million; or each of the above ratios, although it is equal to or more than 2.55%, is less than 25% and the transaction consideration is less than HK$10 million; or |
Article No. | Original Article | Revised Article | ||
(2) the transaction amount of the connected transaction (the definition of connected transactions shall be as defined under the Listing Rules of the Shanghai Stock Exchange, as amended from time to time) is less than 5% of the latest audited net asset absolute value of the Company but does not fall within the scope of authority of the management. | (2) the transaction amount of the connected transaction (the definition of connected transactions shall be as defined under the Listing Rules of the Shanghai Stock Exchange, as amended from time to time) is less than 5% of the latest audited net asset absolute value of the Company accounts for 0.5% (or more than 0.5%), but less than 5%, of the absolute value of the audited net asset of the Company but does not fall within the scope of authority of the management. | |||
(III) Scope of the management's authority
1. General transactions that are subject to the approval of the management (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) include specifically: in the size tests conducted on the transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time.), each of the ratios is less than 3%; | (III) Scope of the management's authority
1. Approval of transactions other than those decided by the general meeting or the board of directors. |
Article No. | Original Article | Revised Article | ||
2. Connected transactions that are subject to the approval of the management (as defined under the relevant listing rules of the jurisdictions where the shares of the Company are listed, as amended from time to time) include specifically: in the size tests conducted on the connected transactions based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (specifics of the size tests shall be based on the Listing Rules of the Stock Exchange, as amended from time to time), all of the ratios are less than 0.1%; or any of the above ratios, although it is equal to or more than 0.1%, is less than 2.5% and the transaction consideration is less than HK$1 million.
3. Other investment projects in respect of which an authority to make a decision has been granted by the general meeting or the board of directors. | 2. Other investment projects in respect of which an authority to make a decision has been granted by the general meeting or the board of directors. | |||
Article 20 | (IV) If a transaction falls within the scope of authority of different decision makers when it is calculated in accordance with the Listing Rules of the Stock Exchange and the Listing Rules of the Shanghai Stock Exchange, the final decision shall be made by the decision maker with higher level of authority. |
Article No. | Original Article | Revised Article | ||
Article 34 | The board of directors, the supervisor committee or shareholders individually or collectively holding 5% or more of the 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 of directors for review and announcement. ... The board of directors, the supervisor committee or shareholders individually or collectively holding 5% or more of the shares of the Company may make a motion of nominations for shareholder representative supervisors. Such motion shall be reviewed by the supervisory committee or the board of directors and passed to the board of directors for announcement. | The board of directors, the supervisor committee or shareholders individually or collectively holding 53% or more of the 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 of directors for review and announcement. ... The board of directors, the supervisor committee or shareholders individually or collectively holding 53% or more of the shares of the Company may make a motion of nominations for shareholder representative supervisors. Such motion shall be reviewed by the supervisory committee or the board of directors and passed to the board of directors for announcement. | ||
Article 37 | For holders of overseas listed foreign shares, the notice of the shareholders' meeting may, subject to the laws, regulations and the relevant listing rules of the jurisdictions where the Company's shares are listed, be delivered in other forms as prescribed in Article 228 of the Articles of Association. | For holders of overseas listed foreign shares, the notice of the shareholders' meeting may, subject to the laws, regulations and the relevant listing rules of the jurisdictions where the Company's shares are listed, be delivered in other forms as prescribed in Article 2287 of the Articles of Association. |
Article No. | Original Article | Revised Article | ||
Article 49 | The general meeting shall be convened by the chairman of the board of directors, and the chairman of the board of directors shall preside over and act as the chairman of the meeting. If the chairman is unable or fails to perform his duties, the vice chairman (where a company has two or more vice chairmen, the vice chairman jointly selected by a simple majority of the directors) shall preside over and act as the chairman of the meeting. In the event that the vice 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 meeting. If a simple majority of directors are unable to elect a director to preside over and act as the chairman of the meeting, the shareholders who attend the meeting may elect a person as the chairman; if for any reason the shareholders are unable to elect a chairman, the shareholder (including his proxy) holding the largest number of shares conferring the right to vote thereat shall be the chairman of the meeting. | The general meeting shall be convened by the chairman of the board of directors, and the chairman of the board of directors shall preside over and act as the chairman of the meeting. If the chairman is unable or fails to perform his duties, the vice chairman (where a company has two or more vice chairmen, the vice chairman jointly selected by a simple majority of the directors) shall preside over and act as the chairman of the meeting. In the event that the vice 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 meeting. If a simple majority of directors are unable to elect a director to preside over and act as the chairman of the meeting, the shareholders who attend the meeting may elect a person as the chairman; if for any reason the shareholders are unable to elect a chairman, the shareholder (including his proxy) holding the largest number of shares conferring the right to vote thereat shall be the chairman of the meeting. |
Article No. | Original Article | Revised Article | ||
Article 55 | At an AGM, the board of directors and the supervisory committee shall, respectively, make reports to the meeting on the work done by them in the past year, and each independent director shall also make a report on his work. | At an AGM, the board of directors and the supervisory committee shall, respectively, make reports to the meeting on the work done by them in the past year, and each independent director shall also make a report on his work. The chairman of each special committee under the board of directors shall make his presence at the AGM. If such chairman fails to attend the AGM, the chairman of the board of directors shall invite another committee member (or the proxy appropriately appointed by such director when such director fails to attend it) to attend the AGM. Such person shall answer questions at the AGM. | ||
Article 57 | The board of directors shall give an explanation to the shareholders in general meetings on any non-standard audit opinion issued by certified public accountants in respect of the Company's financial statements. | The board of directors shall give an explanation to the shareholders in general meetings on any non-standard audit opinion issued by certified public accountants in respect of the Company's financial statements. External certified public accountants shall attend the AGM and answer questions in relation to audit arrangement, the preparation and the content of audit reports, accounting policies and the independence of accountants. |
Article No. | Original Article | Revised Article | ||
Article 58 | For motions to be resolved and included in the agenda of a shareholders' meeting, reasonable discussion time shall be granted for each motion before voting. | For motions to be resolved and included in the agenda of a shareholders' meeting, reasonable discussion time shall be granted for each motion before voting. The chairman of each special committee under the board of directors shall answer questions at the general meetings regarding the approval of connected transactions or any other transactions that require the approval of independent shareholders. | ||
Article 64 | 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 63 in these Rules, each share shall carry one vote. | 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 63 in these Rules, each share shall carry one vote. The controlling shareholder(s) and actual controller(s) of the Company shall not restrict or obstruct minority shareholders to exercise their voting rights in accordance with laws and shall not infringe the legitimate interest of the Company and minority shareholders. |
Article No. | Original Article | Revised Article | ||
Article 66 | Resolutions in respect of the election of directors shall be passed by a way of cumulative voting at shareholders' meeting in accordance with the Articles of Association. The main procedures of the cumulative voting system are as follows: ... | Resolutions in respect of the election of directors shall be passed by a way of cumulative voting at shareholders' meeting in accordance with the Articles of Association. The main procedures of the cumulative voting system are as follows: ... In the voting for the resolution on election of supervisors (excluding employee representative supervisors), the cumulative voting system is carried out with reference to the requirements above in the circumstance that the cumulative voting is adopted in accordance with relevant requirements in the Articles of Association. | ||
Article 67 | When a connected transaction is considered at a shareholders' meeting, the connected shareholder(s) shall abstain from voting, and the voting shares represented by him shall not be counted in the total number of valid votes. The voting result of non-connected shareholders shall be fully disclosed in the announcement of the resolutions on the shareholders' meeting. | When a connected transaction is considered at a shareholders' meeting, the connected shareholder(s) shall abstain from voting, and the voting shares represented by him shall not be counted in the total number of valid votes. The voting result of non-connected shareholders shall be fully disclosed in the announcement of the resolutions on the shareholders' meeting. When material matters affecting the interest of minority shareholders are considered at a general meeting, votes by minority shareholders shall be counted separately. The results of separate counting shall be disclosed to the public in a timely manner. The Company's shares held by the Company shall not carry voting rights, and those shares shall not be included in the total number of voting shares at a general meeting. |
Article No. | Original Article | Revised Article | ||
Article 71 | Shareholders who attend the meeting shall express one of the following opinions on the resolutions put to the vote: pro, con or abstention. | Shareholders who attend the meeting shall express one of the following opinions on the resolutions put to the vote: pro, con or abstention. The declaration made by the securities registration and clearing agency as the nominal holder of shares traded through the Shanghai-Hongkong Stock Connect scheme on behalf of the actual shareholders shall be excluded. | ||
Any vote which is not completed or is completed wrongly or is illegible shall be deemed to be a waiver by the voter of his voting right, and the voting result of the number of shares held by the voter shall be counted as "abstention". | Any vote which is not completed or is completed wrongly or is illegible shall be deemed to be a waiver by the voter of his voting right, and the voting result of the number of shares held by the voter shall be counted as "abstention". | |||
Article 72 | The following issues shall be approved by special resolutions at shareholders' meetings: (3) demerger, merger, dissolution and liquidation of the Company; | The following issues shall be approved by special resolutions at shareholders' meetings:
(3) demerger, merger, dissolution, and liquidation or change of the corporate form of the Company; |
Article No. | Original Article | Revised Article | ||
Article 74 | Special voting procedures for class shareholders shall not apply in the following circumstance: (1) with the approval by special resolution at a shareholders' general meeting, the Company issues either domestic shares or overseas-listed foreign shares and both of them at an interval of 12 months, and the respective number of the proposed domestic shares and overseas-listed foreign shares does not exceed 20% of the outstanding shares of that class; or (2) the Company's plan to issue domestic shares and overseas-listed foreign shares during its establishment is completed within 15 months of the approval by the securities regulatory authority under the State Council. | Special voting procedures for class shareholders shall not apply in the following circumstance: (1) with the approval by special resolution at a shareholders' general meeting, the Company issues either domesticA shares or overseas-listed foreign shares and both of them at an interval of 12 months, and the respective number of the proposed domesticA shares and overseas-listed foreign shares does not exceed 20% of the outstanding shares of that class; or (2) the Company's plan to issue domesticA shares and overseas-listed foreign shares during its establishment is completed within 15 months of the approval by the securities regulatory authority under the State Council. |
Article No. | Original Article | Revised Article | ||
Article 77 | A shareholders' meeting shall pass resolutions for the motions which are listed in the agenda of the meeting. | A shareholders' meeting shall pass resolutions for the motions which are listed in the agenda of the meeting. The resolutions passed at the general meetings are invalid should they are in violation of any laws, or administrative regulations. Should the procedures for convening a general meeting, or the way of voting, be in violation of any laws, administrative regulations or the Articles of Association, or a resolution be in violation of the Articles of Association, the shareholders may, within 60 days from the date on which the resolution is made, request the People's Court to revoke it. | ||
Article 80 | The secretary to the board of directors shall be responsible for keeping written information of the register of attendees, power of attorney, photocopies of identification documents, voting statistics data sheet, minutes of the meeting and resolutions of shareholders' meetings for no less than 10 years. | The secretary to the board of directors shall be responsible for keeping written information of the register of attendees, power of attorney, photocopies of identification documents, voting statistics data sheetstatistical information on online voting and other means of voting, minutes of the meeting and resolutions of shareholders' meetings for no less than 10 years. |
PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS
Particulars of amendments to the Rules and Procedures of Meetings of the Board of Directors are as follows, with the amendments underlined, where appropriate, just for easy reference.
Article No. | Original Article | Revised Article | ||
Article 6 | The board of directors 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 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 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 of the Company; (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 affairs of the Company in compliance with laws and in the interest of the Company, and to report to the board of directors and the shareholders' general meeting of the Company afterwards; | The board of directors shall include one chairman and two vice- chairmenone vice chairman, who are elected and removed by a majority of directors. The Chairman of the board of directors shall exercise the following 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 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 of the Company; (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 affairs of the Company in compliance with laws and in the interest of the Company, and to report to the board of directors and the shareholders' general meeting of the Company afterwards; |
Article No. | Original Article | Revised Article | ||
(7) to exercise other powers conferred by the board of directors. | (7) to exercise other powers conferred by the board of directors. | |||
The vice 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 vice chairman (Should the Company have two or more vice chairmen, the vice chairman selected jointly by a majority of the directors shall perform such duties.). In the event that the vice chairman is unable or fails to perform his duties, a director shall be elected jointly by a majority of the directors to perform such duties. | The vice 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 vice chairman (Should the Company have two or more vice chairmen, the vice chairman selected jointly by a majority of the directors shall perform such duties.). In the event that the vice chairman is unable or fails to perform his duties, a director shall be elected jointly by a majority 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 removed by the board of directors. The secretary shall be accountable to the board of directors. 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; proactively monitor the progress of the implementation of relevant resolutions; reporting any important issues occurring during the implementation to the board of directors and giving relevant advice to the board of directors. | The Company shall have a secretary to the board who shall be nominated by the chairman of the board of directors and employed or removed by the board of directors. The secretary shall be accountable to the board of directors. The main responsibilities and duties of the secretary to the board include: are specified by the terms of reference for the secretary to the board, and the terms of reference for the secretary to the board is formulated by the board of directors. | ||
Article No. | Original Article | Revised Article | ||
(2) ensuring the material matters decided by the board of directors of the Company to be carried out strictly in accordance with the procedures stipulated; at request of the board of directors, participating in the arrangement of consultation on and analysis of the matters to be decided by the board of directors and offering relevant opinions and suggestions; handling the day-to-day affairs of the board of directors 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 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.
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Article No. | Original Article | Revised Article | ||
(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 such as explaining and clarifying it in a timely manner and notifying 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 summary reports on marketing and important visits; and organizing matters about the submission of the reports to the CSRC.
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Article No. | Original Article | Revised Article | ||
(7) managing and maintaining the records 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 fully complying with 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, shall immediately remind the board of directors and is entitled to report such facts to the CSRC and other regulatory authorities. (9) coordinating the provision of relevant information necessary to the Company's supervisory committee and other supervising authorities to discharge their duties; assisting in carrying out investigation on the chief financial officer, directors and the general manager of the Company of their fiduciary duties. |
Article No. | Original Article | Revised Article | ||
(10) exercising other functions and powers as conferred by the board of directors, 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.
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Article 8 | The board of directors shall establish special sub-committees, including a strategy and investment committee, an audit and risk control committee, a nomination and remuneration committee, and an aviation safety committee in accordance with relevant resolutions of the shareholders' general meeting. These special committees shall consider specific matters and provide their opinions and advice as a reference for the board's decision making based on the proposals made by the board of directors, the chairman of the board of directors and the recommendations from the president. | The board of directors shall establish special sub-committees, including a strategy and investment committee, an audit and risk control committee, a nomination and remuneration committee, and an aviation safety committee and other special sub-committees in accordance with relevant resolutions of the shareholders' general meeting. These special committees shall consider specific matters and provide their opinions and advice as a reference for the board's decision making based on the proposals made by the board of directors, the chairman of the board of directors and the recommendations from the president.
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The majority of members of audit and risk control committee and nomination and remuneration committee shall be independent non- executive directors, and the chairman of the committees shall be independent non-executive director. The audit and risk control committee shall have at least one independent non-executive director who shall be an accounting professional. Such special committees shall formulate relevant working rules which shall be come into effect upon receiving approval by the board of directors. | The composition, scope of authority, as well as rules and procedures of meetings for each special sub-committee are specified by the terms of reference for each special sub-committee. The terms of reference for each special committee are formulated by the board of directors. | |||
Article No. | Original Article | Revised Article | ||
Article 9 | The board of directors shall be responsible to the shareholders' general meeting and exercise the following functions and powers:
| The board of directors shall be responsible to the shareholders' general meeting and exercise the following functions and powers: | ||
(7) to formulate the proposals for merger, division or dissolution of the Company; | (7) to formulate the proposals for merger, division,or dissolution or change of the corporate form of the Company;
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(11) to appoint or remove the Company's president, secretary to the board of directors; to appoint or remove other senior officers such as the Company's deputy president, chief accountants and chief pilot based on the proposals of the president and determine their remunerations, rewards and punishment; | (11) to appoint or remove the Company's president, secretary to the board of directors and determine their remunerations; to appoint or remove other senior officers such as the Company's deputy president, chief accountants and chief pilot and other senior officers based on the proposals of the president and determine their remunerations, rewards and punishment;
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(12) to formulate the Company's basic management rules; | (12) to formulate the Company's basic management rules;
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Article No. | Original Article | Revised Article | ||
Article 11 | (1) General transactions which shall be subject to approval of the board of directors (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically: | (1) General transactions which shall be subject to approval of the board of directors (as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically: | ||
1. in the tests conducted on the transactions in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules of the Stock Exchange") based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (in accordance with the Listing Rules of the Stock Exchange, as amended from time to time.), each of the ratios is equal to or more than 3% but less than 25%; | 1. in the tests conducted on the transactions in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Listing Rules of the Stock Exchange") based on assets ratio, profit ratio, revenue ratio, consideration ratio and equity capital ratio (in accordance with the Listing Rules of the Stock Exchange, as amended from time to time.), each of the ratios is equal to or more than 35% but less than 25%; or
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Article No. | Original Article | Revised Article | ||
2. in the tests conducted on the transaction (or related transactions calculated on an aggregated basis) based on total asset, transaction amount, profit, operating revenue and net profit (in accordance with the Rules Governing the Listing of Securities on the Shanghai Stock Exchange.), each of the ratios is less than 50%, but the transaction does not fall within the scope of authority of the management. | 2. in the size tests conducted on the transaction (or related transactions calculated on an aggregated basis) in accordance with the Rules Governing the Listing of Securities on the Shanghai Stock Exchange (hereinafter as the "Listing Rules of Shanghai Stock Exchange") and based on total asset and the latest audited total asset of the Company, transaction amount and the latest audited net asset of the Company, profit and the audited net profit of the Company for the latest accounting year, operating revenue and the audited operating revenue of the Company for the latest accounting year, and net profit and audited net profit of the Company for the latest accounting year (in accordance with the Rules Governing the Listing of Securities on the Shanghai Stock Exchange. subject to the Listing Rules of Shanghai Stock Exchange as amended from time to time), each of the ratios is equal to or more than 10% but less than 50%, but the transaction does not fall within the scope of authority of the management.
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Article No. | Original Article | Revised Article | ||
(2) Connected transactions which shall be subject to the approval of the board of directors (the term "connected transactions" as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically: | (2) Connected transactions which shall be subject to the approval of the board of directors (the term "connected transactions" as defined under the relevant listing rules of the place where the shares of the Company are listed, as amended from time to time) include specifically: | |||
1. in the tests conducted on the connected transactions (The definition of connected transactions shall be based on the Listing Rules of the Stock Exchange, as amended from time to time.) based on assets ratio, revenue ratio, consideration ratio and equity capital ratio (in accordance with the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 0.1% but less than 2.5%, unless the transaction consideration is less than HK$1 million; or each of the above ratios is equal to or more than 2.5% but less than 25% and the transaction consideration is less than HK$10 million; | 1. in the size tests conducted on the connected transactions (The definition of connected transactions shall be based on the Listing Rules of the Stock Exchange, as amended from time to time.) based on assets ratio, revenue ratio, consideration ratio and equity capital ratio (in accordance with the Listing Rules of the Stock Exchange, as amended from time to time), each of the ratios is equal to or more than 0.1% but less than 2.55%, unless the transaction consideration is less than HK$1 million; or each of the above ratios is equal to or more than 2.55% but less than 25% and the transaction consideration is less than HK$10 million;
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Article No. | Original Article | Revised Article | ||
2. The transaction amount of the connected transaction (The definition of connected transactions shall be based on the Rules Governing the Listing of Securities on the Shanghai Stock Exchange, as amended from time to time) is less than 5% of the latest audited net asset absolute value of the Company but does not fall within the scope of authority of the management. | 2. The transaction amount of the connected transaction (The definition of connected transactions shall be based on the Rules Governing the Listing of Securities on the Shanghai Stock Exchange the Listing Rules of Shanghai Stock Exchange, as amended from time to time) is less than 5% of the latest audited net asset absolute value of the Company accounts for 0.5% (or more than 0.5%), but less than 5%, of the absolute value of the latest audited net asset of the Company but does not fall within the scope of authority of the management.
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(3) Risk investments which shall be subject to the approval of the board of directors (referring to futures contracts such as aircraft fuel prices hedging contracts and other derivatives) include: provided that the provisions hereof regarding the authority of the board of directors to approve general transactions and connected transactions are complied with, any projects with an investment amount which does not exceed 15% of the Company's latest audited net asset. | (3) When a transaction is calculated in accordance with different local listing rules, such transaction shall be submitted to the general meeting for consideration if one of the calculation results exceeds the scope of authority of the board of directors. | |||
Article No. | Original Article | Revised Article | ||
(4) External guarantees which shall be subject to the approval of the board of directors include: all external guarantees (including the external guarantees provided by the subsidiaries of the Company) other than those required to be approved by the shareholders' general meetings under the provisions of the laws and regulations of the place where the Company is listed and the relevant listing rules and the Articles of Association. | (34) Risk investments which shall be subject to the approval of the board of directors (referring to futures contracts such as aircraft fuel prices hedging contracts and other derivatives) include: provided that the provisions hereof regarding the authority of the board of directors to approve general transactions and connected transactions are complied with, any projects with an investment amount which does not exceed 15% of the Company's latest audited net asset.
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(5) Other investment projects which is beyond the authority of the management but does not require the approval of the general meeting under the provisions of the laws and regulations of the place where the shares of the Company are listed and the relevant listing rules and the Articles of Association, or in respect of which an authority to make decision is granted by the general meeting. | (45) External guarantees which shall be subject to the approval of the board of directors include: all external guarantees (including the external guarantees provided by the subsidiaries of the Company) other than those required to be approved by the shareholders' general meetings under the provisions of the laws and regulations of the place where the Company is listed and the relevant listing rules and the Articles of Association.
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(56) Other investment projects which is beyond the authority of the management but does not require the approval of the general meeting under the provisions of the laws and regulations of the place where the shares of the Company are listed and the relevant listing rules and the Articles of Association, or in respect of which an authority to make decision is granted by the general meeting.
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Article 14 | (2) Extraordinary board meetings. | (2) Extraordinary board meetings. | ||
If any of the following circumstances occurs, the secretary to 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 10% or more of the voting rights consider(s) it necessary;
2. the chairman of the board of directors considers it necessary;
3. one-third or more of the directors jointly propose it;
4. one-half or more of the independent directors jointly propose it;
5. the supervisory committee proposes it;
6. the president proposes it. | If any of the following circumstances occurs, the secretary to 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 10% or more of the voting rights consider(s) it necessary;
2. the chairman of the board of directors considers it necessary;
3. one-third or more of the directors jointly propose it;
4. one-half or more of the independent directors jointly propose it;
5. the supervisory committee proposes it;
6. the president proposes it;
7. securities regulatory authorities require it;
8. the Articles of Association of the Company provide other circumstances for convening it.
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Article No. | Original Article | Revised Article | ||
Article 16 | A board meeting shall be convened and chaired by the chairman of the board of directors. If the chairman of the board of directors is unable or fails to convene and chair the meetings, the vice chairman shall convene and chair the meetings (Should the Company have two or more vice chairmen, the meetings shall then be convened and chaired by the one selected by a simple majority of directors.); if the vice chairman of the board of directors 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. | A board meeting shall be convened and chaired by the chairman of the board of directors. If the chairman of the board of directors is unable or fails to convene and chair the meetings, the vice chairman shall convene and chair the meetings (Should the Company have two or more vice chairmen, the meetings shall then be convened and chaired by the one selected by a simple majority of directors.); if the vice chairman of the board of directors 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 26 | If any adjournment or cancellation of the meeting due to any reason, a notice shall be given to the attendees one day before the original date of the meeting. | After delivery of the notice of board meeting, forIf any adjournment, or cancellation of the meeting or change of venue due to any reason, a notice shall be given to the attendees one day before the original date of the meeting. In the event that proposals for the meeting need to be added, changed or cancelled, prior approval of all the attending directors shall be obtained and corresponding records shall be made. |
Article No. | Original Article | Revised Article | ||
Article 32 | The independent directors shall give their independent opinions to the board of directors or the shareholders' general meeting on the following matters: (4) substantial money transfers (as determined in accordance with the rules promulgated from time to time) among shareholders of the Company, actual controllers and connected enterprise; (5) distribution plans of the cash dividends that the board of directors has not made; (6) issues that the independent directors consider possible to impair on the rights and interest of minority shareholders; (7) other matters so stipulated by applicable laws, regulations or the Articles of Association. | The independent directors shall give their independent opinions to the board of directors or the shareholders' general meeting on the following matters: (4) substantial money transfers (as determined in accordance with the rules promulgated from time to time) between the Company and among shareholders of the Company, actual controllers and connected enterprise; (5) profit distribution plans proposed to the board meeting of the Company for consideration; (6) distribution plans of the cash dividends that the board of directors has not made; (67) issues that the independent directors consider possible to impair on the rights and interest of minority shareholders; (78) other matters so stipulated by applicable laws, and regulations, department rules or the Articles of Association. |
Article No. | Original Article | Revised Article | ||
Article 35 | Any resolutions of the board of directors with respect to any of the following matters shall be passed by two-thirds or more of the directors while other resolutions of the board of directors 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; and (5) other matters so stipulated by laws, regulations or the Articles of Association. Besides, in addition to the approval by a majority of all directors, a resolution of the board of directors on an external guarantee shall be subject to approval by two-thirds or more of the directors present at the board meeting. | Any resolutions of the board of directors with respect to any of the following matters shall be passed by two-thirds or more of the directors while other resolutions of the board of directors 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 or change of the corporate form of the Company; (4) formulation of proposals for amendments to the Articles of Association; and (5) other matters so stipulated by laws, regulations or the Articles of Association. Besides, in addition to the approval by a majority of all directors, a resolution of the board of directors on an external guarantee shall be subject to approval by two-thirds or more of the directors present at the board meeting. | ||
Article 48 | The following matters shall not be carried out until they are examined and approved by the board of directors and submitted to and approved by the shareholders' general meeting: (5) to formulate the proposals for merger, demerger or dissolution of the Company; | The following matters shall not be carried out until they are examined and approved by the board of directors and submitted to and approved by the shareholders' general meeting: (5) to formulate the proposals for merger, demerger, or dissolution or change of the corporate form of the Company; |
THE THREE YEARS FROM 2015 TO 2017
In order to further improve and enhance the Company's scientific, sustainable and stable dividend distribution mechanism and monitoring mechanism, proactively reward investors, and effectively protect the legitimate rights and interests of all the shareholders, the Board of Directors of the Company has formulated this plan according to the requirements of the Notice on Further Implementing Matters Regarding Distribution of Cash Dividends by Listed Companies (Zheng Jian Fa [2012] No. 37) and Regulatory Guidelines on Listed Companies No. 3 - Cash Dividends of Listed Companies (CSRC Announcement [2013] No. 43) issued by the China Securities Regulatory Commission ("CSRC") and the Articles of Association. Details of the plan are as follows:
I. CONSIDERATIONS IN THE FORMULATION OF THE SHAREHOLDER RETURN PLAN
With a view to strategic objectives and sustainable future development, the Company considers various factors, such as actual development and development plan of the Company, wishes and desires of the shareholders, external financing costs, financing environment and cash flow, so as to achieve a balance between the short-term benefits and long-term returns of the shareholders, establish a sustainable, stable and scientific return plan and mechanism for investors and set up clear systematic arrangements for profit distribution in order to ensure the continuity and stability of its profit distribution policy.
II. PRINCIPLES IN THE FORMULATION OF THE SHAREHOLDER RETURN PLAN
The plan was formulated under laws, regulations and regulatory documents including the PRC Company Law and the Articles of Association. The Company implements a sustainable and stable profit distribution policy, while taking full account of the opinions of the shareholders, especially the minority shareholders and independent directors. As for profit distribution, the Company places emphasis on reasonable investment returns for investors, while taking account of its sustainable development. Provided that the requirements of the Company's production operations and sustainable development for funds are satisfied, priority shall be given to the distribution of cash dividends. A sound cash dividend system maintains the consistency, rationality and stability of the cash dividend policy.
III. THE SPECIFIC SHAREHOLDER RETURN PLAN FOR THE NEXT THREE YEARS (2015-2017)
(I) Profit distribution method
The Company shall distribute dividends by way of cash, shares or a combination of cash and shares, or in other forms as permitted by laws, administrative regulations, departmental rules and regulatory rules of the places where the Company is listed. The Company shall give priority to dividend distribution by way of cash dividends according to the actual circumstance.
The Company may propose the dividend distribution plan by way of stock if the conditions for cash dividend distribution are satisfied and as the Company is operating well, the Board of Directors considers that the Company's stock price is not compatible with the equity scale of the Company and that the distribution of stock dividends is in the interest of all shareholders of the Company as a whole.
(II) Profit distribution conditions and proportion
1. Specific conditions, proportion and time interval for distribution of cash dividends
Except for special circumstances, when the values of distributable profits (meaning the profits after covering losses, appropriating reserves and deducting other items from the after-tax profits as approved by the relevant state departments in accordance with the Articles of Association) for the year realized in the statements of the parent company prepared in accordance with applicable domestic and foreign accounting standards and regulations are positive, the Company shall distribute dividends in cash and the profits to be distributed in cash annually shall not be less than 15% of the profits available for distribution.
Special circumstances refer to the view of the Board of Directors that the continuous operation and long-term development of the Company will be affected by the cash dividends distribution.
When the conditions for the distribution of cash dividends are satisfied, the Company shall generally distribute cash dividends once a year. The Board of Directors may propose the distribution of interim cash dividends by the Company according to the profitability status and financial requirements of the Company.
2. Conditions for distribution of stock dividends
The Company may propose a stock dividend distribution plan when the aforesaid conditions for cash dividend distribution are satisfied and as the Company is operating well, the Board of Directors considers that the Company's stock price is not compatible with the equity scale of the Company and that the distribution of stock dividends is in the interest of all shareholders of the Company as a whole.
3. Differentiated cash dividend policy
For the next three years, with the following circumstances identified, the Board of Directors shall propose a differentiated cash dividend policy after making an overall consideration of various factors, such as the characteristics of the industry in which the Company operates, the stage of development, its business model, profitability levels and whether major capital expenditure arrangements exist, in accordance with the procedures stipulated in the Articles of Association:
(1) where the Company is in a mature stage of development without significant capital expenditure arrangements, when distributing profits, cash dividends shall account for a minimum of 80% of the profits to be distributed;
(2) where the Company is in a mature stage of development with significant capital expenditure arrangements, when distributing profits, cash dividends shall account for a minimum of 40% of the profits to be distributed; and
(3) where the Company is in a growth stage of development with significant capital expenditure arrangements, when distributing profits, cash dividends shall account for a minimum of 20% of the profits to be distributed. If it is not easy to identify the Company's stage of development but significant capital expenditure arrangements exist, profit distribution may be made in accordance with the previous provision.
The stage in which the Company is located before an actual distribution of dividends shall be determined by the Board of Directors according to the specific circumstances at the time.
(III) Profit distribution review procedures
The Company's dividend distribution proposal prepared by the Company's management shall be submitted to the Board of Directors and the Supervisory Committee for consideration. The Board of Directors shall discuss fully the rationality of the profit distribution proposal while the independent directors shall express their independent opinions on the proposal. The Board of Directors shall, after making a special resolution, submit the proposal to the shareholders' general meeting for consideration.
When formulating the specific proposal for cash dividends, the Board of Directors shall carefully examine and deliberate various matters, such as the timing, conditions, minimum proportion, conditions for adjustment and requirements of its decision-making process in respect of the Company's distribution of cash dividends, while the independent directors shall express their opinion thereon. The independent directors may solicit the views of small and medium shareholders, propose a dividend distribution proposal and submit it directly to the Board of Directors for consideration.
If the Company does not carry out any distribution of cash dividends due to the aforesaid special circumstances, the Board of Directors shall make a special explanation on, among others, the specific reasons for not distributing cash dividends, the exact purposes for the Company to retain earnings and the projected return on investment. After the independent directors have expressed their opinions, the explanation shall then be submitted to the shareholders' general meeting for consideration and be disclosed to the public through the media designated by the Company.
IV. FORMULATION OF AND ADJUSTMENTS TO THE SHAREHOLDER RETURN PLAN
1. The Company shall formulate and adjust the shareholder return plan in accordance with the requirements of laws, regulations, regulatory documents and regulatory authorities, as well as the actual circumstances of the Company and the opinions of the shareholders (especially small and medium shareholders).
2. Having taken full account of the profit scale, cash flow, stage of development and current capital requirements of the Company, as well as the opinions of the shareholders (especially small and medium shareholders), the Company shall formulate the shareholder return plan, while the Board of
Directors shall review and deliberate matters relating to shareholder returns and the independent directors shall express their independent opinions thereon, and the plan will be submitted to the shareholder's general meeting for consideration and approval.
3. If it is really necessary for the Company to adjust its established shareholder return plan due to the external business environment or the Company's business needs, the Board of Directors shall discuss in detail the reasons for such adjustment, and compile a discussion report, which shall be considered by the independent directors first and then submitted to the shareholders' general meeting for approval by way of special resolution. In considering any changes to the dividend distribution policy, the Company may take the initiative in communicating and exchanging opinions with the shareholders, especially small and medium shareholders, through various channels (e.g. online voting and inviting small and medium shareholders to meetings) to fully listen to their views and appeals, and give a timely reply to their questions of concern.
V. SUPPLEMENTARY PROVISIONS
Any matters not covered herein shall be handled in accordance with the requirements of relevant laws and regulations as well as regulatory documents and the Articles of Association. The plan shall be construed by the Board of Directors and be effective from the date of consideration and approval at a shareholders' general meeting of the Company. These provisions shall apply likewise to any revisions to the plan.
Air China Limited
APPENDIX V NOTICE OF EXTRAORDINARY GENERAL MEETING
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 2:00 p.m. on 22 December 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, the PRC to consider and, if thought fit, to pass the following resolutions. Unless otherwise indicated, capitalised terms used herein shall have the same meaning as those defined in the circular of the Company dated 7 November 2015.
Special Resolutions:
1. To consider and approve the proposed amendments to the articles of association of the Company as set out in Appendix I of the circular despatched by the Company on 7 November 2015 and the chairman and/or any person authorised by the chairman be authorised to adjust, at his or her discretion, the said amendments in accordance with the opinion of the relevant PRC authorities (the proposed amendment to the Articles of Association will be submitted to the relevant PRC authorities for approval and filing after being approved at the EGM).
2. To consider and approve the proposed amendments to the Rules and Procedure of Shareholders' Meetings of the Company as set out in Appendix II of the circular despatched by the Company on 7 November 2015.
3. To consider and approve the proposed amendments to the Rules and Procedure of Meetings of the Board of Directors of the Company as set out in Appendix III of the circular despatched by the Company on 7 November 2015.
Ordinary Resolutions:
4. To consider and approve the proposed adoption of the shareholders' return plan for the three years from 2015 to 2017 as set out in Appendix IV of the circular despatched by the Company on 7 November 2015.
5. To consider and approve the resolutions concerning the entry into continuing connected transaction agreements for the three years from 1 January 2016 to 31 December 2018 and their respective annual caps.
By order of the Board
Air China Limited
Rao Xinyu Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 7 November 2015
As at the date of this notice, the directors of the Company are Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr. Song Zhiyong, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Pan Xiaojiang*, Mr. Simon To Chi Keung* and Mr. Stanley Hui Hon-chung*.
* 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 close from Saturday, 21 November 2015 to Tuesday, 22 December 2015 (both days inclusive), during which time no transfer of H Shares of the Company will be effected and registered. In order to qualify for attendance 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, 20 November 2015.
Shareholders of the Company whose names appear on the register of members of the Company at the close of business on Friday, 20 November 2015 are entitled to attend and vote at the EGM.
2. Notice of attendance
H Shareholders 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, 2 December 2015. 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 appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company's H Share registrar for holders of H Shares not less than 24 hours before the time specified for the holding of the EGM. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company's H Share registrar.
4. Other businesses
(i) The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be responsible for their own traveling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is: 17M Floor
Hopewell Centre
183 Queen's Road East Wanchai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990