If you are in any doubt as to any aspect of this circular, or as to the action to be taken, you should consult yourstockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or otherprofessional advisor.
If you have sold or transferred all your shares in China Coal Energy Company Limited, you should at once handthis circular, together with the enclosed proxy form, to the purchaser or the transferee or to the bank, stockbrokeror other agent through whom the sale was effected for transmission to the purchaser or the transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes norepresentation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
*
(A joint stock company incorporated in the People’s Republic of China with limited liability)(Stock Code: 1898)
(1) PROPOSED A SHARE ISSUE(2) PROPOSED AMENDMENTS TO THE ARTICLES AND
CERTAIN RULES AND PROCEDURES(3) PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES
It is important to note that the purpose of distributing this circular is to provide Shareholders withinformation on, among other matters, the proposed issue of A Shares by the Company, so that Shareholdersmay make an informed decision on voting in respect of certain resolutions to be tabled at the EGM. Thiscircular does not constitute, or form part of, an offer or invitation, or solicitation or inducement of an offer,to subscribe for or purchase any of the A Shares or other securities of the Company, nor is this circularcalculated to invite offers for any Shares or other securities of the Company.
A notice convening the EGM to be held at 1st Floor, No.1, Huangsidajie, Chaoyang District, Beijing, the People’sRepublic of China on 7 September 2007 at 9: 00 a.m. is set out in this circular.
If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanyingproxy form in accordance with the instructions printed thereon. For holder of H Shares, the proxy form shouldbe returned to Hong Kong Registrars Limited and for holder of Domestic Shares, the proxy form should bereturned to the Secretariat of the Board of Directors of the Company or by post not less than 24 hours before thetime appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the proxy formwill not preclude you from attending and voting in person at the EGM or at any adjourned meeting should youso wish.
If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip tothe Secretariat of the Board of Directors of the Company on or before 18 August 2007.
* For identification purpose only
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
23 July 2007
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Proposed A Share Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Proposed Amendments to the Articles and Certain Rules and Procedures . . . . . . . . . . . . 8
Proposed Establishment of New Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . 8
The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Procedures for Demanding Poll by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Appendix I — Proposed Applicable Articles of Association (Draft)
After Issue and Listing of A Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix II — Proposed Rules of Procedures for Shareholders’ General Meeting . 44
Appendix III — Proposed Rules of Procedures for the Meetings of Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Appendix IV — Proposed Rules of Procedures for Supervisory Committee . . . . . . . 101
Appendix V — Proposed Report of Feasibility Analysis on the Use of Proceeds
from the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Appendix VI — Proposed System of Independent Director’s Work . . . . . . . . . . . . . . 117
Appendix VII — Proposed Administrative Measures on the Application of Funds
Raised by the Issue of A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Appendix VIII — Proposed Administrative Measures on Connected Transactions . . . . 133
Appendix IX — Proposed Administrative System of Security in Favour of
External Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
CONTENTS
— i —
In this circular, unless the context otherwise requires, the following expressions have the
following meanings:
“A Shares” the ordinary shares subscribed for in RMB, which are
proposed to be issued by the Company to the individuals,
entities and other institutions according to the PRC laws and
regulations and other regulatory requirements that the
Company is required to comply with, and to be listed on the
Shanghai Stock Exchange
“A Share Issue’’ the proposed issue of no more than 1,525,333,400 A Shares by
the Company to the individuals, entities and other institutions
according to the PRC laws and regulations and other
regulatory requirements that the Company is required to
comply with, by way of public offering of new shares, which
are proposed to be listed on the Shanghai Stock Exchange
“Articles” the articles of association of the Company, as amended from
time to time
“Board” the board of Directors of the Company
“Company’’ (China Coal Energy Company
Limited*), a joint stock limited company duly incorporated in
the PRC with limited liability and the H Shares of which are
listed on the main board of Hong Kong Stock Exchange under
the stock code 1898
“Company Law” the Company Law of the People’s Republic of China (as
amended from time to time)
“connected person” has the same meaning ascribed to it in the Hong Kong Listing
Rules
“CSRC’’ China Securities Regulatory Commission ( )
“Directors” the directors of the Company
“Domestic Shares’’ the ordinary shares issued by the Company, with a nominal value of
RMB1.00 each, which are subscribed for or credited as fully paid in
RMB
“EGM” the extraordinary general meeting of the Company to be held on 7
September 2007 to approve, inter alia, the A Share Issue
“H Shares” overseas listed foreign shares of RMB1.00 each in the share capital
of the Company which are listed on the Hong Kong Stock Exchange
and traded in Hong Kong dollars
DEFINITIONS
— 1 —
“HK dollars’’ the lawful currency of the Hong Kong Special Administrative Region
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited
“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited
“PRC’’ or ‘‘China” the People’s Republic of China, excluding, for the purpose of this
circular only, Hong KongSpecial Administrative Region, Macau
Special Administrative Region and Taiwan
‘RMB’’ or ‘‘Renminbi’’ the lawful currency of the PRC
“Shareholders’’ holders of Domestic Shares and/or H Shares
“Shares” Domestic Shares and/or H Shares
* For identification purpose only
DEFINITIONS
— 2 —
*
(A joint stock company incorporated in the People’s Republic of China with limited liability)(Stock Code: 1898)
Executive Directors:Jing Tianliang
Yang Lieke
Peng Yi
Non-executive Directors:Zhang Baoshan
Independent non-executive Directors:Gao Shangquan
Zhang Ke
Peng Ruchuan
Wu Rongkang
Li Yanmeng
Registered Office:No.1, Huangsidajie,
Chaoyang District
Beijing 100011
The People’s Republic of China
Principal place of business in Hong Kong:Room 2608, 26th Floor
Office Tower
Convention Plaza
1 Harbour Road
Wanchai
Hong Kong
23 July 2007
To the Shareholders
Dear Sir or Madam,
(1) PROPOSED A SHARE ISSUE(2) PROPOSED AMENDMENTS TO THE ARTICLES AND
CERTAIN RULES AND PROCEDURES(3) PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES
A. INTRODUCTION
On 14 July 2007, the Board announced that the Company will apply to the relevant regulatory
authorities for the allotment and issue of no more than 1,525,333,400 A Shares to qualified strategic
investors, qualified inquirers and domestic natural persons, legal persons and other investors holding
accounts with the Shanghai Stock Exchange (except those who are prohibited by PRC laws,
regulations, rules and state policies), by way of public offering of new A Shares. Such A Shares are
proposed to be listed on the Shanghai Stock Exchange. The A Share Issue is subject to (i) approval
from Shareholders at the EGM and (ii) approvals from the relevant approval authorities.
LETTER FROM THE BOARD
— 3 —
The Company intends to use the net proceeds from the A Share Issue for investing in and
developing major coal related projects, details of which are set out below in this letter and Appendix
V to this circular.
In order to comply with the relevant requirements applicable to PRC listed issuers, the Board
also proposes to make certain amendments to the Articles and to adopt certain rules and procedures,
details of which are set out in Appendix I to IV and VI to IX to this circular.
The purpose of this circular is to give you details of, among other things, the proposed A Share
Issue, amendments to the Articles and certain rules and procedures and establishment of new
rules and procedures.
B. PROPOSED A SHARE ISSUE
1. General
At the Board meeting held on 14 July 2007, it was resolved that the Company will apply to the
relevant regulatory authorities for the allotment and issue of no more than 1,525,333,400 A Shares to
qualified strategic investors, qualified inquirers and domestic natural persons, legal persons and other
investors holding accounts with the Shanghai Stock Exchange (except those who are prohibited by
PRC laws, regulations, rules and state policies), by way of public offering of new A Shares. Such A
Shares are proposed to be listed on the Shanghai Stock Exchange. It is expected that such investors
will not include connected persons of the Company. If any such investors includes connected persons
of the Company, the Company will take steps to comply with the relevant connected transaction
requirements under the Listing Rules. At present, the H Shares of the Company are listed on the main
board of the Hong Kong Stock Exchange. There will be no exercise of over-allotment option in respect
of the A Share Issue.
The proposed A Share Issue and the listing application are subject to (i) approval from
Shareholders at the EGM to be held on 7 September 2007; and (ii) approvals from the CSRC, the
Shanghai Stock Exchange and other relevant approval authorities.
2. Structure of the A Share Issue
The structure of the proposed A Share Issue is set out below:
Type of securities to be issued: A Shares
Number of A Shares: No more than 1,525,333,400 A Shares. The final number of A
Shares to be issued shall be determined by the Board as
authorized by the Shareholders at the EGM after taking into
account market conditions and the approval from the relevant
regulatory authorities.
Nominal value: RMB1.00 each
LETTER FROM THE BOARD
— 4 —
Rights attached to A Shares: The A Shares to be issued are listed Domestic Shares and,
except as otherwise provided for in the relevant laws,
administrative regulations, departmental rules and other
regulatory documents and the Articles, holders of such A
Shares will be entitled to the same rights as the existing
Shareholders of Domestic Shares and H Shares in all respects.
The distributable profit of the Company before the A Share
Issue (after deducting the 2007 interim profit distribution)
will be distributed to all new Shareholders under the A Share
Issue and the existing Shareholders in proportion to their
shareholding. Such profit distribution plan may be adjusted
by the Board, subject to the Shareholders’ approval and the
audit of the relevant financial information, taking into
consideration the progress of the proposed A Share Issue. In
any event, the commencement date in respect of the profit
distribution plan cannot be earlier than 1 July 2007.
Target subscribers: Qualified strategic investors, qualified inquirers and domestic
natural persons, legal persons and other investors holding
accounts with the Shanghai Stock Exchange (except those
who are prohibited by PRC laws, regulations, rules and state
policies).
Methods of issue: The proposed A Share Issue shall be conducted via a
combination of placement through private placement
arrangement with potential strategic investors, offline
offering to investors subject to market consultation and
placement through online subscription at the issue price, or
other method as approved by the CSRC.
Basis for determining the issue
price:
The issue price range will be determined based on price
consultations with participants in the price consultation
process. The issue price will be determined based on the
cumulative bidding price consultations and market conditions
(or by other means of determining the issue price recognised
by the CSRC).
As required by the relevant PRC regulations, including the
Administrative Measures on the Offering and Underwriting of
Securities issued by the CSRC, the price consultation will be
undertaken with not less than 50 qualified price enquiry
participants recognised by the Securities Association of
China. Pursuant to the relevant PRC regulations, the issue
price shall not be lower than the net asset value (excluding
minority interest per Share) according to the then latest
audited financial statements of the Company.
LETTER FROM THE BOARD
— 5 —
The issue price and the amount to be raised from the A Share
Issue cannot be ascertained as at the date of this
announcement nor at the time when the circular is despatched
to Shareholders because the market consultation can only be
conducted after all the requisite approvals have been
obtained. The Company will make the requisite
announcement once the issue price is confirmed.
Use of proceeds: Subject to approval by the relevant regulatory authorities, the
net proceeds from the A Share Issue, after deducting relating
expenses, will be used for the investment in and development
of:
• Erdos Project and ancillary engineering facilities with
an annual production capacity of 25 million tons of coal,
4.2 million tons of methanol and 3 million tons of
dimethylether;
• Heilongjiang Project and ancillary engineering facilities
with an annual production capacity of 10 million tons of
coal, 1.8 million tons of methanol and 0.6 million tons
of alkene;
• Phase II of China Coal and Coke Xuyang Limited
Engineering Project with a total annual production
capacity of 2 million tons of coke;
• Shanxi Lingshi Project with an annual production
capacity of 0.3 million tons of methanol produced from
coke oven gas; and
• China Coal Shuozhou Great Power Project with a
capacity of 2�135 MW of coal gangue generated
electricity.
The remaining proceeds will be applied to supplement
working capital for general corporate purpose, and/or
acquisitions of core business related assets.
3. Shareholders’ approval and other approvals
At the annual general meeting of the Company held on 15 June 2007, the Shareholders granted,
by way of a special resolution, a general mandate to the Board to separately or concurrently issue, allot
and deal with additional Domestic Shares and H Shares in the Company not exceeding 20% of each
of its existing Domestic Shares and H Shares of the Company in issue as at the date of the special
resolution. To date, the Company has not issued any Shares under the above general mandate.
LETTER FROM THE BOARD
— 6 —
The Company’s PRC counsel, Beijing Jia Yuan Law Firm, confirms that the A Share Issue is
subject to approval by Shareholders by way of special resolutions at the EGM as stipulated by the rules
of the CSRC and the Articles. The EGM, as required under the relevant rules of the CSRC, will be held
on 7 September 2007 to consider and, if thought fit, approve the A Share Issue and to authorize the
Board to determine and deal with at its discretion, matters relating to the A Share Issue (including but
not limited to the specific timing of the issue, number of A Shares to be issued, target subscribers,
method of issue, issue price, offering structure and other matters relating to the A Share Issue and the
listing of A Shares). It should be noted that the A Share Issue, upon approval by Shareholders by way
of special resolutions at the EGM, is still subject to approvals by the CSRC and other relevant
regulatory authorities, if necessary. In addition, the approval by the Shanghai Stock Exchange as to
the listing of and dealings in the A Shares on the Shanghai Stock Exchange is also required. The
approval in respect of the A Share Issue, if obtained from Shareholders at the EGM, shall be effective
for a period of 12 months from the date on which such approval is obtained.
4. Reasons for and benefits of the A Share Issue
The Company believes that the A Share Issue will establish a new financing platform for the
Company, provide the Company with funds required for its ongoing business development, in
particular, the major coal related projects, and help improve its competitiveness and profit return to
Shareholders. Details of the projects are set out in Appendix V to this circular. The Directors believe
that the A Share Issue will benefit the Company and the Shareholders as a whole in the long term.
5. Effect of the A Share Issue on the Company’s shareholding structures
Set out below is the shareholding structure of the Company as at the date of this circular and
immediately upon completion of the A Share Issue assuming that an aggregate of 1,525,333,400 A
Shares will be issued under the A Share Issue and no other changes to the share capital of the
Company. However, Shareholders should be cautioned that the final offer size of the A Share Issueis subject to (i) approval from Shareholders at the EGM; and (ii) approvals from the CSRC andother relevant approval authorities and will be dependent on the prevailing conditions of thePRC securities market at the time when the A Share Issue takes place by way of marketconsultation.
As at the date ofthis announcement
Immediately afterCompletion of the
A Share Issue
Number of Shares % Number of Shares %
(1) Domestic Shares 7,626,667,000 65 9,152,000,400 69.03
- Existing Domestic Shares 7,626,667,000 65 7,626,667,000 57.52
- A Shares 0 0 1,525,333,400 11.51
(2) H Shares 4,106,663,000 35 4,106,663,000 30.97
(3) Total Number of Shares 11,733,330,000 100 13,258,663,400 100
LETTER FROM THE BOARD
— 7 —
C. PROPOSED AMENDMENTS TO THE ARTICLES AND CERTAIN RULES ANDPROCEDURES
In light of the A Share Issue and pursuant to the statutory requirements of the applicable PRC
laws and regulations, certain amendments are proposed to be made to the Articles, details of which
are set out in Appendix I to IV to this circular.
To accommodate the A Share Issue, the Company will, when proceeding with the A Share Issue,
make certain amendments to the Articles in compliance with all relevant and applicable PRC legal and
regulatory requirements. Such amendments are proposed in accordance with laws and regulations
prescribed by the relevant PRC authorities including CSRC, stipulating provisions mandatory or
recommended for inclusion in articles of association of A share listed companies. The proposed
amended Articles, subject to Shareholders’ approval at EGM, will be adopted for use by the Company
upon successful completion of the A Share Issue with the exception of nomination committee which
will come into effect immediately after the approval of EGM.
The proposed amendments deal with matters relating to a number of areas, including, among
others, (i) establishment of a nomination committee; (ii) alteration of the Company’s registered capital
and shareholding structure; (iii) regulations on the proceedings of general meetings; and (iv)
regulations on the rights and obligations of shareholders, Directors, supervisors and managers. In
addition, amendments are also proposed to be made to the Rules and Procedures for Shareholders’
Meeting and Rules and Procedures for Board Meeting, which became effective upon Shareholders’
approval at the annual general meeting of the Company held on 15 June 2007.
Further details of the proposed amendments are set out in Appendix I, II, III and IV to this
circular.
D. PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES
In addition to the amendments described above, and in accordance with the rules of the CSRC
governing issuance of A Shares, the Board has proposed to establish, subject to Shareholders’
approval, various new rules and procedures, with a view to further regulating the internal control of
the Company. These rules and procedures include, among others, (i) system of independent Director’s
work; (ii) administrative measures on the application of funds raised by the issue of A Shares; (iii)
administrative measures on connected transaction; and (iv) administrative system of security in favour
of external parties. Full text of each rules and procedures are set out in Appendix VI, VII, VIII and
IX to this circular.
E. THE EGM
Special resolutions to approve, among other matters, the proposed A Share Issue, the
amendments to the articles and certain rules and procedures will be proposed at the EGM. Ordinary
resolutions to approve the establishment of new rules and procedures will also be proposed at the
EGM.
No Shareholder is required to abstain from voting in connection with the matters to be resolved
at the EGM.
LETTER FROM THE BOARD
— 8 —
If you intend to appoint a proxy to attend the EGM, you are required to complete and return the
accompanying proxy form in accordance with the instructions printed thereon. For holder of H Shares,
the proxy form should be returned to Hong Kong Registrars Limited and for holder of Domestic
Shares, the proxy form should be returned to the Secretariat of the Board of the Directors of the
Company in person or by post not less than 24 hours before the time appointed for holding the EGM
or any adjourned meeting thereof. Completion and return of the proxy form will not preclude you from
attending and voting in person at the EGM or at any adjourned meeting should you so wish.
If you intend to attend the EGM in person or by proxy, you are required to complete and return
the reply slip to the Secretariat of the Board of the Directors of the Company on or before 18 August
2007.
F. PROCEDURES FOR DEMANDING POLL BY SHAREHOLDERS
Pursuant to the Articles, a resolution at a Shareholders’ general meeting shall be decided on a
show of hands unless a poll is (before or after the show of hands) demanded:
(1) by the chairman of the meeting;
(2) by at least two Shareholders present in person or by proxy for the time being entitled to vote
at the meeting; or
(3) by any Shareholder or Shareholders (including proxy) holding individually or holding in
aggregate of 10% or more of the Shares carry the right to vote at the meeting.
Unless a poll is demanded, the chairman of the meeting will announce the results of the passing
of a resolution according to the show of hands, which will be recorded in the minutes of the meeting
and treated as conclusive evidence without the need to prove the number or the proportion of votes
for or against the resolution passed.
G. RECOMMENDATION
The Directors consider that the A Share Issue, the proposed amendments to the Articles and
existing rules and procedures and the proposed establishment of new rules and procedures, are in the
best interests of the Company and its Shareholders as a whole in the long term.
Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions,
which will be proposed at the EGM.
Yours faithfully,
By Order of the Board
China Coal Energy Company LimitedJing Tianliang
Chairman of the Board, Executive Director
LETTER FROM THE BOARD
— 9 —
*
(A joint stock company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 1898)
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“EGM’’) of the
shareholders of China Coal Energy Company Limited (the ‘‘Company’’) will be held at 1st Floor,
No.1, Huangsidajie, Chaoyang District, Beijing, the People’s Republic of China at 9: 00 a.m. on 7
September 2007 for the purpose of considering and, if deemed appropriate, passing, with or without
modification, the following resolutions. Unless otherwise indicated, capitalized terms used herein
shall have the same meaning as those defined in the circular of the Company dated 23 July 2007 (the
‘‘Circular’’):
SPECIAL RESOLUTIONS
1. “THAT conditional upon the obtaining of approvals from the CSRC and other relevant regulatory
authorities, the allotment and issue of A Shares by the Company in the PRC by way of public
offering of new A Shares and the following terms and conditions of the A Share Issue be and are
hereby approved:
(1) Class of shares: A Shares;
(2) Nominal value: RMB 1.00 each;
(3) Total number of shares to be issued: No more than 1,525,333,400 A Shares. The final
number of A Shares to be issued shall be determined by the Board pursuant to the
authorization granted under this resolution after taking into account the PRC’s securities
market conditions and the approval from the relevant regulatory authorities.
(4) Target subscribers: Qualified strategic investors, qualified inquirers and domestic natural
persons, legal persons and other investors holding accounts with the Shanghai Stock
Exchange (except those who are prohibited by PRC laws, regulations, rules and state
policies);
(5) Method of issue: The proposed A Share Issue shall be conducted via a combination of
placement through private placement arrangement with potential strategic investors, offline
offering to investors subject to market consultation and placement through online
subscription at the issue price, or other method as approved by CSRC;
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 10 —
(6) Basis for determining the issue price: The issue price range will be determined based on
price consultations with participants in the price consultation process. The issue price will
be determined based on the cumulative bidding price consultations and market conditions
(or by other means of determining the issue price recognised by the CSRC);
(7) Place of listing: Shanghai Stock Exchange;
(8) Use of proceeds: Subject to approval by the relevant regulatory authorities, the net proceeds
from the A Share Issue, after deducting relating expenses, will be used for the investment
in and development of:
• Erdos Project and ancillary engineering facilities with an annual production capacity
of 25 million tons of coal, 4.2 million tons of methanol and 3 million tons of
dimethylether;
• Heilongjiang Project and ancillary engineering facilities with an annual production
capacity of 10 million tons of coal, 1.8 million tons of methanol and 0.6 million tons
of alkene;
• Phase II of China Coal and Coke Xuyang Limited Engineering Project with a total
annual production capacity of 2 million tons of coke;
• Shanxi Lingshi Project with an annual production capacity of 0.3 million tons of
methanol produced from coke oven gas; and
• China Coal Shuozhou Great Power Project with a capacity of 2�135 MW of coal
gangue generated electricity.
The remaining proceeds will be applied to supplement working capital for general corporate
purpose, and/or acquisitions of core business related assets;
(9) Distribution plan for the accumulated profit before the issue: The distributable profit of the
Company before the A Share Issue (after deducting the 2007 interim profit distribution) will
be distributed to all new Shareholders under the A Share Issue and the existing Shareholders
in proportion to their shareholding. Such profit distribution plan may be adjusted by the
Board, subject to the Shareholders’ approval and the audit of the relevant financial
information, taking into consideration the progress of the proposed A Share Issue. In any
event, the commencement date in respect of the profit distribution plan cannot be earlier
than 1 July 2007.
(10) Validity period of this resolution: This resolution shall be effective for a period of 12
months from the date of the passing of this resolution.”
2. “THAT the Board shall be and is authorized to determine and deal with at its discretion and with
full authority, the matters in relation to the A Share Issue (including but not limited to the
specific timing of issue, number of A Shares to be issued, offering mechanism, pricing
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 11 —
mechanism, issue price, target subscribers and the number and proportion of A Shares to be
issued to each subscriber); in addition, the Board shall be and is authorized to at its discretion
and with full authority sign or execute all necessary documents (including but not limited to the
preliminary prospectus, the prospectus, underwriting agreement, listing agreement and any
related announcement), effect and carry out necessary formalities (including but not limited to
procedures for listing of the A Shares on Shanghai Stock Exchange), and take all other necessary
actions in connection with the A Share Issue (including but not limited to making adjustments,
which have been covered in the above special resolution 1 for the proceeds from the A Share
Issue, on the basis of approvals obtained prior to the issue and allotment of A Shares), as well
as to handle all registration requirements in relation to changes in the registered capital of the
Company following the completion of the A Share Issue.”
3. “THAT subject to the passing of the above special resolution 1, the proposed amendment of the
Articles of Association for the establishment of a nomination committee be and are hereby
approved and shall come into immediate effect.”
4. “THAT subject to the passing of the above special resolution 1 and conditional upon the
completion of the A Share Issue, the proposed amendments to the Articles of Association as set
out in Appendix I to the Circular be and are hereby approved and the Board be and is hereby
authorised to make further amendments which in its opinion may be necessary, desirable and
expedient in accordance with the mandatory requirements of the applicable laws and regulations,
and as the government authorities of the PRC may require, and to apply for approvals from the
relevant government authorities after completion of the A Share Issue.”
The amended Articles of Association referred to in this special resolution 4 (other than the
resolution in respect of the establishment of the nomination committee) will come into effect
upon the listing of the A Shares on the Shanghai Stock Exchange.
5. “THAT subject to the passing of the above special resolution 1 and conditional upon the
completion of the A Share Issue, the proposed rules of procedures for Shareholders’ general
meeting as set out in Appendix II to the Circular be and are hereby approved and adopted as part
of the Articles of Association and shall come into effect upon the effectiveness of the
amendments to the Articles of Association covered in above special resolution 4.”
6. “THAT subject to the passing of the above special resolution 1 and conditional upon the
completion of the A Share Issue, the proposed rules of procedures for the meetings of the board
of Directors as set out in Appendix III to the Circular be and are hereby approved and adopted
as part of the Articles of Association and shall come into effect upon the effectiveness of the
amendments to the Articles of Association covered in above special resolution 4.”
7. “THAT subject to the passing of the above special resolution 1 and conditional upon the
completion of the A Share Issue, the proposed rules of procedures for supervisory committee as
set out in Appendix IV to the Circular be and are hereby approved and shall come into effect upon
the effectiveness of the amendments to the Articles of Association covered in above special
resolution 4.”
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 12 —
ORDINARY RESOLUTIONS
8. “THAT subject to the passing of the above special resolution 1, the proposed report of feasibility
analysis on the use of proceeds from the offering as set out in Appendix V to the Circular be and
are hereby approved and shall come into immediate effect.”
9. “THAT subject to the passing of the above special resolution 1, the proposed system of
independent director’s work as set out in Appendix VI to the Circular be and are hereby approved
and shall come into immediate effect.”
10. “THAT subject to the passing of the above special resolution 1, the proposed administrative
measures on the application of funds raised by the issue of A Shares as set out in Appendix VII
to the Circular be and are hereby approved and shall come into effect upon the completion of the
A Share Issue covered in the above special resolution 1.”
11. “THAT subject to the passing of the above special resolution 1, the proposed administrative
measures on connected transactions as set out in Appendix VIII to the Circular be and are hereby
approved and shall come into immediate effect.”
12. “THAT subject to the passing of the above special resolution 1, the proposed administrative
system of security in favour external parties as set out in Appendix IX to the Circular be and are
hereby approved and shall come into immediate effect.”
Yours faithfully,
By Order of the Board
China Coal Energy Company LimitedJing Tianliang
Chairman of the Board, Executive Director
Beijing, the PRC, 23 July 2007
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 13 —
Notes:
1. Corporate governance documents
Details of (a) Rules of Procedures of the Shareholders’ General Meeting; (b) Rules of Procedures for Meetings of the
Board of Directors; and (c) Rules of Procedures for Supervisory Committee are set out in Appendix II to IV respectively to the
Circular and are also available for inspection on the website of The Stock Exchange of Hong Kong Limited
(http://www.hkex.com.hk) and the Company’s website (http://www.chinacoalenergy.com).
2. The proposed A Share Issue and the Company’s proposed plan in relation to the use of proceeds from the A
Share Issue
Shareholders are reminded to read carefully details of the proposed A Share Issue as well as the relevant content of the
proposal made by the Company in relation to the use of proceeds from the A Share Issue as contained in the announcement dated
14 July 2007 and the circular despatched to the Shareholders together with this notice of EGM.
3. Amendments to Articles
Details of the proposed amendments are set out in Appendix I to the Circular to be despatched to the Shareholders and
are also available for inspection on the website of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk) and
the Company’s website (http://www.chinacoalenergy.com).
4. Closure of register of members and eligibility for attending the EGM
Holders of H Shares of the Company are advised that the register of members of the Company will close from 8 August
2007 to 7 September 2007 (both days inclusive), during which time no transfer of H Shares of the Company will be effected
and registered. In order to qualify for attendance at the EGM, instruments of transfer accompanied by share certificates and
other appropriate documents must be lodged with the Company’s H share registrar, Computershare Hong Kong Investor Services
Limited by 4:30 p.m. on 7 August 2007.
Shareholders of the Company whose names appear on the register of member of the Company at the close of business
on 7 September 2007 are entitled to attend the EGM.
5. Notice of attendance
Shareholders who intend to attend the EGM should complete and lodge the accompanying notice of attendance and return
it to, for holders of H Shares, the Company’s H share registrar, or for holders of Domestic Shares and Non-H Foreign Shares,
the Company’s Board Secretariat, on or before 18 August 2007. The notice of attendance may be delivered by hand, by post
or by fax to the Company’s H share registrar, or to the address of the Company’s Board Secretariat (as may be applicable).
Completion and return of the notice of attendance do not affect the right of a Shareholder to attend the EGM. However, a failure
to return the notice of attendance may result in an adjournment of the EGM, if the number of shares carrying the right to vote
represented by the shareholders proposing to attend the EGM by the notice of attendance does not reach more than half of the
total number of shares of the Company carrying the right to vote at the EGM.
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 14 —
6. Proxy
Every Shareholder who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether
or not they are members of the Company, to attend and vote on his behalf at the EGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointer or his attorney
duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person’s seal
or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at
the Company’s H share registrar for holders of H Shares or at the address of the Company’s Board Secretariat for holders of
Domestic Shares and Non-H Foreign Shares not less than 24 hours before the time appointed for the holding of the EGM. If
the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document
of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of
authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company’s H share
registrar or the address of the Company’s Board Secretariat (as may be applicable).
7. Other businesses
(i) The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be
responsible for their own travelling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is:
Room 1712-1716
Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Tel: (852) 2862 8555
Fax: (852) 2865 0990
(iii) The address of the Company’s Board Secretariat is:
Secretariat of the Board of Directors of China Coal Energy Company Limited
No. 1 Huangsidajie, Chaoyang District
Beijing, 100011, PRC
Tel: (8610) 8225 6482, 8225 6481
Fax: (8610) 8225 6479
NOTICE OF EXTRAORDINARY GENERAL MEETING
— 15 —
The Company has now only issued H Shares, and is planning initial public offering and listing
of RMB common shares (A Shares). As required by China Securities Regulatory Commission (CSRC),
the Company shall formulate applicable Articles of Association after listing pursuant to Company Law
of the People’s Republic of China, Securities Law of the People’s Republic of China, Guide to Articles
of Association of Listed Companies, Standards for the Governance of Listed Companies, Rules for
General Meetings of Listed Companies, Guidance Opinions Regarding the Establishment of the System
of Independent Directors, Provisions on Strengthening the Protection of the Rights and Interests of the
General Public Shareholders, Notice on the Standardization of the External Guarantees for Listed
Companies and other relevant regulations and regulatory documents.
Compared with the existing Articles of Association, the added clauses are all provisions
concerning companies listing A Shares in China, including regulations of information disclosure,
announcement, and listing transactions. Some clauses of the Draft Articles of Association, such as the
total equity of the Company and the share registrar, can only be finalized after issue and listing of A
Shares of the Company. Amendments to the Articles of Association shall take effect from the date of
listing of A Shares of the Company upon approval by Shareholders’ general meeting.
Specific amendments are set out as follows. The change in the numbering of chapters, articles,
clauses and paragraphs will not be explained separately, and the amended clauses will be set out one
by one.
1. Article 1 of the existing Articles of Association
“These Articles of Association are formulated pursuant to Company Law of the People’s Republic
of China (“Company Law”), Securities Law of the People’s Republic of China (“Securities Law”),
Special Regulations on Overseas Offerings and Listing of Shares by Joint Stock Limited Companies
(“Special Regulations”), Mandatory Provisions for the Articles of Association of Companies to be
Listed Overseas (“Mandatory Provisions”), Letter of Opinions on Supplementary Amendment to
Articles of Association of Companies to be Listed in Hong Kong (“Letter of Opinions”) and other
relevant regulations, in order to protect the legitimate rights and interests of the Company and
shareholders and creditors thereof and regulate the organization and behavior of the Company.”
is changed to:
“These Articles of Association are formulated pursuant to Company Law of the People’s Republic
of China (“Company Law”), Securities Law of the People’s Republic of China (“Securities Law”),
Special Regulations on Overseas Offerings and Listing of Shares by Joint Stock Limited Companies
(“Special Regulations”), Mandatory Provisions for the Articles of Association of Companies to be
Listed Overseas (“Mandatory Provisions”), Letter of Opinions on Supplementary Amendment to
Articles of Association of Companies to be Listed in Hong Kong (“Letter of Opinions”), Guide to
Articles of Association of Listed Companies (amended in 2006) (“Guide to Articles of Association”),
Notice of China Securities Regulatory Commission and China Banking Regulatory Commission on the
Standardization of the External Guarantee for Listed Companies (“Notice on External Guarantee”)
and other relevant regulations, in order to protect the legitimate rights and interests of the Company
and shareholders and creditors thereof and regulate the organization and behavior of the Company.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 16 —
2. Add Article 3:
“Upon approval by CSRC on the date of [●], the Company issued the initial public offering of
[●] RMB common shares to the public and listed the same with Shanghai Stock Exchange on the date
of [●].”
3. Paragraph 1 of Article 7 of the existing Articles of Association:
“Upon adoption by special resolution on the general meeting of the Company and approval of the
relevant authority of the state, these Articles of Association shall take effect as from the date of listing
of the Company and shall replace the Articles of Association formerly registered with the industrial
and commercial administration authority.”
is changed to:
“Upon adoption by special resolution on the general meeting of the Company and approval of the
relevant authority of the state, these Articles of Association shall take effect as from the date of initial
public offering and listing of RMB common shares of the Company and shall replace the Articles of
Association formerly registered with the industrial and commercial administration authority.”
4. Paragraph 2 of Article 8 of the existing Articles of Association:
“The shareholders of the Company may pursue actions against the Company pursuant to the
Articles of Association; the Company may pursue actions against its shareholders pursuant to the
Articles of Association; the shareholders may pursue actions against other shareholders pursuant to the
Articles of Association; the shareholders of the Company may pursue actions against the Company’s
directors, supervisors, president (manager) and other senior executives of the Company pursuant to the
Articles of Association.”
is changed to:
“The shareholders of the Company may pursue actions against the Company, other shareholders,
the Company’s directors, supervisors, president (manager) and other senior executives of the Company
pursuant to the Articles of Association. The Company may pursue actions against its shareholders,
directors, supervisors, president (manager) and other senior executives pursuant to the Articles of
Association.”
5. Add Article 16:
“The Company shall issue shares in an open, fair and just manner, and each share of the same
category shall have the same right.
All shares of the same category issued at the same time shall be issued under the same conditions
and at the same price; any entity or individual shall pay the same price for each share.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 17 —
6. Add Article 20:
“After issuing of domestically listed RMB common shares, the total number of shares of the
Company is [●], and the structure of the capital stock is [●] RMB common shares and [●] overseas
listed foreign shares.”
7. Add Article 22:
“The domestic shares issued by the Company shall be kept at China Securities Depository and
Clearing Corporation Limited, and foreign shares listed in Hong Kong shall primarily be put under
custody of HKSCC Nominees Limited.”
8. Paragraph 2 of Article 22 of the existing Articles of Association:
“The Company may increase capital as follows:
(I) offer of new shares to non-given investors;
(II) placement of new shares among given investors and/or existing shareholders;
(III) issuing new shares to existing shareholders;
(IV) converting common reserve fund into share capital; or
(V) Other means stipulated by laws and administrative regulations or approved by the securities
authority under the State Council.”
is changed to:
“The Company may increase capital as follows:
(I) public offering;
(II) Non-public offering;
(III) issuing bonus shares to existing shareholders;
(IV) converting common reserve fund into share capital; and
(V) Other means stipulated by laws and administrative regulations or approved by the CSRC.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 18 —
9. Add a clause to Paragraph 2 of Article 27 of the existing Articles of Association:
“(IV)Other means approved by the securities regulatory authority.”
10. Clause (2) of Paragraph 2 of Article 49 of the existing Articles of Association:
“to attend general meetings either in person or by proxy and exercise the voting right.”
is changed to:
“to lawfully require, convene, preside over or attend general meetings either in person or by
proxy and exercise the corresponding voting right.”
11. Add Article 57:
“If any shareholder needs to access the relevant information as set out in the preceding article,
the said shareholder shall provide the Company with written documents bearing evidence of the type
and number of shares held by the said shareholder, and the Company will provide the said information
as required by the said shareholder upon authentication of the said shareholder.”
12. Add Article 58:
“If any resolution of the shareholders’ general meeting or Board of the Directors runs against the
laws and administrative regulations or infringes upon the legitimate right sand interests of the
shareholders, the shareholders shall have the right to request the court to invalidate the said resolution.
If the meeting convening procedure and voting method of the general meeting or Board meeting
run against the laws and administrative regulations or the Articles of Association or if the content of
any resolution runs against the Articles of Association, the shareholders shall have the right to request
the court to cancel the said procedure, method or resolution within 60 days after adoption of the
resolution.”
13. Add Article 59:
“If any director or senior executive violates the laws and administrative regulations or the
Articles of Association in fulfilling their duties, thereby incurring any loss of the Company, the
shareholder(s) separately or jointly holding 1% or more shares of the Company for more than 180 days
continuously shall have the right to submit a written request to the Supervisory Committee to institute
legal proceedings in the court; if the Supervisory Committee violates the laws and administrative
regulations or the Articles of Association in fulfilling its duties, thereby incurring any loss of the
Company, the shareholders shall have the right to submit a written request to the Court for legal
proceedings.
If the Supervisory Committee or Board of Directors refuses to institute legal proceedings after
receipt of the aforesaid written request or does not institute legal proceedings within 30 days after
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 19 —
receipt of the said request, or if the circumstance is urgent or any delay of legal proceedings may incur
irrecoverable damage to the interests of the Company, the shareholders as specified in the preceding
paragraph shall have the right to directly institute legal proceedings in the court in their own names
for the interests of the Company.
If any other person infringes upon the legitimate rights and interests of the Company, thereby
causing any loss of the Company, the shareholders as specified in Paragraph 1 of this Article may
institute legal proceedings in the court pursuant to the preceding two paragraphs.”
14. Add Article 60:
“If any director or senior executive violates the laws and administrative regulations or the
Articles of Association, thereby incurring any loss of the shareholders, the shareholders may institute
legal proceedings in the court.”
15. Add a clause to Paragraph 2 of Article 50 of the existing Articles of Association:
“(V) Shareholders shall not abuse their right to damage the interests of the Company or other
shareholders and shall not abuse the independent status of legal person or shareholders’
limited liability to damage the interests of the creditors of the Company; if any shareholder
abuses shareholder’s right, thereby incurring any loss of the Company or other
shareholders, the said shareholder shall be liable for compensation according to law. If any
shareholder abuses the independent status of legal person or shareholder’s limited liability
or evades debts, thereby damaging the interests of the creditors of the Company, the said
shareholder shall bear joint liability for the Company’s debts.”
16. Add Article 62:
“If any shareholder holding more than 5% voting shares of the Company pledges the said voting
shares, the said shareholder shall submit a written report to the Company on the date on which the said
pledge is executed.”
17. Add a paragraph to Article 51 of the existing Articles of Association:
“The controlling shareholders and effective controllers of the Company shall be honest to the
Company and general public shareholders. The controlling shareholders shall duly exercise
contributors’ rights according to law, shall not damage the legitimate rights and interests of the
Company and general public shareholders by such means as profit distribution, asset reorganization,
external investment, fund appropriation and loan guarantee and shall not abuse its controlling status
to damage the interests of the Company and general public shareholders.”
18. Add two clauses to Clause (XIV) of Paragraph 2 of Article 56 of the existing Articles of
Association, with the existing Clause (XIV) and Clause (XV) changed to Clause (XVII) and
Clause (XVIII) respectively. The two clauses added are:
“(XV) to consider and approve matters relating to the changes in the use of proceeds from share
offerings;
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 20 —
(XVI) to consider share incentives schemes;”
19. Add Article 67:
“The following guarantees to be given by the Company shall be considered and approved by the
shareholders’ general meeting:
(I) Any provision of guarantee, where the total amount of external guarantees provided by the
Company or its subsidiaries exceeds 50% of the latest audited net assets;
(II) provision of guarantee to anyone whose liability-asset ratio exceeds 70%;
(III) provision of a single guarantee whose amount exceeds 10% of the latest audited net assets;
(IV) provision of guarantee to shareholders, effective controllers and their connected parties;
(V) Save as specified in Clauses (I) to (IV), provision of other guarantees involving
“discloseable transactions” as specified in the Listing Rules of SEHK and any of the results
of the five tests is greater than 25%.
External guarantees to be examined and approved on the shareholders’ general meeting shall be
examined and approved by the Board of Directors before submission to the shareholders’ general
meeting. When the shareholders’ general meeting is considering a proposal to provide guarantee for
any shareholder, effective controller or related connected party, the said shareholder or the
shareholders controlled by the said effective controller shall not participate in voting on the said
proposal, and the said proposal shall be subject to adoption by more than half of the voting rights of
other attending Shareholders.
Besides the foregoing, other external guarantees may be examined and approved by the Board of
Directors subject to consideration and approval by over two thirds of the attending directors.”
20. Add Article 70:
“The venue of shareholders’ general meeting of the Company is: domicile of the Company or
other place notified by the convener of the shareholders’ general meeting.
The shareholders’ general meetings shall be held onsite at the venue. The Company may also
provide network or any other means for its shareholders to conveniently participate in general
meetings. Shareholders participating in the general meetings by any aforesaid means shall be deemed
as having attended the meetings.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 21 —
21. Add Article 71:
“In convening a shareholders’ general meeting, the Company shall engage a lawyer to provide
legal opinions and publish an announcement on the following issues:
(I) Whether the convening and procedure of the meeting comply with the laws, administrative
regulations and the Articles of Association;
(II) Whether the attendants and convener of the meeting are eligible;
(III) Whether the voting procedures and results of the meeting are valid;
(IV) Legal opinions on other matters upon request by the Company.”
22. Add Article 72:
“An extraordinary general meeting may be held upon proposal by more than half of the
independent directors to the Board. Regarding the proposal of the independent director to convene an
extraordinary general meeting, the Board shall, pursuant to relevant laws, administrative regulations
and the Articles of Association, give a written reply on whether to convene the extraordinary general
meeting within 10 days after receipt of the proposal.
If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such
meeting within 2 days after the resolution is made by the Board. If the Board does not agree to hold
the extraordinary general meeting, it shall give the reasons and make an announcement in respect
thereof. ”
23. Add Article 73:
“The Supervisory Committee shall have the right to propose to the Board to convene an
extraordinary general meeting, and shall put forward its proposal to the Board in a written form. The
Board shall, pursuant to relevant laws, administrative regulations and the Articles of Association, give
a written reply on whether to convene the extraordinary general meeting within 10 days after receipt
of the proposal.
If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such
meeting within 2 days after the resolution is made by the Board. In the event of any change to the
original proposal set forth in the notice, the consent of the Supervisory Committee is required.
If the Board does not agree to hold the extraordinary general meeting or fails to give a written
reply within 10 days after receipt of the proposal, it shall be deemed as unable to perform or failing
to perform the duty of convening the extraordinary general meeting, and the Supervisory Committee
may convene and preside over the meeting by itself.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 22 —
24. Add Article 75:
“Where the Supervisory Committee or shareholders decide to convene a shareholders’ general
meeting by itself/themselves, it/they shall notify the Board in writing and file with the authority
appointed by CSRC office in the location of the Company and the stock exchange.
Prior to the announcement of the resolution of the shareholders’ general meeting, the
shareholding of shareholders who convene the meeting shall not be less than 10%.”
25. Add Article 76:
“With regard to the shareholders’ general meeting convened by the Supervisory Committee or
shareholders on its/their own initiative, the Board and its secretary shall offer cooperation. The Board
shall provide a shareholders’ register as of the shareholding record date. If the Board fails to provide
the shareholders’ register, the convener may apply to the securities registration and clearing authority
or its agency to obtain it upon presentation of the related notice or announcement of the general
meeting. The shareholders’ register obtained by the convener shall not be used for other purposes
except for the shareholders’ general meeting.”
26. Add Article 77:
“The Company shall bear the expenses in relation to the shareholders’ general meeting convened
by the Supervisory Committee or shareholders on its/their own initiative.”
27. Add Article 78:
“The content of a proposal shall be determined by the shareholders’ general meeting, with
definite topics and specific issues for resolution, and shall comply with the relevant provisions of the
laws, administrative regulations and the Articles of Association.”
28. Add three paragraphs to Article 60 of the existing Articles of Association:
“Where the opinions of an independent director are required on the issues to be discussed, such
opinions and reasons thereof shall be disclosed in the notices or supplementary notices of
shareholders’ general meetings served.
“If a shareholders’ general meeting is held over network or other means, the notice of
shareholders’ general meeting shall specify the voting time and voting procedure over network or
other means. The time to start voting at a general meeting held over network or by other means shall
not be earlier than 3:00 PM of the day preceding the date of the onsite general meeting or later than
9:30 AM of the date of the onsite shareholders’ general meeting, and shall not conclude earlier than
3:00 PM of the date of the onsite shareholders’ general meeting.
The interval between equity registration date and the date of the meeting shall not be more than
7 days. The equity registration date shall not be changed once confirmed.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 23 —
29. Add Article 86:
“After giving the notice of general meeting, the relevant meeting shall not be postponed or
cancelled and the proposals set out in the notice shall not be cancelled without proper reasons. In the
case of any postponement or cancellation of the meeting, the convener shall make an announcement
and give the reasons therefor at least 2 working days prior to the date on which the meeting is
originally scheduled.”
30. Add Article 87:
“The Board or any other convener shall take necessary measures to ensure the proper order of
the general meeting. The Board or any other convener shall take measures to stop any act disturbing
the general meeting, seeking trouble or infringing upon the legitimate rights and interests of
shareholders, and shall report such act to the relevant authority for investigation and treatment.”
31. Add Article 88:
“All the shareholders registered on the equity registration date or the agents of the said
shareholders shall have the right to attend general meetings and exercise voting rights pursuant to
relevant laws, regulations and the Articles of Association.
The shareholders may attend general meetings and exercise voting rights either in person or by
proxy.”
32. Add Article 89:
“An individual shareholder attending a general meeting in person shall present his/her identity
card or other valid identity certificate or share account card; a proxy attending a general meeting on
behalf of an individual shareholder shall present his/her valid identity card and power of attorney of
the shareholder.
For a legal person as shareholder, its legal representative or a proxy appointed thereby shall
attend the meeting. The legal representative attending the meeting shall present his/her identity card
or valid certificate bearing evidence of his/her qualifications as legal representative; a proxy attending
the meeting on behalf of the legal representative shall present his/her identity card and power of
attorney lawfully issued by the legal representative of the legal person as shareholder.”
33. Add Article 95:
“The attendance register shall be prepared by the Company, which register shall state the names
(or names of the corporations), identification document number and the address of the attendee, the
number of voting shares held or represented, names of the principal (or names of the corporations) and
so on.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 24 —
34. Add Article 96:
“In convening a shareholders’ general meeting, the convener and the lawyer appointed by the
Company shall jointly verify the validity of the shareholders’ qualifications based on the shareholders’
register provided by the securities registration and clearing authority, and shall register the names of
the shareholders as well as the amount of their voting shares. The registration for a meeting shall be
completed before the presider announces the number of shareholders and proxies that attend the
meeting and the total amount of their voting shares.”
35. Add Article 99:
“The Company shall formulate rules of procedure for shareholders’ general meetings regulating
the convening and voting procedure of shareholders’ general meetings, including notification,
registration, consideration of proposal, voting, counting of ballots, announcement of voting result,
formation of resolution, meeting minutes and signing thereof and announcement, and the principle for
authorization of the Board on general meetings. The rules of procedure for shareholders’ general
meetings are appendix to the Articles of Association and shall be formulated by the Board and
approved on the shareholders’ general meeting.”
36. Add Article 100:
“The Board and Supervisory Committee shall report their work in the preceding year on the
annual shareholders’ general meeting. Every independent director shall also make his work reports.”
37. Add Article 101:
“Directors, supervisors and senior executives shall make explanations in relation to the inquiries
and suggestions made by shareholders on shareholders’ general meetings.”
38. Add Article 102:
“The presider shall, prior to voting, declare the number of attending shareholders and their
proxies as well as the total number of their voting shares, and the number of attending shareholders
and their proxies and the total number of their voting shares shall be as recorded in the meeting’s
register.
Minutes of a shareholders’ general meeting shall be kept by the Secretary of the Board. The
minutes of the meeting shall specify:
(I) the number of shareholders and proxies attending the meeting, the total number of voting
shares they represent and the proportion of these shares to the total number of shares of the
Company;
(II) the date and venue of the meeting;
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 25 —
(III) the name of the presider of the meeting and the agenda of the meeting;
(IV) the names of the presider, and the directors, supervisors, secretary of the Board, manager
and other senior executives attending or present at the meeting;
(V) the process of discussion, highlights of the speeches and voting result in respect of each
proposal;
(VI) the inquiries and suggestions of shareholders and the answers or explanations made by the
directors or supervisors;
(VII) the name of the lawyer, counting officer and monitoring officer; and
(VIII) other issues that shall be recorded in the minutes in accordance with opinions of the
shareholders’ general meeting and provisions of the Articles of Association.”
39. Add Article 103:
“The convener shall ensure the meeting minutes are true, accurate and complete. The attending
directors, supervisors, secretary to the Board, convener or representative thereof and presider shall
sign the minutes of the meeting. The minutes of the meeting, the signed attendance record of those
shareholders on the spot and the powers of attorney for attendance by proxy, the valid information
relating to the voting over network or by other means shall be kept for at least 10 years.”
40. Add Article 104:
“The convener shall ensure the shareholders’ general meeting is held continuously until final
resolutions are arrived at. If the shareholders’ general meeting is terminated or fails to reach any
resolution due to force majeure or for other special reasons, necessary action shall be taken to resume
the general meeting as soon as possible or directly terminate the general meeting and make a
responsive announcement. Meanwhile, the convener shall report to the authority appointed by CSRC
office in the location of the Company and the stock exchange.”
41. Add Article 116:
“The Company shall provide convenience for shareholders to attend shareholders’ general
meetings by whatever means including the use of modern IT means such as online voting platform,
provided that the shareholders’ general meeting shall be held legally and validly.”
42. Add Article 188:
“Members of staff of the controlling shareholders and effective controllers of the Company who
serve positions other than directors shall not serve as senior executives of the Company.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
— 26 —
43. Add Article 193:
“The working rules of the president (manager) shall specify:
(I) the conditions and procedure for holding president’s meetings, and attendants;
(II) duties and division of work of the president and other senior executives;
(III) use of funds and assets of the Company, right to conclude material contracts, and the system
to report to the Board and the Supervisory Committee;
(IV) other matters deemed necessary by the Board.”
44. Add Article 194:
“The president (manager) may resign before his term of office expires. The procedure and rules
for resignation of president shall be specified in the labor contract between the president (manager)
and the Company.”
45. Add Article 200:
“If the term of office of a supervisor expires but reelection is not made responsively or if any
supervisor resigns during his term of office so that the number of members of the Supervisory
Committee is less than the quorum, the said supervisor shall continue fulfilling the duties as
supervisor pursuant to relevant laws, administrative regulations and the Articles of Association until
a new supervisor is elected.”
46. Add Article 201:
“The supervisors shall ensure the information disclosed by the Company is true, accurate and
complete.”
47. Add Article 202:
“The supervisors may attend Board meetings and make inquiries or suggestions in relation to the
resolutions of Board meetings.”
48. Add Article 203:
“The supervisors shall not abuse their connected relations to damage the interests of the
Company, and shall compensate for any losses caused to the Company.”
49. Add Article 204:
“If any supervisor violates the laws and administrative regulations or the Articles of Association
in fulfilling his duties, thereby incurring any loss of the Company, the said supervisor shall be liable
for compensation.”
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50. Add Article 207:
“The Supervisory Committee shall formulate rules of procedure for Supervisor Committee
meetings specifying the deliberation method and voting procedure of Supervisor Committee meetings,
in order to ensure the work efficiency and proper decision making of the Supervisory Committee. The
rules of procedure for Supervisor Committee meetings specify the convening and voting procedure of
Supervisor Committee meetings, are appendix to the Articles of Association and shall be formulated
by the Supervisory Committee and approved on the general meeting.”
51. Add Article 209:
“The minutes of a Supervisory Committee meeting shall specify:
(I) the time, venue and form of the meeting;
(II) sending of the notice of meeting;
(III) convener and presider of the meeting;
(IV) attendance of the meeting;
(V) the proposals considered at the meeting, chief comments and opinions of each supervisor
on relevant issues, and each supervisor’s voting on the proposals;
(VI) the voting method and result for each proposal (the voting result shall set out the respective
numbers of pros, cons and abstentions); and
(VII) other issues that the attending supervisors think should be included into the minutes.
For a meeting held by correspondence, the Audit Department shall sort out the meeting minutes
as per the preceding provision.”
52. Add Article 211:
”The attending supervisors shall sign and confirm the meeting minutes. Where the supervisors
disagree over the said minutes, they may attach written remarks when signing the said minutes. Where
necessary, they shall responsively report to the regulatory authority or announce public statements.
If any supervisor neither signs as the preceding paragraph requires nor provides his different
opinions in writing or reports to the regulatory authority or announces public statement, the said
supervisor shall be deemed as agreeing with the minutes of the meeting.”
53. Article 92 of the existing Articles of Association
“Directors and vice chairman of the Board shall be elected at general meetings and each director
or vice chairman shall serve a term of three years, which term is renewable upon re-election when it
expires.
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The Chairman of the Board shall be elected or removed by more than half of all the directors,
and the Chairman of the Board shall serve a term of office of three years, and is eligible for
re-election.
A director need not hold shares of the Company.”
is changed to:
“Directors and vice chairman of the Board shall be elected at general meetings and each director
or vice chairman shall serve a term of office of three years. which term is renewable upon re-election
when it expires.
The Chairman shall be elected or removed by more than half of all the directors, and the
Chairman of the Board shall serve a term of office of three years, and is eligible for re-election.
The term of office of a director shall start from the date on which the said director assumes office
to the expiry of the current Board. “If the term of office of a director expires but reelection is not made
responsively, the said director shall continue fulfilling the duties as director pursuant to relevant laws,
administrative regulations and the Articles of Association until a new director is elected.
A director need not hold shares of the Company.”
54. Add Article 142:
“If any director fails to attend board meetings in person or by proxy for two consecutive times,
the said director shall be deemed incapable of performing his duties, and the Board shall suggest that
the general meeting dismiss the said director.”
55. Add Article 143:
“A director may resign before his term of office expires. In resigning his duties, a director shall
tender a resignation to the Board in writing. The Board will disclose relevant information within 2
days.
“If any director resigns so that the membership of the Board falls short of the quorum, the said
director shall continue fulfilling the duties as director pursuant to relevant laws, administrative
regulations and the Articles of Association until a new director is elected.
Besides the provisions set out in the preceding paragraph, a director’s resignation shall be
effective when his resignation is served to the Board.”
56. Add Article 144:
“If resignation of a director takes effect or if his term of office expires, the said director shall
go through all handover formalities with the Board. His loyalty obligation to the Company and
shareholders thereof shall not terminate automatically at the end of his term of office but shall still
be valid within the reasonable period specified in the Articles of Association.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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57. Add Article 145:
“Save as specified in the Articles of Association or properly authorized by the Board, no director
shall act on behalf of the Company or the Board in his personal name. If a director acts in his own
name but a third party may reasonably think the said director is acting on behalf of the Company or
the Board, the said director shall make a prior statement of his standpoint and capacity.”
58. Add Article 146:
“If any director violates the laws and administrative regulations or the Articles of Association in
fulfilling his duties, thereby incurring any loss of the Company, the said director shall be liable for
compensation.”
59. Article 97 of the existing Articles of Association
“The Company shall establish independent director system. Independent directors are directors
who do not hold any positions in the Company other than as director and do not maintain with the
Company and its substantial shareholders a connection which may possibly hamper their independent
and objective judgments.
An independent director shall serve a term of office of three years and is eligible for reelection
but shall not serve for more than nine years.”
is changed to:
“Independent directors are directors who do not hold any positions in the Company other than
as director, do not maintain with the Company and its substantial shareholders (shareholders
separately or jointly holding more than 5% voting shares of the Company) a connection which may
possibly hamper their independent and objective judgments, and comply with the independence
provision of the rules of the stock exchange with which the Company is listed.
The term of office of independent directors is the same as other directors, and the term is
renewable upon re-election when it expires, but the renewed term shall not exceed six years.”
60. Article 98 of the existing Articles of Association
“An independent director shall meet the following basic conditions:
qualified as independent director of a listed company pursuant to relevant laws, administrative
regulations, the listing rules of the stock exchange with which the Company is listed, and other
regulations;
independent as specified in the listing rules of the stock exchange with which the Company is
listed;
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having the basic knowledge about operations of listed companies, and proficient in relevant laws,
administrative regulations and rules;
having more than five years’ experience in legal and economic work or other work required for
fulfilling duties as independent director;
other conditions specified in the Articles of Association.”
is changed to:
“An independent director shall meet the following basic conditions:
qualified as independent director of a listed company pursuant to relevant laws, administrative
regulations, the listing rules of the stock exchange with which the Company is listed, and other
regulations;
independent as specified in the listing rules of the stock exchange with which the Company is
listed;
having the basic knowledge about operations of listed companies, and proficient in relevant laws,
administrative regulations and rules;
having more than 5 years’ experience in legal and economic work or other work required for
fulfilling duties as independent director;
having sufficient time and energy to effectively fulfill duties as independent director;
other conditions specified in the Articles of Association.”
61. Add Article 153:
“The following persons shall not serve as independent director:
(I) persons employed by the Company or its subsidiaries and their immediate family members
and major social connections (immediate family members shall include spouse, parents and
sons and daughters and major social connections shall include siblings, parents-in-law,
sons/daughters-in-law, spouses of siblings, siblings of spouse);
(II) natural person shareholders who directly or indirectly hold 1% or more than 1% of the
Company’s shares or who are top ten shareholders of the Company, and their respective
immediate family members;
(III) persons employed by the shareholder entities which directly or indirectly holds 5% or more
than 5% of the Company’s shares or which are top five shareholder entities of the Company
and their respective immediate family members;
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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(IV) persons who belonged to categories (1) to (3) within the preceding year;
(V) persons who provide financial, legal and consultation services to the Company or its
affiliated companies;
(VI) any other persons specified in the Articles of Association; or
(VII) any other persons specified by CSRC.”
62. Add Article 154:
“The membership of the Board shall include at least one third of independent directors. If any
independent director does not meet the condition of independence or is under any other circumstance
disqualifying him as independent director, so that the number of independent directors of the
Supervisory Committee falls short of the quorum as specified in the Articles of Association, the
Company shall supplement independent directors pursuant to relevant regulations. ”
63. Add Article 155:
“Independent directors of the Company shall be elected as follows:
(I) An independent director candidate may be nominated by the Board, the Supervisory
Committee, or shareholder(s) separately or jointly holding more than 1% of the shares of
the Company, and shall be elected by a shareholders’ general meeting of the Company;
(II) The party nominating any independent director candidate shall have obtained the nominee’s
consent prior to the nomination, and shall be fully aware of such particulars of the nominee
such as his occupation, academic qualification, title, detailed work experience and
information regarding all his positions held concurrently and be responsible for providing
to the Company his opinions in relation to the nominee’s qualification as an independent
director and independence. The nominee shall make a public announcement stating that
there exists no relation between the Company and him that may affect his independent and
objective judgment;
(III) Before the shareholders’ general meeting is convened for election of independent directors,
the Company shall announce the above in accordance with the relevant requirements.
(IV) If the Company issues RMB common shares and lists them with a domestic stock exchange,
then before the shareholders’ general meeting for the election of independent directors, the
Company shall submit the relevant information of all candidates to the CSRC, the CSRC
office at the location of the Company and the stock exchange with which the Company is
listed. If the Board disputes the particulars pertaining to the nominee, it shall also submit
its written opinions to the relevant authorities.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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Any of such nominees objected by CSRC may be treated as a nominee for director instead of
independent director.
When a shareholders’ general meeting is convened to nominate independent directors, the Board
shall make a statement on whether CSRC has any objection to the nominations.”
64. Add Article 159:
“Independent directors shall, in addition to fulfilling the aforesaid duties, provide the Board or
shareholders’ general meeting with independent opinions on the following matters:
(I) nomination, appointment and dismissal of directors;
(II) appointment or dismissal of senior executives;
(III) remuneration of directors and senior executives of the Company;
(IV) existing or new transactions totaling more than RMB3,000,000 between the shareholders,
effective controllers and connected enterprises and the Company or loan exceeding 5% of
the latest audited net assets or other financial transaction, and whether the Company has
taken effective measures to collect outstanding receivables;
(V) matters which independent directors deem likely to damage the equity of small and medium
shareholders;
(VI) other issues specified in the Articles of Association.
Independent directors shall express one of the following types of opinions on the aforesaid
issues: agreement; qualified opinion and reason therefor; objection and reason therefor; inability
to express opinion and reason therefor.
If the relevant issue needs to be disclosed, the Company shall disclose the opinions of the
independent directors in the relevant announcement. If the independent directors are of divergent
views and cannot reach a consensus, the Board shall disclose the respective opinions of each of the
independent directors.”
65. Clauses (XVI) and (XVII) of Article 102 of the existing Articles of Association:
“(XVI) to follow the listing rules of the securities regulatory authority and the stock exchange
with which the Company is listed in the disposal (including acquisition, sale and swap) of assets or
connected transactions;
(XVII) to exercise other functions and powers as stipulated by laws, regulations and the listing
rules of the stock exchange with which the Company is listed or conferred by the shareholders’ general
meetings and the Articles of Association.”
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is changed to:
“(XVI) to decide on external investment, acquisition and sale of assets, asset disposal, external
guarantees, consigned financial management and connected transactions of the Company within the
range authorized by the shareholders’ general meeting and pursuant to the listing rules of the securities
regulatory authority and the stock exchange with which the Company is listed;
(XVII) to exercise other functions and powers as stipulated by laws, administrative regulations,
department rules, and the listing rules or conferred by the shareholders’ general meetings and the
Articles of Association.”
66. Add Article 162:
“The Board shall formulate rules of procedure for Board meetings to ensure execution of
resolutions of the shareholders’ general meeting and enhance the work efficiency and proper decision
making of the Board. The rules of procedure for Board meetings specify the convening and voting
procedure of Board meetings, are appendix to the Articles of Association and shall be formulated by
the Board and approved on the general meeting.”
67. Article 103 of the existing Articles of Association
“The Board shall set up special committees to help the Board fulfill duties as authorized by the
Board. The special committees under the Board are strategic planning committee, audit committee,
remuneration committee, nomination committee, and safety, health and environment protection
committee. The special committees shall be accountable to the Board and consist of directors. In the
Audit Committee and Remuneration Committee, independent directors shall be the majority and shall
act as Chairman, and the Audit Committee shall include at least one accountant as independent
director. Where necessary, the Board may also set up other committees and adjust the existing
committees. The Board shall formulate rules of procedure for respective special committees.”
68. Add Article 166:
“The Board shall make explanations to the shareholders’ general meeting in relation to the
nonstandard audit opinions produced by certified public accountants on the financial reports of the
Company.”
69. Add Article 167:
“In making decisions on external investment, asset disposal, external guarantees, consigned
financial management and connected transactions, the Board shall establish strict examination and
decision making procedure; and organize relevant experts and professionals to make assessments on
material investment projects.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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70. Add Article 169:
“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. If the vice chairman
is unable or fails to perform his duties, a director shall be elected jointly by more than half of the
directors to perform such duties.”
71. Clause (III) of Article 107 of the existing Articles of Association
“jointly proposed by more than two (inclusive) independent directors;”
is changed to:
“jointly proposed by half of the independent directors;”
72. Add Article 172:
“A written notice of meeting shall include at least the following details:
(I) Time and venue of the meeting;
(II) the form of the meeting;
(III) matters (proposals) to be considered;
(IV) convener and presider of the meeting, proposer of and written proposal for the
extraordinary general meeting;
(V) documents needed for voting of directors;
(VI) requirements for the directors to attend the meeting in person or by proxy;
(VI) coordinator and means of contact.
A verbal notice of meeting shall at least include (I) and (II) above, and explanation for a
provisional meeting of the Board in emergency.”
73. Add Article 175:
“After adequate discussion of each proposal, the presider shall submit it to voting by the
attending directors.
Each attendant shall cast one vote, by open ballot or in writing or otherwise.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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The voting intent of a director may be pro, con or abstention. Every attending director shall
choose one out of the aforesaid intents. Where any director does not make any option or makes two
or more options, the presider shall require the said director to make an option again, otherwise the said
director shall be deemed as having abstained from voting; any director who has left the meeting
midway without coming back and has not made any option shall be deemed as having abstained from
voting.”
74. Add Article 176:
“Saved as specified in the Articles of Association, adoption of or resolution on any proposal shall
be subject to approval of more than half of all the directors of the Company, each of whom has one
voting right. If the pros and cons are the same, the Chairman of the Board shall be entitled to an
additional vote. If the relevant laws, administrative regulations and Articles of Association require
approval by more directors, such provisions shall apply.
Any resolution made by the Board on any guarantee within its range of authority in accordance
with the Articles of Association shall be subject to the approval of more than two thirds of the
attending directors.
If different resolutions conflict with each other in contents and meanings, the resolutions formed
later in time shall prevail.”
75. Add Article 177:
“In any of the following circumstances, the directors shall abstain from voting on the relevant
proposals:
(I) The listing rules of the stock exchange with which the company is listed provide for
abstention of the directors from voting;
(II) The directors themselves think they should abstain from voting; and
(III) The directors are connected with the enterprises involved by the proposals and shall
therefore abstain from voting pursuant to the Articles of Association.
If any director abstains from voting, the Board meeting may be held when more than half of the
non-connected directors attend the meeting. The resolution of the Board meeting shall be passed by
more than half of the non-connected directors. If the number of non-connected attending directors is
smaller than 3, the relevant proposal shall not be voted on but shall be submitted to the general
meeting for deliberation.”
76. Add Article 178:
“If more than half of the attending directors or more than two independent directors think they
cannot make judgments on relevant issues because, among other things, the relevant proposal is not
clear or specific or the meeting documents are inadequate, they can jointly propose to adjourn the
Board meeting or suspend considering some issues, and the Board shall approve such proposal.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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The director proposing suspension of voting shall provide specific requirements for the
conditions to be met for resubmitting the said proposal for deliberation.”
77. Add Article 183:
“Archives of Board meetings, including notices of meeting, meeting documents, attendance
book, powers of attorney for proxy directors, meeting recordings, votes, meeting minutes signed by
the attending directors, meeting summaries, records of the resolutions, announcements of the
resolutions, etc., shall be kept by the secretary of the Board.”
78. Article 139 of the existing Articles of Association
“In exercising rights or fulfilling obligations, the directors, supervisors, president (manager) and
other senior executives have the duty to act with due discretion, diligence and skill as a reasonable
discreet person should do in similar circumstances.”
is changed to:
“In exercising rights or fulfilling obligations, the directors, supervisors, president (manager) and
other senior executives have the duty to act with due discretion, diligence and skill as a reasonable
discreet person should do in similar circumstances. Directors, supervisors, president (manager) and
other senior executives shall comply with the laws, administrative regulations and the Articles of
Association and shall fulfill the following obligations with due diligence:
(I) to exercise the rights conferred by the Company with due discretion, care and diligence to
ensure the business operations of the Company comply with state laws, administrative
regulations and economic policies, not beyond the business scope specified in the business
license of the Company;
(II) to treat all shareholders impartially;
(III) to keep informed of the business operations and management of the Company;
(IV) to ensure the information disclosed by the Company is true, accurate and complete in the
range of duties;
(V) to honestly provide the Supervisory Committee with relevant information, and not prevent
the Supervisory Committee or supervisors from exercising their functions and powers; and
(VI) to fulfill other due care obligations stipulated by laws, administrative regulations,
department rules and the Articles of Association.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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79. Article 155 of the existing Articles of Association
“The Company shall prepare financial reports at the end of each fiscal year, which reports shall
be audited by certified public accountants according to law.
The fiscal year of the Company is Gregorian calendar year, i.e. from January 1 to 31 December
every year.”
is changed to:
“The Company shall prepare financial reports at the end of each fiscal year, which reports shall
be audited by certified public accountants according to law.
The fiscal year of the Company is Gregorian calendar year, i.e. from January 1 to 31 December
every year.
The Company shall submit annual financial report to CSRC and the stock exchange within 4
months from the end of each fiscal year, submit semiannual financial report to CSRC and the stock
exchange within 2 months from the end of the first 6 months of each fiscal year, and submit quarterly
financial reports to CSRC and the stock exchange within 1 month from the end of the first 3 months
and 9 months respectively of each fiscal year.”
80. Article 161 of the existing Articles of Association
“The Company shall not establish account books other than the statutory account books.”
is changed to:
“The Company shall not establish account books other than the statutory account books. The
assets of the Company shall not be deposited in any personal account.”
81. Add Article 244:
“The Company shall withdraw 10% of the annual profits as the statutory common reserve fund
of the Company. Such withdrawal may be stopped when the statutory common reserve fund of the
Company has accumulated to at least 50% of the registered capital of the Company.
If the statutory common reserve fund is insufficient to make up for the losses of the preceding
year, the profits of the current year shall first be used to make up for the said losses before any
statutory common reserve fund is withdrawn as stated in the preceding paragraph.
After statutory common reserve fund is withdrawn out of the after-tax profits, discretionary
reserve may also be withdrawn out of the same as per a resolution made at a general meeting.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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The after-tax profits remaining after makeup of losses and withdrawal of reserves shall be
distributed to the shareholders in proportion to their shareholding unless otherwise specified in the
Articles of Association.
If the general meeting, in violation of the provision in the preceding paragraph, distributes
profits to shareholders before recovering losses and withdrawing statutory common reserve fund, the
profits thus distributed shall be returned to the Company.
The shares of the Company held by companies shall not be subject to profit distribution.”
82. Add Article 250:
“Cash dividends and other monies paid by the Company to holders of domestic shares shall be
paid in RMB. Cash dividends and other monies paid by the Company to holders of overseas listed
foreign shares shall be stated and announced in RMB and paid in foreign currency. Foreign currency
needed by the Company to pay cash dividends and other monies to holders of overseas listed foreign
shares and holders of other foreign shares shall be obtained pursuant to state regulations on foreign
exchange.”
83. Add Article 251:
“In distributing dividends to shareholders, the Company shall deduct and pay taxes payable by
the shareholders pursuant to Chinese tax laws.”
84. Add Article 252:
“The Company shall conduct internal audit and assign full-time auditors to conduct internal audit
and supervision on the revenues/expenditures and economic activities of the Company.”
85. Add Article 253:
“The internal audit system and duties of the auditors shall be subject to the approval of the
Board. The auditors shall be accountable to the Board and report his work to the Board.”
86. Article 170 of the existing Articles of Association
“The Company shall appoint qualified independent certified public accountants to audit the
annual financial reports and other financial reports of the Company.”
is changed to:
“The Company shall appoint qualified independent certified public accountants to audit the
annual financial reports and other financial reports of the Company.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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The first certified public accountants of the Company may be appointed at the founding meeting
before the first annual general meeting. The term of the said certified public accountants shall end at
conclusion of the first annual general meeting.”
87. Article 172 of the existing Articles of Association
“The certified public accountants appointed by the Company shall have the following rights:
(I) to access the account books, records and vouchers at any time deemed proper , and to ask
directors, the president (manager) or other senior executives to provide relevant documents
and explanations;
(II) to ask the Company to take every reasonable action to obtain documents and explanations
from its subsidiaries needed for the certified public accountants to perform their duties;
(III) to be present as an observer at shareholders’ general meetings, get notice of shareholders’
general meeting or other information relating to shareholders’ general meetings, and deliver
speeches at shareholders’ general meeting in relation to the matters concerning the certified
public accountants.”
is changed to:
“The certified public accountants appointed by the Company shall have the following rights:
(I) to access the account books, records and vouchers at any time deemed proper, and to ask
directors, the president (manager) or other senior executives to provide relevant documents
and explanations;
(II) to ask the Company to take every action possible to obtain documents and explanations
from its subsidiaries needed for the certified public accountants to perform their duties;
(III) to be present as an observer at shareholders’ general meetings, get notice of shareholders’
general meeting or other information relating to shareholders’ general meetings, and deliver
speeches at shareholders’ general meeting in relation to the matters concerning the certified
public accountants.
The Company shall undertake to provide the certified public accountants with true and complete
accounting vouchers, account books, financial reports and other accounting information, and shall not
reject, conceal or misstate any information.”
88. Add Article 280:
“The liquidation committee shall dutifully fulfill the liquidation obligation.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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The liquidation committee shall not abuse his official powers to accept bribes or other unlawful
income, and not to expropriate the Company’s property.
If any member of the liquidation committee causes any loss to the Company or the creditors with
will or serious negligence, the said member shall be liable for compensation.”
89. Article 196 of the existing Articles of Association
“The Company may amend the Articles of Association pursuant to the laws, administrative
regulations and the Articles of Association.”
is changed to:
“The Company may amend the Articles of Association in any of the following circumstances:
(I) After amendments are made to Company Law or other relevant laws and administrative
regulations, the Articles of Association run counter to the said amendments;
(II) The conditions of the Company have changed, and such change is not covered in the
Articles of Association; and
(III) The shareholders’ general meeting has resolved to amend the Articles of Association.”
90. Add Article 283:
“The Board shall amend the Articles of Association as per the resolution passed at the
shareholders’ general meeting to amend the same and the opinions of the regulatory authority.”
91. Add Article 284:
“The notice of the Company may be served as follows:
(I) by personal delivery;
(II) by post;
(III) by fax or email;
(IV) by announcement on the website designated by the Company and SEHK in accordance with
the laws, regulations and local listing rules;
(V) by announcement;
(VI) by other means agreed before between the Company and the recipient or approved by the
recipient; and
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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(VII) by other means approved by the relevant regulatory authority on the listing place or
stipulated in the Articles of Association.
If a notice of the Company is served by announcement, the said notice shall be deemed as
received by the relevant persons once the said notice is announced.
Save as otherwise specified in the context, the “announcement” as mentioned herein, in respect
of the announcement sent to holders of domestic shares or required to be sent in China pursuant to
relevant regulations and the Articles of Association, refers to announcement published on the
newspapers and periodicals in China, which newspapers and periodicals shall be as specified in the
Chinese laws and administrative regulations or by the securities regulatory authority under the State
Council; in respect of the announcement sent to holders of foreign shares or required to be sent in
Hong Kong pursuant to relevant regulations and the Articles of Association, the announcement must
be published on the designated Hong Kong newspapers and periodicals as provided for in the relevant
listing rules.”
92. Add Article 285:
“Save as otherwise specified in the Articles of Association, the means of service of notice
specified in the preceding article shall apply to notice of general meeting, Board meeting and
Supervisory Committee meeting held by the Company.”
93. Add Article 286:
“If the notice of the Company is sent by personal delivery, the recipient shall affix signature (or
seal) to the Return on Service and the signing date shall be the date of service; if the notice of the
Company is sent by post, fax, email or announcement on the Internet, the sending date shall be the
date of service; if the notice of the Company is sent by announcement, the date of first announcement
shall be the date of service. The relevant announcement shall be published on the designated
newspapers and periodicals.”
94. Add Article 287:
“If the local listing rules stipulate that the Company send, post, distribute, announce or otherwise
provide relevant documents of the Company in English and Chinese, if the Company has made
appropriate arrangement to confirm whether the shareholders hope to receive only the English version
or the Chinese version, the Company may (as per the intent stated by the shareholders) send only the
English version or the Chinese version to the related shareholders within the range allowed by the
applicable laws and regulations and pursuant to the applicable laws and regulations. ”
95. Delete Article 199 of the existing Articles of Association
96. Add Article 289:
“Issues not covered in the Articles of Association shall be handled pursuant to the laws,
administrative regulations and local listing rules and in line with the actual conditions of the
Company. In the event of any discrepancy between the Articles of Association and the newly issued
laws, administrative regulations or local listing rules, the latter shall prevail.”
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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97. Add Article 293:
“Appendixes to the Articles of Association include Rules of Procedure for General Meetings,
Rules of Procedure for Board Meetings and Rules of Procedure for Supervisory Committee Meetings.”
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES
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CHAPTER 1 GENERAL PROVISIONS
Article 1 These Rules are formulated in accordance with the laws and regulations governing the
listed companies within and outside China, including Company Law of the People’s Republic of China
(hereinafter referred to as the “Company Law”), Securities Law of the People’s Republic of China
(hereinafter referred to as the “Securities Law”), the Mandatory Provisions in the Articles of
Association of Companies Listed Overseas (hereinafter referred to as the “Mandatory Provisions”),
Rules Governing the Listing of Securities of The Hong Kong Stock Exchange Company Limited
(hereinafter referred to as the “HKSE Listing Rules”), Rules Governing the Listing of Securities of
the Shanghai Stock Exchange (hereinafter referred to as the “SSE Listing Rules”), Code of Corporate
Governance for Listed Companies (hereinafter referred to as the “Code of Corporate Governance”),
the Guidelines for the Articles of Association of Listed Companies, as amended in 2006 (hereinafter
referred to as the “Guidelines for the Articles of Association”), the Rules for the General Assemblies
of Shareholders of Listed Companies (hereinafter referred to as the “Rules for the GeneralAssemblies of Shareholders”), together with the Articles of Association of China Coal Energy
Company Limited (hereinafter referred to as the “Articles of Association”) and Measures for the
Management of Connected Transactions of China Coal Energy Company Limited (hereinafter referred
to as the “Measures for the Management of Connected Transactions”), in order to regularize the
acts of China Coal Energy Company Limited (hereinafter referred to as the “Company”) and to protect
the legal rights and interests of the Company and its shareholders, as well as to ensure the
shareholders’ general meeting to be conducted according to law.
Article 2 The shareholders’ general meeting shall exercise its functions and powers within the
scope stipulated in the Company Law and the Articles of Association.
Article 3 Shareholders’ general meetings can be classified as annual general meetings
(hereinafter referred to as the “AGM”) and extraordinary general meetings. The AGM shall be
convened once every year and shall be arranged to be held within six months after the end of the
preceding accounting year. Meetings other than the AGM shall be treated as extraordinary general
meetings. The extraordinary general meetings shall be convened on an irregular basis. In the event that
an extraordinary general meeting shall be convened under Article 101 of the Company Law, the
extraordinary general meeting shall be convened within two months. The extraordinary general
meetings shall be arranged in sequential order during the year.
If the Company is unable to convene the shareholders’ general meeting within the above time
limit, the Company shall report to the local agencies of CSRC at the place of domicile of the Company
and the stock exchange (hereinafter referred to as the “Stock Exchange”) on which the Company’s
shares are traded and shall explain the reasons and make an announcement.
Article 4 If the Company convenes the shareholders’ general meeting, the Company shall hire
a lawyer to issue legal opinions on the following issues and make an announcement:
(1) whether the convening of the meeting and the convening procedure comply with the law,
administrative regulations, these Rules and the Articles of Association;
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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(2) whether the qualifications of persons attending the meeting and the board of directors are
legal and valid;
(3) whether the voting procedure of the meeting and the results of the poll are legal and valid;
(4) legal opinions issued on other related issues at the request of the Company.
Article 5 Shareholders holding different classes of shares shall be referred to as “class
shareholders”. Apart from holders of other classes of shares, holders of domestic shares and overseas
listed foreign shares shall be treated as holders of different classes of shares. In the event that the
Company intends to change or abolish the rights enjoyed by the class shareholders, the said change
or abolishment shall, in accordance with the Articles of Association, be approved by a special
resolution at the shareholders’ general meeting and a class meeting for the class shareholders shall be
convened in connection therewith. No shareholders other than the class shareholders shall be allowed
to attend such class meeting.
Article 6 The Company shall convene the shareholders’ general meeting in strict compliance
with the relevant requirements as provided in the law, administrative regulations, these Rules and the
Articles of Association and shall ensure that shareholders can exercise their rights according to the
law.
The board of directors of the Company shall strictly comply with various requirements as
provided in the Company Law and other laws and regulations in respect of convening the
shareholders’ general meeting and shall undertake their responsibilities earnestly and shall organize
the shareholders’ general meeting diligently and in a timely fashion. All directors of the Company
shall be diligent and responsible and shall fulfill their fiduciary duties for properly convening
shareholders’ general meetings and shall not prevent the shareholders’ general meeting from
exercising its functions and powers according to law. Directors attending such meetings shall
undertake their responsibilities in good faith and ensure that the content of the resolutions shall be
true, accurate and complete. No representation which may easily result in misinterpretation thereof
shall be used.
Article 7 Any shareholder who lawfully holds valid shares in the Company shall have the right
to attend, in person or by proxy, the shareholders’ general meeting and shall enjoy various rights
thereat according to the law, including the right to be informed, the right to speak, the right to question
and the right to vote (except on matters not to be voted under the laws, the HKSE Listing Rules, the
Rules for the General Assemblies of Shareholders and the Articles of Association). Shareholders and
their authorized proxies attending the meeting shall comply with the relevant laws and regulations, the
Articles of Association and these Rules to maintain the order of the meeting conscientiously. The
lawful interests of other shareholders shall not be infringed.
Article 8 The secretary of the board of directors of the Company shall be responsible for carrying
out all preparatory and organization work for convening the shareholders’ general meeting.
Article 9 The shareholders’ general meeting shall be convened by adhering to the principles of
cost-saving and simplicity. No additional benefits shall be granted to the shareholders (or their
authorized proxies) attending such meetings.
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CHAPTER 2 FUNCTIONS AND POWERS OF THE SHAREHOLDERS’ GENERAL MEETING
Article 10 The shareholders’ general meeting shall be the power organ of the Company. It shall
exercise the following functions and powers according to law:
(1) to determine the operation plans and investment plans of the Company;
(2) to elect and replace directors who are not representatives of employees, and to determine
matters relating to the remuneration of the directors;
(3) to elect and replace supervisors who are shareholders’ representatives and to determine
matters relating to the remuneration of the supervisors;
(4) to consider and approve the reports of the board of directors;
(5) to consider and approve the reports of the supervisory committee;
(6) to consider and approve the Company’s plans for annual budgets and the final accounts;
(7) to consider and approve the Company’s plans for profit distribution and for making up
losses;
(8) to pass resolutions on the increment or reduction of the Company’s registered capital, and
on the purchase of the Company’s shares;
(9) to pass resolutions on the merger, division, dissolution, liquidation and a change in the
corporate form of the Company;
(10) to pass resolutions on the issue of corporate bonds of the Company;
(11) to pass resolutions on retaining or dismissing or ceasing to continue to retain the accounting
firms;
(12) to amend the Articles of Association;
(13) to consider motions proposed by the shareholders representing more than 3% (inclusive) of
the voting rights of the Company;
(14) to consider and approve the guarantees as provided in Article 67 of the Articles of
Association;
(15) to consider matters in which significant assets purchased or sold by the Company within
one year exceeding 30% of the latest total audited assets of the Company;
(16) to consider and approve matters related to changing the use of the proceeds;
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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(17) to consider equity incentive schemes;
(18) other matters (other than the above functions and powers) which may be authorized or
entrusted by the shareholders’ general meeting to the board of directors.
The functions and powers of the shareholders’ general meeting as stated in Items (1) to (17)
above cannot be exercised by the board of directors or other institutions or individuals on its behalf
by way of authorization.
The shareholders’ general meeting shall exercise its functions and powers to the extent as
permitted by laws and regulations governing the Company within and outside China and the Articles
of Association. It shall not interfere with shareholders in respect of their own rights.
CHAPTER 3 AUTHORISATION OF THE SHAREHOLDERS’ GENERAL MEETING
Article 11 Matters falling within the power of the shareholders’ general meeting in accordance
with laws, administrative regulations, the Articles of Association and other related rules and
provisions must be examined at such meetings so as to protect the decision making power of the
shareholders of the Company on such matters.
Article 12 In order to enhance the efficiency of the Company’s daily operations, the
shareholders’ general meeting specifies the procedures for the decisions on the Company’s investment
plans, disposal of assets, external guarantees and other significant matters, and grants some of the
powers to the board of directors, which are specified as follows:
(I) Investments
1. To approve the annual investment plans of the Company by the shareholders’ general
meeting.
To authorize the board of directors to make adjustments of not exceeding 15% (inclusive)
to the capital expenditures for the year as approved by the shareholders’ general meeting.
2. Investments in single project exceeding 15% (excluding 15%) of the latest audited net
assets of the Company shall be approved by the shareholders’ general meeting, while the
board of directors shall be authorized for approval of investments in single project not
exceeding 15% (inclusive) of the latest audited net assets of the Company.
3. The Company applies the Company’s assets to make risk investments in industries not
related with the business operations of the Company (including but not limited to bonds,
futures and shares). For investments exceeding 2% (excluding 2%) of the latest audited net
assets of the Company, such investments shall be approved by the shareholders’ general
meeting, while the board of directors shall be authorized for approval of investments of not
exceeding 2% (inclusive) of the latest audited net assets of the Company.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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In respect of this item, if any of the above investments involve “notifiable transaction”, under
the HKSE Listing Rules, and any result by conducting five scale testing is larger than or equal
to 25%, then it shall be approved by the shareholders’ general meeting.
(II) Disposal of assets
1. Acquisition and disposal of assets and equity. When conducting a “notifiable transaction”
under the HKSE Listing Rules (including but not limited to the acquisition and disposal of
equity, assets in kind and other rights in assets), the Company shall ascertain whether it
requires approval by the shareholders’ general meeting based on the following five testing
indices (hereinafter the “Five Ratios”) as judgement standards.
(1) Testing of total asset value: Total assets involved in the transaction/Total combined
assets of the listed company (including intangible assets) x 100%
(2) Testing of revenue: Revenue derived from the assets involved in the
transaction/Combined revenue of the listed company x 100%
(3) Testing of consideration to total market capitalization: Total consideration to be
paid/Total market capitalization of the listed company x 100%
(4) Testing of newly issued share capital: Share capital value of the proposed new issue
as consideration of the transaction/Issued share capital value of the listed company x
100%
(5) Testing of profit: Profit involved in the asset transaction/Combined profits of the
listed company x 100%
Based on the results of the scale testing, the relevant transactions can be categorized by the
following standards:
Type of transaction Asset ratioConsideration
ratio Profits ratio Revenue ratioShare capital
ratio
Very substantial acquisitions P≥100% P≥100% P≥100% P≥100% P≥100%
Very substantial disposals P≥75% P≥75% P≥75% P≥75% N/A
Major transaction — acquisitions 25%≤P<100% 25%≤P<100% 25%≤P<100% 25%≤P<100% 25%≤P<100%
Major transaction — disposals 25%≤P<75% 25%≤P<75% 25%≤P<75% 25%≤P<75% N/A
Disclosable transaction 5%≤P<25% 5%≤P<25% 5%≤P<25% 5%≤P<25% 5%≤P<25%
Share transaction P<5% P<5% P<5% P<5% P<5%
Note: P is the percentage result of scale testing.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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For different transactions, approvals are based on the following formula:
Type of transaction
Notification tothe StockExchange
Announcementon newspapers
Issue ofcirculars to
shareholdersApproval byshareholders
Accountantsreport
Very substantial acquisitions Required Required Required Required Required
Very substantial disposals Required Required Required Required Required
Major transaction — acquisitions Required Required Required Required Required
Major transaction — disposals Required Required Required Required Required
Disclosable transaction Required Required Required Not required Not required
Share transaction Required Required Not required Not required1 Not required
Reverse takeover Required Required Required Required Required
Notes: 1. Unless the board of directors of the Company has not obtained a general mandate for the issue of securities
from the shareholders, or the consideration involved in the relevant transaction has exceeded the scope of the
general mandate.
Transactions with the percentage of scale testing smaller than 25% and not belonging to
share transaction are not required to be approved by the shareholders’ general meeting.
Save for the matters requiring for approval upon consideration by the shareholders’ general
meeting under the laws and regulations of the places in which the Company is listed within
and outside China such as the HKSE Listing Rules, the Guidelines for the Articles of
Association and the SSE Listing Rules or the Articles of Association or these Rules of
Procedures, the board of directors are authorized to make approvals on other matters.
2. Disposal of fixed assets. Without prejudice to item (II) in this Article, in the course of
disposing fixed assets, if the total sum of the estimated value of the fixed assets proposed
to be disposed and the value derived from the fixed assets which have been disposed within
four months prior to such disposal proposal exceeds 33% of the fixed assets as shown in
such balance sheet as being considered during the most recent shareholders’ general
meeting, the shareholders’ general meeting shall examine and approve such disposal.
Disposal of fixed assets not exceeding 33% (inclusive) shall be authorized to be approved
by the board of directors.
For the purposes of this item, the term “disposal” of fixed assets excludes the usage of fixed
assets for the provision of guarantee.
3. Assignment and contracting. Without prejudice to item (II) in this Article, in the course of
conducting other business (including but not limited to entering into, changes and
termination of material contracts such as operation on trust, financing on trust, lease
contracting), the amount involved or the aggregate amount within twelve months shall be
used for the calculation of the five ratios in sub-item 1 of item (II) of this Article.
For the purpose of this item, projects with any of the above ratios larger than 5% shall be
approved by the shareholders’ general meeting, while projects with none of the five ratios
exceeding 5% (inclusive) shall be authorized to be approved by the board of directors.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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(III) Indebtedness and guarantees
1. Pursuant to the annual investment plan and the related rules as approved by the
shareholders’ general meeting, the board of directors are authorized to approve the amounts
of long and short-term loans for the year.
2. The following external guarantees shall be subject to the approval by the shareholders’
general meeting:
(1) Any guarantee in which the total sum of the external guarantees provided by the
Company and its controlling subsidiaries exceeds 50% of the latest audited net assets;
(2) Guarantees provided for any guaranteed party with a gearing ratio of more than 70%;
(3) Guarantees in which the single guarantee sum exceeds 10% of the latest audited net
assets.
(4) Guarantees provided for shareholders, the actual controller and their respective
connected parties;
(5) Apart from items (1) to (4), if other external guarantees involve “notifiable
transaction” under the HKSE Listing Rules, and the result of any five scale testing
exceeds or equals to 25%, external guarantees that are subject to the approval by the
shareholders’ general meeting shall be considered and approved by the Board of
Directors before they are submitted for approval by the shareholders’ general meeting.
Save for the above mentioned, the board of directors is authorized to approve external guarantees
under other circumstances but it is required that more than two-thirds of the directors attending the
board meeting give their consent and reach a resolution.
External guarantees considered and approved by the board of directors or the shareholders’
general meeting of the Company shall be disclosed in newspapers designated by CSRC for information
disclosure in a timely manner. The information disclosed shall include the resolutions of the board of
directors or the shareholders’ general meeting, the total sum of the guarantees provided by the
Company and its controlling subsidiaries as at the date of information disclosure, the total sum of the
guarantees provided by the Company to its controlling subsidiaries.
The board of directors shall approve guarantees where the guarantee sum does not exceed 10%
of the latest audited net assets of the Company. The Chairman of the board of directors is authorized
to approve and sign external guarantee contracts where the guarantee sum does not exceed 5% of the
latest audited net assets of the Company.
For the purposes of this item, if the above guarantee involves “notifiable transaction” under the
Listing Rules, and the result of any five scale testing exceeds or equals to 25%, it shall be subject to
the approval by the shareholders’ general meeting.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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External guarantees provided by controlling subsidiaries of the Company are executed with
reference to the above requirements. Controlling subsidiaries of the Company shall notify the
Company to perform the obligation of information disclosure after their board of directors or the
shareholders’ general meeting reaches a resolution.
If the Company provides a guarantee in favour of a third party, the guaranteed party shall provide
a counter-guarantee or other necessary risk prevention measures to the Company.
(IV) Connected transactions
Connected transactions and matters requiring to be approved by the shareholders’ general
meeting shall be considered and approved by the shareholders’ general meeting in accordance with the
HKSE Listing Rules, the SSE Listing Rules, the Guidelines for the Articles of Association, the Articles
of Association and the Measures for the Management of Connected Transactions of the Company.
Other transactions and matters shall be approved by the board of directors and carried out in
accordance with the HKSE Listing Rules, the Guidelines for the Articles of Association, the Articles
of Association and the Measures for the Management of Connected Transactions of the Company.
Notwithstanding the mandate granted to the board of directors as stated in items (1) to (4) above,
transactions referred to in items (1) to (4) above shall be submitted for consideration at the
shareholders’ general meeting when they meet the following criteria:
1. The total assets in respect of the transaction (if both the book value and the assessed value
exist, the higher value will be chosen) represent more than 50% of the latest audited total
assets of the listed company;
2. The trading value of the transaction (including the liabilities and expenses incurred)
represents more than 50% of the latest audited net assets of the listed company and the
absolute amount exceeds RMB50 million yuan;
3. The profit generated from the transaction represents more than 50% of the audited net profit
of the listed company in the latest accounting year and the absolute amount exceeds RMB5
million yuan;
4. For the trading subject (such as equity), the underlying income generated from principal
activities in the latest accounting year represents more than 50% of the audited income
generated from principal activities of the listed company in the latest accounting year and
the absolute amount exceeds RMB50 million yuan;
5. For the trading subject (such as equity), the underlying net profit in the latest accounting
year represents more than 50% of the audited net profit of the listed company in the latest
accounting year and the absolute amount exceeds RMB5 million yuan;
If the figures related to the above benchmarks involve negative values, the absolute values
shall be used for calculation.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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Article 13 If necessary, the shareholders’ general meeting may reasonably delegate the board of
directors or the Chairman of the board the power to determine, to the extent permitted by the
shareholders’ general meeting, any specific matters which are relevant to the matters being resolved
but are unable or unnecessary to be determined at the current shareholders’ general meeting.
CHAPTER 4 PROCEDURES TO CONVENE A SHAREHOLDERS’ GENERAL MEETING
Section 1 Proposing, seeking and considering motions
Article 14 Motions put forward in a shareholders’ general meeting shall be specific documents
and relate to the matters which shall be discussed and considered at a shareholders’ general meeting.
Article 15 Motions shall be generally proposed by the board of directors to the shareholders’
general meeting.
Article 16 In the event that more than a half of independent directors propose to convene an
extraordinary general meeting, such directors shall be responsible to propose motions in relation
thereto.
Article 17 In the course of convening an AGM, shareholders individually or jointly holding more
than 3% (inclusive) of the Company’s shares can propose new motions to the board of directors in
writing 10 days before the convening of the shareholders’ general meeting. The Company shall include
matters in the motion which belong to the scope of responsibilities of the shareholders’ general
meeting in the agenda of the current meeting, and shall issue a supplementary notice of the
shareholders’ general meeting within two days after receiving the motions to publish the contents of
the new motions. However, such motion must be delivered to the Company within thirty days from the
issue of the notice of the AGM.
Save as provided in the preceding paragraph, the board of directors shall not amend the motions
stipulated in the notice of the shareholders’ general meeting or add new motions after issuing the
notice.
Motions not covered in the notice of the shareholders’ general meeting or not complying with
Article 13 of these Rules shall not be resolved upon at the shareholders’ general meeting and no
resolution shall be reached.
Motions of the shareholders shall comply with the following conditions:
(I) the contents are not in violation with the requirements under the laws, regulations and the
Articles of Association, and are within the scope of operations of the Company and the
scope of responsibilities of the shareholders’ general meeting;
(II) have specific agenda and actual matters to be resolved;
(III) submitted or delivered to the board of directors in writing.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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Article 18 In the event that the supervisory committee proposes to convene an extraordinary
general meeting, it shall be responsible to propose motions in relation thereto.
Article 19 Before the board of directors issues the notice to convene the shareholders’ general
meeting, the secretary of the board may seek and collect motions from shareholders, supervisors and
independent directors and submit the same to the board of directors for approval before being
considered by the shareholders’ general meeting.
Article 20 The AGM shall at least consider the following motions:
(1) consider the annual report of the board of directors;
(2) consider the annual report of the supervisory committee;
(3) consider and approve the annual plans for financial budgets and for final accounts of the
Company;
(4) consider and approve the operation plans and annual investment plans of the Company
which are to be considered by the shareholders’ general meeting;
(5) consider the audited financial reports of the Company for the preceding year;
(6) consider the Company’s profit distribution plan of the preceding year;
(7) retain, dismiss or cease to continue to retain an accounting firm;
(8) consider and approve the Company’s remuneration and incentive plans for directors and
supervisors.
Article 21 The Board of Directors shall examine and review the new motions proposed at the
AGM in accordance with the following principles:
(1) Relevance. The board of directors shall examine and review the motions proposed by
shareholders. Motions proposed by shareholders that are directly involved with the
Company and do not exceed the powers of the shareholders’ general meeting as stipulated
in the laws, regulations and the Articles of Association shall be submitted to the
shareholders’ general meeting for discussion. For motions which do not comply with the
foregoing requirements, the shareholder raising such motion will be suggested not to
propose for discussion at the shareholders’ general meeting.
(2) Procedures. The board of directors may advise procedural issues relating to proposing
motions by shareholders. In the event that the proposed motions are voted separately or
jointly, it is necessary to obtain consent of the original proposing party in relation thereto;
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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if the proposing party does not agree with such changes, the Chairman of the shareholders’
general meeting may request the shareholders’ general meeting to determine the procedural
issues and conduct a discussion thereof in accordance with the procedures as determined by
the shareholders’ general meeting.
Article 22 A motion involving any of the following circumstances is deemed to be a change or
abrogation of rights of class shareholders, and the board of directors shall submit the same to a class
meeting for consideration:
(1) to increase or decrease the number of shares of a class, or to increase or decrease the
number of shares of a class having voting rights, distribution rights or other privileges
equal or superior to those of the shares of that class;
(2) to convert all or part of a class of shares into another class, or to convert all or part of
another class of shares into that class of shares, or to grant such conversion right;
(3) to cancel or reduce the rights in respect of accrued dividends or the cumulative dividends
attached to shares of a class;
(4) to reduce or cancel preferential rights of a class of shares to dividends or to distribution of
assets in the event that the Company is liquidated;
(5) to add, cancel or reduce conversion rights, options, voting rights, transfer rights,
pre-emptive rights arising from placement or the right to acquire securities of the Company
attached to shares of a class;
(6) to cancel or reduce the rights to obtain payables in specific currencies from the Company
attached to shares of a class;
(7) to create a new class of shares with voting rights, distribution rights or other privileges
equal or superior to those of the shares of that class;
(8) to restrict the transfer or ownership rights of a class of shares or impose additional
restrictions thereto;
(9) to grant the right to subscribe for, or convert into, shares of a class of shares or another
class of shares;
(10) to increase the rights and privileges of shares of another class;
(11) to conduct the proposed restructuring of the Company in such a way that may result in the
holders of different classes of shares to assume liability disproportionately;
(12) to amend or abrogate the provisions of Chapter 9, Special Procedures for Voting by a Class
of Shareholders, of the Articles of Association.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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Section 2 Notice and change of meeting
Article 23 The board of directors shall give notice to all shareholders 45 days before the
convening of the AGM or the extraordinary general meeting by way of an announcement, in person
or by prepaid mail.
The notice of the shareholders’ general meeting and the supplementary notice shall fully and
completely disclose the specific contents of all motions and all information or explanations required
for shareholders to make reasonable judgments on the matters to be discussed. If the matters to be
discussed requires opinions from independent directors, the opinions and reasons of independent
directors shall be disclosed simultaneously when the notice of the shareholders’ general meeting or the
supplementary notice is issued.
The notice of the shareholders’ general meeting shall be sent to shareholders (regardless of
whether they have voting rights at the shareholder’s general meeting) by way of an announcement, in
person or by prepaid mail. The addresses of the recipients shall be subject to such addresses as shown
in the register of shareholders.
For holders of domestic shares, the notice of the shareholders’ general meeting may also be made
by way of announcement.
An announcement shall be published in one or more designated newspapers and journals within
a period of 45 to 50 days before the shareholders’ general meeting is convened. Once an announcement
is made, all holders of the domestic shares are deemed to have received the relevant notice of the
shareholders’ general meeting.
In the event that the Company fails to give notice of the shareholders’ general meeting as
scheduled such that the shareholders’ general meeting fails to convene for any reasons within six
months since the end of the preceding accounting year, it shall promptly report the same to the stock
exchange(s) on which the Company’s shares are listed to explain the reasons therefor and make an
announcement relating thereto.
Article 24 The notice of the meeting of the class shareholders shall only be served to such
shareholders who have the right to vote in the meeting of the class shareholders.
Article 25 The notice of the shareholders’ general meeting shall meet the following
requirements:
(1) be made in writing;
(2) specify the venue, date and time for the meeting;
(3) set out matters to be discussed in the meeting;
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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(4) state the shareholding record date for shareholders who have the right to attend the
shareholders’ general meeting (the time interval between the shareholding record date for
A Share holders and the date of the meeting shall not be more than seven working days. The
shareholding record date shall not be changed once it is confirmed);
(5) provide the shareholders with such information and explanation as necessary for them to
make prudent decisions in connection with the matters to be discussed; this principle
includes that (but is not limited to) where the Company proposes to merge with the other,
repurchase its shares, restructure its share capital or undergo other reorganization, the
specific terms and conditions of the proposed transactions must be provided in detail
together with copies of the contracts related thereto, if any, and the causes and effect of the
same must be properly explained;
(6) If any director, supervisor, president and other senior management have material interests
in the transaction subject to discussion, the nature and extent of the material interests of any
director, supervisor, president and other senior management in the proposed transaction
shall be disclosed and the effect which the proposed transaction will have on them in their
capacity as shareholders insofar as it is different from the effect on interests of other
shareholders of the same class shall also be contained;
(7) If the election of directors, supervisors is to be discussed, the notice of the shareholders’
general meeting shall fully disclose the particulars of the director’s and supervisor’s
candidates and at least shall include the following contents: personal particulars such as
educational background, working experience and part-time jobs; whether they have any
connection with the Company or its controlling shareholder and actual controller; disclose
the number of shares of the Company held; whether they have been subject to penalties by
CSRC and other relevant authorities as well as sanctions by any stock exchange. Apart from
the election of directors, supervisors based on the cumulative voting system, each director’s
or supervisor’s candidate shall be proposed by way of single motions.
(8) contain the full text of any special resolution to be proposed and approved at the meeting;
(9) contain a clear statement that a shareholder who has the right to attend and vote at the
meeting shall have the right to appoint one or more proxies to attend and vote at the meeting
on its behalf and that such proxies need not be shareholders;
(10) state the date and place to serve a proxy form to appoint a proxy to vote at the meeting;
(11) state the name and contact numbers of the contact persons in connection with the meeting.
Article 26 Shareholders and proxies of shareholders who intend to attend the shareholders’
general meeting shall serve a written reply on attending the meeting to the Company 20 days before
the meeting is convened.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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The Company shall calculate the number of voting shares represented by the shareholders and
their proxies who intend to attend the meeting based on the written replies it has received 20 days
before convening the shareholders’ general meeting. In the event that the number of voting shares
represented by the shareholders who intend to attend the meeting is more than one-half of the total
number of the voting shares of the Company, the Company may convene the shareholders’ general
meeting; if not, the Company shall, within 5 days, notify the shareholders again of the matters to be
considered at, and the place and date for, the meeting by way of public announcement. The Company
may convene the shareholders’ general meeting after such an announcement is made.
Article 27 After giving notice of the shareholders’ general meeting, the shareholders’ general
meeting shall not be convened in advance, delayed or cancelled without proper reasons. Motions
covered in the notice of the shareholders’ general meeting shall not be withdrawn. Once the meeting
is delayed or cancelled, the board of directors shall make an announcement at least two working days
before the original date scheduled for convening the meeting and provide reasons and the time for
convening the meeting after it is delayed.
Section 3 Registration of the meeting
Article 28 Shareholders may attend the shareholders’ general meeting in person or appoint a
proxy to attend and vote on their behalf within the scope of authorization. All directors, supervisors,
secretary of the board shall present at such meeting. The president (manager), vice president executive
(deputy manager), the chief financial officer (person in charge of finance) and other senior
management of the Company and other persons being invited by the board of directors may also
present at such meeting.
All shareholders or their proxies registered in the register on the shareholding record date have
the rights to attend the shareholders’ general meeting. The Company and the board of directors shall
not reject them by any reason.
The board of directors shall take necessary steps to ensure the proper order of the shareholders’
general meeting, and shall take steps to prevent any acts of interfering with the shareholders’ general
meeting, causing trouble and infringing the legal interests of shareholders and report to the relevant
authorities in a timely manner for investigation and giving punishment. In order to ensure the
solemnity and proper order of the shareholders’ general meeting, the Company shall have the right to
refuse persons other than those as set out in the preceding paragraph entry into the meeting venue.
Article 29 The board of directors and the lawyer shall jointly verify the validity of the
qualifications of shareholders in accordance with the register of shareholders provided by the
securities registration and settlement institution and shall register the names of shareholders and the
number of voting shares held by them. Before the board of directors announces the number of
shareholders and proxies attending the meeting on site and the total number of voting shares held by
them, registration at the meeting shall be terminated.
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The Company shall be responsible for preparing an attendance register for shareholders’ general
meeting, which shall be signed by the persons who attend the meeting. The attendance register shall
contain the names of the persons and/or the entity(ies) who (or which) attend the meeting, their
identity card numbers, information to confirm the identity of the each of the shareholders (such as the
shareholder’s account number), the number of voting shares they held or represented, the name of the
principal or the name of the entity which acts as the principal and etc.
Article 30 Shareholders shall appoint their proxies in writing. The content of such written proxy
form shall state the following:
(1) name of the proxy authorized by the shareholder;
(2) the number of shares represented by the relevant proxy on behalf of the principal;
(3) whether or not the proxy has the right to vote;
(4) instruction to vote “for”, “against” or “abstention” in respect of each matter on the agenda
of the shareholders’ general meeting;
(5) whether or not the proxy has the right to vote in connection with the ex tempore motions
which may be put on the agenda of the AGM and, if so, specific instructions on how to
exercise such voting right;
(6) the date of signing and the term for such proxy form;
(7) signature (or seal) of the principal or its proxy who is appointed in writing and, where the
principal is a legal person, the official stamp of such legal person or the signature of its
director or its duly appointed agent. The proxy form shall expressly state that the proxy
entrusted by the shareholders may cast vote at its own discretion in the absence of any
specific instruction from the shareholder.
Article 31 The proxy form shall be lodged at the place of domicile or such place as specified in
the notice of convening the meeting at least 24 hours before convening the meeting for which votes
will be cast under the proxy form or 24 hours before the specified voting time. In the event that such
proxy form is caused to be signed under a power of attorney issued by the principal, such power of
attorney or other authorization documents related thereto shall be notarised. The notarised power of
attorney or other authorization documents together with the proxy form shall be lodged at place of
domicile of the Company or other place as specified in the notice of convening the meeting.
Article 32 Shareholders attending the shareholders’ general meeting shall be registered. The
following documents shall be provided respectively for the purposes of shareholders’ registration at
the meeting:
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(1) Natural person shareholders: present their share account cards, identity cards or other valid
documents evidencing their identity, or provide other proofs that enable the Company to
confirm his status as a shareholder; in case of attending the meeting by proxies, such
proxies shall present their identity cards, the proxy forms, and provide documents that
enable the Company to confirm the principal’s status as a shareholder.
(2) Legal person shareholders: in case of attending the meeting by legal representatives, the
legal representatives shall present their share account cards, identity cards and other valid
documents evidencing their identity, or provide other proofs that enable the Company to
confirm their qualification to act as legal representatives; in case of attending the meeting
by proxies, such proxies shall present their identity cards, proxy forms issued by the legal
representatives of the legal person shareholders according to law or notarized copies of the
authorization and resolutions by the board of directors or other decision-making bodies of
the legal person shareholders, and provide documents that enable the Company to confirm
their status as the legal person shareholders.
Article 33 Contents subject to be registered in connection with the shareholders or proxies who
attend the shareholders’ general meeting include:
(1) confirmation of the identities of the shareholders or their proxies;
(2) the requests to speak together with a description of the content of the speeches, if any;
(3) the number of votes which the shareholders or their proxies may exercise in accordance
with the number of shares they held/represented;
(4) new motions, if any.
Article 34 In the event that a shareholder or its proxy requests to speak at the shareholders’
general meeting, it shall, to the fullest extent as possible, register with the Company before convening
the shareholders’ general meeting.
Article 35 In the event of convening an extraordinary general meeting, the Company shall not
accept registration of the new motions and the Chairman of the meeting shall not add such new
motions into the meeting agenda.
Section 4 Convening the meeting
Article 36 Independent directors shall have the right to propose to the board of directors to
convene the extraordinary general meeting. For a motion put forward by independent directors to
request the convening of the extraordinary general meeting, the board of directors shall give written
feedback as regards whether it agrees or disagrees to convene the extraordinary general meeting within
10 days after receiving the motion in accordance with the law, administrative regulations and the
Articles of Association. However, if more than one-half of the independent directors propose to
convene the meeting, the board of directors shall convene the extraordinary general meeting in
accordance with the Articles of Association.
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If the board of directors agrees to convene the extraordinary general meeting, it shall give notice
of the shareholders’ general meeting within two days after the resolution of the board of directors is
made. If the board of directors disagrees to convene the extraordinary general meeting, it shall give
reasons and make an announcement.
Article 37 The supervisory committee has the right to propose to the board of directors to
convene the extraordinary general meeting and can sign one or several copies of the written request
with the same format and content to state the subject of the meeting. At the same time, it shall submit
in writing the motions in compliance with the preceding article of these Rules to the board of
directors. The board of directors shall give written feedback as regards whether it agrees or disagrees
to convene the extraordinary general meeting within 10 days after receiving the motion in accordance
with the law, administrative regulations and the Articles of Association.
If the board of directors agrees to convene the extraordinary general meeting, it shall give notice
of the shareholders’ general meeting within two days after the resolution of the board of directors is
made. Any change in the original request as stated in the notice shall be approved by the supervisory
committee.
If the board of directors disagrees to convene the extraordinary general meeting, or does not give
any written feedback within 10 days after receiving the motion, the board of directors shall be deemed
as being unable to perform or not performing the duty of convening the shareholders’ general meeting.
The supervisory committee can convene and preside over the meeting on its own.
Article 38 Shareholders individually or jointly holding more than 10% of the shares of the
Company shall have the right to request the board of directors to convene the extraordinary general
meeting and can sign one or several copies of the written request with the same format and content
to state the subject of the meeting and shall at the same time propose to the board of directors in
writing. The board of directors shall give written feedback as regards whether it agrees or disagrees
to convene the extraordinary general meeting within 10 days after receiving the request in accordance
with the law, administrative regulations and the Articles of Association.
If the board of directors agrees to convene the extraordinary general meeting, it shall give notice
of the shareholders’ general meeting within two days after the resolution of the board of directors is
made. Any change in the original request as stated in the notice shall be approved by the relevant
shareholders.
If the board of directors disagrees to convene the extraordinary general meeting, or does not give
any feedback within 10 days after receiving the request, shareholders individually or jointly holding
more than 10% of the shares of the Company shall have the right to propose to the supervisory
committee to convene the extraordinary general meeting and shall file a request with the supervisory
committee in writing.
In the event that the board of directors does not convene a shareholders’ general meeting within
30 days after receiving a written request to convene the shareholder’s general meeting made by
shareholder(s) who, individually or jointly, hold more than 10% (inclusive) of the total issued and
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outstanding shares of the Company, the proposing shareholder(s) may convene an extraordinary
general meeting on their own within 4 months after the receipt by the board of directors of such
request. Before the announcement of the resolution of the shareholders’ general meeting, the
shareholding of convening shareholder(s) shall not be less than 10%.
In the event that the proposing shareholder(s) decide to convene such meeting on their own, they
shall inform the board of directors in writing, and thereafter give notice of convening the
extraordinary general meeting. In addition to the general requirements governing the notice of the
shareholders’ general meeting, such notice shall also be subject to the following requirements:
(1) No new item shall be added to the proposed motions. Otherwise, the proposing
shareholder(s) shall resubmit to the board of directors the request to convene the
shareholders’ general meeting;
(2) The meeting shall be convened at the place of domicile of the Company.
If the supervisory committee agrees to convene the extraordinary general meeting, it shall give
notice of the extraordinary general meeting within two days after receiving the request. Any change
in the original request as stated in the notice shall be approved by the relevant shareholders.
If the supervisory committee fails to give notice of the shareholders’ general meeting within the
stipulated deadline, it shall be deemed as not convening and presiding over the shareholders’ general
meeting. Shareholders individually or jointly holding more than 10% of the shares of the Company for
more than 90 days in a row can convene and preside over the meeting on their own.
Article 39 If the supervisory committee or shareholders decides to convene the shareholders’
general meeting on their own, they shall notify the board of directors in writing, and shall register for
the record with the local agencies of CSRC and the stock exchange at the place of domicile of the
Company.
Before the announcement of the resolution of the shareholders’ general meeting, the shareholding
of the proposing shareholder(s) shall not be less than 10%.
When issuing the notice of the shareholders’ general meeting and making an announcement on
the resolution of the shareholders’ general meeting, the supervisory committee and the proposing
shareholder(s) shall submit the relevant supporting documents to the local agencies of CSRC and the
stock exchange at the place of domicile of the Company.
Article 40 For shareholders’ general meetings convened by the Supervisory Committee or
shareholders on their own, the board of directors and the secretary of the board of directors shall offer
cooperation. The board of directors shall provide the register of members as at the shareholding record
date. In the event that the board of directors has not provided the register of members, the convenor
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can apply to the securities registration and settlement institution for the register of members by
submitting the relevant announcement on the notice of the shareholders’ general meeting. The register
of members obtained by the convenor shall not be used for purposes other than convening the
shareholders’ general meeting.
Article 41 For shareholders’ general meetings convened by the Supervisory Committee or
shareholders on their own, the expenses required for the meetings shall be borne by the Company.
Article 42 The Company shall convene the shareholders’ general meeting at the place of
domicile of the Company or at the place stipulated in the Articles of Association.
The shareholders’ general meeting shall set up the meeting place and convene the meeting in the
form of spot meeting. The Company can make use of a safe, economic, convenient network or other
methods to offer convenience to shareholders attending the shareholders’ general meeting.
Shareholders who attend the shareholders’ general meeting through the above methods are deemed as
being present at the meeting.
If the shareholders’ general meeting of the Company makes use of a network or other methods,
it shall state clearly the voting time and the voting procedure for the network or other methods in the
notice of the shareholders’ general meeting.
The time for the commencement of voting through a network or other methods at the
shareholders’ general meeting shall not be earlier than 3:00pm on the day immediately before the
convening of the shareholders’ general meeting on site and shall not be later than 9:30am on the day
the shareholders’ general meeting is convened on site. Its conclusion time shall not be earlier than
3:00pm on the day the shareholders’ general meeting concludes on site.
Article 43 The Chairman of the board of directors shall preside over, and act as Chairman of,
the shareholders’ general meeting; if for any reason the Chairman of the board of directors is unable
or fails to perform his/her duties, the vice chairman of the board of directors shall preside over the
meeting; if for any reason the vice chairman of the board of directors is unable or fails to perform
his/her duties, a director jointly elected by more than half of the directors shall preside over the
meeting.
In the event that both the Chairman and the vice chairman of the board of directors are unable
to attend the meeting and the Chairman has not appointed any other director as Chairman of the
meeting, the board of directors may appoint a director of the Company to be the Chairman of the
meeting; in the event that the board of directors has not appointed the Chairman of the meeting,
shareholders attending the meeting may elect one person among them to become the Chairman of the
meeting; in the event that shareholders are for any reason unable to elect a Chairman, the shareholder
who attends the meeting with the highest number of voting shares (including his proxy) shall then
become the Chairman of the meeting.
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Shareholders’ general meetings convened by the Supervisory Committee on its own shall be
presided over by the Chairman of the Supervisory Committee. In the event that the Chairman of the
Supervisory Committee is unable or fails to perform duties, the meeting can be presided over by other
supervisors designated by the Chairman of the Supervisory Committee on his/her behalf.
Shareholders’ general meetings convened by shareholders on their own shall be presided over by
the representative elected by the convenor. The board of directors and the secretary of the board of
directors shall earnestly perform their duties. Directors and supervisors shall attend the meeting. The
secretary of the board of directors shall attend the meeting and ensure the proper order of the meeting.
The meeting can also be presided over and chaired by the Chairman of the board of directors. If the
Chairman of the board of directors is unable to attend the meeting for some reasons, the vice-chairman
of the board of directors shall act as the Chairman of the meeting. If the Chairman of the board of
directors and the vice-chairman of the board of directors are unable to attend the meeting, and the
Chairman of the board of directors has not designated the Chairman of the meeting, the board of
directors can designate one director of the Company to act as the Chairman of the meeting. If the board
of director has not designated one director to chair the shareholders’ general meeting, the shareholder
who makes the motion shall preside over the meeting.
In the event of convening the shareholders’ general meeting, if the above meeting presider
violates the rules of procedures such that the shareholders’ general meeting cannot proceed, upon
consent of more than half of the shareholders having voting rights attending the shareholders’ general
meeting on site, the shareholders’ general meeting can elect one person to act as the meeting presider
to continue to hold the meeting.
Article 44 After declaring the meeting officially open, the Chairman of the meeting shall first
announce the number of shareholders and proxies attending the meeting and the total number of voting
shares they hold and state whether the number of attendees and the voting right share meet the legal
requirements. Thereafter, he shall read out the agenda as set out in the notice and inquire whether or
not the shareholders attending the meeting have any objection to the voting order for the motions.
In the event that the board of directors or the Chairman of the meeting determines not to put such
motions as proposed by the supervisory committee or the shareholders on the agenda of the AGM, an
explanation or description relating thereto shall be given during such AGM.
At an extraordinary general meeting, no person shall have the right to request consideration of
any new motion which has not been contained in the notice of the shareholders’ general meeting.
Article 45 After the Chairman of the meeting finishes his inquiries on the meeting agenda, he
may start to read the motions or authorise a person to read them out and, when necessary, make an
explanation on the motions in accordance with the following requirements:
(1) in the event that the motion is proposed by the board of directors, the Chairman of the board
of directors or other persons entrusted by him shall make an explanation in relation thereto;
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(2) in the event that the motion is proposed by a legal person shareholder, its legal
representative or a proxy who is lawfully and validly authorized by it shall give an
explanation in relation thereto. If the motion is proposed by an individual shareholder, then
the said person or a proxy who is lawfully and validly authorized by a shareholder shall
give an explanation in relation thereto.
(3) in the event that the motion is proposed by the Supervisory Committee, the person entrusted
by the Supervisory Committee shall give an explanation in relation thereto.
Article 46 Motions which are included on the meeting agenda shall be considered before voting.
Each motion shall be given a reasonable time for discussion during the shareholders’ general meeting.
The Chairman of the meeting shall orally inquire whether shareholders attending the meeting have
finished considering such motions. In the event that the shareholders attending the meeting have no
objection in connection therewith, consideration of the motions shall be deemed completed.
Article 47 A shareholder requesting to speak shall to the fullest extent as possible not interrupt
a person from presenting his report or interrupt other shareholders from making their speech.
Article 48 Shareholders may query the Company during the shareholders’ general meeting. The
Chairman of the meeting shall direct the directors, supervisors or senior management to respond to or
provide explanations or descriptions in connection with queries raised by shareholders, except
questions relating to the commercial secrets of the Company which shall not be disclosed during the
shareholders’ general meeting.
Article 49 At the AGM, the board of directors, and the supervisory committee shall report to the
shareholders’ general meeting as regards their work over the past year. Each independent director shall
also report their work.
Section 5 Voting and resolutions
Article 50 Shareholders’ general meetings shall pass resolutions on specific motions.
Article 51 Matters not covered in the notice of an extraordinary shareholders’ general meeting
shall not be resolved upon at the meeting, In the course of considering the content of the motions as
set out in the notice of extraordinary general meeting, no alteration shall be made to motions relating
to the following issues:
(1) an increase or reduction of the registered capital;
(2) the issuance of corporate bonds;
(3) division, merger, dissolution or liquidation of the Company;
(4) amendments to the Articles of Association;
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(5) plans for profit distribution and for making up losses of the Company;
(6) appointment or removal of the members of the board of directors and supervisory
committee;
(7) changes in the use of proceeds from share offerings;
(8) connected transactions which are subject to being considered during the shareholders’
general meeting;
(9) matters relating to the acquisition or sale of assets which are subject to being considered
during the shareholders’ general meeting;
(10) changing of the accounting firm.
Any change of the above contents of motions shall be deemed to be a new motion, which shall
not be voted at the then shareholders’ general meeting.
The shareholders’ general meeting shall vote on all motions that are put on the agenda
one-by-one. Except for special reasons such as force majeure which lead to suspension of the
shareholders’ general meeting or its failure to reach a resolution, voting of the same shall neither be
put on hold nor be refused for any reason. In the event that different motions are proposed for the same
matters in the AGM, voting on such motions shall be conducted based on the order of the time of
proposing such motions.
Article 52 The Chairman of the meeting is obliged to demand a poll on the motions at the
shareholders’ general meeting by open ballot. Each shareholder or its proxy shall exercise its voting
right on the basis of the number of the voting shares represented. Except for voting on the motions
in accordance with the Article 107 under the Articles, each share shall have the right to one vote.
If pursuant to the requirements under the HKSE Listing Rules, a shareholder (including its
proxy(ies)) shall abstain from voting or may only vote “for” or “against” a resolution, then votes in
violation to the aforesaid requirements shall be invalid.
Article 53 In the election of directors by the shareholders’ general meeting, if there are more
than two candidates, each share held by shareholders (including its proxies) shall have the same voting
rights as the candidates, and they can either concentrate all the votes to elect one person or separate
the votes to elect a number of persons, but shall make explanations on such distribution of the voting
rights.
Article 54 In considering the motions in connection with the election of directors or supervisors
at a shareholders’ general meeting, voting shall be conducted on each of the candidates for director
or supervisor one by one.
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Article 55 Resolutions of the shareholders’ general meeting shall be classified as ordinary
resolutions and special resolutions.
(1) Ordinary resolutions
1. An ordinary resolution at a shareholders’ general meeting shall be passed by votes
representing more than one-half of the voting rights represented by the shareholders
(including proxies authorized by the shareholders) attending the meeting.
2. The following matters shall be resolved by an ordinary resolution at a shareholders’ general
meeting:
(1) working reports of the board of directors and the supervisory committee;
(2) plans for profit distribution and recovery of losses prepared by the board of directors;
(3) matters relating to methods of appointment and removal of the members of the board
of directors and the shareholder representative supervisor and the methods for paying
their remuneration;
(4) the annual budget, final report, balance sheet, profit and loss statements and other
financial statements of the Company;
(5) matters other than those required by law, administrative regulations or the Articles of
Association to be adopted by special resolutions; and
(6) other matters as required under the HKSE Listing Rules, other than those requiring
special resolutions.
(2) Special resolutions
1. A special resolution at a shareholders’ general meeting shall be passed by votes
representing more than two-thirds of the voting rights represented by the shareholders
(including proxies authorized by the shareholders) attending the meeting;
2. The following matters shall be resolved by a special resolution at a shareholders’ general
meeting:
(1) an increase or reduction of the share capital of the Company and the issue of any class
of shares, warrants and other similar securities;
(2) issuance of corporate bonds;
(3) division, merger, dissolution or liquidation of the Company, changing the form of the
Company and material acquisition or disposal;
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(4) amendment to the Articles of Association;
(5) any other matter, being considered at a shareholders’ general meeting by way of an
ordinary resolution, which may have a material impact on the Company and which is
necessary to be adopted by a special resolution; and
(6) other matters requiring to be passed by special resolutions as required by the HKSE
Listing Rules.
Article 56 Affected class shareholders shall have the right to vote on matters involving
sub-paragraphs (2) to (8), (11), (12) of Article 134 hereof, regardless of whether or not they originally
have the right to vote at the class meeting for class shareholders, provided that interested shareholders
shall not have any right to vote at the class meeting for the class shareholders. The term “interested
shareholders” mentioned in the preceding paragraph shall mean:
(1) In the event that the Company repurchases its own shares by way of a general offer to all
shareholders in proportion to their respective shareholdings or through a public dealing on
a stock exchange in accordance with Article 34 of the Articles of Association, “interested
shareholders” mean such controlling shareholders as defined in Article 64 of the Articles
of Association;
(2) In the event that the Company repurchases its own shares by a off-market agreement in
accordance with Article 34 of the Articles of Association, “interested shareholders” mean
the shareholders to whom such agreement relates;
(3) Under the proposed restructuring of a Company, “interested shareholders” mean the
shareholders who assume the liability thereof in a proportion less than that assumed by
other holders of the same class of shares or who have a different interest to other holders
of the same class of shares.
Article 57 A resolution of the class shareholders at a class meeting shall only be passed by votes
representing more than two-thirds of the voting rights represented by the shareholders attending the
class meeting in accordance with the preceding article.
The special procedures for voting by class shareholders shall not apply to the following
circumstances:
(1) where upon approval by a special resolution at a shareholders’ general meeting, the
Company issues, either separately or simultaneously, once every 12 months domestic shares
and overseas-listed foreign-invested shares and the proposed numbers of domestic shares
and overseas listed foreign-invested shares shall not exceed 20% of their respective issued
and outstanding shares;
(2) the plan to issue domestic shares and overseas-listed foreign-invested shares during the
establishment of the Company are completed within fifteen months from the date of
approval by the securities regulatory authority of the State Council;
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(3) Shares held by holders of domestic shares are transferred to overseas investors under the
approval by the securities regulatory authority of the State Council, and are dealt with on
overseas stock exchanges.
Article 58 In the course of considering matters relating to the connected transactions at a
shareholders’ general meeting, the connected shareholders shall abstain from voting. The voting rights
represented by the number of shares of such shareholders shall be excluded from the total number of
valid votes. The voting result of the non-connected shareholders shall be fully disclosed in the
announcement of the resolution of the shareholders’ general meeting.
Shares held by the Company do not have voting rights and this portion of shares shall not be
counted in the total number of voting shares at the shareholders’ general meeting.
Article 59 Shareholders and their proxies shall, as required, carefully complete the ballot papers
and put such ballot papers into a ballot box. Any ballot paper which is left blank or is not duly
completed or the handwriting thereon is found to be illegible or which is not cast shall be deemed to
be an abstention of voting by the shareholder and the votes represented thereon shall not be counted
in the total number of valid votes.
Article 60 Without prejudice to the requirements under the HKSE Listing Rules, before a poll
begins, shareholders attending the meeting shall elect among themselves at least one supervisor and
one shareholders’ representative to act as the counting officers. Votes shall be counted on the spot and
the counting officers shall sign on the statistical information relating thereto.
When the shareholders’ general meeting votes on the motions, the lawyer, the shareholder
representative and the supervisor representative shall be jointly responsible for counting the votes and
scrutinizing balloting.
Shareholders of the Company or its proxies voting through a network or other methods shall have
the right to check their voting results through the corresponding voting system.
For same voting rights, only one of the voting methods, i.e. on site, network or otherwise, can
be chosen. For repeated voting in case of same voting rights, the result of the first voting shall prevail.
Article 61 The time for the conclusion of the shareholders’ general meeting held on site shall not
be earlier than that held through a network or other methods. The Chairman of the meeting shall be
responsible for making an announcement at the meeting on whether or not a resolution is passed by
the shareholders’ general meeting according to the results of the poll counted by the counting officers,
and shall record the same in the minutes.
Before the official announcement of the voting result, the relevant parties such as the Company,
tally clerk, scrutineer, substantial shareholders, network service party involved in on-site voting and
voting through a network and other methods at the shareholders’ general meeting shall have the
obligations to keep confidential the voting result.
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Article 62 If the shareholders’ general meeting passes the resolution on the election of directors
and supervisors, the newly appointed directors and supervisors shall assume office in accordance with
the Articles.
Article 63 If the shareholders’ general meeting passes the motion of distribution of cash dividend
and bonus shares or conversion of the capital surplus reserve into share capital, the Company shall
implement the specific plan within two months following the conclusion of the shareholders’ general
meeting.
Article 64 The resolution of the shareholders’ general meeting of the Company shall be rendered
invalid if it is in violation of the law, administrative regulations.
If the procedure for convening the meeting and the method of the voting of the shareholders’
general meeting are in violation of the law, administrative regulations or the Articles, or the content
of the resolution is in violation of the Articles of Association, shareholders can request the People’s
Court to withdraw the resolution within 60 days from the date of the resolution.
Article 65 The secretary of the board of directors shall be responsible for recording the minutes
of the shareholders’ general meeting. The minutes shall contain the following contents:
(1) the number of shareholders and proxies attending the general meeting, the total number of
voting shares held, and the proportion of such shares in the total number of shares of the
Company;
(2) the date and place of the meeting;
(3) the name of the Chairman of the meeting and the agenda of the meeting;
(4) the names of the Chairman of the meeting and directors, supervisors, secretary of the board
of directors, managers and other senior management attending or present at the meeting;
(5) the consideration process, highlights of speeches and results of the poll in respect of each
motion proposed by the persons who speak at the meeting;
(6) details of the inquiries, opinions and recommendations of the shareholders and the
responses or explanations from the directors and supervisors;
(7) the names of lawyers, vote counters and scrutineers;
(8) other matters which according to the opinions of the shareholdings’ general meeting and the
provisions of the Articles shall be recorded in the minutes.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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Directors, the secretary of the board of directors, the meeting convenor and the meeting presider
attending the meeting shall sign their names on the minutes and ensure that the contents of the minutes
are true, accurate and complete. The minutes shall be kept together with the book of signatures of
shareholders attending the meeting on site, the power of attorney and valid information on voting
through a network and other methods for a term of not less than 10 years.
Section 6 Adjournment of meeting
Article 66 The board of directors of the Company shall ensure that the shareholders’ general
meeting is held continuously within a reasonable working time until reaching the final resolutions.
Article 67 If, in the course of the meeting, disputes arising out of the identity of any shareholder
or the results of the calculation of the votes and so on cannot be resolved on site in such a way that
the order of the meeting is affected and the meeting cannot proceed as usual, the Chairman of the
meeting shall declare an adjournment of the meeting. If the foregoing circumstances cease to exist,
the Chairman of the meeting shall notify the shareholders of the resumption of the meeting as soon
as possible.
Article 68 In the event that the shareholders’ general meeting has been adjourned for more than
one working day due to event of force majeure or other unforeseeable reasons such that the meeting
fails to convene as usual or fails to reach any resolution, the board of directors of the Company is
obliged to take necessary measures to resume the shareholders’ general meeting as soon as possible
or directly terminate the meeting, and at the same time, shall explain to the stock exchange the reasons
and make an announcement in a timely manner.
Section 7 Post-meeting issues and announcement
Article 69 After the shareholders’ general meeting the secretary of the board of directors shall
be responsible for submitting the relevant materials including minutes and resolutions to the relevant
regulatory authorities and making an announcement (if required by law, or HKSE Listing Rules, SSE
Listing Rules, Guidelines for the Articles of Association) in the designated media in accordance with
the relevant laws and regulations and as required by the securities regulatory authority under the State
Council and the stock exchanges upon which the shares of the Company are listed.
Article 70 The number of shareholders or their authorized proxies attending the meeting, the
total number of voting shares held by such shareholders or represented by such proxies and the
proportion thereof to the total number of voting shares of the Company, the voting method, the results
of the polls for every motion and the details regarding the passing of all motions shall be stated clearly
in the announcement of the resolutions of the shareholders’ general meeting. For resolutions of a
motion proposed by a shareholder, the name and the shareholding of the proposing shareholder
together with the contents of the motion shall be specified.
In the event that the board of the directors or the Chairman of the meeting decides not to include
the motion proposed by the supervisory committee or the shareholders into the agenda of the AGM,
the board of directors or the Chairman of the meeting shall explain and specify the reasons during the
AGM. The content of such motion and the statement made by the board of directors shall, together
with the resolutions of the AGM, be announced after the AGM.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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In the event that a motion in connection with the meeting has not been adopted or the resolutions
of the preceding shareholders’ general meeting have been changed at the current shareholders’ general
meeting, the board of directors shall specify the same in the announcement of the resolutions of the
shareholders’ general meeting. The announcement of the resolutions of the shareholders’ general
meeting shall be published in the designated newspapers or on the Company’s website.
Article 71 The secretary of the board of directors shall be responsible for keeping written
materials, including the register of the attendees of the meeting, the proxy forms, statistical
information relating to the voting, minutes, announcement of resolutions and etc.
CHAPTER 5 SUPPLEMENTARY PROVISIONS
Article 72 These rules shall become effective after being adopted by the shareholders’ general
meeting.
Article 73 Any modification to these Rules shall be made by way of amendments proposed by
the board of directors and submitted to the shareholders’ general meeting for approval by way of an
special resolution.
Article 74 The board of directors shall be responsible for the interpretation of these Rules.
Article 75 The terms of “above” and “below” referred to in these Rules shall include the number
concerned while terms of “exceed” and “less than” do not include the number concerned.
Article 76 In the event that any matter not covered herein or these Rules contradict to or are
inconsistent with the provisions and requirements of laws, administrative regulations, other relevant
regulatory documents, HKSE Listing Rules, SSE Listing Rules, Articles of Association and the
relevant regulatory authorities as promulgated from time to time, the provisions and requirements of
such laws, administrative regulations, other relevant regulatory documents, HKSE Listing Rules, SSE
Listing Rules, Articles of Association and the relevant regulatory authorities shall prevail.
Article 77 These rules serve to clarify those matters not covered in the Articles of Association
and increase the efficiency of the procedure for shareholders’ general meeting and are a guiding
document. Any provisions and terms contained in these Rules shall not affect the provisions of the
Articles of Association and shareholders’ rights (whether these are legal rights or rights under the
Articles of Association or any other rights).
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING
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CHAPTER 1 GENERAL PROVISIONS
Article 1 These Rules are formulated in accordance with the regulatory rules of the listing
places both in the PRC and overseas, such as the Company Law of the People’s
Republic of China (the “Company Law”), Securities Law of the People’s Republic of
China (the “Securities Law”), Mandatory Provisions for the Articles of Association of
Companies Listed Overseas (“Mandatory Provisions”), Guide to Articles of
Association of Listed Companies (“Guide to Articles of Association”), Standards for
the Governance of Listed Companies (“Standards for Governance”), Rules Governing
the Listing of Securities on the Shanghai Stock Exchange (“SSE Listing Rules”),
Rules Governing the Listing of Securities on The Hong Kong Stock Exchange Limited
(“Stock Exchange Listing Rules”) and other relevant laws and regulations and the
Articles of Association of China Coal Energy Co., Ltd. (the “Articles of Association”)
and the Rules of Procedures for the Shareholders’ General Meeting of China Coal
Energy Co., Ltd., in order to regulate the rules of procedures and decision-making
procedures of China Coal Energy Co., Ltd. (the “Company”), to ensure the Board of
Directors effectively fulfills the duties, and to improve the standardized operations
and scientific decison-making level.
CHAPTER 2 FUNCTIONS, POWERS AND AUTHORIZATION OF THE BOARD
Article 2 The Board shall be responsible to the shareholders’ general meeting and exercise the
following functions and powers:
(I) to be responsible for convening shareholders’ general meetings and report on its
work to the shareholders’ general meeting;
(II) to implement the resolutions passed at the shareholders’ general meeting;
(III) to determine the Company’s business plans and investment plans;
(IV) to formulate the Company’s annual budgets and final accounts;
(V) to formulate the Company’s profit distribution proposals and loss recovery
proposals;
(VI) to formulate the proposals for increase or reduction of the Company’s registered
capital, and proposals for issue of the Company’s bonds;
(VII) to formulate proposals for material acquisitions, repurchase of shares of the
Company, merger, division, dissolution or transformation of the Company;
(VIII) to decide on the establishment of the Company’s internal management bodies;
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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(IX) to appoint or dismiss the Company’s president (general manager), chief financial
officer (chief executive officer) and secretary of the Board; to appoint or dismiss
the Company’s vice president (vice general manager) as nominated by the
president (general manager) and determine their remunerations;
(X) to approve the basic management system of the Company;
(XI) to formulate the proposals for any amendment to the Articles of Association;
(XII) to manage disclosure of information of the Company;
(XIII) to determine the establishment of special committees and designate and dismiss
related persons in charge thereof;
(XIV) to propose to the shareholders’ general meeting to appoint or replace the
accounting firm;
(XV) to listen to the work report of the president (general manager) of the Company
and examine the related work;
(XVI) with the authority granted by the shareholders’ general meeting, to determine the
Company’s external investment, acquisition of sale assets, disposal of assets,
external guarantees, entrusted asset management, and connected transactions,
and handled the same in accordance with the listing rules of the security
regulatory authorities and the stock exchange located in the place that the
company list the stock;
(XVII) to exercise other functions and powers as stipulated by laws, regulations and the
listing rules of the place where the Company is listed or conferred by the general
meetings and the Articles of Association.
Article 3 Preconditions for the Board to fulfill its duties:
The president (general manager) shall provide the Board with necessary information
and data so that the Board can make prompt and prudent decisions.
The Board may require the president (general manager), or through the president
(general manager), require the related departments of the Company to provide
necessary data and explanations for the Board to make decisions.
Independent directors may, if they consider it necessary, appoint an independent
institution to produce independent opinions as a basis for decision making and the
expenses for the independent institution shall be borne by the Company.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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Article 4 The Board shall deliberate and resolve on matters which, in accordance with the
provisions of the laws, administrative regulations, rules of competent departments and
the Articles of Association, require approval by the general meetings as proposed by
the Board. The Board of Director should act strictly under the authorisation of the
Shareholders’ General Meeting and the Articles of Association and it shall not pass
any resolution beyond such authorisation.
The Board shall deliberate provisional proposals proposed by shareholders severally
or jointly holding more than 3% of the Company’s voting shares at annual general
meetings in accordance with Rules of Procedure for Shareholders’ General Meeting,
and decide whether to submit the said proposals to the annual general meetings for
deliberation:
Article 5 To improve the daily operation efficiency of the Company, the Board may specify the
functions and powers concerning the investment plans, asset disposal, external
guarantee, corporate debts, financial policies and organization structure of the
Company and grant the said functions and powers to the Chairman of the Board, other
one or several directors or the president (general manager) in accordance with the
Articles of Association and Rules of Procedure for Shareholders’ General Meeting and
upon authorization of the general meetings.
Article 6 The Board has the right which is not specified by the Articles and these Rules to be
exercised by the shareholders’ general meeting to decide on important matters relating
to the Company’s development strategy, operation management, financial audit and
human resource management.
Article 7 Powers and authorization to decide on investment:
(I) The Board shall be responsible for reviewing the medium/long-term
development plans and annual investment plans of the Company and submit the
same to the general meetings for approval.
(II) The Board may adjust no more than 15% (inclusive) of the annual capital
expenditure amount approved by the general meeting for the year and authorize
the Chairman to adjust no more than 10% (inclusive) of the annual capital
expenditure amount approved by the general meeting.
(III) The Board may examine and approve a single investment project (including but
not limited to exploration and development, fixed assets and external equity
investment) whose amount is no greater than 15% (inclusive) of the latest
audited net asset value of the Company, and authorize the Chairman to examine
and approve a single investment project whose amount is no greater than 10% of
the latest audited net asset value of the Company.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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(IV) The Board may examine and approve a single venture investment project
(including but not limited to bonds, futures and stock) which uses the assets of
the Company but is unrelated to the business of the Company and the amount of
which is no greater than 2% (inclusive) of the latest audited net asset value of
the Company, and authorize the Chairman to examine and approve a single
investment project whose amount is no greater than 1% (inclusive) of the latest
audited net asset value of the Company.
(V) Right of selection of new business opportunities and preemptive rights of new
business.
Only independent non-executive directors have the right to vote on decisions
made by the Board concerning avoidance of intra-industry competition,
including selection of new business opportunities and preemptive rights of new
businesses of China National Coal Group Corporation.
(VI) The rights and authorization of the Chairman relating to the aforesaid
investments all cover investments within the scope of main business of the
Company. Investments outside the scope of mainline business of the Company
and exceeding 5% of the annual investment amount of the Company shall be
subject to examination and approval of the Board, while investments not
exceeding 5% of the annual investment of the Company shall be subject to the
approval by the Chairman.
(VII) If the aforesaid investment rights and authorization involve “transactions to be
disclosed” as specified in the Stock Exchange Listing Rules and any of the
results of the five scale tests is greater than 25%, examination and approval of
the shareholders’ general meeting are required.
Article 8 Powers and authorization to decide on asset disposal:
(I) In conducting “transactions to be disclosed” (including but not limited to
purchase and sale of equity, tangible assets and other property rights) as
specified in the Listing Rules, the Company shall calculate the following five
test indices (“the five ratios”) as judgment standards as provided for in the Stock
Exchange Listing Rules:
(1) Total assets test:Total assets involved in transactions
X 100%Total consolidated assets (including
intangible assets) of the listed company
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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(2) Return test:
Profit from assets involved
in related transactions x 100%
Consolidated profit of the listed company
(3) Consideration-to-total:
market value test:Total consideration to be paid x 100%
Total market value of the listed
company
(4) Newly issued
equity test:
Value of equity to be issued by the listed
company as transaction considerationx 100%
Value of equity already issued
by the listed company
(5) Profit test:Profit from assets involved in transactions
x 100%Consolidated profit of the listed company
Based on the test results, the related transactions can be divided as per the following
standards:
Type of transaction Assets ratio
Consideration
ratio Profit ratio Return ratio Equity ratio
Very substantial acquisition P�100% P�100% P�100% P�100% P�100%
Very substantial disposal P�75% P�75% P�75% P�75% N/A
Major transaction —
acquisition 25%�P<100% 25%�P<100% 25%�P<100% 25%�P<100% 25%�P<100%
Major transaction —
disposal 25%�P<75% 25%�P<75% 25%�P<75% 25%�P<75% N/A
Transactions to be disclosed 5%�P<25% 5%�P<25% 5%�P<25% 5%�P<25% 5%�P<25%
Equity transaction P<5% P<5% P<5% P<5% P<5%
Note: P is the resulting percentage of scale tests
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
— 76 —
Different transactions shall be subject to the examination and approval procedures in
accordance with the Stock Exchange Listing Rules:
Type of transaction Notify SEHK
Announce on
newspapers
Send
circular to
shareholders
Approval by
shareholders
Accountants’
Report
Very substantial acquisition Required Required Required Required Required
Very substantial disposal Required Required Required Required Required
Major transaction —
acquisition Required Required Required Required Required
Major transaction —
disposal Required Required Required Required Required
Transactions to be disclosed Required Required Required Not required Not required
Equity transaction Required Required Not Required Not required1 Not required
Reverse takeover Required Required Required Required Required
Note 1: Unless the directors of the Company have not obtained the shareholders’ general mandate to issue
securities or the consideration of the related transaction exceeds the range of general
authorization, transactions whose scale test percentage is smaller than 25% and which are no
equity transactions do not require approval by general meetings.
Except for the matters which require the consideration and approval of the
shareholders’ general meeting under the security regulatory provisions of the place
where the company list the stock, such as the listing rules of the Hong Kong Stock
Exchange, the Guidance of the Articles of Association and the listing rules of
Shanghai Stock Exchange, or the Articles of Association or these rules of procedures,
the Board is authorised to examine and approve other matters.
(II) Subject to Clause (I) of this article, the Board shall examine and approve
disposal of fixed assets if the sum of the expected value of the fixed assets to be
disposed of and the value derived from the disposal of fixed assets within 4
months before such proposal of the fixed assets is not greater than 33%
(inclusive) of the value of fixed assets as shown on the balance sheet most
recently considered and approved by the general meeting; or authorize the
Chairman to examine and approve if the percentage is not greater than 10%
(inclusive). Disposals of the fixed assets under this Clause include transfer of
some asset interests, but do not include guarantee provided by pledge of fixed
assets.
(III) In other aspects (including but not limited to conclusion, amendment and
termination of important contracts on operation on consignment, operation on
entrustment, financial management on consignment, contracting and lease), the
five ratios as set out herein shall be calculated based on the value involved or the
value accumulated in 12 months.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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Subject to Clause (I) of this article, the Board shall examine and approve
projects whose any of the aforesaid ratios is not greater than 5% (inclusive) or
authorize the Chairman to examine and approve projects whose any of the
aforesaid ratios is no greater than 1%.
(IV) The rights and authorization relating to the aforesaid disposal of investments all
cover disposal of assets within the scope of mainline business of the Company.
Disposal of assets outside the scope of business of the Company and exceeding
5% of the annual investment amount of the Company shall be subject to
examination and approval of the Board and those not exceeding 5% of the annual
investment amount of the company shall be considered and approved by the
Chairman of the Board.
Article 9 Powers and authorization to decide on debts and guarantees:
(I) The Board examines and approves the long-term or short-term loan plan of the
year according to the annual investment plan approved by the general meeting;
authorizes the Chairman to make no more than 20% adjustment of the long-term
or short-term loan plan of the year approved by the Board; authorizes the
Chairman to examine and approve a single loan no more than
RMB1,000,000,000 within the long-term or short-term loan plan of the year
approved by the Board;
(II) The following external guarantees shall be subject to approval by shareholders’
general meeting:
(1) Any external guarantee provided by the Company and its holding
subsidiaries where the total external guarantees provided by the Company
and its holding subsidiaries have exceeded 50% of its latest audited net
assets;
(2) guarantees provided to guaranteed objects with gearing ratios exceeding
70%;
(3) guarantees where single guaranteed amount exceeded 10% of the latest
audited net assets;
(4) guarantees provided to shareholders, actual controllers and their related
parties;
(5) save as items (1) and (4), if the aforesaid guarantee involves “transactions
to be disclosed” as specified in the Stock Exchange Listing Rules and any
of the results of the five scale tests is greater than 25%.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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External guarantees subject to approval by the shareholders’ general meeting must be
considered and passed by the Board before submitted for approval to the shareholders’
general meeting. When proposals in respect of guarantees to be provided for
shareholders, actual controllers and their related parties are being considered at the
shareholders’ general meeting, such shareholders or shareholders under the control of
such actual controllers shall abstain from voting. The voting shall be passed by over
half of the voting rights held by other shareholders attending the meeting.
Save as the above, the Board is authorized to consider other external guarantees, but
must be subject to approval and resolved by more than two-thirds of the directors
attending in the Board meeting.
External guarantees considered and approved by the Board or shareholders’ general
meetings must be disclosed on newspapers designated by CSRC in a timely manner.
Contents of disclosures include resolutions of the Board or shareholders’ general
meetings, total external guarantees provided by the Company and its holding
subsidiaries as of the date of information disclosure, total guarantees provided by the
Company to its holding subsidiaries.
In respect of guarantees provided by the Company to others, the guaranteed party shall
provide counter-guaranty to the Company or other necessary risk prevention
measures. Guarantees where the guaranteed amounts are not exceeding 10% of the
Company’s latest audited net assets shall be considered by the Board. The Chairman
of the Board is authorized to consider and sign external guaranty contracts where the
guaranteed amounts are not exceeding 5% of the Company’s latest audited net assets.
For the purpose of this section, if the aforesaid guarantee involves “transactions to be
disclosed” as specified in the Stock Exchange Listing Rules and any of the results of
the five tests is greater than 25%, it shall be subject to approval by the shareholders’
general meeting.
Article 10 If the institutions as determined with the various aforesaid relevant standards for
examining and approving any of the aforesaid investment, asset disposal and external
guarantee include both the Board and the Chairman, submission shall be made to the
highest authority for approval.
Article 11 Powers and authorization to decide on connected transactions:
In accordance with the provisions in the Stock Exchange Listing Rules concerning
connected transactions, only non-continuing connected transactions whose all five
scale test results are smaller than 25% and whose total consideration is less than
HK$10,000,000 shall be decided by the Board. Other non-continuing and continuing
connected transactions shall be subject to approval by independent shareholders.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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Independent non-executive directors shall examine the connected transactions of the
Company and its subsidiaries every year in accordance with the Stock Exchange
Listing Rules, Guide to the Articles of Association and SSE Listing Rules. If any
director has any connection (serving as director or senior executive of the other
transaction party, or serving as director or senior executive of a legal person directly
or indirectly controlling the other transaction party or directly or indirectly controlled
by the other transaction party) with the enterprise involved in any matters to be
resolved on at the Board meeting, the said director shall not exercise the right to vote
on the said resolution nor exercise the right to vote on behalf of another director and
shall abstain from voting on the said resolution.
If the aforesaid investment, asset disposal and debt constitute connected transactions,
this article shall apply.
Article 12 Powers and authorization to decide on organization and personnel matters
The Board authorizes the Chairman to decide on the following matters:
(1) internal management setup of the Company;
(2) setting of branches;
(3) appointment or replacement of members of the board of directors and
supervisory committee of any wholly owned subsidiary, and appointment,
replacement or referral of shareholders’ representatives, directors (candidates)
and supervisors (candidates) of the holding subsidiaries and of joint ventures
invested by the Company.
CHAPTER 3 FORMATION AND COMMITTEES OF THE BOARD
Article 13 The Board shall comprise nine directors, including one Chairman, one vice chairman,
and five of which are independent non-executive directors.
Article 14 The Board shall set under it the following special committees: Audit Committee,
Remuneration Committee, Strategic Planning Committee, Nomination Committee and
Safety, Health and Environmental Protection Committee. The special committees shall
study special matters and provide opinions and proposals for the Board to consider in
decision making.
The special committees shall all consist of directors. In the Audit Committee and
Remuneration Committee, independent directors shall be the majority and shall act as
conveners, and the Audit Committee shall include at least one professional accountant
as independent director.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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Article 15 The main duties of the Audit Committee are:
(I) to appoint and supervise independent auditors of the Company and approve in
advance all the non-audit services provided by independent auditors;
(II) reviewing the Company’s annual and interim financial statements, earnings
releases, major accounting policies and practices used to prepare financial
statements, alternative treatments of financial information, the effectiveness of
disclosure controls and procedures and important trends and developments in
financial reporting practices and requirements;
(III) to review the internal audit plans and personnel arrangement, the composition,
responsibilities, plans, performance, budget and personnel arrangement of the
internal audit team, and the quality and effectiveness of internal control of the
Company;
(IV) to review the risk assessment and management policies of the Company;
(V) to establish the procedure for handling complaints (about matters relating to
accounting, internal accounting control and audit, potential illegal acts, and
potential dubious accounting or audit matters) against the Company;
(VI) to exercise other functions and powers conferred by the Board.
Article 16 The main duties of the Remuneration Committee are:
(I) to formulate the remuneration plan for the senior executives of the Company,
evaluate the performance of the senior management, and propose to the Board
the annual remuneration, welfare and equity incentive plans for the senior
management;
(II) to propose to the Board the annual remuneration, welfare and equity incentive
plans for directors;
(III) to manage and regularly review the long-term remuneration and bonus plan or
equity incentive plans for directors, employees and senior management, and
make proposals to the Board;
(IV) to consider and approve compensations to executive directors and senior
management in relation to the loss of or termination of their offices or
appointments, so as to ensure the compensations are determined in accordance
with the relevant contract terms. Where it is unable to be determined in
accordance with the contract terms, the compensation shall be fair and
reasonable, without causing excessive burden to the Company;
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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(V) to consider and approve compensation arrangements involved in dismissal or
removal of directors due to misconduct of such directors, so as to ensure that
such arrangement are determined in accordance with the relevant contract terms.
Where it is unable to be determined in accordance with the contract terms, the
relevant compensation shall be fair and reasonable;
(VI) to ensure that none of the directors or any associates shall determine their own
remunerations;
(VII) to exercise other functions and powers conferred by the Board.
Article 17 The main duties of the Nomination Committee are:
(I) to make proposals to the Board on the scale and composition of the Board basing
on the Company’s operation activities, asset scope and shareholding structure;
(II) to study the standards and procedures selected by the directors and senior
management, and to make proposals to the Board;
(III) to review and make proposals on the candidates of directors and senior
management;
(IV) to assess the independence of independent non-executive directors;
(V) to exercise other functions and powers conferred by the Board.
Article 18 The main duties of the Strategic Planning Committee are:
(I) to study the long-term development strategies and material investment decisions
of the Company and provide proposals;
(II) to study the material plans on investments, financing and capital operations of
the Company that are subject to the approval of the Board and make proposals;
(III) to study the material capital expenditures, investments and asset disposals of the
Company that are subject to the approval of the Board and make proposals;
(IV) to study other significant matters affecting the development of the Company and
make proposals;
(V) to examine the implementation of the aforesaid matters;
(VI) to exercise other functions and powers conferred by the Board.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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Article 19 The main duties of the Safety, Health and Environmental Protection Committee are:
(I) to supervise the implementation of the security, health and environmental plans
of the Company, and to supervise the Company’s potential liabilities, changes of
regulations and technological upgrading relating to security, health and
environmental issues;
(II) to make proposals to the Board concerning important issues affecting the health,
security and environmental sectors of the Company;
(III) to make inquiries about serious accidents of operation, property, staff or other
facilities of the Company and the liabilities for such accidents, and to inspect
and supervise handling of the accidents;
(IV) to exercise other functions and powers conferred by the Board.
Article 20 The special committees of the Board shall formulate working rules to specify the
concrete duties of each special committee and the same shall come into effect upon
approval by the Board.
CHAPTER 4 SECRETARY OF THE BOARD
Article 21 The Company shall have a secretary of the Board.
The main duties of the secretary of the Board are to make preparations for
shareholders’ general meetings and Board meetings, keeping of files and shareholders’
information, handling matters relating to information disclosure of the Company, and
keeping the chops of the Board and Board secretariat.
The secretary of the Board shall comply with the laws, administrative regulations,
departmental rules and regulations, the Articles of Association and the relevant
requirements of these Rules.
Article 22 The main duties of the secretary of the Board are:
(I) to be responsible for communication and coordination between the Company and
the related parties, stock exchange and the securities regulatory authority, to
ensure that the Company legally prepare and submit reports and documents as
required by the regulatory authorities;
(II) to be responsible for information disclosure of the Company, to procure the
Company to formulate and implement the information disclosure system and
material information internal reporting system, to procure the Company and the
related parties to fulfill the information disclosure obligation in accordance with
law and to submit regular reports and temporary reports to the stock exchange
in accordance with the relevant regulations;
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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(III) to coordinate the relationship between the Company and its investors, to handle
visits of the investors, to answer questions raised by the investors, and to provide
the investors with information disclosed by the Company;
(IV) to make preparations for general meetings and Board meetings following the
statutory procedure, and to prepare and submit relevant documents and
information of the meetings;
(V) to attend Board meetings and prepare and sign the minutes of the meetings;
(VI) to be responsible for confidentiality issues relating to information disclosure of
the Company, formulate confidentiality measures, procure the directors,
supervisors, president (general manager) and other senior management and
related informed persons to keep confidential all information before disclosure
thereof, make prompt responsive remedies in the event of divulgence of inside
information and report to the stock exchange;
(VII) to be responsible for keeping shareholders’ register, directors’ register, data
about shareholdings of major shareholders, directors, supervisors, president
(general manager) and other senior management, and documents and minutes of
the shareholders’ general meeting and Board meetings, to ensure the Company
has complete organizational documents and records, and to ensure the persons
with right of access to relevant records and documents of the Company can have
the said records and documents in time;
(VIII)to help directors, supervisors, president (general manager) and other senior
management learn about information disclosure related laws, regulations, rules,
listing rules and other rules of the stock exchange, and the Articles of
Association, and the provisions in the listing agreements concerning their legal
liabilities;
(IX) to procure the Board to exercise functions and powers in accordance with law;
to remind the attending directors where the resolutions to be made by the Board
do not comply with the relevant laws, regulations, rules, listing rules of the stock
exchange, and other provisions or the Articles of Association, and request the
supervisors present at meeting as observers to express their opinions; to record
the opinions of relevant supervisors and persons in the minutes if the Board
insists on making the aforesaid resolutions, and report to the stock exchange;
(X) to fulfill other duties specified in the applicable laws, regulations, rules, listing
rules of the stock exchange, and the Articles of Association.
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Article 23 Directors or other senior management (other than the president (general manager) and
chief executive officer (chief financial officer)) may also act as the secretary of the
Board. Accountants of public certified accountants appointed by the Company shall
not concurrently act as the secretary of the Board.
Where a director concurrently acts as the secretary of the Board, and in the event an
action should be done by the director and the secretary of the Board respectively, the
person who is both a director and the secretary of the Board shall not act in dual
capacity.
Article 24 The Company shall formulate the rules of work for the secretary of the Board, which
shall be responsible for information disclosure and investors’ relations. The said rules
shall take effect upon approval of the Board.
The Company shall set up a secretariat as the daily office where the secretary of the
Board fulfills the duties thereof.
CHAPTER 5 PROCEEDINGS OF BOARD MEETINGS
Article 25 Board meetings shall comprise regular meetings and provisional meetings. The Board
shall convene at least four regular meetings every year.
Article 26 Regular meetings shall include the following:
(I) Board meetings approving results reports of the Company:
1. Annual Results Board meetings
Annual Results Board meetings shall be convened within 120 days from the
end of the fiscal year of the Company and shall primarily discuss the annual
reports of the Company and other related matters. Annual Results Board
meetings shall be convened at such a time as to ensure that the annual
reports of the Company will be dispatched to the shareholders before the
deadline specified by the relevant regulations and the Articles of
Association, that the preliminary annual financial results of the Company
will be announced before the deadline specified by the relevant regulations,
and that the annual general meeting will be convened within 180 days from
the end of the fiscal year of the Company.
2. Semi-annual Results Board meetings
Such meetings shall be convened within 60 days from the end of the
previous six months of each fiscal year of the Company and shall primarily
discuss the Company’s semi-annual reports and deal with other relevant
matters.
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3. Quarterly Results Board meetings
Such meetings shall be convened in the first month of each of the second
and fourth quarter of the calendar year and shall primarily discuss the
Company’s quarterly reports for the preceding quarters.
(II) Year-end review meetings
Such meetings shall be convened in December of each year or January of the
next year and shall hear and review the president’s (general manager’s) annual
working report for the year and the work arrangements for the following year.
Article 27 In any of the following circumstances, the Chairman of the Board shall issue a notice
to convene an extraordinary meeting within seven days:
(I) jointly proposed by more than one-third of the directors;
(II) proposed by the supervisory committee;
(III) jointly proposed by more than half of the independent directors;
(IV) deemed necessary by the Chairman of the Board;
(V) proposed by shareholders representing more than 10% of the voting rights;
(VI) proposed by the president (general manager);
(VII) requested by the securities regulatory authorities;
(VIII) other circumstances required by the Articles of Association.
Article 28 Board meetings shall in principle be held on site. Where necessary, and subject to full
expression of opinions of directors, and under the approval of the Chairman and the
proposer, Board meetings can be held by way of video, telephone, facsimile or e-mail
voting. Board meetings can also adopt both on site and other methods at the same
time.
Where Board meetings are not held on site, directors who are indicated on the video
to be present, and directors who express their opinions in telephone meetings, and
valid facsimile or e-mail votes received within the required time limit, or confirmation
letters of attendance of directors which are subsequently submitted shall be accounted
in the number of directors who attend the meeting.
Board meetings convened on site and by way of video, telephone, shall be taped
recorded where necessary.
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Board meetings convened in the form of videoconference shall be recorded and
videotaped. If any director cannot sign the resolutions of the meeting in real time, the
said director shall give a verbal vote and responsively affix the written signature
thereof. The verbal vote by a director shall have the same effect as the written
signature, provided that there is no discrepancy between the opinions expressed by
such director in completing the written signature and the opinions orally expressed by
him during the meeting.
If, in any emergency circumstance, a Board meeting cannot be held onsite or in the
form of videoconference and the proposals need not be discussed because the matters
to be discussed are highly procedural and case-specific, the meeting can be held by
written proposal, i.e. the proposal is circulated for resolution (as by delivery in
person, fax, express courier and registered airmail), and the signatures of the directors
on the proposal shall be deemed as pros unless otherwise specified on the proposal.
However, matters relating to material connected transactions between shareholders
and effective controllers of the Company, the connected enterprises or directors and
the Company shall, as far as possible, not be processed by circulating them for
approval but must be submitted to special committees for consideration, and the Board
shall hold onsite meetings on such transactions. Independent directors not materially
interested in the said transactions shall attend the related meetings.
CHAPTER 6 RULES OF PROCEDURE FOR BOARD MEETINGS
Article 29 Collection of proposals
The secretary of the Board shall be responsible for collecting draft proposals to be
discussed on Board meetings. The proposals shall be submitted together with
descriptive data at least 15 days before the date of the meeting. Proposals involving
material connected transactions (as determined according to the standards issued from
time to time by the competent regulatory authorities) that must be discussed on Board
meetings or the shareholders’ general meeting according to law shall first be approved
by independent directors. After sorting out the related data, the secretary of the Board
shall set out the time, venue and agenda of Board meetings and submit the same to the
Chairman.
Proposals to be submitted to Board meetings shall relate to:
(I) matters proposed by the directors;
(II) matters proposed by the supervisory committee;
(III) proposals from the special committees of the Board;
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(IV) matters proposed by the president (general manager);
(V) matters to be discussed on general meetings convened upon request of the
holding subsidiaries and joint ventures invested by the Company.
Article 30 Submission of proposals
In respect of proposals for regular meetings, the Board secretariat shall fully solicit
opinions of the directors before issue of the notice to convene the regular Board
meeting, and after the initial formation of proposals, to submit to the Chairman for
decision. Prior to the decision by the Chairman, opinions from the manager and other
senior management are deemed to be required.
In respect of proposals for provisional meetings, individuals or institutions proposing
to convene provisional meetings shall submit proposals in writing and signed
(chopped) by the proposer through the Board secretariat or directly to the Chairman.
The written proposal shall set out the following:
(1) name(s) of the proposer(s);
(2) reasons of the proposal or objective reasons as the basis of the proposal;
(3) time or time limit, venue and way of meeting proposed to be convened;
(4) clear and specific proposals;
(5) way of contact of the proposer and date the proposal is served.
Contents of the proposal shall fall within the scope of duties of the Board as required
in the Articles of Association, and should be submitted along with information relating
with the proposal.
Upon receipt of the above written proposal and relevant information, the Board
secretariat shall forward the same to the Chairman on the same day. If the Chairman
considers that the contents of the proposal are not clear, not specific or insufficient,
the proposer may be requested to make amendments or supplements.
Article 31 Convening of meetings
The Chairman shall convene and preside over Board meetings and issue notice of
meeting. If the Chairman is unable to fulfil the duty for special reasons, the meeting
shall be convened and presided by the vice chairman. If the vice chairman fails to
fulfil the duty, a director jointly elected by at least half of the directors shall convene
and preside over the meeting.
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After election for new session of the Board by the shareholders’ general meeting, the
director obtaining the majority of votes in the general meeting (if more than one, then
elect one of them) to preside over the meeting, and to elect the Chairman of the new
session of the Board.
Article 32 Notice of meeting
(I) Notice of meeting shall be sent to all the directors, supervisors, president
(general manager), secretary of the Board and other non-voting attendants before
any Board meeting is held. The written notice of meeting shall at least include
the following contents:
(1) Time and venue of the meeting;
(2) Form of the meeting to be held;
(3) Matters (agenda) to be discussed;
(4) Convener of the meeting and the Chairman, proposer of the extraordinary
meeting and its written proposals;
(5) Meeting documents required for voting by directors:
(6) Requests requiring the director to attend the meeting in person or requiring
the director to appoint other directors to attend the meeting as his proxy;
(7) Contact persons and way of contacts.
Oral notice of meeting shall at least include contents in (1) and (2) above, and
explanations for requiring convening provisional meetings at the earliest
possible under emergency.
(II) Board meetings shall be notified in accordance with the following:
When convening regular Board meetings and provisional meetings, the written notice
sealed with the chop of the Board secretariat shall be served at least 10 days and five
days in advance respectively to all directors, supervisors, president (general manager),
the secretary of the Board and other non-voting attendants by hand, facsimile, e-mail,
courier, telex, telegram or other ways. Where delivery is made indirectly, telephone
confirmation shall be followed and corresponding records made.
In the event of emergency requiring convening extraordinary Board meeting at the
earliest possible, notice can be made any time by way of telephone or other oral ways,
but the Chairman shall make explanations in the meeting.
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Notice shall be served in Chinese, or attached with a version in English if necessary.
Notice of meeting shall be deemed to have been served to any director who attends the
meeting without raising any objection before or during the meeting that he has not
received the notice of meeting.
(III) Changes in the notice of meeting
If changes in the time, venue of meeting or additions, changes, deletions of proposals
are required to be made after the issue of the written notice of the Board regular
meeting, notice of the changes shall be served three days before the originally
determined date for convening the meeting, explaining the situation and the relevant
contents of the new proposals and related information. If the notice is given less than
three days, the date of meeting shall be correspondingly deferred or can be convened
as scheduled after approval by all the directors attending the meeting.
If changes in the time, venue of meeting or addition, changes, deletions of proposals
are required to be made after the issue of the notice of the provisional Board meeting,
approval from all the directors attending the meeting should be obtained in advance
and making corresponding records.
Article 33 Communication before meetings
From the delivery of notice to the holding of meeting, the secretary of the Board shall
be responsible for contacting all the directors, especially external directors, obtain
their views or suggestions on the proposals to be considered and transfer the said
views or suggestions to those who submit the proposals so that they can improve the
said proposals. The secretary of the Board shall also arrange for providing the
supplemental materials which are required for the directors to make decisions on the
proposals to be considered at the meetings, including the background information
relating to the subject of the resolution and other information which will assist the
directors in decision making.
Where more than 1/4 directors or more than 1/2 external directors deem the documents
relating to a certain proposal as inadequate or the reasoning as unclear, they may
jointly propose to adjourn the Board meeting or suspend discussing some proposals,
and the Board shall adopt such a proposal. Unless such proposals are presented
directly at the Board meeting, the Board secretary shall responsively notify the
directors, supervisors, president (general manager), secretary of the Board and other
non-voting attendants of the written proposals jointly presented by relevant directors
to adjourn the Board meeting or suspend discussing some topics on the meeting.
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Article 34 Attendance on meetings
Directors shall in principle attend Board meetings in person. If any director cannot
attend the meeting in person for any reason, he should review the meeting information
in advance to form a definite opinion, and authorize in writing another director to
attend on his behalf.
The power of attorney shall specify:
(I) the name of the principal and proxy;
(II) summarized opinion of the principal on every proposal;
(III) scope of authorization of the principal and instructions as to his intentions to
vote on the proposals;
(IV) signature of the principal, and date etc.
Any director appointing another director to sign written confirmation opinion in
respect of regular reports on his behalf should make a special authorization in the
power of attorney.
The director acting as the proxy shall submit to the Chairman the power of attorney,
and make explanations on the attendance record book on his appointment to attend the
meeting.
If any independent director fails to attend Board meetings in person for three
consecutive times, the Board shall propose to the shareholders’ general meeting to
replace the said director.
Board meetings shall be attended by over half of the directors. If the relevant directors
refuse to attend or is delinquent to attend, resulting in failure to satisfy the quorum
for convening a meeting, the Chairman and the secretary of the Board shall report to
the regulatory authority promptly.
Supervisors may attend Board meetings as observers. The president (general manager)
and secretary of the Board who are not directors shall attend the Board meetings as
observers. If the Chairman consider it necessary, he may notify other relevant
personnel to attend Board meetings as observers.
Article 35 Appointment of proxy to attend Board meetings and acceptance of such appointment
shall follow the following principles:
(I) When considering connected transactions, unrelated directors shall not appoint
related directors to attend the meeting on his behalf, and the related director
shall not accept the appointment of such unrelated directors;
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(II) Independent directors shall not appoint non-independent directors to attend the
meeting on his behalf, and the non-independent directors shall not accept the
appointment of such independent directors;
(III) A director shall not fully authorize another director to attend the meeting on his
behalf without making explanations on his personal opinions regarding the
proposals and his voting intentions, and the relevant director shall not accept
appointment that are fully or unclearly authorized.
(IV) A director shall not accept the appointment of more than two directors as their
proxies, and directors shall also not appoint directors who have accepted
assignments of two other directors as their proxies.
Article 36 Discussion of proposals
The Chairman shall declare the meeting open at the prescribed time.
After the attending directors have reached an agreement on the agenda, the meeting
shall discuss the proposals one by one as presided over by the Chairman. First the
persons who submit the proposals shall report to the Board or explain the proposals
either in person or by proxy.
In discussing the relevant plans, proposals and reports, the Board may require the
persons in charge of the related departments to attend the Board meeting so that the
Board may listen to his views and put questions to him regarding the relevant
circumstances to make prudent decisions. If any proposal is found unclear or not quite
feasible in the course of consideration, the Board shall require the related departments
to make explanations or the Board may dismiss the proposals or suspend voting on
them.
The Chairman shall request directors attending the Board meeting to express their
definite opinions on the various proposals. The directors shall seriously read the
relevant meeting information, and based on their full understanding, to express their
independent and cautious opinions.
In respect of proposals requiring approval in advance by independent directors, the
Chairman shall prior to the discussion of the relevant proposal, designate an
independent director to read the written approval opinion of independent directors.
If any director hinders the normal progress of the meeting or affects other directors
from making a speech, the Chairman shall stop him in time.
Except for the unanimous agreement of all the directors attending the meeting, Board
meetings shall not vote for proposals not included in the notice of the meeting. The
director acting as the proxy of other directors to attend Board meetings shall not vote
on behalf of other directors on proposals not included in the notice of the meeting.
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Article 37 Independent directors shall provide the Board with independent opinions on the
following matters:
(I) nomination, appointment and dismissal of directors;
(II) appointment or dismissal of president (general manager), vice president (deputy
general manager), chief financial officer and secretary of the Board;
(III) remunerations of directors, president (general manager), vice president (deputy
general manage), chief financial officer and secretary of the Board;
(IV) loans or other fund operations equal to or exceeding the standards for material
connected transactions (as determined according to standards issued from time
to time by the competent regulatory authorities or the stock exchange where the
Company is listed) between the shareholders, actual controllers and connected
enterprises thereof and the Company, which material connected transactions
must be discussed at Board meetings or the shareholders’ general meeting
according to law, and whether the Company shall take effective measures to
recover the outstanding receivables;
(V) matters which independent directors deem likely to damage the interests of small
or medium shareholders.
The independent directors shall express definite opinions on the aforesaid
matters.
1. consent;
2. qualified opinion and reason thereof;
3. objection and reasons thereof;
4. inability to express opinions and reasons thereof.
Article 38 Voting on proposals
After full discussions have been made on every proposal, the Chairman shall in
appropriate time request the directors to vote.
Voting on Board meetings may be conducted by poll and in writing. Each director has
the right of one vote. The voting intentions of the directors are divided into pros, cons
and abstentions. Directors attending the meeting shall choose one of the above
intentions, and if no selections have been made or more than two intentions have been
chosen at the same time, the Chairman shall request the relevant directors to re-elect,
and those refused to re-elect shall be deemed as abstained. Those who leave the
meeting site mid-term without making selections shall be deemed as abstained.
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A director attending the meeting as proxy shall exercise rights within the scope of
authorization. Where a director fails to attend a Board meeting in person and to
appoint a proxy to attend on his behalf, the said director shall be deemed to have
waived his rights to vote at the meeting.
Article 39 Counting of voting results
After completion of voting by directors, the relevant personnel of the Board
secretariat shall collect the votes of the directors in a timely manner, to be counted by
the secretary of the Board under the supervision of one supervisor or independent
director.
If the meeting is convened on site, the Chairman shall announce the result on site.
Under other situations, the Chairman shall request the secretary of the Board to notify
the results of voting to directors before the next working day after the completion of
the required time limit for voting.
Voting made by directors after the announcement of the voting results by the
Chairman or after the end of the required time limit for voting shall not be counted.
Article 40 Abstentions
Under the following circumstances, directors shall abstain from voting on the relevant
resolutions:
(I) Situations where directors are required to abstain under the SSE Listing Rules
and Stock Exchange Listing Rules;
(II) Situations where directors themselves consider should abstain;
(III) Other situations as required by the Articles of Association where directors should
abstain due to their connections with the corporate involved in the proposals of
the meeting.
Where directors abstain from voting, the relevant Board meeting may be convened by
the attendance of more than half of the unrelated directors, and the resolutions formed
are required to be passed by more than half of the unrelated directors. Where the
number of unrelated directors who attend the meeting is less than three, no voting
shall be made on the relevant resolution, and the matter shall be submitted for
consideration by the shareholders’ general meeting.
If any director or its associates (defined by the Stock Exchange Listing Rules) has an
interest in certain contract, transaction, arrangement or other matters requiring
consideration by the Board, the relevant director shall abstain from voting on the
relevant matter in the Board meeting, and shall also not be counted into the quorum
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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of the relevant meeting. If no resolution can be reached due to the abstention of the
relevant director, after approval by the securities regulatory authorities, the interested
director can participate in the voting, and be counted into the quorum, but the
Company shall make detailed explanations in the relevant announcement.
Article 41 Formation of resolutions
Save as the abstentions under these Rules, resolutions formed through consideration
by the Board on the proposals must be passed by over half of the number of all the
directors voting for such proposal. If the laws, administrative regulations and the
Articles of Association have special requirements that the formation of resolutions of
the Board should be subject to the approval by more directors, the procedure of Board
meetings shall comply with the said special requirements.
When the Board is making resolution on guarantees within its permitted scope of
authority in accordance with the Articles of Association, in addition to the approval
by more than half of all the directors, shall also be subject to the approval of more
than two-thirds of the directors attending the meeting.
Where contradictions appear in the contents and meanings of different resolutions, the
resolution formed at a later time shall rule. Where there are special requirement of the
listing rules of the stock exchange of the place of listing on the resolution made by
the Board, the procedures of the Board meeting shall comply with such special
requirement.
Voting on Board meetings may be conducted by a show of hands or by poll. Each
director has the right of one vote. If the pros and cons are the same, the Chairman shall
be entitled to an additional vote.
Article 42 Special requirement regarding profit distribution
Where the Board meeting is required to make a resolution on the company’s profit
distribution, the distribution plan intended to be submitted for consideration by the
Board may be first notified to its public registered accountants, and a request may be
made to them to issue a draft audit report (other financial information have been
confirmed other than those involved in the distribution). After the resolution on the
distribution is made, the Board should request the registered public accountants to
issue a formal audit report. The Board shall then make a resolution on other related
matters in the regular report based on the formal audit report of the public registered
accountants.
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Article 43 Handling of proposals not been passed
If a proposal has not been passed, under the situation where no significant changes
have occurred to the relevant conditions and factors, the Board shall within one month
not re-consider proposals with same contents.
Article 44 Suspension of voting
If more than half of the directors who attend the meeting or more than two of theindependent directors shall consider it impossible to make judgment on the relevantmatters because the proposal is not definite, not specific, or the meeting informationis not sufficient or otherwise, the directors may jointly request to adjourn the Boardmeeting or to suspend some of the matters to be considered by the Board meeting,which shall be adopted by the Board.
Directors requesting suspension of voting shall state specific requirements on theconditions to be fulfilled when such proposal is being re-proposed.
Article 45 Liability of the directors for the resolutions of the Board
Any written resolution made by the Board not following the statutory procedure shallnot have legal force as a resolution of the Board even if every director has expressedopinions in different ways. The directors shall be responsible for the resolutionspassed at Board meetings. Any director who votes for a resolution which contravenesthe relevant laws, administrative regulations and the Articles of Association and whichincurs serious losses of the Company shall be directly responsible (including theliability for compensation) the same. A director who votes against the resolution, andwho has been proved as having expressed dissenting opinions on the resolution andsuch opinions are recorded in the minutes of the meeting can be exempt from liability.A director who waives his right to vote or who fails to attend the meeting and doesnot appoint a proxy to act on his behalf shall not be exempt from liability. A directorwho explicitly expresses his objection in the course of discussion but fails to cast acon in the voting shall not be exempt from liability.
Article 46 Resolutions of meetings
In principle, a Board meeting shall resolve on all the matters discussed on the meeting.
A resolution on the Company’s connected transaction shall not be valid until it issigned by all the attending independent directors.
The independent directors’ opinions shall be set out in the resolutions of the Boardmeetings.
Article 47 Minutes of meetings
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The minutes of the Board meeting, which are the formal evidence for the resolutionsof the Board, shall be recorded in detail. The secretary of the Board shall arrange thepersonnel of the Board secretariat to keep proper minutes of Board meetings. Theminutes of a Board meeting shall specify:
(I) the date, venue, names of the convener of the meeting;
(II) the names of the attending directors, the names of directors (proxies) accepting
another director’s appointment to attend the meeting;
(III) the agenda of the meeting;
(IV) summaries of the speeches of the directors;
(V) the voting method and result for each resolution (the voting result shall set out
the numbers of pros, cons and abstentions);
(VI) the directors’ signatures.
In addition to the minutes of meetings, the secretary of the Board may also arrange the
personnel of the Board secretariat to make summaries of the minutes if necessary, and
make individual minute of the resolutions adopted based on the statistics on the voting
results.
Article 48 The secretary of the Board shall organize the recording of minutes at the meeting and
compile the minutes in a serious manner.
Directors who attend the meeting shall sign the minutes of the meeting and minutes
of resolutions on behalf of themselves and the directors who have appointed them as
proxies to attend the meeting as confirmation. The secretary of the Board shall provide
complete copies of the minutes of each Board meeting to the directors as soon as
possible. Directors who disagree with the minutes of the meeting or resolutions, may
give explanation in writing when signing.
Directors who have not signed in confirmation in accordance with the previous
paragraph and have not made explanation in writing, shall be deemed as completely
agreed with the contents in the minutes of the meeting and the minutes of the
resolutions.
The minutes of Board meetings shall be kept properly as important documents of the
Company at the domicile of the Company for at least 10 years. After a director sends
a reasonable notice, the Board shall provide the related minutes for the director to
check at a reasonable time (see A.1.5 of Appendix 14 of the Stock Exchange Listing
Rules).
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CHAPTER 7 INFORMATION DISCLOSURE OF BOARD MEETINGS
Article 49 The Board of the Company shall strictly comply with the requirements of the
regulatory authority of the place of listing and the SSE Listing Rules of Shanghai
Stock Exchange in relation to information disclosure, and shall ensure that matters
considered or resolutions passed at the Board meeting which must be disclosed are
disclosed fully, promptly and accurately. Information relating to material matters must
be reported the soonest possible to the relevant stock exchange in conformity with the
principle of fair information disclosure, shall be disclosed in accordance with the
relevant listing rules, and shall be filed with the relevant regulatory authority (where
appropriate).
Article 50 If a matter which requires the independent opinions of the independent directors must
be disclosed, the Company shall announce such opinions of the independent directors.
If the independent directors hold divergent views and cannot reach any consensus, the
Board shall disclose the respective opinions of each independent director.
Article 51 In respect of relevant contents of Board meetings requiring confidentiality, the
informed persons shall fulfill the obligation of confidentiality, otherwise they shall be
pursued for relevant liability.
CHAPTER 8 MANAGEMENT OF DOCUMENTATION FILES RELATING TO BOARD MEETINGS
Article 52 The secretary of the Board shall arrange to record and maintain the files of Board
meetings, including the notice and information of meetings, attendance record book,
the power of attorney of the Board meeting, tape records of the meetings, voting
tickets, minutes of meetings signed by directors who attend the meetings, minutes of
the meetings, minutes of resolutions, and notice of resolutions.
The preservation period for the files of Board meetings shall be for a period of 10
years.
CHAPTER 9 IMPLEMENTATION OF AND FEEDBACK ON RESOLUTIONS OF BOARD MEETINGS
Article 53 The following matters shall, after examination and approval by Board meetings, be
submitted to general meetings for approval and then executed:
(I) formulation of the Company’s annual budgets and final accounts;
(II) formulation of the Company’s profit distribution scheme and loss recovery
scheme;
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(III) formulation of the plan for increase or reduction of the Company’s registered
capital, the plan for issue of the Company’s bonds and other securities, and the
plan of listing and repurchase of the Company’s shares;
(IV) resolution on the merger, division, dissolution and liquidation of the Company;
(V) formulation of the proposal for any amendment to the Articles of Association;
(VI) proposal to the general meeting to appoint or replace the accounting firm which
audits the Company’s accounts;
(VII) election and replacement of directors who are not the employee representatives
and decision on matters relating to remuneration and equity incentive for the
directors;
(VIII) election and replacement of supervisors who are shareholders’ representatives
and decision on matters relating to the remuneration of supervisors;
(IX) consideration and approval of the reports of the Board;
(X) consideration and approval of the reports of the Supervisory Committee;
Article 54 After resolutions are passed at Board meetings, the president (general manager) shall
implement the resolutions which fall within the scope of the authority of the president
(general manager), or which the Board authorizes the president (general manager) to
handle, and shall report to the Board on the implementation of the resolutions.
Article 55 The Chairman shall have the right to inspect and supervise implementation of the
resolutions of the meetings or authorize the vice chairman or another director to do
the same.
Article 56 On every Board meeting, the president (general manager) shall deliver a written report
to the meeting in relation to the status of implementation of the matters which are to
be implemented according to the resolutions of the previous Board meeting.
Article 57 Under the direction of the Board and the Chairman, the secretary of the Board shall
take the initiative to obtain information in respect of the progress of the
implementation of the resolutions, and shall, on a regular (monthly) basis and in due
time, report to and submit proposals to the Board and the Chairman in relation to the
important issues during implementation.
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CHAPTER 10 SUPPLEMENTARY PROVISIONS
Article 58 Where any matter is not covered herein or where these Rules conflict with the laws,
administrative regulations, and other relevant regulatory documents, the latter shall
prevail.
Article 59 The phrases “more than” and “less than” as mentioned in these Rules are inclusive
while “exceeding” is exclusive.
Article 60 Formulation of and amendment to these Rules shall be subject to the unanimous
approval of all the directors of the Company and to the approval of the general
meeting through a special resolution.
Article 61 These Rules shall be subject to the interpretation of the Board.
Article 62 In the event of any discrepancy between these Rules and the Listing Rules of place of
listing, the Company Law and the Articles of Association, the latter shall prevail.
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS
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CHAPTER 1 GENERAL PROVISIONS
Article 1 These Rules of Procedures are formulated in accordance with the laws and regulations
such as the Company Law of the People’s Republic of China (hereinafter the
“Company Law”), the Securities Law of the People’s Republic of China (hereinafter
the “Securities Law”), the Mandatory Provisions for the Articles of Association of
Companies to be Listed Overseas (hereinafter the “Mandatory Provisions”), the
Guidelines for Articles of Association of Listed Companies (hereinafter the
“Guidelines for Articles”), the Corporate Governance Standards of Listed Company
(hereinafter the “Governance Standards”), the Rules Governing the Listing of Shares
on Shanghai Stock Exchange (hereinafter the “Listing Rules of Shanghai Stock
Exchange”), etc, and together with the Articles of Association of China Coal Energy
Company Limited (hereinafter the “Articles”), the Rules of Procedures for
Shareholders’ General Meeting of China Coal Energy Company Limited (hereinafter
the “Rules of Procedures for Shareholder’s General Meeting”) for the purpose of
regulating the rules of procedures and voting procedures of China Coal Energy
Company Limited (hereinafter the “Company”), protecting the rights of the
Supervisory Committee of the Company (hereinafter the “Supervisory Committee”)
in its effective performance of supervisory rights, so as to ensure the overall interests
of shareholders and the Company’s development and to improve its corporate
governance structure.
Article 2 The Company shall establish a Supervisory Committee in accordance with law. The
composition of the Supervisory Committee shall be in accordance with the Articles of
Association, and the Supervisory Committee shall exercise its supervision to protect
the interests of shareholders, the interests of the Company and the legal rights and
interests of the staff from being infringed.
Article 3 The Supervisory Committee shall be responsible to the shareholders’ general meeting
and report work progress to the latter. The Supervisory Committee shall supervise,
inspect and make assessments on the financial status of the Company and on the
discharge of duties by directors, the president, vice president, chief financial officer
and the secretary of the Board.
Article 4 The Company shall adopt measures to ensure that Supervisors have the rights to learn
about the Company’s matters and shall provide them with necessary information and
materials in a prompt manner for their effective performance of supervision,
inspection and assessment on the financial status, operation and management of the
Company.
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CHAPTER 2 COMPOSITION OF THE SUPERVISORY COMMITTEE AND ITS EXECUTIVE ARM
Article 5 The Supervisory Committee is comprised of three members, two of whom are
representatives of shareholders and one is the representative of employees of the
Company. The directors, president and other senior management of the Company shall
not act as supervisors concurrently.
Article 6 The supervisor’s term of office is three years, and may be re-elected to serve another
term of office.
Article 7 The Supervisory Committee shall have one chairman. The appointment and removal
of Chairman of the Supervisory Committee shall be approved by over two thirds
(inclusive) of the votes of the supervisors.
Article 8 A supervisor representing shareholders shall be nominated by shareholders in
accordance with the Articles of Association of the Company and the Rules of
Procedure of the General Meeting of Shareholders and elected or removed by more
than half of the voting rights represented by the shareholders attending the
shareholders’ general meeting, whereas a supervisor representing employees shall be
elected and removed democratically by employees of the Company.
Article 9 A supervisor may resign from his office before the expiry of his term. Resignation by
a supervisor shall be made by submitting a written resignation report to the
Supervisory Committee.
Provisions in the Articles of Association of the Company relating to the resignation
of directors shall be applicable to supervisors, including (but not limited to) the
provision that if the resignation of such supervisor shall lead to the number of
supervisors in the Supervisory Committee of the Company to be less than the statutory
minimum number, the resignation report of such supervisor shall take effect only after
the vacancy caused by his resignation has been filled by a succeeding supervisor.
Article 10 For the purpose of streamlining the organisation and enhancing efficiency, the
Supervisory Committee shall not set up its own office, and the meetings and other
daily routines of the Supervisory Committee shall be undertaken by the Auditing
Department of the Company.
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CHAPTER 3 POWERS AND DUTIES OF THE SUPERVISORY COMMITTEE
Article 11 The Supervisory Committee shall be responsible to the shareholders’ general meeting
and have the following powers and duties under the laws:
(I) To review the financial position of the Company;
(II) To supervise the acts of the directors and senior management of the Company in
their performance of company duties and to raise proposals for removal of any
of directors and senior management who has violated the laws, administrative
regulations, the Articles of Association of the Company or resolutions of the
Shareholders’ Meeting;
(III) To instruct directors, president and other senior management to rectify such acts
which are harmful to the interests of the Company;
(IV) To verify the financial information to be submitted by the Board to the
shareholders’ general meeting, such as financial statements, business reports and
profit distribution plans, and in the event of any doubt, may engage, in the
Company’s name, certified public accountants and qualified auditors to assist in
the review of such information;
(v) To propose the convention of extraordinary shareholders’ general meeting and to
convene and preside over the meeting in the failure of the Board to convene and
preside over such meeting;
(VI) To propose proposals to the shareholders’ general meeting;
(VII) To represent the Company in negotiations with, or bring actions against directors
and senior management;
(VIII) Other duties specified in the Articles of Association or authorized by the
shareholders’ general meetings.
The Supervisors may attend meetings of the board of directors as observers.
Article 12 The Chairman of the Supervisory Committee shall have the following powers and
duties:
(I) To convene and preside as chairman at each meetings of the Supervisory
Committee, and to inspect implementation of resolutions of the Supervisory
Committee;
(II) To report to the shareholders’ general meeting on behalf of the Supervisory
Committee;
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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(III) In the event that the Supervisory Committee commences legal proceedings
against directors and other senior management pursuant to Article 152 of the
Company Law, the proceedings shall be conducted by the Chairman of the
Supervisory Committee on behalf of the Company.
Where the Chairman of the Supervisory Committee is unable to perform his powers
and duties, the Chairman may designate a supervisor to perform his powers and duties
on his behalf.
Article 13 The Supervisory Committee shall inspect the Company’s financial status at least once
a year, and where necessary may request the Company to make regular reports on the
Company’s operation and financial situation, and may conduct inspections and
interviews at the Company or its subsidiaries so as to fully understand the operation
of the Company. It may also engage law firms, accounting firms or the audit division
of the Company to provide assistance.
Article 14 The Supervisory Committee shall have the right to propose the replacement of any
director to the shareholders’ general meeting or to propose the dismissal of president
or other senior management from the office to the Board of directors after such
proposal is unanimously approved by more than half of supervisors if the director,
president or any other senior management concerned is in breach of laws or is in
material breach of his duties.
Article 15 The records of supervision of the Supervisory Committee on directors, president or
other senior management as well as the results of its financial or other specific
investigations shall be used as an important basis for performance assessment of
directors, president and other senior management.
Article 16 The Supervisory Committee may report directly to securities regulatory authorities
and other related authorities while reporting to the board of directors and the
shareholders’ general meeting.
Article 17 The Supervisory Committee may during exercise of its powers and duties engage
professionals such as lawyers or certified public accountants to provide professional
advice when necessary and the relevant expenses so incurred shall be borne by the
Company.
The expenses reasonably incurred by supervisors in attending Supervisory Committee
meetings shall be borne by the Company. Such expenses shall include the traveling
expenses from the place of domicile of the supervisors to the place of the meeting (if
it is not at the place of domicile of the supervisors), catering and accommodation
expenses during the meeting, rental of the venue and local transportation expenses.
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Article 18 Under the following circumstances where the Board fails to convene an extraordinary
general meeting as scheduled, the Supervisory Committee may resolve to request the
Board to convene an extraordinary general meeting:
(I) the number of directors is less than the quorum or two-thirds of the number as
required under the Articles;
(II) aggregated losses to be compensated by the Company reach one-third of the total
share capital of the Company.
Article 19 The supervision activities carried out by supervisors pursuant to law are protected by
the laws, and shall not be interfered by any units and individuals. The Company shall
provide necessary office conditions and business activity funds for the actions of
supervisors in performing their duties.
Article 20 During the discharge of duties, supervisors are entitled to request any department of
the Company to provide relevant information, and all business departments of the
Company must provide the same as requested, and shall provide other necessary
assistance, and shall not refuse, shift the responsibility of or hinder the provision of
such information.
Article 21 Supervisors shall inspect at least once a year whether the internal control systems of
the Company and its subsidiaries are still effective, and to report to the shareholders
in the annual report for that year. The relevant review shall cover all important aspects
of the control, including financial control, operation control and compliance control
and risk management functions.
Article 22 Supervisors shall discharge their duties and undertake obligations in compliance with
the Articles of Association.
Where a supervisor violates the laws, regulations or the Articles of Association during
the discharge of his duties, causing damages to the Company, he shall undertake the
responsibility to make compensation.
Supervisors shall undertake confidential obligations on the Company’s un-published
information, including trade secrets and financial information they may have acquired
during the discharge of their supervision powers and duties.
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CHAPTER 4 SYSTEM OF THE SUPERVISORY COMMITTEE MEETING
Article 23 Meetings of the Supervisory Committee include regular meetings and extraordinary
meetings. Regular meetings are convened every six months, while extraordinary
meetings are convened by the Chairman of the Supervisory Committee in light of
circumstances.
Article 24 Regular meetings of the Supervisory Committee are: Annual Results Meeting and
Interim Results Meeting. Of these:
(I) the Annual Results Meeting shall be held within 10 days after the conclusion of
the fiscal year of the Company, mainly to consider the Company’s annual report
and to handle other relevant matters;
(II) the Interim Results Meeting shall be held within 10 days after the conclusion of
the first six months of the Company’s fiscal year, mainly to consider the
Company’s interim report and to handle other relevant matters.
Article 25 Under justifiable reasons, a supervisor is entitled to request the Supervisory
Committee to convene an extraordinary meeting, but whether or not to convene such
meeting shall be decided by the Supervisory Committee. However, under any of the
following circumstances, an extraordinary meeting should be convened:
(I) where the Chairman of the Supervisory Committee considers it to be necessary:
(II) under the joint proposal of over two-thirds of the supervisors;
(III) the Company has been or is undergoing material loss of assets, which has
damaged the shareholders’ interests;
(IV) the directors, president, vice president, chief financial officer, secretary of the
Board are in breach of the laws, regulations and the Articles of Association,
seriously damaging the interests of the Company.
In the event the Supervisory Committee is for some reasons unable to convene a
regular meeting as scheduled, an announcement shall be published to explain the
reasons.
Article 26 Each supervisor shall attend the Supervisory Committee meeting in person.
Supervisor who is for some reasons unable to attend the meeting may appoint a proxy
in writing amongst other supervisors to attend the meeting on his behalf. The power
of attorney shall contain the name of the proxy, matters authorized to be dealt with on
the supervisor’s behalf, and the limits and term of such authorization, and shall be
signed by and affixed with a chop of the principal. A supervisor who attends the
meeting on behalf of another supervisor shall exercise such rights and duties within
the scope of authorization.
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Article 27 A Supervisor who fails to attend any Supervisory Committee meeting and has not
appointed a proxy to attend the meeting on his behalf shall be deemed as having failed
to discharge his duties as a supervisor. A supervisor who fails to attend the
Supervisory Committee meetings in person twice consecutively shall be removed in
accordance with the Articles of Association.
A meeting of the Supervisory Committee shall only be held if attended by more than
two-thirds of the supervisors. For those supervisors refusing to attend or are reluctant
to attend so that the minimum requirement for the quorum of the meeting is not
satisfied, the other supervisors shall report to the regulatory authorities in due course.
The secretary to the Board and the securities representative(s) of the Company shall
attend the meeting of the Supervisory Committee as observers.
CHAPTER 5 PROCEDURES OF THE SUPERVISORY COMMITTEE MEETING
Article 28 Agenda at the Supervisory Committee meeting are mainly made based on matters
considered at the Board meeting and matters proposed by the Supervisory Committee
meeting.
Article 29 The Supervisory Committee shall authorize the Auditing Department to collect the
matters considered by the Board and the matters proposed by the Supervisory
Committee, and submit such matters to the Chairman of the Supervisory Committee
promptly. The Chairman has the rights to decide whether or not to submit the same for
consideration by the Supervisory Committee depending on their urgency.
Article 30 The Supervisory Committee meeting shall be convened and presided by the Chairman
of the Supervisory Committee. If the Chairman of the Supervisory Committee is
unable to perform his duties or has failed to perform his duties, the meeting could be
presided by another supervisor designated by the Chairman of the Supervisory
Committee.
A notice of convening the Supervisory Committee should be signed by the Chairman
of Supervisory Committee and the Auditing Department shall be responsible for the
issue of the notice. The notice of convening the meeting shall contain the following:
(I) Time and venue of the meeting;
(II) Matters to be considered (proposed resolutions of the meeting);
(III) The convenor and presider of the meeting, as well as the proposer of the
extraordinary meeting and his/her written proposal;
(IV) The required meeting materials for voting by supervisors;
(V) Request that supervisors shall attend the meeting in person;
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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(VI) The contact person and the ways to contact him/her.
The notice of meeting in verbal form shall contain at least items (I) and (II) above,
and the explanation on the need of convening an extraordinary Supervisory Committee
meeting promptly in case of emergency.
To convene regular meetings and extraordinary meetings of the Supervisory
Committee, the Auditing Department shall give written notice affixed with the chop
of the Supervisory Committee to all supervisors by delivery, facsimile, e-mail or other
measures 10 days before the date of a regular meeting or 5 days before that of an
extraordinary meeting. If the notice is not delivered by hand, a telephone confirmation
shall be made and recorded accordingly.
When an extraordinary meeting of the Supervisory Committee is required to be
convened as soon as possible to deal with urgent matters, the notice of meeting shall
be given verbally or by telephone at any time; however an explanation shall be made
by the convener at the meeting.
Article 31 Prior to the issue of the notice of extraordinary Supervisory Committee meeting, the
Auditing Department shall collect proposals of the meeting from all supervisors and
expend at least two days for seeking opinions from the Company’s employees. When
collecting proposals and obtaining opinions, it shall be explained that the main
objective of the Auditing Department is to supervise the compliance and operation of
the Company and the performance of duties of the directors and senior management
personnel rather than to make decision on the Company’s operation and management.
From the issue of the notice to the convening of the meeting, the Auditing Department
of the Company shall organize and arrange communications and contacts with all
supervisors, and obtain the opinions or proposals of the supervisors on the relevant
proposals, so as to improve the relevant proposal.
If over one third of the supervisors consider that a proposal is not supported by
sufficient information or is not demonstrated clearly, they may raise a joint proposal
to consider the proposal at a later time, which the Supervisory Committee shall adopt.
Article 32 When the convening of an extraordinary meeting of Supervisory Committee is
proposed by a supervisor, a written proposal signed by the proposing supervisor shall
be submitted through the Auditing Department or directly to the Chairman of
Supervisory Committee. The written proposal shall contain the following information:
(I) the name of the supervisor proposing the meeting;
(II) the reason for convening the meeting or the objective facts on which the proposal
was based;
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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(III) the date/time or period within which the meeting is to be held, venue and method
of the meeting to be convened;
(IV) clear and specific contents of the proposal;
(V) contact information of the proposing supervisor and the date of proposal.
Within 3 days after receipt of a written proposal from a supervisor by the Auditing
Department or by the Chairman of the Supervisory Committee, the Auditing
Department shall give the notice for convening an extraordinary meeting of the
Supervisory Committee.
In the event that the Auditing Department is reluctant to give the notice of the
meeting, the proposing supervisor shall promptly report to the regulatory authorities.
Article 33 A meeting of the Supervisory Committee shall be held at a meeting place in the form
of physical meeting. Under urgent circumstances, voting at a meeting of the
Supervisory Committee may be conducted by way of telecommunications provided
that the Chairman of the Supervisory Committee shall explain to the attending
supervisors the urgency in specific detail. When voting by way of
telecommunications, supervisors shall, after confirming their votes by signing a
written opinion on the matter considered and his/her voting intention, fax the same to
the Auditing Department. Supervisors shall not only indicate the voting intention
without stating the written opinion or reason for such voting intention.
For supervisory committee meetings held in the form of physical meeting, the
Chairman of the Supervisory Committee shall announce commencement of the
meeting as scheduled. After the meeting has been officially commenced, supervisors
present at the meeting shall first arrive at a consensus on the agenda of the meeting.
If over one third of the supervisors consider that a proposal is not supported by
sufficient information or is not demonstrated clearly, they may raise a joint proposal
to consider the proposal at a later time, which the chairman of the meeting shall adopt.
After a consensus on the agenda has been reached by the supervisors present at the
meeting, the meeting shall consider the proposals one by one as presided over by the
chairman.
Article 34 When considering the relevant proposals and reports, the Supervisory Committee may
request the directors, president, vice president, chief financial officer, secretary of the
Board, internal and external auditors to attend the meeting as observers to make
necessary explanations on the relevant matters and reply to questions for which the
Supervisory Committee is concerned.
Article 35 When discussing proposals at the Supervisory Committee’s meeting, the Chairman of
the Supervisory Committee shall request the attending supervisors to give a specific
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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and clear opinion on each proposal. All the supervisors present at the meeting shall
vote for or against or abstain from voting on each propsoal. Resolutions of the
Supervisory Committee shall be voted on by the supervisors present at the meeting by
way of poll.
Supervisors present at the meeting on behalf of others shall exercise their rights on
behalf of the principal within the scope of authorization.
Supervisor failing to attend any specified Supervisory Committee meeting and appoint
a proxy to attend the meeting on his behalf shall be deemed to have waived his voting
rights in such meeting.
Article 36 The Supervisory Committee meeting shall in general make resolutions on matters to
be considered. Voting at the Supervisory Committee meetings shall be by ballot or by
show of hands. One voting is made for each matter and each supervisor shall have one
vote only. The voting shall be conducted in open ballot and in written form.
The voting intention of a supervisor shall be divided into “for”, “against” or
“abstention”. Each attending supervisor shall indicate his/her voting intention by
choosing one of the above. The Chairman of the Supervisory Committee shall request
each supervisor who fails to choose any of the above or have chosen two or more of
the above to vote again, refusal to do so shall be regarded as having abstained from
voting. Any supervisor who leaves the meeting and does not return and has not voted
by choosing any of the above shall be regarded as having abstained from voting.
To be valid, all resolutions must be agreed by more than two thirds of the votes of all
the supervisors. Where the votes for and against are equal, the Chairman of the
Supervisory Committee shall have the right to cast an additional vote.
Article 37 The Supervisory Committee meeting shall keep detailed minutes of the meeting as a
formal evidence of the resolutions made on matters considered by the Supervisory
Committee. Audio recording of the entire meeting of the Supervisory Committee can
be made if necessary.
The minutes of a physical meeting of the Supervisory Committee shall be duly made
by the personnel of the Auditing Department and shall contain the following:
(I) the session of the meeting, the date, time, venue and manner of convening the
meeting;
(II) details of the notice of the meeting being given;
(III) the convener and the chairman of the meeting;
(IV) attendance at the meeting;
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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(V) proposals considered at the meeting, key points and summarized opinion of
supervisors towards the relevant issues and their votes on the proposals;
(VI) method and results of voting on each proposal (stating the number of votes for
and against and abstention); and
(VII) other matters that the attending supervisors consider necessary to be recorded.
The minutes of the Supervisory Committee’s meetings held by telecommunications
shall be prepared by the Auditing Department with reference to the above
requirements.
The Auditing Department of the Company shall designate personnel to seriously
organize the records and collate the matters considered at the meeting. Minutes of
each Supervisory Committee meeting shall be promptly provided for review by all the
supervisors present at the meeting. Supervisors present at the meeting and the person
who has drafted the minutes shall sign the minutes of the meeting. Supervisors have
the right to request to put a note to the minutes to clarify the speech made by him at
the meeting.
Article 38 Notices of and materials for the meeting of the Supervisory Committee, attendance
sheets, audio recording, voting slips, minutes signed and confirmed by the attending
supervisors, and announcements of the resolutions shall be properly kept as the
Company’s important file at the Company’s place of domicile by the Secretary of the
Board for a period of 10 years.
Article 39 Supervisors shall be responsible for any resolutions made by the Supervisory
Committee. If the resolutions of the Supervisory Committee breach any laws,
regulations or the Articles and cause serious damage to the Company, supervisors
responsible for making such resolution shall be liable for compensation, except those
who are proved to have objected and the objections of whom have been recorded in
the minutes.
Article 40 Supervisors and the Supervisory Committee shall not be liable for resolutions of the
Board. However, if the Supervisory Committee considers that the Board resolution is
in violation of the laws, regulations and the Articles or harming the interests of the
Company, the Supervisory Committee may resolve to propose a re-consideration to the
Board.
CHAPTER 6 DISCLOSURE OF INFORMATION OF THE SUPERVISORY COMMITTEE MEETING
Article 41 The Supervisory Committee shall strictly comply with the requirements for disclosure
of information stipulated by relevant regulatory authorities and the stock exchange of
the place where the shares of the Company are listed, and disclose in a timely and
accurate manner the matters discussed and the resolutions passed at the Supervisory
Committee meeting.
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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Article 42 All persons who have attended the meeting shall keep in strict confidence all contents
requiring secrecy. Anyone who violates this Article shall bear personal legal liability.
CHAPTER 7 EXECUTION OF THE RESOLUTIONS OF THE SUPERVISORY COMMITTEE MEETING
Article 43 The resolutions of the Supervisory Committee shall be executed by supervisors or
executed under the supervision of supervisors. Material resolutions on supervisory
matters such as resolution to perform an inspection on the financial status of the
Company shall be executed by supervisors, and resolutions recommending any
supervisory matters such as where the actions of directors or the president are harming
the Company’s interests, and a resolution has been made to request for rectification
by the directors or the president, shall be executed under supervision of supervisors.
Article 44 The Supervisory Committee shall set up a record system on the execution of
Supervisory Committee resolutions. The appointed supervisor shall keep records of
the execution of the resolution, and report to the Supervisory Committee of the final
results of execution. The Chairman of the Supervisory Committee shall report at
subsequent meetings the status of implementation of passed resolutions.
CHAPTER 8 SUPPLEMENTARY PROVISIONS
Article 45 These Rules shall take effect after the approval by the shareholders’ general meeting.
In these Rules, the terms of “over”, “within” shall mean to be inclusive.
Article 46 The Supervisory Committee shall have the right to interpret these Rules.
Article 47 Any matters uncovered under these Rules or where these Rules are in conflict with the
relevant laws, administrative regulations, other relevant regulatory provisions, the
Articles and the provisions and requirements of the relevant regulatory authorities, the
relevant laws, administrative regulations, other relevant regulatory provisions, the
Articles and the provisions and requirements of the relevant regulatory authorities
shall prevail.
Article 48 These Rules aim to specify matters not set forth in the Articles of Association and to
enhance the efficiency of the Supervisory Committee, and is a guiding document. Any
terms and provisions in these Rules shall not affect the provisions of the Articles of
Association and the rights of shareholders (whether rights under the laws or rights
under the Articles of Association or any other rights).
Article 49 If any content in these Rules of Procedure is inconsistent with the Listing Rules, the
Company Law of the PRC and the Articles, the latter shall prevail.
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE
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In order to further promote sustainable and rapid development, after careful consideration and
intensive study and discussion, China Coal Energy Company Limited (hereinafter referred to as “the
Company”), determines to raise funds by an initial public offering of A shares to develop key projects
and to realize the Company’s strategy for development.
I. Investment summary of the projects
After taking the domestic coal market conditions, stock market conditions, as well as the
financial position of the Company into consideration, the Company plans to issue A shares of no more
than 1,525,333,400 shares, and the raised funds will be used in following projects after deduction of
issuance expenses:
No. Project name
EstimatedTotal amountof investment
(RMB million)
1 Erdos Project with an annual production capacity of 25 million
tons of coal, 4.2 million tons of methanol and 3 million tons of
dimethylether and ancillary engineering facilities (hereinafter
referred to as “the Erdos Project”);
35,000
2 Heilongjiang Project with an annual production capacity of 10
million tons of coal, 1.8 million tons of methanol and 0.6 million
tons of alkene and ancillary engineering facilities (hereinafter
referred to as “the Heilongjiang Project”);
20,000
3 Phase II of China Coal and Coke Xuyang Limited Engineering
Project with a total annual production capacity of 2 million tons of
coke (hereinafter referred to as “the Xuyang Project”);
781
4 Shanxi Lingshi Project with an annual production capacity of 0.3
million tons of methanol produced from coke oven gas (hereinafter
referred to as “the Lingshi Project”); and
917
5 China Coal Shuozhou Great Power Project with a capacity of
2�135 MW of coal gangue generated electricity (hereinafter
referred to as “the Great Project”).
1,409
Note 1: the Erdos Project, the Xuyang Project and the Great Project will be jointly invested by the company and other
companies, while detailed investment will be apportioned according to share ratio.
Note 2: the above projects shall be implemented in the sequence of their serial numbers.
Note 3: the actual amounts of investment of above projects might be adjusted according to requests from relevant
regulatory authorities. When the raised funds of this issuance of shares is collected in full amount, besides
injection of equity capital into above projects which require equity injection and, taking into consideration the
actual total amount of raised funds, funds will also be injected by increase of investment in equity capital in
the subsidiary companies which undertake the project implementation and construction, or by extension of
loans by mandate.
APPENDIX V PROPOSED REPORT OF FEASIBILITY ANALYSIS ONTHE USE OF PROCEEDS FROM THE OFFERING
— 113 —
Note 4: In case there is surplus from the raised funds, the surplus of the proceeds will be applied to supplement the
working capital for general corporate purpose and or acquisitions of core business related assets. In case of
shortfall, the Company will use its own funds or otherwise through bank loans to make up the shortfall.
II. Investment details of the projects
(I). the Erdos Project
This project is located in the large coal production base in Erdos, Inner Mongolia. Main
facilities to be constructed include coal mines, coal processing plants, production facilities and
transfer pipes for dimethylether, as well as production supporting facilities such as dedicated
railway lines and power plants. The project company is jointly funded and organized by the
Company, China Petroleum & Chemical Corporation (“Sinopec”), Shenergy (Group) Co., Ltd.
(“Shenergy Group”), and Inner Mongolia ManShi Coal Group Corporation (“Manshi Coal
Group”). The share ratios are: The Company 38.75%, Sinopec 38.75%, Shenergy Group 12.5%,
and ManShi Coal Group 10%. Among 25 million tons of coal output after completion of this
project, 10 million tons will be used to produce methanol and dimethylether, and the other 15
million tons will be used to blend with coal produced from Pingshuo mining area of the Company
so as to improve coal quality and increase the added value, which is of great significance for the
Company’s strategic deployment, the increase of volume of raw coal output, the production of
advanced coal chemical products and the Company’s other core competences, as well as
enhancement of domestic market position and corporate image.
The total amount of investment for this project is estimated to be RMB 35 billion, with
construction period of 3 years. Upon completion of the project, it will play the role as a model
project and promote the development of local coal chemical industries, and will also contribute
towards the development of deep-level coal resources in Erdos.
(II). the Heilongjiang Project
The mines of this project are located at Yongqing coal mining area of Jidong County, Jixi
City, Heilongjiang Province. The coal reserve of this mining area is 1.554 billion tons, the coal
category is lignite. The existing external conditions in terms of water and power supplies and
transportation are excellent. The individual projects scheduled for construction are mainly: two
5 million ton/year coal mines in Yongqing coal mining area and auxiliary projects including coal
processing plants, 1.80 million ton/year methanol project, 600,000 ton/year methanol-for-alkene
project, heat-electricity co-generation power plant and Dashitou Reservoir, as well as dedicated
railway line for the mine.
The total amount of investment for this project is estimated to be RMB 20.0 billion, with
construction period of 3 years. This project is compliant with the nation’s strategy of
development of coal chemical industry, and also with the construction program of coal-electricity
base in east Heilongjiang Province, as well as the orientation of the development of the
Company’s core businesses, thus it enjoys superb conditions for construction.
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(III). the Xuyang Project
This project plans to build two 55-hole JNDK55-05F model tamping coke ovens and their
auxiliary production facilities including 8 kms dedicated railway line at the west of Shixiang
Village, Yanjia Town, Xingtai County, where it is to the south of the Phase I of China Coal and
Coke Xuyang Limited Engineering Project. The individual projects scheduled for construction
are mainly production facilities such as workshop for coal preparation, coke plant, coal gas
purification plant and auxiliary facilities. There is ample raw material supply for this project,
while construction conditions including transportation are excellent. The project company is
China Coal and Coke Xuyang Limited, an entity jointly invested by the Company, Xingtai
Xuyang Coking Co., Ltd. and Xingtai Delong Iron & Steel Co., Ltd.. The Company has a share
ratio of 45%.
The total amount of investment of this project is estimated to be RMB0.781 billion, of
which investment in fixed assets is RMB 0.656 billion, investment in working capital is
RMB0.125 billion, with construction period of 2 years.
(IV). the Lingshi Project
This project is to make use of the 424 million normal cubic meters of coke oven gas
generated from the production of 2 million-ton/year coke by China Coal Jiuxin Coking Limited
in Lingshi County of Shanxi Province, producing 300,000 ton/year methanol with the coke oven
gas as raw material. China Coal Jiuxin Coking Limited is a large coking enterprise being a joint
venture of China Coal & Coke Holdings Limited and Lingshi County Jiuxin Coal Processing Co.,
Ltd, with a annual production capacity of of 2 million tons of coke , 20MW/h power generation
by coke oven gas and 424 million normal cubic meters of coke oven gas supplied externally. In
this project, advanced technologies are adopted with integrated use of coke oven gas in
deep-processing for the production of refined methanol products of immense market
potential,which shall be beneficial the sustainable development of the deep-processing coking
industry and the cyclical economy.
The total investment of this project is estimated to be RMB 0.917 billion, with construction
period of 2 years. This project which is expected to bring in superb economic returns, has been
categorized to be the comprehensive resources utilization and environmental protection project
which has been encouraged by the State.
(V). the Great Project
This is a project of integrative using of coal gangue for power generation which is jointly
invested and developed by the Company and Jinxin Smelting Co., Ltd., Pianguan Country,
Shanxi Province. The registered share capital of the project company is RMB 0.425 billion, of
which the Company holds 78%, while Jinxin Smelting Co., Ltd., holds 22%. The project has 2
ultra-highpressure circulating fluidised bed boilers matching 2 air-cooling power units, and
mainly consuming a large amount of coal slime, coal gangue and inferior coals generated by
Pingshuo mining area of the Company. This project has been categorized to be the comprehensive
resources utilization and environmental protection project which has been encouraged by the
State.
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The total investment of this project is estimated to be RMB 1.409 billion, with construction
period of 2 years.
III. Conclusion
All the members of the Company’s Board of Directors have participated in careful, detailed,
rigorous reasoning and discussion on the feasibility and necessity for the use of proceeds raised from
this initial public offering of A shares. The Board has achieved consensus in that investment in
projects to be financed by proceeds of the offering are compliant with nation’s industrial policy and
the Company’s development strategy, where the Company’s orientation for progress and real demands
are embodied. These projects are of great significances for the further improvement of the Company’s
core competence, enhancement of potential for development, strengthening of market competitive
advantages, expansion in point of profit growth and the promotion of the Company’s sustainable and
healthy development.
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
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Chapter One General Principles
Article 1 To further strengthen the corporate governance structure of China Coal Energy
Company Limited (hereinafter referred to as “the Company”), to promote the
Company’s operation in accordance with relevant regulations, to ensure that
Independent Directors perform their duties, this System is formulated in accordance
with relevant provisions of the Company Law of the People’s Republic of China
(hereinafter referred to as “the Company Law”), the “Guidance Opinions on the
establishment of the system of Independent Directors in Listed Companies”
(hereinafter referred to as “the Guidance Opinions”), the Rules Governing the Listing
of Securities on the Stock Exchange of Hong Kong Limited (hereinafter referred to as
the “Hong Kong Listing Rules”), the Rules Governing the Listing of Securities on the
Shanghai Stock Exchange (hereinafter referred to as the “Shanghai Listing Rules”),
“Standards of Corporate Governance of Listed Companies” and the “Articles of
Association of China Coal Energy Company Limited (hereinafter referred to as the
“Articles of Association of the Company”).
Article 2 Independent directors refer to directors who do not take up any post in the Company
and do not have any relationship with the Company and the Company’s major
shareholder which may prevent them from exercising independent and objective
judgments, and who are recognized by the Stock Exchange of Hong Kong Limited as
independent non-executive directors. At least one of the independent directors shall be
a finance or accounting professional.
Article 3 Provisions on directors contained in the Articles of Association are applicable to
independent directors, except for those provided otherwise in this System.
Chapter Two Qualifications for Independent Directors
Article 4 To become an Independent Director , the following basic qualifications are required:
(1) possess the qualifications for directors of listed company in accordance with
laws, administrative regulations and other relevant regulations of the place of
listing;
(2) possess the independency required by the Guidance Opinions, the Shanghai
Listing Rules and the Hong Kong Listing Rules;
(3) possess basic knowledge on the operation of listed companies, familiar with
relevant laws, rules and administrative regulations;
(4) possess more than five years’ legal, economic or other working experience
required to perform directors’ duties;
(5) ensure the availability of adequate time and energy to perform the duties of
independent director effectively;
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(6) other qualifications stipulated by the Articles of Association of the Company, the
Shanghai Listing Rules and the Hong Kong Listing Rules.
Article 5 At least one third of the members of the company’s Board of Directors shall be
independent directors, and the number of independent non-executive directors shall
not be less than three, of which at least one must be an accounting professional. The
accounting professional referred to in this article means a professional with senior
title or certified public accountant qualification.
Article 6 In principle, Independent Directors and persons intending to act as Independent
Directors shall, in accordance with the China Securities Regulatory Commission’s
request, participate in training organized by the China Securities Regulatory
Commission and the organizations authorized by the China Securities Regulatory
Commission.
Chapter Three The Independence of Independent Directors
Article 7 Independent Directors must possess independence, complying with the requirement
for independence of Independent Directors in the Guidance Opinions, and the
requirements for independence of Independent Non-Executive Directors in the Hong
Kong Listing Rules, Shanghai Listing Rules, and by the Hong Kong Stock Exchange
and the Shanghai Stock Exchange. The following persons are not allowed to become
Independent Directors:
(1) persons employed by the Company or its affiliated company (excluding
Independent Directors); immediate families; main social relations (immidiate
families refer to spouses, parents, sons and daughters, etc.; main social relations
refer to brothers, sisters, fathers-in-law, mothers-in-law, daughters-in-law,
sons-in-law, spouses of brothers or sisters, brothers or sisters of spouses, etc.);
(2) persons directly or indirectly holding 1% or more than 1% of the shares of the
Company or the company’s top ten natural person shareholders and their
immidiate families;
(3) persons employed by Shareholders holding 5% or more than 5% of the Shares of
the Company or the top five shareholders of the Company as well as those
persons’ immidiate families;
(4) persons who fall in any of the above three situations set forth above during the
most recent year;
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(5) persons who provide financial, legal or consultancy services to the Company or
its affiliated companies;
(6) other persons specified in the Articles of Association
(7) other persons presumed by the China Securities Regulatory Commission, the
Hong Kong Stock Exchange and / or the Hong Kong Listing Rules, and the
Shanghai Listing Rules.
Chapter Four Nomination, Election or Replacement of Independent Directors
Article 8 The Company’s Board of Directors, Supervisory Committee, shareholders alone or
jointly holding more than 1% of the shares of the Company can nominate candidates
for Independent Directors, whose appointment shall be subject to the election and
decision of Shareholders’ General Meetings.
Article 9 The nominators of Independent Directors should obtain the consent of nominees
before the nomination. A nominator should have full knowledge of the occupation,
academic qualification, professional title, detailed working experience, all part-time
jobs of the nominee, as well as express opinions on the nominee’s qualifications and
independence as an independent director. The nominee should also make a public
declaration that there is not any relationship between him or herself and the Company
that affects his or her independent and objective judgment.
The Company’s Board of Directors shall declare the above-mentioned contents before
convening a Shareholders’ General Meeting for the election of Independent Directors.
Article 10 Before convening Shareholders’ General Meetings for the election of Independent
Directors, the Company shall submit relevant information on all the nominees to the
Stock Exchange or the China Securities Regulatory Commission. When there is any
dissent from the Company’s Board of Directors concerning the nominee’s information,
the Board shall submit its written opinion as well.
Nominees dissented by the Stock Exchange is eligible as a candidate for director of
the Company but not eligible as a candidate for Independent Director. During the
election of Independent Directors at a Shareholder’s General Meeting, the Company’s
Board of Directors shall make a statement on whether the Stock Exchange has
expressed dissents on any candidates for independent directorship.
Article 11 The term of office for Independent Directors is the same as that of other directors of
the Company. At the expiration of a term of office, directors can continue in office
provided they are re-elected, provide that the consecutive terms of office shall not
exceed 6 years.
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Article 12 If an Independent Director abstains from attending Board Meetings in person for three
times in succession, the Board of Directors shall propose a replacement of the director
to Shareholders’ General Meeting.
Except for the conditions mentioned above and the situations in which a person shall
not act as director under the Company Law, the office of an Independent Director
cannot be terminated without any reason before expiration. In case of termination of
a Director’s office prior to expiration, it shall be disclosed as a special issue by the
Company. If the Independent Director whose office is terminated before expiration
considers that the reason for termination is not proper, he or she can make a public
declaration.
Article 13 An Independent Director may tender resignation before expiration of the term of
office by submitting a written resignation application to the Board of Directors;
providing an explanation of any conditions which are related to his or her resignation
or which is considered by him/her as necessary to draw the attention of shareholders
and creditors of the Company. The Independent Director should continue performing
his or her duty before obtaining approval from the Board of Directors for his
resignation. An Independent Director shall immediately submit his latest contact to
the Hong Kong Stock Exchange after his resignation.
If the proportion of Independent Directors in the Board of Directors is lower than the
number required by the Guidance Opinions due to the resignation of the Independent
Director, the resignation report of this Independent Director shall only come into
effect when the next Independent Director fill his vacancy.
If the number of Independent Directors falls below the number required by the Hong
Kong Listing Rules and the Shanghai Listing Rules, the Company should notify the
Hong Kong Stock Exchange and Shanghai Stock Exchange, make a public
announcement and appoint Independent Non-Executive Director according to relevant
regulations.
Article 14 If an Independent Director does not meet the independence qualification or there is
other circumstance which render him or her unsuitable to perform the duties of an
Independent Director, so as to result in the number of Independent Directors of the
Company falling below that required by the Guidance Opinions and / or the Hong
Kong Listing Rules, the Company shall make up the numbers of Independent Directors
according to relevant regulations.
If at any time the Company does not comply with stipulations on qualification of
Independent Non-Executive Directors provided in the Hong Kong Listing Rules and
the Shanghai Listing Rule, the Company should notify the Hong Kong Stock Exchange
and Shanghai Stock Exchange, to make a public announcement and appoint
Independent Non-Executive Directors according to relevant regulations.
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Chapter Five Duties and Authority of Independent Directors
Article 15 In order to bring Independent Directors’ functions into full play, besides the duties and
authorities endowed by the Company Law, the Hong Kong Listing Rules, the Shanghai
Listing Rules and other relevant laws and regulations, the Company shall delegate the
following specific authorities to Independent Directors:
(1) Significant connected transactions shall be submitted to the Board of Directors
for discussion after confirmation by Independent Directors. Independent
Directors engage an intermediary to issue an independent financial advisor’s
report as the basis of their judgment.
(2) Make proposals to the Board of Directors for the appointment or dismissal of
accounting firms;
(3) Make proposals to the Board of Directors to hold Shareholders’ Meeting;
(4) Make proposals to hold Board Meetings;
(5) Appoint an external auditor or consultancy firms independently;
(6) collect voting rights from shareholders in public before the convening of
Shareholders’ General Meeting;
(7) other responsibilities stipulated in laws, administrative regulations, rules or the
Articles of Association.
Significant connection transactions, the appointment or dismissal of accounting firms
should be submitted to the Board of Directors for discussion only after they have been
agreed by at least half of the Independent Directors. Before Independent Directors
make proposals to the Board of Directors to hold Shareholders’ General Meeting,
Directors’ Meetings and collect voting rights from shareholders in public before the
convening of Shareholders’ General Meeting, the consent of more than half of the
Independent Directors should be obtained. With the consensus of all Independent
Directors, the Independent Directors can appoint external audit firms and
consultancies to carry out audits and provide consultancy on specific issues, the
Company shall bear all related expenses.
If the above proposals are not adopted or the above authorities cannot be exercised
normally, the company should disclose relevant circumstances.
The proportion of Independent Directors in the Remuneration, Audit and Nomination
Committees set up under the Board of Directors of Company should be more than 1/2.
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Article 16 Independent Directors should perform the above duties and responsibilities as well as
various duties stipulated in Appendix 14A 5.2 of the Hong Kong Listing Rules and
Shanghai Listing Rules. In addition, they should express independent opinions to the
Board of Directors and Shareholders’ General Meeting on the following issues:
1. nomination, appointment and dismissal of directors;
2. appointment or dismissal of senior management;
3. remuneration of directors and senior management of the Company;
4. Any existing or new borrowings or payables and receivables by shareholders,
actual controller or their connected enterprises with an amount exceeding Rmb
3 million or 5% of the lastest audited net assets and whether the Company has
adopted any effective measure to recover the debts;
5. issues which in the opinion of Independent Director may harm the interests of
small or medium shareholders;
6. other issues stipulated in the Articles of Association, the Hong Kong Listing
Rules and Shanghai Listing Rules
Article 17 Independent Directors should express one of the following opinions on the above
issues: consent, qualified opinion and its reason; dissent and its reason, unable to
express an opinion and its hindrance.
Article 18 If the relevant issues are issues required to be disclosed, the Company shall make a
public announcement of Independent Directors’ opinions. If the Independent Directors
have different opinions and cannot reach consensus, the Board of Directors should
disclose opinions of each Independent Director separately.
Article 19 Independent Directors must perform their duties and responsibilities as elaborated in
prospectuses for the issuance of H shares, especially in relation to new business
opportunities and connected transactions.
Chapter VI Obligations of Independent Directors
Article 20 Independent Directors owe the duty of faithfulness and diligence to the Company and
the shareholders as a whole. Independent Directors should perform their
responsibilities according to requirements of relevant laws, rules, the Guidance
Opinions, the Hong Kong Listing Rules, the Shanghai Listing Rules and the Articles
of Association, perform their duties earnestly, protect the interest of the Company as
a whole and, in particular, attention to ensure that legal rights and interests of small
or medium shareholders shall not be harmed. Independent Directors should perform
their obligations independently without being influenced by major shareholders,
actual controller of the Company or other companies or persons that have interest in
the Company.
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Article 21 In principle, an Independent Directors can as act an Independent Director for at most
five listed companies and should make sure that there is enough time and energy to
discharge his duties as an Independent Director effectively.
Article 22 Independent Director should attend Board Meetings on time, understand the business
and operation of the Company, investigate to obtain information for strategic decision
making. Independent Directors should submit annual work reports to the Annual
General Meeting of the Company and explain the performance of their duties.
Independent Directors shall comply with provisions of the Model Code of Appendix
of the Hong Kong Listing Rules and the Shanghai Listing Rules
Chapter VII Protection for Independent Directors in the Performance of Duties
Article 23 The Company should ensure that Independent Director have equal rights to know the
truth which are the same as other Directors. All resolutions of the Board of Directors
shall be notified to Independent Directors in advance by the Company within the time
limit according to the legal requirements and adequate information must be provided.
If an Independent Director considers the information provided is insufficient, he can
require information to be supplemented. When two or more Independent Directors
think that information provided is insufficient or the basis of argument is not clear,
they can submit a joint written request to the Board of Directors to postpone the Board
Meeting or postpone deliberation of the issue. The Board of Directors should adopt
such proposals.
Information provided by the Company to Independent Directors should be kept by the
Company and Independent Directors for at least 5 years.
Article 24 The Company should provide necessary working conditions for Independent Directors
to discharge their duties. The Secretary of the Board of Directors should assist
Independent Directors to discharge their duties, such as providing information or
supplying documents, etc. If any announcement is required to be made in respect of
any independent opinions, proposals and written statements of Independent Directors,
the secretary of the Board of the Company shall promptly so through the matters
relating to the announcement with the stock exchange.
Article 25 When the Independent Directors exercise their rights, the relevant personnel of the
Company shall actively co-operate, and shall not refuse, hinder or conceal any matter,
and shall not interfere in the exercise of directors’ rights.
Article 26 The Company shall pay all expenses for intermediaries engaged by Independent
Directors and other necessary expenses they incur in the exercise of their rights.
Article 27 The Company shall grant Directors an appropriate amount of allowances. Proposals on
the level of allowances shall be prepared by the Board of Directors, approved by a
Shareholders’ General Meeting, and to be disclosed in the Company’s annual report.
APPENDIX VI PROPOSED SYSTEM OF INDEPENDENT DIRECTOR’S WORK
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Besides the above-mentioned allowances, the Independent Directors shall not obtain
any additional, undisclosed benefits from the Company, its major Shareholders or any
organization or personnel in which it has an interest.
Article 28 The Company can set up a necessary insurance system for the Independent Directors
to reduce the risk involved in normal performance of duties by Independent Directors.
Chapter Eight Legal Liabilities of Independent Directors
Article 29 The followings are considered as major dereliction of duties by Independent
Directors:
(1) leaking of the Company’s confidential commercial information, resulting in
damage to the Company’s legal interests;
(2) Accepting illicit benefits during the course of performance of duties, or seeking
personal profits by taking advantage of his position as an Independent Director.
(3) Refrain from raising objection to Board Resolutions that, within his knowledge,
violate the laws, administrative regulations or the Company’s Articles of
Association.
(4) Where connected transactions result in major losses to the Company, the
Independent Director has not exercised his veto power.
Article 30 If resolution of Directors’ Meeting violate laws, administrative regulations or the
Articles of Association of the Company resulting in great losses of the Company, and
an Independent Director knows the violation but has not expressed his opposition, or
where an Independent Director engages in illegal acts prohibited by the Company
Law, administrative regulations and regulatory documents, resulting in great losses to
the Company, he/she will be liable for payment of compensation for the losses.
Chapter Nine Supplementary Provisions
Article 31 In case of conflict between this System and the laws and regulations of the place of
listing, performance shall be in accordance with the laws and regulations of the place
of listing.
Article 32 The Board of Directors is responsible for the formulation and interpretation of this
System. Upon approval of the Shareholders’ General Meeting, this System will
become effective on the date of listing of the domestic shares issued by the Company
on the Stock Exchange.
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Article 33 In the event that there is any matter not covered in these detailed working rules,
performance shall be in accordance with relevant provisions of the laws and
regulations of the State, the Hong Kong Listing Rules, the Shanghai Listing Rules and
the Articles of Association of the Company. In case of conflict between provisions of
these detailed working rules and the laws and regulations of the State to be
promulgated in future, any duly and legally amended “Articles of Association of the
Company”, the Shanghai Listing Rules and the Hong Kong Listing Rules, performance
shall be in accordance with the relevant laws and regulations of the State, the
Shanghai Listing Rules and the Hong Kong Listing Rules while immediate
amendments shall be submitted to the Board of the Company for deliberation and the
passing of a resolution.
The Board of Directors —
China Coal Energy Company Limited14th July 2007
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX VI PROPOSED SYSTEM OF INDEPENDENT DIRECTOR’S WORK
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Chapter One General Principles
Article 1 To regulate the management and application of funds raised by China Coal Energy
Company Limited (hereinafter referred to as “the Company”), to offer maximum
protection of investors’ interests, this Administrative System is formulated in
accordance with relevant laws, regulations and regulatory documents including the
Company Law of the People’s Republic of China (hereinafter referred to as “the
Company Law”), the Securities Law of the People’s Republic of China (hereinafter
referred to as “the Securities Law”), the Rules Governing the Listing of Securities on
the Shanghai Stock Exchange (hereinafter referred to as the “Shanghai Listing Rules”)
and other relevant laws, regulations and regulatory documents, and in line with the
actual condition of the Company.
Article 2 Raised fund as referred to in these Measures means the raised fund by issuing shares
(including initial public offering, share allotment after listing, and issuance of
additional shares), or by issuing convertible bond, corporate bonds and debentures or
otherwise by means permitted to raise funds from the public for specific use in
accordance with relevant laws, regulations and the Articles of Association by the
Company.
Article 3 When the funds raised is collected, capital verification procedures shall be carried out
timely, during which a capital verification report is prepared by an accounting firm
qualified for securities-related business. The Company’s Board of Directors shall
manage and use the funds raised according to the projections of the funds application
as committed in the prospectus.
Article 4 All raised fund shall only be used in projects committed in the prospectus as publicly
announced. The Company’s Board of Directors shall prepare detailed plans for the
application of funds so as to keep the use of funds regulated, open and transparent.
Article 5 The Company’s Board of Directors shall disclose the application of funds according
to provisions of laws and regulations such as the Company Law, the Securities Law
and Shanghai Listing Rules etc. on a timely basis.
Article 6 The person responsible for violation of the country’s laws, regulations or the Articles
of Association in the application of funds raised which result in loss to the Company
shall be liable for civil compensation.
Article 7 Where the funds raised is invested by a subsidiary or another enterprise controlled by
the Company, that subsidiary or the other enterprise shall implement the provisions of
these Measures by reference.
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Chapter 2: Deposit of funds raised
Article 8 Company should set up specific procedures for depositing raised fund. Raised fund
shall be deposited in a dedicated account determined by the Board of Directors for
centralized management. The number of dedicated accounts for raised fund shall not
be more than the number of projects financed by raised fund, and the fund to be used
in a particular project should be deposited in the same dedicated account.
Article 9 Within 1 month after collecting raised fund, a three-party custody agreement shall be
signed among the Company, the Sponsor and the commercial bank maintaining deposit
accounts of the raised fund, and shall be reported to the Shanghai Stock Exchange
(hereinafter referred to as “SSE”) for records.
In case the agreement is terminated prior to expiry, a new agreement with relevant
parties shall be made within 1 month from the date of termination of the original
agreement, and a report shall be submitted to SSE on a timely basis for record
purposes, followed by announcement to the public.
Article 10 The Company shall urge the commercial bank in the implementation of the agreement.
In case of three successive failures by the commercial bank in providing the sponsor
with statements of account or notice on the withdrawals of large amounts from the
dedicated accounts, or in case of failure to cooperate with the Sponsor in inquiry and
investigation on the dedicated accounts status, the Company shall suggest the Board
of Directors pass a resolution on the termination of the agreement and dedicated
account, and consider replacing it with another dedicated account.
Chapter 3: Use and management of funds raised
Article 11 Raised fund shall be invested in projects strictly in accordance with commitments in
the prospectus regarding investment projects, the amounts and timing of investment.
Raised fund shall be specifically used for dedicated purpose, misappropriation is
prohibited, and effective measures should be taken to prevent investment in projects
with the raised fund to generate illicit profits.
Article 12 The projects invested with the raised fund shall not be used for trading securities or
available-for-sale financial assets, or loans to others or entrusted asset management or
other financial investment. They shall not be invested, directly or indirectly, in
companies with core businesses in the purchase and sale of securities. The Company
shall not make use of the raised fund in pledge, entrust loan or for other investment
purposes in disguised form.
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Article 13 When the Company uses the raised fund in project investment, examination and
approval procedures for the use of funds shall be strictly followed according to the
requirements of the Articles of Association and other normative regulations of the
Company. An application form for the use of funds shall be filled in by the specific
department which will use the funds, and such form shall be jointly signed in approval
by the President (manager), Chief Financial Officer (person in charge of finance) and
Vice President (deputy manager), and approved by Chairman of the Company’s board
before implemented by the finance department.
Article 14 The investment project shall be implemented in accordance with the schedule
committed by the Company’s Board of Directors, while the implementing departments
will work out details of the schedule, to ensure that all the works can be accomplished
according to the schedule. At the end of each fiscal year, the Company shall conduct
a comprehensive review on the progress of investment projects financed by the raised
fund.
Article 15 When the difference between the actual amount of raised fund invested in projects and
the expected amount as previously disclosed when the investment plan was made
exceeds 30%, the Company shall adjust the investment plan in respect of the use of
raised fund, and disclose, in the explanatory note included in the special annual
statement on the use of raised fund, details such as the previous annual investment
plan of raised fund, the current status of actual progress in investment projects,
adjusted annual investment plans, as well as the reasons for changes in investment
plans.
Article 16 When the investment amount under investment projects financed by raised fund is
expected to exceed the budget due to special reasons, an application report for
investment expenditure in excess of budget shall be prepared by the department in
charge of the project, with detailed reasons for the over-budget expenditure, the new
budget plan, and proposals on measures of budget control shall also be submitted.
These will be implemented after discussion at the Company’s work meeting,
submitted to the Board of Directors for examination and approval, and approved by
a Shareholders’ General Meeting.
Article 17 In case of any of the followings in respect of raised fund investment project, the
Company shall assess the feasibility and estimated earnings of projects so as to decide
whether to go on with the implementation of that project, and disclose the progress of
the project in the current periodic report, the reasons of anomalies and the adjusted
funds investment plan (if any):
(1) Critical changes in market environment regarding to the investment project;
(2) The investment project financed by the raised fund has been shelved for more
than one year;
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(3) Delay in the completion of investment financed by the raised fund in the
previous project investment plan, and invested amount is less than 50% of
planned amount;
(4) Anomalies in the other investment projects financed by the raised fund.
Article 18 In case the Company changes the place or time of the investment project financed by
the raised fund, it shall be reviewed and approved by the Company’s Board of
Directors, a report shall be filed within 2 trading days with SSE, and the reasons for
the changes should be announced.
Article 19 If the investment project cannot be completed according to the committed schedule
due to unpredictable objective factors, the Company shall make public disclosure of
the real circumstances, with a detailed statement on the underlying reasons.
Article 20 In order to prevent funds from remaining idle, and to achieve efficiency in the use of
funds, raised fund can be used temporarily as supplement to working capital of the
Company as long as it is permitted by laws, regulations and regulatory documents and
subject to the following conditions:
(1) No change in the purpose of funds raised in disguised form;
(2) No influence upon implementation of investment plan for the raised fund;
(3) Every single cycle of supplementation to working capital cannot be longer than
6 months;
(4) The explicit consent is released by the Sponsor.
The aforementioned temporary use of raised fund as supplement to working capital
must be considered and approved by the Company’s Board of Directors, and shall be
reported within 2 trading days to SSE, with a public announcement. At the end of the
period for the use of supplementary working capital, the Company shall submit a
report within 2 trading days to SSE, with a public announcement.
Article 21 Upon completion of the investment project financed by the raised fund, the Company
is allowed to use a small amount of remaining fund for other purposes if the following
conditions are met:
(1) Independent opinions with explicit consent is received from the independent
directors;
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(2) Audit opinion of “consistent” or “basically consistent” is issued by an
accounting firm in the special audit report on the raised fund;
(3) The opinion of explicit consent is released by the Sponsor.
Chapter 4: Changes in the Project financed by the funds raised
Article 22 If really due to market changes, the Company decides to give up the original
investment project, and intends to change investments of the raised fund, or if
adjustment to the original investment project is considered as reorientation of
investment of the raised fund according to regulations of the China Securities
Regulatory Commission or the Stock Exchange, the matter must be submitted to the
Board of Directors for examination and approval, and then submitted to a
Shareholders’ General Meeting for approval. The Sponsor and its representatives shall
be informed, a report should be submitted to SSE within 2 trading days and a public
announcement should be made, including the following information:
(1) Basic status of the original project and specific reasons for change;
(2) Basic status of the new project, feasibility analysis and risk alerts;
(3) Investment plan of the new project;
(4) Explanations on approvals obtained or to be obtained from relevant authorities
for the new project (if applicable);
(5) Comments from independent directors, the Supervisory Committee and the
Sponsor on the reorientation of investments of raised fund;
(6) Explanations on the fact that changes in investment project financed by the
raised fund are subject to review and approval at Shareholders’ General
Meetings;
(7) Other requirements of SSE.
Article 23 If the Company intends to change the investment project financed by the raised fund
to investment in a joint venture, the necessity of investment in the joint venture shall
be carefully considered on the basis of sufficient understanding of the joint partner,
and the Company shall ensure effective control of the investment project financed by
the raised fund by means of holding shares.
Article 24 For the Company to effectively avoid competition within the industry after acquisition
and to reduce connected transactions, after consideration and discussion by the Board
of Directors and the passing of resolutions at Shareholders’ General Meetings,
investment of funds raised can be reoriented to acquire assets (including equity) from
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the controlling shareholder(s) or the actual controller(s), with timely disclosure of the
reasons for entering into transactions with the controlling shareholders or the actual
controllers, the pricing policy and the basis of pricing for connected transactions, the
impact of the connected transactions on the Company, as well as solutions for relevant
issues.
Chapter 5: Supervision and report on fund raising
Article 25 The finance department of the Company shall keep a full set of accounting records and
ledgers for activities involved in the application of the funds raised, and accounting
settlement shall be carried out in respect of investment projects. Every quarter, the
internal audit department of the Company will examine the safekeeping and use of the
funds raised, as well as the result of using the funds. Audit reports will be submitted
to the President’s (manager) work meetings.
The President (manager) of the Company shall submit a written report to the Board of
Directors at the end of each quarter on the use of raised fund, with a copy to the
Supervisory Committee.
Article 26 The Company’s Board of Directors shall prepare a special annual report on the
safekeeping and use of funds raised, and appoint an accounting firm to conduct special
audit on the safekeeping and use of funds raised, and to issue special audit reports.
The special audit report shall contain explicit audit opinions on the actual safekeeping
and use of funds raised during the year, and whether the situation is consistent with
that described by the Board of Directors in their explanatory notes. In case the audit
opinions issued by the accounting firm is “basically inconsistent” or “completely
inconsistent”, the Company’s Board of Directors shall provide an explanation for the
discrepancy, with remedial measures being disclosed in the annual report.
Article 27 The Company’s Board of Directors shall, at both the Annual General Meeting and in
periodic reports (annual report, semi-annual report and quarterly report), inform
investors on the use and approval of the raised fund and progress of relevant projects
on a timely basis.
The secretary to the Board of Directors shall take the lead in drafting the information
disclosure on the application of raised fund, which will be jointly verified and signed
by the finance department.
Article 28 The Independent Directors shall be entitled to check the use of raised fund and, with
consent from over half of the Independent Directors, appoint an accounting firm to
conduct a special audit on the application of funds. The Company shall provide full
cooperation in support of the audit, and pay for the necessary audit fee.
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Article 29 The Sponsor and its designated representatives shall be entitled to supervise the use
of raised fund.
Chapter 6: Supplementary Provisions
Article 30 These Measures shall be implemented on the day on which the Board of Directors
reviews and approves the requisite resolution.
Article 31 In the event of any matters not addressed in these Measures, performance shall be
carried out in accordance with relevant provisions of the country’s laws, regulations
and the Articles of Association of the Company. In case of conflict between provisions
of these Measures and the country’s laws and regulations to be promulgated thereafter
and any duly and legally amended “Articles of Association of the Company”,
performance shall be carried out in accordance with the country’s relevant laws and
regulations and the Articles of Association of the Company, while immediate revision
of these Measures shall be made and submitted to the Company’s Board of Directors
for deliberation and approval.
Article 32 The Board of Directors is responsible for the formulation, revision and interpretation
of these Measures.
Article 33 The right of interpretation of these measures belongs to the Board of Directors of the
Company.
The Board of Directors
China Coal Energy Company Limited
14th July 2007
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
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Chapter One General Principles
Article 1 These measures are formulated in order to regulate the connected transactions of
China Coal Energy Company Limited (hereinafter referred to as “the Company”); to
protect the legal interests of the Company, shareholders, and creditors; and to ensure
the fairness of the decision-making actions of the Company relating to connected
transactions. These Measures are drawn up in accordance with the Company Law of
the People’s Republic of China (hereinafter referred to as “the Company Law”),
Enterprise Accounting Standard — Disclosure of Connected Parties, The Listing
Rules of Shanghai Stock Exchange(hereinafter referred to as “the Shanghai Stock
Exchange Listing Rules”), and the Articles of Association of the Company.
Article 2 The Company shall follow and implement the following principles in the recognition
and handling of relationships with connected persons and connected transactions:
(1) to avoid or reduce connected transactions with connected persons as far as
possible;
(2) must comply with the “factual disclosure” principle regarding connected
transactions that must take place;
(3) must comply with the general commercial principles of “fairness, righteousness,
openness, and valuable consideration” in determining the price of any connected
transaction, and relevant provisions shall be made for that in the form of
agreement.
Article 3 When the Company deals with the connected transactions with connected persons, it
shall not harm the legal rights and interests of the shareholders as a whole, especially
that of the minority shareholders.
Chapter Two The Recognition of Connected Persons and Connected Transactions
Article 4 The standards of connected parties and connected transactions shall be in accordance
with rules laid down by the laws, regulations and listing rules of the stock exchange
where the shares of the Company are listed.
Article 5 Under the leadership of the Secretary to the Board of Directors of the Company, the
Finance Department, Legal Affairs Department and the Board Secretariat, shall jointly
deal with the daily transactions and businesses of the Company. The relevant
responsible persons have the responsibilities and duties to carry out investigation on
the detailed background of counter-parties of transactions, and review the name list of
connected persons in detail to determine in a prudent manner whether transactions
constitute connected transactions, and to update the name list of connected parties at
any time.
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Article 6 When the Company enters into the following transactions or dealings with connected
parties, they are deemed as connected transactions between connected persons and the
Company, including but are not limited to:
(1) purchase or sales of goods;
(2) purchase or sales of other assets other than goods;
(3) provision and acceptance of services;
(4) guarantee;
(5) provision of funds (credit or equity investments)
(6) leasing;
(7) agency;
(8) transfer of research and development projects;
(9) licensing agreement;
(10) settlement of debts on behalf of the Company or by the Company on behalf of
the other party;
(11) remuneration of key management personnel.
Article 7 When there are different judgments on connected transactions due to provisions of the
laws and regulations, and the listing rules of the stock exchange of the place of listing,
all the relevant principles shall be applied respectively.
Chapter Three The Bringing up, Initial Review and Investigation of Connected Transactions
Article 8 During the course of business operations, when the finance department, the Legal
Affairs Department and the Board Secretariat of the Company come across
transactions between the Company and connected persons confirmed as connected
transactions according to the rules in Chapter Two of these Measures, the relevant
department shall submit a written report on the relevant connected transaction to the
Company’s head office, all relevant departments of the Company’s head office, and
disseminate to all enterprises under the Company.
The written report shall include the following contents:
(1) the names and addresses of the connected parties;
(2) specific details of the relevant connected transaction and the transaction amount;
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(3) the principle on which to determine the price of connected transactions and the
basis of price determination;
(4) other matters that need to be recorded.
Article 9 The Board Secretariat shall be responsible for assisting the Legal Affairs Department
in completing a compliance review of connected transactions, keeping in touch with
legal advisors, regulatory authorities, and stock exchanges, cooperating with legal
advisors to submit various announcements relating to connected transactions to the
regulatory authorities, arranging for the general meeting to examine and approve
matters relating to connected transactions, and arranging for public announcement of
connected transactions which are to be announced to the public.
Article 10 The finance department shall be responsible for designing specialized forms to record
continuing connected transactions and to include them in the monthly financial
express news reporting system, to compile monthly statistics on the amount of
continuing connected transactions of subsidiary enterprises, and to carry out relevant
procedures according to the requirements of these Measures.
Article 11 For non-continuing connected transactions, the Legal Affairs Department shall be
responsible for confirming at any time whether a transaction is a connected
transaction when reviewing commercial contracts of the Company and its subsidiaries.
A contract involving any connected transaction shall not be signed immediately and
shall be notified to the Board Secretariat to complete relevant approval procedures as
required.
Chapter Four Investigation by the Board of Directors of the Company
Article 12 Upon receipt of reports from relevant responsible departments, the Company’s Board
of Directors shall issue a notice to all the Directors to convene a Board Meeting.
Article 13 If the connected transaction is entered into with a Company’s Director or an individual
or other enterprises with which such Director has an interest, when the Company
convenes a Board Meeting to deliberate on the relevant connected transaction, the
convener of the meeting shall remind the relevant connected director to avoid from
taking part in voting for the resolution before the voting takes place. When the
connected director does not take the initiative to make a declaration and abstain from
voting for the resolution, directors who have knowledge of the situation shall request
the connected director to avoid from taking part in voting for the resolution.
Article 14 The Board of Directors shall investigate and discuss the necessity and reasonableness
of relevant connected transactions at the Board Meeting. Directors who attend the
Board Meeting can demand explanation from the management about whether it has
actively sought third parties in the market to enter into transactions to replace
connected transactions. The operational management shall provide explanations to the
Board of Directors on relevant results. When it is confirmed that there is no way to
find a third party to replace the connected transaction, the Board of Directors shall
confirm that the connected transaction is necessary.
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The Board of Directors shall consider the following factors in investigating the
reasonableness of connected transactions:
(1) When the object of a connected transaction is products procured by the
connected person from external sources, investigations must be carried out to
determine if the Company can procure or sell such products independently. When
the Company does not have the procurement or sales channels or when
procurement or sale by the Company itself cannot bring about relevant
preferential treatments; or if the Company, by procuring from or selling to
connected persons, can lower its production, procurement, or sales costs, the
Board of Directors shall confirm that the connected transaction is reasonable.
However, the price of the connected transaction shall be based on the
procurement price of the connected person plus absorption of a reasonable share
of procurement costs. Procurement costs can include transportation, loading and
unloading expenses.
(2) If the object of a connected transaction is products produced by the connected
person himself, then the transaction price for that connected transaction shall be
determined based on the production costs of the connection person plus a
reasonable share of profit.
(3) If the connection transaction concerns with the provision or acceptance of labor
services, agency, leasing, mortgage and guarantee, management, research,
development and licensing, then the Company must obtain or request the
connected person to provide the legal and valid basis for ascertaining transaction
prices so as to form the basis of signing agreements in respect of prices of the
relevant connected transaction.
Article 15 When deliberating on connected transactions, the Board of Directors shall:
(1) gain a detailed understanding of the actual conditions of the object of the
transaction, including its operating condition and earning power; whether any
defect in rights such as mortgage or freeze on the property exists; or whether
legal disputes such as litigation or arbitration exists;
(2) gain a detailed understanding of the credit history of the counter-party, its credit
status and ability to perform etc., and to select counter-party of transaction
prudently;
(3) ascertain the transaction price based on an adequate basis for price fixing;
(4) comply with the Shanghai Stock Exchange Listing Rules and when the Company
considers it necessary, intermediaries can be engaged to carry out audit or
assessment of the object of the transaction.
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The Board of Directors shall not deliberate and make decision on connected
transactions for which the condition of the object is not clear, the transaction price has
not yet been confirmed, or where the conditions of the counter-party to the transaction
is unclear.
Chapter Five Deliberation at Shareholders’ General Meeting
Article 16 When the Board of Directors of the Company examimes relevant connected
transactions and resolves to submit it to Shareholders’ General Meetings for
deliberation, the Board of Directors shall issue notice to convene a Shareholders’
General Meeting pursuant to the time limit and procedures prescribed in the Company
Law and the Company’s Articles of Association.
Connected transactions that are required to be submitted to Shareholders’ General
Meetings for deliberation under the Shanghai Stock Exchange Listing Rules must be
submitted by the Board of Directors to a Shareholders’ General Meeting for
deliberation.
Article 17 Shareholders’ General Meeting shall deliberate and vote on relevant connected
transactions submitted by the Board of Directors. At the time of voting, the Board of
Directors of the Company and the witnessing lawyer shall, before the shareholders
cast their votes, remind the connected shareholder(s) to abstain from voting. The
connected shareholder(s) shall abstain from voting in accordance with the Company
Law and the Articles of Association of the Company, and the voting rights represented
by his/their shareholding shall be excluded from the total number of valid votes. Both
the Independent Directors and Supervisors present at the Meeting shall express fair
opinions on the relevant connected transactions.
Chapter Six The Execution of Connected Transactions
Article 18 After connected transactions have gone through relevant approval procedures, the
Company shall sign a written agreement (or contract) on the relevant connected
transaction with the connected persons, specifying the rights, obligations and legal
responsibilities of both parties.
Article 19 Once the conditions of connected transactions, especially conditions on price and
terms of payment, are confirmed, various departments of the Company shall execute
transactions strictly in compliance with the approved conditions for transaction. The
operational management of the Company shall not change the conditions of
transaction on their own during the course of executing the transaction. If an
agreement or a contract of connected transaction must be terminated or amended due
to changes in production and operating conditions, parties to the contract can sign a
supplementary agreement (or contract) to terminate or amend the original contract.
APPENDIX VIII PROPOSED ADMINISTRATIVE MEASURES ON CONNECTED TRANSACTIONS
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Chapter Seven Information Disclosure for Connected Transaction
Article 20 Connected transactions that meet the following standards of the Shanghai Stock
Exchange Listing Rules shall be disclosed on a timely basis:
(1) any connected transaction between the Company and a connected natural person
involving an amount of Rmb 300,000 or more (except where the Company
provides guarantee);
(2) any connected transaction between the Company and a connected legal person
involving an amount of Rmb 3,000,000 or more and representing 0.5% or more
of the absolute value of the latest audited net assets of the Company;
Where the Company provides guarantees for connected parties, such guarantees,
irrespective of the amount involved, shall be disclosed on a timely basis after they are
considered and approved by the Board of Directors.
Article 21 Where provisions of the laws, regulations and listing requirements of a stock
exchange of the place of listing lead to different information disclosure requirements,
such requirements shall be followed.
Chapter Eight Examination and Supervision
Article 22 The Company shall carry out periodic examination of connected transactions and keep
proper records of the examinations.
Article 23 During the course of audit by an accounting firm, the Company shall furnish all
records of connected transactions truthfully, and provide all relevant records of
connected transactions to the independent directors.
Article 24 Directors, supervisors and senior management of the Company have the obligations to
pay close attention to see whether any embezzlement of funds of the Company by any
connected person exists, and whether other problems which infringe the Company’s
interests exist. The independent directors and supervisors of the Company shall have
access to records of money transactions between the Company and connected persons
to see whether there exists any misappropriation or transfer by the controlling
shareholder or its connected persons of the funds, assets or other resources of the
Company, and shall notify the board of directors promptly in case any irregularity is
discovered.
Article 25 If any misappropriation or transfer by any connected person of any funds, assets or
other resources of the Company has caused or may cause losses to the Company, the
board of directors of the Company shall promptly take such protective measures as
litigation or property preservation to prevent or minimize losses.
APPENDIX VIII PROPOSED ADMINISTRATIVE MEASURES ON CONNECTED TRANSACTIONS
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Chapter Nine Supplementary Provisions
Article 26 Connected transactions between the Company and subsidiaries, joint venture
companies and associated companies are exempted from submission for the
examination and consideration by the Board of Directors and deliberation by a
Shareholders’ General Meeting as required herein.
Connected transactions between subsidiaries of the Company and other connected
persons are deemed connected transactions between the Company and connected
persons.
Article 27 Besides complying with the regulations contained in these Measures, the Company
must also strictly comply with relevant regulations on connected transactions in the
Listing Rules of Hong Kong Stock Exchange.
Article 28 After being examined and adopted by a shareholders’ general meeting, these Measures
shall become effective from the date on which the Company’s Renminbi-denominated
common shares are listed. These Measures shall be binding on the Company, the board
of directors, directors, the supervisory committee, supervisors, chief executive officer
(manager) and other senior management personnel. The Company shall implement
these Measures before shares of the Company are listed.
Article 29 Matters not addressed in these Measures shall be handled in accordance with relevant
provisions of the country’s laws, regulations and the Articles of Association of the
Company. In case of conflict between provisions of these Measures and the national
laws and regulations to be promulgated from time to time in future and any duly and
legally amended Articles of Association of the Company, the provisions of such laws,
regulations, and the Articles of Association of the Company shall prevail and the
Measures shall be amended promptly and submitted to the general meeting of
shareholders for approval.
Article 30 The Board of Directors is responsible for the formulation, amendment and
interpretation of these Measures.
Article 31 The right of interpretation of these Measures belongs to the Board of Directors.
The Board of Directors —
China Coal Energy Company Limited14th July 2007
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX VIII PROPOSED ADMINISTRATIVE MEASURES ON CONNECTED TRANSACTIONS
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Chapter One General Principles
Article 1 To strengthen the risk management of China Coal Energy Company Limited
(hereinafter referred to as “the Company”), and regulate the Company’s acts
concerning the issue of securities in favour of external parties, this System is
formulated in accordance with the relevant laws and regulations including the
Company Law of the People’s Republic of China (hereinafter referred to as “the
Company Law”), the Securities Law of the People’s Republic of China (hereinafter
referred to as “the Securities Law”) and the Security Law of the People’s Republic of
China (hereinafter referred to as “the Security Law”. If the secured party is a
connected person as defined in the Rules Governing the Listing of Securities on the
Stock Exchange of Hong Kong Limited (hereinafter referred to as the “Listing
Rules”), it must also comply with the disclosure requirements on financial assistance
as stipulated in Chapter 14A of the Rules Governing the Listing of Securities on the
Stock Exchange of Hong Kong Limited. If a security is provided for an “associated
company” as defined in the Rules Governing the Listing of Securities on the Stock
Exchange of Hong Kong Limited and exceeds a certain amount, then it must comply
with the disclosure requirements of Chapter 13 of the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited.
Article 2 In principle, the Company and its subsidiaries are not allowed to provide securities in
favour of external parties in any form, with the exception of security issued in favour
of enterprises with close business relationships. These securities must go through the
relevant procedures as required in this System.
Article 3 Securities issued in favour of external parties must adhere to the general principle of
sufficient reasons.
(1) Securities issued in favour of external parties must bring significant benefits to
the Company, or the Company will certainly suffer great losses if such securities
are not provided. The benefits or losses must obviously be greater than the
relevant losses from the risk involved in the security in favour of external
parties.
(2) There exists a reciprocal security agreement with the guaranteed party, and the
scales of the cross securities are similar;
(3) Strict eradication of the issuance of securities in favour of external parties for
personal relationships.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
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Article 4 Securities issued in favour of external parties referred to in this System mean
securities provided by the Company for enterprises over which the Company does not
exercise control or which, although controlled by the Company, constitute connected
persons of the Company.
Chapter Two Specific Rules
Article 5 The Company and its subsidiaries are not allowed to provide securities in any form to
external parties except in the following circumstances:
A relevant entity provides a security in favour of an enterprise which has close
business relations with it and is suffering difficulties with operating funds in relation
to any borrowing from a financial institution such as a bank. In such case, the entity
must, as preconditions, carry out adequate investigation to gain an understanding of
the creditworthiness, performance ability and financial conditions of the entity which
applies for the security, and whether the application complies with the policy of
providing securities. The application is then submitted for review by the board of
directors or the General Manager’s Office of that entity which forms an opinion or
makes a proposal for approval by the Company or for consideration and approval by
the Shareholders’ General Meeting of the Company.
Before signing a security agreement, the relevant entity must request the guaranteed
party to provide a counter-guarantee and sign a counter-guarantee agreement. The
guaranteed party shall offer corresponding assets as a security and provide and pledge
valid proof of property rights. The value of the security for the counter-guarantee must
be higher than the guaranteed amount. The pledged assets must be valid assets not
subject to repeated pledges. An asset valuation institutions with the relevant
qualifications must be appointed to carry out valuations when necessary.
Entities that have obtained approval to provide securities must not sign long term
security contracts or agreements with a term of more than one year, and must not
provide revolving securities.
The provision of any form of securities for borrowings other than for borrowings from
banking or non-banking financial institutions for external business entities is not
allowed.
The provision of securities for borrowings in any form for non-business entities,
institutions, groups and individuals is not allowed.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
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Article 6 Approval authority in respect of securities in favour of external parties.
The following securities in favour of external parties must be reviewed and approved
by the Shareholders’ General Meetings:
(1) any security where the total sum of securities provided by the Company and its
holding subsidiaries exceeds 50% of the latest audited net assets;
(2) securities provided for secured parties with a gearing ratio of more than 70%;
(3) securities where the single guaranteed amount exceeds 10% of the latest audited
net assets;
(4) securities provided for shareholders, the actual controller and its connected
parties;
(5) apart from items (1) to (4), if other securities in favour of external parties
involve “disclosable transactions” as described in the Listing Rules of the Hong
Kong Stock Exchange, and the result of any of the five scale tests is greater than
or equals to 25%.
Securities in favour of external parties requiring approval by the Shareholders’
General Meetings shall be considered and approved by the Board of Directors before
they are submitted for approval at the Shareholders’ General Meetings. When a motion
for providing securities in favour of Shareholders, the actual controller and its
connected parties is considered at the Shareholders’ General Meetings, the
Shareholder(s) or the Shareholder(s) controlled by the actual controller shall abstain
from voting. The resolution shall be passed by more than half of the voting rights held
by other shareholders who attend the Shareholders’ General Meeting.
Except for the above circumstances, the Board of Directors is authorized to review and
approve securities in favour of external parties in other circumstances, but they must
be reviewed and approved by more than two third of the Directors present at the
Directors’ Meeting with a resolution passed.
Securities in favour of external parties approved by the Board of Directors or the
Shareholders’ General Meeting of the Company must be disclosed in a timely manner
in newspapers specified for information disclosure by the China Securities Regulatory
Commission. Information disclosed shall include the resolutions of the Board of
Directors or the Shareholders’ General Meeting, the aggregate amount of securities in
favour of external parties issued by the Company and its holding subsidiaries as at the
date of information disclosure, and the aggregate amount of securities issued by the
Company in favor of its holding subsidiaries.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
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Article 7 The principle of counter-guarantee must be adhered to for securities in favour of
external parties. This means that guaranteed parties are required to provide reliable
counter-guarantees, or to provide enforceable mortgages or pledges so that losses
arising from securities can be covered.
Article 8 Securities in favour of external parties must be subject to stringent risk assessment by
the department which proposes the project together with the finance department. Basic
information such as the business licence and the latest audited financial reports etc.
must be obtained from the guaranteed parties, projection of the application of project
funds and project information must be obtained; strict examination on the
creditworthiness and the solvency of the investee must be carried out, with
comprehensive estimation of various risks and a proposal on whether or not to provide
the security.
The Company can appoint external professional institutions to carry out risk
assessment of securities in favour of external parties when necessary, so as to form the
basis for the Board of Directors or the Shareholders’ General Meetings to make
decisions.
Article 9 Securities in favour of external parties must be approved by the Board of Directors or
the Shareholders’ General Meetings, or approved by the Chairman of the Board to the
extent authorized by the Board of Directors and then implemented by the Company.
Other departments or individuals within the Company have no rights to provide
securities to external parties on its behalf.
Article 10 Independent directors of the Company should express their independent opinions
while the Board of Directors is considering securities in favour of external parties. An
accounting firm can be appointed to audit the Company’s cumulative and current
conditions of securities in favour of external parties if necessary. Any irregularity
identified must be reported to the Board of Directors and the supervisory department
promptly, and a public announcement must also be made.
Article 11 Approval authority in respect of securities in favour of external parties
(1) Securities in favour of external parties that exceeds the approval authority of the
Chairman of the Board shall be approved by the Company’s Board of Directors.
The approval authority of the Company’s Board of Directors shall not exceed the
relevant requirements stipulated in the Articles of Association.
(2) Securities in favour of external parties that exceed the approval authority of the
Company’s Board of Directors shall be approved by the Shareholders’ General
Meetings of the Company.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
— 143 —
Article 12 The Company shall manage security contracts and related original documents
properly, process and examine them on a timely basis, conduct regular checks with
relevant institutions such as banks to ensure that the information on file is complete,
accurate and valid. Attention shall be paid to the limitation periods of securities.
During the course of contract management, once any irregular contract which has not
been approved by the Board of Directors or the Shareholders’ General Meeting is
identified, it shall be reported to the Board of Directors or the Supervisory Committee
in n a timely manner.
Article 13 During the effective term of securities in favour of external parties, the relevant
responsible department must keep the matter of relevant securities in favour of
external parties under strict control, collect the latest financial information and audit
reports of the guaranteed parties, conduct regular analyses of the financial conditions
and solvency. Besides, it shall also pay attention to the production operations, assets
and liabilities, securities in favour of external parties, spin-offs, mergers and changes
in legal representatives etc. of the guaranteed parties. It shall also set up relevant
financial files and report to the Board of Directors on a regular basis.
If it is discovered that the operating conditions of the guaranteed parties deteriorate
significantly or major events such as company dissolution or spin-off occur, the
relevant responsible person shall report to the Board of Directors in a timely manner.
The Board of Directors has the obligation to take effective measures to minimize loss.
Article 14 When the debt covered by a security in favour of external parties matures, the
Company shall urge the guaranteed party to duly perform its obligation of repayment.
If the guaranteed party fails to duly perform its obligation of repayment, the Company
shall take necessary remedial measures.
Article 15 The Company shall take effective measures to demand repayment from the debtor and
the party that provides the counter-guarantee after the Company acting as the
guarantor has performed its obligation of repayment on behalf of the debtor within the
limit of the security.
Article 16 Upon maturity of the debt covered by the Company’s security, if there is a need to
renew and continue to provide the security, it shall be treated as a new security in
favour of external parties, and shall undergo security approval procedures again.
Article 17 Holding subsidiaries of the Company shall follow the above procedures to provide
securities in favour of external parties. After the Board of Directors or the
Shareholders’ General Meeting passes a resolution, holding subsidiaries of the
Company shall notify the Company promptly to perform its obligation of information
disclosure.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
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Chapter Three Supplementary Articles
Article 18 This system is drawn up by the finance department of the Company and shall take
effect on the day when it is approved by the Board of Directors upon consideration.
Apart from provisions stipulated in this System, the Company must also strictly
adhere to the relevant regulations in the Listing Rules in respect of securities.
Article 19 Matters not addressed in this System shall be handled in accordance with the relevant
requirements of the state’s laws, regulations and regulatory documents such as the
“Articles of Association of the Company”. In the event that this System contravenes
the state’s laws and regulations to be promulgated from time to time in future and the
“Articles of Association of the Company” amended through legal procedures, it shall
be implemented in accordance with the state’s relevant laws and regulations and the
“Articles of Association of the Company”, while immediate revision of the System
shall be submitted to the Company’s Board of Directors for deliberation and the
passing of a resolution.
Article 20 The Board of Directors is responsible for the drawing up, revision and interpretation
of this System.
Article 21 The Board of Directors of the Company has the right to interpret this System.
The Board of Directors —
China Coal Energy Company Limited14th July 2007
This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.
APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES
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