REG - Air China Ld - CIRCULAR FOR THE 2024 ANNUAL GENERAL MEETING
Wed 08:45
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RNS Number : 3854L Air China Ld 04 June 2025
If you are in any doubt as to any aspect of this circular, you should consult
a 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 of Air China Limited, you
should at once hand this circular and the form of proxy to the purchaser or
transferee or to the bank, stockbroker or other agent through whom the sale
was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this circular, make no
representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this circular.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
(1) CONTINUING CONNECTED TRANSACTION AND DISCLOSEABLE TRANSACTION: THE CNACG
FRAMEWORK AGREEMENT
(2) CONTINUING CONNECTED TRANSACTION: THE NEW FRAMEWORK AGREEMENT
(3) PROPOSED CHANGE OF AUDITORS
(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE ABOLISHMENT
OF THE SUPERVISORY COMMITTEE
(5) PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS
AND THE RULES AND PROCEDURES OF
MEETINGS OF THE BOARD
(6) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS AND
(7) NOTICE OF ANNUAL GENERAL MEETING
A letter from the Board is set out on pages 5 to 31 of this circular.
A letter from the Independent Board Committee, containing its advice to the
Independent Shareholders of the Company, is set out on pages 32 to 33 of this
circular.
A letter from the Independent Financial Adviser, containing its advice to the
Independent Board Committee and the Independent Shareholders of the Company,
is set out on pages 34 to 48 of this circular.
A notice convening the AGM to be held at 10:00 a.m. on Tuesday, 24 June 2025
at The Conference Room C313, No. 30, Tianzhu Road, Airport Industrial Zone,
Shunyi District, Beijing, the PRC, is set out on pages 208 to 211 of this
circular. Whether or not you are able to attend the AGM, 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 AGM or any
adjournment thereof. Completion and return of the form of proxy will not
preclude you from attending and voting in person at the AGM or any adjournment
thereof should you so wish.
4 June 2025
Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
. . . . . . . . . . . . . . . . . . . . . .
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
. . . . . . . . . . . . . . .
I. Introduction . . . . . . . . . . . . . . . . . . . . . . 5
. . . . . . . . . . . . . . . . . . . . . . . . . . .
II. Continuing Connected Transactions . . . . . . . . . . . . . 6
. . . . . . . . . . . . . . . . . . . .
III. Proposed Change of Auditors . . . . . . . . . . . . . . . . . . 23
. . . . . . . . . . . . . . . . . . .
IV. Proposed Amendments to the Articles of Association and the
Abolishment of the Supervisory Committee . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . 24
V. Proposed Amendments to the Rules and Procedures of
Shareholders' Meetings and the Rules and Procedures of Meetings of the Board .
. . . . . . . . . . . . . . . . . . . 25
VI. Details of Other Resolutions . . . . . . . . . . . . . . . . . . 25
. . . . . . . . . . . . . . . . . . . .
VII. AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
. . . . . . . . . . . . . . . . . . . . .
VIII. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
. . . . . . . . . . . . . . . . .
IX. Additional Information . . . . . . . . . . . . . . . . . . . . . 30
. . . . . . . . . . . . . . . . . . . .
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . 32
. . .
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . 34
. . . .
APPENDIX I - GENERAL INFORMATION . . . . . . . . . . . . 49
. . . . . . . . . . . . . . . . . .
APPENDIX II - 2024 WORK REPORT OF THE BOARD OF DIRECTORS 54
. . . . . . . .
APPENDIX III - 2024 WORK REPORT OF THE SUPERVISORY COMMITTEE 59
. . . . .
APPENDIX IV - PROPOSED AMENDMENTS TO THE ARTICLES OF 63
ASSOCIATION . . .
APPENDIX V - PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF
SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . .
164
APPENDIX VI - PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES
OF MEETINGS OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . .
198
NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . 208
. . . . . . . . .
In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
"2022 Circular" the circular issued by the Company on 28 September 2022 to the Shareholders in
respect of, among other things, the CNACG Transactions
"30%-controlled company(ies)" has the meaning ascribed to it under the Hong Kong Listing Rules
"30%-controlled Corporations" 30%-controlled companies and their subsidiaries
"AGM" the annual general meeting of the Company for the year ended 31 December 2024
to be held on Tuesday, 24 June 2025
"Articles of Association" the articles of association of the Company
"associate(s)" has the meaning ascribed to it under the Hong Kong Listing Rules
"Board" the board of Directors of the Company
"Cathay Pacific" Cathay Pacific Airways Limited (國泰航空有限公司） , a
company incorporated in Hong Kong and listed on the Hong Kong Stock Exchange,
the principal activity of which is the operation of scheduled airline services
"Cathay Pacific Group" Cathay Pacific and its subsidiaries from time to time
"Cathay Transactions" transactions between members of the Group on the one hand and members of
Cathay Pacific Group and Cathay Pacific's 30%-controlled Corporations (where
applicable) on the other hand, as well as members of Cathay Pacific Group on
the one hand and members of the Group and the Company's 30%-controlled
Corporations (where applicable) on the other hand arising from joint venture
arrangements for the operation of passenger air transportation, code sharing
arrangements, interline arrangements, aircraft leasing, frequent flyer
programmes, the provision of airline catering, ground support and engineering
services, inbound/outbound cargo handling services and other services agreed
to be provided and other transactions agreed to be undertaken under the
Framework Agreement or the New Framework Agreement, as applicable
"CNACG" China National Aviation Corporation (Group) Limited, a company incorporated
under the laws of Hong Kong and a wholly-owned subsidiary of CNAHC and a
substantial shareholder of the Company, which directly holds approximately
11.18% of the Company's issued share capital as at the Latest Practicable Date
"CNAHC" China National Aviation Holding Corporation Limited, a PRC state-owned
enterprise and the controlling shareholder of the Company, directly and
through its wholly-owned subsidiary CNACG, holding approximately 53.71% of the
issued share capital of the Company in aggregate as at the Latest Practicable
Date
"CNACG Group" CNACG, its subsidiaries and 30%-controlled companies (as defined under Hong
Kong Listing Rules)
"CNACG Framework Agreement" the framework agreement dated 30 October 2019 entered into between the Company
and CNACG in respect of the CNACG Transactions
"CNACG Transactions" the continuing connected transactions contemplated under the CNACG Framework
Agreement between members of the Group on the one hand, and members of the
CNACG Group on the other hand, but excluding the various services, such as
airline catering service, housing rental, etc., that have been included or
will be included in the continuing connected transaction framework agreements
entered into between the Company and CNAHC
"Company" or "Air China" Air China Limited, a company incorporated in the PRC, 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. The Company is
principally engaged in providing air passenger, air cargo and related services
"connected person(s)" has the meaning ascribed to it under the Hong Kong Listing Rules
"Director(s)" the director(s) of the Company
"Framework Agreement" the framework agreement dated 26 June 2008 between the Company and Cathay
Pacific governing the execution, renewal and extension of the relevant
agreements between members of the Group on the one hand and members of Cathay
Pacific Group on the other hand
"Group" or "Air China Group" the Company and its subsidiaries from time to time
"HK$" Hong Kong dollar, the lawful currency of Hong Kong
"Hong Kong" Hong Kong Special Administrative Region of the PRC
"Hong Kong Listing Rules" The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"H Share(s)" ordinary share(s) in the share capital of the Company, with a nominal value of
RMB1.00 each, which are listed on the Hong Kong Stock Exchange as primary
listing venue and have been admitted into the Official List of the UK Listing
Authority as secondary listing venue
"H Shareholder(s)" holders of the H Shares
"IFRS Accounting Standards" IFRS Accounting Standards as issued by the International Accounting Standards
Board
"Independent Board Committee" a board committee comprising Mr. Xu Niansha, Mr. He Yun, Ms. Winnie Tam
Wan-chi and Mr. Gao Chunlei, all being the independent non-executive
Directors, to advise the Independent Shareholders on the Non-exempt
Transactions
"Independent Financial Adviser" or "BaoQiao Partners" BaoQiao Partners Capital Limited, a corporation licensed to carry out Type 6
(advising on corporate finance) regulated activity under the SFO, being the
independent financial adviser to the Independent Board Committee and the
Independent Shareholders to advise on the Non-exempt Transactions
"Independent Shareholders" In respect of the CNACG Transactions, the Shareholders of the Company other
than CNAHC and its associate(s); in respect of the transactions contemplated
under the New Framework Agreement, the Shareholders of the Company other than
Cathay Pacific and its associate(s)
"Latest Practicable Date" 28 May 2025, being the latest practicable date prior to the printing of this
circular for ascertaining certain information contained herein
"New Framework Agreement" the new framework agreement dated 28 May 2025 between the Company and Cathay
Pacific governing the execution, renewal and extension of the relevant
agreements between members of the Group on the one hand and members of Cathay
Pacific Group and Cathay Pacific's 30%-controlled Corporations (where
applicable) on the other hand, as well as members of Cathay Pacific Group on
the one hand and members of the Group and the Company's 30%-controlled
Corporations (where applicable) on the other hand
"Non-exempt Transactions" the finance and operating leases entered into by the Group as lessee under the
CNACG Transactions, the highest applicable percentage ratio of the proposed
annual cap in respect of the total value of right-of-use assets of which is,
on an annual basis, higher than 5% but less than 25%
"RMB" Renminbi, the lawful currency of the PRC
"Shanghai Listing Rules" the Rules Governing the Listing of Stocks on Shanghai Stock Exchange
"Shareholder(s)" holder(s) of the shares of the Company
"SFO" the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
"substantial shareholder(s)" has the meaning ascribed thereto under the Hong Kong Listing Rules
"Supervisor(s)" the supervisor(s) of the Company
"Supervisory Committee" the supervisory committee of the Company
"%" per cent
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
Directors: Registered Address:
Executive Directors: 1st Floor-9th Floor 101, Building 1
Mr. Ma Chongxian (Chairman) 30 Tianzhu Road Shunyi District Beijing, the PRC
Mr. Wang Mingyuan
Principal Place of Business in Hong Kong:
Non-Executive Directors: 5th Floor, CNAC House 12 Tung Fai Road
Mr. Cui Xiaofeng Mr. Patrick Healy Hong Kong International Airport Hong Kong
Employee Representative Director:
Mr. Xiao Peng
Independent Non-Executive Directors:
Mr. Xu Niansha Mr. He Yun
Ms. Winnie Tam Wan-chi
Mr. Gao Chunlei
4 June 2025
To the Shareholders
Dear Sir or Madam,
(1) CONTINUING CONNECTED TRANSACTION AND DISCLOSEABLE TRANSACTION: THE CNACG
FRAMEWORK AGREEMENT
(2) CONTINUING CONNECTED TRANSACTION: THE NEW FRAMEWORK AGREEMENT
(3) PROPOSED CHANGE OF AUDITORS
(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE ABOLISHMENT OF
THE SUPERVISORY COMMITTEE
(5) PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS'
MEETINGS AND THE RULES AND PROCEDURES OF
MEETINGS OF THE BOARD
(6) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS AND
(7) NOTICE OF ANNUAL GENERAL MEETING
I. INTRODUCTION
The AGM of the Company will be held at 10:00 a.m. on Tuesday, 24 June 2025.
The resolutions to be proposed at the AGM for the Shareholders' approval
include: (1) the resolution on the 2024 work report of the Board; (2) the
resolution on the 2024 work report of the Supervisory Committee; (3) the
resolution on the financial reports for the year 2024; (4) the resolution on
the profit distribution proposal for the year 2024; (5) the resolution on the
unrecovered losses of the Company exceeding one-third of the total amount of
its paid-up share capital; (6) the resolution on the renewal of the CNACG
Framework Agreement between the Company and CNACG and the application for the
annual transaction caps for 2026 to 2028; (7) the resolution on the entering
into of the New Framework Agreement between the Company and Cathay Pacific and
the application for the annual transaction caps for 2026 to 2028; (8) the
resolution on the proposed change of auditors; (9) the resolution on the
proposed amendments to the Articles of Association and the abolishment of the
Supervisory Committee; (10) the resolution on the proposed amendments to the
Rules and Procedures of Shareholders' Meetings; (11) the resolution on the
proposed amendments to the Rules and Procedures of Meetings of the Board; and
(12) the resolution on the grant of mandate to the Board of the Company to
issue debt financing instruments.
The above resolutions no. (9) to no. (12) are special resolutions and the rest
resolutions are ordinary resolutions.
The purpose of this circular is to provide you with all the information
reasonably necessary to enable you to make an informed decision on voting in
respect of the relevant resolutions at the AGM. For details of the above
resolutions no. 1 to 5 and resolution no. 12, please refer to the section
headed "VI. DETAILS OF OTHER RESOLUTIONS" in this circular. For details of the
above resolutions no. 6 and 7, please refer to the section headed "II.
CONTINUING CONNECTED TRANSACTIONS" in this circular. For details of the above
resolution no. 8, please refer to the section headed "III. PROPOSED CHANGE OF
AUDITORS" in this circular. For details of the above resolution no. 9, please
refer to the section headed "IV. PROPOSED AMENDMENTS TO THE ARTICLES
OF ASSOCIATION AND THE ABOLISHMENT OF THE SUPERVISORY COMMITTEE" in
this circular. For details of the above resolutions no. 10 and no. 11, please
refer to the section headed "V. PROPOSED AMENDMENTS TO THE RULES AND
PROCEDURES OF SHAREHOLDERS' MEETINGS AND THE RULES AND
PROCEDURES OF MEETINGS OF THE BOARD" in this circular.
II. CONTINUING CONNECTED TRANSACTIONS
1. The CNACG Transactions
Reference is made to the 2022 Circular in relation to, among other things, the
CNACG Transactions. The current term of the CNACG Framework Agreement will
expire on 31 December 2025. As the Company expects that the CNACG Transactions
will continue to be conducted after 31 December 2025, on 28 May 2025, the
Board resolved to renew the CNACG Framework Agreement for a term of three
years commencing from 1 January 2026 to 31 December 2028, subject to
Independent Shareholders' approval at the AGM.
(1) Parties and the Relationship between the Parties
The Company's principal business activity is air passenger, air cargo and
airline-related services.
CNACG is a wholly-owned subsidiary of CNAHC, the controlling shareholder of
the Company, and a substantial shareholder of the Company, directly holding
approximately 11.18% of the Company's shares as at the Latest Practicable
Date. CNACG is an investment holding company established in Hong Kong whose
principal businesses include passenger terminal operation, cargo terminal
operation, airport ground handling services, airline catering services,
finance/operating lease, aircraft maintenance, property investment, logistics
and other businesses conducted through its subsidiaries. As at the Latest
Practicable Date, the State-owned Assets Supervision and Administration
Commission of the State Council is the controlling shareholder and de facto
controller of CNAHC. CNAHC primarily operates all the state-owned assets and
state-owned equity interests invested by the State in CNAHC and its invested
entities, aircraft leasing and aviation equipment and facilities maintenance
businesses.
(2) Description of the CNACG Transactions
The CNACG Transactions contemplated under the CNACG Framework Agreement are as
follows:
• Finance and operating lease services: the CNACG Group
will provide finance and operating lease services in respect of, including but
not limited to, aircraft, engines, simulators, aircraft-related materials,
equipment and vehicles to the Group; the Group will provide finance and
operating lease services in respect of, including but not limited to,
equipment and vehicles to the CNACG Group.
Set out below are the differences between (i) engines, equipment and vehicle
leasing services provided by the CNACG Group to the Group; and (ii) equipment
and vehicle leasing services provided by the Group to the CNACG Group:
o The CNACG Group leases engines, equipment and vehicles to
the Group through its specialised leasing subsidiary. These leasing services,
offered under either finance lease or operating lease arrangements, typically
have leasing terms of one year or longer. The leased equipment primarily
includes airborne media equipment, baggage handling equipment and vehicles;
and
o The Group provides equipment and vehicle leasing services
to the CNACG Group on a selective basis, primarily consisting of catering
trolleys leases based on the needs of CNACG Group from time to time and
typically involving a leasing term of one year or longer.
• Ground support services and other services: including
but not limited to the following transactions conducted between any member of
the Group on the one hand and any member of the CNACG Group on the other hand:
ground support services, aircraft maintenance services, aircraft repair
services, property investment and management services, ticket and tourism
services, logistics services, administrative management services, cleaning
and washing services, resident security services, lounge supplies procurement
services and aircraft material procurement services.
In particular, the services provided by the CNACG Group to the
Group from time to time mainly include the ground support services, aircraft
maintenance services, property investment and management services, ticket and
tourism services, logistics services, administrative management services,
cleaning and washing services and resident security services, while the
services provided by the Group to the CNACG Group from time to time mainly
include the aircraft repair services, lounge supplies procurement services and
aircraft material procurement services.
(3) Pricing Policies for the CNACG Transactions
The consideration of any specific CNACG Transactions shall be agreed on arm's
length negotiations between the Group and the CNACG Group and on normal
commercial terms, which shall be determined in accordance with the pricing
policies set forth below on a case-by- case basis.
• Finance and operating lease services: the final
transaction price will be determined on arm's length negotiations between both
parties with reference to the prices for the same type of lease services
offered by independent third parties and after taking into account certain
factors. Such factors include purchasing price of the leasing subject,
interest rate and arrangement fees (if any) (for finance lease), rental fee
(for operating lease), the lease terms, the feature of the leasing subject and
the comparable market rental prices. The final transaction price should not be
higher than the transaction prices offered by at least two independent third
parties on the same conditions (for services received by the Group); or the
final transaction price should not be lower than the transaction prices
offered by the Group to the independent third parties on the same conditions
(for services provided by the Group).
• Ground support services and other services:
The pricing policies for ground support services and other services provided
to or by the Group are set forth below:
(i) Follow the government pricing or guide price if it is
available, including but not limited to the guidance from the Civil Aviation
Administration of China (CAAC) and the International Air Transport Association
regarding the prices for the ground support services and other terms, as well
as the pricing standards for aeronautical information set by CAAC and the Air
Traffic Management Bureau.
(ii) If no government pricing or guide price is available, first
by making reference to the market prices offered by at least two independent
third parties on the market for the same type of services, and after
considering certain factors, the final transaction price shall be determined
through arm's length negotiations between the parties. Such factors include
service standards, scope, business volume and specific need of parties. If the
service recipient's service requirements change, the transaction price may be
adjusted appropriately through negotiation between both parties, based on the
extent of changes in relevant costs, service quality or other factors.
(iii) If neither of the above cases is applicable, the price will
be determined on the basis of cost plus reasonable profit. The costs are
mainly based on the costs and expenses of the service provider, including
human resource costs, facility, equipment and material costs. The reasonable
profit margin will be determined mainly by reference to the historical average
prices of similar products or services (where possible) of the relevant
industry, and/ or the profit margin of comparable products and services
disclosed by other listed companies. The profit margin of the CNACG Group
shall not exceed 10%. The final transaction prices shall be determined on
terms that are no less favourable to the Group than those provided by
independent third parties to the Group or by the CNACG Group to independent
third parties (for services received by the Group), or no more favourable than
those provided by the Group to independent third parties (for services
provided by the Group). The Group may generally learn about the historical
average prices of reasonable profit margins for similar products or services
in the relevant industry by making its own enquiries at the official websites
of other listed companies. Besides, prior to entering into individual CNACG
Transactions, the Group may have access to the terms of similar comparable
transactions entered into by the CNACG Group with independent third parties
for reference in determining the transaction price. While making reference to
the profit margins of comparable products and services disclosed by other
listed companies, the Group will seek to obtain as much comparable data as
practicable, typically referencing at least two listed companies' relevant
data where practicable.
(4) The Term of the CNACG Framework Agreement
The renewal of the CNACG Framework Agreement is subject to the approval of
Independent Shareholders at the AGM. If approval of the Independent
Shareholders is obtained, the CNACG Framework Agreement will be renewed for a
term of three years commencing from 1 January 2026 to 31 December 2028, and
may be renewed automatically for successive terms of three years each, subject
to the fulfilment of requirements under the Hong Kong Listing Rules/the
Shanghai Listing Rules and the approval procedures required under the Hong
Kong Listing Rules/the Shanghai Listing Rules. Before expiry of the term of
the CNACG Framework Agreement, the Board will re-assess the terms and
conditions of the CNACG Framework Agreement, and the Company will re-comply
with the relevant rules governing connected transactions under the Hong Kong
Listing Rules/the Shanghai Listing Rules. During the term of the CNACG
Framework Agreement, the agreement can be terminated upon the expiry on any 31
December by either party thereto by serving the other party a prior written
notice of not less than three months.
(5) Reasons for and Benefits of the CNACG Transactions
Regarding the finance and operating lease services, by utilizing the leasing
platform of the CNACG Group, the Group is able to secure equipment tailored to
its specific needs, benefiting from lower financing costs, greater flexibility
and reduced cash flow impact compared to direct purchases. This effectively
supports the Group's production and operational needs. Simultaneously, the
CNACG Group gains a stable revenue stream, creating a mutually beneficial and
win-win relationship for both parties.
Regarding the ground support services and other services, the CNACG Group
possesses extensive management experience and financial resources in airport
ground services and logistics operations, which enables the CNACG Group to
provide high-quality, efficient and convenient services to the Group,
primarily covering ground operations in Hong Kong, as well as administrative
support. The Group provides ground and other services to the CNACG Group,
mainly focused on aviation materials procurement, albeit on a smaller scale.
The collaboration between the CNACG Group and the Group ensures a mutually
beneficial partnership, enhancing service quality and operational efficiency
for both parties.
Overall, the transaction fosters a win-win relationship, with both parties
leveraging their respective strengths to achieve cost efficiency, operational
stability and mutual growth.
(6) Historical Amounts and Existing Annual Caps
The table below sets out (i) the annual caps of the Group for the three years
ended/ ending 31 December 2023, 2024 and 2025; and (ii) the actual historical
amounts for each of the two years ended 31 December 2023 and 2024 and the
estimated aggregate amounts payable for the year ending 31 December 2025:
Unit: RMB million
Estimated Amounts
Actual Historical Amounts Existing Annual Caps
For the year ended 31 December For the year ended 31 December For the year ending 31 December For the year ended 31 December For the year ended 31 December For the year ending 31 December
2023 2024 2025 2023 2024 2025
Total value of right-of-use assets in relation to the finance and operating
leases entered into by the Group as lessee
808 1,948 7,466 14,000 16,500 17,500
Annual rental fee for operating leases not accounted for as right-of- use
assets provided by CNACG Group
18 18 23 100 140 220
Amounts payable/paid to CNACG Group by the Group for ground support
services and other services
423 440 405 750 800 850
Reasons for the lower utilization rate of the historical annual caps
For the years ended 31 December 2023 and 2024, the utilization rates were
calculated by comparing the actual historical amounts against the respective
existing annual caps during each period. Looking ahead to 2025, the estimated
utilization rates are based on the estimated amounts for the year ending 31
December 2025 against the existing annual cap for 2025. Specifically, the
utilization rates for total value of right-of-use assets in relation to
finance and operating leases entered into by the Group as lessee were 6% in
2023 and 12% in 2024, with an estimated utilization rate of 43% for 2025. For
the annual rental fee for operating leases not accounted for as right-of-use
assets provided by the CNACG Group, the utilization rates were 18% in 2023 and
13% in 2024, with an estimated 10% utilization rate for 2025. Amounts
payable/paid to the CNACG Group by the Group for ground support services and
other services showed utilization rates of 56% in 2023 and 55% in 2024, with
the 2025 estimation at 48% of the existing annual cap. The estimated amounts
for the year ending 31 December 2025 is based on the Group's plan to introduce
47 aircraft during 2025, of which no more than 50% will be financed through
finance lease arrangements with the CNACG Group.
The discrepancy between the actual and estimated expenditure on finance leases
is mainly due to delivery uncertainties by aircraft manufacturers, resulting
in delays and a lower-than-planned number of aircraft introduced through
finance leases. Additionally, the proceeds raised from the Company's
non-public issuance of shares in 2022 and 2024 were primarily used for direct
aircraft purchases, which further reduced the number of aircraft introduced
via finance leases. The relatively low utilization rate of the historical
annual caps for ground support services and other services is primarily due to
flight volumes in Hong Kong not yet recovering to pre-pandemic levels,
resulting in lower-than-expected utilization rate of the transaction annual
caps for ground support services and other related services.
(7) Proposed Annual Caps and Basis of Determination
The table below sets out the proposed annual caps for the relevant
transactions of the Group below for each of the three years ending 31 December
2026, 2027 and 2028, respectively:
Unit: RMB million
Proposed Annual Caps
For the year For the year For the year
ending 31 December ending 31 December ending 31 December
2026 2027 2028
Total value of right-of-use assets in relation to the finance and operating
leases entered into by the Group as lessee
14,800 19,500 17,500
Annual rental fee for operating leases not accounted for as right-of-use
assets provided by CNACG Group
200 300 400
Amounts payable to CNACG Group by the Group for ground support services and
other services
750 800 850
In arriving at the annual caps of the total value of right-of-use assets in
relation to the finance and operating leases entered into by the Group as
lessee above, the Company has considered the following factors:
• When estimating the total value of right-of-use assets
in relation to aircraft under finance lease for the next three years, the
Company has considered: (i) historical transaction amounts; (ii) the aircraft
introduction plan of the Group and the assumption that 50% of aircraft to be
introduced during 2026 to 2028 for which funding arrangements have not been
finalised will be introduced through finance lease with the CNACG Group. The
proposed annual cap for 2028 is lower than it for 2027 primarily because the
proposed annual caps in respect of finance lease are derived based on the
aircraft introduction plan of the Group. The aircraft introduction plan is
driven by operational and strategic considerations which are formulated
through comprehensive analysis of multiple operational factors including fleet
composition optimisation, strategic market deployment and planned capacity
allocation. It is estimated that more aircraft will be introduced in 2027 than
in 2028, leading to a lower proposed annual cap for 2028 compared to it for
2027; (iii) given the expected lease term of 10 to 12 years for each aircraft
under finance lease, the calculation of aircraft finance lease interest uses
the People's Bank of China's over-five-year RMB Loan Prime Rate (LPR) of 3.6%
as of 30 April 2025; (iv) based on the information currently available to the
Group, it is anticipated that the CNACG Group will not charge arrangement fees
for finance leases in the coming three years, and accordingly the arrangement
fees have not been included in the annual cap estimates.
• When estimating the total value of right-of-use assets
under operating leases for aircraft, engines and ground equipment over the
next three years, the Company has considered: (i) in respect of aircraft
operating leases, the estimation is primarily based on the Group's aircraft
induction and retirement plans, and assuming no more than 10 aircraft will be
introduced through operating leases with the CNACG Group for each of the years
from 2026 to 2028. The lease rentals will be determined mainly by reference to
prevailing market rates or professional appraisals subject to arm's length
negotiations between the parties; (ii) in respect of the operating leases of
engines and ground equipment, the estimation takes into account the current
lease arrangements, the operational status of the Group's engines, simulators
and equipment, along with anticipated commercial demand for operating lease in
the next three years. Specifically, the Group plans to lease annually from the
CNACG Group (a) one to two used engines and (b) 23 ground equipment, with
lease terms typically ranging from 1 to 12 years.
• An exchange rate of RMB7.3 : USD1.0 is adopted for the
calculation of the proposed annual caps.
• A reasonable buffer of 5% is reserved to accommodate
unforeseen circumstances, ensuring flexibility in the financial planning
process.
• Based on the above, the Company expected that for the
three years ending 31 December 2028, the total annual rental fee payable by
the Group to CNACG Group throughout the lease term for aircraft, engines and
ground equipment under finance lease and operating lease entered into will not
exceed RMB15 billion, RMB20 billion and RMB18 billion, respectively. By
adopting the incremental borrowing rate of the Company as the discount rate
(ranging from 2.24% to 2.74%) to discount such estimated future total rental
fee, the total value of the right-of-use assets under the finance leases and
operating leases entered into by the Group as the lessee for the three years
ending 31 December 2028 will not exceed RMB14.8 billion, RMB19.5 billion and
RMB17 billion, respectively.
In arriving at the above annual caps of annual rental fee payable by the Group
to the CNACG Group in relation to the operating leases not accounted for as
right-of-use assets, the Company has considered, among other things, the
following factors:
• The historical transaction amounts and the assumption
that certain operating leases of ground equipment may have a lease term of
less than one year.
• The operation status of the Group's engines and
equipment and the Group's commercial demand for operating leases in the
following three years. The Group's annual rental fees paid for the lease with
the CNACG Group that were not accounted for as right-of-use assets in the past
were mainly related to some sporadic and temporary leases of engines and
equipment, with an annual rental fee of approximately RMB25 million. As
mentioned above, the Group may lease between one to two engines and 23 ground
equipment from the CNACG Group in each of the three years from 2026 to 2028,
respectively. As the Group has not yet determined whether to adopt long-term
leases of over one year (in which case the leased assets will be accounted for
as right-of-use assets) or short-term leases for these engines and equipment,
the Company has also set annual caps for the rental fees of operating leases
not accounted for as right-of-use assets to ensure that the transaction
amounts are subject to corresponding annual caps regardless of the lease
method. The Group will determine the lease method based on its actual business
needs, taking into account the respective rental quotations for long-term and
short-term leases and the financial impact on the Group. Based on the above,
the Company estimates that, for the three years ending 31 December 2028, the
annual rental fee of operating leases for engines and equipment not accounted
for as right-of-use assets will not exceed RMB101 million, RMB180 million and
RMB259 million, respectively.
• On the basis of the above estimated transaction amount
and accounting for potential foreign exchange fluctuations, a reasonable
buffer of 5% has further been included by rounding to the nearest integer to
accommodate the Group's operating needs from time to time.
In arriving at the above annual caps of amount payable by the Group to the
CNACG Group for ground support services and other services provided by the
CNACG Group, the Company has considered, among other things, the following
factors:
• Since 2023, the ground support and other services
transaction volume has experienced growth, with the actual transaction amount
reaching RMB440 million in 2024. Such growth reflects the Group's increasing
demand for the CNACG Group's ground support and other services.
• Looking ahead, the estimated transaction scale for
2026 to 2028 is estimated to range between RMB500 million and RMB800 million.
Such estimation is assuming an average annual growth rate of 7%, which is
reached with reference to the civil aviation industry's average annual growth
rate outlined in the "14th Five-Year Plan". Additionally, factors such as
rising labor costs have been taken into account to ensure a realistic and
comprehensive forecast.
• To account for potential uncertainties or unforeseen
circumstances, a reasonable buffer of 5% has been included in the proposed
annual caps for the amount payable by the Group to the CNACG Group for ground
support services and other services provided by the CNACG Group, which ensures
flexibility and preparedness for any unexpected changes in service demand or
operational requirements.
(8) Internal Control Procedures
The Group has adopted the following internal control procedures to ensure that
the CNACG Transactions will be conducted on normal commercial terms, and in
accordance with the CNACG Framework Agreement and the pricing policies of the
Group:
• Before entering into individual CNACG Transactions,
the Finance Department, the Legal Department, the Asset Management Department
(which has a dedicated subdivision responsible for the management of connected
transactions) and if applicable, certain other relevant departments of the
Company will review the proposed terms for the individual CNACG Transactions
and discuss with the relevant business department of the Group to ensure that
such transactions are conducted on normal commercial terms and in compliance
with the pricing policies of the Group before these relevant departments
approve the finalized transaction agreements according to their authority
within the Group.
• The Asset Management Department of the Company is
responsible for overseeing the connected transactions of the Company. The
Asset Management Department will monitor and collect detailed information on
the CNACG Transactions on a regular basis, including but not limited to the
implementation of pricing policies, term of agreement and actual transaction
amount of each finance lease transaction, operating lease transaction and
ground support services and other services to ensure that the transactions are
conducted in accordance with the framework agreement. In addition, the Asset
Management Department is responsible for monitoring and reviewing the balance
amount of the annual cap for the CNACG Transactions on a monthly basis and if
the annual cap for the CNACG Transactions is expected to be exceeded for a
particular year, it will report to the management and take appropriate
measures in accordance with the relevant requirements of the Hong Kong Listing
Rules and/or the Shanghai Listing Rules.
• The Company's Internal Audit Department is responsible
for performing annual assessment on the internal control procedures of the
Group, including but not limited to the relevant information on the management
of continuing connected transactions. In addition, the Internal Audit
Department is responsible for compiling the annual internal control assessment
report and submitting the report to the Board for examination and approval.
• The independent auditor of the Company and the
independent non-executive Directors will conduct an annual review on the
continuing connected transactions of the Group.
(9) Hong Kong Listing Rules Implications
CNACG is a connected person of the Company as defined under the Hong Kong
Listing Rules, and accordingly the CNACG Transactions constitute continuing
connected transactions of the Company under Chapter 14A of the Hong Kong
Listing Rules. As the highest applicable percentage ratio of the proposed
annual cap in respect of the total value of right-of-use assets relating to
the finance and operating leases entered into by the Group as lessee under the
CNACG Transactions is, on an annual basis, higher than 5% but less than 25%,
these transactions are therefore subject to the announcement, annual review,
circular (including advice of independent financial adviser) and Independent
Shareholders' approval requirements under Chapter 14A of the Hong Kong Listing
Rules and the requirements under Chapter 14 of the Hong Kong Listing Rules
applicable to discloseable transactions.
In respect of the operating lease not accounted for as right-of-use assets
provided by the CNACG Group, as the highest applicable percentage ratio in
respect of the proposed annual caps of the rental fee payable by the Group is,
on an annual basis, higher than 0.1% but less than 5%, these transactions are
subject to the announcement and annual review requirements under Chapter 14A
of the Hong Kong Listing Rules but are exempt from the Independent
Shareholders' approval requirement.
In respect of the ground support services and other services provided by CNACG
Group, as the highest applicable percentage ratio in respect of the proposed
annual caps of the amounts payable by the Group is, on an annual basis, higher
than 0.1% but less than 5%, these transactions are subject to the announcement
and annual review requirements under Chapter 14A of the Hong Kong Listing
Rules but are exempt from the Independent Shareholders' approval requirement.
In respect of the finance and operating lease services provided by the Group
to CNACG Group, for each of the three years ending 31 December 2026, 2027 and
2028, the aggregate amounts payable to the 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 transactions will be exempt from the
announcement, annual review and Independent Shareholders' approval
requirements under Chapter 14A of the Hong Kong Listing Rules.
In respect of the ground support services and other services provided by the
Group to CNACG Group, for each of the three years ending 31 December 2026,
2027 and 2028, the aggregate amounts payable to the 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 transactions will be exempt from the
announcement, annual review and Independent Shareholders' approval
requirements under Chapter 14A of the Hong Kong Listing Rules.
The Board (including the independent non-executive Directors) considers that
the terms and conditions of the CNACG Transactions 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 Group, and are
in the interests of the Company and its Shareholders as a whole. The Board
also considers that the annual caps for each of the three years ending 31
December 2026, 2027 and 2028 for the CNACG Transactions are fair and
reasonable.
Mr. Ma Chongxian, Mr. Wang Mingyuan, Mr. Cui Xiaofeng and Mr. Xiao Peng, being
the Directors of the Company also holding directorship in CNAHC, are
considered to have material interests in the CNACG Transactions and therefore
have abstained from voting in the relevant Board resolutions in respect of the
CNACG Transactions. Save as disclosed above, none of the Directors have a
material interest in the CNACG Transactions and hence no other Director is
required to abstain from voting in the relevant Board resolutions.
(10) Shanghai Listing Rules Implications
As CNACG is controlled by CNAHC, the controlling shareholder of the Company,
CNACG is considered as a related party of the Company according to the
Shanghai Listing Rules. As a result, the transactions between the Group and
CNACG Group constitute related party transactions under the Shanghai Listing
Rules. According to the Shanghai Listing Rules, the transaction amounts of the
proposed annual caps of the CNACG Transactions exceed 5% of the latest audited
net assets of the Company, and therefore shall be disclosed in a timely manner
and be submitted to the general meeting of the Company for consideration and
approval by unrelated shareholders of the Company (i.e. the Independent
Shareholders).
2. The Cathay Transactions
(1) Background and Particulars
Reference is made to the joint announcements dated 26 June 2008, 10 September
2010, 26 September 2013, 30 August 2016, 28 August 2019 and 30 August 2022
issued by the Company and Cathay Pacific in connection with the Framework
Agreement entered into between the Company and Cathay Pacific on 26 June 2008.
The Framework Agreement was renewed on 1 October 2022 for a term of three
years from 1 January 2023 to 31 December 2025. As the parties expect that
certain transactions contemplated under the Framework Agreement will continue
after 31 December 2025, the Company and Cathay Pacific entered into the New
Framework Agreement on 28 May 2025. The New Framework Agreement is conditional
upon, among others, approval being given by the Independent Shareholders at
the AGM. If such condition is satisfied, the New Framework Agreement will come
into effect on 1 January 2026.
The Framework Agreement provided the framework governing the execution,
renewal and extension of the relevant agreements between members of the Group
on the one hand and members of Cathay Pacific Group on the other hand.
Historically, transactions involving 30%- controlled Corporations of either
the Company or Cathay Pacific were de minimis in value, and therefore were not
included in the Framework Agreement. However, in light of the evolving
business development between the Group (including the Company's 30%-controlled
Corporations) and Cathay Pacific Group (including Cathay Pacific's
30%-controlled Corporations), the volume of transactions are expected to grow
substantially.
To accommodate such anticipated expansion and ensure efficient governance, the
New Framework Agreement extends coverage to include each party's
30%-controlled Corporations. The expanded scope will facilitate seamless
collaboration. By broadening the framework to cover these transactions, the
New Framework Agreement enhances operational flexibility, improves management
efficiency and supports the deepening partnership between the Company and
Cathay Pacific.
As Cathay Pacific is a substantial shareholder and therefore a connected
person of the Company, transactions between members of the Group on the one
hand and members of Cathay Pacific Group and Cathay Pacific's 30%-controlled
Corporations on the other hand constitute continuing connected transactions
for the Company under Rule 14A.31 of the Hong Kong Listing Rules and are
subject to reporting, annual review and announcement requirements under
Chapter 14A of the Hong Kong Listing Rules.
The transactions contemplated under the New Framework Agreement include those
arising from interline arrangements, code sharing arrangements, joint
operating arrangements, aircraft leasing, frequent flyer programmes, the
provision of airline catering, ground support and engineering services,
inbound/outbound cargo handling services and other services agreed to be
provided and other transactions agreed to be undertaken under the New
Framework Agreement.
Except for the expanded scope under the New Framework Agreement and the
corresponding changes in pricing policies thereunder, other material terms of
the Framework Agreement remain unchanged.
The New Framework Agreement will be renewed automatically for successive
periods of three years after the three years term ending on 31 December 2028,
subject to each party's compliance with relevant requirements, including
obtaining board and/or shareholders' approvals (if applicable), in accordance
with applicable laws, rules and regulations (including the listing rules of
the stock exchange(s) where the parties' shares are respectively listed).
Either party may terminate the agreement by giving the other party notice of
termination of not less than three months, expiring on any 31st December.
(2) Pricing terms and policies
The following table outlines the relevant pricing terms and policies for the
respective transactions contemplated under the New Framework Agreement.
Transaction Pricing Terms and Policies
Interline arrangements and codeshare arrangements Revenue is apportioned between the parties in accordance with bilateral
prorate agreements which follow the principles in the Multi-lateral Prorate
Agreement of International Air Transport Association.
Joint operating arrangements Revenue is apportioned between the parties having regard to the fleet capacity
of both parties and the values of seats sold by each party.
Aircraft leasing Rentals payable under aircraft leases are determined after negotiations at
arm's length between the parties having regard to rentals payable under
comparable leases by at least two unconnected parties for comparable aircraft
and comparable periods and prevailing long term interest rates.
Frequent flyer programmes Frequent flyers of either party can earn mileage credits by taking the other
party's flights. Payments by each party to the other for mileage values are
determined by the parties on an arm's length basis having regard to comparable
mileage values payable by at least two unconnected airlines to the relevant
party.
Airline catering The parties determine the pricing of airline catering having regard to
quotations provided by at least two unconnected caterers, taking due account
of material and labour costs, quality, assurance of supply, safety and
innovation of similar catering products (including changes in the foregoing
matters).
Ground support and engineering services The pricing of ground support and engineering services charged by one party to
the other party is required to be no less favourable than that offered for
comparable services of similar scope to at least two unconnected parties
taking due account of the quality of services.
Inbound/outbound cargo handling services The pricing of cargo handling services charged by one party to the other party
is required to be no less favourable than that offered for comparable services
of similar scope to at least two unconnected parties taking due account of the
quality of services.
Transaction Pricing Terms and Policies
Other products and services The pricing of other products and services, including leasing premises and
handling customs clearance, is determined having regard to relevant market
information to ensure fairness and reasonableness and to ensure the offer is
comparable to those offered by unrelated third parties. This includes
soliciting at least two independent third-party quotations for comparable
products in similar quantities and services of similar scope. Additionally,
the costs incurred by the relevant party and the quality of products and
services, including any changes in these factors, are taken into
consideration.
The pricing terms and policies as set out above have been, and any variation
of it will be, negotiated between Cathay Pacific and the Company at arm's
length. If comparable market prices for the relevant products and services as
described in the above are available, the parties agree to obtain, verify and
compare quotations and terms from at least two independent parties to ensure
the fairness and reasonableness of their terms.
(3) The annual caps
For the purpose of setting the annual caps in respect of the continuing
connected transactions of the Company, the Cathay Transactions contemplated
under the New Framework Agreement involve, among other things, transactions
between the Group on the one hand and Cathay Pacific Group and Cathay
Pacific's 30%-controlled Corporations on the other hand, which constitute
continuing connected transactions for the Company under Rule 14A.31 of the
Hong Kong Listing Rules.
The table below sets out the historical payments and the corresponding annual
caps for the relevant continuing connected transactions of the Company
contemplated under the New Framework Agreement.
Historical amounts (HK$ million)
Annual caps (HK$ million)
Financial years ended 31 December Financial years ending 31 December
2022 2023 2024 2025 2026 2027 2028
(Note)
The payments made by the Group to Cathay Pacific Group and/or Cathay Pacific's
30%-
controlled Corporations
25 84 133 900 700 800 900
The payments received by the Group from Cathay Pacific Group and/or Cathay
Pacific's 30%- controlled Corporations
36 174 365 900 800 900 1,000
Notes: 1. Reference is made to the joint announcement made on 30 August 2022
issued by the Company and Cathay Pacific. The prescribed 2025 annual caps for
(i) payments made by the Group to Cathay Pacific Group, and (ii) payments made
by Cathay Pacific Group to the Group, in each case, excluding transactions
involving Cathay Pacific's 30%-controlled Corporations is HK$900 million
respectively.
2. For the avoidance of doubt, for transactions between the Group and Cathay
Pacific's 30%-controlled Corporations, the actual transaction amount for the
period between 1 January 2025 and 30 April 2025 was and the expected
transaction amount for the year ending 31 December 2025 will be within the de
minimis threshold under the Hong Kong Listing Rules.
The following key factors are considered in determining the above annual caps
set for continuing connected transactions under the New Framework Agreement:
(1) the historical transaction volume and the estimated
transaction amounts for 2025;
(2) the operational needs of both the Group and Cathay Pacific
Group, including amongst other things, the projections of each party's fleet
sizes, the delivery schedules of new aircraft, the anticipated annual growth
in flights scheduled for Hong Kong;
(3) the expanded scope under the New Framework Agreement to
include Cathay Pacific's 30%-controlled Corporations, as well as the potential
increase in number of subsidiaries of both parties over time; and
(4) foreign exchange fluctuations and a buffer of 5% have been
incorporated to account for potential unplanned increases in aircraft
maintenance services and other unforeseen factors, allowing for sufficient
flexibility to accommodate future developments.
(4) Reasons for, and benefits of, entering into the New Framework Agreement
The cooperation between the Group and Cathay Pacific Group is expected to
continue to further the development of Beijing Capital International Airport
and Hong Kong International Airport as gateways to and hubs for Mainland China
and Hong Kong and will assist the Group and Cathay Pacific Group in their
efforts to optimise the allocation of operating resources.
(5) Hong Kong Listing Rules Implications
Cathay Pacific, by virtue of its 15.09% shareholding in the Company, is a
substantial shareholder and therefore a connected person of the Company under
the Hong Kong Listing Rules.
As the highest of the applicable percentage ratios in respect of the annual
caps applicable to each of the (i) payments made by the Group to Cathay
Pacific Group and/or Cathay Pacific's 30%-controlled Corporations, and (ii)
payments received by the Group from Cathay Pacific Group and/or Cathay
Pacific's 30%-controlled Corporation is, on an annual basis, more than 0.1%
but less than 5%, such transactions are subject to the announcement and annual
review requirements but are exempt from the shareholders' approval
requirements under Chapter 14A of the Hong Kong Listing Rules.
The Directors, including the independent non-executive Directors, consider
that the terms of the New Framework Agreement are fair and reasonable and that
the New Framework Agreement is (i) on normal commercial terms or better and in
the ordinary and usual course of business of the Group; and (ii) in the
interests of the Company and its shareholders as a whole.
Mr. Ma Chongxian, Mr. Wang Mingyuan and Mr. Patrick Healy, being the Directors
of the Company also holding directorship in Cathay Pacific, are considered to
have material interests in the transactions contemplated under the New
Framework Agreement and therefore have abstained from voting in the relevant
Board resolution in respect of the continuing connected transactions. Save as
disclosed above, none of the Directors have a material interest in the
transactions contemplated under the New Framework Agreement and hence no other
Director is required to abstain from voting in the relevant Board resolution.
(6) Shanghai Listing Rules Implications
As Cathay Pacific is a substantial shareholder of the Company, Cathay Pacific
is considered as a related party of the Company according to Shanghai Listing
Rules. As a result, the transactions between the Group and Cathay Pacific
Group constitute related party transactions of the Company under the Shanghai
Listing Rules. According to Shanghai Listing Rules, the transaction amounts of
the proposed annual caps exceed 5% of the latest audited net assets of the
Company, and therefore shall be disclosed in a timely manner and be submitted
to the general meeting of the Company for consideration and approval by
unrelated shareholders of the Company (i.e. the Independent Shareholders).
Therefore, although the transactions contemplated under the New Framework
Agreement are exempted from Independent Shareholders' approval under the Hong
Kong Listing Rules, they are required to be approved by the Independent
Shareholders under the Shanghai Listing Rules.
(7) Internal controls
In order to ensure that the continuing connected transactions between Cathay
Pacific Group and the Group are being conducted in a fair and reasonable
manner, the Company has adopted the following internal control procedures:
(i) the Company conducts regular reviews to ensure that the
transaction amounts of the continuing connected transactions are within the
relevant annual caps;
(ii) the Company's independent non-executive Directors will
review the Group's continuing connected transactions on an annual basis as
required under Rule 14A.55 of the Hong Kong Listing Rules and confirm in its
annual report whether the continuing connected transactions have been entered
into (a) in the ordinary and usual course of business of the Group; (b) on
normal commercial terms or better; and (c) the terms of the agreements
governing the relevant transactions are fair and reasonable and in the
interests of the Company and its shareholders as a whole; and
(iii) for compliance with Rule 14A.56 of the Hong Kong Listing
Rules, the Company will also engage its external auditors to conduct an annual
review of the respective continuing connected transactions of the Company to
ensure that, among others, the transactions (a) have been approved by the
Directors, (b) were, in all material respects, in accordance with the pricing
policies of the Company (including, but not limited to, those set out in the
section "Pricing Terms and Policies" in this circular) if the transactions
involve the provision of goods or services by the Company, (c) were conducted,
in all material respects, in accordance with the terms of the relevant
agreements, and (d) have not exceeded the relevant annual caps.
III. PROPOSED CHANGE OF AUDITORS
Reference is made to the announcement of the Company dated 27 March 2025.
Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu Certified Public
Accountants LLP (collectively, "Deloitte") have been providing audit services
to the Company for eight consecutive years. In accordance with the relevant
provisions of the Measures for the Administration of Selection and Engagement
of Accounting Firms by State-owned Enterprises and Listed Companies 《(
國有企業、上市公司選聘會計師事務所管理辦法》), following
the procurement process and based on the results thereof, the Board has
resolved on 27 March 2025, with the recommendation from the Audit and Risk
Management Committee (the Supervision Committee) of the Board, to propose to
appoint KPMG Huazhen LLP as the Company's domestic auditor and internal
control auditor for 2025 and KPMG as the Company's international auditor for
2025 (the "Proposed Appointment"). The estimated annual audit fees for the
year 2025 amount to RMB11.149 million, of which the fees for audit and review
of financial reports amount to RMB10.149 million and the audit fees for
internal control amount to RMB1.00 million, remaining basically unchanged from
the previous year's annual audit fees of RMB11.242 million.
The Proposed Appointment is subject to the approval of the Shareholders at the
AGM. Upon approval at the AGM, Deloitte will cease to be the auditors of the
Company.
Deloitte has confirmed that there were no matters relating to their retirement
as auditors of the Company that need to be brought to the attention of the
Shareholders. The Company also confirmed that there was no disagreement
between the Company and Deloitte regarding work arrangements, fees or
opinions.
The Audit and Risk Management Committee (the Supervision Committee), having
reviewed the credentials of KPMG and KPMG Huazhen LLP, including their basic
information, personnel details, professional competence, investor protection
capability, integrity status and independence, considers that they can meet
the requirements for providing audit services to the Company, and the reasons
for changing the auditors are sufficient and appropriate.
The Proposed Appointment will be put forward for approval by the Shareholders
by way of an ordinary resolution at the AGM.
IV. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND THE ABOLISHMENT OF THE SUPERVISORY COMMITTEE
Reference is made to the announcement of the Company dated 28 May 2025 in
relation to, among other things, the proposed amendments to the Articles of
Association.
In accordance with provisions of the Company Law of the People's Republic of
China (the "Company Law"), the Guidelines for the Articles of Association of
Listed Companies, the Rules for Shareholders' Meetings of Listed Companies and
other laws, regulations and normative documents and regulatory requirements,
and in light of the actual operational and management needs of the Company,
the Board resolved on 28 May 2025 to propose amendments to the Articles of
Association, and to make corresponding amendments to the Rules and Procedures
of Shareholders' Meetings and the Rules and Procedures of Meetings of the
Board. Upon completion of the amendments to the Articles of Association, the
Rules and Procedures of Shareholders' Meetings and the Rules and Procedures of
Meetings of the Board, the Company will no longer maintain the Supervisory
Committee and supervisor positions, with the Audit and Risk Management
Committee (the Supervision Committee) under the Board exercising the functions
and powers of the Supervisory Committee as stipulated under the Company Law.
The Rules and Procedures of the Supervisory Committee will be repealed
accordingly.
The main amendments include: (1) the abolishment of the Supervisory Committee
and supervisor positions, with the Audit and Risk Management Committee (the
Supervision Committee) excising the original functions and powers of the
Supervisory Committee. The Rules and Procedures of the Supervisory Committee
will be repealed accordingly; (2) adjustments of certain functions and powers
of the shareholders' meeting and the Board; (3) addition of a new chapter on
special committees of the Board to set forth the composition and authorities
of the five existing special committees of the Board, and deletion of the
chapter on the Supervisory Committee; (4) enhancement of shareholders' rights,
which the eligibility threshold for submitting proposals to the shareholders'
meeting of the Company is changed from shareholders holding, individually or
collectively, 3% or more of the Company's shares to those holding,
individually or collectively, 1% or more of the Company's shares; adjustments
are made to the content and exercise methods of shareholders' rights to
information, further strengthening protections for minority shareholders; and
(5) updates or refinements to other provisions of the Articles of Association
in accordance with the latest laws and regulations and normative documents.
The details of the proposed amendments to the Articles of Association is set
out in Appendix IV to this circular.
The proposed amendments to the Articles of Association will be put forward for
approval by the Shareholders by way of a special resolution at the AGM.
V. PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OF SHAREHOLDERS' MEETINGS AND THE RULES AND PROCEDURES OF MEETINGS OF THE BOARD
On 28 May 2025, the Board also resolved to propose to the Shareholders certain
amendments to the Rules and Procedures of Shareholders' Meetings and the Rules
and Procedures of Meetings of the Board, so as to, among other things, align
with the proposed amendments to the Articles of Association.
The details of the proposed amendments to the Rules and Procedures of
Shareholders' Meetings and the Rules and Procedures of Meetings of the Board
are set out in Appendix V and Appendix VI to this circular, respectively.
The proposed amendments to the Rules and Procedures of Shareholders' Meetings
and the Rules and Procedures of Meetings of the Board will be put forward for
approval by the Shareholders by way of special resolutions at the AGM.
VI. DETAILS OF OTHER RESOLUTIONS
(I) Resolution on the 2024 work report of the Board
For the full text of the 2024 work report of the Board, please refer to
Appendix II to this circular.
(II) Resolution on the 2024 work report of the Supervisory Committee
For the full text of the 2024 work report of the Supervisory Committee, please
refer to Appendix III to this circular.
(III) Resolution on the financial reports for the year 2024
For the full text of the financial reports for the year 2024 prepared under
the PRC Accounting Standards and the IFRS Accounting Standards, please refer
to relevant disclosures made by the Company on the website of the Shanghai
Stock Exchange and the HKEXnews website of the Hong Kong Stock Exchange,
respectively.
(IV) Resolution on the profit distribution proposal for the year 2024
According to the audited financial statements of the Company prepared in
accordance with the PRC Accounting Standards and the IFRS Accounting
Standards, the Company recorded negative profits available for distribution to
Shareholders in 2024. As considered and approved by the second meeting of the
seventh session of the Board, the Company proposed not to make profit
distribution for the year of 2024.
(V) Resolution on the unrecovered losses of the Company exceeding one-third of the total amount of its paid-up share capital
Pursuant to the relevant requirements of the Company Law and the Articles of
Association, under circumstances that the amount of the unrecovered losses of
the Company exceeds one-third of the total paid-up share capital, it shall be
subject to consideration at the general meeting of the Shareholders.
According to the audit report issued by Deloitte Touche Tohmatsu Certified
Public Accountants LLP, the net loss attributable to shareholders of parent
company of the Company in 2024 was RMB237 million. As of the end of 2024, the
accumulated unrecovered losses of the Company was RMB30.744 billion and the
share capital of the Company was RMB17.448 billion. The amount of the
unrecovered losses of the Company exceeded one-third of the total paid-up
share capital.
(VI) Resolution on the grant of general mandate to the Board to issue debt financing instruments
Given the general mandate to issue debt financing instruments granted by
Shareholders at the last annual general meeting of the Company will lapse at
the conclusion of the AGM, a special resolution will be proposed at the AGM to
grant a general mandate to the Board to issue the debt financing instruments
(the "Debt Financing Instrument Issue Mandate").
In order to meet the Company's production and operation needs, according to
the 2025 financing plan of the Company, the Company shall issue the Debt
Financing Instruments (as defined below) at appropriate time. To grasp the
favourable opportunity in the market, improve flexibility and efficiency of
financing, the application is now been submitted by the Board at the general
meeting of Shareholders of the Company to obtain general and unconditional
mandate from the general meeting, under which the Board shall determine to
issue debt financing instruments in one or multiple tranches within the cap
amount of bond issuance under the requirements of applicable laws (the
"Issuance"). If the Board has resolved to issue debt financing instruments
according to the authorisation obtained at the general meeting(s), the
authorisation in relation to the issuance of such debt financing instruments
shall continue to be valid and extended to the term of authorisation of the
Issuance accordingly. Particulars regarding the Issuance are as follows:
1. Plan of the issuance
The relevant debt financing instruments include, but not limited to,
ultra-short-term commercial papers, short- term commercial papers, mid-term
notes, corporate bonds, domestic targeted debt financing instruments, overseas
debt financing instruments and overseas bonds/ notes denominated in RMB or
foreign currencies ("Debt Financing Instruments").
2. Major Terms of the issuance
(1) Issuer: the Company and/or its controlled or wholly-owned subsidiary, and the specific
issuer shall be determined by the Board according to the needs of issuance.
(2) Placing arrangement: no preferential placement to the shareholders of the Company.
(3) Issue size: subject to that the balance of the outstanding debt financing instruments of
the Issuance shall be within the permissible size prescribed by the relevant
laws and regulations and specified by regulatory authorities, and the specific
issue size shall be determined by the Board according to the capital
requirement and the market conditions.
(4) Term and type: not more than 15 years for one single-term instrument or a portfolio of
instruments with various terms, and the specific term composition and the
issue size of instruments with various terms shall be determined by the Board
according to the relevant regulations and market conditions.
(5) Use of proceeds: the proceeds to be raised from the Issuance are intended to be applied towards
uses such as meeting the demand of the Company's production and operations,
adjusting its debt structure, replenishing its working capital and/or funding
its project investments, and the specific use of proceeds shall be determined
by the Board according to the capital requirement.
(6) Term of validity of the authorization: from the date of the passing of the resolution at the general meeting of the
Company to the date of the annual general meeting of the Company for the year
2025.
If the Board (including its authorized person) has resolved to issue within
the valid term of the mandate, it shall be deemed as an extension to the term
of the mandate granted to the Board (including its authorized person) in
respect of such issue on the general meeting, provided that there is no
conflict between the mandate renewed by the Board (including its authorized
person) on the general meeting after the expiry of the mandate and the mandate
granted to the Board (including its authorized person) in respect of such
issue.
3. Authorization to the Board
The Board proposed to the shareholders of the Company at the AGM to authorize
the Board, generally and unconditionally, to deal with the following in
accordance with the specific needs of the Company and other market conditions:
(1) to determine the issuer, issue size, type, specific
instruments, detailed terms, conditions and other matters relating to the
Issuance (including, but not limited to, the specific issue size, actual
principal amount, currency, issue price, interest rate or mechanism for
determining the interest rate, issue place, issue timing, term, whether or not
to issue in multiple tranches and number of tranches, whether or not to set
put-back or redemption terms, credit rating, guarantee, repayment term,
detailed fund-raising arrangements within the scope of use approved by the
Shareholders' meeting, detailed placing arrangements, underwriting
arrangements and all other matters relating to the Issuance).
(2) to carry out all necessary and ancillary actions and
procedures relating to the Issuance (including, but not limited to, engaging
underwriters, lawyers, auditors, rating agencies, financial advisers and other
intermediary institutions, handling all approval, registration and filing
procedures with the relevant regulatory authorities in connection with the
Issuance on behalf of the Company, executing all necessary legal documents in
connection with the Issuance, selecting bonds trustee manager for the
Issuance, formulating rules for the bondholders' meeting and handling any
other matters relating to the issuance and trading).
(3) to approve and confirm any action or procedure relating to
the Issuance as mentioned above already taken by the Company.
(4) to make adjustments to the relevant matters such as the
specific proposals for the Issuance in accordance with the comments from the
regulatory authorities or the prevailing market conditions within the
authority granted at the general meeting of the Company, except where a new
vote at a general meeting of the Company is required by relevant laws and
regulations and the Articles of Association.
(5) to determine and handle relevant matters relating to the
listing of the issued Debt Financing Instruments upon the completion of the
issuance.
(6) in the case of issuance of corporate debt financing
instruments, during the term of the corporate debt financing instruments, to
determine not to distribute profits to the shareholders to safeguard repayment
of debts as required under the relevant laws and regulations in the event that
the Company expects to, or does fail to pay the principal and interests as
they fall due.
(7) to approve, execute and dispatch any announcements or
circulars relating to the Issuance and make any related disclosure in
accordance with the listing rules of the relevant jurisdictions where the
shares of the Company are listed.
The Board also proposed to the shareholders at the AGM to authorize the Board
to further delegate the authorizations set forth in paragraph (1) to (6) above
to the president and/ or the general accountant of the Company and to
authorize the Board to further delegate the authorization set forth in
paragraph (7) above to the secretary of the Board while obtaining the
authorization at the AGM.
VII. AGM
The Company will convene the AGM at The Conference Room C313, No. 30, Tianzhu
Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC at 10:00 a.m.
on Tuesday, 24 June 2025 to consider and, if thought fit, approve, among other
things, the aforesaid matters. Votes on the resolutions to be considered at
the AGM shall be taken by way of poll. A form of proxy is also enclosed
herein, and published on the websites of the Hong Kong Stock Exchange
(www.hkexnews.hk) and the Company (www.airchina.com.cn). The notice of AGM is
reproduced in this circular.
In respect of the CNACG Transactions, pursuant to Rule 14A.36 of the Hong Kong
Listing Rules, any Shareholder with a material interest in the CNACG
Transactions is required to abstain from voting on the relevant resolutions at
the AGM. As at the Latest Practicable Date, CNACG is a wholly-owned subsidiary
of CNAHC. Therefore, CNAHC and CNACG are required to abstain from voting on
the resolution in respect of the CNACG Transactions at the AGM. As at the
Latest Practicable Date, CNAHC and CNACG, in aggregate, held 9,370,724,929
shares of the Company, representing approximately 53.71% of the issued share
capital of the Company, controlled or were entitled to control over the voting
right in respect of the shares held by them in the Company. To the best
knowledge, information and belief of the Directors, having made all reasonable
enquiries, save as disclosed above, no Shareholder has a material interest in
the resolution in respect of the CNACG Transactions or should be required to
abstain from voting on the relevant resolution at the AGM.
In respect of the transactions contemplated under the New Framework Agreement,
pursuant to Rule 14A.36 of the Hong Kong Listing Rules, any Shareholder with a
material interest in such transactions is required to abstain from voting on
the relevant resolution at the AGM. As at the Latest Practicable Date, Cathay
Pacific is a substantial shareholder of the Company. Therefore, Cathay Pacific
and its associates are required to abstain from voting on the resolution in
respect of the transactions contemplated under the New Framework Agreement. As
at the Latest Practicable Date, Cathay Pacific and its associates, in
aggregate, held 2,633,725,455 shares of the Company, representing
approximately 15.09% of the issued share capital of the Company, and
controlled or were entitled to control over the voting right in respect of the
shares held by them in the Company. To the best knowledge, information and
belief of the Directors, having made all reasonable enquiries, save as
disclosed above, no Shareholder has a material interest in the resolution in
respect of the transactions contemplated under the New Framework Agreement or
should be required to abstain from voting on the relevant resolution at the
AGM.
To the best knowledge, information and belief of the Directors, having made
all reasonable enquiries, save as the above Shareholders, no Shareholder has a
material interest in the resolutions set out in the notice of the AGM or
should be required to abstain from voting on the relevant resolutions at the
AGM.
The register of members of H shares will be closed from Thursday, 19 June 2025
to Tuesday, 24 June 2025 (both days inclusive), during which no transfer of H
shares will be effected in order to determine the list of holders of H shares
of the Company who will be entitled to attend and vote at the AGM. H
Shareholders of the Company whose names appear on the H share register of
members of the Company at the close of business on Wednesday, 18 June 2025 are
entitled to attend the AGM after completing the registration procedures. In
order to qualify for attendance at the AGM, all the transfer documents must be
lodged with the Company's H Share registrar, Computershare Hong Kong Investor
Services Limited, by 4:30 p.m. on Wednesday, 18 June 2025.
Whether or not you intend to attend the AGM, you are requested to complete and
return the form of proxy in accordance with the instruction printed thereon as
soon as practicable but in any event not less than 24 hours before the time
appointed for convening the AGM or any adjournment thereof. Completion and
return of the form of proxy will not preclude you from attending and voting in
person at the AGM or at any adjourned meeting thereof should you so wish.
VIII. RECOMMENDATION
The Board considers that the matters to be proposed to the Shareholders for
voting at the AGM are in the interests of the Company and its shareholders as
a whole. Accordingly, the Board recommends the Shareholders to vote in favour
of all the resolutions at the AGM.
IX. ADDITIONAL INFORMATION
Your attention is drawn to the letter from the Independent Board Committee as
set out in this circular which contains its recommendation to the Independent
Shareholders as to the voting at the AGM regarding the Non-exempt
Transactions.
Your attention is also drawn to the letter from the Independent Financial
Adviser as set out in this circular, which contains, among others, its advice
to the Independent Board Committee and the Independent Shareholders in
relation to the Non-exempt Transactions as well as the principal factors and
reasons considered by it in concluding its advice.
Your attention is also drawn to the additional information set out in
Appendices to this circular.
By order of the Board Air China Limited
Ma Chongxian Chairman
Beijing, the PRC
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People’s Republic of
China with limited liability)
(Stock Code: 00753)
Independent Board Committee:
Mr. Xu Niansha Mr. He Yun
Ms. Winnie Tam Wan-chi Mr. Gao Chunlei
4 June 2025
To the Independent Shareholders of the Company
Dear Sir or Madam,
CONTINUING CONNECTED TRANSACTIONS
We refer to the circular dated 4 June 2025 issued by the Company to its
Shareholders (the "Circular") of which this letter forms a part. Terms defined
in the Circular shall have the same meanings in this letter unless the context
otherwise requires.
On 28 May 2025, the Board approved the renewal of the CNACG Framework
Agreement in respect of the CNACG Transactions and the proposed annual caps of
the transactions contemplated thereunder for the three years ending 31
December 2028 as set out in the Circular. The Non-exempt Transactions are
subject to the announcement, annual review, circular (including advice of
independent financial adviser) and Independent Shareholders' approval
requirements under Chapter 14A of the Hong Kong Listing Rules.
The terms and the reasons for the renewed CNACG Framework Agreement are
summarised in the Letter from the Board of the Circular.
We have been appointed to form the Independent Board Committee to make a
recommendation to the Independent Shareholders as to whether the Non-exempt
Transactions are fair and reasonable and whether such transactions are in the
interests of the Company and the Shareholders as a whole. BaoQiao Partners
Capital Limited has been appointed as the independent financial adviser to
advise the Independent Board Committee and the Independent Shareholders in
this regard.
As your Independent Board Committee, we have discussed with the management of
the Company the reasons for the Non-exempt Transactions, their terms and the
basis upon which the terms have been determined. We have also considered the
key factors taken into account by the Independent Financial Adviser in
arriving at its opinion regarding the above mentioned transactions and their
proposed annual caps as set out in the Letter from the Independent Financial
Adviser of the Circular, which we urge you to read carefully.
The Independent Board Committee, after taking into account, among other
things, the advice of the Independent Financial Adviser, considers that the
Non-exempt Transactions are conducted on normal commercial terms or on terms
no less favourable than those available to independent third parties and are
entered into in the ordinary and usual course of business of the Group, are
fair and reasonable and in the interests of the Company and the Shareholders
as a whole, and that the proposed annual caps under those transactions are
also fair and reasonable. Accordingly, the Independent Board Committee
recommends the Independent Shareholders to vote in favor of the relevant
ordinary resolution as set out in the notice of the AGM.
Yours faithfully,
Independent Board Committee
Mr. Xu Niansha Mr. He Yun Ms. Winnie Tam Wan-chi Mr. Gao Chunlei
Independent Independent Independent Independent
non-executive Director non-executive Director non-executive Director non-executive Director
The following is the full text of the letter of advice from BaoQiao Partners
Capital Limited to the Independent Board Committee and the Independent
Shareholders in respect of Non-exempt Transactions, which has been prepared
for the purpose of inclusion in this circular.
Room C01, 26/F, United Centre,
95 Queensway, Admiralty, Hong Kong
4 June 2025
To the Independent Board Committee and the Independent Shareholders of Air
China Limited
Dear Sir or Madam,
CONTINUING CONNECTED TRANSACTIONS
INTRODUCTION
We refer to our engagement as the Independent Financial Adviser to advise the
Independent Board Committee and the Independent Shareholders in respect of the
continuing connected transactions relating to the finance and operating lease
services entered into by the Group as lessee under the CNACG Transactions (the
"Non-exempt Transactions") under the CNACG Framework Agreement, details of
which are set out in the Letter from the Board ("Letter from the Board")
contained in the circular (the "Circular") issued by the Company to the
Shareholders dated 4 June 2025. Terms used herein shall have the same meanings
as those defined in the Circular unless the context requires otherwise.
As disclosed in the Letter from the Board, the current term of the CNACG
Framework Agreement will expire on 31 December 2025. As the Company expects
that the CNACG Transactions (which include the Non-exempt Transactions) will
continue to be conducted after 31 December 2025, on 28 May 2025, the Board
resolved to renew the CNACG Framework Agreement for a term of three years
commencing from 1 January 2026 to 31 December 2028, subject to Independent
Shareholders' approval at the AGM.
As CNACG is a substantial shareholder of the Company and a wholly-owned
subsidiary of CNAHC, the controlling shareholder of the Company, CNACG is a
connected person of the Company as defined under the Chapter 14A of the Hong
Kong Listing Rules, and accordingly the renewal of the CNACG Framework
Agreement and the CNACG Transactions (which include the Non-exempt
Transactions) contemplated thereunder constitute continuing connected
transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.
As the highest applicable percentage ratio in respect of the proposed annual
caps of the Non-exempt Transactions provided by the CNACG Group under the
CNACG Transactions is, on an annual basis, higher than 5% but less than 25%,
these transactions are therefore subject to the announcement, annual review,
circular (including advice of independent financial adviser) and Independent
Shareholders' approval requirements under Chapter 14A of the Hong Kong Listing
Rules.
OUR INDEPENDENCE
In the last two years, prior to the Latest Practicable Date, BaoQiao Partners
was appointed as the independent financial adviser by the Company (i) to
advise of the Board in respect of the opinion pursuant to Rule 14A.52 of Hong
Kong Listing Rules, as set out in (a) the circular of the Company dated 3 May
2023; and (b) the announcement and circular of the Company dated 30 October
2024 and 18 November 2024 respectively; (ii) to advise the independent board
committee and independent shareholders of the Company in respect of the
disclosable transaction and continuing connected transactions of the Company
and the proposed revision of annual cap and entering into financial service
agreements, as set out in the circular of the Company dated 3 May 2023; (iii)
to advise the independent board committee and the independent shareholders of
the Company in respect of the connected transaction involving the proposed
issuance of A Shares and H Shares to specific investor, as set out in the
circular of the Company dated 9 January 2024; and (iv) to advise the
independent board committee and independent shareholders of the Company in
respect of the continuing connected transactions of the Group's passenger
aircraft cargo businesses, as set out in the circular of the Company dated 18
November 2024.
As at the Latest Practicable Date, we do not have any relationship with, or
have any interest in, the Company, CNACG, and their respective associates that
could reasonably be regarded as relevant to our independence. Apart from the
normal professional fees payable to us in connection with this appointment as
the Independent Financial Adviser, no other arrangement exists whereby we had
received or will receive any fees or benefits from the Company or any other
parties that could reasonably be regarded as relevant to our independence. As
such, we consider that we are independent pursuant to Rule 13.84 of the Hong
Kong Listing Rules.
BASIS OF OUR OPINION
In formulating our opinion to the Independent Board Committee and the
Independent Shareholders, we have relied on the accuracy of the statements,
information, opinions and representations contained or referred to in the
Circular and the information and representations provided to us by the
Company, the Directors and the management of the Company (collectively, the
"Management"). We have reviewed, among others, the annual reports of the
Company for each of the years ended 31 December 2022 ("FY2022") (the "2022
Annual Report"), 31 December 2023 ("FY2023") (the "2023 Annual Report") and 31
December 2024 ("FY2024") (the "2024 Annual Report"), the CNACG Framework
Agreement, certain corporate and financial information of the Group and the
CNACG Group, and the information set out in the announcement of the Company
dated 28 May 2025 in respect of the Non-exempt Transactions (the
"Announcement") and the Circular. We have assumed that all information and
representations that have been provided by the Management, for which they are
solely and wholly responsible, are true, accurate and complete in all material
respects and not misleading or deceptive at the time when they were made and
continue to be so as at the Latest Practicable Date. We have also assumed that
all statements of belief, opinion, expectation and representations made by the
Management in the Circular and/or discussed with/ provided to us were
reasonably made after due enquiries and careful consideration. We have no
reason to suspect that any material facts or information have been withheld or
to doubt the truth, accuracy and completeness of the information and facts
contained in the Circular, or the reasonableness of the opinions expressed by
the Company, its advisers, the Management, which have been provided to us.
The Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Hong Kong Listing Rules for
the purpose of giving information with regard to the Group. The Directors,
having made all reasonable enquiries, confirm that to the best of their
knowledge and belief, the information contained in the Circular is accurate
and complete in all material respects and not misleading or deceptive, and
there are no other matters the omission of which would make any statement
herein or in the Circular misleading.
We consider that we have been provided with sufficient information to reach an
informed view and to provide a reasonable basis for our opinion. We have not,
however, conducted any independent in-depth investigation into the business
and affairs, financial condition and future prospects of the Company, its
subsidiaries or associates, nor have we considered the taxation implication on
the Group or the Shareholders as a result of the entering into the CNACG
Framework Agreement. Our opinion is necessarily based on financial, economic,
market and other conditions in effect, and the facts, information,
representations and opinions made available to us, at the Latest Practicable
Date.
This letter is issued for the information for the Independent Board Committee
and the Independent Shareholders solely in connection with the Non-exempt
Transactions under the CNACG Framework Agreement, and this letter, except for
its inclusion in the Circular as required under the Hong Kong Listing Rules,
is not to be quoted or referred to, in whole or in part, nor shall this letter
be used for any other purposes, without our prior written consent.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In giving our recommendation to the Independent Board Committee and the
Independent Shareholders with regard to the Non-exempt Transactions, we have
taken into consideration the following factors and reasons:
1. Background Information of the Parties
Information on the Company and Group
The Company is incorporated in the People's Republic of China with limited
liability, the shares of which have been listed on the Main Board of the Hong
Kong Stock Exchange since 15 December 2004. The Group is principally engaged
in the provision of airline and airline related services, including aircraft
engineering services and airport ground handling services.
According to the 2024 Annual Report, the Group reported a revenue of
approximately RMB166,698.88 million, representing a year-on-year increase of
approximately 18.14% or RMB25,598.65 million which was mainly attributable to
the increase in both the Group's air passenger revenue and air cargo and mail
revenue for FY2024 by around 16.3% or RMB21,272.11 million and 78.01% or
RMB3,249.11 million respectively as compared with that for FY2023. In
line with the increase in revenue, loss for the year attributable to equity
shareholders of the Company decreased from approximately RMB1,038.41 million
for FY2023 to loss of approximately RMB232.56 million for FY2024.
Based on the 2024 Annual Report, the Group introduced 36 aircraft and phased
out 11 aircraft during FY2024. As at 31 December 2024, the Group operated a
fleet of 930 aircraft in total with an average age of 9.90 years, of which an
aggregate of 524 aircraft were acquired under finance and operating leases.
Information on CNACG
As disclosed in the Letter from the Board, CNACG is a substantial shareholder
of the Company and a wholly-owned subsidiary of CNAHC, the controlling
shareholder of the Company. CNACG is an investment holding company established
in Hong Kong whose principal businesses include passenger terminal operation,
cargo terminal operation, airport ground handling services, airline catering
services, finance/operating lease, aircraft maintenance, property investment,
logistics and other businesses conducted through its subsidiaries.
The CNACG Group has been providing a wide range of aircraft related services
to the Group since 2008, including but not limited to, ground support
services, aircraft repair and maintenance services, administrative management
services as well as finance lease and operating lease services in respect of,
among other things, aircrafts, engine, simulator, equipment and vehicles.
2. Overview of Aviation Industry
According to the press releases published by the International Air Transport
Association ("IATA") on 29 January 2025 and 30 January 2025, both air
passenger traffic (measured in revenue passenger kilometers) and air cargo
traffic (measured in cargo tonne-kilometers) showed strong performance in
2024. Globally, full year 2024 air passenger traffic rose 10.4% compared to
2023, which was 3.8% above the pre-pandemic (2019) level. In respect of air
cargo traffic, global full-year demand in 2024 rose 11.3% compared to 2023.
Both air passenger and cargo demand continue to grow in 2025. Based on the
press releases published by IATA on 27 February 2025, the revenue passenger
kilometers (RPKs) were up 10.0% compared to January 2024 and the cargo
tonne-kilometers (CTKs) also rose by 3.2% compared to January 2024 level.
In addition, according to the financial outlook for the global airline
industry in 2025 published by IATA on 10 December 2024, overall strengthening
of profitability is expected in 2025 and both passenger numbers and cargo
volumes are expected to increase by 6.7% and 5.8% respectively compared to
2024.
China also witnessed growth in demand for air transport in 2024. According to
the 2024 Statistical Bulletin (the "CAAC Bulletin") on Civil Transport Airport
Operations published by the Civil Aviation Administration of China ("CAAC"),
China's full year air passenger traffic rose 15.9% versus 2023, and was 8%
above the pre-pandemic (2019) level, of which domestic traffic rose 12.2%
versus 2023 (12.2 % above the 2019 level), while international traffic has
shown a recovery trend and rose 109.8% versus 2023 and was at 71.2% of 2019
level.
3. Reasons for and benefits of the Non-exempt Transactions
As advised by the Management and as disclosed in the Letter from the Board, we
note that the Company has developed its cooperation relationship with CNACG
since 2008. In light of the long- established cooperation relationship between
the Company and the CNACG Group as well as the CNACG Group's proven track
record in aircraft as well as equipment/machinery leasing business, the CNACG
Group has a better understanding of the Group's business needs and
communications between the Company and the CNACG Group tend to be smoother and
for them to reach an agreement in the best interests of both parties.
In addition, considering certain subsidiaries of CNACG, as the lessor, are
located in China's Free Trade Zones and qualified for certain
industry-supportive policies, by utilising the leasing platform for finance
leases services of the CNACG Group, the Group is able to secure
aircraft/equipment tailored to its specific needs, benefiting from lower
financing costs, greater flexibility, and reduced cash flow impact compared to
direct purchases.
In addition to the anticipated industry-supportive grants provided under the
abovementioned industry- supportive policies, we have been advised by the
Management the Group can benefit from the lower effective interest rates by
utilising aircraft finance lease under the CNACG Framework Agreement, when
compared to secured loan arrangements with equivalent interest rates available
over the same period. The Group is projected to save approximately USD10.46
million, USD14.84 million, and USD13.12 million in total financing costs for
each year from 2026 to 2028, respectively. Simultaneously, the CNACG Group can
also gain a stable revenue stream, creating a mutually beneficial and win-win
relationship for both parties.
Furthermore, as advised by the Management, aviation equipment or machinery
(collectively "Aviation Equipment") is usually lower in transaction value as
compared to aircraft, and could be tailor-made in nature, and such
equipment/machinery may not necessarily have a readily available second-hand
market. As such, independent finance institutions do not necessarily offer
operating leases for smaller value equipment or may not be willing to provide
the financing options for such Aviation Equipment due to a limited market. We
however understand from the Management that, other than servicing the specific
needs of the Group, CNACG has independent third-party clients such as
airports, for operating leases involving Aviation Equipment.
We also note in the 2023 Annual Report and 2024 Annual Report that around
56.80% and 56.34 % of the aircraft fleet of the Group were held under either
finance lease or operating lease as at 31 December 2023 and 31 December 2024
respectively and as such, the renewal of the CNACG Framework Agreement, in
particular, in relation to the finance and operating lease services of
aircraft, equipment and machinery is considered in line with the Group's
business financing strategy.
Given that (i) the CNACG Group has experience, expertise and have been
providing leasing services to the Group for a long time, and (ii) not only
that the renewal of the CNACG Framework Agreement will continue to enhance
financing flexibility for the Group as discussed in the paragraphs above, most
importantly, it will not obligate the Group to enter into any transactions
with the CNACG Group, but will provide the Group with the flexibility to
choose the CNACG Group for its finance/operating leasing services if the terms
provided are at a market rate or better, we are of the view that the entering
into of the Non- exempt Transactions pursuant to the renewal of the CNACG
Framework Agreement is in the ordinary and usual course of business of the
Group and is in the interests of the Company and the Shareholders.
4. Principal Terms of the Non-exempt Transactions under the CNACG Framework Agreement
Services The CNACG Group will provide finance
and operating lease services in respect of, including but not limited to,
aircraft, engines, simulators, aircraft-related materials, equipment and
vehicles to the Group.
Pricing The final transaction price will be
determined on arm's length negotiations between both parties with reference to
the prices for the same type of lease services offered by independent third
parties and after taking into account certain factors. Such factors include
purchasing price of the leasing subject, interest rate and arrangement fees
(if any) (for finance lease), rental fee (for operating lease), the lease
terms, the feature of the leasing subject and the comparable market rental
prices. The final transaction price should not be higher than the transaction
prices offered by at least two independent third parties on the same
conditions.
We have discussed with and understand from the Management that aircraft
finance lease ("Aircraft Finance Lease") transactions accounted for majority
of the historical transactions value for the Non-exempt Transactions under the
CNACG Framework Agreement and the Company would compare the terms, including
pricing terms offered by independent third parties so as to ensure that the
terms offered by the CNACG Group are fair and reasonable, no less favourable
compared to independent third parties and on normal commercial terms.
As confirmed with the Management, there was no finance lease transaction for
Aviation Equipment entered into between the CNACG Group and the Group during
FY2023, FY2024 and up to the Latest Practicable Date. We have further
discussed with and understand from the Management that before entering into
any operating lease transactions for aircraft ("Aircraft Operating Lease")
and/or Aviation Equipment ("Aviation Equipment Operating Lease"), it would
firstly research into the costs associated with direct purchase of the
aircraft and/or Aviation Equipment it requires and compare against potential
costs of lease associated with entering into an operating lease for the same
aircraft and/or Aviation Equipment. After taking into consideration the
commercial factors including business needs, should the Company decide to
enter into an operating lease for the aircraft and/or Aviation Equipment, the
Company would then either compare the terms offered by the CNACG Group with
terms offered for that similar aircraft and/or Aviation Equipment already
leased by the Company and/or request the CNACG Group, to the greatest extent
possible, to provide terms offered by the CNACG Group for the same or similar
aircraft and/or Aviation Equipment to its independent third-party clients, so
as to ensure that the terms offered by the CNACG Group in relation to the
aircraft and/or Aviation Equipment are fair and reasonable, no less favourable
and on normal commercial terms.
There was no Aircraft Operating Lease transaction between the CNACG Group and
the Group for FY2023, FY2024 and up to the Latest Practicable Date. Based on
our discussion with the Management, in respect of Aircraft Operating Lease
under the CNACG Framework Agreement, we understand from the Management that
the rental fees are determined with reference to prevailing market rates or
professional appraisals subject to arm's length negotiations between the
parties, which will take into account commercial negotiation with relevant
stakeholders and technical assessments of various factors, including but not
limited to aircraft's configuration, maintenance status, and operational
performance, etc. Based on our review of the continuing connected transaction
circulars published by the peers of the Company, namely China
Southern Airlines Company Limited (stock code: 1055.HK) ("CSA") and China
Eastern Airlines Corporation Limited (stock code: 670.HK) ("CEA") (which we
consider to be fair and representative as both airlines are state- owned and
listed on the Hong Kong Stock Exchange) regarding Aircraft Operating Lease
transactions in the past three years, we note that the circular published by
CSA on 1 December 2022 (the "2022 CSA Circular") and CEA on 26 December 2022
(the "2022 CEA Circular") contained relevant disclosure on pricing basis of
aircraft operating lease transactions and we further note that similar
determination basis is adopted by both CSA and CEA in respect of Aircraft
Operating Lease.
Interest Rate for Aircraft Finance Lease
Based on our understanding from the Management, interest rates used for
Aircraft Finance Lease for, among others, aircraft, are usually determined
with reference to loan market quoted interest rate ("LPR") promulgated by the
People's Bank of China ("PBOC") and that the period of Aircraft Finance Lease
would normally exceed five years. We note the LPR promulgated by PBOC for
period greater than five years is 3.50% as at the Latest Practicable Date,
which is similar to the interest rate of 3.6% adopted by the Company for
estimating the proposed annual caps for the three years ending 31 December
2028 for the Non-exempt Transactions.
Review of Sample Transactions Documents for Aircraft Finance Lease and Aviation Equipment Operating Lease between the CNACG Group and the Group under the CNACG Framework Agreement
We have obtained from the Company (i) the only two transactions of Aircraft
Finance Lease transactions conducted between the Group and the independent
third parties in years 2023 and 2024 ("Sample Aircraft Finance Lease") and
(ii) 1 sample of Aircraft Finance Lease transaction conducted in 2023 and 2
samples of Aircraft Finance Lease transactions conducted in 2024 out of the
transaction list of the total 7 Aircraft Finance Lease transactions between
the Group and the CNACG Group ("Sample CNACG Aircraft Finance Lease") during
the years 2023 and 2024 for comparison with the Aircraft Finance Lease
transactions under the CNACG Framework Agreement. We consider the number of
samples and the sampling period (i.e. 2023 and 2024) to be sufficient and are
fair and representative from our perspective.
We note that the lease interest rates were all benchmarked against the LPR
published by the PBOC +/- certain percentage and lease terms of 10 years, in
particular, the Sample CNACG Aircraft Finance Lease transactions were with nil
handling fee, which compared favourably to the terms of the Sample Aircraft
Finance Lease. As such, we consider the terms of Aircraft Finance Lease
offered by the CNACG Group under the CNACG Framework Agreement to be
commercially reasonable and not deviating from those offered by independent
third parties under the comparable market conditions.
There was only one transaction of Aviation Equipment Operating Lease conducted
between the CNACG Group and the independent third party from 2023 to 2024
("Sample Aviation Equipment Operating Lease") and we have obtained the
relevant transaction documents together with 1 sample of that similar
equipment between the Group and the CNACG Group ("Sample CNACG Aviation
Equipment Operation Lease") during the years 2023 and 2024 for comparison with
the Aviation Equipment Operating Lease transactions under the CNACG Framework
Agreement. We note that the rental fee for Sample Aviation Equipment Operating
Lease and the Sample CNACG Aviation Equipment Operating Lease of that similar
equipment is settled on the same basis, which is quarterly basis and that the
rental expenses for the similar equipment charged by the CNACG Group on the
Group are lower than those charged on the independent third party.
Based on the above, we consider that the terms of the Non-exempt Transactions
are no less favourable compared to independent third parties, and generally in
line with the market and such arrangement with the CNACG Group is fair and
reasonable.
5. Proposed Annual Caps
Set out below are the historical transaction figures of the Non-exempt
Transactions under the CNACG Framework Agreement for FY2023, FY2024 and the
expected transaction amount of the Non-exempt Transactions for the year ending
31 December 2025 ("FY2025") estimated by the Company and the proposed annual
caps for the three years ending 31 December 2026 ("FY2026"), 31 December 2027
("FY2027") and 31 December 2028 ("FY2028") for the Non-exempt Transactions
("Proposed Annual Cap(s)") to be contemplated under the CNACG Framework
Agreement:
Historical transaction figures and Historical Annual Caps
FY2023 FY2024 FY2025
(in millions of RMB)
In terms of total value of right-of-use assets in relation to the finance and
operating leases entered into by the Group as lessee
Historical transaction amounts 808 1,948 7,466 Note 2
Historical Annual Caps 14,000 16,500 17,500
Utilisation rate (Note) (1) 5.8% 11.8% 42.7%
Notes:
1. The utilisation rate is calculated as the actual/expected
transaction amount of Non-exempt Transactions divided by the Historical Annual
Cap for the respective year.
2. The amount of RMB7,466 million represents the expected
transaction amount for FY2025 estimated by the Company.
With respect to the utilisation rate of the historical annual caps
("Historical Annual Caps") of the Non-exempt Transactions, we note that the
actual amount of total value of right-of-use assets in relation to the finance
and operating leases entered into by the Group as lessee amounted to
approximately RMB808 million and RMB1,948 million for FY2023 and FY2024
respectively and the expected transaction amount for FY2025, which as advised
by the Management, is estimated based on the Group's plan to introduce 47
aircraft in 2025 with no more than 50% of the acquisition cost would be
financed with the Aircraft Finance Lease with the CNACG Group, would be
RMB7,466 million, representing a utilisation rate of approximately 5.8%, 11.8%
and 42.7% (estimated) for FY2023, FY2024 and FY2025, respectively.
We have discussed and understand from the Management that the relatively lower
utilisation rate for the Historical Annual Caps for FY2023, FY2024 and FY2025
(estimated) was principally due to the uncertainties in aircraft delivery by
manufacturers, in particular, the production delay of B737 series from Boeing
as advised by the Management, resulting in delays and a reduction in the
number of aircraft acquired through finance lease compared to initial plans.
Additionally, the proceeds raised from the Company's non-public issuance of
shares in 2022 and 2024 ("Shares Issuance Exercises") were primarily used to
purchase aircraft directly, which further reduced the number of aircraft
introduced through finance leases. Based on our review of the Company
announcements in relation to the Shares Issuance Exercises published on the
website of the Hong Kong Stock Exchange, the Shares Issuance Exercises were
completed on 17 January 2023, 7 February 2024 and 12 December 2024
respectively with aggregate gross proceeds of RMB23 billion, of which RMB15
billion were intended to apply for purchasing 39 aircraft.
Proposed Annual Caps
FY2026 FY2027 FY2028
(in millions of RMB)
In terms of total value of right-of-use assets in relation to the finance and
operating leases entered into by the Group as lessee
14,800 19,500 17,500
Basis for Determining the Proposed Annual Caps
As stated in the Letter from the Board, the Proposed Annual Caps for the three
years ending 31 December 2028 for the Non-exempt Transactions are determined
with reference to the following primary factors:
(i) When estimating the total value of right-of-use assets in
relation to the aircraft under finance lease in the following three years, the
Company has considered the followings:
(a) historical transaction amounts;
(b) the aircraft introduction plan of the Group and the
assumption that 50% of the aircraft to be introduced during the years from
2026 to 2028 for which funding arrangements have not been finalised will be
introduced through finance lease with the CNACG Group; The proposed annual cap
for 2028 is lower than it for 2027 primarily because the proposed annual caps
are derived based on the aircraft introduction plan of the Group. The aircraft
introduction plan is driven by operational and strategic considerations which
are formulated through comprehensive analysis of multiple operational factors
including fleet composition optimisation, strategic market deployment and
planned capacity allocation. It is estimated that more aircraft will be
introduced in 2027 than in 2028, leading to lower proposed annual cap for 2028
compared to it for 2027;
(c) given the expected lease term of 10 to 12 years for each
aircraft under finance lease, the calculation of aircraft finance lease
interest rate uses the People's Bank of China's over-five-year RMB Loan Prime
Rate (LPR) of 3.6% as of 30 April 2025;
(d) based on the information currently available to the Group,
it is anticipated that CNACG Group will not charge the Group arrangement fees
for finance leases in the coming three years, and accordingly no arrangement
fees have been included in the annual cap estimates.
(ii) When estimating the total value of right-of-use assets
under operating leases for aircraft, engines and ground equipment in the
following three years, the Company has considered the followings:
(a) in respect of aircraft operating leases, the estimation is
primarily based on the Group's aircraft induction and retirement plans, and
assuming no more than 10 aircraft will be introduced through operating leases
with the CNACG Group for each of the years from 2026 to 2028. The lease
rentals will be determined mainly by reference to prevailing market rates or
professional appraisals subject to arm's length negotiations between the
parties;
(b) in respect of the operating leases of engines and ground
equipment, the estimation takes into account the current lease arrangements,
the operational status of the Group's engines, simulators and equipment, along
with anticipated commercial demand for operating lease in the next three
years. Specifically, the Group plans to lease annually from the CNACG Group
one to two used engines and 23 ground equipment units, with lease terms
typically ranging from 1 to 12 years.
(iii) An exchange rate of RMB7.3: USD1.0 is adopted for the
calculation of the proposed annual caps.
(iv) A reasonable buffer of 5% is reserved to accommodate
unforeseen circumstances, ensuring flexibility in the financial planning
process.
(v) Based on the above, the Company expected that for the three
years ending 31 December 2028, the total annual rental fee payable by the
Group to the CNACG Group throughout the lease term for aircraft, engines and
ground equipment under finance lease and operating lease entered into will not
exceed RMB15 billion, RMB20 billion and RMB18 billion, respectively. By
adopting the incremental borrowing rate of the Company as the discount rate
(ranging from 2.24% to 2.74%) to discount such estimated future total rental
fee, the total value of the right-of-use assets under the finance leases and
operating leases entered into by the Group as the lessee for the three years
ending 31 December 2028 will not exceed RMB14.8 billion, RMB19.5 billion and
RMB17 billion, respectively.
For our due diligence purpose, we have discussed with the Management and
reviewed the basis adopted by the Company in determining the Proposed Annual
Caps for the Non-exempt Transactions under the CNACG Framework Agreement as
follows.
Aircraft Finance Lease and Aircraft Operating Lease
Based on our discussion with the Management and for reasons outlined above,
the relatively lower utilisation rate for the Historical Annual Caps was
principally due to uncertainties in aircraft delivery by manufacturers and the
aircraft purchasing plan of the Company was mostly funded by the proceeds
raised in the Shares Issuance Exercises.
In addition, based on our review of the annual reports of the Company, the
Company has also been postponing/slowing its pace to acquire aircraft to
update and/or replace its existing fleet and portfolio. Prior to FY2020, the
Group has been acquiring on average, 56 aircraft per year, and phasing out, on
average 20 aircraft per year. We also note that the average age of the Group's
fleet prior to COVID-19 pandemic was approximately 6.48 years. However, for
the years from 2020 to 2023, the average growth in total fleet dropped to 29
aircraft per year and phasing out only, on average 10 aircraft per year. We
note that the Company has demonstrated its effort in acquiring aircraft in
2024 and the Group had acquired 36 aircraft as disclosed in the 2024 Annual
Report. As such, we consider the Group's business and financing plans to
enhance its financial flexibility with finance lease/operating lease options
in order to update its existing portfolio of aircrafts and expand its fleet
size are commercially justifiable, in particular, from a business perspective
so that it would be able to remain competitive to its closest peers and to
align with the growth prospects of the aviation industry as supported by the
statistics published by IATA and CAAC as discussed in section headed "2.
Overview of Aviation Industry" in this letter. As such, leaving a sufficient
portion on buffer when determining the annual caps for the coming three
financial years ending 31 December 2028 is not without basis.
We have discussed and understand from the Company that the Proposed Annual
Caps for Non- exempt Transactions, are estimated based on the total value of
right-of-use assets in relation to the finance and operating leases of
aircraft, which is positively co-related to the growth in the Group's fleet of
aircraft. We note that the Proposed Annual Cap for FY2028 is RMB17,500 million
as compared to RMB19,500 million for FY2027. As disclosed in the Letter from
the Board, we understand that the number of aircraft to be introduced in 2028
is expected to be lower than that for FY2027, we consider the lower Proposed
Annual Cap for 2028 as compared to 2027 to be reasonable.
According to the 2024 Annual Report and based on the information provided by
the Management, the Group was intended to introduce 47 aircraft, 44 aircraft,
and 59 aircraft for 2025, 2026, and 2027 respectively, of which 50% of the
total amount of the introduced aircraft for which funding arrangements have
not been finalised would be acquired through finance lease arrangement with
the CNACG Group. As such, the maximum aggregate principal amount of total
value of right-of-use assets in relation to the Aircraft Finance Lease
("Aircraft Finance Leases PV") with the CNACG Group during 2026 to 2028, shall
not exceed half of the aggregate consideration amounts for the total aircraft
projected to be added using finance leases during the said year. We have
reviewed the Company's 2023 Annual Report and 2024 Annual Report and noted
that the Group introduced 36 aircraft for 2024, and the number of fleet under
finance lease increased by 12 aircraft from 2023 to 2024.
To assess whether the computation process adopted by the Company to account
for half of the expected total amount of aircrafts scheduled to be introduced
using finance lease as the relevant principal amount is a market norm, we have
reviewed and also noted that the Company's peers, the other two state-owned
airlines listed on the Hong Kong Stock Exchange, namely CSA and CEA in their
respective continuing connected transaction circulars dated 1 December 2022
and 26 October 2022 also adopted a similar computation process of accounting
for 60% and half of the expected total purchase price of total aircrafts
scheduled to be introduced as the relevant principal amount respectively.
As mentioned in the letter from the Board, the aircraft introduced by way of
operating lease with the CNACG Group will be no more than 10 aircraft for each
year. Based on our discussion with the Management, the acquisition of new
aircraft and the sales and leaseback arrangements for middle- aged to
older-generation aircraft via operating lease is a common financing method in
the aviation industry and aligns with the industry practices. We note from
both 2022 CSA Circular and the annual results announcement of CEA for FY2024
that the Company's peers have adopted the operating lease arrangements for
financing the acquisition of aircraft.
Discount Rate
Similar to previous financial years, pursuant to IFRS (International Financial
Reporting Standards) 16, the finance leases entered into by the Company as the
lessee will be recognised as right-of-use assets and discounted using the
Company's incremental borrowing rate, and the result of such calculation is
used to determine the annual caps relating to the Non-exempt Transactions.
Therefore, the amounts of Aircraft Finance Leases PV and total value of
right-of-use assets in relation to the operating lease of aircraft ("Aircraft
Operating Leases PV") for each of the years 2026, 2027 and 2028 are derived
based on the total value of right-of-use assets relating to the aircraft
finance and operating leases expected to be entered into between the Company
and the CNACG Group during 2026, 2027 and 2028 respectively. We have reviewed
the computation inputs of the respective values for the right-of-use assets
relating to the planned aircraft finance and operating leases and noted that
it is calculated by discounting the estimated total financing amount required
for new aircrafts (including interest with zero arrangement fees) to be
introduced for the particular year by a discount rate of 2.74% (for leases
with terms over 5 years) which is equivalent to the Company's prescribed
internal incremental borrowing rate for loans/leases over five years. We have
reviewed the 2024 Annual Report and noted that the interest rate for the
Group's interest bearing bank loans and other borrowings ranged from 1.6% to
4.38% (median interest rate being 2.99%), and range of interest rates for
corporate bonds repayable and short-term commercial papers is from 2.03% to
3.46% (median interest rate being 2.745%). Given the abovementioned ranges and
medians of interest rates applicable to the Group's interest-bearing bank
loans and other borrowings, and the fact that the internal rate being 2.74% is
towards the high end of the median interest rates and in the middle range of
the aforementioned quoted ranges, we would consider the Company's use of
internal rate of 2.74% to be prudent.
Aviation Equipment Operating Leases
We have discussed and understand from the Management that the anticipated
total value of right-of-use assets in relation to the Aviation Equipment
Operating Lease for each of the three years ending 31 December 2028 ("Aviation
Equipment Leases PV") represents the present value of engines and other
aviation related equipment that are capable to be supplied by CNACG and in
response to the Group's estimated demand which is based on internal budgets
and purchase schedules. As mentioned above, the Group plans to lease one to
two used engines annually and 23 ground equipment units annually, from the
CNACG Group during 2026 to 2028, with lease terms typically ranging from 1 to
12 years. The Group will only enter into lease agreements with members of the
CNACG Group if terms offered by the CNACG Group are on normal commercial terms
or better.
From the information provided that the lease period for engines normally
ranges between 5 to 12 years and for other aviation equipment, the lease
period ranges between 1 to 6 years. Similar to that of Aircraft Finance Leases
PV and Aircraft Operating Leases PV, pursuant to IFRS 16, Aviation Equipment
will be recognised as right-of-use assets and such right-of-use asset value is
used to determine the annual cap for Non-exempt Transactions. The Aviation
Equipment Leases PV are derived from the expected total value of right-of-use
assets relating to the engines and other aviation equipment operating lease,
which is computed by discounting the estimated total rental fee for Aviation
Equipment introduced each year as discussed above, by the Company's internal
incremental borrowing rate. As advised by the Management, the prescribed
internal incremental borrowing rate referred to for leases with a term longer
than five years is 2.74%, and 2.24% for leases with a term of 5 years or
below. Similar to the aforementioned with Aircraft Finance Lease PV and
Aircraft Operating Leases PV, based on the information in the 2024 Annual
Report, the interest rate for the Group's interest bearing bank loans and
other borrowings ranged from 1.6% to 4.38% (median interest rate being 2.99%),
and range of interest rates for corporate bonds repayable and short-term
commercial papers is from 2.03% to 3.46% (median interest rate being 2.745%).
Given the abovementioned ranges and medians of interest rates applicable to
the Group's interest-bearing bank loans and other borrowings, and the fact
that the internal rates, being 2.74% (for leases with term longer than 5
years) or 2.24% (for leases with term of 5 years or below) are both towards
the high end of the median interest rates and in the middle range of the
aforementioned quoted ranges, we would consider the Company's use of internal
rates of 2.74% and 2.24% to be prudent.
Buffer
We also note that the Management has included a buffer of approximately 5% in
its estimated amounts for each of the annual caps for 2026, 2027, and 2028. We
have discussed and understand that the aforementioned buffer is included to
accommodate unforeseen circumstances. We consider the use of a buffer of
approximately 5% to be commercially acceptable.
Based on the discussion above, we consider such estimates for (i) calculating
the estimation for Aircraft Finance Lease PV, Aircraft Operating Leases PV and
Aviation Equipment Leases PV for three years ending 31 December 2028; and (ii)
the total value of the right-of-use assets under the finance leases and
operating leases entered into by the Group as the lessee under the
CNACG Framework Agreement of approximately RMB14.8 billion, RMB19.5 billion
and RMB17 billion, respectively for the three years ending 31 December 2028,
are fair and reasonable as far as the Company and Independent Shareholders are
concerned.
6. Internal Control
The Company has also adopted the measures as set out under the section headed
"Internal Control Procedures" of the Letter from the Board for monitoring the
CNACG Transactions and to ensure that the CNACG Transactions (including the
Non-exempt Transactions) will be conducted on normal commercial terms and in
accordance with the CNACG Framework Agreement and the pricing policies of the
Group.
Upon our enquiry, we note that the Directors confirmed that the Company shall
comply with the requirements of Rules 14A.53 to 14A.59 of the Hong Kong
Listing Rules pursuant to which (i) the values of the CNACG Transactions
(including the Non-exempt Transactions) must be restricted by the applicable
annual caps for the period concerned under the CNACG Framework Agreement; (ii)
the terms of the CNACG Transactions (including the Non-exempt Transactions)
must be reviewed by the independent non- executive Directors annually; and
(iii) details of independent non-executive Directors' annual review on the
terms of the CNACG Transactions (including the Non-exempt Transactions) must
be included in the Company's subsequent published annual reports and financial
accounts.
Furthermore, it is also required by the Hong Kong Listing Rules that the
auditors of the Company must provide a letter to the Board confirming, among
other things, whether anything has come to their attention that causes them to
believe that the CNACG Transactions (including the Non-exempt Transactions)
(i) have not been approved by the Board; (ii) were not, in all material
respects, in accordance with the relevant agreement governing the
transactions; and (iii) have exceeded the applicable annual caps. We have
obtained from the Company and reviewed the letters issued by the Company's
external auditors in 2023 and 2024 and note that the auditors have confirmed
that the internal control procedures implemented by the Company have been
effective in all material aspects.
Given the above stipulated requirements for continuing connected transactions
pursuant to the Hong Kong Listing Rules, we concur with the view of the
Directors that the Company has internal control in place to monitor the CNACG
Transactions (including the Non-exempt Transactions) and thus the interest of
the Independent Shareholders would be safeguarded.
RECOMMENDATION
Having taken into consideration the factors and reasons as stated above, we
are of the opinion that the Non-exempt Transactions under the CNACG Framework
Agreement are conducted on normal commercial terms and in the ordinary and
usual course of business of the Group, and are fair and reasonable so far as
the Independent Shareholders are concerned, and are in the interests of the
Company and the Shareholders as a whole, and that the Proposed Annual Caps
are also fair and reasonable. Accordingly, we recommend the Independent
Shareholders, and the Independent Board Committee to recommend the Independent
Shareholders, to vote in favour of the relevant ordinary resolution to be
proposed at the AGM.
Yours faithfully,
For and on behalf of
BaoQiao Partners Capital Limited Irene Poon
Executive Director
Ms. Irene Poon is a responsible officer registered under the SFO to carry out
Type 6 (advising on corporate finance) regulated activity for BaoQiao Partners
Capital Limited and has over 20 years of experience in the accounting and
corporate financial services industry.
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept
full responsibility, includes particulars given in compliance with the Hong
Kong Listing Rules for the purpose of giving information with regard to the
Group. The Directors, having made all reasonable enquiries, confirm that to
the best of their knowledge and belief, the information contained in this
circular is accurate and complete in all material respects and not misleading
or deceptive, and there are no other matters the omission of which would make
any statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS OF DIRECTORS AND SUPERVISORS
As at the Latest Practicable Date, none of the Directors, Supervisors or chief
executive of the Company had interests or short positions in the shares,
underlying shares and/or debentures (as the case may be) of the Company or its
associated corporations (within the meaning of Part XV of the SFO) which were
notifiable to the Company and the Hong Kong Stock Exchange pursuant to the
SFO, or were recorded in the register maintained by the Company pursuant to
section 352 of the SFO, or which were notifiable to the Company and the Hong
Kong Stock Exchange pursuant to the Model Code for Securities Transactions by
Directors of Listed Issuers.
As at the Latest Practicable Date, none of the Directors or Supervisors of the
Company had any direct or indirect interest in any assets which have been,
since 31 December 2024 (being the date to which the latest published audited
financial statements of the Group were made up), acquired or disposed of by or
leased to any member of the Group or are proposed to be acquired or disposed
of by or leased to any member of the Group.
As at the Latest Practicable Date, none of the Directors or Supervisors of the
Company was materially interested in any contract or arrangement which is
significant in relation to the business of the Group and subsisting as at the
Latest Practicable Date.
Mr. Patrick Healy, a non-executive Director, is concurrently the chairman and
an executive director of Cathay Pacific. Cathay Pacific is a substantial
shareholder of the Company, holding 2,633,725,455 H Shares of the Company
(representing approximately 15.09% of the total issued shares of the Company)
as at the Latest Practicable Date. Mr. Ma Chongxian and Mr. Wang Mingyuan,
both are executive Directors, are concurrently non-executive directors of
Cathay Pacific. Cathay Pacific competes or is likely to compete either
directly or indirectly with some aspects of the business of the Company as it
operates airline services to certain destinations, which are also served by
the Company.
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors or Supervisors of the Company and their respective close associates
(as defined in the Hong Kong Listing Rules) had any competing interests which
would be required to be disclosed under Rule 8.10 of the Hong Kong Listing
Rules.
3. DISCLOSURE OF INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as the Directors were aware, the
following persons (not being a Director or Supervisor or chief executive of
the Company or their associate) had an interest or short position (if any) in
the Shares or the underlying Shares which would fall to be disclosed to the
Company under Divisions 2 and 3 of Part XV of the SFO, or which were recorded
in the register of the Company required to be kept under section 336 of the
SFO:
Approximate percentage of the total number of Shares in issue Percentage of the Percentage of the
Type and number of shares held total issued A Shares of the total issued H Shares of the
Company Company
Name Type of interests
CNAHC Beneficial owner 7,421,462,701 (L) 42.53% 59.41% -
A Shares
CNAHC((1)) Equity attributable 1,332,482,920 (L) 7.64% 10.67% -
A Shares
CNAHC((1)) Equity attributable 616,779,308 (L) 3.54% - 12.45%
H Shares
CNACG Beneficial owner 1,332,482,920 (L) 7.64% 10.67% -
A Shares
CNACG Beneficial owner 616,779,308 (L) 3.54% - 12.45%
H Shares
Cathay Pacific Beneficial owner 2,633,725,455 (L) 15.09% - 53.15%
H Shares
Swire Pacific Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
John Swire & Sons (H.K.) Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
John Swire & Sons Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
Notes:
(1) By virtue of CNAHC's 100% interest in CNACG, CNAHC was
deemed to be interested in the 1,332,482,920 A Shares and 616,779,308 H Shares
directly held by CNACG.
(2) By virtue of John Swire & Sons Limited's 100% interest
in John Swire & Sons (H.K.) Limited and their approximately 63.05% equity
interest and 70.13% voting rights in Swire Pacific Limited, and Swire Pacific
Limited's approximately 44.98% interest in Cathay Pacific as at the Latest
Practicable Date, John Swire & Sons Limited, John Swire & Sons (H.K.)
Limited and Swire Pacific Limited were deemed to be interested in the
2,633,725,455 H Shares of the Company directly held by Cathay Pacific.
(3) The letter "L" denotes a long position in the Shares.
Save as disclosed above, as at the Latest Practicable Date, no other persons
(not being a Director or Supervisor or chief executive of the Company or their
associate) had any interest or short position (if any) in the Shares or the
underlying Shares which would fall to be disclosed to the Company under
Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the
register of the Company required to be kept under section 336 of the SFO.
4. SERVICE CONTRACTS OF DIRECTORS AND SUPERVISORS
As at the Latest Practicable Date, none of the Directors or Supervisors had
any existing or proposed service contract with any member of the Group which
is not expiring or terminable by the Group within one year without payment of
compensation (other than statutory compensation).
5. DIRECTORS' AND SUPERVISORS' EMPLOYMENT WITH SUBSTANTIAL SHAREHOLDERS
The followings are the particulars of Directors' and Supervisors' employment
with substantial Shareholders (holding interests or short positions in the
shares and underlying shares of the Company required to be disclosed to the
Company pursuant to Divisions 2 and 3 of Part XV of the SFO) as at the Latest
Practicable Date:
Directors
Mr. Ma Chongxian, an executive Director, the chairman of the Board and the
secretary of the Party Committee of the Company, serves as a director, the
chairman, a member of the Party Leadership Group and the secretary of the
Party Leadership Group of CNAHC. He is also the deputy chairman of the board
of directors and a non-executive director of Cathay Pacific.
Mr. Wang Mingyuan, an executive Director, the vice chairman of the Board, the
president and the deputy secretary of the Party Committee of the Company,
serves as a director, the general manager, a member of the Party Leadership
Group and the deputy secretary of the Party Leadership Group of CNAHC. He is
also a non-executive director of Cathay Pacific.
Mr. Cui Xiaofeng, a non-executive Director of the Company, is a director, a
member of the Party Leadership Group and the deputy secretary of the Party
Leadership Group of CNAHC.
Mr. Patrick Healy, a non-executive Director of the Company, is the chairman of
the board of directors and an executive director of Cathay Pacific, a director
of Swire Pacific Limited, and a director of John Swire & Sons (H.K.)
Limited.
Mr. Xiao Peng, the employee representative Director of the Company, serves as
the chairman of the labour union and the employee representative director of
CNAHC.
Supervisor
Ms. Lyu Yanfang, a Supervisor of the Company, serves as the general manager of
the law department of CNAHC.
6. NO MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, there has been no material adverse change
in the Group's financial or trading position since 31 December 2024, being the
date to which the latest published audited financial statements of the Group
have been made up.
7. LITIGATION
As at the Latest Practical Date, the Company was not involved in any
significant litigation or arbitration and to the knowledge of the Company,
there were no litigation or claims of material importance pending or
threatened against any member of the Group.
8. EXPERT
The following is the qualification of the expert who has given its opinions or
advices, which are contained in this circular:
Name Qualification
BaoQiao Partners a corporation licensed to carry out Type 6 (advising on corporate finance)
regulated activity under the SFO
a. As at the Latest Practicable Date, BaoQiao Partners did not
have any direct or indirect interest in any assets which have been acquired or
disposed of by or leased to any member of the Group, or are proposed to be
acquired or disposed of by or leased to any member of the Group since 31
December 2024 (the date to which the latest published audited financial
statements of the Group were made up);
b. As at the Latest Practicable Date, BaoQiao Partners was not
beneficially interested in the share capital of any member of the Group and
had no right, whether legally enforceable or not, to subscribe for or to
nominate persons to subscribe for securities in any member of the Group; and
c. BaoQiao Partners has given and has not withdrawn its
written consent to the issue of this circular with inclusion of its opinion
and the references to its name, logo and qualification included herein in the
form and context in which they respectively appear. The letter and
recommendation from BaoQiao Partners are given as of the date of this circular
for incorporation herein.
9. MISCELLANEOUS
a. The joint company secretaries of the Company are Mr. Xiao
Feng and Mr. Huen Ho Yin. Mr. Huen Ho Yin is a practicing solicitor of the
High Court of Hong Kong
b. The registered address of the Company is at 1st Floor - 9th
Floor 101, Building 1, 30 Tianzhu Road, Airport Industrial Zone, Shunyi
District, Beijing, the PRC. The head office of the Company is at No. 30
Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC.
c. The H Share registrar and transfer office of the Company is
Computershare Hong Kong Investor Services Limited, the address of which is
Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong
Kong.
10. DOCUMENTS ON DISPLAY
Copies of the following documents will be published on the websites of the
Hong Kong Stock Exchange (www.hkexnews.hk) and the Company
(www.airchina.com.cn) for a period of 14 days from the date of this circular:
a. the CNACG Framework Agreement; and
b. this circular.
2024 WORK REPORT OF THE BOARD OF AIR CHINA
In 2024, the Board of Air China adhered to the guidance of Xi Jinping Thought
on Socialism with Chinese Characteristics for a New Era, thoroughly
implemented the guiding principles of the 20th National Congress of the
Communist Party of China (CPC) and the Second and Third Plenary Sessions of
the 20th CPC Central Committee as well as the resolutions and deployments of
the CPC Central Committee and the State Council, conscientiously implemented
the state-owned assets supervision and securities regulatory requirements, and
continuously deepen the development of a scientific, rational and efficient
Board, striving to promote the Company's high-quality development.
I. CONSCIENTIOUSLY IMPLEMENTED THE RESOLUTIONS AND DEPLOYMENTS OF THE CPC CENTRAL COMMITTEE AND THE STATE COUNCIL, AND RESOLUTELY FULFILLED THE ECONOMIC, POLITICAL AND SOCIAL RESPONSIBILITIES OF A CENTRAL ENTERPRISE. Firstly, fully embracing its responsibilities and missions as a national flag carrier and ensuring "Two Absolute Safeties (兩個絕對安全)". The Company recorded a total of 2.95 million safe flight hours throughout the year, representing a year-on-year growth of 14%. Aircraft movements amounted to 1.13 million, representing a year-on-year increase of 10.1%, and 155 million passengers were transported, representing a year-on-year increase of 20.9%. Secondly, aligning closely with the national regional development strategy and contributing to the major-country diplomacy with Chinese Characteristics. The Board pushed ahead with the cooperation with local governments in the Beijing-Tianjin-Hebei, the Yangtze River Delta, the Guangdong-Hong Kong-Macau Greater Bay Area and Chengdu-Chongqing, and steadily advanced the expansion of international routes. 63 "Belt and Road" related routes were operational across 28 countries, with flight volumes surpassing that of 2019. Thirdly, aligning with the strategy of domestically produced large aircrafts. 33 C909 aircraft operated normally. The Company approved the introduction of 100 C919 aircraft and became the launch customer for C929 aircraft. Fourthly, accelerating the cultivation of new quality productive forces. With a focus on three major R&D initiatives: domestic civil aircraft R&D/operations, intelligent flight operation control and air-ground connectivity for in-flight networks, the Board promotes the Company to facilitate the joint research on the core technologies and key areas of Beidou navigation. Fifthly, strengthening digitalization development. The Board approved "Top-Level Design Plan for Digitalisation Development" and established the Digital Transformation Office to drive the implementation of the comprehensive digitalization planning strategy and related projects. Sixthly, comprehensively promoting the deepening of reforms. The Board has completed 263 reform initiatives, achieving 71.5% of its three-year reform target. Seventhly, improving the modern corporate system with Chinese characteristics. The Company strictly ensured that preliminary research were carried out by the Party Committee for material operation and management matters. Among the 37 proposals considered and approved by the Board, 22 were undergone preliminary research and discussion by the Standing Committee of the Party Committee of the Company.
II. ACCELERATED THE ESTABLISHMENT OF A SCIENTIFIC, RATIONAL AND EFFICIENT BOARD TO LEAD AND SUPPORT THE HIGH-QUALITY DEVELOPMENT.
Firstly, improving the institutional development. The Articles of Association
and the Checklist of Rights and Responsibilities for Material Matters
(重大事項權責清單) were amended to clearly define the scope of rights
and responsibilities. The "Four Yes-and-No" (四個是否) review requirements
for preliminary deliberations were amended and refined, so as to reinforce the
leading role of the Party in setting strategic direction, overseeing broader
interests and ensuring implementation. Secondly, implementing state-owned
assets supervision and enhancing the quality of Board development. The Board
deepened its understanding of the guiding principles from the Conference on
Advancing Board Development in Central Enterprises
(中央企業董事會建設工作推進會), conducted research on and
formulated the "Task List for Board Development" (董事會建設任務清單)
and made deployment for implementing special initiatives to elevate board
governance quality across all subsidiaries. Thirdly, optimizing the
operational mechanisms. The Board formulated its work plan scientifically with
arrangements for matters including the meetings of the Board and the special
committees, investigations and research and trainings. The advance reporting
mechanism was implemented, under which major matters including the
introduction of 100 C919 aircraft were communicated and reported to external
directors in advance. The supervision mechanisms were implemented to
strengthen the supervision over the rectification of issues identified in
central inspections and audits, and the feedback mechanism was implemented to
improve the work arrangements in relation to the implementation of and
response to the opinions and recommendations of directors. Fourthly,
strengthening communication and coordination. Regulatory authorities were
invited to attend the meetings of the Board to enhance work guidance. The
communication between the Board and the Party Committee was strengthened
through the establishment of a two-way communication and exchange mechanism,
and the communication between the management and the Board was strengthened
with all management team members regularly attending Board meetings, and the
management regularly reporting to the Board on the implementation progress of
resolutions, authorized matters and the opinions and recommendation of
directors. Fifthly, enhancing the development standards of the board of
directors of subsidiaries.The Board reinforced the foundation of the
governance systems of the subsidiaries, promoted standardized operation of the
boards of directors and strengthened the development of the team of directors
with dedicated duties. Sixthly, improving the quality of listed companies.The
Board was awarded the "Best Practice Case of Board of Directors of Listed
Companies in 2024" by the China Association of Public Companies
(中國上市公司協會) and was awarded an 'A' Grade in information
disclosure by the Shanghai Stock Exchange for 11 consecutive years. The
Company published its social responsibility (ESG) reports for 16 consective
years, fully utilized its listing platform functions and completed the
non-public issuance of A-shares and H-shares of RMB8 billion. The research on
market capitalization management was advanced and a market capitalization
management mechanism was established.
III. STRENGTHENED THE MAIN FUNCTION OF THE BOARD IN DECISION-MAKING ON OPERATION, AND GAVE FULL PLAY TO ITS ROLE IN FORMULATING STRATEGIES, DECISION-MAKING AND RISK PREVENTION.
(I) The Board strengthened its strategic leadership and
fulfilled its strategic functions. With a firm commitment to national
priorities, the Board accurately identified the new positioning and mission of
an air transportation enterprise within China's civil aviation power-nation
strategy and the new development paradigm. By leveraging the "dual pathways"
and fulfilling the "three roles", it oversaw the entire process of strategy
formulation, implementation, and evaluation, ensuring scientifically sound
strategic goals to steer corporate reform and development. Firstly, robust
strategy implementation was advanced.Focusing on building a world-class air
transportation industry group, the Board convened a strategy-decoding
conference to coordinate progress on the "eight critical campaigns". Together
with the members of the Party Committee and the senior management, the Board
analyzed the current situation, benchmarked against the major requirements for
strengthening core functions and competitiveness, identified gaps and
deficiencies, and further solidified consensus to reinforce strategic
leadership. The Board actively promoted the implementation of value creation
initiative and aligned efforts with key tasks in the "14th Five-Year" Plan.
Secondly, strategic emerging industries expanded rapidly.The Board formulated
a development plan for strategic emerging industries and supporting policies,
advanced the systematic digital transformation projects, and conducted a
comprehensive review of the fundamental aspects across three key domains and
mapped out growth directions, fostering a data-driven value creation mindset.
It launched a range of pivotal long-term projects, such as full-fleet
air-ground connectivity upgrades and digitalized dispatch systems. Thirdly,
groundwork for the 15th Five-Year Plan commenced. The Board designed the
planning framework for the 15th Five-Year Plan, outlined guiding principles
and progress schedule, and coordinated preliminary research for Air China,
Shenzhen Airlines, and Shandong Airlines. It initiated fleet planning studies
to analyze market trends, aircraft performance, and fleet management, yielding
preliminary proposals. Emphasis was placed on industry trend analysis and
strategic research, ensuring alignment with national, industrial and regional
plans to chart the course of development and reform for the next five years.
Fourthly, the strategic evaluation system was optimized. Anchored in
high-quality development and aligned with national and industrial strategies,
the Board dynamically optimized the medium-to-long-term planning system to
ensure corporate planning objectives and pathways remained congruent with
regulatory requirements. Enhanced monitoring and tiered evaluations
safeguarded operational decisions' adherence to strategic plans and focus on
the primary responsibilities and main business of the Company, mitigated
strategic risks, and corrected implementation deviations promptly.
(II) Strengthened rational decision-making and performed
decision-making functions. The Board focused on the implementation of the
Central Government's policy directives, coordinated state-owned assets
supervision and securities regulation, and promoted the implementation of
major projects through scientific and rational decision-making. Firstly,
pre-meeting communication was enhanced. Meeting-related documents were
distributed in advance to facilitate external directors' review, with their
opinions actively solicited through pre-meeting consultations. For instance,
during preliminary discussions and reporting on the introduction of 100 C919
aircraft, external directors provided critical inputs on debt ratio
implications, economic feasibility, and legal risks, leading to refined
feasibility reports and supplementary data that improved the Board's decision
efficiency and quality. Secondly, in-depth and focused research was
conducted.Closely monitoring the Company's strategies and the Board's
decisions, the Board conducted in-depth investigations and researches on the
front line to best keep abreast with the prevailing conditions of the
enterprise and the actual situation. In 2024, the external directors completed
4 field investigations in 2024 focusing on strategic synergies, digital
transformation, marketing and sales, brand services and overseas risk
management, producing 4 reports with 26 actionable recommendations on
management and development to provide important reference and support for
evidence-based decisions and high-quality development. Thirdly, the special
committees provided efficient support. Special committees conducted
preliminary reviews of proposals prior to Board deliberations, with committee
chairs reporting their recommendations during Board meetings. In 2024, the
Board held nine meetings, considered and approved 37 resolutions, including
the introduction and retirement of aircraft and major organizational
adjustments, and received 20 special reports. The special committees of the
Board held 23 meetings, studied and reviewed 36 resolutions, and received 27
reports. Among them, the Strategy and Investment Committee held seven
meetings, the Audit and Risk Management Committee (the Supervision Committee)
held seven meetings, the Remuneration and Appraisal Committee held three
meetings, the Nomination Committee held three meetings, and the Aviation
Safety Committee held three meetings, which robustly supported the Board's
informed and efficient decision-making. Fourthly, external directors fully
utilized their expertise. With diverse professional experiences and
complementary skills, external directors focused on evaluating the "four key
criteria", i.e. the legality and compliance of decisions, consistency with
investors' and Shareholders' demands, alignment with corporate development
strategy and comprehensive risk-reward balance, thereby ensuring independent
judgment and decisions. Fifthly, enhanced joint work group collaboration.The
chief accountant, chief legal counsel, secretary of the Board and responsible
persons of business departments attended meetings on a regular basis, and
regularly reported on production and operation, budget execution, risk
compliance and corporate governance, so as to strengthen the cross-functional
decision-making support.
(III) Strengthened risk prevention and control and performed risk
management responsibilities. The Board firmly implements the important
instructions and directives of General Secretary Xi Jinping regarding the
prevention and resolution of major risks, adheres to a bottom-line mindset,
enhances risk awareness, and gives full play to the supervisory role of the
Board, so as to effectively prevent and resolve the major risks of the
enterprise. Firstly, the Board built
up a strong defense for safe operation. The Board insists on the principle of
"putting people and life first (人民至上、生命至上)", prioritizing
the protection of people's lives and safety. It proactively examined the
safety conditions, strengthened the supervision on safety operation,
established a long-term effective mechanism for safety operation, and
continuously improves safety management capabilities and safety standards.
Secondly, major business risks were prevented and resolved.The Board conducted
in-depth analysis of macroeconomic conditions, overall industry conditions and
status of market competition, and identified the top five annual operational
risks for the Company: aviation safety operations, fluctuations in operating
performance, volatility in oil prices, exchange rates and interest rates, debt
and foreign-related legal compliance. The Board provided guidance to formulate
the corresponding prevention and control measures, and continuously tracked
the risks to ensure a closed-loop management process. The Board conducted risk
assessments for major decisions requiring comprehensive evaluation of all
significant decisions, and continuously improved assessment quality. The Board
also pays close attention to the inspection for foreign-related legal
compliance risks. A regular mechanism has been established for identifying
such risk, with focus on key areas such as material contracts, large fund
management, bidding and procurement and data protection. Monthly checks are
conducted for foreign-related legal compliance risks and existing risks are
properly addressed. Thirdly, improving the risk prevention and control
system.The Board provided guidance on the promotion of integrated management
of legal affairs, risk, internal control and compliance, formulated the
Regulations on the Management of Legal Dispute Cases 《(
法律糾紛案件管理規定》), the Implementation Rules for Risk
Assessment and Reporting 《( 風險評估及報告實施細則》), the
Implementation Rules for Internal Controls 《( 內部控制實施細則》).
It also scrutinized and approved the evaluation report of internal control
and the internal control audit report, the work report on internal audit and
the internal audit plan, and the report of financial company on the continuous
assessment of risks. Fourthly, the supervision of the Audit Committee was
strengthened.The Board emphasized the role of the Audit and Risk Management
Committee (the Supervision Committee). In 2024, it promoted to improve
mechanisms for risk management, internal control, compliance management, audit
supervision and accountability for irregular business and investment
activities. The Board reviewed and received 11 special reports during the
year. Fifthly, implementing rectifications based on central inspection and
audit findings. The Board focused on addressing issues identified during
inspections and audits, received specialized reports, and pushed forward both
immediate and long-term actions to rectify the issues at root.
In the process of continuously improving corporate governance, Air China has
gradually cultivated a robust Board culture. All directors are faithful,
diligent and responsible, exercising their rights and fulfilling their
obligations in accordance with laws and regulations. The various governance
entities provide effective support for each other and operate efficiently.
In 2025, the Board of Air China will further adhere to the guidance of Xi
Jinping Thought on Socialism with Chinese Characteristics for a New Era,
conscientiously implement the decisions and deployments of the CPC Central
Committee and the State Council, and carry out the requirements of state-
owned assets supervision and securities regulation. Anchored in the strategic
goal of building a world-class enterprise, the Board will complete the tasks
and fulfilled the objectives of the "14th Five-Year" Plan with high quality,
laying a solid foundation for a good start of the "15th Five-Year" Plan.
AIR CHINA LIMITED
2024 WORK REPORT OF THE SUPERVISORY COMMITTEE
In 2024, Air China adhered to the guidance of Xi Jinping Thought on Socialism
with Chinese Characteristics for a New Era, thoroughly implemented the guiding
principles of the 20th National Congress of the Communist Party of China (CPC)
and the Second and Third Plenary Sessions of the 20th CPC Central
Committee, comprehensively implemented the "Two Consistencies
(兩個一以貫之)" approach, and achieved
positive results in several areas, including safe operation, maximizing
operational efficiency, enhancing service quality, and deepening reforms.
These efforts have laid a solid foundation for high-quality development and
the establishment of a world-class aviation transportation industry group. The
Supervisory Committee of the Company has consistently implemented the work
requirements of state-owned assets regulation and securities regulation. Based
on its functions and positioning, it faithfully and diligently fulfilled its
responsibilities in strict accordance with the laws and regulations, including
the Company Law and the Securities Law, as well as the relevant requirements
provided in the Articles of Association and the Rules and Procedures of the
Supervisory Committee. The Supervisory Committee independently exercised its
powers in accordance with the law, overseeing and inspecting the Company's
finances, related party transactions, the establishment of the internal
control system, the use of funds raised and the decision- making procedures of
the Board and the General Meeting, as well as the performance of directors and
senior management in carrying out their duties. In addition, the Supervisory
Committee has actively safeguarded the interests of the Company and its
shareholders and the legitimate rights and interests of employees. The work of
the Supervisory Committee is hereby reported as follows:
I. PERFORM THE SUPERVISORY AND INSPECTION DUTIES OF THE SUPERVISORY COMMITTEE
(1) Perform its duties according to laws and play the supervisory
role. Firstly, the Supervisory Committee attended 4 general meetings of
shareholders, 7 on-site meetings of the Board and important special meetings
of the Company throughout the year to gain comprehensive insights into the
Company's production, operation and significant operational management
matters. It focused on the supervision of meeting convening procedures and
decision-making procedures. Secondly, the Supervisory Committee attended the
Company's annual work meeting, interim work meeting and employee
representative meeting. The Supervisory Committee carefully reviewed the work
report of the management and the duty performance reports of directors and
senior management of the Company, timely monitoring their duty performance;
based on the audit inspection and the assessment results of SASAC, the
Supervisory Committee followed up on the implementation of SASAC's assessment
and corrective actions regarding the Board. Thirdly, the Supervisory Committee
regularly supervised the implementation of Board resolutions and
authorizations, keeping track of the implementation of decision-making matters
and ensuring that the management exercised its powers strictly within the
scope of the authorization and in accordance with the laws and regulations.
(2) Effectively strengthen financial supervision. In view of its
basic supervisory responsibilities, the Supervisory Committee reviewed the
Company's annual, interim and quarterly financial reports, and supervised the
Company's financial operations and the preparation, review and disclosure
procedures of the reports, to ensure that they truly, objectively and
comprehensively reflect the Company's operational management and financial
status, and that the information disclosed in the financial reports was true,
accurate and complete.
(3) Promote the development of the internal control system. The
Supervisory Committee implemented the Company's requirements for legal
compliance, quality improvement and efficiency enhancement, further
strengthening the development of the Company's internal control system and the
implementation of internal control assessment and rectification. While
carefully reviewing the internal control implementation plan and assessment
report, the Supervisory Committee supervised the internal control assessment
and rectification, improved the internal control process framework, and
continuously enhanced the internal control management standard of the Company
in view of the weaknesses identified and the actual operation and management.
(4) Strengthen supervision coordination. The Supervisory Committee
put emphasis on enhancing the communication with the Audit and Risk Control
Committee (Supervision Committee) and independent directors, constantly
innovated the supervision mechanism and methods to achieve coordinated
supervision and resource sharing. Adhering to preventing and eliminating major
risks, the Supervisory Committee worked together with the Company's internal
audit, compliance, discipline inspection and other supervisory departments to
enhance the risk control and supervision system of pre-warning, in-process
control and post-event accountability.
II. FOCUS ON LEGAL COMPLIANCE AND IMPROVE THE QUALITY OF DECISION- MAKING AND SUPERVISION
(1) Perform the duties of supervisors. The Supervisory Committee
strictly adhered to its role and responsibilities, faithfully and diligently
performing its duties. Sticking to the principles of collective review,
independent voting and individual accountability, it organized 5 meetings of
the Supervisory Committee during the year, making decisions on and supervising
17 major issues, including the annual financial plan, investment plan,
financial report, profit distribution proposals, management and use of raised
funds, internal control assessment reports and internal control audit reports,
as well as related party transactions.
(2) Support the management to exercise their powers and perform
their duties. The Supervisory Committee always expressed its opinions from the
perspective of safeguarding the interests of the Company and its shareholders,
as well as the legitimate rights and interests of employees. It supported the
management to promote intensive management and control, synergistic
development and refined management initiatives, facilitating the management to
perform their duties in operation, implementation and management, promoting
the Company's reform and upgrading initiatives and the implementation of the
Company's major projects, and assisting the Company in developing into a
world-class enterprise.
(3) Enhance the ability to perform duties. Members of the
Supervisory Committee actively participated in specialized training programs
organized by the China Association for Public Companies and the Listed
Companies Association of Beijing. These programs kept them abreast of the
latest securities regulatory policies, the standardized operation of
listed companies and the practice of the Supervisory Committee, and
strengthened their sense of responsibility for performance of duties in legal
compliance, thereby enhancing their ability to perform duties and make
decisions.
III. EXPRESS SPECIAL OPINIONS BASED ON THE INDEPENDENCE PRINCIPLE
(1) Independent opinions on the lawful and compliant operation of
the Company. During the reporting period, the Supervisory Committee attended
important meetings of the Board and the Company, received special reports and
fully exercised its inspection and supervision powers. The Supervisory
Committee held that the Company operated in accordance with the Company Law
and the Articles of Association, and that its decision-making procedures were
legal and effective. No directors or senior management of the Company have
been found to violate laws, regulations or the Company's Articles of
Association, nor to harm the interests of the Company or the legitimate rights
and interests of employees when performing their duties.
(2) Independent opinions on the Company's financial status. During
the reporting period, the Supervisory Committee reviewed the Company's annual
report, interim report and quarterly reports for Q1 and Q3 (including
financial reports). It concluded that the financial data contained in the
above reports truly, accurately and completely reflected the Company's
financial status and operating results, and concurred with the standard
unqualified audit opinion issued by Deloitte Touche Tohmatsu on the financial
reports.
(3) Independent opinions on the Company's related party
transactions. During the reporting period, the Supervisory Committee
respectively reviewed the continuing connected transactions between the
Company and CNAHC Group and its subsidiaries, and the continuing connected
transactions between the Company and Air China Cargo Co., Ltd. It considered
that the continuing connected transactions of the Company were normal business
transactions, with fair and reasonable pricing and terms in compliance with
business practices and the arm's length principle, and did not harm the
interests of the Company or minority shareholders. Related directors and
shareholders abstained from voting during the meetings of the Board meetings
and the general meetings of shareholders according to review and consideration
procedures in compliance with laws.
(4) Review and independent opinions on the self-assessment report
of internal control. During the reporting period, the Supervisory Committee
reviewed the Company's internal control assessment report and internal control
audit report, monitored and supervised the development of the Company's
internal control system and internal control rectification. It considered that
the Company's internal control mechanism was continuously improved and its
risk control ability was continuously enhanced. The self-assessment report on
the Company's internal control issued by the Board reflected the actual status
of the Company's internal control in an objective and true manner.
(5) Independent opinions on the deposit and actual use of the
proceeds. During the reporting period, the Supervisory Committee reviewed the
special report on the deposit and actual use of proceeds, as well as the
special report and audit report issued by Deloitte Touche Tohmatsu.
It considered that the Company had utilized the proceeds in compliance with
the laws and regulations, providing truthful, accurate and complete
disclosures regarding the deposit and use of the proceeds, and there were no
violations in the management and use of the proceeds.
We hereby submit this report.
Set out below are the details of the proposed amendments to the Articles of
Association. The revisions have been underlined (if applicable) for the
convenience of perusal.
Amended Articles (Note: if no markup is shown, it means that no amendment has
been made)
Existing Articles of the Articles of Association
CHAPTER 1 GENERAL PROVISIONS CHAPTER 1 GENERAL PROVISIONS
Article 4 The Company's legal representative is the Chairman of the board of Article 4 The Company's legal representative is the Chairman of the board of
directors of the Company. directors of the Company. The legal consequences of civil activities performed
by the legal representative in the name of the Company shall be borne by the
Company.
Article 8 The Articles of Association are binding on the Company and its Article 8 The Articles of Association are binding on the Company and its
shareholders, directors, supervisors, president, vice presidents and other shareholders, directors, supervisors, president, vice presidents and other
senior officers; all of whom may, according to the Company's Articles of 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. Association, assert their rights in respect of the affairs of the Company.
A shareholder may take action against the Company pursuant to the Company's A shareholder may take action against the Company pursuant to the Company's
Articles of Association. The Company may take action against a shareholder, Articles of Association. The Company may take action against a shareholder,
directors, supervisors, president, vice presidents and other senior officers directors, supervisors, president, vice presidents and other and senior
of the Company pursuant to the Company's Articles of Association. A officers of the Company pursuant to the Company's Articles of Association. A
shareholder may also take action against another shareholder, and may take shareholder may also take action against another shareholder, and may take
action against the directors, supervisors, president, vice presidents and action against the directors, supervisors, president, vice presidents and
other senior officers of the Company pursuant to the Company's Articles of other and senior officers of the Company pursuant to the Company's Articles of
Association. Association.
The "other senior officers" referred to in these Articles of Association mean The "other senior officers" referred to in these Articles of Association mean
the board secretary, chief accountant, chief pilot, general legal counsel and the president, vice president, chief accountant, board secretary, chief
other senior officers appointed by the board of directors of the Company. accountant, chief pilot, general legal counsel 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
Article 14 There shall, at all times, be ordinary shares in the Company. Article 14 The Company's equity shall be represented in the form of shares.
Subject to the approval of the department authorized by the State Council, the There shall, at all times, be ordinary shares in the Company.
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Company may, according to its requirements, create different classes of Subject to the approval of the department authorized by the State Council, the
shares. Company may, according to its requirements, create different classes of
shares. The issuance of the Company shares shall adhere to the principles of
openness, fairness, and impartiality, and each share of the same class shall
have equal rights. For shares of the same class issued in the same tranche,
the issuance terms and price per share shall be identical; all subscribers
shall pay the same consideration per share.
Article 16 The Company may issue shares to Domestic Investors and Foreign Article 16 The Company may issue shares to Domestic Investors and Foreign
Investors according to the laws, and shall file with the securities regulatory Investors according to the laws, and shall register orfile with the securities
authority of the State Council regulatory authority of the State
according to the requirements. Council according to the requirements.
Article 21 The registered capital of the Company is RMB17,448,421,000. Article 21 The registered capital of the Company is RMB17,448,421,000. The
number of shares issued by the Company is 17,448,421,000 shares, all of which
are ordinary shares.
Article 22 The Company or the Company's subsidiaries (including the Company's Article 22 The Company or the Company's subsidiaries (including the Company's
affiliated enterprises) shall not provide any assistance in the form of affiliated enterprises) shall not provide any financialassistance in the form
donates, advances, guarantees, compensation or loans to persons who acquire or of donates, advances, guarantees, compensation or loans or borrowings to other
intend to acquire the shares of the Company. persons who acquire or intend to acquire the shares of the Company or its
parent company, except for the implementation of the Company's employee share
ownership plan.
For the interests of the Company, upon a resolution of the shareholders'
meeting, or a resolution of the board of directors in accordance with the
Articles of Association or the authorization of the shareholders' meeting, the
Company may provide financial assistance to other persons for the acquisition
of the shares of the Company or its parent company, provided that the
cumulative total amount of the financial assistance shall not exceed 10
percent of the total issued share capital.
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Resolutions made by the board of directors shall be approved by more than
two-thirds of all directors.
CHAPTER 4 INCREASE, DECREASE AND REPURCHASE OF SHARES CHAPTER 4 INCREASE, DECREASE AND REPURCHASE OF SHARES
Article 23 The Company may, based on its operating and development needs, Article 23 The Company may, based on its operating and development needs,
authorize the increase of its capital pursuant to the Articles of Association. authorize the increase of its capital pursuant to the Articles of Association.
The Company may increase its capital in the following ways: The Company may increase its capital in the following ways:
(1) by public offering of shares; (1) by publicoffering of shares to unspecified targets;
(2) by non-public offering of shares; (2) by non-public offering of shares to specified targets;
(3) by issuing bonus shares to its existing shareholders; (3) by issuing bonus shares to its existing shareholders;
(4) by converting the common reserve into share capital; (4) by converting the common reserve into share capital;
(5) by any other means which is prescribed by law and administrative (5) by any other means which is prescribed by
regulations and approved by the securities regulatory authority of the State
laws,law and administrative regulations
Council. and approved by the securities regulatory authority of the State Council the
CSRC.
Article 25 The Company must prepare a balance sheet and an inventory of assets Article 25 The Company must prepare a balance sheet and an inventory of assets
when it reduces its registered capital. when it reduces its registered capital.
The Company shall notify its creditors within ten The Company shall notify its creditors within ten
(10) days of the date of the Company's resolution for reduction of capital and (10) days of the date of the Company's resolution for reduction of capital and
shall publish an announcement in a newspaper within thirty (30) days of the shall publish an announcement in a newspaper or on the National Enterprise
date of such resolution. A creditor has the right within thirty (30) days of Credit Information Publicity Systemwithin thirty (30) days of the date of such
receipt of the notice from the Company or, in the case of a creditor who does resolution. A creditor has the right within thirty (30) days of receipt of the
not receive such notice, within notice from
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forty-five (45) days of the date of announcement, to require the Company to the Company or, in the case of a creditor who does not receive such notice,
repay its debts or to provide a corresponding guarantee for such debt. within forty-five (45) days of the date of announcement, to require the
Company to repay its debts or to provide a corresponding guarantee for such
debt.
The Company's registered capital may not, after the reduction in capital, be
less than the minimum amount prescribed by law.
Where the Company reduces its registered capital, the amount of capital
contribution or shares shall be reduced in proportion to the shares held by
the shareholders, unless otherwise provided by laws or the Articles of
Association. The Company's registered capital may not, after the reduction in
capital, be less than the minimum amount prescribed by law.
Article 27 The Company may acquire the shares of the Company by way of open Article 27 The Company may acquire the shares of the Company by way of open
and centralized trading, or by other means approved by the laws and and centralized trading, or by other means approved by the laws and
regulations and the securities regulatory authority of the State Council. regulations and the securities regulatory authority of the State Council CSRC.
The repurchase of the shares of the Company arising from the circumstances The repurchase of the shares of the Company arising from the circumstances
provided under items (3), (5) and (6) of the first paragraph of Article 26 of provided under items (3), (5) and (6) of the first paragraph of Article 26 of
these Articles of Association shall be carried out by way of open and these Articles of Association shall be carried out by way of open and
centralized trading. centralized trading.
CHAPTER 5 SHARE TRANSFER CHAPTER 5 SHARE TRANSFER
Article 29 Unless otherwise provided in laws, regulations and other regulatory Article 29 Unless otherwise provided in laws, regulations and other regulatory
documents, the shares of the Company shall be transferrable in documents, the shares of the Company shall be transferrable in accordance with
laws without any lien attached.
accordance with laws without any lien attached.
Article 30 The Company shall not accept any pledge being created over its own Article 30 The Company shall not accept any pledge being created over its own
shares. shares as the subject matter of a pledge.
Article 31 The shares of the Company held by the promoters shall not be Article 31 The shares of the Company held by the promoters shall not be
transferred within one year from the date of establishment of the Company. The transferred within one year from the date of establishment of the Company. The
shares issued before the Company's public offering of shares shall not be shares issued before the Company's public offering of shares shall not be
transferred within one year from the date on which the shares of the transferred within one year from the date on which the shares of the
Company are listed and traded on a stock exchange. Company are listed and traded on a stock exchange.
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The directors, supervisors and senior officers of the Company shall report to The directors, supervisors and senior officers of the Company shall report to
the Company the shares of the Company held by him/her and the changes thereof. the Company the shares of the Company held by him/her and the changes thereof.
During the term of his/her office, the shares transferred by him/her each year During the term of his/her office as determined when he/she takes office, the
shall not exceed 25% of the total shares of the Company that he/she holds. The shares transferred by him/her each year shall not exceed 25% of the total
shares of the Company held by the aforesaid persons shall not be transferred shares of the Company that he/she holds. The shares of the Company held by the
within one year from the date on which the shares of the Company are listed aforesaid persons shall not be transferred within one year from the date on
and traded on a stock exchange. The aforesaid persons shall not transfer the which the shares of the Company are listed and traded on a stock exchange. The
shares of the Company that he/she holds within half a year after leaving aforesaid persons shall not transfer the shares of the Company that he/she
his/her office. holds within half a year after leaving his/her office.
Article 32 Should a shareholder, director, supervisor or senior officer Article 32 Should a shareholder, director, supervisor or senior officer
holding 5% or more of the Company's shares sells his/her shares in the Company holding 5% or more of the Company's shares sells his/her shares in the Company
or other securities of equity nature within six months from the date of or other securities of equity nature within six months from the date of
purchase of the same, or repurchase the shares within six months from the date purchase of the same, or repurchase the shares within six months from the date
of selling the same, the profits derived from such activities shall be vested of selling the same, the profits derived from such activities shall be vested
in the Company. The board of directors of the Company shall recover from the in the Company. The board of directors of the Company shall recover from the
aforementioned parties the gains derived therefrom, except where a securities aforementioned parties the gains derived therefrom, except where a securities
company holding 5% or more of the shares as a result of its purchase of company holding 5% or more of the shares as a result of its purchase of
remaining shares after sold under an underwriting obligation, and otherwise remaining shares after sold under an underwriting obligation, and otherwise
required by the securities regulatory authority of the State Council. required by the securities regulatory authority of the State Council CSRC.
Shares or other securities of equity nature held by directors, supervisors, Shares or other securities of equity nature held by directors, supervisors,
senior officers and natural person shareholders referred to in the preceding senior officers and natural person shareholders referred to in the preceding
paragraph include shares or other securities of equity nature held by their paragraph include shares or other securities of equity nature held by their
spouses, parents, children and under accounts of other persons. spouses, parents, children and under accounts of other persons.
Should the Company's board of directors not comply with the provision set Should the Company's board of directors not comply with the provision set
forth in the first paragraph of this Article and act accordingly, the forth in the first paragraph of this Article and act accordingly, the
shareholders shall have the right to request the shareholders shall have the right to request the
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board of directors to duly act in accordance with the same within 30 days. board of directors to duly act in accordance with the same within 30 days.
Should the Company's board of directors not act in accordance with the same Should the Company's board of directors not act in accordance with the same
within the aforementioned period, the shareholders shall have the right to within the aforementioned period, the shareholders shall have the right to
initiate proceedings at a People's Court directly in his/ her own name for the initiate proceedings at a People's Court directly in his/ her own name for the
interests of the Company. interests of the Company.
Should the Company's board of directors not comply with the provision set out Should the Company's board of directors not comply with the provision set out
in the first paragraph of this Article and act accordingly, the responsible in the first paragraph of this Article and act accordingly, the responsible
directors shall assume joint liabilities in accordance with the laws. directors shall assume joint liabilities in accordance with the laws.
CHAPTER 6 SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS CHAPTER 6 SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS
Article 36 The Company shall keep a register of shareholders which shall Article 36 The Company shall keeps a register of shareholders which shall
contain the following particulars: contain the following particulars:
(1) the name (title), address (residence) and the occupation or the nature (1) the name (title), address (residence) and the occupation or the nature
of the occupation of each shareholder; of the occupation of each shareholder;
(2) the class and quantity of shares held by each shareholder; (2) the class and quantity of shares held by each shareholder;
(3) the amount paid-up on or agreed to be paid-up on the shares held by each (3) the amount paid-up on or agreed to be paid-up on the shares held by each
shareholder; shareholder;
(4) the share certificate number(s) of the shares held by each (4) the share certificate number(s) of the shares held by each shareholder;
shareholder;
(5) the date on which each person was entered in the register as a
(5) the date on which each person was entered in the register as a shareholder;
shareholder;
(6) the date on which any shareholder ceased to be a shareholder.
(6) the date on which any shareholder ceased to be a shareholder.
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Unless there is evidence to the contrary, the register of shareholders shall Unless there is evidence to the contrary, the register of shareholders shall
be sufficient evidence of the shareholders' shareholdings in the Company. be sufficient evidence of the shareholders' shareholdings in the Company.
CHAPTER 7 SHAREHOLDERS' RIGHTS AND OBLIGATIONS CHAPTER 7 SHAREHOLDERS' RIGHTS AND OBLIGATIONS
Article 46 Holders of the ordinary shares of the Company shall enjoy the Article 46 Holders of the ordinary shares of the Company shall enjoy the
following rights: following rights:
…… ……
(5) the right to obtain relevant information in accordance with the (5) the right to inspect and copy the Articles of Association, register of
provisions of the Articles of Association, including: shareholders, minutes of shareholders' meetings, resolutions of the board of
directors, and financial and accounting report, shareholders who meet the
requirements may inspect the Company's accounting books and accounting
vouchers;
(i) the right to obtain a copy of the Articles of Association, subject to
payment of costs;
the right to obtain relevant information in accordance with the provisions of
the Articles of Association, including:
(ii) the right to inspect, and copy after payment of a reasonable fee:
(i) the right to obtain a copy of the Articles of Association, subject to
(a) all parts of the register of shareholders; payment of costs;
(b) report on the state of the Company's share capital; (ii) the right to inspect, and copy after payment of a reasonable fee:
(c) minutes of shareholders' general meetings; (a) all parts of the register of shareholders;
(d) counterfoils of corporate bonds, resolutions of the board of directors, (b) report on the state of the Company's share capital;
resolutions of the supervisory board, financial and accounting report;
(c) minutes of shareholders' general meetings;
(6) in the event of the termination or liquidation of the Company, the right
to participate in the distribution of surplus assets of the Company in
accordance with the number of shares held;
(d) counterfoils of corporate bonds, resolutions of the board of directors,
resolutions of the supervisory board, financial and accounting report;
(7) With respect to shareholders who vote against any resolution adopted at
the shareholders' general
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meeting on the merger or demerger of the Company, the right to request the (6) in the event of the termination or liquidation of the Company, the right
Company to acquire their shares; to participate in the distribution of surplus assets of the Company in
accordance with the number of shares held;
(8) other rights conferred by laws, administrative regulations, departmental
rules and regulations and the Articles of Association of the Company. (7) With respect to shareholders who vote against any resolution adopted at
the shareholders' general meeting on the merger or demerger of the Company,
the right to request the Company to acquire their shares;
(8) other rights conferred by laws, administrative regulations, departmental
rules and regulations and the Articles of Association of the Company.
Where shareholders request for inspection and duplication of the relevant
information or demand for materials as mentioned in the preceding paragraphs,
they shall comply with the requirements of laws and administrative regulations
including the Company Law, and follow the procedural requirements of the
Company. they shall provide the Company with written documents evidencing the
class and number of shares of the Company they hold. Upon verification of the
shareholder's identity, the Company shall provide information requested by
such shareholder.
If shareholders who individually or aggregately hold more than 3 percent of
the Company's shares for more than 180 consecutive days request to inspect the
accounting books and accounting vouchers of the Company, they shall submit a
written request to the Company stating the purpose. If the Company has
reasonable grounds to believe that the shareholders' requests to inspect the
accounting books and accounting vouchers are made for improper purposes and
may impair the legitimate interests of the Company, it may reject the request
for inspection.
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Where shareholders request for inspection of the relevant information or Shareholders and the accounting firm, law firm, or other intermediaries
demand for materials as mentioned in the preceding paragraphs, they shall retained by them shall comply with the provisions of laws and administrative
provide the Company with written documents evidencing the class and number of regulations on the protection of state secrets, trade secrets, personal
shares of the Company they hold. Upon verification of the shareholder's privacy and personal information when inspecting and duplicating the relevant
identity, the Company shall provide information requested by such shareholder. material.
Article 47 If the content of a resolution of the shareholders' general meeting Article 47 If the content of a resolution of the shareholders' general meeting
or the board of directors of the Company violates the laws or administrative or the board of directors of the Company violates the laws or administrative
regulations, the shareholders shall have the right to submit a petition to the regulations, the shareholders shall have the right to submit a petition to the
People's Court to render the same invalid. People's Court to render the same invalid.
If the procedures for convening or the method of voting at a shareholders' If the procedures for convening or the method of voting at a shareholders'
general meeting or meeting of the board of directors violate the laws, generalmeeting or meeting of the board of directors violate the laws,
administrative regulations or these Articles of Association, or the contents administrative regulations or these Articles of Association, or the contents
of a resolution violate these Articles of Association, the shareholders shall of a resolution violate these Articles of Association, the shareholders shall
have the right to submit a petition to the People's Court to revoke the same have the right to submit a petition to the People's Court to revoke the same
within sixty (60) days from the date on which such resolution is passed. within sixty (60) days from the date on which such resolution is passed.,
unless there is only a slight defect in the procedure of convening or the
method of voting at the shareholders' meeting or the meeting of the board of
directors which has no substantive impact on the resolution.
Where the board of directors, shareholders and other stakeholders have
disputes over the validity of a resolution of a shareholders' meeting, they
shall promptly file a lawsuit with the People's Court. Before the People's
Court makes a judgement or ruling, the stakeholders shall execute the
resolution of the shareholders' meeting. The Company, directors and senior
officers shall perform their duties diligently to ensure the normal operation
of the Company.
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Where the People's Court makes a judgement or ruling on the relevant matter,
the Company shall fulfil its obligation to disclose information in accordance
with the laws, administrative regulations, and the requirements of the CSRC
and the stock exchanges to fully explain the impact, and actively co-operate
with the enforcement of the judgement or ruling after it has come into effect.
Where corrections to prior events are involved, they shall be handled in a
timely manner and the corresponding information disclosure obligations shall
be fulfilled.
Article 48 Any director or senior officer who, when performing their duties in Article 48 Any director or senior officer who, when performing their duties in
the Company, violates the laws, administrative regulations, or the provisions the Company, violates the laws, administrative regulations, or the provisions
contained in these Articles of Association resulting in causing losses to the contained in these Articles of Association resulting in causing losses to the
Company, the shareholders individually or jointly holding 1% or more of the Company, the shareholders individually or jointly holding 1% or more of the
shares of the Company for 180 consecutive days or more shall have the right to shares of the Company for 180 consecutive days or more shall have the right
request in writing the supervisory committee to initiate proceedings at a pursuant to applicable laws, regulations and other normative documents to
People's Court. Where the supervisory committee, when performing its duties in request in writing the relevant bodies supervisory committee to initiate
the Company, violates the laws, administrative regulations, or the provisions proceedings at a People's Court. Where the supervisory committee, when
contained in these Articles of Association resulting in causing losses to the performing its duties in the Company, violates the laws, administrative
Company, the shareholders shall have the rights to request in writing to the regulations, or the provisions contained in these Articles of Association
board of directors to initiate proceedings at a People's Court. resulting in causing losses to the Company, the shareholders shall have the
rights to request in writing to the board of directors to initiate proceedings
at a People's Court.
If the supervisory committee or the board of directors refuses to initiate
proceedings upon receipt of the written request of shareholders stated in the
preceding paragraph, or fails to initiate such proceedings within thirty (30) If the relevant bodies supervisory committee or the board of directors refuses
days from the date on which such request is received, or in case of emergency to initiate proceedings upon receipt of the written request of shareholders
where failure to initiate such proceedings immediately will result in stated in the preceding paragraph, or fails to initiate such proceedings
irreparable damage to the Company's interests, the shareholders described in within thirty (30) days from the date on which such request is received, or in
the preceding paragraph shall have the right to case of emergency where failure to initiate such proceedings immediately will
result in irreparable damage to the
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initiate proceedings at a People's Court directly in their own names in the Company's interests, the shareholders described in the preceding paragraph
interest of the Company. shall have the right to initiate proceedings at a People's Court directly in
their own names in the interest of the Company.
If any person infringes the lawful rights and interests of the Company, thus
causing any losses to the Company, the shareholders described in the first If any person infringes the lawful rights and interests of the Company, thus
paragraph of this Article may initiate proceedings at a People's Court in causing any losses to the Company, the shareholders described in the first
accordance with the provisions of the preceding two paragraphs. paragraph of this Article may initiate proceedings at a People's Court in
accordance with the provisions of the preceding two paragraphs.
Article 50 The ordinary shareholders of the Company shall assume the following Article 50 The ordinary shareholders of the Company shall assume the following
obligations: obligations:
(1) to comply with the Articles of Association; (1) to comply with the Articles of Association;
(2) to pay subscription monies according to the number of shares (2) to pay subscription monies price according to the number of shares
subscribed and the method of subscription; subscribed and the method of subscription;
(3) unless otherwise provided for by the laws and regulations, not to (3) unless otherwise provided for by the laws and regulations, not to
withdraw their shares; withdraw their shares capital;
(4) not to abuse the rights of the shareholders to impair the interests of (4) not to abuse the rights of the shareholders to impair the interests of
the Company or other shareholders; not to abuse the independent legal person the Company or other shareholders; not to abuse the independent legal person
status of the Company and the enjoyment of limited liabilities of the status of the Company and the enjoyment of limited liabilities of the
shareholders to impair the Company's creditors interest. Should the Company's shareholders to impair the Company's creditors interest. Should the Company's
shareholders abuse their shareholder's rights and cause losses to the Company shareholders abuse their shareholder's rights and cause losses to the Company
or other shareholders, the said shareholders shall be liable for damages or other shareholders, the said shareholders shall be liable for damages
pursuant to the law. Should the Company's shareholders abuse the Company's pursuant to the law. Should the Company's shareholders abuse the Company's
independent legal person status and the enjoyment of limited liabilities of independent legal person status and the enjoyment of limited liabilities of
the the shareholders to evade
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shareholders to evade debt liabilities, resulting in materially impairing the debt liabilities, resulting in materially impairing the interests of the
interests of the Company's creditors, the said shareholders shall bear joint Company's creditors, the said shareholders shall bear joint and several
and several liabilities to the Company's debts; liabilities to the Company's debts;
(5) other obligations imposed by laws, administrative regulations and the (5) other obligations imposed by laws, administrative regulations and the
Articles of Association. Articles of Association.
Shareholders are not liable to make any further contribution to the share Shareholders are not liable to make any further contribution to the share
capital other than according to the terms which were agreed by the subscriber capital other than according to the terms which were agreed by the subscriber
of the relevant shares at the time of subscription. of the relevant shares at the time of subscription.
Article 51 Should a shareholders holding 5% or more of the voting shares
pledges any shares in his/her possession, he or she shall submit to the
Company a written report on the day on which he/she pledges his/her shares.
Article 52 The controlling shareholders and the de facto controlling persons Article 51 The controlling shareholders and the de facto controlling persons
of the Company shall not make use of its connected relationship to impair the of the Company shall not make use of its connected relationship to impair the
Company's interest. The abovementioned persons who violate such provisions and Company's interest. The abovementioned persons who violate such provisions and
cause losses to the Company shall be liable for damages to the Company. cause losses to the Company shall be liable for damages to the Company. The
controlling shareholders and de facto controller of the Company shall exercise
their rights and fulfil their obligations in accordance with laws,
administrative regulations, and the requirements of the CSRC and the stock
The controlling shareholders and the de facto controlling persons of the exchanges to safeguard the interests of the Company.
Company shall have fiduciary duties to both the Company and its public
shareholders. The controlling shareholders shall exercise its rights as a
capital contributor in strict compliance with the law. The controlling
shareholders shall neither impair the legal interests of the Company and the The controlling shareholders and the de facto controlling persons of the
public shareholders through profit distribution, asset restructuring, external Company shall have fiduciary duties to both the Company and its public
investment, use of funds, provision of guarantee by borrowing funds as well as shareholders. The controlling shareholders shall exercise its rights as a
other methods, nor shall they make use of its controlling position to impair capital contributor in strict compliance with the law. The controlling
the interest of the Company and the public shareholders. shareholders shall neither impair the legal interests of the Company
and the public
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shareholders through profit distribution, asset restructuring, external
investment, use of funds, provision of guarantee by borrowing funds as well as
other methods, nor shall they make use of its controlling position to impair
the interest of the Company and the public shareholders.
The controlling shareholders and de facto controller of the Company shall
comply with the following requirements:
(1) to exercise their rights as shareholders in accordance with the law and
not to abuse their control or use their related relationship to prejudice the
legitimate interests of the Company or other shareholders;
(2) to strictly fulfil their public statements and various undertakings and
not to change or waive such statements and undertakings;
(3) to fulfil their information disclosure obligations in strict accordance
with relevant regulations, proactively cooperate with the Company in
information disclosure and inform the Company in a timely manner of material
events that have occurred or are intended to occur;
(4) not to appropriate the Company's funds in any way;
(5) not to order, instruct, or request the Company and its relevant personnel
to provide guarantees in violation of laws and regulations;
(6) not to make use of the Company's undisclosed material information to gain
benefits, or disclose in any way undisclosed material information relating to
the Company, or engage in insider trading, short-term trading, market
manipulation or other illegal and unlawful acts;
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(7) not to prejudice the legitimate interests of the Company and other
shareholders through unfair related transactions, profit distribution, asset
restructuring, external investment or any other means;
(8) to ensure the integrity of the Company's assets, and the independence of
its personnel, finance, organization and business, and not to affect the
independence of the Company in any way;
(9) to comply with laws, administrative regulations, and provisions of the
CSRC, listing rules of securities and other requirements of the Articles of
Association.
Where a controlling shareholder or de facto controller of the Company
instructs a director or senior officer to engage in an act that is detrimental
to the interests of the Company or its shareholders, it shall bear joint and
several liability with the director or senior officer.
Article 53 A "controlling shareholder" means a shareholder who holds shares Article 52 A "controlling shareholder" means a shareholder who holds shares
representing 50% or more of the total share capital of the Company; or a representing 50% or more of the total share capital of the Company; or a
shareholder having sufficient voting right in respect of the shares he/she shareholder having sufficient voting right in respect of the shares he/she
holds to pose a significant influence on the resolutions of the shareholders' holds to pose a significant influence on the resolutions of the shareholders'
general meetings despite holding less than 50% of the total share capital of general meetings despite holding less than 50% of the total share capital of
the Company. the Company.
Where a controlling shareholder or de facto controller pledges the shares of
the Company that he/she holds or effectively controls, he/she shall maintain
control of the Company and the stability of its production and operation.
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Where a controlling shareholder or de facto controller transfers the shares of
the Company held by him/her, he/she shall comply with the restrictive
provisions on the transfer of shares set out in laws, administrative
regulations, the regulations of the CSRC and stock exchanges, as well as its
undertakings in respect of restrictions on the transfer of shares.
CHAPTER 8 SHAREHOLDERS' GENERAL MEETINGS CHAPTER 8 SHAREHOLDERS' GENERAL MEETINGS
Article 54 The shareholders' general meeting is the organ of authority of the Article 53 The shareholders' meeting of the Company is composed of all
Company, and shall exercise the following functions and powers in accordance shareholders. The shareholders' general meeting is the organ of authority of
with laws: the Company, and shall exercise the following functions and powers in
accordance with laws:
(1) to decide on the Company's operational policies and investment
plans; (1) to decide on the Company's operational policies and investment plans;
(2) to elect and replace directors (excluding the employee representative (2) to elect and replace directors (excluding the employee
director) and to decide on matters relating to the remuneration of directors; representative director) and to decide on matters relating to the remuneration
of directors;
(3) to elect and replace supervisors appointed from personnel who are not
representatives of the employees and to decide on matters relating to the (3) to elect and replace supervisors appointed from personnel who are not
remuneration of supervisors; representatives of the employees and to decide on matters relating to the
remuneration of supervisors;
(4) to examine and approve the board of directors' reports;
(42) to examine and approve the board of directors' reports;
(5) to examine and approve the supervisory committee's reports;
(5) to examine and approve the supervisory committee's reports;
(6) to examine and approve the Company's proposed preliminary and final
annual financial budgets; (6) to examine and approve the Company's proposed preliminary and final
annual financial budgets;
(7) to examine and approve the Company's profit distribution plans and loss
recovery plans; (73) to examine and approve the Company's profit distribution plans and loss
recovery plans;
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(8) to decide on the increase or reduction of the Company's registered (84) to decide on the increase or reduction of the Company's registered
capital; capital;
(9) to decide on matters such as merger, division, dissolution, liquidation (5) to decide on the issue of bonds by the Company;
or change of the form of the Company;
(96) to decide on matters such as merger, division, dissolution, liquidation
(10) to decide on the issue of debentures by the Company; or change of the form of the Company;
(11) to decide on the appointment, dismissal and non-reappointment of the (107) to decide amend on the issue of debentures by the Articles of
accountants of the Company; Association of the Company;
(12) to amend the Articles of Association; (118) to decide on the appointment, and dismissal and non-reappointment of the
accountants of the Company which undertakes the audit work of the Company;
(13) to resolve the material purchase and sale of assets with a value in
excess of 30% of the most recent audited total assets of the Company during (129) to amend consider and approve external guarantee matters which should be
the year; decided by the shareholders' meeting as stipulated by laws, administrative
regulations, other regulatory documents and the Articles of Association;
(14) to resolve issues relating to the provision of guarantee in favour of
third parties that must be approved at the shareholders' general meeting in (130) to resolve consider the material purchase and sale of assets with a
accordance with the laws, administrative regulations, other regulatory value in excess of 30% percentof the most recent audited total assets of the
documents and Articles of Association; Company during the year;
(15) to consider and approve the variation of use of proceeds; (14) to resolve issues relating to the provision of guarantee in favour of
third parties that must be approved at the shareholders' general meeting in
accordance with the laws, administrative regulations, other regulatory
documents and Articles of Association;
(16) to consider the shares incentive program and employee share ownership
plan;
(151) to consider and approve the variation of use of proceeds;
(17) to decide on other matters which, according to laws, administrative
regulations, other regulatory documents and the Articles of Association, need
to be approved by shareholders in general meetings. (162) to consider the shares incentive program and employee share ownership
plan;
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(173) to decide on other matters which, according to laws, administrative
regulations, other regulatory documents and the Articles of Association, need
to be approved by shareholders in general meetings the shareholders' meeting.
Article 54 The shareholders' meeting may authorize the board of directors to
resolve on matters such as the issuance of Company's shares and bonds in
accordance with laws, administrative regulations, departmental rules and
listing rules of securities. If the shareholders' meeting authorizes the
board of directors to decide on the issuance of new shares, the board
resolution must be approved by more than two-thirds of all directors.
If the board of directors decides to issue shares under the authorization
which results in changes to the Company's registered capital or the number of
issued shares, the corresponding amendments to the Company's Articles of
Association do not need to be approved by the shareholders' meeting.
Article 55 Any matters in relation to the provision of guarantee in favour of Article 55 Any matters in relation to the provision of guarantee in favour of
third parties by the Company shall be approved by the board of directors. The third parties by the Company shall be approved by the board of directors. The
following matters relating to the provision of guarantee shall be submitted to following matters relating to the provision of guarantee shall be submitted to
the shareholders' general meetings for examination and approval after the same the shareholders' general meetings for examination and approval after the same
have been considered by the board of directors: have been considered by the board of directors:
(1) Any guarantee to be provided by the Company and its controlling (1) Any guarantee to be provided by the Company and its controlling
subsidiaries, with the total amount of the guarantee provided in favour of subsidiaries, with the total amount of the guarantee provided in favour of
third parties that exceeds 50% of the most recent audited net assets; third parties that exceeds 50% percent of the most recent audited net assets;
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(2) any guarantee provided by the Company in favour of third parties with (2) any guarantee provided by the Company in favour of third parties with
the total amount of the guarantee exceeds 30% of the most recent audited total the total amount of the guarantee exceeds 30% percent of the most recent
assets; audited total assets;
(3) any guarantee provided by the Company within one year with the amount of (3) any guarantee provided by the Company within one year with the amount of
guarantee exceeds 30% of the most recent audited total assets; guarantee exceeds 30% percent of the most recent audited total assets;
(4) guarantees to be provided in favour of an entity which is subject to a (4) guarantees to be provided in favour of an entity which is subject to a
gearing ratio of over 70%; gearing ratio of over 70% percent;
(5) any single guarantee with an amount which exceeds 10% of the most (5) any single guarantee with an amount which exceeds 10% percent of the
recent audited net asset value; most recent audited net asset value;
(6) guarantees to be provided in favour of any shareholder, person who (6) guarantees to be provided in favour of any shareholder, person who
exercises effective control over the Company and its affiliates; exercises effective control over the Company and its affiliates;
(7) matters relating to the provision of guarantee that need to be submitted (7) matters relating to the provision of guarantee that need to be submitted
to the shareholders' general meeting for examination and approval as required to the shareholders' general meeting for examination and approval as required
by other laws and regulations and the Articles of Association of the Company. by other laws and regulations and the Articles of Association of the Company.
If a director, president, vice president and other senior officer personnel If a director or, president, vice president and other senior officer personnel
commits any act in breach of the provisions governing the authority in respect commits any act in breach of the provisions governing the authority in respect
of the examination and approval of, and the examination procedures in relation of the examination and approval of, and the examination procedures in relation
to, the provision of guarantee in favour of a third party under the laws, to, the provision of guarantee in favour of a third party under the laws,
administrative regulations or the Articles of Association of the Company, administrative regulations or the Articles of Association of the Company,
which results in causing the Company to suffer from loss, such director, which results in causing the Company to suffer from loss, such director or,
president, vice president and senior officer personnel shall be liable for president, vice president and other senior officer personnel shall be liable
indemnity and the Company may bring an action against the same in accordance for indemnity and the Company may bring an action against the same in
with the law. accordance with the law.
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Article 56 Matters which should be determined at a shareholders' general Article 56 Save as otherwise provided in the laws, administrative regulations,
meeting as stipulated by the laws, administrative regulations and these departmental rules and listing rules of securities, the duties and powers of
Articles of Association must be considered at a shareholders' general meeting the shareholders' meeting shall not be exercised by the board of directors or
in order to protect the right of the Company's shareholders to make decision other institutions and individuals on its behalf by way of authorization.
over such matters. When necessary or under reasonable circumstances, the Matters which should be determined at a shareholders' general meeting as
shareholders' general meeting may authorize the board of directors to make a stipulated by the laws, administrative regulations and these Articles of
decision within its scope of authorization granted at a shareholders' general Association must be considered at a shareholders' general meeting in order to
meeting on specific issues which are related to matters to be resolved but protect the right of the Company's shareholders to make decision over such
cannot be determined immediately at the shareholders' general meeting. matters. When necessary or under reasonable circumstances, the shareholders'
general meeting may authorize the board of directors to make a decision within
its scope of authorization granted at a shareholders' general meeting on
specific issues which are related to matters to be resolved at the
With respect to granting authorization to the board of directors at the shareholders' meeting but cannot be determined immediately at the
shareholders' general meeting, if a matter for authorization is the matter shareholders' general meeting.
subject to an ordinary resolution, such authorization shall be adopted by more
than half of the voting rights held by shareholders (including their agents)
attending the shareholders' general meeting; if a matter for authorization is
the matter subject to special resolution, such authorization shall be adopted With respect to granting authorization to the board of directors at the
by more than two-thirds (2/3) of the voting rights held by shareholders shareholders' general meeting, if a matter for authorization is the matter
(including their agents) attending the shareholders' general meeting. The subject to an ordinary resolution, such authorization shall be adopted by more
content of the scope of authorization shall be clear and specific. than half of the voting rights held by shareholders (including their agents)
attending the shareholders' general meeting; if a matter for authorization is
the matter subject to special resolution, such authorization shall be adopted
by more than two-thirds (2/3) of the voting rights held by shareholders
(including their agents) attending the shareholders' general meeting. The
content of the scope of authorization shall be clear and specific.
Article 57 Shareholders' general meetings are divided into annual general Article 57 Shareholders' general meetings are divided into annual
meetings and extraordinary general meetings. The annual general meetings shall shareholders'general meetings and extraordinary shareholders'general meetings.
be convened once every year and shall be held within 6 months from the end of The annual shareholders'general meetings shall be convened once every year and
the preceding financial year. Meeting venues shall be shall be held within 6 months from the end of the
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fixed for the shareholders' general meetings, and the shareholders' general preceding financial year. Meeting venues shall be fixed for the shareholders'
meetings shall be convened in the on-site conference mode. The Company also general meetings, and the shareholders' general meetings shall be convened in
provides the online voting manner for the convenience of shareholders in the on-site conference mode. The Company also provides the online voting
attending their general meetings. manner and/or other electronic communication optionsfor the convenience of
shareholders in attending their general meetings.
The Company may facilitate the shareholders participating in the shareholders'
general meetings by providing other manners and means to participate in the The Company may facilitate the shareholders participating in the shareholders'
shareholders' general meetings, provided that the legality and effectiveness general meetings by providing other manners and means to participate in the
of the shareholders' general meeting are ensured. Shareholders are deemed to shareholders' general meetings, provided that the legality and effectiveness
be attending the shareholders' general meetings in the aforesaid manners and of the shareholders' general meeting are ensured. Shareholders are deemed to
forms. be attending the shareholders' general meetings in the aforesaid manners and
forms.
The Company shall convene an extraordinary general meeting within 2 months of
the occurrence of any one of the following events: The Company shall convene an extraordinary shareholders'general meeting within
2 months of the date of 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 (1) where the number of directors is less than the minimum number stipulated
Association; 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 paid-in share capital; (2) where the unrecovered losses of the Company amount to one-third of the
total amount of its paid-in share capital;
(3) where shareholders who separately or jointly holds more than 10% of
the total Company's shares make such request in writing; (3) where shareholders who separately or jointly holds more than 10%
percent 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; (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.
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The shareholding mentioned in sub-paragraph (3) above shall be calculated from (5) when the audit and risk management committee (the supervision committee)
the date on which a shareholder submits his/her request in writing. proposes to convene such meeting;
(56) 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.
Article 58 The board of directors shall convene a shareholders' general Article 58 The board of directors shall convene a shareholders' general
meeting within the time limit as stipulated in Article 57 of these Articles of meeting within the time limit as stipulated in Article 57 of these by laws,
Association. regulations and the Articles of Association.
The independent directors, the supervisory committee or shareholders who More than half of Tthe independent directors, the supervisory committee audit
separately or jointly hold shares of the Company in excess of 10% shall have and risk management committee (the supervision committee) or shareholders who
the right to propose to the board of directors and request for convening an separately or jointly hold shares of the Company in excess of 10% percent
extraordinary general meeting. The following procedures shall be adopted shall have the right to propose to the board of directors and request for
should the independent directors, the supervisory committee, shareholders who convening an extraordinary general meeting. The following procedures shall be
separately or jointly hold shares of the Company in excess of 10% propose to adopted should the independent directors, the supervisory committee, audit and
the board of directors and request for convening of an extraordinary general risk management committee (the supervision committee) and shareholders who
meeting: separately or jointly hold shares of the Company in excess of 10% percent
propose to the board of directors and request for convening of an
extraordinary shareholders'general meeting:
(1) Sign a copy, or several copies, of written request in the same form
and substance, and request the board of directors to convene a meeting, with
clearly stated topics for discussion at the meeting. Within 10 days of (1) Sign a copy, or several copies, of written request in the same form
receiving the aforesaid written request, the board of directors shall reply in and substance, and request the board of directors to convene a meeting, with
writing on whether or not they agree to convene the meeting. clearly stated topics for discussion at the meeting. Within 10 days of
receiving the aforesaid written request, the board of directors shall reply in
writing on whether or not they agree to convene the meeting.
(2) Should the board of directors agree to convene the meeting, a notice for
convening such meeting shall be issued within 5 days after the board of
directors has passed the resolution. Prior approval
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for making amendment to the original proposal contained in the notice shall be (2) Should the board of directors agree to convene the meeting, a notice for
obtained from the original proposer. convening such meeting shall be issued within 5 days after the board of
directors has passed the resolution. Prior approval for making amendment to
the original proposal contained in the notice shall be obtained from the
original proposer.
(3) Should the board of directors not agree to convene the meeting as
proposed by the independent directors, it shall state its reasons and issue an
announcement of the same.
(3) Should the board of directors not agree to convene the meeting as
proposed by the independent directors, it shall state its reasons and issue an
announcement of the same.
(4) Should the board of directors not agree to convene the meeting as
proposed by the supervisory committee, or not provide any reply within 10 days
upon receipt of the said request, the board of directors is deemed to be
unable to perform or failed to perform its duties in respect of convening such (4) Should the board of directors not agree to convene the meeting as
meeting. The supervisory committee may convene and preside over the meeting by proposed by the supervisory committee audit and risk management committee (the
itself. The procedures for convening such meeting shall be identical to those supervision committee) or not provide any reply within 10 days upon receipt of
employed by the board of directors for convening a meeting as far as the said request, the board of directors is deemed to be unable to perform or
practicable. failed to perform its duties in respect of convening such meeting. The
supervisory committee audit and risk management committee (the supervision
committee) may convene and preside over the meeting by itself. The procedures
for convening such meeting shall be identical to those employed by the board
(5) Should the board of directors not agree to convene the meeting as of directors for convening a meeting as far as practicable.
proposed by the shareholders, or not provide any reply within 10 days upon
receipt of the said request, the shareholders shall propose to the supervisory
committee in writing to convene the meeting.
(5) Should the board of directors not agree to convene the meeting as
proposed by the shareholders, or not provide any reply within 10 days upon
receipt of the said request, the shareholders shall propose to the supervisory
Should the supervisory committee agree to convene the meeting, it shall issue committee audit and risk management committee (the supervision committee) in
a notice for convening the meeting within 5 days upon receipt of the said writing to convene the meeting.
request. Prior approval for making amendment to the original proposal
contained in the notice shall be obtained from the original proposer.
Should the supervisory committee audit and risk management committee (the
supervision committee) agree to convene the meeting, it shall issue a notice
Should the supervisory committee not issue a notice for the meeting within the for convening the meeting within 5
stipulated period, the supervisory committee shall be deemed to not convene
and preside over such meeting and shareholders who separately or jointly hold
10% or more of the Company's shares for a
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consecutive 90 days or more may convene and preside over the said meeting days upon receipt of the said request. Prior approval for making amendment to
themselves (Prior to the announcement of the resolutions adopted at the the original proposal contained in the notice shall be obtained from the
meeting, the shares held by the convening shareholders shall not be less than original proposer.
10% of the total number of shares). The procedures for convening such meeting
shall be identical to those employed by the board of directors for convening a
meeting as far as practicable.
Should the supervisory committee audit and risk management committee (the
supervision committee) not issue a notice for the meeting within the
stipulated period, the supervisory committee audit and risk management
Should the supervisory committee or the shareholders convene and hold a committee (the supervision committee) shall be deemed to not convene and
meeting by itself/themselves pursuant to the preceding paragraphs, it/they preside over such meeting and shareholders who separately or jointly hold 10%
shall inform the board of directors in writing, and file the same with the percent or more of the Company's shares for a consecutive 90 days or more may
relevant competent departments in accordance with the applicable requirements. convene and preside over the said meeting themselves (Prior to the
The board of directors and the secretary to the board of directors shall announcement of the resolutions adopted at the meeting, the shares held by the
provide assistance in connection with the meeting. The board of directors convening shareholders shall not be less than 10% of the total number of
shall provide the share register. The Company shall bear all reasonable costs shares). The procedures for convening such meeting shall be identical to those
incurred by the meeting. employed by the board of directors for convening a meeting as far as
practicable.
Should the supervisory committee audit and risk management committee (the
supervision committee)or the shareholders convene and hold a meeting by
itself/themselves pursuant to the preceding paragraphs, it/they shall inform
the board of directors in writing, and file the same with the relevant stock
exchanges of the jurisdictions where the shares are listed competent
departments in accordance with the applicable requirements listing rules of
securities. The audit and risk management committee (the supervision
committee) or the convening shareholders shall submit relevant evidence to the
stock exchanges upon the issuance of the notice of the shareholders' meeting
and the announcement of the resolutions of the shareholders' meeting. Prior
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to the announcement of the shareholders resolutions, the shareholding ratio of
the convening shareholders shall not be less than 10 percent.
The board of directors and the secretary to the board of directors shall
provide assistance in connection with the meeting shareholders' meeting
convened by the audit and risk management committee (the supervision
committee) or the convening shareholders on their own. The board of directors
shall provide the share register. The Company shall bear all reasonable costs
incurred by the meeting.
Article 59 Where the Company convenes a shareholders' general meeting, the Article 59 Where the Company convenes a shareholders' general meeting, the
board of directors, the supervisory committee and shareholders who separately board of directors, the supervisory committee audit and risk management
or jointly hold 3% or more of the shares of the Company may submit proposals committee (the supervision committee) and shareholders who separately or
to the Company. jointly hold 1 percent 3% or more of the shares of the Company may submit
proposals to the Company.
Shareholders who hold, separately or jointly, more than 3% of the Company's
shares can propose an extraordinary resolution in writing to the convenor 10 Shareholders who hold, separately or jointly, more than 1 percent 3% of the
days prior to the shareholders' general meeting. Within 2 days after the Company's shares can propose an extraordinary resolution in writing to the
receipt of the extraordinary resolution, the convenor shall issue a convenor 10 days prior to the shareholders' general meeting. Within 2 days
supplementary notice of the general meeting to announce the content of the after the receipt of the extraordinary resolution, the convenor shall issue a
extraordinary resolution. If it is otherwise provided for under the listing supplementary notice of the shareholders' general meeting to announce the
rules of the jurisdictions where the shares of the Company are listed, such content of the extraordinary resolution, and submit the same to the
requirements shall also be complied with. shareholders' meeting for consideration, unless the extraordinary resolution
violates the laws, administrative regulations or provisions of the Articles of
Association, or does not fall within the terms of reference of the
shareholders' meeting. If it is otherwise provided for under the listing rules
With the exception of conditions mentioned above, the convener shall neither of securities of the jurisdictions where the shares of the Company are listed,
amend the proposals specified on the notice of the shareholders' general such requirements shall also be complied with.
meeting, nor add any new proposals after the issuance of the notice of the
shareholders' general meeting.
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With the exception of conditions mentioned above, the convener shall neither
amend the proposals specified on the notice of the shareholders' general
meeting, nor add any new proposals after the issuance of the notice of the
shareholders' general meeting.
Article 60 Matters for discussion and determination at a shareholder's general Article 60 Matters for discussion and determination at a shareholder's general
meeting shall be determined in accordance with the Company Law and the meeting shall be determined in accordance with the scope of authority of the
Articles of Association. The shareholders' general meeting may determine any shareholders' meeting as prescribed under the laws, administrative regulations
matter stipulated by the Articles of Association. and the Company Law and the Articles of Association. The shareholders' general
meeting may determine any matter stipulated by the Articles of Association.
Issues not specified in the notice as provided for in Article 57 and Article
59 of the Articles of Association or proposals which do not conform with the Issues not specified in the notice as provided for in Article 57 and Article
requirements contained in Article 61 of the Articles of Association shall not 59 of the Articles of Association or proposals which do not conform with the
be voted and resolved at the shareholders' general meetings. requirements contained in Article 61 of the Articles of Association shall not
be voted and resolved at the shareholders' general meetings.
Article 71 The authorization letter issued by shareholders to appoint other Article 71 The authorization letter issued by shareholders to appoint other
persons to attend the shareholders' general meeting shall clearly state the persons to attend the shareholders' general meeting shall clearly state the
followings: followings:
(1) the name of the proxy; (1) the name of the proxy the name of the principal and the class and number
of the shares of the Company held by him/her;
(2) whether the proxy has the right to vote;
(2) whether the proxy has the right to vote the name of the proxy;
(3) the respective instruction of voting "for", "against" or "abstain"
for each resolution in the agenda of the shareholders' general meeting; (3) the respective specific instruction of the shareholder, including
the directive to vote voting "for", "against" or "abstain" for each resolution
in the agenda of the shareholders' general meeting;
(4) date of signing the proxy form and the effective period;
(4) date of signing the proxy form and the effective period;
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(5) signature (or seal) of the principal. If the principal is a corporate (5) signature (or seal) of the principal. If the principal is a corporate
shareholder, the seal of the corporate shall be affixed. shareholder, the seal of the corporate shall be affixed.
Such a form shall contain a statement that, in the absence of specific Such a form shall contain a statement that, in the absence of specific
instructions from the shareholder, specifies whether the proxy may vote as he instructions from the shareholder, specifies whether the proxy may vote as he
thinks fit. thinks fit.
Article 72 If an individual shareholder attends the meeting in person, he/she Article 72 If an individual shareholder attends the meeting in person, he/she
shall present his/her identity card or other valid documents or certificates shall present his/her identity card or other valid documents or certificates
showing his/her identity and the shareholding certificate. If an individual showing his/her identity and the shareholding certificate. If an individual
shareholder appoints a proxy to attend the shareholders' general meeting, such shareholder appoints a. A proxy to attending the shareholders' general
proxy shall present his/her own identification documents and the power of meeting, such proxy shall present his/her own identification documents and the
attorney signed by the appointor. Legal person shareholders shall be shareholder's power of attorney signed by the appointor.
represented at the meeting by the legal representative or the proxy appointed
by the legal representative. If the legal representative attends the meeting,
he/she shall present his/her identity card and a valid certificate proving
his/her qualification as a legal representative. If the legal representative Legal person shareholders shall be represented at the meeting by the legal
of a legal person shareholder appoints a proxy to attend the shareholders' representative or the proxy appointed by the legal representative. If the
general meeting, such proxy shall present his/her own identification documents legal representative attends the meeting, he/she shall present his/her
and the power of attorney signed by the legal representative. If a person is identity card and a valid certificate proving his/her qualification as a legal
authorized by resolution to attend the shareholders' general meeting upon representative. If the legal The representative of a legal person shareholder
resolutions at the board of directors of a legal person shareholder or other appoints a proxy to attending the shareholders' general meeting, such proxy
decision making authority, such person shall present his/her own shall present his/her own identification documents and the power of attorney
identification documents and the written authorization issued upon resolution in written form signed issuedby the legal representative of the legal person
by the board of directors of the legal person shareholder or other decision shareholders in accordance with laws. If a person is authorized by resolution
making authority with the legal person seal affixed thereon. The letter of to attend the shareholders' general meeting upon resolutions at the board of
authorization shall specify its date of issue. directors of a legal person shareholder or other decision making authority,
such person shall present his/her own identification documents and the written
authorization issued upon resolution by the board of directors of the legal
person shareholder
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or other decision making authority with the legal person seal affixed thereon.
The letter of authorization shall specify its date of issue.
Article 73 In the event that the Company's board of directors, independent Article 73 In the event that the The Company's board of directors, independent
directors, shareholders who have satisfied certain conditions (which are directors, shareholders who have satisfied certain conditions (which are
determined based on such standards as promulgated from time to time by the determined based on such standards as promulgated from time to time by the
relevant competent authorities) or investor protection institutions relevant competent authorities) hold 1 percent or more of shares with voting
established in accordance with laws and regulations publicly request the rights or investor protection institutions established in accordance with laws
shareholders to entrust them to exercise the proposal rights, voting rights and regulations may solicit voting rights from shareholders publicly.
and other shareholders' rights on their behalf, the solicitor shall disclose Information including the specific voting intention shall be fully disclosed
the soliciting announcement and relevant soliciting documents in accordance to the shareholders from whom the voting rights are being solicited.
with the laws and regulations, and the Company shall cooperate. Consideration Consideration or de facto consideration for soliciting shareholders' voting
or de facto consideration for soliciting the shareholders' rights publicly is rights is prohibited. Except for statutory conditions, the Company shall not
prohibited. Any person who publicly solicits the shareholders of the Company impose any minimum shareholding limitation for soliciting voting rights.
to entrust him/her to exercise the proposal right, voting right and other publicly request the shareholders to entrust them to exercise the proposal
shareholders' rights on their behalf shall also comply with other provisions rights, voting rights and other shareholders' rights on their behalf, the
stipulated by the relevant competent authorities and the stock exchanges on solicitor shall disclose the soliciting announcement and relevant soliciting
which the shares of the Company are listed and traded. documents in accordance with the laws and regulations, and the Company shall
cooperate. Consideration or de facto consideration for soliciting the
shareholders' rights publicly is prohibited. Any person who publicly solicits
the shareholders of the Company to entrust him/her to exercise the proposal
right, voting right and other shareholders' rights on their behalf 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.
Article 74 The Chairman of the board of directors shall preside over and chair Article 74 The Chairman of the board of directors shall preside over and chair
every shareholders' general meeting. If the Chairman is unable to or does not every shareholders' general meeting. If the Chairman is unable to or does not
perform his/her duties, the vice-chairman of the perform his/her duties, the vice-chairman of the
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board of directors shall preside over and chair the meeting. If the board of directors shall preside over and chair the meeting. If the
vice-chairman of the board of directors is unable to or does not perform vice-chairman of the board of directors is unable to or does not perform
his/her duties, a director jointly elected by more than half of the number of his/her duties, a director jointly elected by more than half of the number of
directors shall preside over and chair the meeting. If more than half of the directors shall preside over and chair the meeting. If more than half of the
number of directors are unable to elect a director to preside over and chair number of directors are unable to elect a director to preside over and chair
the meeting, then shareholders attending the meeting may elect one (1) person the meeting, then shareholders attending the meeting may elect one (1) person
to act as the chairman of the meeting. If for any reason, the shareholders to act as the chairman of the meeting. If for any reason, the shareholders
fail to elect a chairman, then the shareholder (including a proxy) holding the fail to elect a chairman, then the shareholder (including a proxy) holding the
largest number of shares carrying the right to vote thereat shall be the largest number of shares carrying the right to vote thereat shall be the
chairman of the meeting. chairman of the meeting.
A shareholders' general meeting convened by the supervisory committee on their A shareholders' general meeting convened by the supervisory committee audit
own shall be presided by the chairman of the supervisory committee. If the and risk management committee (the supervision committee) on their own shall
chairman of the supervisory committee is unable to or does not perform his/her be presided by the chairman convenor of the supervisory committee audit and
duties, a supervisor jointly elected by more than half of the number of risk management committee (the supervision committee). If the chairman
supervisors shall preside over the said meeting. convenor of the supervisory committee audit and risk management committee (the
supervision committee) is unable to or does not perform his/her duties, a
supervisor member of the audit and risk management committee (the supervision
committee) jointly elected by more than half of the number of supervisors
Where the shareholders' general meeting is convened by the shareholders on members of the audit and risk management committee (the supervision committee)
their own, the convener shall elect a representative to preside over the shall preside over the said meeting.
meeting.
Where the shareholders' general meeting is convened by the shareholders on
When convening a shareholders' general meeting, should the chairman of the their own, the convener shall elect a representative to preside over the
meeting violates the rules and procedures, resulting that the shareholders' meeting.
general meeting becomes unable to proceed, a person may, subject to the
consent of more than half of the number of shareholders with voting rights
attending the meeting at the scene, be elected at the shareholders' general
meeting to act as the chairman of the shareholders' general meeting such that When convening a shareholders' general meeting, should the chairman of the
the meeting may be continued. meeting violates the rules and procedures, resulting that the shareholders'
general meeting becomes unable to
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proceed, a person may, subject to the consent of more than half of the number
of shareholders with voting rights attending the meeting at the scene, be
elected at the shareholders' general meeting to act as the chairman of the
shareholders' general meeting such that the meeting may be continued.
Article 77 The convener shall ensure that the shareholders' general meeting is Article 77 The convener shall ensure that the shareholders' general meeting is
held continuously until a final resolution is formed. If the shareholders' held continuously until a final resolution is formed. If the shareholders'
general meeting is suspended or no resolution can be made due to force majeure general meeting is suspended or no resolution can be made due to force majeure
and other special reasons, necessary measures shall be taken to resume the and other special reasons, necessary measures shall be taken to resume the
shareholders' general meeting as soon as possible or to terminate this shareholders' general meeting as soon as possible or to terminate this
shareholders' general meeting directly, and an announcement shall be made shareholders' general meeting directly, and an announcement shall be made
promptly. At the same time, the convener shall report to the local office of promptly. At the same time, the convener shall report to the local office of
securities regulatory authority of the State Council and the stock exchange in securities regulatory authority of the State Council the CSRCand the stock
the locality of the Company. exchange in the locality of the Company.
Article 79 A shareholder (including a proxy), when voting at a shareholders' Article 79 A shareholder (including a proxy), when voting at a shareholders'
general meeting, may exercise such voting rights as are attached to the number 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 voting shares which he represents. Except otherwise provided for the
of directors in Article 101 and election of supervisors in Article 143 of election of directors in laws, administrative regulations and the Article 101
these Articles of Association in connection with the adoption of the and election of supervisors in Article 143 of these Articles of Association in
cumulative voting system, each share shall have one (1) vote. The shares held connection with the adoption of the cumulative voting system, each share shall
by the Company itself shall not be attached with voting rights. Those shares have one (1) vote. The shares held by the Company itself shall not be attached
shall not be counted as the total number of voting shares held by shareholders with voting rights. Those shares shall not be counted as the total number of
attending the shareholders' general meetings. voting shares held by shareholders attending the shareholders' general
meetings.
Where material issues affecting the interests of small and medium investors
are being considered in the shareholders' general meeting, the votes by small Where material issues affecting the interests of small and medium investors
and medium investors shall be counted separately. The separate counting are being considered in the shareholders' general meeting, the votes by small
results shall be disclosed to the public in a timely manner. and medium investors shall be counted separately. The separate counting
results shall be disclosed to the public in a timely manner.
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The shares held by the Company itself shall have no voting rights and shall
not be counted towards the total number of voting shares attending the
shareholders' meeting.
If a shareholder buys voting shares of the Company in violation of the
provisions of Article 63 (1) and (2) of the Securities Law, such shares in
excess of the prescribed proportion are not entitled to exercise voting rights
for a period of thirty-six (36) months after the purchase, and shall not be
counted towards the total number of voting shares attending the shareholders'
meeting.
Article 81 Unless the Company is in a crisis or other special circumstances, Article 81 Unless the Company is in a crisis or other special circumstances,
it shall not, without approval by a special resolution at a shareholders' it shall not, without approval by a special resolution at a shareholders'
general meeting, enter into a contract to handover all or material business general meeting, enter into a contract to handover all or material business
management of the Company to a person other than a director, supervisor, management of the Company to a person other than a director, supervisor,
president, vice president and other senior officer. president, vice president and other or senior officer.
Article 85 Before voting takes place on a proposal at a shareholders' general Article 85 Before voting takes place on a proposal at a shareholders' general
meeting, two shareholders' representatives shall be elected to participate in meeting, two shareholders' representatives shall be elected to participate in
vote counting and scrutinizing. In the event that a shareholder is related to vote counting and scrutinizing. In the event that a shareholder is related to
the matter to be considered, the relevant shareholder and his/her proxy shall the matter to be considered, the relevant shareholder and his/her proxy shall
not participate in the vote counting and scrutinizing. not participate in the vote counting and scrutinizing.
When voting takes place on a proposal at a shareholders' general meeting, When voting takes place on a proposal at a shareholders' general meeting,
lawyers, representatives of shareholders and supervisors shall be jointly lawyers, and representatives of shareholders and supervisors shall be jointly
responsible for vote counting and scrutinizing, and shall announce the voting responsible for vote counting and scrutinizing, and shall announce the voting
results on the spot. The voting results of resolutions shall be recorded in results on the spot. The voting results of resolutions shall be recorded in
the minutes. the minutes.
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The shareholders of the Company or their proxies who cast votes by online The shareholders of the Company or their proxies who cast votes by online
voting or other means shall be entitled to check their respective voting voting or other means shall be entitled to check their respective voting
results through corresponding voting systems. results through corresponding voting systems.
Article 87 A shareholder attending the shareholders' general meeting shall Article 87 A shareholder attending the shareholders' general meeting shall
express its opinion of "for", "against" or "abstain" on the proposal submitted express its opinion of "for", "against" or "abstain" on the proposal submitted
for voting. for voting, except that securities registration and settlement institutions,
being the nominal holders of shares that can be traded through the mutual
stock market access between the Mainland and Hong Kong, may make declarations
according to the intention of actual holders.
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 Where a shareholder is, under the applicable listing rules as amended from
restriction shall not be counted. 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.
Votes that are not filled in, incorrectly filled in, or not legible, or votes
that are not cast are considered to be abstention by the voter, and the result
of the vote on the number of shares held by such voter shall be counted as
"abstained". Votes that are not filled in, incorrectly filled in, or not legible, or votes
that are not cast are considered to be abstention by the voter, and the result
of the vote on the number of shares held by such voter shall be counted as
"abstained".
Article 88 Any vote of shareholders at a shareholders' general meeting must be Article 88 Any vote of shareholders at a shareholders' general meeting must be
taken by poll except where the chairman of the meeting, in good faith, decides taken by poll except where the chairman of the meeting, in good faith, decides
to allow a resolution which relates purely to a procedural or administrative to allow a resolution which relates purely to a procedural or administrative
matter to be voted on by a show of hands. matter to be voted on by a show of hands.
Article 89 The following matters shall be resolved by an ordinary resolution Article 88 The following matters shall be resolved by an ordinary resolution
at a shareholders' general meeting: at a shareholders' general meeting:
(1) work reports of the board of directors and the supervisory committee; (1) work reports of the board of directors and the supervisory committee;
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(2) profit distribution plans and loss recovery plans formulated by the (2) profit distribution plans and loss recovery plans formulated by the
board of directors; board of directors;
(3) election or removal of members of the board of directors and members of (3) election or removal of members of the board of directors and members
the supervisory committee, their remuneration and manner of payment; of the supervisory committee, their remuneration and manner of payment;
(4) annual preliminary and final budgets, balance sheets and profit and loss (4) annual preliminary and final budgets, balance sheets and profit and
accounts and other financial statements of the Company; loss accounts and other financial statements of the Company;
(5) the appointment, removal or non-reappointment of an accounting firm; (5) the appointment, removal or non-reappointment of an accounting firm;
(6) matters other than those which are required by the laws and (6) matters other than those which are required by the laws and administrative
administrative regulations or by the Company's Articles of Association to be regulations or by the Company's Articles of Association to be adopted
adopted
by special resolution.
by special resolution.
Article 90 The following matters shall be resolved by a special resolution at Article 89 The following matters shall be resolved by a special resolution at
a shareholders' general meeting: a shareholders' general meeting:
(1) the increase or reduction in share capital and the issue of shares of (1) the increase or reduction in share registered capital and the issue
any class, warrants and other similar securities; of shares of any class, warrants and other similar securities of the Company;
(2) the issue of debentures of the Company; (2) the issue of debentures of the Company;
(3) the demerger, spin-off, merger, dissolution and liquidation or change of (32) the demerger, spin-off, merger, dissolution and liquidation or change of
the form of the Company; the form of the Company;
(4) amendment of the Articles of Association; (43) amendment of the Articles of Association;
(5) the material purchase or sale of assets or the provision of guarantee by (54) the material purchase or sale of assets or the provision of guarantee by
the Company during the year that is in excess of 30% of the most recent the Company during the year that is in excess of 30% percent of the most
audited total assets value of the Company; recent audited total assets value of the Company;
(6) the shares incentive program; (65) the shares incentive program;
(7) any other matter as provided for by the laws,
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administrative regulations or the Articles of Association, and as considered (76) any other matter as provided for by the laws, administrative regulations
by the shareholders at a shareholders' general meeting, and resolved by way of or the Articles of Association, and as considered determined by the
an ordinary resolution, which is of a nature which may have a material impact shareholders at a shareholders' general meeting, and resolved by way of an
on the Company and should be adopted by special resolution. ordinary resolution, which is to of a nature which may have a material impact
on the Company and should be adopted by special resolution.
Article 93 If the chairman of the meeting has any doubt as to the result of a Article 92 If the chairman of the meeting has any doubt as to the result of a
resolution which has been put to vote at a shareholders' meeting, he may have resolution which has been put to vote at a shareholders' meeting, he/she may
the votes counted. If the chairman of the meeting has not counted the votes, have the votes counted organize a vote count. If the chairman of the meeting
any shareholder who is attending in person or by proxy and who objects to the has not counted the votes, any shareholder who is attending in person or by
result announced by the chairman of the meeting may, immediately after the proxy and who objects to the result announced by the chairman of the meeting
declaration of the result, demand that the votes be counted and the chairman may, immediately after the declaration of the result, demand that the votes be
of the meeting shall have the votes counted immediately. counted and the chairman of the meeting shall have the votes
counted
immediately.
Article 94 If votes are counted at a shareholders' general meeting, the result Article 93 If votes are counted at a shareholders' general meeting, the result
of the count shall be recorded in the minute book. of the count shall be recorded in the minute book.
The convenor shall ensure that the particulars included in the record of the The convenor shall ensure that the particulars included in the record of the
meeting are true, accurate and complete. The Company secretary shall make the meeting are true, accurate and complete. The Company secretary shall make the
record of the shareholders' general meeting, which shall be signed by the record of the shareholders' general meeting, which shall be signed by t The
person presiding the meeting (chairman of the meeting), directors, directors, secretary to the board, convenor or their representatives and the
supervisors, board secretary and convenor attending the meeting or their chairman of the meeting person presiding who have attended or observed the
representatives. meeting (chairman of the meeting), directors, supervisors, board secretary and
convenor attending the meeting or their representatives shall sign the record
of the meeting.
Resolutions adopted by a shareholders' general meeting shall be included in
the record of the meeting. The record of the meeting shall be in Chinese. Such
record, shareholders' attendance lists and proxy forms shall be kept at the Resolutions adopted by a shareholders' general meeting shall be included in
Company's place of residence for a period of not less than 10 years. the record of the meeting. The record of the meeting shall be in
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Chinese. Such record, shall be kept together with the shareholders' attendance
lists of shareholders attending the meeting, and proxy forms as well as valid
information on the results of voting online or by other means (if any) shall
be kept at the Company's place of residence for a period of not less than 10
years.
Article 95 Copies of the minutes of proceedings of any shareholders' meeting Article 94 For any resolutions on the distribution of cash or share dividends
shall, during business hours of the Company, be open for inspection by any or conversion of capital reserve into share capital adopted at the
shareholder without charge. If a shareholder requests for a copy of such shareholders' meeting, the specific proposal shall be implemented by the
minutes from the Company, the Company shall send a copy of such minutes to him Company within two (2) months after the conclusion of the shareholders'
within seven (7) days after receipt of reasonable fees therefor. meeting. Copies of the minutes of proceedings of any shareholders' meeting
shall, during business hours of the Company, be open for inspection by any
shareholder without charge. If a shareholder requests for a copy of such
minutes from the Company, the Company shall send a copy of such minutes to him
within seven (7) days after receipt of reasonable fees therefor.
CHAPTER 9 THE PARTY COMMITTEE CHAPTER 9 THE PARTY COMMITTEE
Article 96 According to the requirements of the Constitution of the Communist Article 95 According to the requirements of the Constitution of the Communist
Party of China and subject to the approval by upper Party organization, the Party of China and subject to the approval by upper Party organization, the
Company shall establish the Chinese Communist Party Committee of Air China Company shall establish the Chinese Communist Party Committee of Air China
Limited. The Party Committee is comprised of one secretary and several other Limited. The Party Committee is comprised of one secretary and several other
members, and shall establish the Commission for Discipline Inspection of the members, and. The Company shall establish the Commission for Discipline
Party in accordance with the requirements. Inspection of the Party discipline inspection and supervision bodies in
accordance with the requirements.
Article 97 The Party Committee of the Company shall play a leading role, set Article 96 The Party Committee of the Company shall play a leading role, set
the right direction, keep in mind the big picture, ensure the implementation the right direction, keep in mind the big picture, ensure the implementation
of Party policies and principles, discuss and decide on major issues of the of Party policies and principles, discuss and decide on major issues of the
Company in accordance with the regulations. Decisions relating to Company in accordance with the regulations. The list of major operation and
major
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operation and management matters shall be made in accordance with relevant management matters shall be established in accordance with relevant
regulations by the board of directors or the management after the pre-study regulations. Decisions relating to major operation and management matters
and discussion by the Party Committee. The main duties of the Party Committee shall be made in accordance with the functions and powers and the required
are as follows: procedures of relevant regulations by the board of directors or the management
after the pre-study and discussion by the Party Committee. The main duties of
the Party Committee are as follows:
(1) to enhance the political building of the Party in the Company, adhere to
and implement the fundamental system, basic system and important system of
socialism with Chinese characteristics, educate and guide all Party members to (1) to enhance the political building of the Party in the Company, adhere to
closely align with the Party Central Committee with Comrade Xi Jinping at its and implement the fundamental system, basic system and important system of
core in terms of political stance, direction, principles and path; socialism with Chinese characteristics, educate and guide all Party members to
closely align with the Party Central Committee with Comrade Xi Jinping at its
core in terms of political stance, direction, principles and path;
(2) to thoroughly study and implement Xi Jinping Thought on Socialism with
Chinese Characteristics for a New Era, study and propagate the Party's theory,
thoroughly implement the Party's line, principles and policies, supervise and (2) to thoroughly study and implement Xi Jinping Thought on Socialism with
guarantee the implementation of major strategy deployments of the Party Chinese Characteristics for a New Era, study and propagate the Party's theory,
Central Committee and the resolutions of the Party organization at a higher thoroughly implement the Party's line, principles and policies, supervise and
level in the Company; guarantee the implementation of major strategy deployments of the Party
Central Committee and the resolutions of the Party organization at a higher
level in the Company;
(3) to investigate and discuss major issues relating to the operation and
management of the Company and support the board of directors and the
management in exercising their powers and performing their duties in (3) to investigate and discuss major issues relating to the operation and
accordance with the laws; management of the Company and support the shareholders' meeting, board of
directors and the management in exercising their powers and performing their
duties in accordance with the laws;
(4) to strengthen the leadership and gatekeeping role in the process of
selection and appointment of personnel of the Company, and enhance the
building of the leadership team, the cadre team and the talent team of the (4) to strengthen the leadership and gatekeeping role in the process of
Company; selection and appointment of personnel of the Company, and enhance the
building of the leadership team, the cadre team and the talent team of the
Company;
(5) to undertake the main responsibility in improving Party conduct and
upholding integrity, lead and support the internal discipline inspection
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committee to discharge its supervisory and disciplining responsibilities as (5) to undertake the main responsibility in improving Party conduct
well as exercise strict administrative discipline and political rules and and upholding integrity, lead and support the internal discipline inspection
promote Party self- governance exercised fully and with right into the committee to discharge its supervisory and disciplining responsibilities
grassroots level; support and cooperate with the work of the discipline inspection and
supervision bodies as well as exercise strict administrative discipline and
political rules and promote Party self-governance exercised fully and with
right into the grassroots level;
(6) to strengthen the building of primary- level Party organizations and
of its contingent of Party members, unite and lead employees to devote
themselves into the reform and development of the Company;
(6) to strengthen the building of primary- level Party organizations and
of its contingent of Party members, unite and lead employees to devote
themselves into the reform and development of the Company;
(7) to lead the Company's ideological and political work, the spirit and
civilization progress, the United Front work and lead the mass organizations
such as the Labour Union, the Communist Youth League and the Women's
Organization of the Company. (7) to lead the Company's ideological and political work, the spirit and
civilization progress, the United Front work and lead the mass organizations
such as the Labour Union, the Communist Youth League and the Women's
Organization of the Company.;
(8) to discuss and decide on other material matters within the scope of duties
of the Party Committee.
CHAPTER 10 BOARD OF DIRECTORS CHAPTER 10 BOARD OF DIRECTORS
Article 99 The Company shall have a board of directors. The board of directors Article 98 The Company shall have a board of directors. The board of directors
shall consist of 7 to 13 directors, at least half of which shall be outside shall consist of 7 to 13 directors, at least half of which shall be outside
directors (those who do not assume any position within the Company), and of directors (those who do not assume any position within the Company), and of
which at least 1/3 of the overall directors shall be independent directors. At which at least 1/3 of the overall directors shall be independent directors. At
least one independent director shall have appropriate professional least one independent director shall have appropriate professional
qualification, or expertise in accounting or related financial management; the qualification prescribed by the securities regulatory authority and the
board of directors shall have one (1) employee representative director. listing rules of securities, or expertise in accounting or related financial
management; the board of directors shall have one (1) employee representative
director.
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The board of directors shall have one (1) Chairman and one (1) Deputy The board of directors shall have one (1) Chairman and one (1) Deputy
Chairman. Chairman.
An independent director refers to a director who does not hold any position An independent director refers to a director who does not hold any position
other than a director in the Company and has no direct or indirect interest other than a director in the Company and has no direct or indirect interest
relationship with the Company, its substantial shareholders and actual relationship with the Company, its substantial shareholders and actualde
controllers, or any other relationship that may affect his independent and factocontrollers, or any other relationship that may affect his independent
objective judgment. and objective judgment.
Article 100 Directors (excluding the employee representative director) shall Article 99 Directors (excluding the employee representative
be elected or replaced at the shareholders' general meeting and director) shall be elected or replaced at the shareholders' general
the employee representative director shall be elected or dismissed by meeting and the employee representative director shall be elected
the employee representative meeting each for a term of 3 years (starting or dismissed by the employee representative meeting each for a term of
from the election date to the date on which a new board of directors is 3 years (starting from the election date to the date on which a new board of
elected at a shareholders' general meeting). At the expiry of a director's directors is elected at a shareholders' general meeting). At the expiry of a
term, the term is renewable upon re-election, provided that the term of director's term, the term is renewable upon re-election, provided that the
reappointment of an independent director shall not be more than 6 years. term of reappointment of an independent director shall not be more than 6
years.
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If the term of office of a director expires but re- election is not made If the term of office of a director expires but re- election is not made
promptly, the said director shall continue fulfilling the duties as director promptly, the said director shall continue fulfilling the duties as director
pursuant to relevant laws, administrative regulations, departmental rules and pursuant to relevant laws, administrative regulations, departmental rules and
the Articles of Association until a new director is elected. the Articles of Association until a new director is elected.
The list of candidates for the director (excluding the employee representative The list of candidates for the director (excluding the employee representative
director) shall be submitted in form of a motion to a shareholders' general director) shall be submitted in form of a motion to a shareholders' general
meeting for consideration. Candidates other than those for independent meeting for consideration. Candidates other than those for independent
directors and the employee representative director shall be nominated by the directors and the employee representative for director shall be nominated by
board of directors, supervisory committee or shareholder(s) holding, alone or the board of directors, supervisory committee or shareholder(s) holding, alone
together, more than three percent (3%) of the total amount of voting shares in or together, more than three onepercent (3 1%) of the total amount of voting
the Company and elected at the shareholders' general meeting. shares in the Company and elected at the shareholders' general meeting.
A written notice of the intention to propose a person for election as a A written notice of the intention to propose a person for election as a
director (excluding the employee representative director) and a notice in director (excluding the employee representative director) and a notice in
writing by that person indicating his acceptance of such election shall have writing by that person indicating his acceptance of such election shall have
been given to the Company seven (7) days before the date of such shareholders' been given to the Company seven (7) days before the date of such shareholders'
general meeting. The shortest notice period for such written notice shall be 7 general meeting. The shortest notice period for such written notice shall be 7
days. days.
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The outside directors shall have sufficient time and necessary knowledge and The outside directors shall have sufficient time and necessary knowledge and
ability to perform its duties. When an outside director performs his duties, ability to perform its duties. When an outside director performs his duties,
the Company must provide necessary information and independent directors may the Company must provide necessary information and independent directors may
directly report to the shareholders' meeting, the authority in charge of directly report to the shareholders' meeting, the authority in charge of
securities of the State Council and other relevant departments thereon. securities of the State Council CSRC and other relevant departments thereon.
If a director is a natural person, he or she may not be required to hold If a director is a natural person, he or she may not be required to hold
shares in the Company. shares in the Company.
Article 101 The following procedures shall be carried out prior to Article 100 The following procedures shall be carried out prior to
the election of the non-independent directors: the election of the non-independent directors:
(1) The nominator of a candidate for the non- independent directors shall seek (1) The nominator of a candidate for the non- independent directors shall seek
the consent of such candidate prior to nomination and shall have a full the consent of such candidate prior to nomination and shall have a full
understanding towards the profession, education, job position, detailed understanding towards the profession, education, job position, detailed
working experience and all other positions held concurrently as well as working experience and all other positions held concurrently as well as
preparing written materials containing the said information to the Company. preparing written materials containing the said information to the Company.
Candidates shall undertake to the Company in writing that they have agreed to Candidates shall undertake to the Company in writing that they have agreed to
accept the nomination and that all disclosed information relating to them are accept the nomination and that all disclosed information relating to them are
true and complete and shall guarantee that they will conscientiously perform true and complete and shall guarantee that they will conscientiously perform
the director's responsibilities after being elected. the director's responsibilities after being elected.
(2) If the nomination of a candidate for the non- independent directors is (2) If the nomination of a candidate for the non- independent directors is
taken place before the board meeting of the Company was convened and if the taken place before the board meeting of the Company was convened and if the
applicable laws, regulations, other regulatory documents and/or the relevant applicable laws, regulations, other regulatory documents and/or the relevant
regulatory authorities of the jurisdictions where the shares are listed and regulatory authorities of the jurisdictions where the shares are listed and
the listing rules contain relevant provisions, the written materials the listing rules of securities contain relevant provisions, the written
concerning the nominee set out in sub-paragraph (1) of this Article shall be materials concerning the nominee set out in sub-paragraph
publicly announced together with the resolutions of the board meeting in
accordance with such provisions. (1) of this Article shall be publicly announced together with the resolutions
of the board meeting in accordance with such provisions.
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(3) If a shareholder holding, alone or together, more than three percent (3%) (3) If a shareholder holding, alone or together, more than three one percent
of the total voting shares of the Company proposes an ex tempore motion on (3 1%) of the total voting shares of the Company proposes an ex tempore motion
the election of non-independent directors (excluding the employee on the election of non-independent directors (excluding the employee
representative director) at the shareholders' general meeting of the Company, representative director) at the shareholders' general meeting of the Company,
the written notice specifying the intention to propose a person for election the written notice specifying the intention to propose a person for election
as a director and the willingness of the nominee to accept nomination as a director and the willingness of the nominee to accept nomination
together with the written materials and undertakings containing together with the written materials and undertakings containing
such particulars of the nominee as set out in sub-paragraph (1) of this such particulars of the nominee as set out in sub-paragraph (1) of this
Article shall be despatched to the Company within ten (10) days prior to the Article shall be despatched to the Company within ten (10) days prior to the
shareholders' general meeting. Such notice shall commence no earlier shareholders' general meeting. Such notice shall commence no earlier
than the day after the despatch of the notice of the meeting for than the day after the despatch of the notice of the meeting for
election of directors and end no later than seven (7) days prior to the date election of directors and end no later than seven (7) days prior to the date
of such meeting. of such meeting.
Article 102 At a shareholders' general meeting, the cumulative voting system Article 101 At a shareholders' general meeting, the cumulative voting system
shall be adopted for voting on the motions for election of directors shall be adopted for voting on the motions for election of directors
(excluding the employee representative director). In other words, when (excluding the employee representative director). In other words, when
electing two or more directors at a shareholders' general meeting, the electing two or more directors at a shareholders' general meeting, the number
number of voting rights carried by each of the shares held by a voting of voting rights carried by each of the shares held by a voting shareholder is
shareholder is the same as the number of directors to be elected such that a the same as the number of directors to be elected such that a shareholder may
shareholder may exercise the voting rights in a way to concentrate all exercise the voting rights in a way to concentrate all his votes on a
his votes on a particular candidate or to spread his votes particular candidate or to spread his votes on several candidates.
on several candidates.
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Article 105 The board of directors is responsible to the shareholders' general Article 104 The board of directors is responsible to the shareholders' general
meeting for formulating strategies, making decisions and preventing risks and meeting for undertakes the functions of formulating strategies, making
shall exercise the following duties and powers in accordance with statutory decisions and preventing risks and shall exercise the following duties and
procedures and the Articles of Association: powers in accordance with statutory procedures and the Articles of
Association:
(1) to be responsible for the convening of the shareholders' general
meeting and to report on its work to the shareholders in general meetings; (1) to be responsible for the convening of convene 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;
(2) to implement the resolutions passed by the shareholders' in general
meetings;
(3) to determine the Company's business plans and investment proposals;
(3) to determine the development strategy and planning of the Company;
(4) to formulate the Company's preliminary and final annual financial
budgets;
(34) to determine the Company's business plans and investment proposals;
(5) to formulate the Company's profit distribution proposal and loss
recovery proposal; (45) to formulatedeterminethe Company's preliminary and final annual financial
budgets;
(6) to formulate proposals for the increase or reduction of the Company's
registered capital and for the issuance of the Company's debentures; (56) to formulate the Company's profit distribution proposal and loss recovery
proposal;
(7) to draw up the Company's proposals for the merger, division,
dissolution or change of the form of the Company; (67) to formulate proposals for the increase or reduction of the Company's
registered capital and, for, the issuance and listing of the Company's
debentures or other securities;
(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, regulations, other regulatory documents (78) to draw up the Company's proposals for the major acquisitions of the
and these Articles of Association; Company, acquisition of the shares of the Company or merger, division,
dissolution or andchange of the form of the Company;
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(9) to decide on the external investments, purchase and sale of assets, (89) to decide on other issues relating to the provision of guarantee in favor
creation of mortgage over assets, entrusted asset management, connected of a third party other than those must be approved at a shareholders'
transactions, external donations and other matters within the scope of generalmeeting pursuant to the laws, regulations, other regulatory documents
authorization conferred by the shareholders' general meeting; and these Articles of Association;
(10) to decide on the Company's internal management structure; (910) to decide on the external investments, purchase and sale of assets,
creation of mortgage over assets, entrusted asset management, connected
transactions, external donations and other matters within the scope of
authorization conferred by the shareholders' general meeting;
(11) to appoint or dismiss the president of the Company, secretary to the
board of directors, conduct appraisal on their performance and determine
remunerations; and to appoint or dismiss, with reference to the nomination by
the president, the vice presidents, chief accountant, chief pilot, general (101) to decide on the Company's internal management structure and the
legal counsel and other senior officers, conduct appraisal on their establishment and cancellation of major branches and subsidiaries;
performance and determine remunerations;
(112) to decide on the appointment or dismissal of appoint or dismissthe
(12) to formulate the basic management structure of the Company; president of the Company, secretary to the board of directors and other senior
officers, conduct appraisal on their performance and determine remunerations,
rewards and punishments; and to appoint or dismiss, with reference to the
nomination by the president, the vice presidents, chief accountant, chief
pilot, general legal counsel and other senior officers, conduct appraisal on
their performance and determine remunerations, rewards and punishments;
(123) to formulate the basic management structure of the Company;
(134) to manage matters relating to the disclosure of information by the
Company;
(15) to decide on major accounting policies and plans of change in accounting
estimates of the Company;
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(13) to manage matters relating to the disclosure of information by the (146) to make recommendations to the shareholders' general meetings on the
Company; appointment or change of the accounting firm which performs the audit work for
the Company;
(14) to make recommendations to the shareholders' general meetings on the
appointment or change of the accounting firm which performs the audit work for (157) to hear from the Company's president reports on work performed and to
the Company; inspect the work of the president;
(15) to hear from the Company's president reports on work performed and to (168) to formulate proposals for any amendment of the Company's Articles of
inspect the work of the president; Association;
(16) to formulate proposals for any amendment of the Company's Articles of (19) to decide on proposals for major income distribution of the Company,
Association; determine the major matters in relation to employee income distribution;
(17) to determine the risk management system, the internal control system (1720) to establish and improve the internal supervision, management and risk
and the legal compliance management system of the Company, and monitor the control system, enhance internal compliance management, determine the risk
relevant systems and their implementation; management system, the internal control system, the accountability system for
non-compliance operation and investment and the legal compliance management
system of the Company, and monitor and evaluate the risk management, internal
control and legal compliance management systems of the Company relevant
(18) to guide, inspect and assess the internal audit works and approve the systems and their effective implementation as a whole;
annual audit plan and important audit reports pursuant to laws;
(1821) to guide, inspect and assess the internal audit works of the Company,
(19) to promote the development of corporate governance and supervise the and review and approve the annual audit plan and important audit reports
legality of the operation of the management; pursuant to laws;
(20) to exercise any other powers stipulated by laws, regulations, other (22) to consider the plans for addressing the Company's major litigation,
regulatory documents and these Articles of Association and conferred by the arbitration and other legal affairs;
shareholders in general meetings.
(19) to promote the development of corporate governance and supervise
Resolutions by the board of directors on matters referred to in the preceding the legality of the
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 attending the board meeting) with the exception of resolutions on
matters referred to in subparagraphs (6), (7) and (16) which shall require
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the affirmative vote of more than two-thirds of all the directors. operation of the management;
If any director is connected with the enterprises that are involved in the (203) to exercise any other powers stipulated by laws, regulations, other
matters to be resolved by the board meetings, he shall not exercise his voting regulatory documents and these Articles of Association and conferred by the
rights for such matters, nor shall he exercise voting rights on behalf of shareholders' in general meetings.
other directors. Such board meetings shall be convened by a majority of the
directors attending 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 Saved as otherwise provided by the laws, administrative regulations and the
more of the directors shall be passed by votes of two-thirds or more of the Articles of Association, resolutions by the board of directors on the matters
directors that are not connected. If the number of non-connected directors referred to in the preceding paragraphs shall be passed by the affirmative
attending the board meetings falls short of three, such matters shall be vote of more than half of all of the directors with the exception of
submitted to the shareholders' general meeting of the Company for approval. resolutions to formulate the proposals on the increase or reduction of the
Company's registered capital and the proposals on the issuance of corporate
bonds, and the resolutions to formulate the plans for merger, division and
dissolution of the Company and to formulate the proposals for the amendment to
Resolutions made by the board of directors on the Company's connected the Articles of Association, which shall require the affirmative vote of at
transactions shall come into effect only after they are signed by the least two- thirds of all of the directors for adoption.
independent directors.
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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 attending the board meeting) with the exception of resolutions on
matters referred to in subparagraphs (6), (7) and (16) which shall require the
affirmative vote of more than two-thirds of all the directors.
If any director is connected with the enterprises or individuals that are
involved in the matters to be resolved by the board meetings, he/she shall
promptly report in writing to the board of directors. The director who has a
related relationshipshall 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 attending 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.
Article 108 Unless otherwise provided for in the laws, regulations, other Article 107 Unless otherwise provided for in the laws, regulations, other
regulatory documents and/ or the relevant requirements of regulatory regulatory documents and/ or the relevant requirements of regulatory
authorities of the jurisdictions where the shares are listed and the authorities of the jurisdictions where the shares are listed and the listing
listing rules, the board of rules of securities, the
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directors shall, within the scope of authority as conferred by the board of directors shall, within the scope of authority as conferred by the
shareholders' general meeting, have the right to decide on an investment shareholders' general meeting, have the right to decide on an investment
(including risk investment) or acquisition project. For any major investment (including risk investment) or acquisition project. For any major investment
or acquisition project which is beyond the limits of authority of the board of or acquisition project which is beyond the limits of authority of the board of
directors to examine and approve thereof, the board of directors shall directors to examine and approve thereof, the board of directors shall
organize the relevant experts and professionals to conduct an evaluation organize the relevant experts and professionals to conduct an evaluation
thereof and report the same to the shareholders' general meeting for approval. thereof and report the same to the shareholders' general meeting for approval.
Article 109 The board of directors may establish the strategy and investment Article 109 The board of directors may establish the strategy and investment
committee, the audit and risk management committee (the supervision committee, the audit and risk management committee (the supervision
committee), the nomination committee, the remuneration and appraisal committee), the nomination committee, the remuneration and appraisal
committee, the aviation safety committee and other special committees. The committee, the aviation safety committee and other special committees. The
members' composition, duties and responsibilities, and procedures of each members' composition, duties and responsibilities, and procedures of each
special committee of the board of directors are specifically determined special committee of the board of directors are specifically determined
according to the terms of reference of each special committee, which are drawn according to the terms of reference of each special committee, which are drawn
up by the board of directors. up by the board of directors.
Article 110 The Chairman of the board of directors shall exercise the Article 108 The Chairman of the board of directors shall exercise the
following powers: following powers:
(1) to preside over shareholders' general meetings and to convene and (1) to preside over shareholders' general meetings and to convene and
preside over meetings of the board of directors; preside over meetings of the board of directors;
(2) to check on the implementation of resolutions passed by the board of (2) to convey the spirit of the Central Committee and state-owned assets
directors at directors' meetings; supervision policies to the board of directors, and to inform the board of the
tasks requiring the board's advancement and implementation as well as the
issues requiring rectification as identified in relevant supervision and
inspection;
(3) to sign the securities certificates issued by the Company;
(23) to oversee andcheck on the implementation of resolutions passed by the
board of directors at directors' meetings;
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(4) to sign important documents of the board of directors and other (3) to sign the securities certificates issued by the Company;
documents that shall be signed by the legal representative of the Company;
(4) to sign important documents of the board of directors and other
(5) to exercise the authorities of legal representative; documents that shall be signed by the legal representative of the Company;
(6) to receive reports on operation and management and study related (5) to exercise the authorities of legal representative;
issues;
(64) to receive reports on operation and management and study related issues;
(7) to manage the internal audit of the Company as the primary responsible
person for internal audit work;
(7) to manage the internal audit of the Company as the primary responsible
person for internal audit work;
(8) in the event of emergency due to force majeure or major crisis that
makes it impossible to convene a board meeting in a timely manner, to exercise
special disposal powers within the authority of the board of directors in
accordance with laws and regulations and in the interests of the Company, and (85) in the event of emergency due to force majeure or major crisis that makes
to report to the board of directors after exercising such power so as to it impossible to convene a board meeting in a timely manner, to exercise
ratify the same in accordance with the procedures; special disposal powers within the authority of the board of directors in
accordance with laws and regulations and in the interests of the Company, and
to report to the board of directors after exercising such power so as to
ratify the same in accordance with the procedures;
(9) to exercise other powers conferred by the board of directors.
(96) to exercise other powers prescribed by the state-owned assets supervision
The vice chairman of the board of directors shall assist the chairman of the and administration authority of the State Council, the CSRC and the stock
board of directors with his/her duties. Should the chairman of the board of exchanges or those conferred by the board of directors.
directors be unable to perform or fail to perform his/her duties, the vice
chairman of the board of directors shall perform the said duties. Should the
vice chairman of the board of directors be unable to perform or fail to
perform his/her duties, a director jointly elected by more than half of the The vice chairman of the board of directors shall assist the chairman of the
number of Directors shall perform the said duties. board of directors with his/her duties. Should the chairman of the board of
directors be unable to perform or fail to perform his/her duties, the vice
chairman of the board of directors shall perform the said duties. Should the
vice chairman of the board of directors be unable to perform or
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fail to perform his/her duties, a director jointly elected by more than half
of the number of Directors shall perform the said duties.
Article 114 A board of directors meeting shall only be convened if a majority Article 112 A board of directors meeting shall only be convened if a majority
of the number of the board members are attending (including any directors of the number of the board members are attending (including any directors
appointed pursuant to Article 115 of these Articles of Association to attend appointed pursuant to Article 1153of these Articles of Association to attend
the meeting as the representatives of other directors). Each director has one the meeting as the representatives of other directors). Each director has one
vote. Any resolution requires the affirmative votes of more than half of all vote. Any resolution requires the affirmative votes of more than half of all
the board of directors in order to be passed. the board of directors in order to be passed, unless otherwise specified in
Article 104.
Article 120 A director may resign prior to the expiration of his term of Article 118 A director may resign prior to the expiration of his term of
office. If a director resigns from his office, he shall submit a written office. If a director resigns from his office, he shall submit a written
report of his resignation to the board of directors. Independent directors report of his resignation to the board of directors, which will be effective
shall provide an explanation on the circumstances which are relevant to his from the date of receipt of the resignation report by the Company. The board
resignation and which in his opinion are necessary to bring to the attention of directors shall disclose such matter within two (2) days. Independent
of the shareholders and creditors of the Company. directors shall provide an explanation on the circumstances which are relevant
to his resignation and which in his opinion are necessary to bring to the
attention of the shareholders and creditors of the Company.
If the resignation of a director will result in the board of directors of the
Company having less than the statutory minimum number of directors, then such
director's report of resignation shall only become effective after a new If the resignation of a director will result in the number of board of
independent director has been appointed to fill the vacancy so caused by his directors of the Company having less than falling below the statutory minimum
resignation. The Company shall convene an ad hoc meeting or employee number of directors, then such director shall perform his/her duties as a
representative meeting as soon as possible to elect a director to fill up the director in accordance with laws, administrative regulations, departmental
vacancy arising from the resignation of the director. Before a decision is rules and the Articles of Association before a new director is elected to take
made at the shareholders' general meeting or the employee representative office's report of resignation shall only become effective after a new
meeting regarding the election of the director, the functions and powers of independent director has been appointed to fill the vacancy so caused by his
the resigning director and the remaining board of director shall be restricted resignation. The Company shall convene an ad hoc meeting or employee
to a reasonable extent. representative meeting as soon as possible to elect a director to fill up the
vacancy arising from the resignation of the director. Before a decision is
made at the
If the resignation of an independent director will
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result in the board of directors of the Company or its special committees shareholders' general meeting or the employee representative meeting regarding
having less than the minimum required proportion of independent directors as the election of the director, the functions and powers of the resigning
required by the relevant laws and regulations or the Articles of Association director and the remaining board of director shall be restricted to a
or result in lack of accounting professionals among the independent directors, reasonable extent.
then such independent director's report of resignation shall only become
effective after a new independent director has been appointed to fill the
vacancy so caused by his resignation.
If the resignation of an independent director will result in the board of
directors of the Company or its the special committees having less than the
minimum required proportion of independent directors as required by the
Other than conditions aforementioned, the resignation of director shall be relevant laws, and administrative regulations, other regulatory documents, or
effective upon the delivery of its resignation report to the board of the Articles of Association or relevant rules of the special committees or
directors. result in lack of accounting professionals among the independent directors,
then such independent director's report of resignation shall only become
effective after a new independent director has been appointed to fill the
vacancy so caused by his resignation shall continue to fulfil the relevant
duties.
Other than conditions aforementioned, the resignation of director shall be
effective upon the delivery of its resignation report to the board of
directors.
CHAPTER 11 INDEPENDENT DIRECTORS CHAPTER 11 INDEPENDENT DIRECTORS
Article 121 Candidates for the independent directors shall be nominated by the Article 119 Candidates for the independent directors shall be nominated by the
board of directors, supervisory committee or shareholder(s) holding, whether board of directors, supervisory committee audit and risk management committee
alone or together, one percent (1%) or more of the total amount of voting (the supervision committee) or shareholder(s) holding, whether alone or
shares in the Company and elected at shareholders' general meeting. The together, one percent (1% percent) or more of the total amount of voting
investor protection institution established according to laws may publicly shares in the Company and elected at shareholders' general meeting. The
request the shareholders to entrust it to exercise the right to nominate investor protection institution established according to laws may publicly
independent directors on their behalf. request the shareholders to entrust it to exercise the right to nominate
independent directors on their behalf.
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(1) The nominator of a candidate for the independent directors shall (1) The nominator of a candidate for the independent directors shall
seek the consent of such candidate prior to nomination and shall have a full seek the consent of such candidate prior to nomination and shall have a full
understanding towards the profession, education, job position, detailed understanding towards the profession, education, job position, detailed
working experience and all other positions held concurrently, and whether working experience and all other positions held concurrently, and whether
there is any gross dishonesty or other adverse records as well as preparing there is any gross dishonesty or other adverse records as well as preparing
written materials containing the said information to the Company. Candidates written materials containing the said information to the Company. Candidates
shall undertake to the Company in writing that they have agreed to accept the shall undertake to the Company in writing that they have agreed to accept the
nomination and that all disclosed information relating to them are true and nomination and that all disclosed information relating to them are true and
complete and shall guarantee that they will conscientiously perform the complete and shall guarantee that they will conscientiously perform the
director's responsibilities when elected. director's responsibilities when elected.
(2) The nominator shall provide his opinion in connection with the (2) The nominator shall provide his opinion in connection with the
qualification and independency of such nominees for acting as an independent qualification and independency of such nominees for acting as an independent
director. If the applicable laws, regulations, other regulatory documents director. If the applicable laws, regulations, other regulatory documents
and/or the relevant listing rules contain the relevant provisions, the nominee and/or the relevant listing rules of securities contain the relevant
shall make a public statement in accordance with such provisions that there provisions, the nominee shall make a public statement in accordance with such
does not exist any relationship between himself and the Company which may provisions that there does not exist any relationship between himself and the
influence his independent objective judgement. Company which may influence his independent objective judgement.
(3) If the nomination of a candidate for the independent directors is (3) If the nomination of a candidate for the independent directors is
taken place before the board meeting of the Company is convened and if the taken place before the board meeting of the Company is convened and if the
applicable laws, regulations, other regulatory documents and/or the relevant applicable laws, regulations, other regulatory documents and/or the relevant
listing rules contain the relevant provisions, the written materials listing rules of securities contain the relevant provisions, the written
concerning the nominee set out in subparagraphs (1) and (2) of this Article materials concerning the nominee set out in subparagraphs (1) and (2) of this
shall be publicly announced together with the resolutions of the board meeting Article shall be publicly announced together with the resolutions of the
in accordance with such provisions. board meeting in accordance with such
provisions.
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(4) If a shareholder holding, alone or together, more than 3% of the (4) If a shareholder holding, alone or together, more than 3% 1 percent of
voting right of the Company or the supervisory committee proposes an ex the voting right of the Company or the supervisory committee audit and risk
tempore motion on the election of non-independent directors, the written management committee (the supervision committee) proposes an ex tempore motion
notice specifying the intention to propose a person for election as a director at the shareholders' meeting on the election of non- independent directors,
and the willingness of the nominee to accept nomination together with the the written notice specifying the intention to propose a person for election
written materials and undertakings containing such particulars of the nominee as a director and the willingness of the nominee to accept nomination together
as set out in subparagraphs (1) and (2) of this Article shall be despatched to with the written materials and undertakings containing such particulars of the
the Company within ten (10) days prior to the shareholders' general meeting. nominee as set out in subparagraphs (1) and (2) of this Article shall be
despatched to the Company within ten (10) days prior to the shareholders'
general meeting.
(5) Before a general meeting of shareholders is convened to elect
independent directors, if the applicable laws, regulations, other regulatory
documents and/or the relevant listing rules contain the relevant provisions, (5) Before a shareholders'general meeting of shareholders is convened to
the Company shall in accordance with such provisions submit relevant materials elect independent directors, if the applicable laws, regulations, other
regarding all nominees to the authority in charge of securities of the State regulatory documents and/or the relevant listing rules of securities contain
Council and/or its local residence office and the stock exchanges on which the the relevant provisions, the Company shall in accordance with such provisions
Company's shares are listed. If the board of directors of the Company objects submit relevant materials regarding all nominees to the authority in charge of
to the qualifications of the nominees, a written opinion of the board of securities of the State Council and/or its local residence office and the
directors in connection therewith shall also be submitted at the same time. If stock exchanges on which the Company's securities are islisted. If the board
the authority in charge of securities of the State Council has an objection to of directors of the Company objects to the qualifications of the nominees, a
a nominee, such nominee shall not qualify to be a candidate for election as an written opinion of the board of directors in connection therewith shall also
independent director. When convening a shareholders' general meeting to elect be submitted at the same time. If the authority in charge of securities of the
independent directors, the board of directors of the Company shall explain State Council stock exchanges on which the securities of the Company are
whether or not the authority in charge of securities of the State Council had listed has an objection to a nominee, such nominee shall not qualify to be a
any objection to any of the candidates for independent directors. candidate for election as an independent director. When convening a
shareholders' general meeting to elect independent directors, the board of
directors of the Company shall explain whether or not the authority in charge
of securities of the State Council had there is any objection to any of the
candidates for independent directors.
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Article 120 In accordance with the requirements of the laws, administrative
regulations, regulations of the CSRC, the stock exchanges and the Articles of
Association, independent directors shall diligently perform their duties, play
the roles in decision-making, supervise checks and balances, and provide
professional advice to the board of directors, safeguard the overall interests
of the Company, and protect the legitimate rights and interests of minority
shareholders.
Article 122 A person acting as an independent director shall fulfil the Article 121 A person acting as an independent director shall fulfil the
following basic requirements: following basic requirements:
(1) he or she shall possess the qualifications to act as the director of the (1) he or she shall possess the qualifications to act as the director of the
Company in accordance with the relevant requirements of laws, regulations and Company a listed company in accordance with the relevant requirements of laws,
other regulatory documents; regulations and other regulatory documents relevant requirements;
(2) he or she conforms with independence required by the relevant laws, (2) he or she conforms with independence required by the relevant laws,
regulations, other regulatory documents and the listing rules; regulations, other regulatory documents and the listing rules relevant
requirements and the Articles of Association;
(3) he or she possesses the basic knowledge of operation of a listed
company and is familiar with relevant laws and administrative regulations as (3) he or she possesses the basic knowledge of operation of a listed
well as rules and regulations (including but not limited to the accounting company and is familiar with relevant laws, and administrativeregulations as
principles); well as andrules and regulations (including but not limited to the accounting
principles);
(4) he or she shall have not less than 5 years of experience in law,
accounting, economics or other working experience necessary for performing (4) he or she shall have not less than 5 years of experience in law,
duties of an independent director; accounting, economics or other working experience necessary for performing
duties of an independent director;
(5) he or she shall have good character traits and shall not have any gross
dishonesty or other adverse records; (5) he or she shall have good character traits and shall not have any gross
dishonesty or other adverse records;
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(6) he or she shall fulfil other conditions as provided for in these Articles (6) he or she shall fulfil other conditions as provided for in these
of Association. prescribed by the laws, administrative regulations, securities regulatory
authority in the place where the Company is listed, the stock exchanges where
the securities of the Company are listed and the Articles of Association.
Article 123 Independent directors shall have independence. Unless otherwise Article 122 Independent directors shall have independence. Unless otherwise
required by the relevant laws, regulations, other regulatory documents and/or required by the relevant laws, regulations, other regulatory documents and/or
the relevant listing rules, none of the following persons shall act as the relevant listing rules of securities, none of the following persons shall
independent directors: act as independent directors:
(1) persons working in the Company or its subsidiaries, as well as their (1) persons working in the Company or its subsidiaries, as well as their
direct family members or major social relations (in which direct family direct family members or major social relations (in which direct family
members refer to their spouses, parents and children etc.; and major social members refer to their spouses, parents and, children etc.; and major social
relations refer to siblings, parents-in-law, sons or daughters-in-law, spouses relations refer to siblings, parents-in-law, sons or daughters-in-law, spouses
of their siblings and siblings of their spouses etc.); of their siblings and siblings of their spouses etc.);
(2) natural person shareholders as well as their direct family members who (2) natural person shareholders as well as their spouses, parents and
directly or indirectly hold not less than one percent (1%) of the issued children direct family members who directly or indirectly hold not less than
shares of the Company or who are ranked as the top ten shareholders of the one percent (1%) of the issued shares of the Company or who are ranked as the
Company; top ten shareholders of the Company;
(3) persons as well as their direct family members who work in entities (3) persons as well as their direct family members spouses, parents and
which are such shareholders of the Company directly or indirectly holding not childrenwho work in entities which are such shareholders of the Company
less than five percent (5%) of the shares of the Company in issue or which are directly or indirectly holding not less than five percent (5%) of the shares
ranked as the top five shareholders of the Company; of the Company in issue or which are ranked as the top five shareholders of
the Company;
(4) persons as well as their direct family members who work in the
subsidiary of the Company's controlling shareholder and actual controller; (4) persons as well as their spouses, parents and children direct family
members who work in the subsidiary of the Company's controlling shareholder
and actualde facto controller;
(5) persons who have material business transactions with the Company
and its controlling
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shareholders, actual controllers or their respective subsidiaries, or persons (5) persons who have material business transactions with the Company
who hold positions in such entities and their controlling shareholders or and its controlling shareholders, actualde facto controllers or their
actual controllers that have material business transactions with the same; respective subsidiaries, or persons who hold positions in such entities and
their controlling shareholders or actualde facto controllers that have
material business transactions with the same;
(6) persons who provide financial, legal, consulting, recommendation
and other services for the Company, its controlling shareholders, actual
controllers or their respective subsidiaries, including but not limited to all (6) persons who provide financial, legal, consulting, recommendation
personnel of the project team, reviewers at all levels, personnel signing the and other services for the Company, its controlling shareholders, actualde
report, partners, directors, senior officers and principal responsible persons facto controllers or their respective subsidiaries, including but not limited
of the intermediary institutions providing services; to all personnel of the project team, reviewers at all levels, personnel
signing the report, partners, directors, senior officers and principal
responsible persons of the intermediary institutions providing services;
(7) persons who have satisfied the conditions stated in sub-paragraph (1) to
sub-paragraph (6) in the last 12 months;
(7) persons who have satisfied the conditions stated in sub-paragraph (1) to
sub-paragraph (6) in the last 12 months;
(8) persons who are determined by the authority in charge of securities to
be unqualified to act as independent directors.
(8) other persons who are determined by the authority in charge of
securities to be unqualified to act as independent directors without
independence as stipulated by laws, administrative regulations, the CSRC,
The subsidiaries of the controlling shareholders and actual controllers of the stock exchanges and these Articles of Association.
Company mentioned in preceding subparagraphs (4) to (6) do not include the
enterprises controlled by the same state-owned assets management institution
as the Company and not forming a connected relationship with the Company
according to relevant regulations. The subsidiaries of the controlling shareholders and actualde facto
controllers of the Company mentioned in preceding subparagraphs (4) to (6) do
not include the enterprises controlled by the same state-owned assets
management institution as the Company and not forming a connected relationship
Independent directors shall conduct self- examination on their independence with the Company according to relevant regulations.
every year and submit the self-examination results to the board of directors.
The board of directors shall evaluate the independence of the independent
directors in office and issue special opinions every year, which shall be
disclosed together with the annual report. Independent directors shall conduct self- examination on their independence
every year and submit the self-examination results to the board of
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directors. The board of directors shall evaluate the independence of the
independent directors in office and issue special opinions every year, which
shall be disclosed together with the annual report.
Article 125 Independent directors shall perform the following duties: Article 124 Independent directors, as members of the board of directors, shall
have the duty of loyalty and diligence to the Company and all shareholders to
prudently perform the following duties:
(1) to participate in the decision-making of the board of directors and
express clear opinions on the matters discussed;
(1) to participate in the decision-making of the board of directors and
express clear opinions on the matters discussed;
(2) to supervise the potential material conflicts of interest between the
Company and its controlling shareholders, actual controllers, directors and
senior officers in accordance with the relevant provisions of the Measures for (2) to supervise the potential material conflicts of interest between the
the Administration of Independent Directors of Listed Companies, so as to Company and its controlling shareholders, actualde facto controllers,
ensure that the decisions of the board of directors are in line with the directors and senior officers in accordance with the relevant provisions of
overall interests of the Company and protect the legitimate rights and the Measures for the Administration of Independent Directors of Listed
interests of minority shareholders; Companies, so as to ensure that the decisions of the board of directors are in
line with the overall interests of the Company and protect the legitimate
rights and interests of minority shareholders;
(3) to provide professional and objective suggestions on the operation
and development of the Company, and promote the improvement of the
decision-making level of the board of directors; (3) to provide professional and objective suggestions on the operation
and development of the Company, and promote the improvement of the
decision-making level of the board of directors;
(4) other duties as stipulated by laws, regulations and the Articles of
Association.
(4) other duties as stipulated by laws, regulations and the Articles of
Association.
Article 126 Apart from such powers as conferred on a director under the Article 125 Apart from such powers as conferred on a director under the
Company Law and other relevant laws, regulations, other regulatory documents Company Law and other relevant laws, regulations, other regulatory documents
and the Articles of Association, an independent director shall also have the and the Articles of Association, an independent director shall also have
following special functions and powers: exercise the following special functions and powers:
(1) to independently engage an intermediary to audit, consult on or verify (1) to independently engage an intermediary to audit, consult on or verify
specific matters of the Company; specific matters of the Company;
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(2) to propose to the board of directors to convene an extraordinary general (2) to propose to the board of directors to convene an extraordinary
meeting; generalshareholders'meeting;
(3) to propose to convene a board meeting; (3) to propose to convene a board meeting;
(4) to publicly solicit shareholders' rights from shareholders according (4) to publicly solicit shareholders' rights from shareholders according
to laws; to laws;
(5) to express independent opinions on matters that may damage the rights (5) to express independent opinions on matters that may damage the rights
and interests of the Company or minority shareholders; and interests of the Company or minority shareholders;
(6) other functions and powers as stipulated by laws, regulations and the (6) other functions and powers as stipulated by laws, administrative
Articles of Association. regulations, the CSRC and theseArticles of Association.
An independent director shall obtain the consent from more than half of all An independent director shall obtain the consent from more than half of all
independent directors in the case of exercising his/her functions as described independent directors in the case of exercising his/her functions as described
in preceding sub-paragraphs (1) to (3). in preceding sub-paragraphs (1) to (3).
If an independent director exercises the functions and powers as described in If an independent director exercises the functions and powers as described in
the sub-paragraph (1) of this Article, the Company shall timely disclose the the sub-paragraph (1) of this Article, the Company shall timely disclose the
same. If the aforesaid functions and powers cannot be normally exercised, the same. If the aforesaid functions and powers cannot be normally exercised, the
Company shall disclose the specific circumstances and reasons. Company shall disclose the specific circumstances and reasons.
Article 127 The following matters shall be submitted to the board of directors Article 126 The following matters shall be submitted to the board of directors
for consideration after being approved by more than half of all independent for consideration after being approved by more than half of all independent
directors: directors:
(1) connected transactions that should be disclosed; (1) connected transactions that should be disclosed;
(2) changes in or waivers of commitments by the Company and related parties; (2) plans on changes in or waivers of commitments by the Company and
related parties;
(3) the decisions made and measures taken by the board of directors of the
acquired company in connection with the acquisition; (3) the decisions made and measures taken by the board of directors of the
acquired company in connection with the acquisition of the Company;
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(4) other matters as stipulated by laws, regulations and the Articles of (4) other matters as stipulated by laws, administrative regulations, the CSRC
Association. and these Articles of Association.
Article 128 The independent directors shall hold special meetings on a regular Article 127 The Company shall establish a mechanism of special meetings
or irregular basis, and the matters as described in sub-paragraphs (1) to (3) attended by all independent directors. Matters such as related transactions to
of paragraph 1 of Article 126 and Article 127 of these Articles of Association be considered by the board of directors shall be approved in advance by a
shall be considered at special meetings of independent directors. special meeting of independent directors. The independent directors shall hold
special meetings on a regular or irregular basis, and the matters as described
in sub-paragraphs (1) to (3) of paragraph 1 of Article 1265and Article 1276of
these Articles of Association shall be considered at special meetings of
The special meeting of independent directors may study and discuss other independent directors.
matters of the Company as required.
The special meeting of independent directors may study and discuss other
The special meeting of independent directors shall be convened and presided matters of the Company as required.
over by an independent director jointly recommended by more than half of the
independent directors; if the convener does not perform his duties or is
unable to perform his duties, two or more independent directors may convene
the meeting and elect a representative to preside over the meeting on their The special meeting of independent directors shall be convened and presided
own. over by an independent director jointly recommended by more than half of the
independent directors; if the convener does not perform his duties or is
unable to perform his duties, two or more independent directors may convene
the meeting and elect a representative to preside over the meeting on their
The Company shall provide convenience and support for the convening of special own.
meetings of independent directors.
The minutes of the special meeting of independent directors shall be prepared
in accordance with the regulations, and the opinions of independent directors
shall be recorded in the minutes of the meeting. The independent directors
shall sign to confirm the minutes of the meeting.
The Company shall provide convenience and support for the convening of special
meetings of independent directors.
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CHAPTER 12: SPECIAL COMMITTEES OF THE BOARD OF DIRECTORS
Article 129 The board of directors of the Company shall establish the audit
and risk management committee (the supervision committee), the strategy and
investment committee, the nomination committee, the remuneration and appraisal
committee, the aviation safety committee and other special committees, which
shall perform their duties in accordance with these Articles of Association
and the authorization of the board of directors. The resolutions of the
special committees shall be submitted to the board of directors for
deliberation and decision. The working rules of the special committees shall
be formulated by the board of directors.
Article 130 The audit and risk management committee (the supervision
committee) shall be composed of three to five members, who shall be directors
who do not hold senior officer positions in the Company, of whom more than
half shall be independent directors, with accounting professionals among the
independent directors serving as the convenor; the strategy and investment
committee shall be composed of three to seven directors, with the chairman of
the board of directors or his/her designated committee member serving as the
convenor; the nomination committee shall be composed of three to seven
directors, of whom a majority shall be independent directors, with the
chairman of the board of directors serving as the convenor; the remuneration
and appraisal committee shall be composed of three to seven directors, of whom
a majority shall be independent directors, with the independent directors
serving as the convenor; and the aviation safety committee shall be composed
of
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three members, with the convenor being elected by the members of the aviation
safety committee.
Article 131 The audit and risk management committee (the supervision
committee) under the board of directors shall exercise the powers and
functions of the supervisory committee as stipulated in the Company Law.
Article 132 The audit and risk management committee (the supervision
committee) shall be responsible for reviewing the Company's financial
information and its disclosure, supervising and evaluating the internal and
external auditing work and internal control. The following matters shall be
submitted to the board of directors for deliberation with the approval of more
than half of all members of the audit and risk management committee (the
supervision committee):
(1) disclosure of financial information and internal control evaluation
reports in financial accounting reports and periodic reports;
(2) appointment or dismissal of an accounting firm that undertakes the audit
business of the Company;
(3) appointment or dismissal of the Company's financial controller;
(4) changes in accounting policies, accounting estimates or corrections of
major accounting errors due to reasons other than changes in accounting
standards;
(5) other matters stipulated by laws, administrative regulations, provisions
of the CSRC and these Articles of Association.
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Article 133 The audit and risk management committee (the supervision
committee) shall hold meetings at least once a quarter. Extraordinary meetings
may be convened at the proposals of two or more members or when the convener
considers it necessary. Meetings of the audit and risk management committee
(the supervision committee) shall be held with the presence of more than two
thirds of the members.
Resolutions of the audit and risk management committee (the supervision
committee) shall be passed by more than half of the members of the audit and
risk management committee (the supervision committee).
Each person shall have one vote for a resolution of the audit and risk
management committee (the supervision committee).
The audit and risk management committee (the supervision committee) shall
prepare the minutes of the meeting with respect of resolutions in accordance
with the regulations, and the minutes shall be signed by the members of the
audit and risk management committee (the supervision committee) attending the
meeting.
Article 134 The strategy and investment committee shall be responsible for
studying and supervising the Company's long-term development strategy, major
investment and financing decisions and environmental, social and governance
work, etc., and making recommendations to the board of directors on the
following matters:
(1) conducting studies and making recommendations on the Company's long-term
development strategic planning;
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(2) conducting studies and making recommendations on the Company's annual
investment plan;
(3) conducting studies and making recommendations on plans for major
investment and financing projects subject to the approval of the board of
directors;
(4) formulating the Company's environmental, social and governance structure,
objectives, management approach and strategy;
(5) conducting supervision and inspection of the implementation of matters
within the scope of the proposed authority;
(6) other matters authorized by laws, administrative regulations, provisions
of the CSRC, these Articles of Association and the board of directors.
Article 135 The nomination committee shall be responsible for formulating
criteria and procedures for the selection of directors and senior officers,
selecting and reviewing candidates for directors and senior officers and their
qualifications, and making recommendations to the board of directors on the
following matters:
(1) nomination or appointment or dismissal of directors;
(2) appointment or dismissal of senior officers;
(3) other matters authorized by laws, administrative regulations, provisions
of the CSRC, these Articles of Association and the board of directors.
If the board of directors does not adopt or does not fully adopt the
recommendations of the
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nomination committee, it shall record the opinions of the nomination committee
and the specific reasons for their non-adoption in the resolution of the board
of directors and disclose the same.
Article 136 The remuneration and appraisal committee shall be responsible for
formulating the appraisal standards for directors and senior officers,
conducting appraisal, formulating and reviewing the remuneration determination
mechanisms, decision-making processes, payment and payment cessation and
recovery arrangements, and other remuneration policies and plans for directors
and senior officers, and making recommendations to the board of directors on
the following matters:
(1) the remuneration of directors and senior officers;
(2) the formulation or amendment of equity incentive plans, employee stock
ownership plans, and the granting of rights to incentive recipients and the
achievement of conditions for the exercise of such rights by incentive
recipients;
(3) the arrangement of stock ownership plans for directors and senior officers
in the event of a proposed spin-off of a subsidiary;
(4) other matters authorized by laws, administrative regulations, provisions
of the CSRC, these Articles of Association and the board of directors.
If the board of directors does not adopt or does not fully adopt the
recommendations of the remuneration and appraisal committee, it shall record
the opinions of the remuneration and appraisal committee and the specific
reasons for their non-adoption in the resolution of the board of directors and
disclose the same.
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Article 137 The aviation safety committee shall be responsible for supervising
the management of aviation safety of the Company, providing support to the
board of directors in making decisions on aviation safety, and making
recommendations to the board of directors on the following matters:
(1) analysis of the Company's security situation;
(2) major problems in the Company's aviation safety work;
(3) other matters authorized by the board of directors of the Company.
Article 138 Where the relevant competent department of the State Council makes
other provisions regarding special committees, such provisions shall prevail.
CHAPTER 12: SECRETARY OF THE BOARD OF DIRECTORS CHAPTER 123: SECRETARY OF THE BOARD OF DIRECTORS
Article 130 The Company shall have one (1) secretary of the board of Article 139 The Company shall have one (1) secretary of the board of
directors. The secretary shall be a senior officer of the Company. directors. The secretary shall be a senior officer of the Company and be
present at the shareholders' meetings, the board of directors' meetings, the
president's office meetings and other important decision-making meetings of
the Company as well as the special committee meetings of the board of
The board of directors shall establish a secretariat of the board of directors. When the party committee studies and discusses major operation and
directors. management matters, the secretary of the board of directors shall attend.
The board of directors shall establish the office of the board of directors as
the administrative organization of the board of directors, a secretariat of
the board of directors which shall be headed by the secretary of the board of
directors.
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Article 131 The secretary of the Company's board of directors shall be a Article 140 The secretary of the Company's board of directors shall be a
natural person who has the requisite professional knowledge and experience, natural person who has the requisite professional knowledge and experience,
and shall be appointed by the board of directors. and shall be appointed by the board of directors.
The main tasks and duties of the secretary of the board of directors include: The main tasks and duties of the secretary of the board of directors include:
…… ……
(10) other duties as stipulated by laws, regulations, other regulatory (10) other duties as stipulated by laws, regulations, other regulatory
documents (including the listing rules) and the Articles of Association. documents (including the listing rules of securities) and the Articles of
Association.
CHAPTER 13: PRESIDENT CHAPTER 134: PRESIDENTSENIOR OFFICERS
Article 136 The president shall be accountable to the board of directors and Article 145 The president shall be accountable to the board of directors and
shall exercise the following functions and powers: shall exercise the following functions and powers:
(1) to be in charge of the Company's production, operation and management (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 and to organize the implementation of the resolutions of the board of
directors; directors;
(2) to organize the implementation of the Company's annual business plan (2) to organize the implementation of the Company's annual business plan
and investment proposal; and investment proposal;
(3) subject to applicable laws and these Articles of Association, to decide (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 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 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 Company's latest audited net assets (the said amount and proportion to be
determined by the shareholders' meeting); determined by the shareholders' meeting);
(4) to sign contracts and agreements on behalf of the Company in accordance (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 with the authorization granted by the board of directors or the legal
representative; representative;
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(5) to draft plans for the establishment of the Company's internal (5) to draft plans for the establishment of the Company's internal
management structure, and where necessary, make plans for general management structure, and where necessary, make plans for general
institutional adjustment; institutional adjustment;
(6) to draft the Company's basic management system; (6) to draft the Company's basic management system;
(7) to formulate basic rules and regulations for the Company; (7) to formulate basicspecific rules and regulations for the Company;
(8) to propose the appointment or dismissal of the vice presidents, chief (8) to propose to the board of directors the appointment or dismissal of
accountant, chief pilot and general legal counsel of the Company; the vice presidents, chief accountant, chief pilot and general legal counsel
of the Company;
(9) to appoint or dismiss management personnel other than those required
to be appointed or dismissed by the board of directors; (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; (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. (11) other powers conferred by the Articles of Association andorthe board
of directors.
Article 146 The president shall formulate the president's working rules and
submit the same to the board of directors for approval before implementation.
The president's working rules shall include the following:
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(1) the conditions and procedures for the convening of the president's meeting
and the persons participating in it;
(2) the use of funds and assets of the Company, the authority to sign major
contracts, and the reporting system to the board of directors;
(3) other matters deemed necessary by the board of directors.
Article 137 The president shall attend meetings of the board of directors. The Article 147 The president shall attend meetings of the board of directors. If
president who is not a director shall not have the right to vote at board the matters deliberated by the board of directors involve legal issues, the
meetings. general legal counsel shall attend and give legal opinions. The president who
is not a director shall not have the right to vote at board meetings.
Article 148 If the senior officers, in performing their duties for the
Company, cause damage to others, the Company shall bear the liability for
compensation; the senior officers shall also bear the liability for
compensation if there is any willfulness or gross negligence on their part.
Senior officers who violate laws, administrative regulations, departmental
rules or the provisions of these Articles of Association in the course of
performing their duties for the Company and cause damage to the Company shall
be liable for compensation.
Article 138 In performing their duties and powers, the president, vice Article 149 Senior officers of the Company shall faithfully perform their
presidents, chief accountant, chief pilot, general legal counsel and other duties and safeguard the best interests of the Company and all shareholders.
senior officers shall act honestly and diligently in accordance with laws, Senior officers of the Company who fail to perform their duties faithfully or
regulations, other regulatory documents and the Articles of Association. violate their obligations of good faith and cause damage to the interests of
the Company and public shareholders shall be liable for compensation in
accordance with laws.
In performing their duties and powers, the president, vice presidents, chief
accountant, chief pilot, general legal counsel and other senior
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officers shall act honestly and diligently in accordance with laws,
regulations, other regulatory documents and the Articles of Association.
CHAPTER 14: SUPERVISORY COMMITTEE CHAPTER 14: SUPERVISORY COMMITTEE
Article 139 The Company shall have a supervisory committee. The supervisory Article 139 The Company shall have a supervisory committee. The supervisory
committee is a permanent supervisory body of the Company responsible for committee is a permanent supervisory body of the Company responsible for
supervising the board of directors and its members, the president, vice supervising the board of directors and its members, the president, vice
presidents, chief financial officer and other senior officers of the Company presidents, chief financial officer and other senior officers of the Company
to prevent them from abusing their powers and infringing the legal rights and to prevent them from abusing their powers and infringing the legal rights and
interests of the shareholders, the Company and its employees. interests of the shareholders, the Company and its employees.
Article 140 The supervisory committee shall compose of five (5) supervisors. Article 140 The supervisory committee shall compose of five (5) supervisors.
The number of outside supervisor (hereinafter meaning supervisors who do not The number of outside supervisor (hereinafter meaning supervisors who do not
hold office in the Company) shall account for one half or more of the total hold office in the Company) shall account for one half or more of the total
number of supervisory committee members. The number of supervisors number of supervisory committee members. The number of supervisors
representing employees shall not be less than one-third (1/3) of the total representing employees shall not be less than one-third (1/3) of the total
number of supervisors. The supervisory committee shall have one (1) chairman number of supervisors. The supervisory committee shall have one (1) chairman
who shall be elected by more than half of the number of supervisors. Each who shall be elected by more than half of the number of supervisors. Each
supervisor shall serve for a term of 3 years, which term is renewable upon supervisor shall serve for a term of 3 years, which term is renewable upon
reelection and re-appointment. reelection and re-appointment.
The chairman of the supervisory committee shall organise the implementation of The chairman of the supervisory committee shall organise the implementation of
the duties of the supervisory committee. the duties of the supervisory committee.
Article 141 The supervisory committee shall include three (3) supervisors who Article 141 The supervisory committee shall include three (3) supervisors who
shall represent the shareholders (all of whom are outside supervisors) and two shall represent the shareholders (all of whom are outside supervisors) and two
(2) supervisors who shall represent the employees. Supervisors who represent (2) supervisors who shall represent the employees. Supervisors who represent
the shareholders shall be elected or the shareholders shall be elected or removed by the shareholders in general
removed by the shareholders in general meetings, meetings, and the
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and the supervisor who represents employees shall be elected or removed by the supervisor who represents employees shall be elected or removed by the
employees democratically. employees democratically.
Where necessary, the supervisory committee may establish an office responsible Where necessary, the supervisory committee may establish an office responsible
for the day-to-day work of the supervisory committee. for the day-to-day work of the supervisory committee.
Article 142 The list of candidates for supervisors representing shareholders Article 142 The list of candidates for supervisors representing shareholders
shall be proposed in form of a motion to the shareholders' general meeting for shall be proposed in form of a motion to the shareholders' general meeting for
resolution. Candidates for supervisors representing employees shall be resolution. Candidates for supervisors representing employees shall be
nominated by the board of directors, supervisory committee or by nominated by the board of directors, supervisory committee or by
shareholder(s) holding, alone or together, more than three percent (3%) of the shareholder(s) holding, alone or together, more than three percent (3%) of the
total amount of voting shares in the Company and shall be elected or removed total amount of voting shares in the Company and shall be elected or removed
at the shareholders' general meeting. at the shareholders' general meeting.
Article 143 The cumulative voting method shall be adopted for voting the Article 143 The cumulative voting method shall be adopted for voting the
resolution to elect supervisors (excluding supervisors acted by staff resolution to elect supervisors (excluding supervisors acted by staff
representatives) at the shareholders' general meeting of the Company. Namely, representatives) at the shareholders' general meeting of the Company. Namely,
for the election of more than two supervisors at the shareholders' general for the election of more than two supervisors at the shareholders' general
meeting, each share held by the shareholders participating in the voting shall meeting, each share held by the shareholders participating in the voting shall
carry the voting right equal to the total number of supervisors to be elected. carry the voting right equal to the total number of supervisors to be elected.
The shareholders can either cast all the votes to elect one person or cast the The shareholders can either cast all the votes to elect one person or cast the
votes to elect several persons. votes to elect several persons.
Article 144 The directors, president, vice presidents and other senior officer Article 144 The directors, president, vice presidents and other senior officer
of the Company shall not act concurrently as supervisors. of the Company shall not act concurrently as supervisors.
Article 145 The board of supervisors' meetings Article 145 The board of supervisors' meetings
shall be convened at least once every 6 months.
shall be convened at least once every 6 months.
The chairman of the board of supervisors shall convene and chair the said
The chairman of the board of supervisors shall convene and chair the said
meetings. Should the chairman of the board of supervisors be unable to perform meetings. Should the chairman of the board of supervisors be unable to perform
his/her duties or fail to perform his/her his/her duties or fail to perform his/her
duties, a supervisor jointly elected by more than
duties, a supervisor jointly elected by more than
half of the number of supervisors shall convene
half of the number of supervisors shall convene and
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and chair the board of supervisors' meeting. A notice of the board of chair the board of supervisors' meeting. A notice of the board of supervisors'
supervisors' meetings shall be delivered to all supervisors in writing 10 days meetings shall be delivered to all supervisors in writing 10 days prior to the
prior to the convening of the said meeting. The notice of meeting shall convening of the said meeting. The notice of meeting shall incorporate the
incorporate the following information: following information:
(1) The date, venue and duration of the meeting; (1) The date, venue and duration of the meeting;
(2) The reason for convening the meeting and the topics for discussion (2) The reason for convening the meeting and the topics for discussion
thereat; thereat;
(3) The date on which the notice is issued. (3) The date on which the notice is issued.
Article 146 If, at the time when the term of office of a supervisor expires, Article 146 If, at the time when the term of office of a supervisor expires,
the election of a new supervisor is not held in time, and if a supervisor the election of a new supervisor is not held in time, and if a supervisor
resigns during his/her term of office and causes the number of members of the resigns during his/her term of office and causes the number of members of the
supervisory committee fall below those required by law, the incumbent supervisory committee fall below those required by law, the incumbent
supervisor shall continue to perform his/her supervisor's responsibilities in supervisor shall continue to perform his/her supervisor's responsibilities in
accordance with the relevant laws, administrative regulations and these accordance with the relevant laws, administrative regulations and these
Articles of Association until the newly elected supervisor take his/her Articles of Association until the newly elected supervisor take his/her
office. office.
Article 147 The supervisory committee shall be accountable to the shareholders Article 147 The supervisory committee shall be accountable to the shareholders
in a general meeting and shall exercise the following functions and powers in in a general meeting and shall exercise the following functions and powers in
accordance with law: accordance with law:
(1) to review the Company's financial position situation, to examine the (1) to review the Company's financial position situation, to examine the
Company's reports prepared by the board of directors on a regular basis and to Company's reports prepared by the board of directors on a regular basis and to
prepare written opinion after the same have been examined; prepare written opinion after the same have been examined;
(2) to monitor the performance directors, president, vice presidents, (2) to monitor the performance directors, president, vice presidents,
financial controller and other financial controller and other
senior officers of their duties to ensure that they do not act in
senior officers of their duties to ensure that they do not act in
contravention of any law, regulation or the Articles of Association, and to contravention of any law, regulation or the Articles of Association, and to
recommend the dismissal of any directors and senior officer recommend the dismissal of any directors and senior officer
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personnel who has violated the laws, administrative regulations, the Articles personnel who has violated the laws, administrative regulations, the Articles
of Association or the resolutions passed at the shareholders' general of Association or the resolutions passed at the shareholders' general
meetings; meetings;
(3) to demand any director, president, vice president, financial (3) to demand any director, president, vice president, financial controller
controller or any other senior officer who acts in a manner which is harmful or any other senior officer who acts in a manner which is harmful to the
to the Company's interest to rectify such behaviour; Company's interest to rectify such behaviour;
(4) to verify the financial information such as the financial report, (4) to verify the financial information such as the financial report,
business report and plans for distribution of profits to be submitted by the business report and plans for distribution of profits to be submitted by the
board of directors to the shareholders' general meetings and to authorize, in board of directors to the shareholders' general meetings and to authorize, in
the Company's name, publicly certified accountants and practising auditors to the Company's name, publicly certified accountants and practising auditors to
assist in the re-examination of such information should any doubt arise in assist in the re-examination of such information should any doubt arise in
respect thereof; respect thereof;
(5) to propose to a motion at the shareholder's annual general meeting; (5) to propose to a motion at the shareholder's annual general meeting;
(6) to propose to convene an extraordinary general meeting and to convene (6) to propose to convene an extraordinary general meeting and to convene
and preside over the shareholders' general meetings when the board of and preside over the shareholders' general meetings when the board of
directors fails to do so; directors fails to do so;
(7) to propose to convene an extraordinary meeting of the board of (7) to propose to convene an extraordinary meeting of the board of
directors; directors;
(8) to represent the Company in negotiations with, or in bringing actions (8) to represent the Company in negotiations with, or in bringing actions
against, a director or senior officer; against, a director or senior officer;
(9) other functions and powers specified in laws, administrative regulations (9) other functions and powers specified in laws, administrative regulations
and in these Articles of Association as well as those as conferred by the and in these Articles of Association as well as those as conferred by the
shareholders' general meeting. shareholders' general meeting.
The supervisory committee may make recommendations on the appointment of The supervisory committee may make recommendations on the appointment of
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accounting firm by the Company, may appoint another accounting firm in the accounting firm by the Company, may appoint another accounting firm in the
name of the Company when necessary to examine financial affairs of the Company name of the Company when necessary to examine financial affairs of the Company
independently, and may directly report relevant information to the authorities independently, and may directly report relevant information to the authorities
in charge of securities of the State Council and other relevant authorities. in charge of securities of the State Council and other relevant authorities.
Outside supervisors shall report independently to the shareholders' meeting on Outside supervisors shall report independently to the shareholders' meeting on
whether the senior officers perform their duties honestly and diligently. whether the senior officers perform their duties honestly and diligently.
Supervisors may attend meetings of the board of directors as observers, and to Supervisors may attend meetings of the board of directors as observers, and to
interrogate or give suggestion to the resolutions at the board of directors. interrogate or give suggestion to the resolutions at the board of directors.
Article 148 Supervisors may require the directors, the president, vice Article 148 Supervisors may require the directors, the president, vice
president and other senior officer personnel to the Board and internal and president and other senior officer personnel to the Board and internal and
external auditing personnel to attend meetings of the supervisory committee external auditing personnel to attend meetings of the supervisory committee
and to answer matters of concerns of the supervisory committee. and to answer matters of concerns of the supervisory committee.
Article 149 Resolutions of the supervisory committee shall be passed by more Article 149 Resolutions of the supervisory committee shall be passed by more
than half of the number of supervisors. than half of the number of supervisors.
Article 150 The supervisory committee shall take minutes of the resolutions at Article 150 The supervisory committee shall take minutes of the resolutions at
the meetings. Supervisors who attend the meeting and the person taking the the meetings. Supervisors who attend the meeting and the person taking the
minutes shall sign the minutes. The supervisors attending the supervisory minutes shall sign the minutes. The supervisors attending the supervisory
committee meeting shall have the right to request to have the descriptive committee meeting shall have the right to request to have the descriptive
information on their speech given thereat to be recorded in the minutes. information on their speech given thereat to be recorded in the minutes.
Minutes of the supervisory committee meeting shall be treated as important Minutes of the supervisory committee meeting shall be treated as important
file and kept properly for a period of at least 10 years. file and kept properly for a period of at least 10 years.
Article 151 All reasonable fees incurred in respect Article 151 All reasonable fees incurred in respect
of the employment of professionals (such as, lawyers, certified public of the employment of professionals (such as, lawyers, certified public
accountants or practicing auditors) accountants or practising auditors)
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which are required by the supervisory committee in the exercise of its which are required by the supervisory committee in the exercise of its
functions and powers shall be borne by the Company. functions and powers shall be borne by the Company.
Article 152 A supervisor shall carry out his duties honestly and faithfully in Article 152 A supervisor shall carry out his duties honestly and faithfully in
accordance with laws, administrative regulations and the Articles of accordance with laws, administrative regulations and the Articles of
Association. Association.
CHAPTER 15: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS, CHAPTER 15: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS,
PRESIDENT, VICE PRESIDENTS AND OTHER SENIOR OFFICERS OF THE COMPANY PRESIDENT, VICE PRESIDENTS AND OTHER SENIOR OFFICERS OF THE COMPANY
Article 153 A person may not serve as a director, supervisor, president, vice Article 150 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 presidents or any other or senior officers of the Company if any of the
circumstances apply: following circumstances apply:
(1) a person who does not have or who has limited capacity for civil (1) a person who does not have or who has limited capacity for civil
conduct; conduct;
(2) a person who has been sentenced for corruption, bribery, (2) a person who has been sentenced for corruption, bribery,
infringement of property or misappropriation of property or other crimes which infringement of property or misappropriation of property or other crimes which
disrupt the social economic order, where less than 5 years have elapsed since disruption of the social economic order, where less than 5 years have elapsed
the sentence was served, or a person who has been deprived of his political since the sentence was served, or a person who has been deprived of his
rights and not more than 5 years have elapsed since the sentence was served; political rights and not more than 5 years have elapsed since the sentence was
served, or, in the case of a probation, less than 2 years have elapsed since
the date of expiry of the period of probation;
(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 (3) a person who is a former director, factory manager or manager of a
less than 3 years have elapsed since the date of completion of the insolvent company or enterprise which has been dissolved or put into liquidation and who
liquidation of the company or enterprise; was personally liable for the winding up of such company or enterprise, where
less than 3 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
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who are personally liable therefor, where less than (4) a person who is a former legal representative of a company or
enterprise the business licence of which was revoked or which has been ordered
3 years have elapsed since the date of the revocation of the business licence; to be closed due to violation of law and who are personally liable therefor,
where less than 3 years have elapsed since the date of the revocation of the
business licence or the ordering of being closed;
(5) a person who has a relatively large amount of debts which have become
overdue;
(5) a person who has been listed as a dishonest debtor by the People's
Court due to 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;
(6) a person who has been subject to measures imposed by the CSRC in
relation to the ban on the entry into the securities market for a period of
time that has not expired; a person who is currently under investigation by
(7) a person who, according to laws, administrative regulations or judicial organs for violation of criminal law;
departmental rules, cannot act as a leader of an enterprise;
(7) a person who has been publicly recognized by the stock exchange as
(8) a person other than a natural person; unsuitable to serve as a director, senior officers, etc. of a listed company
for a period of time that has not expired;
(9) a person who has been convicted by the competent authority for
violation of relevant securities regulations and such conviction involves a (78) a person who, according to laws, administrative regulations or
finding that such person has acted fraudulently or dishonestly, where less departmental rules, cannot act as a leader of an enterprise;
than 5 years have elapsed since the date of such conviction;
(8) a person other than a natural person;
(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;
(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 5 years
(11) other contents as provided for by the laws, administrative regulations have elapsed since the date of such conviction;
or departmental rules.
(10) a person who has been confirmed by the authority in charge of
If any of the above circumstances occurs on the part of a director during his securities of the State Council as being prohibited from participating in the
term of office, the board of directors shall, starting from the date on which market or have not been released from such prohibition;
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
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they are aware thereof, forthwith cease the performance of duties by the (119) other contents as provided for by the laws, administrative regulations
relevant president and convene a board meeting to dismiss such president. If or departmental rules.
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' If a director is elected or appointed in violation of the provision of this
general meeting or the employee representatives' meeting. Article, such election, appointment or employment shall be null and void. 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 from his postat the
shareholders' general meeting. If any of the above circumstances occurs on the
part of the president a senior officer 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 senior
officer and convene a board meeting to dismiss such presidentsenior officer.
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.
Article 155 The directors of the Company shall comply with the laws, Article 152 The directors of the Company shall comply with the laws,
administrative regulations and these Articles of Association, and shall have administrative regulations and these Articles of Association, and bear
the following loyalty obligations to the Company: fiduciary duties to the Company, take measures to avoid any possible conflict
of interests with the Company and may not abuse their authority to seek
illicit benefits.
The directors shall have the following loyalty obligations to the Company:
(1) not to take advantage of his authority to accept bribes or other illegal
income, and not to misappropriate the property of the Company;
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(1) not to take advantage of his authority to accept bribes or other illegal (2) not to, misappropriate the funds of the Company;
income, and not to misappropriate the property of the Company;
(32) not to open an account in his own name or in the name of any other
(2) not to misappropriate the funds of the Company; individual to deposit the assets or funds of the Company;
(3) not to open an account in his own name or in the name of any other (43) not to lend the Company's funds to others abuse their authority to accept
individual to deposit the assets or funds of the Company; any bribe or provide guarantees for others with the Company's property in
violation of the provisions of these Articles of Association and without the
consent of the shareholders' general meetings or the board of directors other
illicit income;
(4) not to lend the Company's funds to others or provide guarantees for
others with the Company's property in violation of the provisions of these
Articles of Association and without the consent of the shareholders' general
meetings or the board of directors; (54) not to enter into contracts or conduct transactions with the Company
without reporting to the Board or the shareholders' meeting or approval of
resolutions of the Board or shareholders' meeting directly or indirectly in
violation of pursuant to the provisions of these Articles of Association or
(5) not to enter into contracts or conduct transactions with the Company without the consent of the shareholders' general meeting;
in violation of the provisions of these Articles of Association or without the
consent of the shareholders' general meeting;
(65) without the consent of the shareholders' general meeting, not to take
advantage of his authority to seek for himself or others business
(6) without the consent of the shareholders' general meeting, not to take opportunities that should belong to the Company, except where they reported to
advantage of his authority to seek for himself or others business the Board or the shareholders' meeting and received approval of shareholders'
opportunities that should belong to the Company, or to engage in business of meeting resolutions or such business opportunities can not be exploited by the
the same kind as that of the Company for himself or others; Company according to laws, regulations or these Articles of Association;
(7) not to accept commissions from transactions with the Company for his (6) notor to engage in business of the same kind as that of the Company for
own benefit; himself or others without reporting to the Board or the shareholders' meeting
and obtaining approval by a resolution of the shareholders' meeting;
(8) not to disclose the secrets of the Company without authorization;
(9) not to damage the interests of the Company by taking advantage of its
connected relationship;
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(10) other loyalty obligations stipulated by laws, administrative regulations, (7) not to accept commissions from others'
departmental rules and these Articles of Association.
transactions with the Company for his own benefit;
The income obtained by a director in violation of the provisions of this
Article shall belong to the Company; If any loss is caused to the Company, (8) not to disclose the secrets of the Company without authorization;
he/she shall be liable for compensation.
(9) not to damage the interests of the Company by taking advantage of its
connected relationship;
(10) other loyalty obligations stipulated by laws, administrative
regulations, departmental rules and these Articles of Association.
The income obtained by a director in violation of the provisions of this
Article shall belong to the Company; If any loss is caused to the Company,
he/she shall be liable for compensation.
The provisions in subparagraph (4) of the second paragraph of this Article
shall apply to contracts or transactions entered into by close relatives of
directors or the senior officer, enterprises directly or indirectly controlled
by directors or senior officer personnel or their close relatives, and
associates with whom directors or senior officer personnel have other related
relationships.
Article 156 Directors shall abide by laws, administrative regulations and Article 153 Directors shall abide by laws, administrative regulations and
these Articles of Association, and shall have the following diligence these Articles of Association, and owe a duty of diligence to the Company, and
obligations to the Company: shall perform their duties with the reasonable care that a person in a
governance role would ordinarily exercise for the Company's best interests.
(1) to exercise the rights granted by the Company cautiously,
conscientiously and diligently to ensure that the business activities of the
Company comply with the requirements of national laws, administrative
regulations and various national economic policies, and that the business
activities do not exceed the business scope specified in the business license;
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(2) to treat all shareholders fairly; Directors shall have the following diligence obligations to the Company:
(3) to keep abreast of the business operation and management status of the (1) to exercise the rights granted by the Company cautiously,
Company; conscientiously and diligently to ensure that the business activities of the
Company comply with the requirements of national laws, administrative
regulations and various national economic policies, and that the business
activities do not exceed the business scope specified in the business license;
(4) to sign a written confirmation opinion on the periodic report of the
Company. Ensure that the information disclosed by the Company is true,
accurate and complete;
(2) to treat all shareholders fairly;
(5) to provide the board of supervisors with relevant information and
materials truthfully, and not to hinder the board of supervisors or (3) to keep abreast of the business operation and management status of the
supervisors from exercising their powers; Company;
(6) other diligence obligations stipulated by laws, administrative (4) to sign a written confirmation opinion on the periodic report of the
regulations, departmental rules and these Articles of Association. Company. Ensure that the information disclosed by the Company is true,
accurate and complete;
(5) to provide the board of supervisorsaudit and risk management committee
(supervision committee) with relevant information and materials truthfully,
and not to hinder the board of supervisors or supervisors audit and risk
management committee (supervision committee)from exercising their powers;
(6) other diligence obligations stipulated by laws, administrative
regulations, departmental rules and these Articles of Association.
Article 159 Supervisors shall abide by laws, administrative regulations and Article 159 Supervisors shall abide by laws, administrative regulations and
these Articles of Association, and shall have the obligations of loyalty and these Articles of Association, and shall have the obligations of loyalty and
diligence to the Company. Supervisors shall neither accept bribes or other diligence to the Company. Supervisors shall neither accept bribes or other
illegal income by taking advantage of their authority, nor shall they illegal income by taking advantage of their authority, nor shall they
misappropriate the property of the Company. misappropriate the property of the Company.
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Article 160 All directors, supervisors and the secretary of the board of Article 156 All directors, supervisors and the secretary of the board of
directors of the Company shall attend the shareholders' general meeting when directors of the Company shall attend the shareholders' general meeting wWhen
the meeting is convened, and president, vice president and other senior thea shareholders' meeting is convened, and president, vice president and
officer personnel shall attend the same as non-voting attendees and provide other senior officer personnel shall attend the same as non-voting attendees
response and explanations to the interrogations and suggestion raised by the and provide response and explanations to the interrogations and suggestion
shareholders. raised by the shareholders. where the shareholders' meeting requires
directors, senior officer personnel to attend the meeting, the directors and
senior officer personnel shall attend the meeting and answer the inquiries of
shareholders.
Directors, supervisors, presidents, vice presidents and other senior officer
personnel shall inform the supervisory committee of the relevant status and
provide the same with the relevant information in accordance with the facts
and shall not preclude the supervisory committee from exercising its functions Directors, supervisors, presidents, vice presidents and other senior officer
and powers. personnel shall inform the supervisory committee of the relevant status and
provide the same with the relevant information in accordance with the facts
and shall not preclude the supervisory committee from exercising its functions
and powers.
Article 161 If a director, supervisor, president and vice president and other Article 157 The Company has established a management system for directors' and
senior officer of the senior officers' resignations, clearly specifying the accountability and
Company resigns or his or her term of office expires, his or her fiduciary compensation measures for unfulfilled public commitments and other outstanding
duty owed to the Company and shareholders may not be necessarily discharged matters.
before his or her report of resignation
takes effect or within a reasonable period thereafter and within a reasonable
period after the expiry of his or her terms of office while his or her duty to
keep confidential of the trade secrets of the If the resignation of a director, supervisor, president and vice president and
Company shall remain effective after the expiry other or senior officer of the Company resigns takes effector his or her term
of his or her term of office until such secrets enter of office expires, he or she shall
into the public domain. The survival of other duties shall be determined in
complete all handover procedures to the board of directors, his or her
accordance with the fiduciary duty owed to the Company and shareholders may not be necessarily
principles of fairness as well as taking into consideration the time interval discharged before his or her report of resignation
between the occurrence of the event concern and the timing
takes effect or within a reasonable period thereafter and within a reasonable
of his or her departure together with the period after the expiry of his or her terms of office while his or her duty to
keep confidential of the trade secrets of the Company shall remain effective
after the expiry
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circumstances and conditions under which the said person terminates his or her of his or her term of office until such secrets enter into the public domain
relationship with the Company. do not automatically terminate upon the expiration of his or her term of
office, and shall remain effective for a reasonable period determined by the
Company at the time of his or her resignation or the expiry of his or her term
of office. Responsibilities that a director shall assume due to the
performance of his duties during his term of office shall not be exempted or
terminated due to his separation from the Company. The survival of other a
director's fiduciary duties shall be determined in accordance with the
principles of fairness as well as taking into consideration the time interval
between the occurrence of the event concern and the timing of his or her
departure together with the circumstances and conditions under which the said
person terminates his or her relationship with the Company.
Article 162 Any director, supervisor, president, vice president and other Article 158 Any director, supervisor, president, vice president and otheror
senior officer personnel who, when performing their duties in the Company, senior officer personnel who, when performing their duties in the Company,
violates the laws, administrative regulations, departmental rules and violates the laws, administrative regulations, departmental rules and
regulations or the provisions contained in the Articles of Association regulations or the provisions contained in the Articles of Association
resulting in causing losses to the Company shall be liable for indemnifying resulting in causing losses to the Company shall be liable for indemnifying
the Company. Any director, supervisor, president, vice president or other the Company. Any director, supervisor, president, vice president or
senior officer whose term of office has not been expired shall be liable for otherorsenior officer whose term of office has not been expired shall be
compensation of any losses incurred by the Company due to his or her absence liable for compensation of any losses incurred by the Company due to his or
from duty without permission. her absence from duty without permission.
Article 164 Subject to the approval by the shareholders' general meeting, the Article 160 Subject to the approval by the shareholders' general meeting
Company may shareholders' meeting, the Company may take out liability insurance for any
take out liability insurance for any director, supervisor, president, vice director, supervisor, president, vice president and any otherandsenior officer
president and any of the Company, except for those liability resulting
other senior officer of the Company, except for from the violation of laws, regulations, other
those liability resulting from the violation of laws, regulations, other
regulatory documents and the
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Articles of Association by such director, supervisor, president, vice regulatory documents and the Articles of Association by such director,
president and other senior officer of the Company. supervisor, president, vice president and other and senior officer of the
Company.
CHAPTER 16: FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND AUDIT CHAPTER 16: FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND AUDIT
Article 165 The Company shall establish its financial and accounting systems Article 161 The Company shall establish its financial and accounting systems
in accordance with laws, administrative regulations and PRC accounting in accordance with laws, administrative regulations and PRC accounting
standards formulated by the finance regulatory department of the State standards formulated by provisions ofthe finance regulatory department of the
Council. State Council relevant authorities of the state.
Article 167 The board of directors of the Company shall place before the Article 163 The board of directors of the Company shall place before the
shareholders at every annual general meeting such financial reports which the shareholders at every annual shareholders'general meeting such financial
relevant laws, administrative regulations and directives promulgated by reports which the relevant laws, administrative regulations, rules and other
competent regional and central governmental authorities require the Company to and directives promulgated by competent regional and central governmental
prepare. Such reports must be audited and reviewed. authorities require the Company to prepare. Such reports must be audited and
reviewed.
Article 168 The Company's financial reports shall be made available for Article 164 The Company's financial reports shall be made available for
shareholders' inspection at the Company twenty (20) days before the date of shareholders' inspection at the Company twenty (20) days before the date of
every shareholders' annual general meeting. Each shareholder shall be entitled every shareholders' annual generalshareholders' meeting. Each shareholder
to obtain a copy of the financial reports referred to in this Chapter. shall be entitled to obtain a copy of the financial reports referred to in
this Chapter.
The Company shall send to each holder of Overseas-Listed Foreign Shares by
prepaid mail at the address registered in the register of shareholders the The Company shall send to each holder of Overseas-Listed Foreign Shares by
said reports not later than twenty-one (21) days before the date of every prepaid mail at the address registered in the register of shareholders the
annual general meeting of the shareholders. said reports not later than twenty-one (21) days before the date of every
annual generalshareholders' meeting of the shareholders.
Provided that the laws and regulations and the relevant listing rules of the
jurisdictions where the shares of the Company are listed are complied with, Provided that the laws and regulations and the relevant listing rules
the abovementioned report may also be of securities of the
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issued or provided to the holders of Overseas- Listed Foreign Shares by other jurisdictions where the shares of the Company are listed are complied with,
means as specified in Article 212 herein. the abovementioned report may also be issued or provided to the holders of
Overseas- Listed Foreign Shares by other means as specified in Article
2125herein.
Article 175 Capital surplus fund includes the following items: Article 175 Capital surplus fund includes the following items:
(1) premium on shares issued at a premium price; (1) premium on shares issued at a premium price;
(2) any other income designated for the capital surplus fund by the (2) any other income designated for the capital surplus fund by the
regulations of the finance regulatory department of the State Council. regulations of the finance regulatory department of the State Council.
Article 176 The common reserve funds (including the statutory common reserve Article 171 The common reserve funds (including the statutory common reserve
fund, discretionary common reserve funds and capital surplus fund) of the fund, discretionary common reserve funds and capital surplus fund) of the
Company shall be applied for making up for losses, expanding the Company's Company shall be applied for making up for losses, expanding the Company's
production and operation or capitalisation; provided that the capital surplus production and operation or converting into increased registered capital.
fund shall not be used for covering the loss of the Company. capitalisation; provided that the capital surplus fund shall not be used for
covering the loss of the Company.
When capitalising the statutory common reserve fund, the balance of such fund
shall not be less than 25% of the registered capital prior to capitalisation. When capitalising the statutory common reserve fund is converted into
increased registered capital, the balance of such fund shall not be less than
25%percent of the registered capital prior to capitalisation.
Article 177 After making up for the losses and making contributions to the Article 172 After making up for the losses and making contributions to the
common reserve fund, any remaining profits shall be distributed to the common reserve fund, any remaining profits shall be distributed to the
shareholders in proportion to their respective shareholders. shareholders in proportion to their respective shareholders.
The Company shall not allocate dividends or carry out other allocations in the The Company shall not allocate dividends or carry out other allocations in the
form of bonuses before it has compensated for its losses and made allocations form of bonuses before it has compensated for its losses and made allocations
to the statutory common reserve fund. No shares of the Company held by the to the statutory common reserve fund. No shares of the Company held by the
Company shall participate in these allocations. Company shall participate in these allocations.
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Dividends paid by the Company shall not carry any interest except where the If the shareholders' meeting distributes profit to shareholders in violation
Company has failed to pay the dividends to the shareholders on the date on of the Company Law, the shareholders shall return such distributed profits to
which such dividends become payable. the Company; if losses are caused to the Company, shareholders and directors
and senior officers held accountable shall be liable for damages.
Any amount paid up in advance of calls on a share shall carry interest, but
shall not entitle the holder of the share to receive, by way of advance Dividends paid by the Company shall not carry any interest except where the
payment, the dividend declared and distributed thereafter. Company has failed to pay the dividends to the shareholders on the date on
which such dividends become payable.
Any amount paid up in advance of calls on a share shall carry interest, but
shall not entitle the holder of the share to receive, by way of advance
payment, the dividend declared and distributed thereafter.
Article 179 Specific dividends distribution policy of the Company: Article 174 Specific dividends distribution policy of the Company:
(1) The form of dividends distribution: (1) The form of dividends distribution:
The Company may distribute dividends in cash, shares or a combination of cash The Company may distribute dividends in cash, shares or a combination of cash
and shares or other methods permitted by the laws, administrative regulations, and shares or other methods permitted by the laws, administrative regulations,
departmental rules and the regulatory rules of the jurisdictions in which the departmental rules and the regulatory rules of the jurisdictions in which the
shares of the Company are listed. shares of the Company are listed.
The board of directors of the Company shall have comprehensive consideration The board of directors of the Company shall have comprehensive consideration
of the factors, of the factors, including its industry characteristics, development stage,
including its industry characteristics, development stage, operation mode, operation mode, profitability level and
profitability level and whether there is any significant expenditure payment arrangement, make the
whether there is any significant expenditure payment arrangement, make the differentiated
differentiated
cash bonus policy according to the procedures prescribed by the Articles of
cash bonus policy according to the procedures prescribed by the Articles of Association, and
Association, and identify the proportion of the cash bonus in the profit distribution in the
identify the proportion of the cash bonus in the profit distribution in the current year, with
current year, with proportion in compliance with the relevant
proportion in compliance with the relevant
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stipulations of laws, administrative regulations, normative documentation and stipulations of laws, administrative regulations, normative documentation and
stock exchanges. stock exchanges.
(2) Specific conditions, proportions and intervals for distributing cash (2) Specific conditions, proportions and intervals for distributing cash
dividends by the Company: dividends by the Company:
Save as special circumstances, the dividends shall be distributed in cash by Save as special circumstances, the dividends shall be distributed in cash by
the Company provided that the distributable profits (i.e. the balance of 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 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 the common reserve fund in accordance with the provisions of these Articles of
Association as well as deducting otherwise approved by the relevant national Association as well as deducting otherwise approved by the relevant national
departments) realized for the current year in the financial statement of the departments) realized for the current year in the financial statement of the
parent company prepared in accordance with applicable domestic and overseas parent company prepared in accordance with applicable domestic and overseas
accounting standards and regulations are positive, and the cash dividends to accounting standards and regulations are positive, and the cash dividends to
be distributed each year shall not be less than 15% of the applicable be distributed each year shall not be less than 15% percentof the applicable
distributable profits. distributable profits.
The applicable distributable profits shall be the lower of the distributable The applicable distributable profits shall be the lower of the distributable
profits in the financial statements of the parent company prepared by the profits in the financial statements of the parent company prepared by the
Company in accordance with applicable domestic and overseas accounting Company in accordance with applicable domestic and overseas accounting
standards and regulations. standards and regulations.
Special circumstances refer to the circumstances under which the board of Special circumstances refer to the circumstances under which the board of
directors considers that cash dividend distribution may influence the directors considers that cash dividend distribution may influence the
Company's continuing operation and long-term development. Company's continuing operation and long-term development.
When the aforesaid conditions of cash distribution are met, cash dividends When the aforesaid conditions of cash distribution
shall be distributed once a year. The board of directors of the Company can are met, cash dividends shall be distributed once a year. The board of
propose an interim dividend distribution according to the Company's status of directors of the Company can propose an interim dividend distribution the
profitability and capital needs.
annual shareholders' meeting to consider and approve the conditions of the
distribution of interim cash dividend, the proportional limits, and the upper
amount limits and etc. for the
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(3) Specific conditions under which the Company may issue shares in lieu of subsequent year according to the Company's status of profitability and capital
dividends: needs., and the board of directors shall formulate a specific interim dividend
plan based on the resolution of the annual shareholders' meeting, and
distribute interim cash dividend, provided that the conditions for profit
distribution are met. The interim dividend distribution of the Company shall
Where the Company is in a sound operating condition, and the board of not exceed the net profit attributable to shareholders of the listed company
directors considers that the Company's stock price does not reflect the for the corresponding period.
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.
Article 180 Alteration of the Company's dividend distribution policy: Article 175 Alteration of the Company's dividend distribution policy:
In the event of war, natural disasters and other incidents of force majeure, In the event of war, natural disasters and other incidents of force majeure,
or changes to the Company's external operating environment resulting in or changes to the Company's external operating environment resulting in
material impact on its production and operation, or considerably significant material impact on its production and operation, or considerably significant
changes to the Company's own operating conditions, the Company may adjust its changes to the Company's own operating conditions, the Company may adjust its
profit distribution policy. profit distribution policy.
The board of directors shall formulate a written report concerning the The board of directors shall formulate a written report concerning the
adjustment of the Company's profit distribution policy upon a special adjustment of the Company's profit distribution policy upon a special
discussion with detailed verification and reasons provided. Such written discussion with detailed verification and reasons provided. Such written
report, along with the opinions expressed by the independent directors, shall report, along with the opinions expressed by the independent directors, shall
be submitted to the shareholders' general meeting for be submitted to the shareholders' general meeting for
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approval by way of a special resolution. In considering the changes to the approval by way of a special resolution. In considering the changes to the
profit distribution policy, the Company may actively communicate and exchange profit distribution policy, the Company may actively communicate and exchange
ideas with the Shareholders, in particular the non-substantial and minority ideas with the Shareholders, in particular the non-substantial and minority
Shareholders, through various channels (such as providing online voting and Shareholders, through various channels (such as providing online voting and
inviting non-substantial and minority Shareholders to participate in the inviting non-substantial and minority Shareholders to participate in the
meeting), duly listen to the opinions and demands of non-substantial and meeting), duly listen to the opinions and demands of non-substantial and
minority Shareholders and provide prompt responses to their questions. minority Shareholders and provide prompt responses to their questions.
Article 181 Procedures for considering and approving the dividend distribution Article 176 Procedures for considering and approving the dividend distribution
proposal of the Company: proposal of the Company:
(1) The dividends distribution plan of the Company shall be drawn up by the (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 management of the Company and submitted to the board of directors and the
supervisory committee of the Company for consideration. The board of directors supervisory committee audit and risk management committee (the supervision
shall thoroughly discuss the rationality of the dividends distribution plan committee) and the board of directors of the Company for consideration. The
and the independent Directors shall explicitly express their opinions. A board of directors shall thoroughly discuss the rationality of the dividends
special resolution formulated by the board of directors shall be submitted to distribution plan and the independent Directors shall explicitly express their
the shareholders' general meeting for consideration. The board of directors opinions. A, formulate a special resolution formulated by the board of
will also fully listen to the opinions of minority Shareholders. directors shall be and then submitted it to the shareholders' general
meeting for consideration. The board of directors will also fully listen to
the opinions of minority Shareholders.
(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, (2) When formulating specific plan for distribution
conditions for adjustment and requirements for decision-making procedures of cash dividends by the Company, the board of directors shall study and
involved in implementing the distribution of cash dividends, etc. Independent identify with caution the timing, conditions and minimum proportion,
Directors shall explicitly express their opinions thereon. Independent conditions for adjustment and requirements for decision-making procedures
Directors may collect opinions from minority shareholders for putting forward involved in implementing the distribution of cash dividends,
a profit distribution proposal which
etc. Independent Directors shall explicitly express
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can be directly submitted to the board of directors for consideration. 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.
(3) Where the Company does not distribute cash dividends under the special
circumstances as prescribed in the foregoing Article 179, the board of
directors shall explain the specific reasons for not distributing cash If independent directors believe that the specific plan for distribution of
dividends, the exact purpose for the retained profit and the estimated cash dividends may harm the interests of the Company or minority shareholders,
investment return. Such explanation, along with the opinions expressed by the they have the right to express an independent opinion. If the Board does not
independent directors, shall be submitted to the shareholders' general meeting adopt or only partially adopts the opinions of independent directors, the
for consideration and be disclosed on the designated media of the Company. independent directors' opinions and the specific reasons for not adopting
them shall be included in the Board resolution and be disclosed.
Subject to Article 56 and subparagraph (20) of the first paragraph of Article
105 of these Articles of Association, the board of directors may decide to (3) Where the Company does not distribute needs to adjust or amend the cash
distribute interim or special dividends. dividends policy as determined in these Articles of Association under the
special circumstances as prescribed in the foregoing Article 1794, the board
of directors shall conduct a detailed verification of the specific reasons for
the adjustment or amendment explain the specific reasons for not distributing
cash dividends, the exact purpose for the retained profit and the estimated
investment return. The board of directors shall then follow the corresponding
decision-making procedures, and the adjustment or amendment shall be approved
by at least two-thirds of the voting rights held by the shareholders attending
the shareholders' meeting. 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 56 and subparagraph (20) of the first paragraph of Article
105 of these Articles of Association, the board of directors may decide to
distribute interim or special dividends. Before the
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specific plan for distribution of cash dividends is considered at the
shareholders' meeting, the Company shall communicate with the shareholders,
especially the minority shareholders, through various channels, such that the
opinions and requests of the minority shareholders can be fully heard, and
their concerns can be responded in a timely manner.
Article 182 After the resolution of profit distribution has been adopted by Article 177 After the resolution of profit distribution has been adopted by
the shareholders at a general meeting, the board of directors of the Company the shareholders at a general shareholders' meeting, or after the board of
is required to complete the distribution of dividends (or shares) within 2 directors of the Company has determined a specific plan for the next year's
months following the meeting. interim dividend based on the conditions and caps approved by the annual
shareholders' meeting, the board of directors of the Companyis required to
complete the distribution of dividends (or shares) within 2 months following
the meeting.
In case of the Shareholders' illegal occupation of company funds, the Company
shall deduct the cash dividends distributed to such Shareholders, in order to
repay the Shareholders' funds occupied.
In case of the Shareholders' illegal occupation of company funds, the Company
shall deduct the cash dividends distributed to such Shareholders, in order to
repay the Shareholders' funds occupied.
Article 187 The Company shall establish an internal audit system by employing Article 182 The Company shall establish an internal audit system by employing
professional auditing personnel, who shall conduct internal audit and professional auditing personnel, who shall conduct internal audit and
supervision on the income and expenses and economic activities of the Company. supervision on the income and expenses and economic activities of the
Company., which specifies the leadership system, responsibilities and
authorities, staffing, funding security, use of audit results, and
accountability in relation to internal audit work. The internal audit system
of the Company shall be implemented upon approval by the board of directors.
Article 183 The internal audit department of the Company shall supervise and
inspect the business activities, risk management, internal control, financial
information and other matters of the Company.
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Article 185 The internal audit department is accountable to the board of
directors. The internal audit department shall be subject to the supervision
and guidance of the audit and risk management committee (the supervision
committee) in the course of its supervising and inspecting the Company's
business activities, risk management, internal control and financial
information. The internal audit department shall immediately and directly
report to the audit and risk management committee (the supervision committee)
upon discovering any relevant major issues or leads.
Article 186 The internal audit department shall be responsible for the
specific organization and implementation of the Company's internal control
evaluation. The Company shall issue an annual internal control evaluation
report based on the evaluation report and related information issued by the
internal audit department and reviewed by the audit and risk management
committee (the supervision committee).
Article 187 When the audit and risk management committee (the supervision
committee) communicates with external audit units such as accounting firms and
national audit agencies, the internal audit department shall proactively
cooperate with them and provide necessary support and collaboration. The audit
and risk management committee (the supervision committee) shall participate in
the appraisal of the person in charge of the internal audit.
CHAPTER 17: APPOINTMENT OF ACCOUNTANCY FIRM CHAPTER 17: APPOINTMENT OF ACCOUNTANCY FIRM
Article 189 The Company shall engage accountants' firms that complies with the Article 188 The Company shall engage accountants' firms that complies with the
requirements of the Securities Law and the listing rules of the jurisdictions requirements of the Securities Law and the listing rules of securities of the
where the shares of the Company are listed, to perform the tasks of jurisdictions where the shares of the Company are listed, to perform the
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auditing accounting statements, verifying the net assets and other relevant tasks of auditing accounting statements, verifying the net assets and other
consulting services. relevant consulting services.
Article 190 The accounting firm appointed by the Company shall hold office for
1 year from the conclusion of the annual general meeting of shareholders at
which they were appointed until the conclusion of the next annual general
meeting of shareholders. The appointment thereof and may be renewed at expiry.
Article 190 The accounting firm appointed by the Company shall hold office for
1 year from the conclusion of the annual general meeting of shareholders at
which they were appointed until the conclusion of the next annual general
meeting of shareholders. The appointment thereof may be renewed at expiry.
Article 191 The accounting firm appointed by the Company shall enjoy the Article 191 The accounting firm appointed by the Company shall enjoy the
following rights: following rights:
(1) a right to review to the books, records and vouchers of the Company at (1) a right to review to the books, records and vouchers of the Company at
any time, the right to require the directors, president, vice presidents and any time, the right to require the directors, president, vice presidents and
other senior officers of the Company to supply relevant information and other senior officers of the Company to supply relevant information and
explanations; explanations;
(2) a right to require the Company to take all reasonable steps to obtain (2) a right to require the Company to take all reasonable steps to obtain
from its subsidiaries such information and explanation as are necessary for from its subsidiaries such information and explanation as are necessary for
the discharge of its duties; the discharge of its duties;
(3) a right to attend and speak at any shareholders' general meeting in (3) a right to attend and speak at any shareholders' general meeting in
relation to matters concerning its role as the Company's accounting firm. relation to matters concerning its role as the Company's accounting firm.
Article 192 If there is a vacancy in the position of accountant of the Article 189 The appointment or removal of an accounting firm by the Company
Company, the board of directors may appoint an accounting firm to fill such shall be decided by an ordinary resolution of the shareholders' meeting. The
vacancy before the convening of the shareholders' general meeting. board of directors shall not appoint an accounting firm before the decision is
made at the shareholders' meeting.
Article 193 The shareholders in a general meeting shall have the power to
remove the Company's accounting firm by ordinary resolution before the Article 192 If there is a vacancy in the position of accountant of the
expiration of its term of office. Company, the board of directors may appoint an accounting firm to fill such
vacancy before the convening of the shareholders' general meeting.
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Article 193 The shareholders in a general meeting shall have the power to
remove the Company's accounting firm by ordinary resolution before the
expiration of its term of office.
Article 190 The Company undertakes to provide true and complete accounting
vouchers, account books, financial accounting reports and other accounting
information to the appointed accounting firm, and shall not refuse to provide,
conceal or provide any false information.
Article 194 The remuneration of an accounting firm or the manner in which such Article 191 The remuneration of audit fees payable to an accounting firm or
firm is to be remunerated shall be determined by way of an ordinary resolution the manner in which such firm is to be remunerated shall be determined by way
by the shareholders in a general meeting. The remuneration of an accounting of an ordinary resolution by the shareholders in a general shareholders'
firm appointed by the board of directors shall be determined by the board of meeting. The remuneration of an accounting firm appointed by the board of
directors. directors shall be determined by the board of directors.
CHAPTER 18: MERGER AND DEMERGER OF THE COMPANY CHAPTER 18: MERGER AND DEMERGER OF THE COMPANY
Article 197 The merger of the Company may take the form of either merger by Article 194 The merger of the Company may take the form of either merger by
absorption or merger by the establishment of a new company. absorption or merger by the establishment of a new company.
In the event of a merger, the merging parties shall execute a merger agreement Article 195 Where the price paid by the Company for a merger does not exceed
and prepare a balance sheet and an inventory of assets. The Company shall ten percent of the Company's net assets, the merger may be effected without a
notify its creditors within ten (10) days of the date of the Company's merger resolution of the general meeting, unless otherwise provided for in these
resolution and shall publish a public notice in a newspaper within thirty Articles of Association. Where the Company mergers pursuant to the aforesaid
provision without a resolution of the general meeting, it shall be resolved by
(30) days of the date of the Company's merger resolution. the board of directors.
A creditor has the right, within thirty (30) days upon receipt of the notice,
or for those who have not received the notice, within forty-five (45) days
from the date of the public announcement, to demand the Company to repay its
debts or provide a corresponding guarantee for such debt.
Article 196 In the event of a merger, the merging parties shall execute a
merger agreement and prepare a balance sheet and an inventory of
assets. The Company shall notify its creditors within ten (10) days of the
date of the Company's
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Upon the merger, rights in relation to debtors and indebtedness of each of the merger resolution and shall publish a public notice in a newspaper or on the
merged parties shall be assumed by the company which survives the merger or National Enterprise Credit Information Publicity System within thirty (30)
the newly established company. days of the date of the Company's merger resolution.
A creditor has the right, within thirty (30) days upon receipt of the notice,
or for those who have not received the notice, within forty-five (45) days
from the date of the public announcement, to demand the Company to repay its
debts or provide a corresponding guarantee for such debt.
Article 197 Upon the merger, rights in relation to debtors and indebtedness of
each of the merged parties shall be assumed by the company which survives
the merger or the newly established
company.
Article 198 Where there is a demerger of the Company, its assets shall be Article 198 Where there is a demerger of the Company, its assets shall be
divided up accordingly. divided up accordingly.
In the event of demerger of the Company, the parties to such demerger shall In the event of demerger of the Company, the parties to such demerger shall
execute a demerger agreement and prepare a balance sheet and an inventory of execute a demerger agreement and prepare a balance sheet and an inventory of
assets. The Company shall notify its creditors within ten (10) days of the assets. The Company shall notify its creditors within ten (10) days of the
date of the Company's division resolution and shall publish a public notice in date of the Company's division resolution and shall publish a public notice in
a newspaper at least three (3) times within thirty (30) days of the date of a newspaper or on the National Enterprise Credit Information Publicity
the Company's demerger resolution. Systemat least three (3) times within thirty (30) days of the date of the
Company's demerger resolution.
Debts of the Company prior to demerger shall be assumed by the companies which
exist after the division on a joint and several basis except to the extent Article 199 Debts of the Company prior to demerger shall be assumed by the
that prior to demerger, the Company has otherwise reached a written agreement companies which exist after the division on a joint and several basis except
with its creditors in respect of the settlement of debts. to the extent that prior to demerger, the Company has otherwise reached a
written agreement with its creditors in respect of the settlement of debts.
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CHAPTER 19: DISSOLUTION AND LIQUIDATION CHAPTER 19: DISSOLUTION AND LIQUIDATION
Article 200 The Company shall be dissolved upon the following reasons: Article 201 The Company shall be dissolved upon the following reasons:
(1) the term of operation of the Company prescribed in these Articles of (1) the term of operation of the Company prescribed in these Articles of
Association has expired, or other causes for dissolution as stipulated in Association has expired, or other causes for dissolution as stipulated in
these Articles of Association occur; these Articles of Association occur;
(2) a resolution for dissolution is passed by shareholders at a general (2) a resolution for dissolution is passed by shareholders at a general
meeting; shareholders' meeting;
(3) dissolution is necessary due to a merger or demerger of the Company; (3) dissolution is necessary due to a merger or demerger of the Company;
(4) the company has its business licence revoked, or is ordered to close up (4) the company has its business licence revoked, or is ordered to close up
or to have its business cancelled in accordance with the law; or or to have its business cancelled in accordance with the law; or
(5) If a company has encountered serious difficulties in its operations (5) If a company has encountered serious difficulties in its operations
and management and the company's continued existence may materially harm the and management and the company's continued existence may materially harm the
interests of the shareholders, and if the same fails to be resolved by any interests of the shareholders, and if the same fails to be resolved by any
other means, shareholders holding ten percent or more of the aggregate voting other means, shareholders holding ten percent or more of the aggregate voting
rights of the Company may request a People's Court to dissolve the Company. rights of the Company may request a People's Court to dissolve the Company.
The Company shall, within ten (10) days of the occurrence of any of the
reasons for dissolution as stipulated in the preceding paragraph, make public
such reason for dissolution through the National Enterprise Credit Information
Publicity System.
Article 201 Under the circumstances described in sub-paragraph (1) of Article Article 202 Under the circumstances described in sub-paragraphs (1) and (2) of
200 in these Articles of Association, the Company may continue to exist Article 2001 in these Articles of Association and no asset has been
through amendment of these Articles of Association. distributed to the shareholders, the Company may continue to exist through
amendment of these
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Amendment of these Articles of Association in accordance with the above Articles of Association or by a resolution of the shareholders' meeting.
paragraph shall be passed by no less than two-thirds of the voting rights held
by the shareholders attending the general meeting.
Amendment of these Articles of Association or a resolution made at a
shareholders' meeting in accordance with the above paragraph shall be passed
by no less than two-thirds of the voting rights held by the shareholders
attending the general shareholders'meeting.
Article 202 A liquidation committee shall be set up within fifteen (15) days Article 203 A liquidation committee shall be set up within fifteen (15) days
commencing from the date on which the events being the grounds for dissolution commencing from the date on which the events being the grounds for dissolution
occurred, in order to start liquidation process where the Company is dissolved occurred, in order to start liquidation process where tThe Company shall be
pursuant to sub-paragraphs (1), (2), (4) and (5) of Article 200 in these liquidated if itis dissolved pursuant to sub-paragraphs (1), (2), (4) and (5)
Articles of Association. The members of the liquidation committee shall be of Article 200201in these Articles of Association. The directors are the
composed of persons decided by directors or decided at shareholders' general Company's liquidators and shall establish a liquidation committee to carry out
meeting. If the Company fails to set up the liquidation committee within the liquidation within fifteen (15) days after the occurrence of the cause for
time limit, the creditors may apply to the People's Court for appointment of dissolution. The members of the liquidation committee shall be composed of
relevant persons to form a liquidation committee and carry out liquidation. persons decided by directors, except where otherwise provided by these
Articles of Association or resolved at a shareholders' meeting to appoint
othersor decided at shareholders' general meeting. If the Company fails to set
up the liquidation committee within the time limit, the creditors may apply to
the People's Court for appointment of relevant persons to form a liquidation
committee and carry out liquidation.
If the liquidators fail to fulfill the liquidation obligations in a timely
manner and causes losses to the Company or creditors, they shall be liable for
compensation.
Article 203 The liquidation committee shall, within ten (10) days of its Article 204 The liquidation committee shall, within ten (10) days of its
establishment, send notices to creditors and shall, within sixty (60) days of establishment, send notices to creditors and shall, within sixty (60) days of
its establishment, publish a public announcement in a newspaper. Creditors its establishment, publish a public announcement in a newspaper or on the
should, within thirty (30) National Enterprise Credit
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days upon receipt of the notice, or for those who have not received the Information Publicity System. Creditors should, within thirty (30) days upon
notice, within forty-five (45) days from the date of the public announcement, receipt of the notice, or for those who have not received the notice, within
declare their claims to the liquidation committee. forty-five (45) days from the date of the public announcement, declare their
claims to the liquidation committee.
When declaring claims, creditors shall state relevant particulars of their
claims and provide supporting materials. The liquidation committee shall When declaring claims, creditors shall state relevant particulars of their
register the claims. claims and provide supporting materials. The liquidation committee shall
register the claims.
The liquidation committee shall not make repayment to creditors during the
claims declaration period. The liquidation committee shall not make repayment to creditors during the
claims declaration period.
Article 205 After it has sorted out the Company's assets and after it has Article 206 After it has sorted out the Company's assets and after it has
prepared the balance sheet and an inventory of assets, the liquidation prepared the balance sheet and an inventory of assets, the liquidation
committee shall formulate a liquidation plan and present it to a shareholders' committee shall formulate a liquidation plan and present it to a shareholders'
general meeting or to the relevant governing authority for confirmation. general meeting or to the relevant governing authorityPeople's Court for
confirmation.
After the payment of liquidation expenses with priority, the Company's assets
shall be distributed in accordance with the following sequence: (i) salaries; After the payment of liquidation expenses with priority, the Company's assets
(ii) social insurance premiums and statutory compensation payments; (iii) shall be distributed in accordance with the following sequence: (i) salaries;,
outstanding taxes; (iv) bank loans, and company bonds and other debts of the (ii) social insurance premiums and statutory compensation payments;,
Company. (iii) outstanding taxes;, (iv) bank loans, and company bonds and other debts
of the Company, the remaining assets of the Company. Any surplus assets of the
Company remaining after payment referred to in the preceding paragraph shall
be distributed to its shareholders according to the class of shares and the
Any surplus assets of the Company remaining after payment referred to in the proportion of shares held in the following sequence:their shareholding.
preceding paragraph shall be distributed to its shareholders according to the
class of shares and the proportion of shares held in the following sequence:
(1) In the case of preferential shares, distribution shall be made to holders
of such preferential shares according to the par value thereof; if the surplus
(1) In the case of preferential shares, distribution shall be made to holders assets are not sufficient to repay the amount of
of such preferential shares according to the par value thereof; if the surplus
assets are not sufficient to repay the amount of preferential shares in full,
the distribution shall be
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made to holders of such shares in proportion to their respective preferential shares in full, the distribution shall be made to holders of such
shareholdings. shares in proportion to their respective shareholdings. (2) In the case of
ordinary shares, distribution shall be made to holders of such shares in
proportion to their respective shareholdings. The Company's assets shall not
be distributed to shareholders before repayments are made in accordance with
(2) In the case of ordinary shares, distribution shall be made to holders of the requirements under the preceding paragraph. During the liquidation period,
such shares in proportion to their respective shareholdings. the Company survives and shall not commence any business activities that are
not related to liquidation.
During the liquidation period, the Company shall not commence any business
activities that are not related to liquidation.
Article 206 If after putting the Company's assets in order and preparing a Article 207 If after putting the Company's assets in order and preparing a
balance sheet and an inventory of assets in connection with the liquidation of balance sheet and an inventory of assets in connection with the liquidation of
the Company, the liquidation committee discovers that the Company's assets are the Company, the liquidation committee discovers that the Company's assets are
insufficient to repay the Company's debts in full, the liquidation committee insufficient to repay the Company's debts in full, the liquidation committee
shall immediately apply to the People's Court for a declaration of insolvency. shall immediately apply to the People's Court for a declaration of insolvency
bankruptcy and liquidation in accordance with laws.
After a Company is declared insolvent by a ruling of the People's Court, the
liquidation committee shall transfer all matters arising from the liquidation After a Company is declared insolvent by a ruling of the People's Court
to the People's Court. accepts the bankruptcy application, the liquidation committee shall transfer
all matters arising from the liquidation to the bankruptcy administrator
designated by the People's Court.
Article 207 Following the completion of the liquidation, the liquidation Article 208 Following the completion of the liquidation, the liquidation
committee shall prepare a liquidation report and submit it to the committee shall prepare a liquidation report and submit it to the
shareholders' general meeting or the relevant governing authority for shareholders' general meeting or the relevant governing authority People' s
confirmation and to the companies registration authority to apply for Court for confirmation and to the companies registration authority to apply
cancellation of registration and announce the for cancellation of registration and announce the termination of the Company.
termination of the Company.
Article 209 Members of the liquidation committee shall perform their
liquidation obligation and bear duties of loyalty and diligence. If any member
of the liquidation
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committee is negligent in performing its liquidation duties and causes losses
to the Company, or causes losses to the creditors due to intentional
misconduct or gross negligence, he/she shall be liable for compensation
Article 210 Where it is declared bankrupt by law, the Company shall implement
bankruptcy and liquidation in accordance with the law on corporate bankruptcy.
CHAPTER 20: PROCEDURES FOR AMENDMENT OF THE COMPANY'S ARTICLES OF ASSOCIATION CHAPTER 20: PROCEDURES FOR AMENDMENT OF THE COMPANY'S ARTICLES OF ASSOCIATION
Article 208 The Company may amend its Articles of Association in accordance Article 208 The Company may amend its Articles of Association in accordance
with the requirements of laws, regulations, other regulatory documents and the with the requirements of laws, regulations, other regulatory documents and the
Articles of Association. Articles of Association.
Article 209 The amendment to the Articles of Association shall be handled in Article 209 The amendment to the Articles of Association shall be handled in
accordance with the following procedures: accordance with the following procedures:
(1) The board of directors shall adopt a resolution therefor in accordance (1) The board of directors shall adopt a resolution therefor in accordance
with these Articles of Association and formulate the proposal for the with these Articles of Association and formulate the proposal for the
amendment of the Articles of Association; or the shareholders shall propose amendment of the Articles of Association; or the shareholders shall propose
the proposal for the amendment of the Articles of Association; the proposal for the amendment of the Articles of Association;
(2) The shareholders shall be notified of the amendment proposal and a (2) The shareholders shall be notified of the amendment proposal and a
shareholders' general meeting shall be convened to reach a resolution; shareholders' general meeting shall be convened to reach a resolution;
(3) Content of the amendment to the Articles of Association shall be adopted (3) Content of the amendment to the Articles of Association shall be adopted
by special resolutions. by special resolutions.
Article 210 The Company shall amend these Articles of Association under any of Article 211 The Company shallwill amend these Articles of Association under
the following circumstances: any of the following circumstances:
(1) following the amendments to the Company Law or other relevant laws or (1) following the amendments to the Company Law or other relevant laws or
administrative administrative regulations,
regulations, the matters provided for in these the matters provided for in these Articles of
Amended Articles (Note: if no markup is shown, it means that no amendment has
been made)
Existing Articles of the Articles of Association
Articles of Association conflict with the requirements of the amended laws or Association conflict with the requirements of the amended laws or
administrative regulations; administrative regulations;
(2) following the change in the state of the Company's affairs, its (2) following the change in the state of the Company's affairs, its
conditions become inconsistent with matters provided for in these Articles of conditions become inconsistent with matters provided for in these Articles of
Association; Association;
(3) following a resolution passed at a shareholders' general meeting, it is (3) following a resolution passed at a shareholders' general meeting, it is
determined to amend the Articles of Association. determined to amend the Articles of Association.
Article 211 Where amendments of the Articles of Association involve the Article 212 Any amendment to the Articles of Association approved by a
registered particulars of the Company, procedures for alteration of resolution of the shareholders' meeting subject to review and approval by the
registration shall be handled in accordance with the law. Matters on amendment competent authorities shall be submitted to the competent authorities for
to the Articles of Association shall be publicly disclosed if so required by approval. Where amendments of the Articles of Association involve the
laws, regulations and the listing rules and regulatory authorities of the registered particulars of the Company, procedures for alteration of
jurisdictions where the shares of the Company are listed. registration
shall be handled in accordance with the law.
Article 213 The board of directors shall make amendments to these Articles of
Association in accordance with the resolution of the shareholders' meeting
on the amendments to the Articles of Association and the review comments from
the relevant competent authorities.
Article 214 Matters on amendment to the Articles of Association shall be
publicly disclosed if so required by laws, regulations and the listing rules
of securities, and regulatory authorities of the jurisdictions where the
shares of the Company are listed.
CHAPTER 21: NOTICES AND PUBLIC ANNOUNCEMENTS CHAPTER 21: NOTICES AND PUBLIC ANNOUNCEMENTS
Article 212 The Company's notices (for the purpose of this chapter, the term Article 215 The Company's notices (for the purpose of this chapter, the term
"Notice" shall include the notice of any meetings, corporate "Notice" shall include the notice of any meetings, corporate
communications or other written materials issued communications or other written materials issued
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been made)
Existing Articles of the Articles of Association
by the Company to its shareholders) may be delivered by the following means: by the Company to its shareholders) may be delivered by the following means:
(1) by designated person; (2) by mail; (3) by way of public announcement; (4) (1) by designated person; (2) by mail; (3) by way of public announcement; (4)
by other means as recognised by the securities regulatory authority and stock by other means as recognised by the securities regulatory authority and stock
exchanges in the jurisdictions where the shares of the Company are listed or exchanges in the jurisdictions where the shares of the Company are listed or
by other means as provided in Articles of Association. by other means as provided in Articles of Association.
The Company's notices delivered by way of public announcement shall be The Company's notices delivered by way of public announcement shall be
published in the newspapers designated by the securities regulatory authority published in the newspapers designated by the securities regulatory authority
and stock exchanges of the jurisdictions where the shares of the Company are and stock exchanges of the jurisdictions where the shares of the Company are
listed (if any) and/or in other designated media (including websites). listed (if any) and/or in other designated media (including websites).
As for the methods in which the corporate communications are provided and/or As for the methods in which the corporate communications are provided and/or
distributed by the Company to holders of Overseas-Listed Foreign Shares as distributed by the Company to holders of Overseas-Listed Foreign Shares as
required by Hong Kong Listing Rules, the corporate communications may, subject required by Hong Kong Listing Rules, the corporate communications may, subject
to compliance with the laws and regulations and the relevant listing rules of to compliance with the laws and regulations and the relevant listing rules of
the jurisdictions where the shares of the Company are listed, also be sent or securities of the jurisdictions where the shares of the Company are listed,
provided by the Company to the holders of Overseas-Listed Foreign Shares by also be sent or provided by the Company to the holders of Overseas-Listed
any electronic means or by publishing such corporate communications on the Foreign Shares by any electronic means or by publishing such corporate
Company's website, instead of sending such corporate communications by communications on the Company's website and the designated website of the
personal delivery or by prepaid postage mail to the holders of Overseas-Listed Stock Exchange, instead of sending such corporate communications by personal
Foreign Shares. delivery or by prepaid postage mail to the holders of Overseas-Listed Foreign
Shares.
…
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Article 213 If the notice of the Company is given in person, the recipient Article 216 If the notice of the Company is given in person, the recipient
shall sign (or seal) on the return receipt and the date of signing the return shall sign (or seal) on the return receipt and the date of signing the return
receipt by the recipient shall be deemed to be the date of delivery. receipt by the recipient shall be deemed to be the date of delivery.
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been made)
Existing Articles of the Articles of Association
If a notice of the Company is made by public announcement, the date of service If a notice of the Company is made by public announcement, the date of service
shall be the date on which the first announcement is published. If the shall be the date on which the first announcement is published. If the
corporate communication is made or provided at the Company's website to corporate communication is made or provided at the Company's website and the
holders of Overseas-Listed Foreign Shares, such corporate communication shall designated website of the Stock Exchange to holders of Overseas-Listed Foreign
be deemed to be made and served at the later of: (1) the date on which a Shares, such corporate communication shall be deemed to be made and served on
notice notifying that the corporate communication has already been published the date it is first published on the websites at the later of: (1) the date
on the Company's website is issued to holders of Overseas-Listed Foreign on which a notice notifying that the corporate communication has already been
Shares pursuant to the Hong Kong Listing Rules; or (2) the date on which the published on the Company's website is issued to holders of Overseas-Listed
corporate communication is first published on the Company's website (in the Foreign Shares pursuant to the Hong Kong Listing Rules; or (2) the date on
event that corporate communication is published on the website subsequent to which the corporate communication is first published on the Company's website
the issuance of the said notice). (in the event that corporate communication is published on the website
subsequent to the issuance of the said notice). The corporate communication
shall be deemed to have been received at the time it is sent by way of e-mail
as recorded by the computer.
Article 218 The accidental omission to give notice of the meeting to, or the
non-receipt of notice of the meeting by, any person entitled to receive notice
shall not invalidate the meeting or the resolutions made at the meeting.
CHAPTER 22: SUPPLEMENTARY CHAPTER 22: SUPPLEMENTARY
Article 219 Definitions:
(1) A "controlling shareholder" means a shareholder who holds shares
representing over 50 percent of the total share capital of the joint stock
company; or a shareholder having sufficient voting right in respect of the
shares he/she holds to pose a significant influence on the resolutions of the
general meetings despite not holding over 50 percent of the total share
capital of the Company.
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(2) A "de facto controller" means a natural person, legal person or other
organisation able to actually control the acts of the Company through an
investment, agreement or other arrangement.
(3) "Related relationship" means the relationshi p betwee n th e controlling
shareholders, de facto controller, directors and senior officer personnel of
the Company and the enterprises under their direct or indirect control, as
well as other relationships that may lead to the transfer of the Company's
interests. However, there is no related relationship between state-controlled
enterprises only because they are under the common control of the state.
(4) "CSRC" means the China Securities Regulatory Commission.
(5) A "stock exchange" means any of the stock exchanges on which the Company's
shares are listed, which means the Shanghai Stock Exchange and/or the Stock
Exchange, as the context may require.
(6) The "listing rules of securities" means, according to the context, the
Rules Governing the Listing of Stocks on Shanghai Stock Exchange currently in
force issued by the Shanghai Stock Exchange and/or the Hong Kong Listing
Rules, and the relevant provisions of the Shanghai Stock Exchange and/or the
relevant provisions of the Stock Exchange.
Article 216 The matters not covered in these Article 221 The matters not covered in these Articles of Association shall be
Articles of Association shall be dealt with in accordance with relevant laws, dealt with in accordance with relevant laws, administrative regulations, rules
administrative regulations, rules and the listing rules and the securities and the listing rules of securities an d th e securitie s regulatory
regulatory requirements of the jurisdictions where the shares of the Company requirements of the jurisdictions where the shares
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been made)
Existing Articles of the Articles of Association
are listed, in conjunction with the actual circumstances of the Company. In of the Company are listed, in conjunction with the actual circumstances of the
the event that these Articles of Association is in conflict with the newly Company. In the event that these Articles of Association is in conflict with
promulgated relevant laws, administrative regulations, rules or the listing the newly promulgated relevant laws, administrative regulations, rules orand
rules and the securities regulatory requirements of the jurisdictions where the listing rules of securities and the securities regulatory requirements of
the shares of the Company are listed, such newly promulgated laws, the jurisdictions where the shares of the Company are listed, such newly
administrative regulations, rules or the listing rules and the securities promulgated laws, administrative regulations, rules orand the listing rules of
regulatory requirements of the jurisdictions where the shares of the Company securities and the securities regulatory requirements of the jurisdictions
are listed shall prevail. where the shares of the Company are listed shall prevail.
Article 218 The board of directors of the Company shall be responsible for the Article 223 The board of directors of the Company shall be responsible for the
interpretation of these Articles of Association, and the shareholders in interpretation of these Articles of Association, and the shareholders in
general meeting shall have the right to amend the Articles of Association. general meeting shall have the right to amend the Articles of Association. The
board of directors may, in accordance with the provisions of these Articles of
Association, develops detailed rules for implementation, which shall not
violate the provisions hereof.
Article 220 For the purpose of these Articles of Association, the terms "not Article 225 For the purpose of these Articles of Association, the terms "not
less than", "within", "not more than" are all inclusive terms and the terms less than", and "within", "not more than" are all inclusive terms and the
"more than half", "less than", "exceed", "beyond", "below" and "above" are terms "more than half", "less than", "exceed" "more than", "beyond", "below"
exclusive terms. and "above" are exclusive terms.
Notes:
1. Save as the table above, all references to
"shareholders' meetings" in the Chinese version of the Articles of Association
have been revised from "股東大會" to "股東會" in accordance with the
Company Law of the People's Republic of China (Revised in 2023) (the "Company
Law").
2. Save as the table above, in accordance with Article
121 of the Company Law, the Company abolishes the Supervisory Committee and
Supervisors and the Audit and Risk Management Committee (the Supervision
Committee) shall exercise the duties and powers of the Supervisory Committee
as stipulated in the Company Law. Therefore, the expressions in relation to
"Supervisory Committee" and "Supervisors" have been deleted in the Articles of
Association, or have been revised to the "Audit and Risk Management Committee
(the Supervision Committee)".
3. Save as the table above, if the serial numbering of
the articles is changed due to the addition, deletion or re- arrangement of
certain articles, the serial numbering of the articles of the Articles of
Association as so amended shall be changed accordingly, including those
referred to in cross references.
4. The Articles of Association have been prepared in
Chinese and the English version is therefore a translation only. In the event
of any discrepancy between the English and Chinese versions, the Chinese
version shall prevail.
1.
Set out below are the details of the proposed amendments to the Rules and
Procedures of Shareholders' Meetings and revisions have been underlined (if
applicable) for the convenience of perusal.
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been made)
Existing Articles of the Rules and Procedures
CHAPTER 1 GENERAL PROVISIONS CHAPTER 1 GENERAL PROVISIONS
Article 2 These Rules apply to the general meetings of the Company and shall Article 2 These Rules apply to the convening, proposal, notification and
be binding on the Company, shareholders, authorized proxies of the holding of shareholders' general meetings of the Company and shall be binding
shareholders attending the meeting, and directors, supervisors and other on the Company, shareholders, authorized proxies of the shareholders attending
relevant personnel attending the meeting. the shareholders' meeting, and directors, supervisors senior management and
other relevant personnel attending the
shareholders' meeting.
Article 3 Meeting venues will be fixed for the shareholders' general meetings, Article 3 Meeting venues will be fixed for the shareholders' general meetings,
and the shareholders' general meetings shall be convened in the on-site and the shareholders' general meetings shall be convened in the on-site
conference mode. The Company shall also provide convenience for the conference mode. The Company shall also provide convenience for the
shareholders attending general meetings by the provision of the online voting. shareholders attending general meetings by the provision of the online voting
and/or other electronic communication options.
On condition that the general meeting shall be held legally and validly, the
Company may set up other means and ways to attend the general meeting to On condition that the general meeting shall be held legally and validly, the
facilitate the shareholders to participate in the meeting. Shareholders are Company may set up other means and ways to attend the general meeting to
deemed to be attending the shareholders' general meetings through the facilitate the shareholders to participate in the meeting. Shareholders are
aforesaid means. deemed to be attending the shareholders' general meetings through the
aforesaid means.
Article 4 The board of the Company shall strictly comply with the provisions Article 4 The board of the Company shall strictly comply with the provisions
of the relevant laws and regulations and the Articles of Association regarding of the relevant laws and regulations and the Articles of Association regarding
the convening of general meetings when organizing the general meetings. The the convening of general shareholders' meetings when organizing the
directors of the Company shall not obstruct the lawful exercise of powers by a general shareholders'meetings to ensure shareholders can exercise their
general meeting. rights in accordance with laws. The board of directors of the Company shall
diligently fulfils its duties and convene shareholders' meetings in a serious
and timely manner.
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The directors of the Company shall not obstruct the lawful exercise of powers
by a general meeting. All directors of the Company shall be diligent and
responsible to ensure that shareholders' meetings are convened in the normal
course and their powers are exercised in accordance with laws.
CHAPTER 2 SYSTEM OF SHAREHOLDERS' GENERAL MEETINGS CHAPTER 2 SYSTEM OF SHAREHOLDERS' GENERAL MEETINGS
Article 9 The shareholders' general meeting is classified into the annual Article 9 The shareholders' general meeting is classified into the annual
general meeting (hereinafter referred to as "AGM") and extraordinary general general shareholders' meeting (hereinafter or referred to as "AGM") and
meeting. extraordinary general shareholders'meeting.
All shareholders are entitled to attend the AGMs and extraordinary general All shareholders are entitled to attend the AGMs and extraordinary general
meetings. shareholders' meetings.
Article 10 AGMs shall be convened by the board once every year and held within Article 10 AGMs shall be convened by the board once every year and held within
six months from the end of the previous financial year. In the event that the six months from the end of the previous financial year. In the event that the
Company is unable to convene an AGM within the period of time mentioned above, Company is unable to convene an AGM within the period of time mentioned above,
the Company shall report and explain the reasons to the relevant local office the Company shall report and explain the reasons to the relevant local office
of the securities regulatory authority of the State Council at the place where of the securities regulatory authority of the State Council at the place where
the Company is located and the stock exchange(s) on which its shares are the Company is located and the stock exchange(s) on which its shares are
listed for trading and make a public announcement. listed for trading and make a public announcement.
Article 11 The Company shall convene an extraordinary general meeting within Article 11 The Company shall convene an extraordinary general shareholders'
two months from the date of occurrence of any of the following circumstance: meeting within two months from the date of occurrence of any of the following
circumstance:
(1) the number of directors falls short of the minimum number required by
the Company Law or is less than two-thirds of the number required under the (1) the number of directors falls short of the minimum number required by
Articles of Association; the Company Law or is less than two-thirds of the number required under the
Articles of Association;
(2) the unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital; (2) the unrecovered losses of the Company amount to one-third of the total
amount of its paid-up share capital;
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been made)
Existing Articles of the Rules and Procedures
(3) shareholder(s) individually or collectively holding 10% or more of (3) shareholder(s) individually or collectively holding 10% or more of
the Company's shares request(s) in writing the convening of an extraordinary the Company's shares request(s) in writing the convening of an extraordinary
general meeting; general shareholders'meeting;
(4) it is deemed necessary by the board of directors; (4) it is deemed necessary by the board of directors;
(5) it is proposed by the supervisory committee; (5) it is proposed by the supervisory committee audit and risk management
committee (the supervision committee);
(6) any other circumstance so specified in laws, administrative
regulations, departmental rules or the Articles of Association. (6) any other circumstance so specified in laws, administrative
regulations, departmental rules or the Articles of Association.
The amount(s) of shareholding mentioned in (3) above is calculated as on the
day when the shareholder(s) in question make(s) the request(s) in writing. The amount(s) of shareholding mentioned in (3) above is calculated as on the
day when the shareholder(s) in question make(s) the request(s) in writing.
In any event of (1), (2), (3) or (5) of this Article and if the board of
directors fails to convene an extraordinary general meeting within the In any event of (1), (2), (3) or (5) of this Article and if the board of
specified period, shareholder(s) who fulfill(s) the requirement or the directors fails to convene an extraordinary general shareholders'meeting
supervisory committee may convene an extraordinary general meeting in within the specified period, shareholder(s) who fulfill(s) the requirement or
accordance with the Articles of Association and provisions hereof. the supervisory committee audit and risk management committee (the
supervision committee) may convene an extraordinary general shareholders'
meeting in accordance with the Articles of Association and provisions hereof.
Article 11 If the Company fails to hold its annual shareholders' meeting
within six months from the end of the previous financial year, or cannot
convene an extraordinary shareholders' meeting when required under Article 10
of these Rules and Procedures, it must report to the local branch of the CSRC
and the stock exchanges where its securities are listed. The Company must also
provide an explanation and issue a public announcement.
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Article 12 The Company's board of directors, independent directors, Delete this article and incorporate it in article below
shareholders who have satisfied certain conditions (which are determined based
on such standards as promulgated from time to time by the relevant competent
authorities) or investor protection agencies established in accordance with
laws and regulations may publicly request the shareholders to entrust them to Article 12 The Company's board of directors, independent directors,
exercise the proposal rights, voting rights and other shareholders' rights on shareholders who have satisfied certain conditions (which are determined based
their behalf. The solicitor shall disclose the soliciting announcement and on such standards as promulgated from time to time by the relevant competent
relevant soliciting documents in accordance with the laws and regulations, and authorities) or investor protection agencies established in accordance with
the Company shall cooperate. Consideration or de facto consideration for laws and regulations may publicly request the shareholders to entrust them to
soliciting the shareholders' rights publicly is prohibited. Any person who exercise the proposal rights, voting rights and other shareholders' rights on
publicly solicits the shareholders of the Company to entrust him/her to their behalf. The solicitor shall disclose the soliciting announcement and
exercise the proposal right, voting right and other shareholders' rights on relevant soliciting documents in accordance with the laws and regulations, and
their behalf shall also comply with other provisions stipulated by the the Company shall cooperate. Consideration or de facto consideration for
relevant competent authorities and the stock exchanges on which the shares of soliciting the shareholders' rights publicly is prohibited. Any person who
the Company are listed and traded. publicly solicits the shareholders of the Company to entrust him/her to
exercise the proposal right, voting right and other shareholders' rights on
their behalf 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.
Article 14 When convening the shareholders' general meeting, the Company shall Article 13 When convening the shareholders' general meeting, the Company shall
engage a lawyer to issue legal opinion and publish an announcement on the engage a lawyer to issue legal opinion and publish an announcement on the
following issues: following issues:
(1) whether the convening of the shareholders' general meeting comply with (1) whether the convening of the shareholders' general meeting comply with
the requirements of laws, administrative regulations, etc, and the the requirements of laws, administrative regulations, etc, and the
requirements of the Articles of Association; requirements of the Articles of Association and these Rules and Procedures;
(2) whether the eligibility of the attendees and the convener are legal and (2) whether the eligibility of the attendees and the convener are legal and
valid; valid;
(3) whether the voting procedures and results of the shareholders' general (3) whether the voting procedures and results of the shareholders' general
meeting are legal and valid; meeting are legal and valid;
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(4) legal opinion on other matters upon request by the Company. (4) legal opinion on other matters upon request by the Company.
CHAPTER 3 FUNCTIONS AND POWERS OF THE SHAREHOLDERS' GENERAL MEETING CHAPTER 3 FUNCTIONS AND POWERS OF THE SHAREHOLDERS' GENERAL MEETING
Article 15 The powers exercisable by a general meeting are as follows: Article 14 The powers exercisable by a general
shareholders' meeting are as follows:
(1) to take a decision on the Company's business policy and investment
plans;
(1) to take a decision on the Company's business policy and investment
plans;
(2) to elect and replace directors (excluding the employee representative
director) and to decide on matters relating to the remuneration of directors;
(2) to elect and replace directors (excluding the employee representative
director) and to decide on matters relating to the remuneration of directors;
(3) to elect and replace supervisors who are not employee representatives
and to decide on matters relating to the remuneration of supervisors;
(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;
(42) to examine and approve the reports of the board of directors;
(5) to examine and approve the reports of the supervisory committee;
(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;
(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;
(73) 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;
(84) 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;
(95) 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;
(106) to resolve on the proposal for issue of the Company's debt securities;
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(11) to resolve on the proposal for appointment, removal of the Company's (117) to resolve on the proposal for appointment, and removal of the Company's
accounting firm or the proposal to not appoint any accounting firm; accounting firm or the proposal to not appoint any accounting firm that
undertakes the audit business of the Company;
(12) to amend the Articles of Association;
(128) 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% (9) to review and approve external guarantee matters which should be decided
or more of the shares of the Company; by the shareholders' meeting as stipulated by laws, administrative
regulations, other regulatory documents and the Articles of Association;
(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 (13) to consider motions raised by the board of directors, supervisory
audited total assets of the Company; committee or shareholder(s) who individually or collectively represent(s) 3%
or more of the shares of the Company;
(15) to resolve on the Company's external guarantees which shall be
approved by a shareholders' general meeting as required under laws, (140) to resolve review on matters related to any purchase or sale of major
administrative regulations, other regulatory documents and the Articles of assets by the Company within one year where such transaction amount
Association; thatexceeds 30% of the latest audited total assets of the Company;
(16) to consider and approve any change in the use of proceeds raised; (15) to resolve on the Company's external guarantees which shall be approved
by a shareholders' general meeting as required under laws, administrative
regulations, other regulatory documents and the Articles of Association;
(17) to consider any share incentive schemes and employee share ownership
plans;
(161) to consider and approve any change in the use of proceeds raised;
(18) to resolve on other matters which, in accordance with laws,
administrative regulations, other regulatory documents and Articles of (172) to consider any share incentive schemes and employee share ownership
Association, must be approved by a shareholders' general meeting. plans;
A general meeting shall exercise its powers within the scope stipulated by the (183) to resolve on other matters which, in accordance with laws,
Company Law and the Articles of Association and shall not interfere with the administrative regulations, other regulatory documents and Articles of
decisions of shareholders regarding their own rights. Association, must be approved by a shareholders' general meeting.
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The shareholders' meeting may authorize the board of directors to resolve on
matters related to the issuance of Company's shares and bonds in accordance
with laws, administrative regulations, departmental rules and listing rules of
securities. A general shareholders'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 16 Any external guarantee provided by the Company under any of the Article 15 Any external guarantee provided by the Company under any of the
following circumstances shall be approved by the shareholders' general meeting following circumstances shall be approved by the shareholders' general meeting
after being considered and passed by the board of directors: after being considered and passed by the board of directors:
(1) any provision of guarantee, where the total amount of external (1) any provision of guarantee, where the total amount of external
guarantees provided by the Company or its controlled subsidiaries exceeds 50% guarantees provided by the Company or its controlled subsidiaries exceeds 50%
of the Company's latest audited net assets; of the Company's latest audited net assets;
(2) provision of any guarantee after the total amount of the Company's (2) provision of any guarantee after the total amount of the Company's
external guarantees reaches or exceeds 30% of the Company's latest audited external guarantees reaches or exceeds 30% of the Company's latest audited
total assets; total assets;
(3) provision of guarantee whose amount exceeds 30% of the Company's latest (3) provision of guarantee whose amount exceeds 30% of the Company's latest
audited total assets within one year; audited total assets within one year;
(4) provision of guarantee to anyone whose liability-asset ratio exceeds (4) provision of guarantee to anyone whose liability-asset ratio exceeds
70%; 70%;
(5) provision of a single guarantee whose amount exceeds 10% of the (5) provision of a single guarantee whose amount exceeds 10% of the
Company's latest audited net assets; Company's latest audited net assets;
(6) guarantees to be provided in favour of any shareholder, person who (6) guarantees to be provided in favour of any shareholder, person who
exercises effective control over the Company and its affiliates; exercises effective control over the Company and its affiliates;
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(7) other guarantee-related matters that shall be approved by the (7) other guarantee-related matters that shall be approved by the
shareholders' general meeting as stipulated by laws and regulations and the shareholders' general meeting as stipulated by laws and regulations and the
Articles of Association. Articles of Association.
Based on the principle of aggregating the total amount of guarantees for 1 2 Based on the principle of aggregating the total amount of guarantees for 1 2
consecutive months, any external guarantee exceeding 30% of the Company's consecutive months, any external guarantee exceeding 30% of the Company's
latest audited total assets must be passed by votes representing two-thirds or latest audited total assets must be passed by votes representing two-thirds or
more of the voting rights of the shareholders (including their proxies) more of the voting rights of the shareholders (including their proxies)
attending the shareholders' general meeting. attending the shareholders' general meeting.
Where a director or senior management violates laws, regulations or the
Articles of Association regarding the approval authority and deliberation
procedures for external guarantees, resulting in losses to the Company, such
director or senior management shall be liable for indemnity and the Company
may pursue legal action against them in accordance with the law.
Article 19 In order to guarantee the stabilisation of the operation policies Article 18 In order to guarantee the stabilisation of the operation policies
of the Company, to increase the daily operation efficiency, the relevant of the Company, to increase the daily operation efficiency, the relevant
decision-making and approval authority of the Company are as follows: decision-making and approval authority of the Company are as follows:
(I) Scope of the general meeting's authority (I) Scope of the general shareholders' meeting's authority
…… ……
(IV) If a transaction falls within the scope of authority of different (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 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 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 final decision shall be made by the decision maker with higher level of
authority. authority.
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(V) The board of directors has the authority to adjust the scope of matters
subject to management decision-making based on the requirements of the
state-owned assets supervision and administration authority of the State
Council, the CSRC and the stock exchanges where the Company's securities are
listed, while also taking into account the Company's actual circumstances.
Article 20 The board of directors shall be authorized by the shareholders' Article 19 The board of directors shall be authorized by the shareholders'
general meetings to dispose of any fixed assets of the Company where the general meetings to dispose of any fixed assets of the Company where the
estimated value of the consideration for the proposed disposal and the value estimated value of the consideration for the proposed disposal and the value
of the consideration for any such disposal of any fixed assets of the Company of the consideration for any such disposal of any fixed assets of the Company
that has been completed in the period of four (4) months immediately preceding that has been completed in the period of four (4) months immediately preceding
the proposed disposal, on an aggregate basis exceeds 33% of the value of the the proposed disposal, on an aggregate basis exceeds 33% of the value of the
Company's fixed assets as shown in the latest balance sheet which was Company's fixed assets as shown in the latest balance sheet which was
considered at a shareholders' general meeting. If the abovementioned ratio is considered at a shareholders' general meeting. If the abovementioned ratio is
lower than 0.2%, shareholders' general meetings shall agree that the board of lower than 0.2%, shareholders' general meetings shall agree that the board of
directors shall authorise the president's office meetings to approve the directors shall authorise the president's office meetings to approve the
disposal of such fixed assets. When what's provided above is inconsistent with disposal of such fixed assets. When what's provided above is inconsistent with
that of the rules pertaining listing of corporate securities of the securities that of the rules pertaining listing of corporate securities the matter
exchange, the latter shall prevail. stipulated by of the securitiesstockexchange where the Company' securities are
listed, the latter shall prevail.
The disposals of fixed assets provided in this article include acts of
transferring certain asset equities while not include assurances based on The disposals of fixed assets provided in this article include acts of
fixed assets. transferring certain asset equities while not include assurances based on
fixed assets.
CHAPTER 4 CONVENING OF THE SHAREHOLDERS' GENERAL MEETING CHAPTER 4 CONVENING OF THE SHAREHOLDERS' GENERAL MEETING
Article 21 Independent directors shall have the right to propose the convening Article 20 Upon the approval of more than half of all independent directors,
of an extraordinary general meeting of shareholders to the board of Iindependent directors shall have the right to propose the
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directors. To such proposal, the board of directors shall, in accordance with convening of an extraordinary general shareholders'meeting of shareholders
laws, administrative regulations and the Articles of Association, make a to the board of directors. To such proposal, the board of directors shall, in
written response as to whether or not it agrees to convene an extraordinary accordance with laws, administrative regulations and the Articles of
general meeting of shareholders, within ten (10) days upon receipt of such Association, make a written response as to whether or not it agrees to convene
proposal. an extraordinary general shareholders' meeting of shareholders, within ten
(10) days upon receipt of such proposal.
Where the board of directors agrees to convene the extraordinary general
meeting of shareholders, a notice of the general meeting of shareholders shall Where the board of directors agrees to convene the extraordinary general
be issued within five (5) days after the resolution of the board of directors shareholders' meeting of shareholders, a notice of the general shareholders'
is passed. If the board of directors does not agree to convene such a meeting, meeting of shareholders shall be issued within five
it shall give an explanation and issue an announcement in respect of the same.
(5) days after the resolution of the board of directors is passed. If the
board of directors does not agree to convene such a meeting, it shall give
an explanation and issue an announcement in
respect of the same.
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Article 22 The supervisory committee shall have the right to propose the Article 21 The supervisory committee audit and risk management committee (the
convening of an extraordinary general meeting of shareholders to the board of supervision committee) shall have the right to propose the convening of an
directors. Such proposal shall be made in writing. The board of directors extraordinary general shareholders'meeting of shareholders to the board of
shall make a written response as to whether or not it agrees to convene such directors. Such proposal shall be made in writing. The board of directors
an extraordinary general meeting of shareholders within ten (10) days upon shall make a written response as to whether or not it agrees to convene such
receipt of the proposal in accordance with laws, administrative regulations an extraordinary general shareholders'meeting of shareholders within ten (10)
and the Articles of Association. days upon receipt of the proposal in accordance with laws, administrative
regulations and the Articles of Association.
Where the board of directors agrees to convene the extraordinary general
meeting of shareholders, a notice of the general meeting of shareholders shall Where the board of directors agrees to convene the extraordinary general
be issued within five (5) days after the resolution of the board of directors shareholders' meeting of shareholders, a notice of the general shareholders'
is passed. Prior approval from the supervisory committee shall be required for meeting of shareholders shall be issued within five
any changes made to the original proposal in the notice.
(5) days after the resolution of the board of directors is passed. Prior
approval from the supervisory committee audit and risk management committee
(the supervision committee)shall be required for any changes made to the
In case that the board of directors does not agree to convene the original proposal in the notice.
extraordinary general meeting of shareholders, or does not give any written
response within ten (10) days upon receipt of the proposal, the board of
directors shall be deemed to be unable or have failed to perform its duty to
convene the general meeting of shareholders, and the supervisory committee may In case that the board of directors does not agree to convene the
convene and preside over the meeting on its own. extraordinary general shareholders' meeting of shareholders, or does not give
any written response within ten (10) days upon receipt of the proposal, the
board of directors shall be deemed to be unable or have failed to perform its
duty to convene the general shareholders' meeting of shareholders, and the
supervisory committee audit and risk management committee (the supervision
committee) may convene and preside over the meeting on its own.
Article 23 Shareholder(s) individually or collectively holding 10% or more of Article 22 Shareholder(s) individually or collectively holding 10% or more of
the Company's shares shall have the right to propose the convening of an the Company's shares shall have the right to propose the convening of an
extraordinary general meeting extraordinary general shareholders'meeting of shareholders to the
of shareholders to the board of directors. Such proposal shall be made in board of directors. Such proposal shall be made
writing. The board of
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directors shall make a written response as to whether or not it agrees to in writing. The board of directors shall make a written response as to whether
convene such an extraordinary general meeting of shareholders within ten (10) or not it agrees to convene such an extraordinary
days upon receipt of the proposal in accordance with laws, administrative general shareholders'meeting of shareholders within ten (10) days upon
regulations and the Articles of Association. receipt of the proposal in accordance with laws, administrative regulations
and the Articles of Association.
Where the board of directors agrees to convene the extraordinary general
meeting of shareholders, a notice of the general meeting of shareholders shall Where the board of directors agrees to convene the extraordinary general
be issued within five (5) days after the resolution of the board of directors shareholders' meeting of shareholders, a notice of the general shareholders'
is passed. Prior approval from the relevant shareholders shall be required for meeting of shareholders shall be issued within five
any changes made to the original proposal in the notice.
(5) days after the resolution of the board of directors is passed. Prior
approval from the relevant shareholders shall be required for any changes made
to the original proposal in the notice.
In case that the board of directors does not agree to convene the
extraordinary general meeting of shareholders, or does not give any response
within ten (10) days upon receipt of the proposal, shareholder(s) individually
or collectively holding 10% or more of the Company's shares shall have the In case that the board of directors does not agree to convene the
right to propose the convening of an extraordinary general meeting of extraordinary general shareholders' meeting of shareholders, or does not give
shareholders to the supervisory committee. Such proposal shall be made in any response within ten (10) days upon receipt of the proposal, shareholder(s)
writing. individually or collectively holding 10% or more of the Company's shares shall
have the right to propose the convening of an extraordinary general
shareholders' meeting of shareholders to the supervisory committee audit and
risk management committee (the supervision committee). Such proposal shall be
Where the supervisory committee agrees to convene the extraordinary general made in writing.
meeting of shareholders, it shall issue a notice of the general meeting of
shareholders within 5 days after upon receipt of the proposal. Prior approval
from the relevant shareholders shall be required for any change made to the
original proposal in the notice. Where the supervisory committee audit and risk management committee (the
supervision committee) agrees to convene the extraordinary general
shareholders' meeting of shareholders, it shall issue a notice of the general
shareholders' meeting of shareholders within 5 days after upon receipt of the
Where the supervisory committee fails to issue a notice of the general meeting proposal. Prior approval from the relevant shareholders shall be required for
of shareholders within the prescribed period, the supervisory committee shall any change made to the original proposal in the notice.
be deemed to have failed to convene and preside over the general meeting,
and shareholder(s) individually or collectively holding 10% or more
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shares of the Company for a period of 90 days or more shall have the right to Where the supervisory committee audit and risk management committee (the
convene and preside over the general meeting on their own. supervision committee) fails to issue a notice of the general shareholders'
meeting of shareholders within the prescribed period, the supervisory
committee audit and risk management committee (the supervision committee)
shall be deemed to have failed to convene and preside over the general
shareholders' meeting, and shareholder(s) individually or collectively holding
10% or more shares of the Company for a period of 90 days or more shall have
the right to convene and preside over the general meeting on their own.
Article 24 Where the supervisory committee or shareholders decide to convene a Article 23 Where the supervisory committee audit and risk management committee
shareholders' general meeting on their own, they shall inform the board of (the supervision committee) or shareholders decide to convene a shareholders'
directors in writing and at the same time file the case for the records of the general meeting on their own, they shall inform the board of directors in
local office of the securities regulatory authority of the State Council of writing and at the same time file the case for the records of the local office
the place where the Company is located and for the records of the Shanghai of the CSRC securities regulatory authority of the State Council of the place
Stock Exchange. where the Company is located and for the records of the Shanghai Stock
Exchange.
The shareholding of the convening shareholders shall not fall below 10% prior
to the announcement of the resolution passed at the shareholders' general The shareholding of the convening shareholders shall not fall below 10% prior
meeting. to the announcement of the resolution passed at the shareholders' general
meeting.
The supervisory committee or convening shareholders shall, upon giving a
notice of such meeting and making an announcement on the resolution thereof, The supervisory committee audit and risk management committee (the supervision
submit the relevant supporting materials to the local office of the securities committee) or convening shareholders shall, upon giving a notice of such
regulatory authority of the State Council in the place where the Company is meeting and making an announcement on the resolution thereof, submit the
located and to the Shanghai Stock Exchange. relevant supporting materials to the local office of the CSRC securities
regulatory authority of the State Council in the place where the Company is
located and to the Shanghai Stock Exchange.
Article 25 With regard to a shareholders' general meeting convened by the Article 24 With regard to a shareholders' general meeting convened by the
supervisory committee or shareholders on their own initiative, the board of supervisory committee
audit and risk management committee (the
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directors and the secretary to the board of directors shall provide supervision committee) or shareholders on their own initiative, the board of
cooperation and assistance. The board of directors shall provide the register directors and the secretary to the board of directors shall provide
of members as of the record date. If the board of directors fails to provide cooperation and assistance. The board of directors shall provide the register
the register of members, the convener may apply to the securities registration of members as of the record date. If the board of directors fails to provide
and clearing institution for such register on the strength of the relevant the register of members, the convener may apply to the securities registration
announcement on the convening of the shareholders' general meeting. The and clearing institution for such register on the strength of the relevant
register of members obtained by the convener shall not be used for any purpose announcement on the convening of the shareholders' general meeting. The
other than the holding of the shareholders' general meeting. register of members obtained by the convener shall not be used for any purpose
other than the holding of the shareholders' general meeting.
Article 26 The Company shall bear the necessary costs and expenses of the Article 25 The Company shall bear the necessary costs and expenses of the
shareholders' general meeting convened by the supervisory committee or shareholders' general meeting convened by the supervisory committee audit and
shareholders on their own initiative. risk management committee (the supervision committee)or shareholders on their
own initiative.
CHAPTER 5 MOTIONS IN THE SHAREHOLDERS' GENERAL MEETING CHAPTER 5 MOTIONS IN THE SHAREHOLDERS' GENERAL MEETING
Article 28 When the Company convenes a shareholders' general meeting, the Article 27 When the Company convenes a shareholders' general meeting, the
board of directors, the supervisory committee and shareholder(s) who hold, board of directors, the supervisory committee audit and risk management
individually or jointly, 3% or more of the Company's shares are entitled to committee (the supervision committee) and shareholder(s) who hold,
propose resolutions to the Company. individually or jointly, 31% or more of the Company's shares are
entitled to propose
resolutions to the Company.
Article 29 Shareholders who hold, individually or jointly, 3% or more of the Article 28 Shareholders who hold, individually or jointly, 31% or more of the
Company's shares may propose a provisional resolution in writing to the Company's shares may propose a provisional resolution in writing to the
convener 10 days prior to the general meeting is held. Within 2 days upon convener 10 days prior to the general shareholders'meeting is held. Within 2
receipt of the proposed resolution, the convener shall issue a supplementary days
notice of the general meeting to announce the content of the provisional upon receipt of the proposed resolution, the convener shall issue a
resolution. supplementary notice of the general shareholders' meeting to announce the
content of the provisional resolution. Where
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Where otherwise provided in the listing rules of the stock exchange(s) on otherwise provided in the listing rules of the stock exchange(s) on which the
which the Company's shares are listed, such provisions shall also be met. Company's shares are listed, such provisions shall also be met.
Except for such circumstances as described in the preceding paragraph, the Except for such circumstances as described in the preceding paragraph, the
convener shall neither amend any proposed resolution set out in the notice of convener shall neither amend any proposed resolution set out in the notice of
general meeting nor add any new resolution after making an announcement on the general shareholders' meeting nor add any new resolution after making an
issue of the notice of general meeting. announcement on the issue of the notice of general shareholders' meeting.
Article 30 Where shareholder(s) individually or collectively holding 10% or Article 29 Where shareholder(s) individually or collectively holding 10% or
more of the Company's shares propose(s) to convene an extraordinary general more of the Company's shares propose(s) to convene an extraordinary general
meeting or a class shareholders' general meeting, the shareholder(s) shall shareholders' meeting or a class shareholders' general meeting, the
sign one or more written request(s) in identical form requiring the board to shareholder(s) shall sign one or more written request(s) in identical form
convene an extraordinary general meeting or a class shareholders' general requiring the board to convene an extraordinary general shareholders' meeting
meeting and stating the subject of the meeting, and at the same time submit or a class shareholders' general meeting and stating the subject of the
motions complying with the requirements of these Rules to the board. meeting, and at the same time submit motions complying with the requirements
of these Rules to the board.
Article 32 The list of candidates for supervisors and directors shall be Article 31 The list of candidates for supervisors and directors shall be
submitted to the shareholders' general meeting in the form of motion for submitted to the shareholders' general meeting in the form of motion for
approval. approval.
Candidates for directors (excluding independent directors and employee Candidates for directors (excluding independent directors and employee
representative directors, the same hereafter) shall be nominated by the board representative directors, the same hereafter) shall be nominated by the board
of directors, the supervisory committee or shareholders who individually or of directors, the supervisory committee audit and risk management committee
jointly hold 3% or more of the Company's voting shares. The proposal shall be (the supervision committee) or shareholders who individually or jointly hold
submitted to the board of directors and will be announced after being reviewed 31% or more of the Company's voting shares. The proposal shall be submitted to
by the board of directors. the board of directors and will be announced after being reviewed by the board
of directors.
The board of directors, the supervisor committee or shareholders individually
or collectively holding 3% or more of the shares of the Company may
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make a motion of nominations for shareholder representative supervisors. Such The board of directors, the supervisor committee or shareholders individually
motion shall be reviewed by the supervisory committee or the board of or collectively holding 3% or more of the shares of the Company may make a
directors and passed to the board of directors for announcement. 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 proposer shall provide the board with the brief biographies, background
information and relevant verification materials of the nominees, which shall
be reviewed by the board of directors or the supervisory committee. Motions The proposer shall provide the board with the brief biographies, background
which comply with laws and regulations and the Company's Articles of information and relevant verification materials of the nominees, which shall
Association shall be submitted to the general meeting for consideration. be reviewed by the board of directors or the supervisory committee. Motions
Motions which are not in compliance with laws, regulations and the Articles of which comply with laws and regulations and the Company's Articles of
Association and which are not submitted to the general meeting for Association shall be submitted to the general shareholders' meeting for
consideration shall be explained and accounted for at the general meeting. The consideration. Motions which are not in compliance with laws, regulations and
board of directors or the supervisory committee shall provide shareholders the Articles of Association and which are not submitted to the
with the brief biographies and background information of the nominees for general shareholders' meeting for consideration shall be explained and
directorship or supervisorship. accounted for at the general shareholders' meeting. The board of directors or
the supervisory committee shall provide shareholders with the brief
biographies and background information of the nominees for
directorship or supervisorship.
Article 33 Procedures for nomination of independent directors are as follows: Article 32 Procedures for nomination of independent directors are as follows:
(1) An independent director candidate may be nominated by the board of (1) An independent director candidate may be nominated by the board of
directors, the supervisory committee, or shareholder(s) individually or directors, the supervisory committee audit and risk management committee
collectively holding 1% or more of the total number of shares carrying the (the supervision committee), or shareholder(s) individually or collectively
right to vote, and shall be appointed by election at a shareholders' general holding 1% or more of the total number of shares carrying the right to vote,
meeting of the Company. Investor protection agencies legally established may and shall be appointed by election at a shareholders' general meeting of the
publicly request shareholders to appoint them to exercise the right to Company. Investor protection agencies legally established may
nominate independent directors on their behalf.
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…… publicly request shareholders to appoint them to exercise the right to
nominate independent directors on their behalf.
(3) Before the shareholders' general meeting for the election of the
independent directors, if required under any applicable laws, regulations, ……
other regulatory documents and/or the relevant listing rules, the Company
shall, in accordance with such requirements, submit the relevant materials
concerning all the nominees to the securities regulatory authority of the
State Council and/or its external authority and the stock exchange(s) on which (3) Before the shareholders' general meeting for the election of the
the Company's shares are listed and traded. If the board of directors disputes independent directors, if required under any applicable laws, regulations,
the particulars pertaining to the nominee, it shall also submit its written other regulatory documents and/or the relevant listing rules, the Company
opinion to the relevant authorities. shall, in accordance with such requirements, submit the relevant materials
concerning all the nominees to the securities regulatory authority of the
State Council and/or its external authority and the stock exchange(s) on which
the Company's shares securitiesare listed and traded. If the board of
(4) The above securities regulatory authorities will verify the directors disputes the particulars pertaining to the nominee, it shall also
qualifications and degrees of independence of the nominees for independent submit its written opinion to the relevant authorities.
directors within each of its stipulated period. Any nominees objected to by
the securities regulatory authorities of the State Council may be treated as a
nominee for a director of the Company instead of an independent director. When
a general meeting is convened to elect independent directors, the board shall (4) The above securities regulatory authorities will verify the
make a statement on whether the securities regulatory authorities of the State qualifications and degrees of independence of the nominees for independent
Council have any objection against the nominations. directors within each of its stipulated period. Any nominees objected to by
the securities regulatory authorities of the State Council stock exchanges
where the Company's securities are listedmay be treated as a nominee for a
director of the Company instead of an independent director. When a general
shareholders' meeting is convened to elect independent directors, the board
shall make a statement on whether the securities regulatory authorities of the
State Council exchanges where the Company's securities are listed have any
objection against the nominations.
Article 34 The board shall, in relation to the agenda items of a general Article 33 The board shall, in relation to the agenda items of a general the
meeting, provide a set of materials including the agenda, resolutions and the shareholders'meeting, provide a set of materials including the agenda,
relevant background information to attending shareholders and proxies, resolutions and the relevant background information to attending shareholders
directors, supervisors, president, deputy presidents and other and proxies, directors, supervisors, president, deputy presidents
senior
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officers, for the purpose of ensuring that all the parties attending the and other senior officers, for the purpose of ensuring that all the parties
meeting have an understanding of the matters to be considered at the meeting. attending the meeting have an understanding of the matters to be considered at
For any general meeting legally convened by the supervisory committee or the meeting. For any general shareholders' meeting legally convened by the
shareholders, the materials shall be provided by the convener of the meeting supervisory committee audit and risk management committee (the supervision
in accordance with the aforesaid requirement. committee) or shareholders, the materials shall be provided by the convener of
the meeting in accordance with the aforesaid requirement.
CHAPTER 6 NOTICE OF THE SHAREHOLDERS' GENERAL MEETING CHAPTER 6 NOTICE OF THE SHAREHOLDERS' GENERAL MEETING
Article 35 Where the Company convenes an annual general meeting, a written Article 34 Where the Company convenes an annual generalshareholders' meeting,
notice of the meeting shall be given to the shareholders entitled to attend a written notice of the meeting shall be given to the shareholders entitled to
this general meeting 20 days prior to the date of the meeting. Where the attend this shareholders'general meeting 20 days prior to the date of the
Company convenes an extraordinary general meeting, a written notice of the meeting. Where the Company convenes an extraordinary generalshareholders'
meeting shall be given to the shareholders entitled to attend this general meeting, a written notice of the meeting shall be given to the shareholders
meeting 15 days prior to the date of the meeting. entitled to attend this general shareholders' meeting 15 days prior to the
date of the meeting.
If it is otherwise provided in the laws, administrative regulations, other
regulatory documents and the securities regulatory authorities or stock If it is otherwise provided in the laws, administrative regulations, other
exchanges in the jurisdictions where the shares of the Company are listed, regulatory documents and the securities regulatory authorities or stock
such requirements shall prevail. exchanges in the jurisdictions where, or the stock exchanges on whichthe
shares of the Company are listed, such requirements shall prevail.
The notice of a general meeting shall be delivered to shareholders (whether or
not they are entitled to vote at the general meeting) by way of public The notice of a generalshareholders' meeting shall be delivered to
announcement or other ways as prescribed in Article 212 of the Articles of shareholders (whether or not they are entitled to vote at the
Association. generalshareholders' meeting) by way of public announcement or other ways as
prescribed in Article 212 of the Articles of Association.
Unless otherwise required by applicable laws, the duration aforesaid is
inclusive of the date on which the notice is issued and exclusive of the date
of the general meeting.
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Unless otherwise required by applicable laws, the duration aforesaid is
inclusive of the date on which the notice is issued and exclusive of the date
of the general meeting.
Article 37 Where the general meeting of shareholders intends to discuss the Article 36 Where the shareholders'general meeting of shareholders intends to
election of directors and supervisors, the notice of the general meeting shall discuss the election of directors and supervisors, the notice of the
fully disclose the detailed information of the candidates for directors and shareholders'general meeting shall fully disclose the detailed information of
supervisors, including at least the following contents: … the candidates for directors and supervisors, including at least the following
contents: …
(4) whether he/she has been penalized by the securities regulatory authorities
under the State Council and other relevant departments and disciplined by the (4) whether he/she has been penalized by the securities regulatory authorities
stock exchange. under the State Council CSRC and other relevant departments and disciplined by
the stock exchanges on which the securities of the Company are listed.
CHAPTER 7 REGISTRATION FOR THE SHAREHOLDERS' GENERAL MEETING CHAPTER 7 REGISTRATION FOR THE SHAREHOLDERS' GENERAL MEETING
Article 39 A shareholder may attend the general meeting in person or appoint a Article 38 A shareholder may attend the shareholders'general meeting in person
proxy to attend and vote on his behalf. or appoint a proxy to attend and vote on his behalf.
Where a shareholder intends to appoint a proxy to attend and vote on his Where a shareholder intends to appoint a proxy to attend and vote on his
behalf, a written proxy form shall be duly completed. Such written proxy form behalf, a written proxy form shall be duly completed. Such written proxy form
shall state the following: shall state the following:
(1) the name of the authorized proxy of the shareholder; (1) the name of the principal, and class and number of shares held in the
Company;
(2) the number of shares held by the principal represented by the
authorized proxy; (12) the name of the authorized proxy of the shareholder;
(3) whether or not there is any voting right(s); (2) the number of shares held by the principal represented by the authorized
proxy;
(4) direction(s) to vote for, against or abstain from voting on each and
every issue included in the agenda of the general meeting; (3) the specific instructions of the shareholders,
whether or not there is any voting right(s);
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(5) the proxy form shall state clearly that the proxy shall be entitled to (4) including direction(s) to vote for, against or abstain from voting
vote or not at his discretion in the absence of specific instructions from the on each and every issue included in the agenda of the shareholders'general
shareholder; meeting;
(6) the date of issue and validity period of the proxy form. (5) the proxy form shall state clearly that the proxy shall be entitled to
vote or not at his discretion in the absence of specific instructions from the
shareholder;
A shareholder shall appoint his proxy in writing. The proxy form shall be
signed by the principal or its agent acting under a written power of attorney,
where the principal is a legal person, the proxy form shall bear its seal or (64) the date of issue and validity period of the proxy form.;
be signed by its director or an officer or a proxy duly appointed. Where more
than one proxy are appointed, the proxy form shall specify the respective
number of shares represented by each proxy.
(5) the signature or corporate seal of the principal.
A shareholder shall appoint his proxy in writing. The proxy form shall be
signed by the principal or its agent acting under a written power of attorney,
where the principal is a legal person, the proxy form shall bear its seal or
be signed by its director or an officer or a proxy duly appointed. Where more
than one proxy are appointed, the proxy form shall specify the respective
number of shares represented by each proxy.
The proxy form shall state clearly that the proxy shall be entitled to vote or
not at his/her discretion in the absence of specific instructions from the
shareholder.
Article 41 Where an individual shareholder attends the general meeting in Article 40 Where an individual shareholder attends the general meeting in
person, he shall produce his identification card or other valid documents or person, he shall produce his identification card or other valid documents or
evidence and share account card that can verify his identity; where a proxy is evidence and share account card that can verify his identity; where a proxy is
appointed to attend the meeting, the proxy shall produce his own appointed to attend the meeting, the proxy shall produce his own
identification document and the proxy form. identification document and the proxy form.
A corporate shareholder shall be represented by its legal representative or a A corporate shareholder shall be represented by its legal representative or a
proxy appointed by the legal representative at the meeting. Where a legal proxy appointed by the legal representative at the meeting. Where a legal
representative attends the meeting, the legal representative attends the meeting, the legal
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representative shall produce his identification card and other documents that representative shall produce his identification card and other documents that
can testify to his capacity as a legal representative; where a proxy is can testify to his capacity as a legal representative; where a proxy is
appointed to attend the meeting, the proxy shall produce his own appointed to attend the meeting, the proxy shall produce his own
identification card and the written proxy form issued by the legal identification card and the written proxy form issued by the legal
representative of the corporate shareholder according to law. representative of the corporate shareholder according to law.
CHAPTER 8 REVIEW AND VOTING IN THE SHAREHOLDERS' GENERAL MEETING CHAPTER 8 REVIEW AND VOTING IN THE SHAREHOLDERS' GENERAL MEETING
Article 46 The general meeting shall be convened by the chairman of the board Article 45 The shareholders'general meeting shall be convened by the chairman
of directors, and the chairman of the board of directors shall preside over of the board of directors, and the chairman of the board of directors shall
and act as the chairman of the meeting. If the chairman is unable or fails to preside over and act as the chairman of the meeting. If the chairman is unable
perform his duties, the vice chairman shall preside over and act as the or fails to perform his duties, the vice chairman shall preside over and act
chairman of the meeting. In the event that the vice chairman is unable or as the chairman of the meeting. In the event that the vice chairman is unable
fails to perform his duties, a director shall be elected by a simple majority or fails to perform his duties, a director shall be elected by a simple
of directors to preside over and act as the chairman of the meeting. If a majoritymore than half of directors to preside over and act as the chairman of
simple majority of directors are unable to elect a director to preside over the meeting. If a simple majoritymore than half of directors are unable to
and act as the chairman of the meeting, the shareholders who attend the elect a director to preside over and act as the chairman of the meeting, the
meeting may elect a person as the chairman; if for any reason the shareholders shareholders who attend the meeting may elect a person as the chairman; if for
are unable to elect a chairman, the shareholder (including his proxy) holding any reason the shareholders are unable to elect a chairman, the shareholder
the largest number of shares conferring the right to vote thereat shall be the (including his proxy) holding the largest number of shares conferring the
chairman of the meeting. right to vote thereat shall be the chairman of the meeting.
If the board of directors is unable or fails to perform its duties of If the board of directors is unable or fails to perform its duties of
convening the general meeting, the supervisory committee shall convene, convening the shareholders'general meeting, the supervisory committee audit
preside over and the chairman of the supervisory committee shall act as the and risk management committee (the supervision committee) shall convene,
chairman of the meeting in a timely manner. In the event that the chairman of preside over and the chairman convenor of the supervisory committee audit and
the supervisory committee is unable or fails to perform his duties, a simple risk management committee (the supervision committee)shall act as the chairman
majority of the supervisors shall jointly select a supervisor to act as of the
chairman.
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In the event that the supervisory committee is unable or fails to perform its meeting in a timely manner. In the event that the chairman convenor of the
duties to convene a general meeting, the shareholder(s) who individually or supervisory committee audit and risk management committee (the supervision
collectively holds or hold 10% or more of the shares in the Company for over committee) is unable or fails to perform his duties, a simple majoritymore
ninety (90) days may convene or preside over such meeting at his/their own than half of the supervisorsmembers of the audit and risk management committee
discretion, shareholders attending shall choose one (1) person to act as the (the supervision committee)shall jointly select a supervisor member of the
chairman of the meeting. If for any reason, the shareholders fail to elect a audit and risk management committee (the supervision committee) to act as
chairman, then, of the shareholders attending the meeting, the shareholder chairman.
(including a proxy) holding the largest number of shares carrying the right to
vote thereat shall be the chairman of the meeting.
In the event that the supervisory committee audit and risk management
committee (the supervision committee) is unable or fails to perform its
When a general meeting is convened, if the person presiding over a general duties to convene a shareholders'general meeting, the shareholder(s) who
meeting violates the rules of procedures of the meeting and the general individually or collectively holds or hold 10% or more of the shares in the
meeting cannot proceed as a result, upon the consent of a simple majority of Company for over ninety (90) days may convene or preside over such meeting at
the shareholders who attend the meeting and are entitled to vote thereat, the his/their own discretion, shareholders attending shall choose one (1) person
general meeting may elect a person to act as its chairman to continue the to act as the chairman of the meeting. If for any reason, the shareholders
meeting. fail to elect a chairman, then, of the shareholders attending the meeting, the
shareholder (including a proxy) holding the largest number of shares carrying
the right to vote thereat shall be the chairman of the meeting.
When a shareholders'general meeting is convened, if the person presiding over
a shareholders'general meeting violates the rules of procedures of the meeting
and the shareholders'general meeting cannot proceed as a result, upon the
consent of a simple majority of the shareholders who attend the meeting and
are entitled to vote thereat, the shareholders'general meeting may elect a
person to act as its chairman
to continue the meeting.
Article 47 For an extraordinary general meeting separately convened by the Article 46 For an extraordinary shareholders' general meeting separately
shareholder(s) who individually or collectively holds or hold 10% or convened by the shareholder(s) who individually
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more of the total number of the Company's shares for over ninety (90) days or or collectively holds or hold 10% or more of the total number of the Company's
by the supervisory committee, the board of directors and the secretary to the shares for over ninety (90) days or by the supervisory committee audit and
board shall facilitate such meeting. Reasonable expenses of the meeting shall risk management committee (the supervision committee), the board of
be borne by the Company. directors and the secretary to the board shall facilitate such meeting.
Reasonable expenses of the meeting shall be borne by the Company.
Article 48 When the Company convenes a general meeting of shareholders, all Article 47 When the Company convenes a shareholders'general meeting of
directors, supervisors and the secretary of the board of directors shall shareholders, all directors, supervisors and the secretary of the board of
attend the meeting, and the president, vice presidents and other senior directors shall attend the meeting, and the president, vice presidents and
officers shall attend the meeting and provide explanations and clarifications other senior officers shall attend the meeting and provide explanations and
on the shareholders' inquiries and suggestions. clarifications on the shareholders' inquiries and suggestionsrequiring
directors and senior officer personnel to attend the meeting, the directors
and senior officer personnel shall attend the meeting and answer shareholders'
inquiries.
Article 53 At an AGM, the board of directors and the supervisory committee Article 52 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 shall, respectively, make a reports to the shareholders' meeting on the work
the past year, and each independent director shall also make a report on his done by them in the past year, and each independent director shall also make a
work. report on his work. The directors and senior officer personnel shall provide
explanations and clarifications on the shareholders' inquiries at the
shareholders' meeting of the Company.
Article 54 The convener shall ensure that the general meeting is held Article 53 The convener shall ensure that the shareholders'general meeting is
continuously until the final resolution is made. If the general meeting of held continuously until the final resolution is made. If the
shareholders is suspended or fails to make a resolution due to special reasons shareholders'general meeting of shareholders is suspended or fails to make a
such as force majeure, necessary measures shall be taken to resume the general resolution due to special reasons such as force majeure, necessary measures
meeting of shareholders as soon as possible or directly terminate the general shall be taken to resume the shareholders'general meeting of shareholders as
meeting of shareholders, and timely announcement shall be made. At the same soon as possible or directly terminate the shareholders'general meeting of
time, the convener shall report to the local office of the shareholders, and timely announcement shall be made. At the same time, the
convener shall report to the local office of the securities regulatory
authority under
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securities regulatory authority under the State Council and the stock exchange the State CouncilCSRC and the stock exchange at the place where the Company is
where the Company is located. located and the stock exchanges on which the securities of the Company are
listed.
Article 61 Any vote of shareholders at a general meeting must be taken by poll Article 61 Any vote of shareholders at a general meeting must be taken by poll
except where the chairman of the meeting, in good faith, decides to allow a except where the chairman of the meeting, in good faith, decides to allow a
resolution which relates purely to a procedural or administrative matter to be resolution which relates purely to a procedural or administrative matter to be
voted on by a show of hands. voted on by a show of hands.
Article 64 Each shareholder or his authorized proxy shall exercise his voting Article 62 Each shareholder or his authorized proxy shall exercise his voting
rights in accordance with the number of voting shares represented by him. rights in accordance with the number of voting shares represented by him.
Besides the situations stipulated by Article 63 in these Rules, each share Except under the cumulative voting systemBesides situations stipulated by
shall carry one vote. Article 63 in these Rules, each share shall carry one vote.
The controlling shareholder(s) and de facto controller(s) of the Company shall The controlling shareholder(s) and de facto controller(s) of the Company shall
not restrict or obstruct minority shareholders to exercise their voting rights not restrict or obstruct minority shareholders to exercise their voting rights
in accordance with laws and shall not infringe the legitimate interest of the in accordance with laws and shall not infringe the legitimate interest of the
Company and minority shareholders. Company and minority shareholders.
Article 65 At a shareholders' general meeting, in accordance with the Article 63 At a shareholders' general meeting, in accordance with the
requirements under the Articles of Association the cumulative voting system requirements under the Articles of Association the cumulative voting system
shall be adopted for voting on the motions for the election of directors shall be adopted for voting on the motions for the election of directors
(excluding the employee representative director). The main content of the (excluding the employee representative director). The main content of the
cumulative voting system is as follows: cumulative voting system is as follows:
(1) Where the number of directors to be elected is more than two, the (1) Where the number of directors to be elected is more than two, the
cumulative voting system must be adopted; cumulative voting system must be adopted;
(2) Where cumulative voting system is adopted, each of the shares held by (2) Where cumulative voting system is adopted, each of the shares held by
a shareholder shall carry the same number of votes as the number of directors a shareholder shall carry the same number of votes as the number of directors
to be elected. All shareholders attending the shareholders' meeting for to be elected. All shareholders attending the shareholders' meeting for
election of directors election of directors
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may fully exercise their respective voting rights which shall be the number of may fully exercise their respective voting rights which shall be the number of
their respective shares multiplying by the number of director candidates; their respective shares multiplying by the number of director candidates;
(3) The notice of a shareholders' general meeting shall notify the (3) The notice of a shareholders' general meeting shall notify the
shareholders that a cumulative voting system will be adopted for the election shareholders that a cumulative voting system will be adopted for the election
of directors. The conveners of the meeting shall prepare ballots suitable for of directors. The conveners of the meeting shall prepare ballots suitable for
cumulative voting, and shall give explanations in writing regarding the cumulative voting, and shall give explanations in writing regarding the
cumulative voting system, the way the ballots form are to be completed and the cumulative voting system, the way the ballots form are to be completed and the
methods of counting the votes; methods of counting the votes;
(4) In casting his votes for the director candidates at a shareholders' (4) In casting his votes for the director candidates at a shareholders'
general meeting, a shareholder may exercise his voting rights by spreading his general meeting, a shareholder may exercise his voting rights by spreading his
votes evenly and cast in favour of each of the candidates the number of votes votes evenly and cast in favour of each of the candidates the number of votes
corresponding to the number of shares he holds; or he may focus on one corresponding to the number of shares he holds; or he may focus on one
particular candidate and cast in favour of that candidate the total number of particular candidate and cast in favour of that candidate the total number of
votes carried by all of his shares; or he may spread his votes over several votes carried by all of his shares; or he may spread his votes over several
candidates and cast in favour of each of them part of the total number of candidates and cast in favour of each of them part of the total number of
votes carried by the shares he holds; votes carried by the shares he holds;
(5) Upon the exercise of his voting rights to focus all his votes on one or (5) Upon the exercise of his voting rights to focus all his votes on one or
several of the candidates of directors, a shareholder shall not have any right several of the candidates of directors, a shareholder shall not have any right
to vote for any other candidates; to vote for any other candidates;
(6) Where the total number of votes cast by a shareholder is in excess of the (6) Where the total number of votes cast by a shareholder is in excess of the
number of votes number of votes
carried by the total number of shares held by him,
carried by the total number of shares held by him,
the votes cast by the shareholder shall be invalid, the votes cast by the shareholder shall be invalid,
and the shareholder shall be deemed to have and the shareholder shall be deemed to have
waived his voting rights. Where the total number of votes cast by a
waived his voting rights. Where the total number of votes cast by a
shareholder is less than the shareholder is less than the
number of votes carried by the total number of
number of votes carried by the total number of
shares held by such shareholder, the votes cast by shares held by such shareholder, the votes cast by
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the shareholder shall be valid, and the voting rights attached to the the shareholder shall be valid, and the voting rights attached to the
shortfall between the votes actually cast and the votes which the shareholder shortfall between the votes actually cast and the votes which the shareholder
is entitled to cast shall be deemed to have been waived by the shareholder; is entitled to cast shall be deemed to have been waived by the shareholder;
(7) Where the number of approval votes for a director candidate exceeds (7) Where the number of approval votes for a director candidate exceeds
one-half of the total voting rights (to be calculated in accordance with the one-half of the total voting rights (to be calculated in accordance with the
total number of shares if the cumulative voting is not adopted) represented by total number of shares if the cumulative voting is not adopted) represented by
the shareholders attending the shareholders' general meeting, the candidate the shareholders attending the shareholders' general meeting, the candidate
shall be the elected director. If the number of the elected director shall be the elected director. If the number of the elected director
candidates at the shareholders' general meeting exceeds the total number of candidates at the shareholders' general meeting exceeds the total number of
directors to be elected, those candidates who win the largest number of directors to be elected, those candidates who win the largest number of
approval votes shall be elected as directors (however, if the elected approval votes shall be elected as directors (however, if the elected
directors whose approval votes are comparatively fewer win the same number of directors whose approval votes are comparatively fewer win the same number of
approval votes, and the election of such candidates as directors will give approval votes, and the election of such candidates as directors will give
rise to the number of directors elected exceeding the number of directors to rise to the number of directors elected exceeding the number of directors to
be elected, such candidates shall be deemed as having not been elected); if be elected, such candidates shall be deemed as having not been elected); if
the number of directors elected at a shareholders' general meeting falls short the number of directors elected at a shareholders' general meeting falls short
of the number of directors to be elected, a new round of voting shall be of the number of directors to be elected, a new round of voting shall be
carried out for the purpose of filling such directorship vacancies, until all carried out for the purpose of filling such directorship vacancies, until all
the directors to be elected are validly elected; the directors to be elected are validly elected;
(8) Where a new round of voting is carried out in accordance with the (8) Where a new round of voting is carried out in accordance with the
provisions of paragraph (7) of this Article at the shareholders' general provisions of paragraph (7) of this Article at the shareholders' general
meeting, the number of votes cast by the shareholders in the cumulative voting meeting, the number of votes cast by the shareholders in the cumulative voting
shall be re-counted in accordance with the number of directors to be elected shall be re-counted in accordance with the number of directors to be elected
in the new round of voting. in the new round of voting.
In the voting for the resolution on election of supervisors (excluding In the voting for the resolution on election of supervisors (excluding
employee representative supervisors), the cumulative voting system employee representative supervisors), the cumulative voting system
is is
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carried out with reference to the requirements above in the circumstance that carried out with reference to the requirements above in the circumstance that
the cumulative voting is adopted in accordance with relevant requirements in the cumulative voting is adopted in accordance with relevant requirements in
the Articles of Association. the Articles of Association.
Article 66 When a connected transaction is considered at a shareholders' Article 64 When a connected transaction is considered at a shareholders'
general meeting, the connected shareholder(s) shall abstain from voting, and general meeting, the connected shareholder(s) shall abstain from voting, and
the voting shares represented by him shall not be counted in the total number the voting shares represented by him shall not be counted in the total number
of valid votes. The voting result of nonconnected shareholders shall be fully of valid votes. The voting result of nonconnected shareholders shall be fully
disclosed in the announcement of the resolutions on the shareholders' general disclosed in the announcement of the resolutions on the shareholders' general
meeting. meeting.
When material matters affecting the interest of minority shareholders are When material matters affecting the interest of minority shareholders are
considered at a general meeting, votes by minority shareholders shall be considered at a shareholders'general meeting, votes by minority shareholders
counted separately. The results of separate counting shall be disclosed to the shall be counted separately. The results of separate counting shall be
public in a timely manner. disclosed to the public in a timely manner.
The Company's shares held by the Company shall not carry voting rights, and 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 those shares shall not be included in the total number of voting shares at a
general meeting. shareholders'general meeting.
In the event that a shareholder's purchase of the Company's voting shares
violates the provisions of Articles 63(1) and (2) of the Securities Law of the
People's Republic of China, the voting rights for the portion of the shares in
excess of the prescribed ratio shall not be exercised for a period of 36
months after the purchase and such shares shall not be counted in the total
number of voting shares held by shareholders attending the shareholders'
meeting.
The Company's board of directors, independent directors and shareholders
holding more than 1% of the voting shares or investor protection institutions
established in accordance with laws, administrative regulations or
requirements of the CSRC may publicly solicit the voting rights
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from shareholders. 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
defacto consideration for solicitation of voting rights is prohibited. Except
for the statutory conditions, the Company may not propose any minimum
shareholding restriction on the solicitation of voting rights.
Article 70 If the chairman of the meeting has any doubt as to the result of a Article 68 If the chairman of the meeting has any doubt as to the result of a
resolution which has been put to vote at a shareholders' meeting, he may have resolution which has been put to vote at a shareholders' meeting, he may have
the votes counted. If the chairman of the meeting has not counted the votes, organize a vote count the votes counted. If the chairman of the meeting has
any shareholder and proxy who attends and who objects to the result announced not counted the votes, any shareholder and proxy who attends and who objects
by the chairman of the meeting may, immediately after the declaration of the to the result announced by the chairman of the meeting may, immediately after
result, demand that the votes be counted and the chairman of the meeting shall the declaration of the result, demand that the votes be counted and the
have the votes counted immediately. Shareholders and proxies of shareholders chairman of the meeting shall have the votes counted immediately. Shareholders
who object to the results of voting may take part in checking the votes, and and proxies of shareholders who object to the results of voting may take part
the results shall be final and conclusive. Any objection raised after the in checking the votes, and the results shall be final and conclusive. Any
meeting shall be invalid. objection raised after the meeting shall be invalid.
Article 71 The Company shall announce the resolutions of the shareholders' Article 69 The Company shall announce the resolutions of the shareholders'
general meetings in accordance with applicable laws, regulations and the general meetings in accordance with applicable laws, regulations and the
relevant provisions of the stock exchanges on which the shares of the Company relevant provisions of the stock exchanges on which the shares securities of
are listed and traded. the Company are listed and traded.
Article 72 A shareholder attending the shareholders' general meeting shall Article 70 A shareholder attending the shareholders' general meeting shall
express its opinion of "for", "against" or "abstain" on the proposal submitted express its opinion of "for", "against" or "abstain" on the proposal submitted
for voting. for voting. The securities
registration and settlement institution shall be the nominal holder of shares
under the Stock Connect Mechanism in the Mainland China and
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
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resolution, any votes cast by or on behalf of such shareholder in Hong Kong Stock Markets, except where declaration is made in accordance with
contravention of such requirement or restriction shall not be counted. the actual holder's intention.
Votes that are not filled in, incorrectly filled in, or not legible, or votes Where a shareholder is, under the applicable listing rules as amended from
that are not cast are considered to be abstention by the voter, and the result time to time, required to abstain from voting on any particular resolution or
of the vote on the number of shares held by such voter shall be counted as to vote only for or only against any particular resolution, any votes cast by
"abstained". or on behalf of such shareholder in contravention of such requirement or
restriction shall not be counted.
Votes that are not filled in, incorrectly filled in, or not legible, or votes
that are not cast are considered to be abstention by the voter, and the result
of the vote on the number of shares held by such voter shall be counted as
"abstained".
Article 73 Resolutions of a shareholders' general meeting shall be divided Article 71 Resolutions of a shareholders' general meeting shall be divided
into ordinary resolutions and special resolutions. into ordinary resolutions and special resolutions.
(I) Ordinary resolutions (I) Ordinary resolutions
Ordinary resolutions shall be passed by votes exceeding one-half of voting Ordinary resolutions shall be passed by votes exceeding one-half of voting
rights represented by shareholders (including proxies) attending the rights represented by shareholders (including proxies) attending the
shareholders' general meeting. shareholders' general meeting.
The following issues shall be approved by ordinary resolutions at a The following issues shall be approved by ordinary resolutions at a
shareholders' general meeting: shareholders' general meeting:
(1) working reports of the board of directors and the supervisory committee; (1) working reports of the board of directors and the supervisory committee;
(2) profit distribution plans and loss recovery plans formulated by the (2) profit distribution plans and loss recovery plans formulated by the
board; board;
(3) appointment and removal of the members of the board of directors and (3) appointment and removal of the members of the board of directors and the
the supervisory committee, their remuneration and the method of payment supervisory committee, their remuneration and the method of payment thereof;
thereof;
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(4) annual budgets, final accounts, balance sheets and profit and loss (4) annual budgets, final accounts, balance sheets and profit and loss
accounts and other financial statements of the Company; accounts and other financial statements of the Company;
(5) appointment, removal or non-reappointment of an accounting firm; (5) appointment, removal or non-reappointment of an accounting firm;
(6) other issues, except for those required by laws, administrative (6) other issues, except for those required by laws, administrative
regulations or the Articles of Association to be passed by special regulations or the Articles of Association to be passed by special
resolutions. resolutions.
(II) Special resolutions (II) Special resolutions
Special resolutions shall be passed by votes representing two-thirds or more Special resolutions shall be passed by votes representing two-thirds or more
of voting rights represented by shareholders (including proxies) attending the of voting rights represented by shareholders (including proxies) attending the
shareholders' general meeting. shareholders' general meeting.
The following issues shall be approved by special resolutions at shareholders' The following issues shall be approved by special resolutions at shareholders'
general meetings: general meetings:
(1) increase or reduction in share capital of the Company and the issue of (1) increase or reduction in share registered capital of the Company and the
shares of any class, warrants and other similar securities; issue of shares of any class, warrants and other similar securities;
(2) issue of debt securities of the Company; (2) issue of debt securities of the Company;
(3) demerger, spin-off, merger, dissolution, liquidation or change of (32) demerger, spin-off, merger, dissolution, and liquidation or change of the
the corporate form of the Company; corporate form of the Company;
(4) amendments to the Articles of Association; (43) amendments to the Articles of Association;
(5) purchases and disposals of major assets by the Company or guarantees (54) purchases and disposals of major assets by the Company or guarantees
provided by the Company within one year with an amount excess of 30% of the provided by the Company within one year with an amount excess of 30% of the
latest audited total assets of the Company; latest audited total assets of the Company;
(6) share incentive scheme; (65) share incentive scheme;
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(7) any other matter stipulated by laws, administrative regulations or the (76) any other matter stipulated by laws, administrative regulations or the
Articles of Association and confirmed by an ordinary resolution at a Articles of Association and confirmed by an ordinary resolution at a
shareholders' general meeting that it may have material impact on the Company shareholders' general meeting that it may have material impact on the Company
and is required to be approved by a special resolution. and is required to be approved by a special resolution.
CHAPTER 9 ADJOURNMENT AND TERMINATION OF THE MEETING CHAPTER 9 ADJOURNMENT AND TERMINATION OF THE MEETING
Article 73 If, in the course of the meeting, any dispute is raised by the
shareholders attending the meeting over matters such as the shareholders'
identities and the counting result, which cannot be resolved on site and
therefore results in meeting disorders or prevents continuation of the
meeting, the chairman of the meeting shall announce a temporary adjournment of
the meeting. Upon clearance of the aforementioned circumstances, the chairman
of the meeting shall promptly notify the shareholders to resume the meeting.
CHAPTER 10 RESOLUTIONS AND MINUTES OF THE MEETING CHAPTER 10 RESOLUTIONS AND MINUTES OF THE MEETING
Article 76 A shareholders' general meeting should pass resolutions for the Article 75 A shareholders' general meeting should pass resolutions for the
motions which are listed in the agenda of the meeting. motions which are listed in the agenda of the meeting.
The resolutions passed at the general meetings are invalid should they are in The resolutions passed at the shareholders'general meetings are invalid should
violation of any laws, or administrative regulations. they are in violation of any laws, or administrative regulations.
Should the procedures for convening a general meeting, or the way of voting, Should the procedures for convening a shareholders'general meeting, or the way
be in violation of any laws, administrative regulations or the Articles of of voting, be in violation of any laws, administrative regulations or the
Association, or a resolution be in violation of the Articles of Association, Articles of Association, or a resolution be in violation of the Articles of
the shareholders may, within 60 days from the date on which the resolution is Association, the shareholders may, within 60 days from the date on which the
made, request the People's Court to revoke it. resolution is made, request the People's Court to revoke it; however, minor
flaws in the convening procedures or
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voting methods of the shareholders' meeting that have no substantial impact on
a resolution, shall not invalidate such resolution.
Where the Board of Directors, Shareholders and other relevant parties have
disputes over the qualifications of the convenor, the convening procedures,
the legality of the contents of a resolution and the validity of a resolution
of the shareholders' meeting, they shall promptly file a lawsuit with the
People's Court. Before the People's Court makes a revocation of the resolution
or other judgement or ruling, the relevant parties shall implement the
resolution of the shareholders' meeting. The Company, the Directors and senior
officer members shall effectively perform their duties and implement the
resolution of the shareholders' meeting in a timely manner to ensure the
normal operation of the Company.
If the People's Court makes a judgement or ruling on the relevant matters, the
Company shall perform its information disclosure obligations in accordance
with the laws and administrative regulations, the provisions of the CSRC and
the stock exchanges where the Company's securities are listed, fully explain
the impact, and actively cooperate with the implementation of the judgement or
ruling after it has come into effect. Where correction of prior period matters
is involved, it should be dealt with in a timely manner and be fulfilled with
corresponding information disclosure obligations.
Article 78 Minutes of a general meeting shall be signed by directors, Article 77 Minutes of a shareholders'general meeting shall be signed by
supervisors, secretary to the board of directors, convener or his proxies, and directors, supervisors, secretary to the board of directors, convener or his
the person presiding over the meeting (the chairman of the meeting). proxies attending or present at the meeting, and the person presiding over the
meeting (the chairman of the meeting).
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CHAPTER 11 DISCLOSURE OF INFORMATION CHAPTER 11 DISCLOSURE OF INFORMATION
Article 80 The board of the Company shall strictly comply with the laws, Article 79 The board of the Company shall strictly comply with the laws,
regulations and requirements of the stock exchanges on which the Company's regulations and requirements of the stock exchanges on which the Company's
share are listed and transacted in relation to the disclosure of the Company's share securities are listed and transacted in relation to the disclosure of
information. It shall ensure that matters examined and/or resolutions passed the Company's information. It shall ensure that matters examined and/or
at the shareholders' meeting are disclosed fairly, truly, accurately, resolutions passed at the shareholders' meeting are disclosed fairly, truly,
thoroughly and in a timely manner. accurately, thoroughly and in a timely manner.
Article 80 The announcement of the resolutions of the shareholders' meeting
shall specify (including without limitation) the number of shareholders (or
shareholder proxies) attending the meeting, the total number of shares held
(or proxy shares) and their proportion in the Company's total voting shares,
the voting system and the voting results of each motion.
If any proposal is not adopted, or the current shareholders' meeting amends
the resolution of the last shareholders' meeting, special indication thereof
shall be given in the announcement of the resolution of the shareholders'
meeting.
Article 81 Announcements of the shareholders' meeting resolutions shall be
published in the designated newspaper(s) and website(s). The Company shall
disclose the information within the time limit and in the manner as provided
in laws, regulations as well as the securities regulatory authorities and the
stock exchanges on which the Company's securities are listed.
CHAPTER 12: SUPPLEMENTARY CHAPTER 12: SUPPLEMENTARY
Article 84 For the purpose of these Rules, the term "not less than" is an all Article 85 For the purpose of these Rules, the term "not less than" is an all
inclusive term and the terms "more than half", "exceed", "below" and "above" inclusive term and the terms "more than half", "exceed", "below" and "above"
are exclusive terms. are exclusive terms.
Notes:
1. Save as the table above, all references to "shareholders'
meetings" in the Chinese version of the Rules and Procedures of Shareholders'
Meetings have been revised from "股東大會" to "股東會" in accordance
with the Company Law.
2. Save as the table above, in accordance with Article 121 of
the Company Law, the Company abolishes the Supervisory Committee and
Supervisors and the Audit and Risk Management Committee (the Supervision
Committee) of the Board shall exercise the duties and powers of the
Supervisory Committee as stipulated in the Company Law. Therefore, the
expressions in relation to "Supervisory Committee" and "supervisors" have been
deleted in the Rules and Procedures of Shareholders' Meetings, or have been
revised to the "Audit and Risk Management Committee (the Supervision
Committee)".
3. Save as the table above, if the serial numbering of the
articles is changed due to the addition, deletion or re-arrangement of certain
articles, the serial numbering of the articles of these Rules and Procedures
of Shareholders' Meetings as so amended shall be changed accordingly,
including those referred to in cross references.
4. The Rules and Procedures of Shareholders' Meetings have
been prepared in Chinese and the English version is therefore a translation
only. In the event of any discrepancy between the English and Chinese
versions, the Chinese version shall prevail.
1.
Set out below are the details of the proposed amendments to the Rules and
Procedures of Meetings of the Board. The revisions have been underlined (if
applicable) for the convenience of perusal.
Revised Articles (Note: if no markup is shown, it means that no amendment has
been made)
Existing Articles of the Rules and Procedures
CHAPTER 2 FORMATION AND COMMITTEES OF THE BOARD CHAPTER 2 FORMATION AND COMMITTEES OF THE BOARD
Article 6 The board of directors shall include one chairman, which is Article 6 The board of directors shall include one chairman, which is
generally served by the secretary of the Party Committee, and one vice generally served by the secretary of the Party Committee, and one vice
chairmen, who are elected and removed by a majority of directors. chairmen, who are elected and removed by a majority of directors.
The Chairman of the board of directors shall exercise the following powers: The Chairman of the board of directors shall exercise the following powers:
(1) to determine an annual schedule for periodic meetings of the board of (1) to determine an annual schedule for periodic meetings of the board of
directors; directors;
(2) to preside over shareholders' general meetings and to convene and preside (2) to preside over shareholders' general meetings and to convene and preside
over meetings of the board of directors; over meetings of the board of directors;
(3) to check on the implementation of resolutions passed by the board of (2) to convey the spirit of the Central Committee and state-owned assets
directors; supervision policies to the board of directors, and to inform the board of the
tasks requiring the board's advancement and implementation as well as the
issues requiring rectification as identified in relevant supervision and
inspection;
(4) to sign the securities certificates issued by the Company;
(3) to oversee and check on the implementation of resolutions passed by the
(5) to sign material documents of the board of directors and other documents board of directors;
which shall be signed by the legal representative of the Company;
(4) to sign the securities certificates issued by the Company;
(6) to exercise power of the legal representative;
(5) to sign material documents of the board of directors and other documents
(7) to listen to reports on operation and management and conduct research on which shall be signed by the legal representative of the Company;
related issues;
(6) to exercise power of the legal representative;
(8) to manage the internal audit of the Company as the first responsible
person for internal audit works;
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been made)
Existing Articles of the Rules and Procedures
(9) in the event of emergency due to force majeure or major crisis that (74) to listen to reports on operation and management and conduct research on
makes it impossible to convene a board meeting in a timely manner, to exercise related issues;
special disposal powers within the authority of the board of directors in
accordance with laws and regulations and in the interests of the Company, and
to report to the board of directors after exercising such power so as to
ratify the same in accordance with relevant procedures; (8) to manage the internal audit of the Company as the first responsible
person for internal audit works;
(10) other powers conferred by the board of directors.
(95) in the event of emergency due to force majeure or major crisis that makes
it impossible to convene a board meeting in a timely manner, to exercise
special disposal powers within the authority of the board of directors in
The vice chairman shall assist the chairman in performing his duties. If the accordance with laws and regulations and in the interests of the Company, and
chairman is unable or fails to perform his duties, such duties shall be to report to the board of directors after exercising such power so as to
performed by the vice chairman. In the event that the vice chairman is unable ratify the same in accordance with relevant procedures;
or fails to perform his duties, a director shall be elected jointly by a
majority of the directors to perform such duties.
(106) other powers conferred by the requirements of the state-owned assets
supervision and administration authority of the State Council, the CSRC, the
stock exchanges on which the securities of the Company are listed or 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. In the event that the vice chairman is unable
or fails to perform his duties, a director shall be elected jointly by a
majority more than halfof the directors to perform such duties.
Article 8 In accordance with relevant resolutions of the shareholders' general Article 8 In accordance with relevant resolutions of the shareholders' general
meeting, the board of directors shall establish special committees such as a meeting, the The board of directors shall establish special committees such as
strategy and investment committee, an audit and risk management committee (the a strategy and investment committee, an audit and risk management committee
supervision committee), a nomination committee, a nomination and remuneration (the supervision committee), a nomination committee, a nomination and
and appraisal committee, and an aviation safety committee and other special remuneration and appraisal committee, and an aviation safety committee and
committees. other special committees.
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been made)
Existing Articles of the Rules and Procedures
These special committees shall consider specific matters and provide their These special committees shall consider specific matters and provide their
opinions and advice as a reference for the board's decision making based on 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 the proposals made by the board of directors, the chairman of the board of
directors and the recommendations from the president. directors and the recommendations from the president.
The members' composition, duties and responsibilities, and procedures of each The members' composition, duties and responsibilities, and procedures of each
special committee of the board of directors are specifically determined special committee of the board of directors are specifically determined
according to the terms of reference of each special committee, which are according to the terms of reference of each special committee, which are
formulated by the board of directors. formulated by the board of directors.
Independent directors shall convene special meetings on a regular or irregular Independent directors shall convene special meetings on a regular or irregular
basis to review relevant matters stipulated in laws, regulations, other basis to review relevant matters stipulated in laws, regulations, other
regulatory documents and the Articles of Association. Other matters of the regulatory documents and the Articles of Association. Other matters of the
Company may also be investigated and discussed as required at Company may also be investigated and discussed as required at the special
meetings of independent directors.
the special meetings of independent directors.
CHAPTER 3 FUNCTIONS AND POWERS OF THE BOARD OF DIRECTORS CHAPTER 3 FUNCTIONS AND POWERS OF THE BOARD OF DIRECTORS
Article 9 The board of directors is responsible to the shareholders' general Article 9 The board of directors is responsible to the shareholders' general
meeting for formulating strategies, making decisions and preventing risks and meeting for and shall perform the functions of formulating strategies, making
shall exercise the following duties and powers in accordance with statutory decisions and preventing risks and shall exercises the following duties and
procedures and the Articles of Association: powers in accordance with statutory procedures and the Articles of
Association:
(1) to be responsible for convening the shareholders' general meetings
and report on its work to the shareholders' general meetings; (1) to be responsible for convening convene the shareholders' general
meetings and report on its work to the shareholders' general meetings;
(2) to implement the resolutions passed at the shareholders' general
meetings; (2) to implement the resolutions passed at the shareholders' general
meetings;
(3) to determine the Company's business plans and investment plans;
(3) to determine the Company's development strategies and plans;
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been made)
Existing Articles of the Rules and Procedures
(4) to formulate the Company's annual budgets and final accounts; (34) to determine the Company's business plans and investment plans;
(5) to formulate the Company's profit distribution plans and loss recovery (45) to formulate determine the Company's annual budgets and final accounts;
plans;
(56) to formulate the Company's profit distribution plans and loss recovery
(6) to formulate the plans for increase or reduction of the Company's plans;
registered mcapital, and proposals for issue of corporate bonds;
(67) to formulate the plans for increase or reduction of the Company's
(7) to formulate the proposals for merger, division, dissolution or change registered mcapital capital, and proposals for issue issuance and listingof
of the corporate form of the Company; corporate bonds or other securities;
(8) to decide on the matters such as external investments, acquisition and (78) to formulate the proposals for major acquisitions and acquisition of the
disposal of assets, mortgages on assets, entrusted wealth management, Company's shares or merger, division, dissolution or andchange of the
connected transactions, and external donation of the Company within the corporate form of the Company;
authority granted by the shareholders' general meeting;
(89) to decide on the matters such as external investments, acquisition and
(9) to decide on the external guarantees other than those required to be disposal of assets, mortgages on assets, entrusted wealth management,
approved by the shareholders' general meetings according to laws, regulations, connected transactions, and external donation of the Company within the
other regulatory documents and the Articles of Association; authority granted by the shareholders' general meeting;
(10) to decide on the establishment of the Company's internal management (910) to decide on the external guarantees other than those required to be
bodies; approved by the shareholders' general meetings according to laws, regulations,
other regulatory documents and the Articles of Association;
(11) to appoint or dismiss the president of the Company, secretary to the
board of directors, conduct appraisal on their performance and determine their (101) to decide on the establishment of the Company's internal management
remunerations; and to appoint or dismiss, with reference to the nomination by bodies, and decide on the establishment or deregistration of major branches
the president, the vice presidents, chief accountant, chief pilot, general and subsidiaries;
legal counsel and other senior officers, conduct appraisal on their
performance and determine their remunerations, rewards and punishment;
(112) to appoint or dismiss decide appointment or dismission of the president
of the Company,
secretary to the board of directors and other
senior officers, conduct appraisal on their performance and determine their
remunerations,
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been made)
Existing Articles of the Rules and Procedures
(12) to formulate the Company's basic management rules; rewards and punishment; and to appoint or dismiss, with reference to the
nomination by the president, the vice presidents, chief accountant, chief
pilot, general legal counsel and other senior officers, conduct appraisal on
their performance and determine their remunerations, rewards and punishment;
(13) to formulate the proposals for any amendment to the Articles of
Association;
(123) to formulate the Company's basic management rules;
(14) to manage the disclosure of information of the Company;
(134) to formulate the proposals for any amendment to the Articles of
Association;
(15) to make proposal of any engagement or replacement of the accounting
firm which audits the Company's accounts at the shareholders' general meeting;
(145) to manage the disclosure of information of the Company;
(16) to receive the work report of the president of the Company and examine
on the president's work;
(16) to formulate the Company's major accounting policies and proposals for
amendments to accounting estimates;
(17) to determine the risk management system, the internal control system
and the compliance management system of the Company, and monitor the relevant
systems and their implementation; (157) to make proposal of any engagement or replacement of the accounting firm
which audits the Company's accounts at the shareholders' general meeting;
(18) to guide, inspect and assess the internal audit works and approve the
annual audit plan and important audit reports pursuant to laws; (168) to receive the work report of the president of the Company and examine
on the president's work;
(19) to promote the development of corporate governance and supervise the
lawful management by the management; (19) to formulate the Company's major income distribution plans, and decide on
major matters in relation to employee income distribution;
(20) to exercise other functions and powers as stipulated by laws,
regulations, other regulatory documents and the Articles of Association and (20) to establish and improve the internal supervision, management and risk
granted by the shareholders' general meeting. control
system, and enhance the internal compliance management; to determine the risk
management system, internal control system, accountability system for
non-compliance operation and investment and compliance management system
of the Company, and conduct overall monitoring and evaluation of the Company's
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been made)
Existing Articles of the Rules and Procedures
risk management, internal control and legal compliance management systems and
their effective implementation;
(17) to determine the risk management system, the internal control system and
the compliance management system of the Company, and monitor the relevant
systems and their implementation;
(1821) to guide, inspect and assess the internal audit works of the Company,
and consider and approve the annual audit plan and important audit reports
pursuant to laws;
(22) to consider solutions for the Company's material litigation, arbitration
and other legal affairs;
(19) to promote the development of corporate governance and supervise the
lawful management by the management;
(203) to exercise other functions and powers as stipulated by laws,
regulations, other regulatory documents and the Articles of Association and
granted by the shareholders' general meeting.
Article 11 The approval authority of the board of directors in relation to the Article 11 The approval authority of the board of directors in relation to the
decisions concerning transactions, investments and guarantees, etc. is as decisions concerning transactions, investments and guarantees, etc. is as
follows: follows:
(1) General transactions which shall be subject to approval of the board of (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 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 shares of the Company are listed, as amended from time to time) include
specifically: specifically:
…… ……
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been made)
Existing Articles of the Rules and Procedures
(7) The board of directors is entitled to adjust the scope of management
decision-making matters in accordance with the requirements of the state-owned
assets supervision and administration authority of the State Council, the CSRC
and the stock exchanges where the securities of the Company are listed, while
also taking into account the Company's actual circumstances.
Article 12 The authority of the board to approve the disposals of the Article 12 The authority of the board to approve the disposals of the
Company's fixed assets: Company's fixed assets:
The board of directors shall not, without the prior approval of shareholders The board of directors shall not, without the prior approval of shareholders
in a shareholders' general meeting, dispose of or agree to dispose of any in a shareholders' general meeting, dispose of or agree to dispose of any
fixed assets of the Company, unless the estimated value of the consideration fixed assets of the Company, unless the estimated value of the consideration
for a fixed asset to be disposed of and the value of consideration for any for a fixed asset to be disposed of and the value of consideration for any
such disposals of fixed assets of the Company for a period of four (4) months such disposals of fixed assets of the Company for a period of four (4) months
prior to the proposed disposal, on an aggregated basis does not exceed 33% of prior to the proposed disposal, on an aggregated basis does not exceed 33% of
the value of the Company's fixed assets as shown in the latest balance sheet the value of the Company's fixed assets as shown in the latest balance sheet
tabled at a shareholders' general meeting. Should the above percentage be tabled at a shareholders' general meeting. Should the above percentage be
lower than 0.2%, the disposal of those fixed assets shall be subject to the lower than 0.2%, the disposal of those fixed assets shall be subject to the
approval of the president's office under the authority granted by the board of approval of the president's office under the authority granted by the board of
directors. Should there be any inconsistency between the preceding directors. Should there be any inconsistency between the preceding
requirements and provisions of the stock exchanges on which the Company's requirements and provisions of the stock exchanges on which the Company's
shares are listed and traded in respect of the issue, the latter shall shares securitiesare listed and traded in respect of the issue, the latter
prevail. shall prevail.
Disposals of the fixed assets include transfer of some asset interests, but Disposals of the fixed assets include transfer of some asset interests, but
not include guarantee provided by fixed assets. not include guarantee provided by fixed assets.
The effectiveness of the Company's disposal of the fixed assets shall not be The effectiveness of the Company's disposal of the fixed assets shall not be
affected by any breach of the forgoing provisions in paragraph 1 of this affected by any breach of the forgoing provisions in paragraph 1 of this
Article. Article.
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been made)
Existing Articles of the Rules and Procedures
In the event that the board of directors make decisions on market development, In the event that the board of directors make decisions on market development,
mergers and acquisitions, and investments in new areas, for the projects with mergers and acquisitions, and investments in new areas, for the projects with
the investment amounts or mergers and acquisitions of up to certain percentage the investment amounts or mergers and acquisitions of up to certain percentage
of the Company's total assets (such percentage shall be decided by the of the Company's total assets (such percentage shall be decided by the
shareholders' general meetings), a public consultant institutions shall be shareholders' general meetings), a public consultant institutions shall be
retained to provide professional advice as the important basis for the board's retained to provide professional advice as the important basis for the board's
decision-making. decision-making.
CHAPTER 4 RULES FOR BOARD MEETINGS CHAPTER 4 RULES FOR BOARD MEETINGS
Article 17 A board meeting shall be convened and chaired by the chairman of Article 17 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 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 fails to convene and chair the meetings, the vice chairman shall convene and
chair the meetings; if the vice chairman of the board of directors is unable chair the meetings; if the vice chairman of the board of directors is unable
or fails to convene and chair the meetings, a director shall be jointly 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. elected by a simple majority more than halfof directors to convene and chair
the meetings.
CHAPTER 5 PROPOSED RESOLUTIONS OF BOARD MEETINGS CHAPTER 5 PROPOSED RESOLUTIONS OF BOARD MEETINGS
Article 21 Resolutions shall be proposed to the board meetings in the Article 21 Resolutions shall be proposed to the board meetings in the
following circumstances following circumstances
(1) The chairman of the board of directors propose it; (1) The chairman of the board of directors propose it;
(2) One-third or more of the directors jointly propose it; (2) One-third or more of the directors jointly propose it;
(3) The supervisory committee proposes it; (3) The supervisory committee audit and risk management committee
(supervision committee) proposes it;
(4) Any special committee of the board proposes it;
(4) Any special committee of the board proposes it;
(5) The president proposes it;
(5) The president proposes it;
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been made)
Existing Articles of the Rules and Procedures
(6) One-half or more of the independent directors jointly propose it; (6) One-half or more of the independent directors jointly propose it;
(7) Items raised by shareholders representing 10% or more of the voting (7) Items raised by shareholders representing 10% or more of the voting
right; right;
(8) other circumstances so stipulated by laws, regulations and the (8) other circumstances so stipulated by laws, regulations and the
Articles of Association. Articles of Association.
CHAPTER 7 CONSIDERING AND VOTING ON PROPOSED RESOLUTIONS CHAPTER 7 CONSIDERING AND VOTING ON PROPOSED RESOLUTIONS
Article 33 The following matters shall be submitted to the board of directors Article 33 The following matters shall be submitted to the board of directors
for consideration after being approved by more than half of all independent for consideration after being approved by more than half of all independent
directors of the Company: directors of the Company:
(1) related transactions which shall be discloseable; (1) related transactions which shall be discloseable;
(2) changes in or waivers of commitments by the Company and related parties; (2) changes in or waivers of commitments by the Company and related parties;
(3) decisions and measures taken by the board of directors of the acquired (3) in the event of acquisition of the Company, decisions and measures taken
company in connection with the acquisition; by the board of directors of the acquired company in connection with the
acquisition;
(4) other matters stipulated by laws, administrative regulations and the
Articles of Association. (4) other matters stipulated by laws, administrative regulations and the
Articles of Association.
CHAPTER 9 BOARD MEETING INFORMATION DISCLOSURE CHAPTER 9 BOARD MEETING INFORMATION DISCLOSURE
Article 47 The board of the Company shall strictly comply with the laws, Article 47 The board of the Company shall strictly comply with the laws,
regulations and requirements of the stock exchanges on which the Company's regulations and requirements of the stock exchanges on which the Company's
share are listed and transacted in relation to the disclosure of the Company's share securities are listed and transacted in relation to the disclosure of
information. It shall ensure that matters examined and/or resolutions passed the Company's information. It shall ensure that matters examined and/or
at the board meeting are disclosed fairly, truly, accurately, thoroughly and resolutions passed at the board meeting are disclosed fairly, truly,
in a timely manner. accurately, thoroughly and in a timely manner.
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been made)
Existing Articles of the Rules and Procedures
CHAPTER 11 SUPPLEMENTARY CHAPTER 11 SUPPLEMENTARY
Article 56 For the purpose of these Rules, the term "not less than" is an all Article 56 For the purpose of these Rules, the term "not less than" is an all
inclusive term and the terms "more than half", "exceed", "above" and "below" inclusive term and the terms "more than half", "exceed", "above" and "below"
are exclusive terms. are exclusive terms.
Notes:
1. Save as the table above, all references to "shareholders'
meetings" in the Chinese version of the Rules and Procedures of Meetings of
the Board have been revised from "股東大會" to "股東會" in accordance
with the Company Law.
2. In accordance with Article 121 of the Company Law, the
Company abolishes the Supervisory Committee and Supervisors and the Audit and
Risk Management Committee (the Supervision Committee) of the Board shall
exercise the duties and powers of the Supervisory Committee as stipulated in
the Company Law. Therefore, the expressions in relation to "Supervisory
Committee" and "supervisors" have been deleted in the Rules and Procedures of
Meetings of the Board, or have been revised to the "Audit and Risk Management
Committee (the Supervision Committee)".
3. The Rules and Procedures of Meetings of the Board are
prepared in Chinese, and the English version is for reference only. In case of
any discrepancy between the Chinese and English versions, the Chinese version
shall prevail.
1.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that an annual general meeting (the "AGM") of Air China
Limited (the "Company") for the year ended 31 December 2024 will be held at
10:00 a.m. on Tuesday, 24 June 2025 at The Conference Room C313, No. 30,
Tianzhu Road, Airport Industrial Zone, Shunyi 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 4 June 2025 (the
"Circular").
ORDINARY RESOLUTIONS
1. To consider and approve the 2024 work report of the Board.
2. To consider and approve the 2024 work report of the
Supervisory Committee.
3. To consider and approve the audited consolidated financial
statements of the Company for the year 2024 prepared under the PRC Accounting
Standards and the IFRS Accounting Standards.
4. To consider and approve the profit distribution proposal
for the year 2024.
5. To consider and approve the appointment of KPMG as the
Company's international auditor and KPMG Huazhen LLP as the Company's domestic
auditor and internal control auditor, respectively for the year ending 31
December 2025 and to authorize the Audit and Risk Management Committee (the
Supervision Committee) of the Board to determine their remunerations for the
year 2025.
6. To consider and approve the resolution on the unrecovered
losses of the Company exceeding one-third of the total amount of its paid-up
share capital.
SPECIAL RESOLUTIONS
7. To consider and approve the issue of debt financing
instruments (including, but not limited to, ultra-short-term commercial
papers, short-term commercial papers, mid-term notes, corporate bonds,
domestic targeted debt financing instruments, overseas debt financing
instruments and overseas bonds/notes denominated in RMB or foreign
currencies) within the cap amount of bond issuance stipulated in the
applicable laws in one or multiple tranche(s) (the "Issuance"), and generally
and unconditionally authorise the Board to deal with the followings in
accordance with the specific needs of the Company and other market conditions:
(i) to determine the issuer, issue size, type, specific
instruments, detailed terms, conditions and other matters relating to the
Issuance (including, but not limited to, the specific issue size, actual
principal amount, currency, issue price, interest rate or mechanism for
determining the interest rate, issue place, issue timing, term, whether or not
to issue in multiple tranches and number of tranches, whether or not to set
put-back or redemption terms, credit rating, guarantee, repayment term,
detailed fund-raising arrangements within the scope of use approved by the
shareholders' meeting, detailed placing arrangements, underwriting
arrangements and all other matters relating to the issuance);
(ii) to carry out all necessary and ancillary actions and
procedures relating to the Issuance (including, but not limited to engaging
underwriters, lawyers, auditors, rating agencies, financial advisers and other
intermediary institutions, handling all approval, registration and filing
procedures with the relevant regulatory authorities in connection with the
Issuance on behalf of the Company, executing all necessary legal documents in
connection with the Issuance, selecting bonds trustee manager for the
Issuance, formulating rules for the bondholders' meeting and handle any other
matters relating to the issuance and trading);
(iii) to approve and confirm any action or procedure relating to
the Issuance as mentioned above already taken by the Company;
(iv) to make adjustments to the relevant matters such as the
specific proposals for the Issuance in accordance with the comments from the
regulatory authorities or the prevailing market conditions within the
authority granted at the general meeting of the Company, except where a new
vote at a general meeting of the Company is required by relevant laws and
regulations and the Articles of Association of Air China Limited;
(v) to determine and handle relevant matters relating to the
listing of the issued debt financing instruments upon the completion of the
issuance;
(vi) in the case of issuance of corporate debt financing
instruments, during the term of the corporate debt financing instruments, to
determine not to distribute profits to the shareholders to safeguard repayment
of debts as required under the relevant laws and regulations in the event that
the Company expects to, or does fail to pay the principal and interests as
they fall due;
(vii) to approve, execute and dispatch any announcements or
circulars relating to the Issuance and make any related disclosure in
accordance with the listing rules of the relevant jurisdictions where the
shares of the Company are listed;
(viii) to authorize the Board to further delegate the authorizations
set forth in items (i) to (vi) above to the president and/or the general
accountant of the Company upon obtaining the authorization at the general
meeting; and
(ix) to authorize the Board to further delegate the authorization
set forth in item (vii) above to the secretary of the Board upon obtaining the
authorization at the general meeting.
8. To consider and approve the proposed amendments to the
Articles of Association and the abolishment of the Supervisory Committee as
set out in Appendix IV to the Circular.
9. To consider and approve the proposed amendments to the
Rules and Procedures of Shareholders' Meetings as set out in Appendix V to the
Circular.
10. To consider and approve the proposed amendments to the Rules
and Procedures of Meetings of the Board as set out in Appendix VI to the
Circular.
ORDINARY RESOLUTIONS
11. To consider and approve the resolution on the renewal of the
CNACG Framework Agreement between the Company and CNACG and the application
for the annual transaction caps for 2026 to 2028.
12. To consider and approve the resolution on the entering into of
the New Framework Agreement between the Company and Cathay Pacific and the
application for the annual transaction caps for 2026 to 2028.
By order of the Board Air China Limited
Ma Chongxian
Chairman
Beijing, the PRC, 4 June 2025
As at the date of this notice, the directors of the Company are Mr. Ma
Chongxian, Mr. Wang Mingyuan, Mr. Cui Xiaofeng, Mr. Patrick Healy, Mr. Xiao
Peng, Mr. Xu Niansha*, Mr. He Yun*, Ms. Winnie Tam Wan-chi* and Mr. Gao
Chunlei*.
* Independent non-executive director of the Company Notes:
1. Closure of register of members
Holders of H shares of the Company are advised that the H share register of
members of the Company will be closed from Thursday, 19 June 2025 to Tuesday,
24 June 2025 (both days inclusive), during which time no transfer of shares
will be effected and registered. In order to qualify for attendance and voting
at the AGM, holders of H shares shall lodge all instruments of transfer with
the Company's H share registrar in Hong Kong, Computershare Hong Kong Investor
Services Limited, at Shops 1712- 1716, 17/F, Hopewell Centre, 183 Queen's Road
East, Wanchai, Hong Kong, by 4:30 p.m. on Wednesday, 18 June 2025.
H shareholders whose names appear on the register of members of the Company at
the close of business on Wednesday, 18 June 2025 are entitled to attend and
vote at the AGM.
2. Proxy
Every shareholder who has the right to attend and vote at the AGM 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 AGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall
be signed by the appointor or his attorney duly authorized in writing. If the
appointor is a legal person, then the instrument shall be signed under a legal
person's seal or signed by its director or an attorney duly authorized in
writing. The instrument appointing the proxy for holders of H shares shall be
deposited at the Company's H share registrar not less than 24 hours before the
time specified for the holding of the AGM (or any adjournment thereof). If the
instrument appointing the proxy is signed by a person authorized by the
appointer, the power of attorney or other document of authority under which
the instrument is signed shall be notarized. The notarized 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.
3. Other businesses
• The AGM is expected to last for no more than a half of
a working day. Shareholders and their proxies attending the meeting shall be
responsible for their own traveling and accommodation expenses.
• 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
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