Articles of Association - China Petroleum & Chemical Corp.
Articles of Association of
China Petroleum & Chemical Corporation
(Approved by the extraordinary shareholders' meeting on April 22, 2003;
approved by the State-owned Assets Administration Commission on June 5, 2003)
CHAPTER 1 GENERAL PROVISIONS
Article 1 These Articles of Association are drawn up in accordance with
the "Company Law of the People's Republic of China" (the
"Company Law"), "Special regulations of the State Council
regarding the issue of shares overseas and the listing of
shares overseas by companies limited by share" (the "Special
Regulations"), "Mandatory provisions for the Articles of
Association of the Company to be Listed Overseas" ("Mandatory
Provisions"), "Guidelines for Articles of Association of
Listed Companies", "Standards for the Governance of Listed
Companies" and other relevant laws and regulations to maintain
the legitimate interests of China Petroleum & Chemical
Corporation (the "Company") and its shareholders and
creditors, and to regulate the organization and conducts of
the Company.
Article 2 These Articles of Association of the Company are effective
on the date of incorporation of the Company. Any amendment to
these Articles of Association involving the Mandatory
Provisions shall be effective upon being passed by the
shareholders in a general meeting and examined and approved by
the company authorized by the State Council.
From the date on which the Company's Articles of Association
come into effect, the Company's Articles of Association shall
constitute a legally binding document regulating the Company's
organization and activities, and the rights and obligations
between the Company and its shareholders and among the
shareholders inter se.
Article 3 These Articles of Association are binding on the Company, its
shareholders and directors, supervisors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors; all of whom are entitled, according to
these Articles of Association, to make claims concerning the
affairs of the Company. A shareholder may take action against
the Company and the Company may take action against a
shareholder or a director, a supervisor, the president, the
vice-president, the Chief Financial Officer or the secretary
of the board of directors pursuant to these Articles of
Association. A shareholder may also take action against
another shareholder or directors, supervisors, president,
vice-president, Chief Financial Officer and the secretary of
the board of directors of the Company pursuant to these
Articles of Association.
The actions referred to in the preceding paragraph include
court proceedings and arbitration proceedings.
Article 4 The Company is a joint stock limited company established in
accordance with the Company Law, the Special Regulations and
other relevant laws and administrative regulations of the
State.
The Company was established by way of promotion with the
approval of the State Economic and Trade Commission of the
People's Republic of China ("PRC"), as evidenced by approval
document Guo Jing Mao Qi Gai [2000] No. 154. It is registered
with and has obtained a business licence from China's State
Administration Bureau of Industry and Commerce on 25 February
2000. The Company's business licence number is: 1000001003298.
The promoter of the Company is: China Petrochemical
Corporation.
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Article 5 The registered name of the Company:
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In Chinese: [omitted]
Abbreviation: [omitted]
In English: China Petroleum & Chemical Corporation
Abbreviation: SINOPEC Corp.
Article 6 The address of the Company: A6, Huixindong Street, Chaoyang District, Beijing,China.
Zip: 100029
Tel: (010) 64999295
Fax: (010) 64999294
Website: www.sinopec.com.cn
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Article 7 The Company's legal representative is the Chairman of the
board of directors of the Company.
Article 8 The Company is a joint stock limited company which has
perpetual existence. The capital of the Company is divided
into shares of equal value. The rights and responsibilities of
the Company's shareholders shall only be limited to the
proportion of the shares as held by them; the Company shall be
responsible for the Company's debts by all of its assets.
The Company is an independent legal person, subject to the
jurisdiction and under the protection of the laws and
administrative rules of the PRC.
Article 9 The Company may set up wholly-owned or holding branch
organizations such as subsidiaries, branches, representative
offices and offices according to its business development
needs. The wholly-owned or holding subsidiary may be named
with China Petroleum & Chemical Corporation's abbreviation
"SINOPEC". The branches, representative offices and offices
are non-legal person branch organizations and shall be named
with the full name of China Petroleum & Chemical Corporation.
The Company may set up branch organizations (whether or not
wholly-owned) outside the PRC and in the Hong Kong SAR, Macau
SAR and Taiwan according to its business development needs and
upon the approval of the relevant government body.
Article 10 The Company may invest in other limited liability companies
or joint stock limited companies. The Company's liabilities to
an invested company shall be limited to the amount of its
capital contribution to the invested company. The Company
shall not become the unlimited liability shareholder of other
profit-making organizations.
Upon approval of the companies approving department authorized
by the State Council, the Company may, according to its
operating and management needs, operate as a holding company
as prescribed in Article 12(2) of the Company Law.
CHAPTER 2 THE COMPANY'S OBJECTIVES AND SCOPE OF BUSINESS
Article 11 The operation objectives of the Company are: maximization of
the Company's profits, maximization of shareholders' return.
Article 12 The Company's scope of business shall be consistent with and
subject to the scope of business approved by the authority
responsible for the registration of the Company. The Company's
scope of business includes: the exploration, exploitation and
sales of oil and natural gas; pipeline transportation of oil
and natural gas; oil refining; the production, sales and
storage of oil, petrochemical products, chemical fiber
products and other chemical products; wholesaling, retailing
and storage of oil and other oil products; operation of
24-hour stores; power generation; manufacturing and
installation of machinery; purchase and sales of raw
materials, charcoal, equipment and parts; supervision of
manufacturing of equipment; research, development and
application of technology and information; import and export;
and provision of technology and labour.
CHAPTER 3 SHARES AND REGISTERED CAPITAL
Article 13 There must, at all times, be ordinary shares in the Company,
which include the "domestic-invested shares" and the
"foreign-invested shares". Subject to the approval of the
companies approving department authorized by the State
Council, the Company may, according to its requirements,
create different classes of shares.
Article 14 The shares issued by the Company shall each have a par value
of Renminbi one yuan. "Renminbi" as mentioned above means the
legal currency of the PRC.
Article 15 Shares of the Company are in the form of share certificates.
Subject to the approval of the securities authority of the
State Council, the Company may issue shares to Domestic
Investors and Foreign Investors. The issue of shares by the
Company shall adhere to the principle of openness and
fairness.
"Foreign Investors" means those investors who subscribe for
the Company's shares and who are located in foreign countries
and in the regions of Hong Kong, Macau and Taiwan. "Domestic
Investors" means those investors who subscribe for the
Company's shares and who are located within the territory of
the PRC (except the areas referred to above).
Article 16 Shares which the Company issues to domestic investors for
subscription in Renminbi are called "Domestic-Invested
Shares". Domestic-invested shares listed domestically are
called "Domestic-Listed Domestic-Invested shares" whilst other
kinds of domestic-invested shares are called "Non-Listed
Domestic-Invested Shares".
Shares which the Company issues to foreign investors for
subscription in foreign currencies are called
"Foreign-Invested Shares". Foreign-invested shares which are
listed overseas are called "Overseas-Listed Foreign-Invested
Shares".
"Foreign currencies" means the legal currencies of countries
or districts outside the PRC which are recognized by the
foreign exchange authority of the State and which can be used
to pay the share price to the Company.
The shareholders of "Domestic-Invested Shares" and the
shareholders of "Overseas-Listed Foreign-Invested Shares"
shall be shareholders of ordinary shares, possessing the same
rights and undertaking the same obligations.
Article 17 Foreign-Invested Shares issued by the Company and which are
listed in Hong Kong shall be referred to as "H Shares". "H
Shares" means the shares which have been admitted for listing
on The Stock Exchange of Hong Kong Limited (the "Stock
Exchange"), the par value of which is denominated in Renminbi
and which are subscribed for and traded in Hong Kong dollars.
Article 18 The Company's domestic-invested shares are held on trust by
the Shanghai branch of the China Securities Registration and
Clearing Company Limited. The Company's H shares are mainly
held by the Hong Kong Securities Clearing Company Limited.
Article 19 The Company has at the time of its establishment issued to the
promoter, China Petrochemical Corporation, 6,880,000 ordinary
shares, representing 100% of the issued ordinary shares of the
Company at that time.
Article 20 After the establishment of the Company and upon the approval
of the companies approving department authorized by the State
Council, the promoter, China Petrochemical Corporation,
transferred 19,379,390,000 domestic-invested shares to holders
of other non-listed domestic-invested shares; the Company
issued 16,780,488,000 H shares (out of these, 15,102,439,000
shares are new issue shares of the Company and 1,678,049,000
shares are stock shares sold by the promoter, China
Petrochemical Corporation). Upon completion of the H share
issuance, the Company issued 2,800,000,000 domestic-listed
domestic-invested shares.
The existing structure of the Company's share capital is as
follows: the total number of issued ordinary shares of the
Company is 86,702,439,000 shares, out of these, 47,742,561,000
shares representing 55.07% of the total number of issued
ordinary shares of the Company are held by the promoter, China
Petrochemical Corporation; 19,379,390,000 shares representing
22.35% are held by other non-listed domestic-invested
shareholders; 2,800,000,000 shares representing 3.23% are held
by domestic-listed domestic-invested shareholders; and
16,780,488,000 shares representing 19.35% are held by
foreign-listed foreign-invested shareholders.
Article 21 The Company's board of directors may take all necessary action
for the respective issuance of the Overseas-Listed
Foreign-Invested Shares and Domestic-Invested Shares after the
proposals for issuance of the same have been approved by the
securities authority of the State Council.
The Company may implement its proposal to issue
Overseas-Listed Foreign-Invested Shares and Domestic-Invested
Shares pursuant to the preceding paragraph within fifteen (15)
months from the date of approval by the securities regulatory
organ of the State Council.
Article 22 Where the total number of shares stated in the proposal for
the issuance of shares include Overseas-Listed
Foreign-Invested Shares and Domestic-Invested Shares, such
shares should be fully subscribed for at their respective
offerings. If the shares cannot be fully subscribed for all at
once due to special circumstances, the shares may, subject to
the approval of the securities regulatory organ of the State
Council, be issued on separate occasions.
Article 23 The registered capital of the Company is RMB86,702,439,000.
Article 24 The Company may, based on its operating and development needs,
authorize the increase of its capital pursuant to the
Company's Articles of Association.
The Company may increase its capital in the following ways:
(1) by offering new shares for subscription by unspecified
investors;
(2) by placing new shares to its existing shareholders;
(3) by allotting bonus shares to its existing shareholders;
(4) to increase the share capital with common reserve fund;
(5) by any other means which is permitted by the laws,
administrative regulations and the competent department
under the securities authority of the State Council.
After the Company's increase of share capital by means of the
issuance of new shares has been approved in accordance with
the provisions of the Company's Articles of Association, the
issuance thereof should be made in accordance with the
procedures set out in the relevant laws and administrative
regulations of the State.
Article 25 Unless otherwise stipulated in the relevant laws or
administrative regulations, shares in the Company shall be
freely transferable and are not subject to any lien.
CHAPTER 4 REDUCTION OF CAPITAL AND REPURCHASE OF SHARES
Article 26 According to the provisions of the Company's Articles of
Association, the Company may reduce its registered capital. In
so doing, it shall act according to the Company Law, other
relevant provisions and these Articles of Association.
Article 27 The Company must prepare a balance sheet and an inventory of
assets when it reduces its registered capital.
The Company shall notify its creditors within ten (10) days of
the date of the Company's resolution for reduction of capital
and shall publish an announcement in a newspaper at least
three (3) times within thirty (30) days of the date of such
resolution. A creditor has the right within thirty (30) days
of receipt of the notice from the Company or, in the case of a
creditor who does not receive such notice, within ninety (90)
days of the date of the first public announcement, to require
the Company to repay its debts or to provide a corresponding
guarantee for such debt. The Company's registered capital may
not, after the reduction in capital, be less than the minimum
amount prescribed by law.
Article 28 The Company may, in accordance with the procedures set out in
the Company's Articles of Association and with the approval of
the relevant governing authority of the State, repurchase its
outstanding shares under the following circumstances:
(1) cancellation of shares for the purposes of reducing its
capital;
(2) merging with another company that holds shares in the
Company;
(3) other circumstances permitted by laws and administrative
regulations.
The Company shall repurchase its outstanding shares in
accordance with the stipulations of Article 29 to Article 32.
Article 29 The Company may repurchase shares in one of the following
ways, with the approval of the relevant governing authority of
the State:
(1) by making an offer for the repurchase of shares to all
its shareholders on a pro rata basis;
(2) by repurchasing shares through public dealing on a stock
exchange;
(3) by repurchasing shares outside of the stock exchange
by means of an off-market agreement;
(4) by any other means which is permitted by the laws,
administrative regulations and the securities regulatory
organ of the State Council.
Article 30 The Company must obtain the prior approval of the shareholders
in a general meeting in the manner stipulated in the Company's
Articles of Association before it can repurchase shares
outside the stock exchange by means of an off-market
agreement. The Company may, by obtaining the prior approval of
the shareholders in a general meeting (in the same manner),
rescind or vary any contract which has been so entered into or
waive any right thereof.
A contract for the repurchase of shares referred to in the
preceding paragraph includes (without limitation) an agreement
to become liable to repurchase shares or an agreement to have
the right to repurchase shares.
The Company may not assign any contract for the repurchase of
its shares or any right contained in such contract.
Article 31 Shares which have been legally repurchased by the Company
shall be cancelled within 10 days of completion of the
repurchase (or such other shorter period as required by law or
administrative regulations), and the Company shall apply to
the original companies registration authority for registration
of the change in its registered capital. The aggregate par
value of the cancelled shares shall be deducted from the
Company's registered share capital.
Article 32 Unless the Company is in the course of liquidation, it must
comply with the following provisions in relation to repurchase
of its outstanding shares:
(1) where the Company repurchases shares at par value,
payment shall be made out of book surplus distributable
profits of the Company or out of proceeds of a new issue
of shares made for that purpose;
(2) where the Company repurchases shares of the Company at a
premium to its par value, payment up to the par value
may be made out of the book surplus of distributable
profits of the Company or out of the proceeds of a new
issue of shares made for that purpose. Payment of the
portion in excess of the par value shall be effected as
follows:
1. if the shares being repurchased were issued at par
value, payment shall be made out of the book
surplus of distributable profits of the Company;
2. if the shares being repurchased were issued at a
premium to its par value, payment shall be made out
of the book surplus of distributable profits of the
Company or out of the proceeds of a new issue of
shares made for that purpose, provided that the
amount paid out of the proceeds of the new issue
shall not exceed the aggregate amount of premiums
received by the Company on the issue of the shares
repurchased nor shall it exceed the book value of
the Company's capital common reserve fund account
(including the premiums on the new issue) at the
time of the repurchase;
(3) the Company shall make the following payments out of the
Company's distributable profits:
1. payment for the acquisition of the right to
repurchase its own shares;
2. payment for variation of any contract for the
repurchase of its shares;
3. payment for the release of its obligation(s) under
any contract for the repurchase of shares;
(4) after the Company's registered capital has been reduced
by the aggregate par value of the cancelled shares in
accordance with the relevant provisions, the amount
deducted from the distributable profits of the Company
for payment of the par value of shares which have been
repurchased shall be transferred to the Company's
capital common reserve fund account.
CHAPTER 5 FINANCIAL ASSISTANCE FOR ACQUISITION OF SHARES
Article 33 The Company and its subsidiaries shall not, at any time,
provide any form of financial assistance to a person who is
acquiring or is proposing to acquire shares in the Company.
This includes any person who directly or indirectly incurs any
obligations as a result of the acquisition of shares in the
Company.
The Company and its subsidiaries shall not, at any time,
provide any form of financial assistance to the Obligor for
the purposes of reducing or discharging the obligations
assumed by such person.
This Article shall not apply to the circumstances specified in
Article 35 of this Chapter.
Article 34 For the purposes of this Chapter, "financial assistance"
includes (without limitation) the following:
(1) gift;
(2) guarantee (including the assumption of liability by the
guarantor or the provision of assets by the guarantor to
secure the performance of obligations by the Obligor),
compensation (other than compensation in respect of the
Company's own default) or release or waiver of any
rights;
(3) provision of loan or the making of any other agreement
under which the obligations of the Company are to be
fulfilled before the obligations of another party, or
the change in parties to, or the assignment of rights
under, such loan or contract;
(4) any other form of financial assistance given by the
Company when the Company is insolvent or has no net
assets or when its net assets would thereby be reduced
to a material extent.
For the purposes of this Chapter, "assumption of obligations"
includes the assumption of obligations by way of contract or
by way of arrangement (irrespective of whether such contract
or arrangement is enforceable or not and irrespective of
whether such obligation is to be borne solely by the Obligor
or jointly with other persons) or by any other means which
results in a change in his financial position.
Article 35 The following acts shall not be deemed to be acts prohibited
by Article 33 of this Chapter:
(1) the provision of financial assistance by the Company
where the financial assistance is given in good faith in
the interests of the Company, and the principal purpose
of which is not for the acquisition of shares in the
Company, or the giving of the financial assistance is an
incidental part of a master plan of the Company;
(2) the lawful distribution of the Company's assets as
dividend;
(3) the distribution of dividends in the form of shares;
(4) a reduction of registered capital, a repurchase of
shares of the Company or a reorganization of the share
holding structure of the Company effected in accordance
with the Company's Articles of Association;
(5) the provision of loans by the Company within its scope
of business and in the ordinary course of its business,
where the provision of loans falls within part of the
scope of business of the Company (provided that the net
assets of the Company are not thereby reduced or that,
to the extent that the assets are thereby reduced, the
financial assistance is provided out of distributable
profits);
(6) contributions made by the Company to the employee share
ownership schemes (provided that the net assets of the
Company are not thereby reduced or that, to the extent
that the assets are thereby reduced, the financial
assistance is provided out of distributable profits).
CHAPTER 6 SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS
Article 36 Share certificates of the Company shall be in registered form.
The shares of the Company shall bear the following main items:
(1) Name of the Company;
(2) Date of registration and establishment of the Company;
(3) Type of shares, par value and the number of shares it
represents;
(4) Code of share certificates;
(5) Other matters as required by the Company Law, Special
Regulations and the stock exchange on which the shares
of the Company are listed.
Article 37 The shares of the Company may be transferred, donated,
inherited and pledged in accordance with the relevant laws,
administrative rules, regulations of the competent
department(s) as well as these Articles of Association.
The transfer of shares shall be registered with the share
registration organisation appointed by the Company.
Article 38 The Company does not accept the pledging of its shares.
Article 39 The directors, supervisors, president, vice-president, Chief
Financial Officer and secretary of the board of directors of
the Company shall, during their term of office, declare to the
Company regularly the Company's shares held by them. During
their term of office and within 6 months of their leaving,
they may not transfer the Company's shares held by them.
Article 40 If a shareholder who holds 5% or above of voting shares sells
his shares in the Company within 6 months of his purchase or
purchases again within 6 months of the sale, the profits thus
made shall belong to the Company.
The preceding provision shall apply to senior officers
prescribed in the articles of association of a legal person
shareholder holding 5% or above of the voting shares in the
Company, including but without limitation to its directors,
supervisors and the president.
Article 41 Share certificates of H-shares of the Company shall be signed
by the Chairman of the Company's board of directors. Where the
stock exchange(s) on which the Company's shares are listed
require other directors and/or supervisors, president,
vice-president, Chief Financial Officer and the secretary of
the board of directors of the Company to sign on the share
certificates, the share certificates shall also be signed by
such officer(s). The share certificates shall take effect
after being sealed or imprinted with the seal of the Company
(or the Company chop for securities). The share certificate
shall only be sealed with the Company's seal or securities
chop under the authorization of the board of directors. The
signatures of the Chairman of the board of directors or other
officer(s) of the Company may be printed in printed form.
Article 42 The Company shall keep a register of shareholders which shall
contain the following particulars:
(1) the name (title) and address (residence), the occupation
or nature of each shareholder;
(2) the class and quantity of shares held by each
shareholder;
(3) the amount paid-up on or agreed to be paid-up on the
shares held by each shareholder;
(4) the share certificate number(s) of the shares held by
each shareholder;
(5) the date on which each person was registered as a
shareholder;
(6) the date on which any shareholder ceased to be a
shareholder. Unless there is evidence to the contrary,
the register of shareholders shall be sufficient
evidence of the shareholders' shareholdings in the
Company.
Article 43 The Company may, in accordance with the mutual understanding
and agreements made between the securities regulatory organ of
the State Council and overseas securities regulatory
organizations, maintain the register of shareholders of
Overseas-Listed Foreign-Invested Shares overseas and appoint
overseas agent(s) to manage such register of shareholders. The
original register of shareholders for holders of H Shares
shall be maintained in Hong Kong.
A duplicate register of shareholders for the holders of
Overseas-Listed Foreign-Invested Shares shall be maintained at
the Company's residence. The appointed overseas agent(s) shall
ensure consistency between the original and the duplicate
register of shareholders at all times.
If there is any inconsistency between the original and the
duplicate register of shareholders for the holders of
Overseas-Listed Foreign-Invested Shares, the original register
of shareholders shall prevail.
Article 44 The Company shall have a complete register of shareholders
which shall comprise the following parts:
(1) the register of shareholders which is maintained at the
Company's residence (other than those share registers
which are described in sub-paragraphs (2) and (3) of
this Article);
(2) the register of shareholders in respect of the holders
of Overseas-Listed Foreign-Invested Shares of the
Company which is maintained in the same place as the
overseas stock exchange on which the shares are listed;
and
(3) the register of shareholders which is maintained in such
other place as the board of directors may consider
necessary for the purposes of the listing of the
Company's shares.
Article 45 Different parts of the register of shareholders shall not
overlap. No transfer of any shares registered in any part of
the register shall, during the continuance of that
registration, be registered in any other part of the register.
All Overseas-Listed Foreign-Invested Shares listed in Hong
Kong which have been fully paid-up may be freely transferred
in accordance with the Company's Articles of Association.
However, unless such transfer complies with the following
requirements, the board of directors may refuse to recognize
any instrument of transfer and would not need to provide any
reason therefor:
(1) a fee of HK$2.50 per instrument of transfer or such
higher amount agreed by the Stock Exchange has been paid
to the Company for registration of the instrument of
transfer and other documents relating to or which will
affect the right of ownership of the shares;
(2) the instrument of transfer only relates to
Overseas-Listed Foreign-Invested Shares listed in Hong
Kong;
(3) the stamp duty which is chargeable on the instrument of
transfer has already been paid;
(4) the relevant share certificate(s) and any other evidence
which the board of directors may reasonably require to
show that the transferor has the right to transfer the
shares have been provided;
(5) if it is intended that the shares be transferred to
joint owners, the maximum number of joint owners shall
not be more than four (4); and
(6) the Company does not have any lien on the relevant
shares.
All Overseas-Listed Foreign-Invested Shares listed in Hong
Kong shall be transferred by an instrument in writing in any
usual or common form or any other form which the directors may
approve. The instrument of transfer of any share may only be
executed by hand without seal, or if the assignor or the
assignee is the recognized clearing house or its nominee, the
share transfer form may be executed by hand or in
mechanically-printed form. All instruments of transfer must be
placed at the legal address of the Company or in other places
as the Board of Directors may be specified at any time.
Amendments or rectification of the register of shareholders
shall be made in accordance with the laws of the place where
the register of shareholders is maintained.
Article 46 No change may be made in the register of shareholders as a
result of a transfer of shares within thirty (30) days prior
to the date of a shareholders' general meeting or within five
(5) days before the determination date for the Company's
distribution of dividends.
Article 47 When the Company needs to convene a shareholders' meeting
for the purposes of determination, dividend distribution, for
liquidation or for any other purpose which need to determine
shareholdings, the board of directors shall determine a record
date for the determination of shareholdings. The shareholders
of the Company shall be such persons who appear in the
register of shareholders at the close of such record date.
Article 48 Any person who disputes the register of shareholders and
asks for inclusion of his name in or removal of his name from
the register of shareholders may apply to a court of competent
jurisdiction for rectification of the register.
Article 49 For any person who is a registered shareholder or who
claims to be entitled to have his name (title) entered in the
register of shareholders in respect of shares in the Company
may, if his share certificate (the "original certificate")
relating to the shares is lost, he may apply to the Company
for a replacement share certificate in respect of such shares
(the "Relevant Shares").
Application by a holder of Domestic-Invested Shares, who has
lost his share certificate, for a replacement share
certificate shall be dealt with in accordance with Article 150
of the Company Law.
Application by a holder of Overseas-Listed Foreign-Invested
Shares, who has lost his share certificate, for a replacement
share certificate may be dealt with in accordance with the law
of the place where the original register of shareholders of
holders of Overseas-Listed Foreign-Invested Shares is
maintained, the rules of the stock exchange or other relevant
regulations.
The issue of a replacement share certificate to a holder of H
Shares, who has lost his share certificate, shall comply with
the following requirements:
(1) The applicant shall submit an application to the Company
in a prescribed form accompanied by a notarial
certificate or a statutory declaration, of which the
contents shall include the grounds upon which the
application is made and the circumstances and evidence
of the loss, and the declaration showing that no other
person is entitled to have his name entered in the
register of shareholders in respect of the Relevant
Shares.
(2) The Company has not received any declaration made by any
person other than the applicant declaring that his name
shall be entered in the register of shareholders in
respect of such shares before it decides to issue a
replacement share certificate to the applicant.
(3) The Company shall, if it intends to issue a replacement
share certificate, publish a notice of its intention to
do so at least once every thirty (30) days within a
period of ninety (90) consecutive days in such
newspapers as may be prescribed by the board of
directors.
(4) The Company shall, prior to publication of its intention
to issue a replacement share certificate, deliver to the
stock exchange on which its shares are listed, a copy of
the notice to be published and may publish the notice
upon receipt of confirmation from such stock exchange
that the notice has been exhibited in the premises of
the stock exchange. Such notice shall be exhibited in
the premises of the stock exchange for a period of
ninety (90) days. In the case of an application which is
made without the consent of the registered holder of the
Relevant Shares, the Company shall deliver by mail to
such registered shareholder a copy of the notice to be
published.
(5) If, by the expiration of the 90-day period referred to
in paragraphs (3) and (4) of this Article, the Company
has not received any objection from any person in
respect of the issuance of the replacement share
certificate, it may issue a replacement share
certificate to the applicant pursuant to his
application.
(6) Where the Company issues a replacement share certificate
pursuant to this Article, it shall forthwith cancel the
original share certificate and document the cancellation
of the original share certificate and issuance of a
replacement share certificate in the register of
shareholders accordingly.
(7) All expenses relating to the cancellation of an original
share certificate and the issuance of a replacement
share certificate shall be borne by the applicant and
the Company is entitled to refuse to take any action
until reasonable guarantee is provided by the applicant
therefor.
Article 50 Where the Company issues a replacement share certificate
pursuant to the Company's Articles of Association, as for a
bona fide purchaser obtaining new share certificates referred
to above or a shareholder registered as a owner of the shares
(in case of a bona fide purchaser), his name (title) shall not
be removed from the register of shareholders.
Article 51 The Company shall not be liable for any damages sustained
by any person by reason of the cancellation of the original
share certificate or the issuance of the replacement share
certificate unless the claimant is able to prove that the
Company has acted in a deceitful manner.
CHAPTER 7 SHAREHOLDERS' RIGHTS AND OBLIGATIONS
Article 52 A shareholder of the Company is a person who lawfully holds
shares in the Company and whose name (title) is entered in the
register of shareholders. A shareholder shall enjoy rights and
assume obligations according to the class and amount of shares
held by him; shareholders who hold shares of the same class
shall enjoy the same rights and assume the same obligations.
For the joint shareholders, if one of the joint shareholders
has passed away, the surviving shareholder shall be deemed by
the Company to have the ownership of the related shares, but
the Board of Directors is entitled to ask for the provision of
the suitable death certificate for the purpose of revision of
the shareholders' register. For the joint shareholders, only
the first named shareholder in the shareholders' register has
the right to receive the share certificates of the related
shares, receive the notice of the Company, attend the
shareholders' general meeting and exercise his voting right;
while, any notice delivered to the said shareholder shall be
deemed as if the notice has been delivered to all of the joint
shareholder of the related shares.
Article 53 The shareholders of ordinary shares of the Company shall enjoy
the following rights:
(1) the right to receive dividends and other distributions
in proportion to their shareholdings;
(2) the right to attend or appoint a proxy to attend
shareholders' general meetings and to vote thereat
according to their shareholdings;
(3) the right to supervise the Company's business
operations, the right to present proposals or to raise
queries;
(4) the right to transfer, donate and pledge shares in
accordance with laws, administrative regulations and
provisions of the Company's Articles of Association;
(5) subject to production of the relevant proofs of the type
and quantity of shares that they are holding to the
Company and verification of their identities of
shareholders by the Company, the right to obtain
relevant information in accordance with laws,
administrative regulations and provisions of these
Articles of Association, which information includes:
i. the right to obtain a copy of the Company's
Articles of Association, subject to payment of
costs;
ii. the right to inspect and copy, subject to payment
of a reasonable fee:
(i) all parts of the register of shareholders;
(ii) personal particulars of each of the Company's
directors, supervisors, president,
vice-president, Chief Financial Officer and
secretary of the board of directors,
including:
(a) present and former name and alias;
(b) principal address (place of residence);
(c) nationality;
(d) primary and all other part-time
occupations and duties;
(e) identification documents and the numbers
thereof;
(iii) report on the state of the Company's share
capital;
(iv) reports showing the aggregate par value, quantity,
highest and lowest price paid in respect of each
class of shares repurchased by the Company since
the last accounting year and the aggregate amount
paid by the Company for this purpose;
(v) minutes of shareholders' general meetings;
(vi) regular reports and interim reports of the
Company.
(6) in the event of the termination or liquidation of the
Company, the right to participate in the distribution of
remaining assets of the Company in accordance with the
number of shares held;
(7) in the event that the resolution of a shareholders'
general meeting or board meeting is against the law or
administrative rules and has infringed the legitimate
interest of a shareholder, the shareholder shall have
the right to commence legal proceedings to stop the
illegal or infringing act and to ask the Company to
bring a claim for compensation;
(8) other rights conferred by laws, administrative
regulations and these Articles of Association.
Article 54 The shareholders of ordinary shares of the Company shall
assume the following obligations:
(1) to comply with these Articles of Association;
(2) to pay subscription money according to the number of
shares subscribed and the method of subscription;
(3) not to retire from being a shareholder unless required
by law or administrative regulations;
(4) other obligations imposed by laws, administrative
regulations and these Articles of Association.
Shareholders are not liable to make any further contribution
to the share capital other than according to the terms which
were agreed by the subscriber of the relevant shares at the
time of subscription.
Article 55 In addition to the obligations imposed by laws and
administrative regulations or required by the listing rules of
the stock exchange on which the Company's shares are listed, a
controlling shareholder shall not exercise his voting rights
in respect of the following matters in a manner prejudicial to
the interests of all or part of the shareholders of the
Company:
(1) act honestly in the best interests of the Company in
removing a director or supervisor;
(2) to approve the expropriation by a director or supervisor
(for his own benefit or for the benefit of another
person) of the Company's assets in any way, including
(without limitation to) opportunities which are
beneficial to the Company;
(3) to approve the expropriation by a director or supervisor
(for his own benefit or for the benefit of another
person) of the individual interest of other
shareholders, including (but without limitation to)
rights to distributions and voting rights (excluding a
restructuring which has been submitted for approval by
the shareholders in a general meeting in accordance with
the Company's Articles of Association).
Article 56 For the purpose of the foregoing Article, a "controlling
shareholder" means a person who satisfies any one of the
following conditions:
(1) a person who, acting alone or in concert with others,
has the power to elect more than half of the board of
directors;
(2) a person who, acting alone or in concert with others,
has the power to exercise 30% or more or has power to
control the exercise of 30% or more of the voting rights
in the Company;
(3) a person who, acting alone or in concert with others,
holds 30% or more of the issued and outstanding shares
of the Company;
(4) a person who, acting alone or in concert with others,
has de facto control of the Company in any other way.
"Acting in concert" referred to above means the acting of two
or more persons by agreement (whether verbal or in writing) so
as to gain or strengthen the control of the Company through
the acquisition of voting rights in the Company by either of
them.
CHAPTER 8 SHAREHOLDERS' GENERAL MEETINGS
Article 57 The shareholders' general meeting is the organ of authority
of the Company and shall exercise its functions and powers in
accordance with law.
The Company shall draw up "Rules and Procedures for the
Shareholders' General Meetings" for implementation after being
approved by the shareholders in a general meeting. The Rules
and Procedures for the Shareholders' General Meetings shall
include the followings:
(1) functions and powers of the shareholders general
meetings;
(2) authorities given by the shareholders' general meetings
to the board of directors;
(3) procedures for the convening of a shareholders' general
meeting, which include the putting forward, collection
and approval of motions and notices of meetings and any
change thereto, registration of the meeting, convening
of, voting and resolutions made in the meeting,
adjournments, past-session matters and announcements,
etc.;
(4) other matters deemed necessary by the shareholders'
general meeting. The Rules and Procedures for the
Shareholders' General Meetings is an integral part of
and has the same legal effect as these Articles of
Association.
Article 58 The shareholders' general meeting shall have the following
functions and powers:
(1) to decide on the Company's operational policies and
investment plans;
(2) to elect and replace directors and to decide on matters
relating to the remuneration and liability insurance of
directors;
(3) to elect and replace supervisors who are shareholder
representatives and to decide on matters relating to the
remuneration and liability insurance of supervisors;
(4) to examine and approve the board of directors' reports;
(5) to examine and approve the supervisory committee's
reports;
(6) to examine and approve the Company's profit distribution
plans and loss recovery plans;
(7) to examine and approve the Company's proposed annual
preliminary and final financial budgets;
(8) to pass resolutions on the increase or reduction of the
Company's registered capital;
(9) to pass resolutions on matters such as merger, division,
dissolution and liquidation of the Company;
(10) to pass resolutions on the issue of debentures by the
Company;
(11) to pass resolutions on the appointment, dismissal and
non-reappointment of the accountants of the Company;
(12) to amend the Company's Articles of Association and its
appendices (including the Rules and Procedures for the
Shareholders' General Meetings, Rules and Procedures for
the Board of Directors' Meetings and Rules and
Procedures for the Supervisors' Meetings);
(13) to consider motions raised by the supervisory committee
or shareholders who represent 5% or more of the total
number of voting shares of the Company at annual general
meetings;
(14) to decide on other matters which, according to laws,
administrative regulations, regulations of the competent
department(s) or these Articles of Association, need to
be approved by shareholders in general meetings;
Article 59 Matters which shall be determined by the shareholders in a
general meeting according to the laws, administrative
regulations, regulations of the competent departments or these
Articles of Association must be discussed by the shareholders
in a general meeting in order to protect the shareholders'
right of decision on those matters. Where necessary and
reasonable, the board of directors or its secretary may be
appointed in a shareholders' general meeting to determine (if
so authorized in the general meeting) specific matters which
are related to the matters to be resolved and are not possible
or not necessary to be determined in that general meeting.
Please see the Rules and Procedures for the Shareholders'
General Meetings for the form of authorization by shareholders
to the board of directors in a shareholders' general meeting
to determine major matters of the Company.
If the shareholders authorize the board of directors or its
secretary in a general meeting to determine matters which
shall be determined by ordinary resolutions, the matter should
be resolved by more than one-half of the attending
shareholders (including their proxy) who have voting rights;
if the authorization relates to matters which shall be
determined by special resolutions, the matter should be
resolved by more than two-thirds of the attending shareholders
(including their proxy) who have voting rights. The
authorization should be clear and specific.
Article 60 Unless prior approval of shareholders in the form of a
special resolution is obtained in a general meeting, the
Company shall not enter into any contract with any person
other than the directors, supervisors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors of the Company pursuant to which such
person shall be responsible for the management and
administration of the whole or any substantial part of the
Company's business.
Article 61 Shareholders' general meetings are divided into annual
general meetings ("AGM") and extraordinary general meetings
("EGM"). Unless otherwise provided in these Articles of
Association and the Rules and Procedures for the Shareholders'
General Meetings, shareholders' general meetings shall be
convened by the board of directors.
Article 62 AGMs are held once every year and within six (6) months from
the end of the preceding accounting year. At least the
following matters should be resolved in an AGM:
(1) examination of the board of directors' annual report;
(2) examination of the supervisory committee's annual
report;
(3) examination of the Company's profit distribution
proposal;
(4) examination of the Company's audited final budgets for
the preceding year;
(5) engagement, removal or non-renewal of the appointment of
the accounting firm by the Company and determination of
the remuneration of the accounting firm so engaged.
Matters to be considered in an AGM including but without
limitation to the above matters, and any matter that could be
considered in a general meeting may be considered in an AGM.
In an AGM, the supervisory committee and shareholders who
individually or jointly hold 5% or more of the Company's
voting shares shall have the right to put forward provisional
motions.
Article 63 The board of directors shall convene an EGM within two (2)
months after the occurrence of any one of the following
events:
(1) where the number of directors is less than the number
stipulated in the Company Law or two-thirds of the
number specified in the Company's Articles of
Association;
(2) where the unrecovered losses of the Company amount to
one-third of the total amount of its share capital;
(3) where shareholder(s) who individually or jointly hold
10% or more of the Company's issued and outstanding
voting shares (not including voting by proxy) request(s)
in writing for the convening of an EGM;
(4) whenever the board of directors deems necessary or the
supervisory committee so requests;
(5) other circumstances provided by these Articles of
Association. The shareholdings referred to in item (3)
above shall be calculated as at the date of written
request of the shareholders.
Article 64 Any request for the board of directors to hold an AGM or class
meeting made by the supervisory committee or shareholders who
individually or jointly hold 10% of the Company's voting
shares entitling them to vote in that proposed meeting shall
be dealt with according to the provisions of the Rules and
Procedures for the Shareholders' General Meetings.
If a meeting is convened by the shareholders themselves where
the board of directors has not given the required consent
under the Rules and Procedures for the Shareholders' General
Meetings to the same, the reasonable expenses thus incurred
shall be borne by the Company and paid out of the money
payable by the Company to the negligent director(s).
Article 65 If the number of members of the board of directors falls short
of the number prescribed by the Company Law or is less than
two-thirds of the number prescribed in these Articles of
Association, or if the Company's non-recovered loss has
amounted to one third of the share capital and the board of
directors has failed to call for an EGM in the prescribed
time, shareholders may call for an EGM on their own according
to the prescribed procedures of the Rules and Procedures for
the Shareholders' General Meetings.
Article 66 Any shareholders who individually or jointly hold 10% or
more of the voting shares entitling them to vote in the
proposed meeting have any dispute as to the board of
directors' non-inclusion of their motion into the agenda may,
according to the prescribed procedures of the Rules and
Procedures for the Shareholders' General Meetings, ask for the
convening of an EGM.
Article 67 A motion of a shareholders' general meeting is a discussion
paper of a matter which should be discussed in a general
meeting and shareholders should resolve on the specific motion
in a general meeting. The contents, form and issuing
procedures of a motion shall comply with the requirements of
the Rules and Procedures for the Shareholders' General
Meetings.
Article 68 When the Company convenes a shareholders' general meeting,
written notice of the meeting shall be given forty-five (45)
days (including the date of the meeting) before the date of
the meeting to notify all of the shareholders whose names
appear in the share register of the matters to be considered
and the date and place of the meeting. The contents, form and
issuing procedures of the notice shall comply with the
requirements of the Rules and Procedures for the Shareholders'
General Meetings.
Article 69 Any shareholder who is entitled to attend and vote at a
general meeting of the Company shall be entitled to appoint
one (1) or more persons (whether such person is a shareholder
or not) as his proxy or proxies to attend and vote on his
behalf, and a proxy so appointed shall be entitled to exercise
the following rights pursuant to the authorization from that
shareholder:
(1) the shareholders' right to speak at the meeting;
(2) the right to demand or join in demanding a poll;
(3) the right to vote by hand or on a poll, but a proxy of a
shareholder who has appointed more than one (1) proxy
may only vote on a poll.
If the said shareholder is a recognized clearing house as
defined by Securities and Futures (Clearing House) Ordinance
(Chapter 420 of Hong Kong Law) or the Securities and Futures
Ordinance, the shareholder may authorize one or more suitable
person to act as its representative at any shareholders'
general meeting or any kinds of shareholders' general meeting;
however, if more than one person are authorized, the power of
attorney shall clearly indicate the number and types of the
stocks involved by way of the said authorization. The persons
after such authorization may represent the recognized clearing
house (or its "proxy") to exercise the rights, as if they were
the individual shareholders of the Company.
Article 70 The instrument appointing a proxy to attend the general
meeting shall be in writing clearly indicating the number of
shares of the appointor represented by the proxy and shall be
under the hand of the appointor or his attorney duly
authorized in writing, or if the appointor is a legal person,
either under seal or under the hand of a director or a duly
authorized attorney. If several proxies are appointed, such
written instrument shall clearly indicate the number of shares
of the appointor represented by each proxy. The remaining
contents and form of the instrument shall comply with the
requirements of the Rules and Procedures for the Shareholders'
General Meetings.
Article 71 Any form given to a shareholder by the directors for use by
such shareholder for the appointment of a proxy to attend and
vote at meetings of the Company shall be such as to enable the
shareholder to freely instruct the proxy to vote in favour of
or against the motions, such instructions being given in
respect of each individual matter to be voted on at the
meeting. Such a form shall contain a statement that, in the
absence of specific instructions from the shareholder, the
proxy may vote as he thinks fit.
Article 72 A vote made in accordance with the terms of a proxy shall
be valid notwithstanding the death or loss of capacity of the
appointor or revocation of the proxy or the authority under
which the proxy was executed, or the transfer of the shares in
respect of which the proxy is given, provided that the Company
did not receive any written notice in respect of such matters
before the commencement of the relevant meeting.
Article 73 Apart from the independent directors, the Company's board
of directors and shareholders who meet the relevant
requirements may also collect from other shareholders of the
Company the rights to vote in a shareholders' general meeting.
The collection of voting rights shall be without consideration
with sufficient disclosure of information to the shareholders
from whom voting rights are being collected.
Article 74 When a connected transaction is discussed in a
shareholders' general meeting, the connected shareholders
shall not take part in the voting and the number of voting
shares represented by him will not be counted in.
Announcements of resolutions made in the shareholders in a
general meeting shall make full disclosure of the votes cast
by non-connected shareholders.
Article 75 A shareholder (including a proxy), when voting at a
shareholders' general meeting, may exercise such voting rights
as are attached to the number of voting shares which he
represents except when the accumulated voting system under
Article 103 hereof regarding election of directors is adopted
in which case one (1) vote is attached to each share. Please
refer to the Rules and Procedures for the Shareholders'
General Meetings for the implementation of the accumulated
voting system.
Article 76 At any shareholders' general meeting, a resolution shall be
decided on a show of hands unless a poll is demanded:
(1) by the chairman of the meeting;
(2) by at least two (2) shareholders present in person or by
proxy entitled to vote thereat;
(3) by one (1) or more shareholders present in person or by
proxy and representing 10 % or more of all shares
carrying the right to vote at the meeting singly or in
aggregate, before or after a vote is carried out by a
show of hands.
Unless a poll is demanded, a declaration by the chairman that
a resolution has been passed on a show of hands and the record
of such in the minutes of the meeting shall be conclusive
evidence of the fact that such resolution has been passed.
There is no need to provide evidence of the number or
proportion of votes in favour of or against such resolution.
The demand for a poll may be withdrawn by the person who
demands the same.
Article 77 A poll demanded on the election of the chairman of the
meeting, or on a question of adjournment of the meeting, shall
be taken forthwith. A poll demanded on any other question
shall be taken at such time as the chairman of the meeting
directs, and any business other than that upon which a poll
has been demanded may be proceeded with, pending the taking of
the poll. The result of the poll shall be deemed to be a
resolution of the meeting at which the poll was demanded.
Article 78 On a poll taken at a meeting, a shareholder (including a
proxy) entitled to two (2) or more votes need not cast all his
votes in the same way.
Article 79 In the case of an equality of votes, whether on a show of
hands or on a poll, the chairman of the meeting at which the
show of hands takes place or at which the poll is demanded
shall have a casting vote.
Article 80 Resolutions of shareholders' general meetings shall be
divided into ordinary resolutions and special resolutions. An
ordinary resolution must be passed by votes representing more
than one-half of the voting rights represented by the
shareholders (including their proxy) present at the meeting.
A special resolution must be passed by votes representing more
than two-thirds of the voting rights represented by the
shareholders (including their proxy) present at the meeting.
The shareholders (including their proxy) attending the meeting
shall clearly show approval or objection to every matter to be
voted on. As for the unpolled vote or abstention, the Company
will not treat it as the vote with voting right when
calculating the voting result of this matter.
Article 81 The following matters shall be resolved by an ordinary
resolution at a shareholders' general meeting:
(1) work reports of the board of directors and the
supervisory committee;
(2) profit distribution plans and loss recovery plans
formulated by the board of directors;
(3) removal of members of the board of directors and members
of the supervisory committee who are shareholders'
representatives, their remuneration and manner of
payment and their liability insurance;
(4) annual preliminary and final budgets, balance sheets and
profit and loss accounts and other financial statements
of the Company;
(5) matters other than those which are required by the laws
and administrative regulations or by the Company's
Articles of Association to be adopted by special
resolution.
Article 82 The following matters shall be resolved by a special
resolution at a shareholders' general meeting:
(1) the increase or reduction in share capital and the issue
of shares of any class, warrants and other similar
securities;
(2) the issue of debentures of the Company;
(3) the division, merger, dissolution and liquidation of the
Company;
(4) amendment of the Company's Articles of Association;
(5) repurchase of the Company's shares;
(6) any other matters considered by the shareholders in
general meeting, and resolved by way of an ordinary
resolution, to be of a nature which may have a material
impact on the Company and should be adopted by special
resolutions.
Article 83 The chairman of the meeting shall be responsible for
determining whether a resolution has been passed. His
decision, which shall be final and conclusive, shall be
announced at the meeting and recorded in the minutes.
Article 84 If the chairman of the meeting has any doubt as to the
result of a resolution which has been put to vote at a
shareholders' meeting, he may have the votes counted. If the
chairman of the meeting has not counted the votes, any
shareholder who is present in person or by proxy and who
objects to the result announced by the chairman of the meeting
may, immediately after the declaration of the result, demand
that the votes be counted and the chairman of the meeting
shall have the votes counted immediately.
Article 85 If votes are counted at a shareholders' general meeting,
the result of the count shall be recorded in the minutes.
Article 86 Records of Meetings shall be prepared for shareholders'
general meetings and signed by attending directors and the
recording person. If there is no director attending in the
general meeting, the records of meeting shall be signed by the
shareholder or proxy of shareholder chairing the meeting and
the recording person. The contents and form of the records of
meeting shall comply with the requirements of the Rules and
Procedures for the Shareholders' General Meetings.
The minutes of meeting shall be prepared for all resolutions
adopted at shareholders' general meetings. The records and
minutes of the meeting shall be made in Chinese. The minutes,
together with the shareholders' attendance lists and proxy
forms shall be treated as a Company file and kept by the
secretary of the board of directors at the Company's place of
residence.
Article 87 Copies of the minutes of proceedings of any shareholders'
meeting shall, during business hours of the Company, be open
for inspection by any shareholder without charge. If a
shareholder requests for a copy of such minutes from the
Company, the Company shall send a copy of such minutes to him
within seven (7) days after receipt of reasonable fees
therefor.
CHAPTER 9 SPECIAL PROCEDURES FOR VOTING BY A CLASS OF SHAREHOLDERS
Article 88 Those shareholders who hold different classes of shares are
class shareholders. Class shareholders shall enjoy rights and
assume obligations in accordance with laws, administrative
regulations and the Company's Articles of Association.
Article 89 Rights conferred on any class of shareholders ("class
rights") may not be varied or abrogated save with the approval
of a special resolution of shareholders in a general meeting
and by holders of shares of that class at a separate meeting
conducted in accordance with Articles 91 to 95 hereof.
Article 90 The following circumstances shall be deemed to be variation
or abrogation of the rights attaching to a particular class of
shares:
(1) to increase or decrease the number of shares of that
class, or to increase or decrease the number of shares
of a class having voting or equity rights or privileges
distribution or superior to those of shares of that
class;
(2) to exchange all or part of the shares of that class for
shares of another class or to exchange or to create a
right to exchange all or part of the shares of another
class for shares of that class;
(3) to remove or reduce rights to accrued dividends or
rights to cumulative dividends attached to shares of
that class;
(4) to reduce or remove preferential rights attached to
shares of that class to receive dividends or to the
distribution of assets in the event that the Company is
liquidated;
(5) to add, remove or reduce conversion privileges, options,
voting rights, transfer or pre-emptive rights, or rights
to acquire securities of the Company attached to shares
of that class;
(6) to remove or reduce rights to receive payment payable by
the Company in specific currencies attached to shares of
that class;
(7) to create a new class of shares having voting or
distribution rights or privileges equal or superior to
those of the shares of that class;
(8) to restrict the transfer or ownership of shares of that
class or to increase the types of restrictions attaching
thereto;
(9) to issue rights to subscribe for, or to convert the
existing shares into, shares in the Company of that
class or another class;
(10) to increase the rights or privileges of shares of
another class;
(11) to restructure the Company in such a way so as to result
in the disproportionate distribution of obligations
between the various classes of shareholders;
(12) to vary or abrogate the provisions of this Chapter.
Article 91 Affected class shareholders, whether or not otherwise having
the right to vote at shareholders' general meetings, have the
right to vote at class meetings in respect of matters
concerning sub-paragraphs (2) to (8), (11) and (12) of Article
90 hereof, but interested shareholder(s) shall not be entitled
to vote at such class meetings. "(An) interested
shareholder(s)", as such term is used in the preceding
paragraph, means:
(1) in the case of a repurchase of shares by way of a
general offer to all shareholders of the Company or by
way of public dealing on a stock exchange pursuant to
Article 29 hereof, an interested shareholder is a
"controlling shareholder" within the meaning of Article
56 hereof;
(2) in the case of a repurchase of shares by an off-market
agreement pursuant to Article 29 hereof, a holder of the
shares to which the proposed agreement relates;
(3) in the case of a restructuring of the Company, a
shareholder who assumes a relatively lower proportion of
obligation than the obligations imposed on shareholders
of that class under the proposed restructuring or who
has an interest in the proposed restructuring different
from the general interests of the shareholders of that
class.
Article 92 Resolutions of a class of shareholders shall be passed by
votes representing more than two-thirds of the voting rights
of shareholders of that class represented at the relevant
meeting who, according to Article 91, are entitled to vote
thereat.
Article 93 A written notice of a class meeting shall be given to all
shareholders who are registered as holders of that class in
the register of shareholders forty-five (45) days before the
date of the class meeting (not including the date of meeting).
Such notice shall give such shareholders notice of the matters
to be considered at such meeting, the date and the place of
the class meeting. A shareholder who intends to attend the
class meeting shall deliver his written reply in respect
thereof to the Company twenty (20) days before the date of the
class meeting.
If the shareholders who intend to attend such class meeting
represent more than half of the total number of shares of that
class which have the right to vote at such meeting, the
Company may hold the class meeting; if not, the Company shall
within five (5) days give the shareholders further notice of
the matters to be considered, the date and the place of the
class meeting by way of public announcement. The Company may
then hold the class meeting after such public announcement has
been made.
Article 94 Notice of class meetings need only be served on
shareholders entitled to vote thereat. Class meetings shall be
conducted in a manner which is as similar as possible to that
of shareholders' general meetings. The provisions of the
Company's Articles of Association relating to the manner for
the conduct of shareholders' general meetings are also
applicable to class meetings.
Article 95 Apart from the holders of other classes of shares, the
holders of the Domestic-Invested Shares and holders of
Overseas-Listed Foreign-Invested Shares shall be deemed to be
holders of different classes of shares.
The special procedures for approval by a class of shareholders
shall not apply in the following circumstances:
(1) where the Company issues, upon the approval by special
resolution of its shareholders in a general meeting,
either separately or concurrently once every twelve (12)
months, not more than 20% of each of its existing issued
Domestic-Invested Shares and Overseas-Listed
Foreign-Invested Shares; or
(2) where the Company's plan to issue Domestic-Invested
Shares and Overseas-Listed Foreign-Invested Shares at
the time of its establishment is carried out within
fifteen (15) months from the date of approval of the
securities regulatory organ of the State Council.
CHAPTER 10 BOARD OF DIRECTORS
Article 96 The Company shall have a board of directors which is
accountable to shareholders. The Company shall draw up Rules
and Procedures for the Board of Directors' Meetings for
implementation after being approved by the shareholders in a
general meeting. The Rules and Procedures for the Board of
Directors' Meetings shall include the following items:
(1) functions and powers and authorizations of the board of
directors;
(2) establishment of the board of directors and its
subordinated offices;
(3) secretary of the board of directors;
(4) discussion system of a board meeting;
(5) discussion procedures of a board meeting;
(6) disclosure of information of a board meeting;
(7) implementation and feedback of resolutions of a board
meeting;
(8) other matters deemed necessary by the shareholders'
general meeting. The Rules and Procedures for the Board
of Directors' Meetings is an integral part of and shall
have the same legal effect as these Articles of
Association.
Article 97 The board of directors shall consist of thirteen (13)
directors and there shall be one (1) Chairman and one (1)
Vice-chairman.
Article 98 Directors of the Company shall be natural persons and they are
not required to hold any shares in the Company.
Directors shall be elected at the shareholders' general
meeting each for a term of three (3) years. The term of office
of a director shall be calculated from the date of the passing
of the resolution approving the appointment of such director
at the shareholders' general meeting until the expiry of the
term of the present session of the board of directors. At the
expiry of the term of office of a director, the term is
renewable upon re-election. A director may not be removed by
the shareholders in a general meeting without any reason
before his term of office expires. The term of office of any
independent director may not be renewed for more than 6 years.
Article 99 The list of candidates for directors shall be submitted to
the shareholders' general meeting in the form of motion for
approval. Candidates other than those for independent
directors shall be nominated by the board of directors, the
supervisory committee or shareholders who individually or
jointly hold 5% or more of the Company's voting shares and be
elected by the shareholders in a general meeting.
Candidates for independent directors of the Company shall be
nominated by the Company's board of directors, the supervisory
committee or shareholders who individually or jointly hold 1%
or more of the Company's voting shares and be elected by the
shareholders in a general meeting.
Article 100 Independent directors shall be elected in the following manner:
(1) the nominator of a candidate for independent director
shall seek the consent of the nominee, find out the
occupation, academic qualification, rank and detailed
working experience including all part-time jobs of the
nominee and provide written proofs of the same to the
Company before making the nomination. The candidate
shall give a written undertaking to the Company agreeing
to be nominated, undertaking the truthfulness and
completeness of his particulars disclosed and
guaranteeing the performance of a director's duties
after being elected.
(2) the nominator of an independent director shall give
opinion on the qualification and independence of the
nominee to act as an independent director. The nominee
shall make an open announcement as to the absence of any
relation between the Company and him which would affect
his independent and objective judgment.
(3) if the nomination of candidates for independent
directors is made before the Company's convening of a
board meeting, the written proofs of the nominee
referred to in sub-paragraphs (1) and (2) above shall be
disclosed together with the board resolution.
(4) if the shareholders who individually or jointly hold 5%
or more of the Company's voting shares or the
supervisory committee puts forward a provisional motion
in an AGM of the Company for election of independent
directors, a written notice stating their intention to
nominate a candidate for directors and the nominee's
consent to be nominated together with the written proofs
and undertaking of the nominee referred to in
sub-paragraphs (1) and (2) above shall be delivered to
the Company seven (7) days before the AGM.
(5) before the shareholders' general meeting for election of
independent directors is convened, the Company shall
submit the relevant information of all nominees to the
securities regulatory authority of the State Council,
the organ appointed by the securities regulatory
authority of the State Council in the place of residence
of the Company and the stock exchange on which the
Company's shares are listed. The written opinions of the
board of directors shall also be submitted in case the
Company's board has any dispute as to the particulars of
the nominee. If the securities regulatory authority of
the State Council opposes to the nomination of any
nominee, this nominee may not be included as a candidate
for independent directors. In convening a general
meeting to elect independent directors, the Company's
board shall specify if the securities regulatory
authority of the State Council has any dispute as to the
candidates for independent directors.
Article 101 Non-independent directors shall be elected in the following
manner:
(1) the nominator of a candidate for non-independent
director shall seek the consent of the nominee, find out
the occupation, academic qualification, rank and
detailed working experience including all part-time jobs
of the nominee and provide written proofs of the same to
the Company before making the nomination. The candidate
shall give a written undertaking to the Company agreeing
to be nominated, undertaking the truthfulness and
completeness of his particulars disclosed and
guaranteeing the performance of a director's duties
after being elected.
(2) if the nomination of candidates for non-independent
directors is made before the Company's convening of a
board meeting, the written proofs of the nominee
referred to in sub-paragraph (1) above shall be
disclosed together with the board resolution.
(3) if the shareholders who individually or jointly hold 5%
or more of the Company's voting shares or the
supervisory committee puts forward a provisional motion
in an AGM of the Company for election of non-independent
directors, a written notice stating their intention to
nominate a candidate for directors and the nominee's
consent to be nominated together with the written proofs
and undertaking of the nominee referred to in
sub-paragraph (1) above shall be delivered to the
Company seven (7) days before the AGM.
Article 102 The following basic requirements shall be met in order to be
an independent director:
(1) qualified to be a director of a listed company under the
laws, administrative regulations and other relevant
provisions;
(2) has the independence required by these Articles of
Association;
(3) has basic knowledge of the operation of a listed
company, familiar with the relevant laws, administrative
rules, regulations and rules;
(4) has 5 years or more of legal or financial experience or
other experience in performing the duties of an
independent director;
(5) other requirements stipulated in these Articles of
Association. Article 103 If the controlling shareholders
of the Company control 30% or more of the Company's
shares, the accumulative voting system shall be adopted
when voting on the election of directors in a
shareholders' general meeting, that is, in electing two
or more directors in a shareholders' general meeting,
the number of votes attached to each share held by a
participating shareholder shall be equal to the number
of candidates, in which case the shareholder may cast
his votes for one candidate or for several candidates.
Please refer to the Rules and Procedures for the
Shareholders' General Meetings for details of
implementation of the accumulative voting system.
Article 104 Provided that the relevant laws and administrative rules
are observed, a director whose term of office has not yet been
expired may be removed in a general meeting by way of ordinary
resolution (but the right to lodge a claim under a contract is
not affected).
If a director has failed to attend a board meeting personally
nor appoint a proxy to attend on his behalf on two consecutive
occasions, it shall be treated as a failure to discharge his
duties. The board of directors shall propose in a
shareholders' general meeting to remove and replace this
director.
If an independent director has failed to attend a board
meeting personally on three consecutive occasions, the board
of directors shall propose in a shareholders' general meeting
to remove and replace this director. Unless in the above
circumstances and in circumstances as provided in the Company
Law where a person is prohibited from acting as a director, no
independent director may be removed before his term of office
expires. In case of early removal, the Company shall disclose
it by way of special disclosure. If the removed independent
director considers that he is removed by the Company
improperly, he may make an open declaration.
Article 105 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 and in the case of an independent
director, he shall also specify any matter which is related to
his resignation or which he considers necessary to bring to
the attention of the Company's shareholders and creditors.
Article 106 If the resignation of a director causes the board members of
the Company to fall below the minimum number of members to
form a quorum, the resignation of this director shall be
effective only after the succeeding director has filled his
vacancy. The board shall call an EGM as soon as possible to
elect a director to fill the vacancy caused by his
resignation. Before a resolution is made in a shareholders'
general meeting in relation to the election of directors, the
functions and powers of this resigning director and other
remaining directors shall be subject to reasonable
restrictions. If the resignation of an independent director
causes the proportion of independent directors in the board of
the Company to fall below the minimum requirements of the
relevant regulatory authorities, the resignation of this
independent director shall be effective only after the
succeeding independent director has filled his vacancy.
Article 107 The board of directors shall exercise the following functions
and powers:
(1) to be responsible for the convening of the shareholders'
general meeting and to report on its work to the
shareholders in general meetings;
(2) to implement the resolutions passed by the shareholders
in general meetings;
(3) to determine the Company's business plans and investment
proposals;
(4) to formulate the Company's annual preliminary and final
financial budgets;
(5) to formulate the Company's profit distribution proposal
and loss recovery proposal;
(6) to formulate proposals for the credit and financial
policies of the Company, the increase or reduction of
the Company's registered capital and for the issue of
any kind of securities of the Company's (including but
without limitation to the Company's debentures) and
proposals for listing and repurchase of the Company's
shares;
(7) to draw up plans for significant acquisition or disposal
proposals, the merger, division or dissolution of the
Company;
(8) to determine the risks investment and security
(including pledging of assets) of the Company according
to the authority given in the shareholders' general
meeting;
(9) to decide on the Company's internal management
structure;
(10) to appoint or remove the Company's president and to
appoint or remove the vice-president and Chief Financial
Officer of the Company according to the recommendations
of the president; to appoint or remove the secretary of
the board of directors and to decide on their
remuneration;
(11) to appoint or replace the members of the board of
directors and the supervisory committee of its
wholly-owned subsidiary, appoint, replace or recommend
the shareholders' proxies, directors (candidates) and
supervisors (candidates) of its subsidiary(ies) which
are controlled or invested by the Company.
(12) to determine the establishment of Company's branch
offices;
(13) to formulate proposals for any amendment of the
Company's Articles of Association and its appendices;
(14) to formulate the Company's basic management system; (15)
to manage the disclosure of information of the Company;
(16) to propose in a shareholders' general meeting to engage
or replace the accounting firm which undertakes auditing
work of the Company;
(17) to listen to the president's work report and check the
president's work;
(18) to determine important matters and administrative
matters of the Company other than those which should be
determined by resolution of a shareholders' general
meeting of the Company except for the matters as
specified by law, administrative rules, regulations of
the competent department(s) and these Articles of
Association, and to sign other important agreements;
(19) to exercise any other powers stipulated by laws,
administrative rules, regulations of the competent
department(s) or these Articles of Association and
conferred by the shareholders in a general meeting.
Other than the board of directors' resolutions in respect of
the matters specified in sub-paragraphs (6), (7) and (13) of
this Article which shall be passed by the affirmative vote of
more than two-thirds of all the directors, the board of
directors' resolutions in respect of all other matters may be
passed by the affirmative vote of a simple majority of the
directors.
Article 108 The above functions and powers of board meetings may be
authorized to one or more directors upon the agreement of all
directors, but matters concerning material interests of the
Company shall be determined by the board collectively. The
authorization of the board shall be clear and specific.
Article 109 An independent director shall have the following special
functions and powers in addition to those conferred by the
Company Law, other relevant laws, administrative rules and
these Articles of Association:
(1) material connected transactions (determined according to
the standards issued from time to time by the relevant
regulatory authorities in the place where the Company's
shares are listed) which should be approved by the board
of directors or the shareholders' general meeting
according to law shall, upon the recognition of
independent directors, be submitted to the board of
directors for discussion. Any resolution made by the
board of directors regarding the Company's connected
transactions must only be effective after it has been
signed by the independent directors. The independent
directors may, before making a judgment, engage an
intermediary to issue an independent financial report
for them to rely upon in making the judgment;
(2) to propose to the board of directors to engage or remove
an accounting firm;
(3) two or more than one-half of the independent directors
may propose to the board of directors to convene an EGM;
(4) to propose the calling of a board meeting;
(5) to engage an external auditing or advisory organ
independently;
(6) to collect voting rights from shareholders prior to the
convening of a shareholders' general meeting;
(7) to report directly to the shareholders' general
meetings, securities regulatory organ under the State
Council and other relevant departments.
The independent directors shall seek the consent of more than
half of the independent directors in exercising their
functions and powers other than sub-paragraphs (1) and (3)
above.
If the above proposal is not accepted or the above functions
and powers are not exercised properly, the Company shall
disclose the same.
Article 110 When the board of directors make the decisions in respect of
market development, mergers and acquisitions and the
investment in new areas etc., in case the investment amount or
the asset value thus merged and acquired exceeds more than 10
(ten) percent of total assets of the Company, the board of
directors shall invite the consulting organizations for their
professional opinions, these opinions shall serve as the
important basis for decision-making by the board of directors.
The board of directors shall lay down strict procedures to
inspect and decide on risks investments. For major investment
projects in excess of the approval limit of the board of
directors, the board of directors shall organize the relevant
experts and professional officers to conduct assessment for
approval of the shareholders in a general meeting. Matters
regarding risks investments have been provided explicitly in
the Rules and Procedures for the Board of Directors' Meetings.
Article 111 The Chairman and the Vice-Chairman shall be directors of
the Company and be appointed and removed by affirmative vote
of a simple majority of all directors. The term of office of
the Chairman or the Vice-Chairman shall be three (3) years
which term is renewable upon re-election.
Article 112 The Chairman of the board of directors shall exercise the
following functions and powers:
(1) to preside over shareholders' general meetings and to
convene and preside over meetings of the board of
directors;
(2) to co-ordinate and perform the responsibilities of the
board of directors and review on the implementation of
resolutions passed by the board of directors at
directors' meetings;
(3) to sign the certificates of shares, debentures and other
valuable securities issued by the Company;
(4) to sign important documents of the board and other
documents which should be signed by the Company's legal
representative;
(5) to exercise the functions and powers of a legal
representative;
(6) where it is lawful and in the interest of the Company,
to exercise the special right to deal with the Company's
affairs during emergency such as the occurrence of
natural disasters, and to report to the Company's board
of directors and general meetings thereafter;
(7) to exercise other powers conferred by the board of
directors. Whenever the Chairman is unable to exercise
his powers, such powers shall be exercised by the
Vice-Chairman or other directors who have been
designated by the Chairman to exercise such powers on
his behalf.
Article 113 Board meetings shall be convened regularly at least four
times a year. An EGM shall be called for on occurrence of any
of the events set out in the Rules and Procedures for the
Board of Directors' Meetings.
In convening a regular board meeting or an EGM, a notice shall
be given to all directors 10 days before the meeting. The
calling for a board meeting, and the contents and form of a
notice of meeting shall comply with the requirements of the
Rules and Procedures for the Board of Directors' Meetings.
Article 114 Meetings of the board of directors shall be held only if
more than half of the directors (including any alternate
director appointed) are present. Each director shall have one
(1) vote. Where there is an equality of votes cast both for
and against a resolution, the Chairman of the board of
directors shall have an additional vote.
Article 115 Directors shall attend the meetings of the board of
directors in person. Where a director is unable to attend a
meeting for any reason, he may by a written power of attorney
appoint another director to attend the meeting on his behalf.
The power of attorney shall set out the scope of
authorization.
A director appointed as a representative of another director
to attend the meeting shall exercise the rights of a director
within the scope of authority conferred by the appointing
director. Where a director is unable to attend a meeting of
the board of directors and has not appointed a representative
to attend the meeting on his behalf, he shall be deemed to
have waived his right to vote at the meeting. All expenses
incurred by the directors for attending the board meeting
shall be borne by the Company, including the traffic expense
from the place where the director is located to the place
where the meeting is convened, as well as the board and
lodging expenses during the term of meeting. The miscellaneous
expenses such as the rental of meeting room and the local
traffic expenses etc. shall also be borne by the Company.
Article 116 The board of directors may accept the preparation of a
written resolution instead of convening a board meeting
provided that the contents and form of the written resolution
are in compliance with the Rules and Procedures for the Board
of Directors' Meetings.
Article 117 Matters determined in a board meeting shall be recorded in
Chinese in the form of Records of Meeting. The contents and
form of Records of Board Meetings shall comply with the Rules
and Procedures for the Board of Directors' Meetings.
Article 118 If a written motion of a board meeting is not prepared in
accordance with the stipulated procedures, it will not have
the effect of a board resolution even if each director has
expressed his view thereto. Directors shall be liable for
board resolutions. If a board resolution is against the law,
administrative rules or these Articles of Association and thus
causes the Company to suffer any loss, the directors who cast
an affirmative vote for the motion shall assume direct
liability (including the liability to compensate); directors
who are proved to have cast a dissenting vote against the
motion during the voting as recorded in the records of meeting
shall be exempted from liability; directors who abstained from
voting or failed to attend nor appoint a proxy to attend the
board meeting shall not be exempted from liability; and
directors who opposed to the motion but did not cast a
dissenting vote against it in the voting shall not be exempted
from liability either.
CHAPTER 11 SECRETARY OF THE BOARD OF DIRECTORS
Article 119 The Company shall have one (1) secretary of the board of
directors. The secretary shall be a senior officer of the
Company accountable to the Company. The Company shall draw up
"Work Regulations for the Secretary of the Board" to promote
the management of the Company and make provisions for
disclosure of information. The Work Regulations for the
Secretary of the Board shall be effective upon the approval of
the board of directors.
The board of directors may establish its secretarial
department when necessary.
Article 120 A director or the president, vice-president, Chief Financial
Officer of the Company may concurrently act as the secretary
of the Company's board of directors. No accountant of the
accounting firm or solicitor of the solicitors' firm engaged
by the Company may concurrently act as the secretary of the
Company's board of directors.
The secretary of the Company's board of directors shall be a
natural person who has the requisite professional knowledge
and experience, and shall be nominated by the Chairman of the
Board and appointed or removed by the board of directors. In
the case of a director acting concurrently as the secretary of
the board, if an act has to be performed by a director and the
secretary of the board respectively, this director acting
concurrently as the secretary of the board may not act in both
identities.
Article 121 The main duties of the secretary of the board of directors
include:
(1) to assist directors to deal with the daily matters of
the board of directors, continuously provide, remind and
ensure directors and the president, etc. to be well
informed of the laws, regulations, policies and
requirements of both domestic and overseas regulatory
organizations concerning the operation of the Company,
and assist directors and managers to practically
implement the domestic and foreign laws, regulations,
Company's Articles of Association and other regulations
when performing their duties and powers;
(2) to be responsible for the organization and preparation
of the documents of the board of directors and
shareholders' general meeting, well prepare the meeting
record work, ensure the meeting policies in conformity
with the legal procedures, and to keep abreast of the
execution of the resolutions of the board of directors;
(3) to be responsible for the organization and coordination
of information disclosure, to ensure of a timely,
accurate, lawful, true and complete disclosure of
information, coordination of the relationship with the
investors, and enhancement of the transparency of the
Company;
(4) to participate in and organize the financing in capital
market;
(5) to deal with the relationships with the intermediary
organs, regulatory authorities and the media, and
maintain a good public relationship. Article 122 The
secretary of the board of directors shall discharge his
duties diligently according to these Articles of
Association. The secretary of the board of directors
shall assist the Company to comply with the relevant PRC
law and regulations of the securities regulatory organ
of the place where the Company's shares are listed.
CHAPTER 12 PRESIDENT
Article 123 The Company shall have a president who is accountable to
the board of directors. The president shall be nominated by
the Chairman of the board of directors and appointed or
removed by the board of directors.
The Company shall have several vice-presidents, and one Chief
Financial Officer who shall assist the president in work. The
vice-presidents and the Chief Financial Officer shall be
nominated by the president and appointed or removed by the
board of directors.
A director may also be engaged to act concurrently as the
president, vice-president, Chief Financial Officer or
secretary of the board of directors, but the number of
directors acting concurrently as the president,
vice-president, Chief Financial Officer or secretary of the
board of directors may not exceed one-half of the total number
of directors of the Company.
Article 124 The president shall exercise the following duties and powers:
(1) to be in charge of the Company's production, operation
and management, to co-ordinate the implementation of the
resolutions of the board of directors and to report his
work to the board of directors;
(2) to organize the implementation of the Company's annual
business plan and investment proposal;
(3) to draft plans for the establishment of the Company's
internal management structure;
(4) to draft plans for the establishment of the branch
company of the Company;
(5) to draft the Company's basic management system;
(6) to formulate specific rules and regulations for the
Company;
(7) to propose the appointment or dismissal of the Company's
vice-president(s) and Chief Financial Officer;
(8) to appoint or dismiss management personnel other than
those required to be appointed or dismissed by the board
of directors;
(9) to determine the wages, fringe benefits, rewards and
punishments of the Company's staff, to determine the
appointment and dismissal of the Company's staff;
(10) to propose the convening of extraordinary meetings of
directors;
(11) other powers conferred by the Company's Articles of
Association and the board of directors.
Article 125 The president or vice-president who is not a director
shall have the right to attend board meetings and to receive
notices of meetings and other relevant documents but does not
have any voting rights at board meetings.
Article 126 The president shall at the request of the board of
directors or the supervisory committee make report of the
signing and performance of major contracts, use of funds and
profit and loss of the Company. The president must ensure the
truthfulness of the report.
Article 127 The president shall seek the opinions of the staff members
in determining matters which are closely related to staff
members such as the wages, fringe benefits, safe production
and work, labour insurance, dismissal (or discharge) of staff
members of the Company.
Article 128 The president shall draw up "Work Regulations for the
President" for implementation upon the approval of the board
of directors. The Work Regulations for the President shall
include:
(1) requirements and procedures for the convening of a
presidents' meeting and the officers attending;
(2) the president, vice-presidents and Chief Financial
Officer shall divide their duties among themselves and
perform their own duties;
(3) use of the Company's funds and assets, authority to sign
major contracts and the system to report to the board of
directors and to the supervisory committee at the
request of the supervisory committee;
(4) other matters as the board of directors may consider
necessary.
Article 129 In performing their functions and powers, the president,
vice-presidents and the Chief Financial Officer shall act
honestly and diligently and in accordance with laws,
administrative regulations and these Articles of Association.
They may not alter the resolutions of a shareholders' general
meeting or of a board meeting nor act ultra vires.
Article 130 In retiring from their office, the president,
vice-president or Chief Financial Officer shall, as required
by the relevant labour contract between the above personnel
and the Company, give prior notice to the Company and shall
adhere to the relevant procedures and methods of resignation
provided in the labour contract.
CHAPTER 13 SUPERVISORY COMMITTEE
Article 131 The Company shall have a supervisory committee which is
accountable to the shareholders' general meetings.
The Company shall draw up "Rules and Procedures for the
Supervisors' Meetings" for implementation upon being approved
by the shareholders in a general meeting. The Rules and
Procedures for the Supervisors' Meetings shall include the
followings:
(1) the formation and business system of the supervisory
committee;
(2) the functions and powers of the supervisory committee;
(3) the system of discussion of the supervisors' meetings;
(4) the procedures of discussion of the supervisory
committee;
(5) the disclosure of information of the supervisors'
meetings;
(6) implementation and feedback of resolutions of the
supervisory committee;
(7) other matters as the shareholders' general meetings may
consider necessary.
The Rules and Procedures for the Supervisors' Meetings shall
be an integral part of and have the same legal effect as these
Articles of Association.
Article 132 The supervisory committee shall compose of twelve (12)
supervisors. Of which, eight (8) of them shall be shareholder
representatives (including those who are eligible to be
external supervisors); four (4) of them shall be
representatives of workers and staff of the Company. Each
supervisor shall serve for a term of three (3) years, which
term is renewable upon re-election and re-appointment. The
supervisory committee shall have one (1) Chairman who shall be
a supervisor. The election or removal of the Chairman of the
supervisory committee shall be determined by two-thirds or
more of the members of the supervisory committee. The Chairman
of the supervisory committee shall co-ordinate and exercise
the duties and powers of the supervisory committee.
Article 133 If necessary, the supervisory committee may establish its
offices responsible for daily affairs of the supervisory
committee.
Article 134 A director, president, vice-president or Chief Financial
Officer may not act concurrently as a supervisor.
Article 135 The list of candidates for the supervisors who are shareholder
representatives shall be submitted to the shareholders'
general meeting in the form of motion for approval. Amongst
the candidates for supervisors who are shareholder
representatives, candidates other than those for independent
supervisors shall be nominated by the Company's board of
directors, the supervisory committee or shareholders who
individually or jointly hold 5% or more of the Company's
voting shares and be elected by the shareholders in a general
meeting.
Amongst the candidates for supervisors who are shareholder
representative, candidates for independent supervisors shall
be nominated by the Company's board of directors, the
supervisory committee or shareholders who individually or
jointly hold 1% or more of the Company's voting shares and be
elected by the shareholders in a general meeting.
Article 136 Independent directors shall be elected in the following manner:
(1) the nominator of a candidate for supervisor who is a
shareholder representative shall seek the consent of the
nominee, find out the occupation, academic
qualification, rank and detailed working experience
including all part-time jobs of the nominee and provide
written proofs of the same to the Company before making
the nomination. The candidate shall give a written
undertaking to the Company agreeing to be nominated,
undertaking the truthfulness and completeness of his
particulars disclosed and guaranteeing the performance
of a director's duties after being elected.
(2) If the nomination of a candidate for supervisor who is a
shareholder representative is made before the Company's
convening of a board meeting, the written proofs of the
nominee referred to in sub-paragraphs (1) above shall be
disclosed together with the board resolution.
(3) If the shareholders who individually or jointly hold 5%
or more of the Company's voting shares or the
supervisory committee puts forward a provisional motion
in an AGM of the Company for election of a supervisor
who is a shareholder representative, a written notice
stating their intention to nominate a candidate for a
supervisor and the nominee's consent to be nominated
together with the written proofs and undertaking of the
nominee referred to in sub-paragraph (1) above shall be
delivered to the Company seven (7) days before the AGM.
Article 137 Any supervisor who fails to attend a supervisors' meeting
personally on two consecutive occasions shall be treated as a
failure to discharge his duties. In that case he shall be
removed and replaced in a shareholders' general meeting or
staff representatives' meeting.
A supervisor may resign before his term expires and Chapter 10
hereof regarding resignation of directors shall also be
applicable to supervisors.
Article 138 Supervisors' meetings shall be convened regularly at least
four times a year. An extraordinary supervisors' meeting shall
be convened on occurrence of any of the events specified in
the Rules and Procedures for the Supervisors' Meetings. A 10
days' prior notice shall be given to all supervisors for the
convening of a regular or extraordinary supervisors' meeting.
The convening of a supervisors' meeting and the contents and
form of the notice of meeting shall comply with the Rules and
Procedures for the Supervisors' Meetings.
Article 139 The supervisory committee shall exercise the following
functions and powers in accordance with law:
(1) to review the Company's financial position; to appoint
another accounting firm in the name of the Company to
review the Company's financial condition independently;
(2) to supervise the directors, president, vice-presidents,
Chief Financial Officer and secretary of the board to
ensure that they do not act in contravention of any law,
regulation or these Articles of Association;
(3) to demand the directors, president, vice-presidents,
Chief Financial Officer or secretary of the board to
rectify their error or even to report it in a
shareholders' general meeting or to the competent State
organ if they have acted in a harmful manner to the
Company's interest;
(4) to check and inspect the financial information such as
the financial report, business report and plans for
distribution of profits to be submitted by the board of
directors to the shareholders' general meetings and to
authorize, in the Company's name, publicly certified and
practicing accountants to assist in the review on such
information should any doubt arise in respect thereof;
(5) to make recommendations of accounting firms for
engagement by the Company;
(6) to make provisional motions in an AGM;
(7) to propose to convene an EGM;
(8) to propose to convene an extraordinary board meeting;
(9) to represent the Company in negotiations with or in
bringing actions against a director;
(10) other duties and powers as may be specified by law,
administrative rules, regulations of the competent
department and these Articles of Association and
conferred by the general meeting.
Supervisors shall attend meetings of the board of directors.
Article 140 The supervisory committee may require the directors,
president, vice-president, Chief Financial Officer, secretary
of the board of directors of the Company, internal and
external auditors to attend supervisors' meetings and answer
any question that the supervisory committee may have regarding
matter it cares about.
Article 141 Resolutions of the supervisory committee shall be passed
by the affirmative vote of more than two-thirds of all of its
members.
Article 142 Records shall be made for all supervisors' meetings and be
signed by all attending supervisors and the recording person.
Supervisors shall have the right to ask for the making of a
descriptive record of what he speaks in the meeting. Records
of supervisors' meetings shall be treated as the Company's
files and kept permanently in the business system of the
supervisory committee.
Article 143 All reasonable fees incurred in respect of the employment
of professionals (such as, lawyers, certified public
accountants or practicing auditors) which are required by the
supervisory committee in the exercise of its functions and
powers shall be borne by the Company.
Article 144 A supervisor shall carry out his duties faithfully and
bona fide in accordance with laws, administrative regulations
and the Company's Articles of Association.
CHAPTER 14 QUALIFICATIONS AND OBLIGATIONS OF THE DIRECTORS,
SUPERVISORS, PRESIDENT, VICE-PRESIDENT, CHIEF
FINANCIAL OFFICER AND SECRETARY OF THE BOARD OF
DIRECTORS OF THE COMPANY
Article 145 A person may not serve as a director, supervisor,
president, vice-president, Chief Financial Officer and
secretary of the board of directors of the Company if any of
the following circumstances apply:
(1) a person who does not have or who has limited capacity
for civil conduct;
(2) a person who has been found guilty of for corruption,
bribery, infringement of property or misappropriation of
property or other crimes which destroy the social
economic order, and the sentence is enforced for less
than five (5) years or a person who has been deprived of
his political rights and not more than five (5) years
have lapsed since the sentence was served;
(3) a person who is a former director, factory manager or
president of a company or enterprise which has been
dissolved or put into liquidation as a result of
mismanagement and who was personally liable for the
winding up of such company or enterprise, where less
than three (3) years have elapsed since the date of
completion of the insolvent liquidation of the company
or enterprise;
(4) a person who is a former legal representative of a
company or enterprise the business licence of which was
revoked due to violation of law and who are personally
liable therefor, where less than three (3) years have
elapsed since the date of the cancellation of the
business licence;
(5) a person who has a relatively large amount of debts
which have become due and outstanding;
(6) a government servant of the country;
(7) a person who is currently under investigation by the
judicial authorities for violation of criminal law;
(8) a person who, according to laws and administrative
regulations, cannot act as a leader of an enterprise;
(9) a person other than a natural person;
(10) a person who has been adjudged by the competent
authority for violation of relevant securities
regulations and such conviction involves a finding that
such person has acted fraudulently or dishonestly, where
not more than five (5) years have lapsed from the date
of such conviction;
(11) a person who has been prohibited by the securities
regulatory authority of the State Council to participate
in market activities and the prohibition has still not
been uplifted.
Article 146 The chairman, vice-chairman and directors of the Company's
controlling shareholder acting concurrently as the chairman,
vice-chairman or director of the Company may not exceed two in
number. Managers of the Company's controlling shareholder may
not act concurrently as the Company's president,
vice-president, Chief Financial Officer, sales supervisor or
secretary of the board.
Article 147 The following people may not act as an independent director
of the Company:
(1) persons employed by the Company or its subsidiaries and
their immediate family members and major social
connections (immediate family members shall mean spouse,
parents and issues, etc. and major social connections
shall mean siblings, parents-in-law,
sons/daughters-in-law, spouse of siblings, siblings of
spouse, etc.);
(2) natural person shareholders who directly or indirectly
hold 1% or more of the Company's issued shares or who
are top ten shareholders and their immediate family
members;
(3) persons employed by the shareholder company which
directly or indirectly holds 1% or more of the Company's
issued shares or by the top five shareholder companies
of the Company and their immediate family members;
(4) persons who once belonged to categories (1) to (3) above
in the past 3 years;
(5) persons who provide financial or legal advice to the
Company or its subsidiaries;
(6) any independent director who is already the director of
five listed companies;
(7) other persons determined by the securities regulatory
authority of the State Counsel.
Article 148 The validity of an act carried out by a director, a
supervisor, the president, vice-president, Chief Financial
Officer or secretary of the board of directors of the Company
on its behalf shall, as against a bona fide third party, not
be affected by any irregularity in his office, election or any
defect in his qualification.
Article 149 Without the lawful authorization of these Articles of
Association or the board of directors, a director of the
Company may not act personally on behalf of the Company or the
board of directors. If he acts personally, he shall declare
his own position and identity in advance where the acting
would cause a third party to believe reasonably that he is
acting on behalf of the Company or the board of directors.
Article 150 In addition to the obligations imposed by laws,
administrative regulations or the listing rules of the stock
exchange on which shares of the Company are listed, each of
the Company's directors, supervisors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors owes a duty to each shareholder, in the
exercise of the duties and powers of the Company entrusted to
him:
(1) not to procure the Company to do anything ultra vires to
the scope of business as stipulated in its business
licence;
(2) to act honestly and in the best interests of the
Company;
(3) not to expropriate the Company's property in any way,
including (without limitation to) usurpation of
opportunities which may benefit the Company;
(4) not to deprive of the individual interest of
shareholders, including (without limitation to) rights
to distribution and voting rights, save and except
pursuant to a restructuring of the Company which has
been submitted to the shareholders in general meeting
for approval in accordance with the Company's Articles
of Association.
Article 151 Each of the Company's directors, supervisors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors owes a duty, in the exercise of his powers
and in the discharge of his duties, to exercise the care,
diligence and skill that a reasonably prudent person would
exercise in comparable circumstances.
Article 152 Each of the Company's directors, supervisors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors shall exercise his powers or perform his
duties in accordance with the fiduciary principle, and shall
not put himself in a position where his duty and his interest
may conflict. This principle includes (without limitation to)
discharging of the following obligations:
(1) to act bona fide in the best interests of the Company;
(2) to act within the scope of his powers and not to exceed
such powers;
(3) to exercise the discretion vested in him personally and
not to allow himself to act under the control of another
and, unless and to the extent permitted by laws,
administrative regulations or with the informed consent
of shareholders given in a general meeting, not to
transfer the exercise of his discretion;
(4) to treat shareholders of the same class equally and to
treat shareholders of different classes fairly;
(5) unless otherwise provided for in the Company's Articles
of Association or except with the informed consent of
the shareholders given in a general meeting, not to
enter into any contract, transaction or arrangement with
the Company;
(6) not to use the Company's property for his own benefit,
without the informed consent of the shareholders given
in a general meeting;
(7) not to abuse his position to accept bribes or other
illegal income or expropriate the Company's property in
any way, including (without limitation to) opportunities
which benefit the Company;
(8) not to accept commissions in connection with the
Company's transactions, without the informed consent of
the shareholders given in a general meeting;
(9) to comply with the Company's Articles of Association, to
perform his official duties faithfully, to protect the
Company's interests and not to exploit his position and
power in the Company to advance his own interests;
(10) not to compete with the Company in any way, save with
the informed consent of the shareholders given in a
general meeting;
(11) not to misappropriate the Company's funds or to lend
such funds to any other person, not to use the Company's
assets to set up deposit accounts in his own name or in
the any other name or to use such assets to guarantee
the debts of a shareholder of the Company or any other
personal liabilities;
(12) not to divulge any confidential information which he has
obtained during his term of office, without the informed
consent of the shareholders in a general meeting; nor
shall he use such information otherwise than for the
Company's benefit, unless disclosure of such information
to the court or other governmental authorities is made
in the following circumstances:
1. disclosure is required by law;
2. public interests so warrants;
3. the interests of the relevant director, supervisor,
president, vice-president, Chief Financial Officer
and secretary of the board of directors so
requires.
Article 153 Each director, supervisor, president, vice-president, Chief
Financial Officer and secretary of the board of directors of
the Company shall not direct the following persons or
institutions ("associates") to act in a manner which he is
prohibited from so acting:
(1) the spouse or minor children of the director,
supervisor, president, vice-president, Chief Financial
Officer or secretary of the board of directors;
(2) the trustee of the director, supervisor, president,
vice-president, Chief Financial Officer or secretary of
the board of directors or of any person described in
sub-paragraph (1) above;
(3) partners of directors, supervisors, president,
vice-president, Chief Financial Officer or secretary of
the board of directors of the Company or any person
referred to in sub-paragraphs (1) and (2) of this
Article;
(4) a company in which a director, supervisor, the
president, vice-president, Chief Financial Officer or
secretary of the board of directors, whether alone or
jointly with one (1) or more of the persons referred to
in sub-paragraphs (l), (2) and (3) of this Article and
other directors, supervisors, president, vice-president,
Chief Financial Officer and secretary of the board of
directors, has de facto controlling interest;
(5) the senior officers of a company which is being
controlled in the manner set out in sub-paragraph (4)
above, including but without limitation to directors,
supervisors and president.
Article 154 On submission of a resignation or termination of the tenure of
a director, supervisor, the president, vice-president, Chief
Financial Officer or secretary of the board of directors of
the Company, the fiduciary duties owed by this senior officer
to the Company and its shareholders do not necessarily cease
when his resignation has not yet been effective or within a
reasonable period of the resignation and within a reasonable
period of the termination of tenure. His duty of
confidentiality in respect of trade secrets of the Company
survives the termination of his tenure until the same has
become open information. Other duties may continue for such
period as the principle of fairness may require depending on
the length of time which has lapsed between the termination
and the act concerned and on the circumstances and the terms
under which the relationship between the relevant director,
supervisor, manager and the senior officer on the on hand and
the Company on the other hand was terminated.
Article 155 Any serving director, supervisor, the president,
vice-president, Chief Financial Officer or secretary of the
board of directors of the Company who leaves his post without
permission thereby causing loss to the Company shall be liable
for compensation. Article 156 A director, supervisor, the
president, vice-president, Chief Financial Officer or
secretary of the board of directors of the Company may be
relieved of liability for specific breaches of his duty with
the informed consent of the shareholders given at a general
meeting, save under the circumstances of Article 55 hereof.
Article 157 Where a director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of directors
of the Company is in any way, directly or indirectly,
materially interested in a contract, transaction or
arrangement or proposed contract, transaction or arrangement
with the Company, (other than his contract of service with the
Company), he shall declare the nature and extent of his
interests to the board of directors at the earliest
opportunity, whether or not the contract, transaction or
arrangement or proposal therefor is otherwise subject to the
approval of the board of directors.
Directors shall not vote on the contract, transaction and
arrangement where they own the major rights and interests, and
shall not be listed in the quorum of the meeting.
Unless the interested director, supervisor, the president,
vice-president, Chief Financial Officer or secretary of the
board of directors discloses his interests in accordance with
the preceding sub-paragraph of this Article and the contract,
transaction or arrangement is approved by the board of
directors at a meeting in which the director, supervisor, the
president, vice-president, Chief Financial Officer or
secretary of the board of directors is not counted as part of
the quorum and refrains from voting, or from entering into a
contract, transaction or arrangement in which that senior
officer is materially interested is voidable at the instance
of the Company except as against a bona fide party thereto who
does not have notice of the breach of duty by the interested
senior officer.
For the purposes of this Article, a director, supervisor, the
president, vice-president, Chief Financial Officer or
secretary of the board of directors of the Company is deemed
to be interested in a contract, transaction or arrangement in
which his associate is interested.
Article 158 Where a director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of directors
of the Company gives to the board of directors a notice in
writing stating that, by reason of the facts specified in the
notice, he is interested in contracts, transactions or
arrangements which may subsequently be made by the Company,
that notice shall be deemed for the purposes of the preceding
Article to be a sufficient disclosure of his interests, so far
as the content stated in such notice is concerned, provided
that such notice shall have been given before the date on
which the question of entering into the relevant contract,
transaction or arrangement is first taken into consideration
by the Company.
Article 159 The Company shall not pay taxes for or on behalf
of a director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of directors
in any manner.
Article 160 The Company shall not directly or indirectly make a loan to or
provide any guarantee in connection with the making of a loan
to a director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of directors
of the Company or a senior officer (including but without
limitation to a director, supervisor and the president) of the
holding company of the Company or any of their respective
associates. The foregoing prohibition shall not apply to the
following circumstances:
(1) provision of a loan or guarantee for a loan by the
Company to its subsidiary;
(2) the provision by the Company of a loan or a guarantee in
connection with the making of a loan or any other funds
available to its directors, supervisors, president,
vice-president, Chief Financial Officer or the secretary
of the board of directors to meet expenditure incurred
or to be incurred by him for the purposes of the Company
or for the purpose of enabling him to perform his duties
properly, in accordance with the terms of a service
contract approved by the shareholders in a general
meeting;
(3) if the ordinary course of business of the Company
includes the lending of money or the giving of
guarantees, the Company may make a loan to or provide a
guarantee in connection with the making of a loan to a
director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of
directors or his associates in the ordinary course of
its business on normal commercial terms.
Article 161 Any person who receives funds from a loan which has been made
by the Company acting in breach of the preceding Article
shall, irrespective of the terms of the loan, forthwith repay
such funds.
Article 162 A guarantee for the repayment of a loan which has been
provided by the Company acting in breach of Article 158(1)
shall not be enforceable against the Company, save in respect
of the following circumstances:
(1) the guarantee was provided in connection with a loan
which was made to an associate of a director,
supervisor, the president, vice-president, Chief
Financial Officer or secretary of the board of directors
of the Company or a senior officer (including but
without limitation to a director, supervisor and the
president) of the Company's holding company and the
lender of such funds did not know of the relevant
circumstances at the time of the making of the loan; or
(2) the collateral which has been provided by the Company
has already been lawfully disposed of by the lender to a
bona fide purchaser.
Article 163 For the purposes of the foregoing provisions of this Chapter,
a "guarantee" includes an undertaking or property provided to
secure the obligor's performance of his obligations.
Article 164 In addition to any rights and remedies provided by the laws
and administrative regulations, where a director, supervisor,
the president, vice-president, Chief Financial Officer or
secretary of the board of directors of the Company breaches
the duties which he owes to the Company, the Company has a
right:
(1) to demand such a director, supervisor, the president,
vice-president, Chief Financial Officer or secretary of
the board of directors to compensate it for losses
sustained by the Company as a result of such breach;
(2) to rescind any contract or transaction which has been
entered into between the Company and such a director,
supervisor, the president, vice-president, Chief
Financial Officer or secretary of the board of directors
or between the Company and a third party (where such
third party knows or should have known that such a
director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of
directors representing the Company has breached his
duties owed to the Company);
(3) to demand such a director, supervisor, the president,
vice-president, Chief Financial Officer or secretary of
the board of directors to surrender the gains made as
result of the breach of his obligations;
(4) to recover any monies which should have been received by
the Company and which were received by such a director,
supervisor, the president, vice-president, Chief
Financial Officer or secretary of the board of directors
instead, including (without limitation to) commissions;
and
(5) to demand repayment of interest earned or which may have
been earned by a director, supervisor, the president,
vice-president, Chief Financial Officer or secretary of
the board of directors officer on money that should have
been paid to the Company.
Article 165 If a director, supervisor, the president, vice-president,
Chief Financial Officer or secretary of the board of directors
has violated the law, administrative rules or these Articles
of Association in discharging his duties thereby causing
damage to the Company, he shall be liable for compensation.
Shareholders shall have the right to ask the Company to
commence legal or arbitration proceedings to claim for
compensation according to law.
Article 166 The Company shall make written contract with a director or
supervisor in relation to the rights and duties of the Company
and the director/supervisor, emoluments and term of office of
the director/supervisor, liability of the director/supervisor
for breach of law, regulations and these Articles of
Association and compensation for early termination of the
contract, etc. The emoluments shall be approved in advance by
the shareholders in a general meeting. The aforesaid
emoluments include:
(1) emoluments in respect of his service as director,
supervisor, president, vice-president, Chief Financial
Officer or secretary of the board of directors of the
Company;
(2) emoluments in respect of his acting as a senior officer
(including but without limitation to a director,
supervisor and the president) of any subsidiary of the
Company;
(3) emoluments in respect of the provision of other services
in connection with the management of the affairs of the
Company and any of its subsidiaries;
(4) payment by way of compensation for loss of office, or as
consideration for or in connection with his retirement
from office.
No proceedings may be brought by a director or supervisor
against the Company for anything due to him in respect of the
matters mentioned in this Article except pursuant to the
contract mentioned above.
Article 167 The contract concerning the emoluments between the
Company and its directors or supervisors should provide that
in the event that the Company is acquired, the Company's
directors and supervisors shall, subject to the prior approval
of shareholders in a general meeting, have the right to
receive compensation or other payment in respect of his loss
of office or retirement. For the purposes of this paragraph,
the acquisition of the Company includes any of the following:
(1) an offer made by any person to the general body of
shareholders;
(2) an offer made by any person with a view to the offeror
becoming a "controlling shareholder" within the meaning
of Article 56 hereof.
If the relevant director or supervisor does not comply with
this Article, any sum so received by him shall belong to those
persons who have sold their shares as a result of such offer.
The expenses incurred in distributing such sum on a pro rata
basis amongst such persons shall be borne by the relevant
director or supervisor and shall not be paid out of such sum.
CHAPTER 15 FINANCIAL AND ACCOUNTING SYSTEMS, PROFIT DISTRIBUTION AND
AUDITING
Article 168 The Company shall establish its financial and accounting
systems in accordance with laws, administrative regulations
and PRC accounting standards formulated by the finance
regulatory department of the State Council.
Article 169 The accounting year of the Company shall adopt the
calendar year, i.e. starting from the 1 January of every
calendar year and to 31 December of every calendar year. The
Company shall adopt Renminbi as its denominated currency for
booking and accounting purposes , the account books shall be
recorded in Chinese. At the end of each fiscal year, the
Company shall prepare a financial report which shall be
examined and verified in a manner prescribed by law.
Article 170 The board of directors of the Company shall place before
the shareholders at every annual general meeting such
financial reports which the relevant laws, administrative
regulations and directives promulgated by competent regional
and central governmental authorities require the Company to
prepare. These reports shall be verified.
Article 171 The Company's financial reports shall be made available
for shareholders' inspection at the Company twenty (20) days
before the date of every shareholders' annual general meeting.
Each shareholder shall be entitled to have a copy of the
financial reports referred to in this Chapter.
The Company shall deliver or send to each shareholder of
Overseas-Listed Foreign-Invested Shares by prepaid mail at the
address registered in the register of shareholders the said
reports not later than twenty-one (21) days prior to the date
of every annual general meeting of the shareholders.
Article 172 The financial statements of the Company shall, in addition to
being prepared in accordance with PRC accounting standards and
regulations, be prepared in accordance with either
international accounting standards, or that of the place
outside the PRC where the Company's shares are listed. If
there is any material difference between the financial
statements prepared respectively in accordance with the two
accounting standards, such difference shall be stated in the
financial statements. In distributing its profits after tax,
the lower of the two amounts shown in the financial statements
shall be adopted.
Article 173 Any interim results or financial information published or
disclosed by the Company must also be prepared and presented
in accordance with PRC accounting standards and regulations,
and also in accordance with either international accounting
standards or that of the place overseas where the Company's
shares are listed.
Article 174 The Company shall publish its financial reports four times in
each fiscal year, that is, the report for the first quarter
shall be published within thirty (30) days after the
expiration of the first three (3) months of each fiscal year;
the biannual financial report shall be published within sixty
(60) days after the expiration of the first six (6) months of
each fiscal year; the report for the third quarter shall be
published within thirty (30) days after the expiration of the
first nine (9) months of each fiscal year; and the annual
financial report shall be published within one hundred and
twenty (120) days after the expiration of each fiscal year.
Annual financial reports shall be checked and verified as
required by law.
Article 175 Annual financial reports and biannual financial reports
which deal with biannual profit distribution shall include the
followings:
(1) balance sheet;
(2) statement of profit;
(3) statement of profit distribution;
(4) cash flow statement;
(5) explanatory notes to accounting statements.
If the Company does not make biannual profit distribution, the
biannual financial report shall include the above accounting
statements and explanatory notes save sub-paragraph (3).
Article 176 The Company shall not keep accounts other than those
required by law. Assets of the Company will not be deposited
into any account opened in the name of an individual.
Article 177 When allocating the after-tax profits of the current year,
the Company shall allocate (10) ten percent of its profit to
the statutory common reserve fund, and allocate (5) five
percent to (10) ten percent of its profit to the statutory
public welfare fund. In the event that the accumulated
statutory common reserve fund of the Company has reached more
than (50) fifty percent of the registered capital of the
Company, no allocation is needed.
In the event that the statutory common reserve fund of the
Company is insufficient to make up the losses of the Company
on the previous year, before allocating the statutory common
reserve fund and the statutory public welfare fund in
accordance with the stipulations of the previous paragraph,
the Company shall first make up the losses by using the
profits of the current year.
After allocating the statutory common reserve fund and public
welfare fund from the after-tax profits of the Company, the
Company can allocate the arbitrary common reserve fund
according to the resolution of shareholders' general meeting.
The remaining profits after making-up the losses, allocating
the common reserve funds and the statutory public welfare fund
shall be distributed in accordance with the proportion of
shares held by the shareholders.
Article 178 Before making-up the losses, allocating the surplus common
reserve funds and the statutory public welfare fund, the
Company shall not allocate the dividends or carry out other
allocations by way of bonus.
Article 179 Capital common reserve fund includes the following items:
(1) premium on shares issued at a premium price;
(2) any other income designated for the capital common
reserve fund by the regulations of the finance
regulatory department of the State Council.
Article 180 The common reserve fund of the Company shall be applied for
compensating the losses or converting the common reserve fund
into the capital of the Company. When such conversion takes
place upon the approval of shareholders in a general meeting,
the Company shall distribute new shares in proportion to the
existing shareholders' number of shares, provided, however,
that when the statutory common reserve fund is converted to
capital nature, the balance of the statutory common reserve
fund may not fall below 25% of the registered capital.
Article 181 The Company's statutory public welfare fund is used for
the collective welfare of the Company's employees.
Article 182 After the Company's shareholders have approved in a
general meeting the proposal for profit distribution or for
conversion of the common reserve fund into capital of the
Company, the Company's board of directors shall complete the
distribution or conversion of dividends (or shares) within two
(2) months of the general meeting.
Article 183 The Company may distribute dividends in the form of:
(1) cash;
(2) shares.
Article 184 The Company shall calculate, declare and pay dividends and
other amounts which are payable to holders of
Domestic-Invested Shares in Renminbi. The Company shall
calculate and declare dividends and other payments which are
payable to holders of Overseas-Listed Foreign-Invested Shares
in Renminbi, and shall pay such amounts in Hong Kong Dollars.
As for the foreign currency needed by the Company for payment
of cash dividends and other funds which are payable to the
holders of the Overseas-Listed Foreign-Invested Shares, it
shall be handled in accordance with any related national
regulations on foreign exchange control.
Article 185 Unless otherwise provided by the relevant laws and
administrative regulations, as regards dividends and other
amounts payable in Hong Kong dollars, the applicable exchange
rate shall be the average benchmark rate for the relevant
foreign currency determined by the Peoples' Bank of China and
announced by the State Administration of Foreign Exchange
during the week prior to the announcement of payment of
dividend and other amounts.
Article 186 Unless the shareholders have approved otherwise in a
general meeting, the board of directors may determine to make
half-yearly dividends distribution. Unless otherwise provided
by the relevant laws and administrative regulations, the
amount of the half-yearly dividends distribution shall not
exceed 50% of the profits shown in the biannual statement of
profit of the Company.
Article 187 In the event of allocating the dividends to shareholders
of the Company, the payable taxes on the dividend incomes of
the shareholders shall be withdrawn in accordance with the
requirements of Taxation Law of China and in consideration of
the allocated sum.
Article 188 The Company shall appoint receiving agents for holders of the
Overseas-Listed Foreign-Invested Shares. Such receiving agents
shall receive dividends which have been declared by the
Company and all other amounts which the Company should pay to
holders of Overseas-Listed Foreign-Invested Shares on such
shareholders' behalf. The receiving agents appointed by the
Company shall meet the relevant requirements of the laws of
the place at which the stock exchange on which the Company's
shares are listed or the relevant regulations of such stock
exchange.
The receiving agents appointed for holders of Overseas-Listed
Foreign-Invested Shares listed in Hong Kong shall each be a
company registered as a trust company under the Trustee
Ordinance of Hong Kong.
Article 189 The Company adopts the system of internal auditing and
hires professional auditors to undertake internal auditing of
the Company's financial income and expenditure and economic
activities.
Article 190 The Company's internal auditing system and duties of the
auditors shall be implemented after they have been approved by
the board of directors.
CHAPTER 16 APPOINTMENT OF ACCOUNTING FIRMS
Article 191 The Company shall appoint an independent firm of
accountants which is qualified under the relevant regulations
of the State to audit the Company's annual financial report
and review other financial reports, to conduct verification of
net asset value and other relevant consulting service
business.
Engagement of the firm of accountants shall be determined in a
shareholders' general meeting.
Article 192 The auditors appointed by the Company shall hold office
from the conclusion of the annual general meeting of
shareholders at which they were appointed until the conclusion
of the next annual general meeting of shareholders.
Article 193 The auditors appointed by the Company shall enjoy the
following rights:
(1) a right to review to the books, records and vouchers of
the Company at any time, the right to require the
directors, supervisors, president, vice-president, Chief
Financial Officer and secretary of the board of
directors of the Company to supply relevant information
and explanations;
(2) a right to require the Company to take all reasonable
steps to obtain from its subsidiaries such information
and explanation as are necessary for the discharge of
its duties;
(3) a right to attend shareholders' general meetings and to
receive all notices of, and other communications
relating to, any shareholders' general meeting which any
shareholder is entitled to receive, and to speak at any
shareholders' general meeting in relation to matters
concerning its role as the Company's accounting firm.
Article 194 If there is a vacancy in the position of the accounting
firm, the board of directors may appoint an accounting firm to
fill such vacancy before the convening of the shareholders'
general meeting. Any other accounting firm which has been
appointed by the Company may continue to act during the period
during which a vacancy arises.
Article 195 The shareholders in a general meeting may by ordinary
resolution remove the accounting firm before the expiration of
its term of office, irrespective of the provisions in the
contract between the Company and the accounting firm. However,
the right of the accounting firm in claiming for damages which
arise from its removal shall not be affected thereby.
Article 196 The remuneration of an accounting firm or the manner in
which such firm is to be remunerated shall be determined by
the shareholders in a general meeting. The remuneration of an
accounting firm appointed by the board of directors which is
to fill the vacancy shall be determined by the board of
directors and approved by the shareholders' general meeting.
Article 197 The Company's appointment, removal or non-reappointment of
an accounting firm shall be resolved by the shareholders in a
general meeting and disclosed in the relevant newspapers and
publications stating the reasons for removal, if necessary.
Such resolution shall be filed with the securities authority
of the State Council and The Chinese Institute of Certified
Public Accountants.
Where a resolution at a general meeting of shareholders is
passed to appoint an accounting firm other than an incumbent
accounting firm, to fill a casual vacancy in the office of the
accounting firm, to reappoint an accounting firm who was
appointed by the board of directors to fill a casual vacancy
or to remove an accounting firm before expiry of its term of
office, the following provisions shall apply:
(1) A copy of the appointment or removal proposal shall be
sent (before issue of the notice of meeting) to the firm
proposed to be appointed or proposing to leave its post
or the firm which has left its post in the relevant
fiscal year. Reference as leaving herein includes
leaving by removal, resignation and retirement.
(2) If the accounting firm leaving its post makes
representations in writing and requests the Company to
give the shareholders notice of such representations,
the Company shall (unless the representations have been
received too late) take the following measures:
(i) in any notice of the resolution given to
shareholders, state the fact of the
representations having been made by the accounting
firm leaving its post; and
(ii) attach a copy of the representations to the notice
and deliver it to the shareholders in the manner
stipulated in the Company's Articles of
Association.
(3) If the Company fails to circulate the accounting firm's
representations in the manner set out in sub-paragraph
(2) above, such accounting firm may (in addition to its
right to be heard) require that the representations be
read out at the meeting.
(4) An auditor which is retired from its office shall be
entitled to attend the following shareholders' general
meetings:
(i) the general meeting at which its term of office
would otherwise have expired;
(ii) the general meeting at which it is proposed to
fill the vacancy caused by its removal; and
(iii) the general meeting which convened as a result of
its voluntary resignation:
The leaving accounting firm has the right to receive all
notices of, and other communications relating to, any
such meeting, and to speak at any such meeting which it
attends on any part of the business of the meeting which
concerns it as the former accounting firm of the
Company.
Article 198 Prior notice should be given to the accounting firm 30 days in
advance if the Company decides to remove such accounting firm
or not to renew the appointment thereof. Such accounting firm
shall be entitled to make representations at the shareholders'
general meeting. Where the accounting firm considers that
there is no proper reason for the removal or the non-renewal
of appointment, it may appeal to the securities regulatory
authority of the State Council and The Chinese Institute of
Certified Public Accountants. Where the accounting firm
resigns from its position as the Company's auditors, it shall
make clear to the shareholders in a general meeting whether
there has been any impropriety on the part of the Company.
An accounting firm may resign its office by depositing at the
Company's domicile a resignation notice which shall become
effective on the date of such deposit or on such later date as
may be stipulated in such notice. Such notice shall contain
the following statements:
(1) a statement to the effect that there are no
circumstances connected with its resignation which it
considers should be brought to the notice of the
shareholders or creditors of the Company; or
(2) a statement of any such circumstances.
Where a notice is deposited under the preceding sub-paragraph,
the Company shall within fourteen (14) days send a copy of the
notice to the relevant governing authority. If the notice
contains a statement under the preceding sub-paragraph (2), a
copy of such statement shall be placed at the Company for
shareholders' inspection. The Company should also send a copy
of such statement by prepaid mail to every shareholder of
Overseas-Listed Foreign Shares at the address registered in
the register of shareholders.
Where the accounting firm's notice of resignation contains a
statement in respect of the above, it may require the board of
directors to convene a shareholders' extraordinary general
meeting for the purpose of receiving an explanation of the
circumstances connected with its resignation.
CHAPTER 17 MERGER AND DIVISION OF THE COMPANY
Article 199 The Company may carry out mergers or division in accordance
with law. In the event of merger or division of the Company,
the following procedures shall be adopted:
(1) a proposal for merger or division be drawn up in a board
meeting;
(2) a resolution be made in a shareholders' general meeting
in accordance with these Articles of Association;
(3) a contract for merger or division be made by the
relevant parties;
(4) the relevant procedures for approval be gone through
according to law;
(5) disposal of credit rights and liabilities in the merger
or division;
(6) registration of dissolution or modification.
In the case of merger or division of the Company, the board of
directors of the Company shall take necessary measures to
protect the legitimate interests of the shareholders who
object to the plan of merger or division. A shareholder who
objects to the plan of merger or division shall have the right
to demand the Company or the shareholders who consent to the
plan of merger or division to acquire such dissenting
shareholders' shareholding at a fair price.
The contents of the resolution of merger or division of the
Company shall constitute special documents which shall be
available for inspection by the shareholders of the Company.
Such special documents shall be sent by mail to holders of
Overseas-Listed Foreign-Invested Shares.
Article 200 The merger of the Company may take the form of either merger
by absorption or merger by the establishment of a new company.
In the event of a merger, the merging parties shall execute a
merger agreement and prepare a balance sheet and an inventory
of assets. The Company shall notify its creditors within ten
(10) days from the date of the Company's merger resolution
which is passed at a shareholders' general meeting and shall
publish a public notice in a newspaper at least three (3)
times within thirty (30) days of the date of the Company's
merger resolution.
Article 201 Where there is a division of the Company, its assets shall be
divided up accordingly. In the event of division of the
Company, the parties to such division shall execute a division
agreement and prepare a balance sheet and an inventory of
assets. The Company shall notify its creditors within ten (10)
days from the date of the Company's division resolution which
is passed at a shareholders' general meeting and shall publish
a public notice in a newspaper at least three (3) times within
thirty (30) days of the date of the Company's division
resolution.
Article 202 A creditor shall have the right either within 30 days of
receipt of the notice if he has received a notice or within 90
days of the first announcement if he has not received a notice
to require the Company to settle indebtedness or provide the
relevant security. If the Company fails to settle the
indebtedness or provide the relevant security, the merger or
division shall not be proceeded with.
Article 203 Disposal of the assets, credit rights and liabilities of
the parties to the merger or division shall be provided
explicitly in a contract. After the merger, the rights against
debtors and the indebtedness of each of the parties to the
merger shall be inherited by the company which survives the
merger or the newly established company.
Debts of the Company prior to division shall be assumed by the
companies which exist after the division in accordance with
the agreement of the parties.
Article 204 The Company shall, in accordance with law, apply for
change in its registration with the companies registration
authority where a change in any item in its registration
arises as a result of any merger or division. Where the
Company is dissolved, the Company shall apply for cancellation
of its registration in accordance with law. Where a new
company is established, the Company shall apply for
registration thereof in accordance with law.
CHAPTER 18 DISSOLUTION AND LIQUIDATION
Article 205 The Company shall be dissolved and liquidated upon the
occurrence of any of the following events:
(1) a resolution regarding the dissolution is passed by
shareholders at a general meeting;
(2) dissolution is necessary due to a merger or division of
the Company;
(3) the Company is legally declared insolvent due to its
failure to repay debts as they become due; and
(4) the Company is ordered to close down because of its
violation of laws and administrative regulations.
Article 206 Where the Company is dissolved under sub-paragraph (1) of the
preceding paragraph, a liquidation committee shall be set up
within fifteen (15) days thereafter, and the composition of
the liquidation committee of the Company shall be determined
by an ordinary resolution of shareholders in a general
meeting. Where a liquidation committee is not established
according to schedule, the creditor may apply to the People's
Court to organize the relevant personnel to establish a
liquidation committee to proceed the liquidation.
Where the Company is dissolved under sub-paragraph (2) of the
preceding Article, the liquidation shall be conducted by the
parties to the merger or division in accordance with the
contract or agreement made at the time of merger or division.
Where the Company is dissolved under sub-paragraph (3) of the
preceding Article, the People's Court shall in accordance with
the provisions of relevant laws organize the shareholders,
relevant organizations and relevant professional personnel to
establish a liquidation committee to proceed the liquidation.
Where the Company is dissolved under sub-paragraph (4) of the
preceding Article, the relevant governing authorities shall
organize the shareholders, relevant organizations and
professional personnel to establish a liquidation committee to
proceed with the liquidation.
Article 207 Where the board of directors proposes to liquidate the Company
for any reason other than the Company's declaration of its own
insolvency, the board shall include a statement in its notice
convening a shareholders' general meeting to consider the
proposal to the effect that, after making full inquiry into
the affairs of the Company, the board of directors is of the
opinion that the Company will be able to pay its debts in full
within twelve (12) months from the commencement of the
liquidation.
Upon the passing of the resolution by the shareholders in a
general meeting in relation to the liquidation of the Company,
all duties and powers of the board of directors and the
president shall cease.
The liquidation committee shall act in accordance with the
instructions of the shareholders' general meeting to make a
report at least once every year to the shareholders' general
meeting on the committee's income and expenses, the business
of the Company and the progress of the liquidation; and to
present a final report to the shareholders' general meeting on
completion of the liquidation.
Article 208 The liquidation committee shall, within ten (10) days of
its establishment, send notices to creditors and shall, within
sixty (60) days of its establishment, publish a public
announcement at least three (3) times in a newspaper published
by the securities regulatory authority of the State Council.
The liquidation committee shall register the creditors'
rights.
Article 209 During the liquidation period, the liquidation committee
shall exercise the following functions and powers:
(1) to categorise the Company's assets and prepare a balance
sheet and an inventory of assets respectively;
(2) to notify the creditors or to publish public
announcements;
(3) to dispose of and liquidate any unfinished businesses of
the Company;
(4) to pay all outstanding taxes;
(5) to settle claims and debts;
(6) to deal with the surplus assets remaining after
repayment by the Company of its debts;
(7) to represent the Company in any civil proceedings.
Article 210 After it has categories the Company's assets and after it
has prepared the balance sheet and an inventory of assets, the
liquidation committee shall formulate a liquidation plan and
present it to a shareholders' general meeting or to the
relevant governing authority for confirmation.
After the initial payment of the settlement expense, the
assets of the Company shall be liquidated in the following
order:
(i) salary and labor insurance expenses of the staff members
of the Company;
(ii) outstanding taxes;
(iii) bank loans, debentures and debts to other companies.
Any surplus assets of the Company remaining after its debts
have been repaid in accordance with the provisions of the
preceding paragraph shall be distributed to its shareholders
according to the class of shares and the proportion of shares
held:
(1) In case of the preferred shares, the allocation shall be
first given to the holders of the preferred shares in
accordance with the face value of the preferred shares;
if it is insufficient to repay the preferred shares, the
allocation shall be carried out in accordance with the
proportions of the preferred shares held by them
respectively;
(2) The allocation shall be carried out in accordance with
proportions of shares held by the holders of ordinary
shares.
During the liquidation period, the Company shall not commence
any new business activities.
Article 211 Upon completion of the categorisation of the Company's assets
and preparation a balance sheet and an inventory of assets in
connection with the liquidation of the Company, the
liquidation committee discovers that the Company's assets are
insufficient to repay the Company's debts in full, the
liquidation committee shall immediately apply to the People's
Court for a declaration of insolvency. After a Company is
declared insolvent by a ruling of the People's Court, the
liquidation committee shall transfer all matters arising from
the liquidation to the People's Court.
Article 212 Following the completion of the liquidation, the
liquidation committee shall prepare a liquidation report, a
statement of income and expenses received and made during the
liquidation period and a financial report, which shall be
verified by a Chinese registered accountant and submitted to
the shareholders' general meeting or the relevant governing
authority for confirmation.
The liquidation committee shall, within thirty (30) days after
the confirmation of the liquidation report, submit the
documents referred to in the preceding paragraph to the
companies registration authority and apply for cancellation of
registration of the Company, and publish a public announcement
relating to the termination of the Company.
CHAPTER 19 PROCEDURES FOR AMENDMENT OF THE COMPANY'S ARTICLES OF ASSOCIATION
Article 213 The Company may amend its Articles of Association in
accordance with the requirements of laws, administrative
regulations and the Company's Articles of Association.
Article 214 The Company shall amend these Articles of Association on
the occurrence of any of the following events:
(1) the Company Law or the relevant laws or administrative
regulations are amended and these Articles of
Association are in conflict with the amended laws or
administrative regulations;
(2) there is change to the Company which makes it not
consistent with these Articles of Association;
(3) it has been approved by the shareholders in a general
meeting to amend these Articles of Association.
Article 215 Any amendment of these Articles of Association shall be made
in the following manner:
(1) The Board of Directors shall pass a resolution to draw
up a proposal for amendment of the Company's Article of
Association in accordance with these Articles of
Association;
(2) The foregoing proposal shall be furnished to the
shareholders in writing and a shareholders' meeting
shall be convened;
(3) The amendments shall be approved by a special resolution
in a shareholders' general meeting.
The board of directors shall amend these Articles of
Association pursuant to the resolution of shareholders in a
general meeting for amendment of these Articles of Association
and the approval opinions of the competent authority.
Amendment of these Articles of Association involving the
contents of the Mandatory Provisions shall become effective
upon receipt of approvals from the companies approving
department authorized by the State Council.
Article 216 If there is any change relating to the registered
particulars of the Company, application shall be made for
change in registration in accordance with law. If the
amendment to the Articles of Association is a matter which is
required by the relevant laws and regulations to be disclosed,
an announcement shall be made in accordance with the
provisions of those laws and regulations.
CHAPTER 20 NOTICE
Article 217 Notices of the Company shall be issued in the following
manner: (1) by hand; (2) by post; (3) by public announcement;
(4) any other manner as provided in these Articles of
Association.
If a notice of the Company is issued by public announcement,
it shall be deemed received by the relevant officers once
announced.
Unless otherwise provided in these Articles of Association,
notices, information or written statement issued by the
Company to holders of Overseas-Listed Foreign-Invested Shares
shall be personally delivered to the registered address of
each of such shareholders, or sent by pre-paid mail to each of
such shareholders.
Article 218 If a notice of the Company is issued by hand, the date
when the recipient signed or stamped to acknowledge receipt of
the same shall be regarded as the date of service of the
notice.
If a notice of the Company is issued by public announcement,
the date of the first publication of the announcement shall be
regarded as the date of service of the announcement.
All notices which are to be sent by mail shall be clearly
addressed, postage pre-paid, and shall be put into envelopes
before being posted by mail. Such letters of notice shall be
deemed to have been received by shareholders on the third
working day since it is left with the post office.
Article 219 If a notice of meeting is accidentally omitted to be sent
to any person who is entitled to receive the same or that
person has not received such a notice of meeting, it will not
cause the meeting and any resolution made therein to be void.
CHAPTER 21 RESOLUTION OF DISPUTES
Article 220 The Company shall abide by the following principles for
dispute resolution:
(1) Whenever any disputes or claims arise between: holders
of the Overseas-Listed Foreign-Invested Shares and the
Company; holders of the Overseas-Listed Foreign-Invested
Shares and the Company's, directors, supervisors,
president, vice-presidents, Chief Financial Officer or
the secretary of the board of directors; or holders of
the Overseas-Listed Foreign-Invested Shares and holders
of Domestic-Invested Shares, in respect of any disputes
or claims in relation to the affairs of the Company
arising as a result of any rights or obligations arising
from these Articles of Association, the Company Law or
other relevant laws and administrative regulations, such
disputes or claims shall be referred by the relevant
parties to arbitration.
Where a dispute or claim of rights referred to in the
preceding paragraph is referred to arbitration, the
entire claim or dispute must be referred to arbitration,
and all persons who have a cause of action based on the
same facts giving rise to the dispute or claim or whose
participation is necessary for the resolution of such
dispute or claim, shall, where such person is the
Company or the Company's shareholders, directors,
supervisors, president, vice-presidents, Chief Financial
Officer or the secretary of the board of directors,
comply with the decisions made in the arbitration.
Disputes in respect of the definition of shareholders
and disputes in relation to the register of shareholders
need not be resolved by arbitration.
(2) A claimant may elect for arbitration to be carried out
at either the China International Economic and Trade
Arbitration Commission in accordance with its Rules or
the Hong Kong International Arbitration Center in
accordance with its Securities Arbitration Rules. Once a
claimant refers a dispute or claim to arbitration, the
other party must submit to the arbitral body elected by
the claimant.
If a claimant elects for arbitration to be carried out
at Hong Kong International Arbitration Center, any party
to the dispute or claim may apply for a hearing to take
place in Shenzhen in accordance with the Securities
Arbitration Rules of the Hong Kong International
Arbitration Center.
(3) If any disputes or claims of rights are settled by way
of arbitration in accordance with sub-paragraph (1) of
this Article, the laws of the PRC shall apply, save as
otherwise provided in the laws and administrative
regulations.
(4) The judgement of an arbitral body shall be final and
conclusive and binding on all parties.
CHAPTER 22 SUPPLEMENTARY
Article 221 These Articles of Association are written in Chinese and
English. If there is any conflict between the two versions,
the Chinese version shall prevail.
Article 222 The expressions of "above", "within" and "below" shall
include the figures mentioned whilst the expressions of "short
of" and "less than" shall not include the figures mentioned.
Article 223 The right to interpret these Articles of Association vests
with the board of directors of the Company, and the right to
revise these Articles of Association vests with shareholders'
general meeting.
Article 224 If these Articles of Association are in conflict with the
laws, administrative regulations or provisions of other
regulatory documents promulgated from time to time, the laws,
administrative regulations and provisions of other regulatory
documents shall prevail.
Article 225 In these Articles of Association, references to
"accounting firm" shall have the same meaning as "auditors".
In these Articles of Association, references to "president"
shall have the same meaning as "manager".
Appendix II Rules and Procedures for the Shareholders' General Meetings
Chapter 1 General Provisions
Article 1 In order to safeguard the legitimate interests of China
Petroleum & Chemical Corporation (the "Company") and its
shareholders, to specify the duties, responsibilities and
authority of the shareholders' general meetings, to ensure the
proper, efficient and smooth operation of the shareholders'
general meeting and to ensure the shareholders' general
meeting exercises its functions and powers according to law,
these Rules are formulated according to the "Company Law of
the People's Republic of China" (the "Company Law"),
"Mandatory Provisions for the Articles of Association of
Companies to be Listed Overseas", "Guidelines for the Articles
of Association of Listed Companies", "Standards for the
Governance of Listed Companies" and "Regulatory Opinions
Regarding General Meetings of Listed Companies" and other
relevant laws and regulations regulating listed companies
inside and outside the PRC and the Articles of Association of
China Petroleum & Chemical Corporation ("Articles of
Association").
Article 2 These Rules apply to the shareholders' general meetings of the
Company and shall be binding on the Company, all shareholders,
authorised proxies of the shareholders, directors,
supervisors, president, vice-president, Chief Financial
Officer, secretary of the board of directors and other
relevant personnel present at the meeting.
Article 3 Shareholders' general meetings are divided into annual general
meetings (hereinafter referred to as "AGM"), extraordinary
general meetings; or all shareholders' general meetings or
class shareholders' general meetings.
Article 4 AGMs are held once every year within six months from the end
of the previous accounting year.
Article 5 For the shareholders' general meetings convened each year, all
of them are extraordinary general meetings except the AGM. The
extraordinary general meetings shall be arranged in the order
of the year in which they are convened.
Article 6 Holders of different classes of shares are class shareholders.
Except other class shareholders, holders of domestic shares
and holders of H shares are deemed to be shareholders of
different classes. If the Company intends to alter or annul
the rights of class shareholders, it shall have such
alteration or annulment approved by a special resolution at
the shareholders' general meeting and shall convene a class
shareholders' meeting in accordance with the provisions of the
Articles of Association. Only class shareholders are entitled
to attend class shareholders' meetings.
Article 7 The board of directors of the Company shall strictly comply
with the provisions of the Company Law and other laws and
regulations regarding the convening of shareholders' general
meetings, and shall properly organise the shareholders'
general meeting in a conscientious manner and on schedule. All
directors of the Company are under a bona fide duty to ensure
that the shareholders' general meeting is convened in order,
and shall not obstruct the exercise of powers by the
shareholders' general meeting according to law.
The directors present at the meeting shall perform their
duties in good faith, and shall ensure that the contents of
the resolutions passed at the meeting are true, accurate and
complete and shall not use any words and expressions that may
easily cause ambiguity.
Article 8 Any shareholder who holds the shares of the Company legally
and validly are entitled to attend or authorise a proxy to
attend the shareholders' general meeting, and shall have the
right to know the Company's affairs, the right to speak, the
right to raise questions and the right to vote pursuant to law
and these Rules.
Shareholders and their proxies attending the shareholders'
general meeting shall comply with the provisions of the
relevant laws and regulations, Articles of Association and
these Rules, and shall take the initiative to maintain the
order of the meeting and shall not infringe the legitimate
rights and interests of other shareholders.
Article 9 The Secretary to the board of directors of the Company shall
be responsible for implementing the preparatory and
organisation work for convening a shareholders' general
meeting.
Article 10 In convening a shareholders' general meeting, the principle of
cost-saving and simplicity shall be adhered to. No extra
benefits shall be given to the shareholders (or their proxies)
present at the meeting.
Chapter 2 Functions and Powers of the Shareholders' General Meeting
Article 11 The shareholders' general meeting is the authority organ of
the Company and shall exercise the following functions and
powers according to law:
(1) to decide on the Company's operational policies and
investment plans;
(2) to elect and replace directors and to decide on matters
relating to the remuneration and liability insurance of
directors;
(3) to elect and replace supervisors who are shareholder
representatives and to decide on matters relating to the
remuneration and liability insurance of supervisors;
(4) to examine and approve the board of directors' reports;
(5) to examine and approve the supervisory committee's
reports;
(6) to examine and approve the Company's profit distribution
plans and loss recovery plans;
(7) to examine and approve the Company's proposed annual
preliminary and final financial budgets;
(8) to pass resolutions on the increase or reduction of the
Company's registered capital;
(9) to pass resolutions on matters such as merger, division,
dissolution and liquidation of the Company;
(10) to pass resolutions on the issue of debentures by the
Company;
(11) to pass resolutions on the appointment, dismissal and
non-reappointment of the accounting firm by the Company;
(12) to amend the Articles of Association and its appendices
(including the Rules and Procedures for the
Shareholders' General Meetings, Rules and Procedures for
the Board of Directors' Meetings and Rules and
Procedures for the Supervisors' Meetings);
(13) to consider motions raised by the supervisory committee
or shareholders who represent 5% or more of the total
number of voting shares of the Company at the annual
general meetings;
(14) to decide on other matters which, according to laws,
administrative regulations, rules of the competent
authorities and the Articles of Association, shall be
approved by the shareholders' general meetings.
The shareholders' general meetings shall exercise its powers
within the scope stipulated by the Company Law and shall not
interfere with the decision of shareholders regarding their
own rights.
Chapter 3 Authority of the Shareholders' General Meetings
Article 12 Matters which, in accordance with laws, administrative
regulations, rules of the relevant government authorities and
provisions of the Articles of Association, fall within the
scope of the authority of the shareholders' general meeting
must be examined at such meeting so as to protect the
decision-making power of the shareholders of the Company on
such matters.
Article 13 In order to ensure and increase the stability and efficiency
of the daily operations of the Company, the shareholders'
general meeting authorises the board of directors of the
Company, on a partial basis, to exercise the following powers
on investment plans, asset disposals and external guarantees:
(1) Investment:
(i) The shareholders' general meetings shall examine
and approve medium and long-term investment plans
and annual investment plans of the Company. The
board of directors is authorised to make
adjustments of not more than 15% of the amount of
the capital expenditure for the current year as
approved at the shareholders' general meeting.
(ii) Individual project investments (including but not
limited to exploration and development, fixed
assets, external shareholdings) shall be approved
by the shareholders' general meeting if the
investment amounts are more than 5% of the latest
audited net asset value of the Company. The board
of directors is authorised to examine and approve
projects if the investment amount is not more than
5% of the latest audited net asset value of the
Company.
(iii) Where the Company uses its own assets to make
risky investment in areas not related to the
business of the Company (including but not limited
to debentures, futures, shares), risky investments
shall be approved by the shareholders' general
meeting if the amount of investment is more than
1% of the latest audited net asset value of the
Company. The board of directors is authorised to
examine and approve projects if the investment
amount is not more than 1% of the latest audited
net asset value of the Company.
(2) Asset disposal:
(i) When the Company acquires or sells assets, it has
to take into account of the following 4 testing
indices: (1) total asset ratio: the total amount
of the assets to be acquired or sold (according to
the latest audited financial report, valuation
report or capital verification report) divided by
the latest audited total asset value of the
Company; (2) net profit (loss) ratio of the
acquisition: the absolute value of the net profit
or loss relating to the assets to be acquired
(according to the audited financial report of the
preceding year) divided by the absolute value of
the audited net profit or loss of the Company for
the preceding year; (3) net profit (loss) ratio of
the sale: the absolute value of the net profit or
loss relating to the assets to be sold (according
to the audited financial report of the preceding
year) or the absolute value of the profit or loss
arising from such transaction divided by the
absolute value of the audited net profit or loss
of the Company for the preceding year; (4)
transaction amount ratio: the transaction amount
(taking into account of the assumed liabilities
and costs, etc) of the acquired assets divided by
the total amount of the latest audited net asset
value of the Company.
The shareholders' general meeting shall examine
and approve any of the above projects with a ratio
of not less than 50%. The board of directors is
authorised to examine and approve any of the above
projects with a ratio of less than 50%.
(ii) In disposing of fixed assets, where the total
value of the expected value of the fixed assets to
be disposed of and the value of the fixed assets
which have been disposed of in the four months
prior to such proposed disposal exceeds 33% of the
value of the fixed assets as shown in the latest
balance sheet considered by the shareholders'
general meeting, the shareholders' general meeting
shall examine and approve such disposal, and the
board of directors is authorised to examine and
approve those fixed asset disposals of less than
33%.
The disposal of fixed assets referred to in this
Article includes the transfer of certain asset
interests but excludes the provision of guarantee
by way of fixed assets.
The validity of the transactions for disposal of
fixed assets by the Company shall not be affected
by any breach of paragraph (2)(i) of this Article.
(iii) Regarding others (including but not limited to the
entering into, varying and termination of
important contracts relating to entrustment of
operation, entrusted operation, entrusted
financial management, contracting and leasing),
the relevant amount or the amount accumulated in
12 months shall be calculated according to one of
four testing indices referred to in paragraph
(2)(i) of this Article.
Any of the above projects with a ratio of more
than 5% shall be examined and approved by the
shareholders' general meeting. The board of
directors is authorised to examine and approve any
of the above projects with a ratio of not more
than 5%.
(3) External guarantees
The Company shall not provide guarantees for its
shareholders, controlling subsidiaries of its
shareholders, subsidiary enterprises of shareholders or
personal liability. If the Company provides guarantees
to others, the guaranteed person shall provide
counter-guarantee to the Company or take other necessary
risk preventive measures.
If the guarantee amount exceeds 5% of the latest audited
net asset value of the Company, such guarantees shall be
examined and approved by the shareholders' general
meeting. The board of directors is authorised to examine
and approve guarantees of not more than 5% of the latest
audited net asset value of the Company.
(4) If, when applying the relevant standards as set out
above, the approving offices of any investment, asset
disposal and external guarantee matters as referred to
above include both shareholders' general meeting and the
board of directors, such matters shall be submitted to
the shareholders' general meeting for approval.
(5) If the above investment, asset disposal and external
guarantee matters constitute connected transactions
according to the regulatory stipulations of the places
where the Company is listed, the relevant matters shall
be dealt with according to the relevant stipulations.
Article 14 Under necessary and reasonable circumstances, as regards
specific matters related to the matters to be resolved and
those which cannot or are not required to be decided at the
shareholders' general meeting, the shareholders' general
meeting may authorise the board of directors or the secretary
to the board of directors to decide within the scope of
authority authorised by the shareholders' general meeting.
CHAPTER 4 PROCEDURES FOR CONVENING A SHAREHOLDERS' GENERAL MEETING
Section 1 Putting Forward, Collecting and Examining Motions
Article 15 Motions put forward in a shareholders' general meeting shall
be specific and shall relate to the matters which shall be
discussed at a shareholders' general meeting.
Article 16 Motions at the shareholders' general meeting are usually put
forward by the board of directors.
Article 17 Where two or more than half of the independent directors
request the board of directors to convene an extraordinary
general meeting, they shall be responsible for putting forward
the motions to be examined at the meeting. If the board of
directors disagrees with the convening of an extraordinary
general meeting, it shall disclose the relevant details.
Article 18 Where the Company convenes an AGM, the supervisory committee
or shareholders individually or jointly holding more than 5%
of the total voting shares of the Company are entitled to put
forward provisional motions. If the proposing shareholders
have any objection to the decision of the board of directors
of not including their motions in the agenda, they may request
the convening of an extraordinary general meeting according to
the provisions of these Rules.
Article 19 Where the supervisory committee proposes to convene a
shareholders' general meeting, it shall be responsible for
putting forward motions.
Article 20 Where shareholders individually or jointly holding more than
10% of the Company's voting shares propose to convene a
shareholders' general meeting, the proposing shareholders
shall be responsible for putting forward the motions, whether
or not the meeting is convened by the board of directors.
Article 21 Before the Chairman of the board of directors issues a notice
of the board meeting relating to the convening of a
shareholders' general meeting, the secretary to the board of
directors may collect motions from shareholders individually
holding more than 5% of the Company's voting shares (at the
time of proposing to convene an AGM) or shareholders
individually holding more than 10% of the Company's voting
shares (at the time of proposing to convene an extraordinary
general meeting), supervisors and independent directors and
submit the same to the board of directors for examination and
approval and subsequently submit the same as motions to the
shareholders' general meeting for examination.
Article 22 The following motions shall be put forward at the AGM for
consideration:
(1) to examine the board of directors' annual reports,
including the investment plans and operation strategy
for the following year;
(2) to examine the supervisory committee's annual reports;
(3) to examine the Company's audited final budget proposal
for the preceding year;
(4) to examine and approve the Company's profit distribution
plans and loss recovery plans for the preceding year;
(5) to appoint, dismiss or not to reappoint the accounting
firm.
Article 23 Shareholders individually or jointly holding more than 5% of
the Company's voting shares are entitled to put forward
provisional motions at an AGM. The board of directors shall
examine and approve such shareholders' motions according to
the following principles:
(1) Relevance. The board of directors shall conduct
preliminary examination of a motion, that is, the motion
should be submitted or delivered to the board of
directors or chairman of the meeting in a written form,
and the contents of the motion shall comply with laws,
administrative regulations and the Articles of
Association, shall fall within the scope of business of
the Company and the duties of the shareholders' general
meeting, and shall cover a specific subject for
discussion with concrete matters to be resolved. If the
motion complies with the above requirements, it shall be
submitted to the AGM for discussion. Otherwise no such
submission shall be effected. If the board of directors
decides not to submit the shareholders' motion to the
AGM for voting, it shall give an explanation and
statement at the AGM.
(2) Procedures. The board of directors may decide on the
procedural issues relating to the motion. Where a motion
needs to be divided into different motions or merged
with other motions to be voted on, consent of the person
putting forward the original motion is required. If the
person putting forward the original motion does not
agree with any change, the chairman of the meeting may
request the AGM to decide on the procedural issues and
conduct discussion according to the procedures decided
by the AGM.
Article 24 Where the supervisory committee or shareholders individually
or jointly holding more than 10% of the Company's voting
shares propose to convene an extraordinary general meeting or
class shareholders' general meeting, they may sign one or more
written request(s) of identical form and contents stating the
topics for discussion at the meeting, and at the same time
submit motions complying with the above requirements of these
Rules to the board of directors.
Article 25 Motions involving the following circumstances shall be deemed
to lead to a change or abrogation of the rights of a class
shareholder and the board of directors shall submit them to a
class shareholders' general meeting for examination:
(1) to increase or decrease the number of shares of such
class, or to increase or decrease the number of shares
of a class having voting rights, distribution rights or
other privileges equal or superior to those of the
shares of such class;
(2) to change all or part of the shares of such class into
shares of another class or to change all or part of the
shares of another class into shares of that class or to
grant such conversion right;
(3) to cancel or reduce rights to accrued dividends or
cumulative dividends attached to shares of such class;
(4) to reduce or remove preferential rights attached to
shares of such class to receive dividends or to the
distribution of assets in the event that the Company is
liquidated;
(5) to add, cancel or reduce share conversion rights,
options, voting rights, transfer rights, pre-emptive
placing rights, or rights to acquire securities of the
Company attached to shares of such class;
(6) to cancel or reduce rights to receive payment payable by
the Company in a particular currency attached to shares
of such class;
(7) to create a new class of shares with voting rights,
distribution rights or other privileges equal or
superior to those of the shares of such class;
(8) to restrict the transfer or ownership of shares of such
class or to impose additional restrictions;
(9) To issue rights to subscribe for, or to convert into,
shares of such class or another class;
(10) To increase the rights or privileges of shares of
another class;
(11) to restructure the Company in such a way so as to cause
the shareholders of different classes to bear liability
to different extents during the restructuring;
(12) to amend or abrogate the provisions of Chapter 9 of the
Articles of Association "Special Procedures for Voting
by a Class of Shareholders".
Section 2 Notice of Meeting and its Alterations
Article 26 The notice of a shareholders' general meeting shall be issued
by the convenors of the meeting. Convenors of the meeting
include the board of directors or shareholders individually or
jointly holding more than 10% of the Company's voting shares.
Article 27 A written notice shall be issued 45 days (excluding the date
of the meeting) prior to the meeting, informing all
shareholders of the matters to be considered at the meeting,
and the date and place of the meeting.
The notice of a shareholders' general meeting shall be
delivered to the shareholders (whether or not such
shareholders are entitled to vote at the meeting) by hand or
by pre-paid mail to the addresses of the shareholders as shown
in the register of shareholders of the Company. For the
holders of domestic shares, the notice of the meeting may also
be given by way of public announcement.
The public announcement referred to in the preceding paragraph
shall be published in one or more newspapers designated by the
securities regulatory authority of the State Council during
the period between forty-five to fifty days before the date of
the meeting. Once the announcement is made, the holders of
domestic shares shall be deemed to have received the notice of
the relevant shareholders' general meeting.
Where the Company fails to issue a notice of meeting according
to schedule thus resulting in the failure of the Company to
convene an AGM within six months from the end of the preceding
accounting year, it shall report the same immediately to the
stock exchanges on which its shares are listed stating the
reasons and shall make an announcement accordingly.
Article 28 The notice of a class shareholders' general meeting shall be
delivered only to the shareholders who are entitled to vote at
such meeting.
Article 29 The notice of a shareholders' general meeting shall satisfy
the following requirements:
(1) in writing;
(2) specify the place, date and time of the meeting;
(3) set out the matters to be discussed at the meeting and
fully disclose the contents of the motions. If it is
required to alter matters involved in the resolutions of
the previous shareholders' general meeting, the contents
of the motion shall be complete and not only the
contents of the changes are stated. Items included under
"any other businesses" without specific contents shall
not be deemed as a motion and the same shall not be
voted at a shareholders' general meeting;
(4) enable the shareholders to make an informed decision on
the proposals put before them. Such principle includes
(but not limited to) where a proposal is made to
amalgamate the Company with another, to repurchase
shares of the Company, to reorganize its share capital,
or to restructure the Company in any other way, the
terms of the proposed transaction must be provided in
detail together with contracts (if any) and the cause
and effect of such proposal must be properly explained;
(5) director, supervisor, president, vice-president, Chief
Financial Officer and secretary of the board of
directors in the proposed transaction and the effect
which the proposed transaction will have on them in
their capacity as shareholders in so far as it is
different from the effect on the interests of
shareholders of the same class;
(6) contain the full text of any special resolution to be
proposed at the meeting;
(7) contain a clear statement that a shareholder entitled to
attend and vote at such meeting is entitled to appoint
one or more proxies to attend and vote at such meeting
on his behalf and that such proxy needs not be a
shareholder;
(8) specify the shareholding registration date for the
shareholders who are entitled to attend the
shareholders' general meeting;
(9) specify the time and place for lodging proxy forms for
the meeting;
(10) state names and telephone numbers of the contact persons
for the meeting.
Article 30 The board of directors shall issue a notice to convene the
shareholders' general meeting within fifteen days upon receipt
of a written request for convening a shareholders' general
meeting from the supervisory committee which is in compliance
with the relevant requirements.
Article 31 After the board of directors has received a written request
for convening an extraordinary general meeting in compliance
with the relevant requirements from shareholders individually
or jointly holding more than 10% of the Company's voting
shares, it shall issue a notice to convene a shareholders'
general meeting as soon as possible. Any alterations to the
original motion shall have the consent of the proposing
shareholders. After the issue of the notice, the board of
directors shall not propose any new motions or change or defer
the time for holding the shareholders' general meeting without
the consent of the proposing shareholders.
Article 32 If the board of directors fails to issue a notice to convene a
meeting within thirty days upon receipt of a written request
from shareholders individually or jointly holding more than
10% of the Company's voting shares, the proposing shareholders
may convene a shareholders' extraordinary general meeting
themselves within four months after the board of directors has
received such request. Where the proposing shareholders decide
to convene such a meeting themselves, it shall notify the
board of directors in writing, and shall issue a notice to
convene the meeting after reporting to the branch of the
securities regulatory authority of the State Council of the
locality of the Company and the stock exchanges on which the
Company's shares are listed. The notice of the meeting shall
comply with the general requirements for notices of meetings
and shall also satisfy the following requirements:
(1) new contents shall not be added to a motion, otherwise
the proposing shareholders shall resubmit a request to
convene a shareholders' general meeting to the board of
directors;
(2) the meeting shall be held at the offices of the Company.
Article 33 After the issue of the notice of a meeting, the convenors of
the meeting shall not put forward any new motion which is not
set out in the notice.
Where a shareholder who has the largest shareholding of the
Company intends to put forward a new motion on profit
distribution at an AGM, such shareholder shall, not less than
ten days before the date of the AGM, submit the motion to the
board of directors to enable it to make an announcement,
failing which the shareholder is not entitled to put forward
the motion at the AGM.
Article 34 Shareholders and authorised proxies intending to attend a
shareholders' general meeting shall deliver to the Company
their written replies concerning their attendance at such
meeting twenty days before the date of the meeting.
The Company shall, based on the written replies which it
receives from the shareholders twenty days before the date of
the shareholders' general meeting, calculate the number of
voting shares represented by the shareholders and the
authorised proxies who intend to attend the meeting. If the
number of voting shares represented by the shareholders who
intend to attend the meeting amount to more than one-half of
the Company's total voting shares, the Company may hold the
shareholders' general meeting; if not, then the Company shall,
within five days, notify the shareholders again by way of
public announcement the matters to be considered at, and the
place and date for, the meeting. The Company may then hold the
shareholders' general meeting after publication of such
announcement.
Article 35 After the convenors of a meeting have issued the notice of the
shareholders' general meeting, the shareholders' general
meeting shall not be convened at an earlier date, nor shall it
be postponed without reasons. Where a shareholders' general
meeting has to be postponed for special reasons, the convenors
of the meeting shall publish a postponement notice at least
five working days before the original date of the
shareholders' general meeting. The convenors of the meeting
shall state the relevant reasons and the date for convening
the meeting after the postponement in the postponement notice.
Article 36 Where the Company postpones the shareholders' general meeting,
it shall not change the shareholding registration date for the
shareholders who are entitled to attend the shareholders'
general meeting according to the original notice.
Article 37 The Company shall post all information relating to the
shareholders' general meeting on the website of the Shanghai
Stock Exchange at least five working days before the date of
the meeting according to the requirements of the Shanghai
Stock Exchange.
Section 3 Registration of a Meeting
Article 38 A shareholder may attend the shareholders' general meeting in
person or appoint a proxy to attend and vote on his behalf.
Directors, supervisors, secretary to the board of directors
and the PRC lawyer(s) engaged by the Company shall attend the
meeting. The president, vice-president, Chief Financial
Officer of the Company and persons invited by the board of
directors may also attend the meeting.
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 stated above to enter
into the venue.
Article 39 The Company shall be responsible for preparing an attendance
register, which will be signed by the personnel attending the
meeting. The attendance register shall set out the names of
persons present at the meeting (and/or names of units),
identification document numbers, information confirming the
identities of the shareholders (such as shareholder account
numbers), the number of voting shares held or represented,
names of the proxies (or names of the units) and so on.
Article 40 The contents of registration for the shareholders or proxies
attending the shareholders' general meeting shall include:
(1) confirmation of the identity as a shareholder or proxy;
(2) request to speak and contents of the text (if any);
(3) collecting the voting slips according to the number of
shares held/represented by the shareholders or proxies;
(4) registering new motions (if any).
Article 41 The instrument appointing a proxy of a shareholder shall be in
writing. Such written instrument shall state the following:
(1) the name of the authorised proxy of the shareholder;
(2) the number of shares of the principal represented by the
authorised proxy;
(3) whether or not the proxy has any voting right;
(4) an indication to vote for or against each and every
matter included in the agenda;
(5) whether or not the proxy has voting rights in respect of
the provisional motion which may be included in the
agenda of the AGM; and, if this is the case, specific
instructions as to the type of voting rights to be
exercised;
(6) the date of issue and validity period of the proxy form;
(7) the signature (or seal) of the principal or its agent
appointed in writing; if the principal is a legal person
shareholder, the proxy form shall bear the seal of the
legal person unit, or signed by its director or an agent
duly appointed by it.
The proxy form shall state clearly that the proxy shall be
entitled to vote at his discretion in the absence of specific
instructions from the shareholder.
Article 42 The proxy form shall be lodged with the Company's premises or
such other place as specified in the notice convening the
meeting at least twenty-four hours prior to the relevant
meeting for which the proxy is appointed to vote or
twenty-four hours prior to the scheduled voting time. Where
the proxy form is signed by a person authorised by the
principal, the power of attorney or other authorisation
documents shall be notarised. The notarised power of attorney
and other authorisation documents, together with the proxy
form, shall be lodged with the Company's premises or such
other place as specified in the notice convening the meeting.
Article 43 Shareholders attending a shareholders' general meeting shall
fulfil registration procedures. Shareholders shall produce the
following documents for registration purposes:
(1) Natural person shareholders: an individual shareholder
shall produce his identification documents and provide
information enabling the Company to confirm his identity
as a shareholder. Where a proxy is appointed to attend
the meeting, the proxy shall produce his own
identification documents and the proxy form, and provide
the Company with information enabling the Company to
confirm the identity of his principal as a shareholder.
(2) Legal person shareholders: if a legal representative is
appointed to attend the meeting, the legal
representative shall produce his identification
documents and proof of his qualification as a legal
representative, and he shall provide the Company with
the information enabling the Company to confirm the
identity of the legal person shareholder. Where a proxy
is appointed to attend the meeting, the proxy shall
produce his own identification documents, the proxy form
issued by the legal representative of the legal person
shareholder pursuant to law, or a notarised copy of a
resolution on authorisation adopted by the board of
directors of the legal person shareholder or other
decision-making organs, and shall provide information
enabling the Company to confirm the identity of the
principal as a legal person shareholder.
Article 44 Where a shareholder or a proxy requests to speak at the
shareholders' general meeting, he shall register with the
Company prior to the meeting. The number of speakers shall be
limited to ten. If there are more than ten speakers, the first
ten shareholders who have the largest shareholdings shall have
the right to speak in an order according to their
shareholdings.
Article 45 Where an AGM is convened, the supervisory committee and
shareholders individually or jointly holding more than 5% of
the Company's voting shares shall be entitled to propose new
motions to the Company for registration. For the new motions
put forward by the shareholders, it is for the chairman of the
meeting to decide according to Article 23 of these Rules
whether or not to include the same in the agenda. Where an
extraordinary general meeting is convened, no new motions are
allowed to be registered with the Company, and the chairman
shall not add such new motions to the agenda of the meeting.
Section 4 Convening a Meeting
Article 46 A shareholders' general meeting shall be chaired by the
Chairman of the board of directors, who shall act as the
chairman of the meeting. If the Chairman is unable to attend
the meeting, the Vice Chairman shall act as the chairman of
the meeting.
If both the Chairman and Vice Chairman are unable to attend
the meeting and the Chairman has not appointed another
director to act as the chairman of the meeting, the board of
directors may appoint a director of the Company to take the
chair. If the board of directors fails to do so, the
shareholders present at the meeting may choose a person to act
as the chairman. If, for any reason, the shareholders cannot
elect a chairman, the shareholder (including a proxy) holding
the largest number of voting shares shall be the chairman of
the meeting.
Article 47 Where shareholders individually or jointly holding more than
10% of the Company's voting shares of their own motion decide
to convene an extraordinary general meeting, the board of
directors and secretary to the board of directors shall
earnestly perform their duties. Directors and supervisors
shall attend the meeting, and the secretary to the board of
directors must attend the meeting to ensure the meeting is
held in proper order. The meeting shall be presided over by
the Chairman, who shall also act as the chairman of the
meeting. If the Chairman is unable to attend the meeting for
any reason, the Vice Chairman shall act as the chairman of the
meeting. If both the Chairman and Vice Chairman are unable to
attend the meeting and the Chairman has not designated a
person to act as chairman of the meeting, the board of
directors may designate a director of the Company to so act.
If the board of directors is unable to designate a director to
chair the shareholders' general meeting, the proposing
shareholder shall take the chair after filing a report with
the branch of the securities regulatory authority of the State
Council of the locality of the Company.
Article 48 The chairman shall declare that the meeting commences at the
scheduled time after he has been informed that the
participants are in compliance with legal requirements and new
motions and speakers are registered. In any of the following
circumstances, the meeting may be declared to commence later
than the time scheduled:
(1) when any equipment of the venue is out of order so that
the meeting cannot proceed as usual;
(2) when any matters of material importance take place
affecting the proceeding of the meeting.
Article 49 After the chairman of the meeting has declared the official
commencement of the meeting, he shall firstly announce that
the number of shareholders attending the meeting and the
number of shares represented by such shareholders are in
compliance with the legal requirements. Subsequently he shall
read out the agenda as stated in the notice of the meeting,
and shall inquire whether any person present at the meeting
has any objection to the voting order of the motions. If an
AGM is convened, the chairman of the meeting shall also
inquire whether the supervisory committee or the shareholders
individually or jointly holding more than 5% of the Company's
voting shares need to put forward new motions. Where a new
motion is put forward by a shareholder, the chairman of the
meeting shall decide whether to accept the motion according to
Article 23 of these Rules.
Where the board of directors or chairman of the meeting
decides not to include the motion of the supervisory committee
or shareholders into the agenda of the AGM, explanations and
statements shall be given at such AGM.
At an extraordinary general meeting, no person shall be
allowed to request for discussion of new motions not set out
in the notice of the shareholders' general meeting.
Article 50 After the chairman of the meeting has made inquires regarding
the agenda, he shall read out the motions or appoint another
person to read out the motions, and shall explain the motions
according to the following requirements if necessary:
(1) Where the motion is put forward by the board of
directors, the motion shall be explained by the Chairman
or other persons designated by the Chairman;
(2) Where the motion is put forward by the supervisory
committee or shareholders individually or jointly
holding more than 5% of the Company's voting shares, the
motion shall be explained by the person putting forward
the motion or its legal representative or lawful and
valid proxy.
Article 51 Motions included in the agenda shall be examined before
voting. Reasonable time shall be given at the shareholders'
general meeting for each motion to be discussed, and the
chairman of the meeting shall orally ask the shareholders
attending the meeting whether they have completed the
examination procedures. Examination procedures shall be
regarded as completed if there are no objections by
shareholders attending the meeting.
Article 52 No shareholder shall speak for more than twice at the meeting
without the consent of the chairman. A shareholder is allowed
to speak for no more than five minutes for the first time, and
no more than three minutes for the second time.
When a shareholder requests to speak, he shall only do so if
he does not interrupt report which is being made by the
meeting reporter or speeches which are being made by other
shareholders.
Article 53 Shareholders may query the Company at the shareholders'
general meeting. The chairman of the meeting shall direct the
directors or supervisors to answer such queries unless they
relates to the Company's business secret and shall not be
disclosed at the meeting.
Section 5 Voting and Resolution
Article 54 Shareholders' general meeting shall resolve on any specific
motions.
Article 55 Matters not included in the notice convening the shareholders'
extraordinary general meeting shall not be resolved on at such
a meeting. In approving the motions included in the notice of
an extraordinary general meeting, no alteration shall be made
to the relevant motions in respect of the following matters:
(1) increase or reduction of the registered capital of the
Company;
(2) issuance of bonds of the Company;
(3) division, merger, dissolution and liquidation of the
Company;
(4) amendment to the Articles of Association;
(5) profits distribution plans and loss recovery plans of
the Company;
(6) appointment and removal of a member of the board of
directors and the supervisory committee;
(7) changing the use of proceeds from a share offer;
(8) the entering into of a connected transaction which
requires the approval of the shareholders in general
meetings;
(9) acquisition or sale of assets which requires the
approval of the shareholders in general meetings;
(10) changing the accounting firm engaged.
Any alteration in respect of the contents of the above motions
shall be deemed to be a new motion and shall not be voted on
at that shareholders' general meeting.
Shareholders' general meetings shall resolve on all motions
included in the agenda one by one, and shall not for any
reason cause delay in considering, or fail to consider, such
motions. Where different motions are put forward at the annual
general meeting for the same matter, such motions shall be
resolved on in the order of time in which they are put
forward.
Article 56 The chairman of the meeting is obliged to request the
shareholders to approve the motions by open ballot at the
general meeting.
Each shareholder or proxy shall exercise his voting rights in
accordance with the number of voting shares represented by
him. Except for the circumstances where cumulative voting
system is applicable to the election of directors in
accordance with the Articles of Association, each share shall
carry one voting right.
Article 57 Resolutions in respect of the election of directors shall be
passed by a way of cumulative voting at shareholders' general
meeting in accordance with the Articles of Association. The
details of the cumulative voting system are as follows:
(1) Where the number of directors to be elected is more than
two, the cumulative voting system must be adopted.
(2) Where cumulative voting system is adopted, each of the
shares held by a shareholder shall carry the same number
of votes as the number of directors to be elected.
(3) The notice of a shareholders' general meeting shall
notify the shareholders that a cumulative voting system
will be adopted for the election of directors. The
convenors of the shareholders' general meeting shall
prepare ballots suitable for cumulative voting, and
shall give explanations in writing regarding the
cumulative voting system, the completion of the ballots
and the methods of counting the votes.
(4) In casting his votes for the director candidates at a
shareholders' general meeting, a shareholder may
exercise his voting rights by spreading his votes evenly
and cast for each of the candidates the number of votes
corresponding to the number of shares he holds; or he
may focus his votes on one candidate and cast for a
particular candidate the total number of votes carried
by all of his shares while the number of voting rights
carried by each of his shares is the same as the number
of directors to be elected; or he may spread his votes
over several candidates and cast for each of them part
of the total number of votes carried by the shares he
holds while the number of voting rights carried by each
of his shares is the same as the number of directors to
be elected.
(5) Upon the exercise of his voting rights by focusing his
votes on one or several of the candidates while the
number of voting rights carried by each of his shares is
the same as the number of directors to be elected, a
shareholder shall not have any right to vote for any
other candidates.
(6) Where the total number of votes cast by a shareholder
for one or several of the candidates is in excess of the
number of votes carried by the total number of shares
held by him, the votes cast by the shareholder shall be
invalid, and the shareholder shall be deemed to have
waived his voting rights. Where the total number of
votes cast for one or several candidates by a
shareholder is less than the number of votes carried by
the total number of shares held by such a shareholder,
the votes cast by the shareholder shall be valid, and
the voting rights attached to the shortfall between the
votes actually cast and the votes which the shareholder
is entitled to cast shall be deemed to have been waived
by the shareholder.
(7) Where the number of approval votes won by a director
candidate exceeds one-half of the total voting rights
(to be calculated according to the total number of
shares if the cumulative voting is not adopted)
represented by the shareholders present at the
shareholders' general meeting and the approval votes
exceeds the objection votes, the candidate shall be the
elected director candidate. If the number of the elected
director candidates exceeds the total number of
directors to be elected, those candidates who win the
largest number of approval votes shall be elected as
directors (however, if the elected director candidates
whose approval votes are comparatively fewer win the
same number of approval votes, and the election of such
candidates as directors will give rise to the number of
directors elected exceeding the number of directors to
be elected, such candidates shall be deemed as having
not been elected); if the number of directors elected at
a shareholders' general meeting is less than the number
of directors to be elected, a new round of voting shall
be carried out for the purpose of filling such
directorship vacancies, until all the directors to be
elected are validly elected.
(8) Where a new round of voting is carried out according to
the provisions of paragraph (7) of this Article at the
shareholders' general meeting, the number of votes
casted by the shareholders in the cumulative voting
shall be re-counted according to the number of directors
to be elected in the new round of voting.
Article 58 In examining the motions on the election of directors and
supervisors at a shareholders' general meeting, shareholders
shall vote on the candidates for the office of directors or
supervisors one by one.
Article 59 Resolutions of a shareholders' general meeting shall be
divided into ordinary resolutions and special resolutions.
(1) Ordinary resolutions
(i) Ordinary resolutions shall be passed by votes
representing more than one-half of the voting
rights represented by the shareholders (including
proxies) present at the meeting.
(ii) The following matters shall be approved by
ordinary resolutions at shareholders' general
meetings:
(a) work reports of the board of directors and
the supervisory committee;
(b) profit distribution plans and loss recovery
plans formulated by the board of directors;
(c) appointment and removal of members of the
board of directors and members of the
supervisory committee, their remuneration
and manner of payment and their liability
insurance;
(d) annual preliminary and final budgets,
balance sheets and profit and loss accounts
and other financial statements of the
Company;
(e) annual reports of the Company;
(f) matters other than those which are required
by laws and regulations or by the Articles
of Association to be passed by special
resolutions.
(2) Special resolutions
(i) Special resolutions shall be passed by votes
representing more than two-thirds of the voting
rights represented by the shareholders (including
proxies) present at the meeting.
(ii) The following matters shall be approved by special
resolutions at a shareholders' general meetings:
(a) increase or reduction in share capital and
the issue of shares of any class, warrants
and other similar securities;
(b) issue of bonds of the Company;
(c) division, merger, dissolution and
liquidation of the Company;
(d) repurchase of shares of the Company;
(e) amendment to the Articles of Association,
the Rules and Procedures for the
Shareholders' General Meetings, the Rules
and Procedures for the Board of Directors'
Meetings and the Rules and Procedures for
the Supervisors' Meetings;
(f) any other matters approved by an ordinary
resolution by the shareholders at a general
meeting which may have material impacts on
the Company and accordingly should be
passed by special resolutions.
Article 60 As far as any matter relating to sub-paragraphs (2) to (8),
(11) to (12) of Article 25 of these Rules, the affected class
shareholders, whether or not such shareholders originally have
the right to vote at shareholders' general meetings, shall
have the right to vote at the class meetings. However,
interested shareholder(s) shall not be entitled to vote at
such class meetings.
"(An) interested shareholder(s)", as such term is used in the
preceding paragraph, means:
(1) in the case of a repurchase of shares by way of a
general offer to all shareholders of the Company or by
way of public dealing on a stock exchange pursuant to
Article 29 of the Articles of Association, an interested
shareholder is a controlling shareholder within the
meaning of Article 55 of the Articles of Association;
(2) in the case of a repurchase of shares by an off-market
agreement pursuant to Article 29 of the Articles of
Association, a holder of the shares to which the
proposed agreement relates;
(3) in the case of a restructuring of the Company, a
shareholder who assumes a relatively lower proportion of
obligation than the obligations imposed on shareholders
of that class under the proposed restructuring or who
has an interest in the proposed restructuring which is
different from the general interests of the shareholders
of that class.
Article 61 Resolutions of a class of shareholders shall be passed by
votes representing more than two-thirds of the voting rights
of shareholders of that class represented at the relevant
meeting who, according to Article 62, are entitled to vote at
the meeting. The special procedures for approval by a class of
shareholders shall not apply in the following circumstance:
where the Company issues, upon the approval by special
resolution of its shareholders in a general meeting, either
separately or concurrently once every twelve months, not more
than 20% of each of its existing issued Domestic-Invested
Shares and Overseas-Listed Foreign-Invested Shares.
Article 62 Where a connected transaction is being considered at a
shareholders' general meeting, the connected shareholders
shall abstain from voting, and the voting rights represented
by the shares held by them shall not be counted towards the
total number of valid votes. The voting result of the
non-connected shareholders shall be fully disclosed in the
announcement in relation to the resolutions passed at the
shareholders' general meeting.
Article 63 Shareholders (and proxies) shall complete their ballot papers
carefully as instructed and put the ballot papers into the
ballot box. Any ballot paper containing uncompleted parts,
false information, illegible writing and any uncast paper
shall be deemed to be an abstention of voting by the
shareholder, and such ballot papers shall not be regarded as
valid votes.
Article 64 Prior to voting, the shareholders present at a shareholders'
general meeting shall nominate at least one supervisor and two
shareholders to act as counting officers. Such counting
officers shall count all the votes cast on site and sign the
counting statistical sheet.
If the votes for and against a resolution are equal, the
chairman of the meeting shall be entitled to cast one more
vote.
Article 65 The chairman of the meeting shall be responsible for deciding
whether or not a resolution is duly passed according to the
results of the votes counting. The chairman's decision, which
shall be final and conclusive, shall be announced at the
meeting and recorded in the minutes of the meeting.
Article 66 A shareholders' general meeting shall be recorded by the
minutes of the meeting, which shall be signed by the directors
present at the meeting and the minutes-taking officer. If no
director is present at the meeting, the shareholder or the
shareholder's proxy chairing the meeting together with the
minutes-taking officer shall sign the minutes. The minutes of
the meeting shall record the following matters:
(1) the number of voting shares represented by the
shareholders present at the meeting, and the percentage
of such shares out of the total number of shares of the
Company;
(2) the date and place of the meeting;
(3) the name of the person chairing the meeting and the
agenda of the meeting;
(4) the main points regarding the matters made by each
person who speaks at the meeting;
(5) the voting result of each matter considered;
(6) the inquiries and suggestions of the shareholders and
the answers to these inquiries or statement made by the
directors and supervisors;
(7) other matters which according to the opinions of the
shareholders' general meeting and the provisions of the
Articles of Association shall be recorded in the minutes
of the meeting.
Article 67 The board of directors of the Company shall retain (a) PRC
lawyer(s) to attend the shareholders' general meeting in
accordance with law to enable him(them) to give legal opinions
on the following matters, and shall publish these legal
opinions together with the resolutions of the shareholders'
general meeting:
(1) whether the procedures for convening and holding the
shareholders' general meeting comply with the relevant
laws and regulations as well as the Articles of
Association;
(2) verification of the legality and validity of the
eligibility of the participants of the meeting;
(3) verification of the eligibility of the shareholders who
put forward new motions at the shareholders' annual
general meeting;
(4) whether the voting procedures of the shareholders'
general meeting are lawful and valid;
(5) the issue of any legal advice on any other matters
requested by the Company.
Where the shareholders' extraordinary general meeting is
chaired by the shareholders proposing the holding of such a
meeting, the proposing shareholders shall, in accordance with
law, retain (a) lawyer(s) to give witness legal opinions
according to the provisions as set out above, and the
procedures for convening such a meeting shall also comply with
relevant laws, regulations and this Article.
Section 6 Adjournment of a Meeting
Article 68 The board of directors of the Company shall ensure that a
shareholders' general meeting is held continuously within
reasonable office hours, until the resolutions are finally
voted on.
Article 69 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 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 70 Where a shareholders' general meeting is adjourned for more
than one working day due to force majeure or any other
extraordinary reasons, and the meeting cannot be convened
properly or no resolution is passed, the board of directors of
the Company shall give explanations to the stock exchanges on
which the Company's shares are listed and make a proper
announcement. The board of directors of the Company is obliged
to take all necessary measures to resume the shareholders'
general meeting as soon as possible.
Section 7 Post-meeting Affairs and Announcement
Article 71 The secretary to the board of directors shall be responsible
for submitting the minutes of the meeting and the resolutions
passed at the meeting and other relevant documentation to the
relevant regulatory authorities in accordance with laws,
regulations, the requirements of the securities regulatory
authority of the State Council and the stock exchanges on
which the Company's shares are listed after the meeting. He
shall also be responsible for handling the announcement to be
published in the designated media.
Article 72 The announcement of the resolutions of the shareholders'
general meeting shall state the number of the shareholders (or
the proxies) present at the meeting, the number of shares held
by them (or nominees) and the percentage of such shares out of
the total voting shares of the Company, the method of voting
and the voting result of each motion. The resolutions on the
motions shall state the names of the proposing shareholders,
the percentage of shares held and the details of the motions.
Where a shareholder's motion is not included in the agenda of
an AGM, the details of the motion and the statement made by
the board of directors or the chairman at the AGM shall be
published together with the resolutions of the AGM.
Where the board of directors or the chairman of the meeting
decides not to include the motions put forward by the
supervisory committee or the shareholders in the agenda of the
AGM, explanations and statements shall be given at such a
meeting. Such statements and details of the motions shall,
together with the resolutions of the AGM, be published after
the conclusion of the AGM.
Where a resolution of the meeting is not adopted, or a
resolution passed at the previous shareholders' general
meeting is changed at the current shareholders' general
meeting, the board of directors shall give an explanation in
relation to the resolutions of the current shareholders'
general meeting.
The announcement of resolutions passed at shareholders'
general meetings shall be published in designated newspapers
and on the Company's website.
Article 73 The secretary to the board of directors shall be responsible
for keeping written information such as the register of
attendees, power of attorney, voting statistical sheet,
minutes of the meeting, legal opinions endorsed by lawyer(s)
and announcements of resolutions.
CHAPTER 5 SUPPLEMENTARY ARTICLES
Article 74 These Rules shall come into effect upon the adoption by the
shareholders' general meeting by a special resolution and the
approval by the relevant authorities in accordance with law.
Article 75 Any amendment to these Rules shall be proposed by the board of
directors in the form of an amendment proposal, and shall be
submitted to the shareholders' general meeting for approval by
a special resolution.
Article 76 The right to interpret these Rules shall rest with the board
of directors.
Article 77 Where any relevant matters are not covered in these Rules or
where these Rules fail to comply with the relevant laws,
administrative rules and other relevant regulatory documents
as promulgated from time to time, those laws, administrative
rules and other relevant regulatory documents shall prevail.
APPENDIX III RULES AND PROCEDURES FOR THE BOARD OF DIRECTORS' MEETINGS
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to ensure that the board of directors of China
Petroleum & Chemical Corporation (the "Company") fulfils the
duties and responsibilities conferred by all shareholders of
the Company, conducts discussions efficiently, makes
scientific, immediate and prudent decisions and standardizes
the operation of the board of directors, these Rules are
formulated according to the "Company Law of the People's
Republic of China" (the "Company Law"), "Mandatory Provisions
for the Articles of Association of Companies to be Listed
Overseas", "Guidelines for the Articles of Association of
Listed Companies", "Standards for the Governance of Listed
Companies" and other governing regulations of the places of
the Company's listings inside and outside the PRC and the
Articles of Association of China Petroleum & Chemical
Corporation ("Articles of Association").
CHAPTER 2 FUNCTIONS, POWERS AND AUTHORITY OF THE BOARD OF DIRECTORS
Article 2 The board of directors is accountable to the shareholders'
general meetings and shall exercise the following functions
and powers:
(1) to be responsible for convening shareholders' general
meetings and to report on its work to the shareholders'
general meetings;
(2) to implement the resolutions passed at shareholders' in
general meetings;
(3) to determine the Company's business plans and investment
proposals;
(4) to formulate the Company's annual preliminary and final
financial budgets;
(5) to formulate the Company's profit distribution proposals
and loss recovery proposals;
(6) to formulate proposals for the credit and financial
policies of the Company, the increase or reduction of
the registered capital of the Company and for the issue
of debentures and securities of any kinds (including but
without limitation to the debentures of the Company) and
the listing or repurchase of the shares of the Company;
(7) to draw up plans for significant acquisition or disposal
proposals, the merger, division or dissolution of the
Company;
(8) to determine the risks investment and security
(including pledging of assets) of the Company according
to the authority given in the shareholders' general
meeting;
(9) to decide on the Company's internal management
structure;
(10) to appoint or remove the Company's president and to
appoint or remove the vice-president and Chief Financial
Officer of the Company according to the recommendations
of the president; to appoint or remove the secretary of
the board of directors and to decide on their
remuneration;
(11) to appoint or replace the members of the board of
directors and the supervisory committee of its
wholly-owned subsidiaries; to appoint, replace or
recommend the shareholders' proxies, directors
(candidates) and supervisors (candidates) of its
subsidiaries which are controlled or invested by the
Company;
(12) to determine the establishment of the Company's branch
offices;
(13) to formulate proposals for any amendment of the
Company's Articles of Association and its appendices;
(14) to formulate the Company's basic management system;
(15) to manage the disclosure of information of the Company;
(16) to propose in a shareholders' general meeting to engage
or replace the accounting firm which undertakes auditing
work of the Company;
(17) to listen to the president's work report and check the
president's work;
(18) to determine important matters and administrative
matters of the Company other than those which should be
determined by resolution of a shareholders' general
meeting of the Company except for matters as specified
by law, administrative rules, regulations of the
competent government department(s) and the Articles of
Association, and to sign other important agreements;
(19) to exercise any other powers stipulated by laws,
administrative rules, regulations of the competent
government department(s) or the Articles of Association,
and any other functions and powers conferred by the
shareholders' in general meetings.
Article 3 The necessary conditions for the board of directors to perform
its duties shall include the following:
The president shall provide the directors with necessary
information and data, enabling the board of directors to make
scientific, immediate and prudent decisions.
A director may require the president or, through the
president, require the relevant departments of the Company to
provide information and explanations which are necessary for
him to make scientific, immediate and prudent decisions.
Where the independent directors think necessary, they may
engage (an) independent institution(s) to provide independent
opinions to be relied upon by them in making decisions. The
fees incurred in the engagement of such (an) independent
institution(s) shall be borne by the Company.
Article 4 The board of directors shall examine and resolve on the
matters which the board of directors is required by laws,
administrative rules, regulations of the competent government
department(s) and the Articles of Association to submit to the
shareholders in general meetings for determination (including
matters proposed by two or more than half of the independent
directors).
The board of directors shall examine the provisional motions
put forward by the shareholders individually or jointly
holding more than 5% of the Company's voting shares at the
shareholders' annual general meeting (the "AGM") according to
the standard of "relevance" as set out in the Rules and
Procedures for the Shareholders' General Meetings, and to
decide whether to submit the provisional motions to the AGM
for examination.
Article 5 In order to ensure and increase the stability and efficiency
of the daily operation of the Company, the board of directors
shall explicitly authorise, on a partial basis, the chairman,
other one or more directors or the president to exercise its
functions and powers on investment plans, assets disposals,
external guarantees, the credit and financial policies and the
internal management structure of the Company according to the
provisions of the Articles of Association and the
authorisation of the shareholders' general meeting.
Article 6 The powers and authority of the board of directors on
investments shall include the following:
(1) The board of directors shall be responsible for
conducting preliminary examination of the medium and
long-term investment plans proposed by the president,
and shall submit them to the shareholders' general
meetings for approval.
(2) The board of directors shall be responsible for
conducting preliminary examination of the annual
investment plans proposed by the president, and shall
submit them to the shareholders' general meetings for
approval. The board of directors may make adjustments of
not more than 15% of the amount of the capital
expenditure for the current year as approved at the
shareholders' general meeting. The chairman of the board
of directors is authorised to make adjustments of not
more than of not more than 8% of the amount of the
capital expenditure for the current year as approved at
the shareholders' general meeting.
(3) Individual project investments (including but not
limited to exploration and development, fixed assets,
external shareholdings) shall be approved by the board
of directors if the investment amounts are not more than
5% of the latest audited net asset value of the Company.
The Chairman of the board of directors is authorised to
examine and approve projects if the investment amount is
not more than 3% of the latest audited net asset value
of the Company.
(4) Where the Company uses its own assets to make risky
investment in areas not related to the business of the
Company (including but not limited to debentures,
futures, shares), risky investments shall be approved by
the board of directors if the amount of the individual
investment is not more than 1% of the latest audited net
asset value of the Company. The chairman of the board of
directors is authorised to examine and approve projects
if the investment amount is not more than 0.5% of the
latest audited net asset value of the Company.
Article 7 The powers and authority of the board of directors on asset
disposals shall include the following:
(1) When the Company acquires or sells assets, it has to
take into account of the following four testing indices:
(i) total asset ratio: the total amount of the assets to
be acquired or sold (according to the latest audited
financial report, valuation report or capital
verification report) divided by the latest audited total
asset value of the Company; (ii) net profit (loss) ratio
of the acquisition: the absolute value of the net profit
or loss relating to the assets to be acquired (according
to the audited financial report of the preceding year)
divided by the absolute value of the audited net profit
or loss of the Company for the preceding year; (iii) net
profit (loss) ratio of the sale: the absolute value of
the net profit or loss relating to the assets to be sold
(according to the audited financial report of the
preceding year) or the absolute value of the profit or
loss arising from such transaction divided by the
absolute value of the audited net profit or loss of the
Company for the preceding year; (iv) transaction amount
ratio: the transaction amount (taking into account of
the assumed liabilities and costs, etc) of the acquired
assets divided by the total amount of the latest audited
net asset value of the Company.
The board of directors shall examine and approve
projects with a ratio of less than 50% according to all
the above four testing indices. The chairman of the
board of directors is authorised to examine and approve
projects with a ratio of less than 10% according to all
the above four testing indices.
(2) In disposing of fixed assets, where the total value of
the expected value of the fixed assets to be disposed of
and the value of the fixed assets which have been
disposed of in the four months prior to such proposed
disposal does not exceed 33% of the value of the fixed
assets as shown in the latest balance sheet considered
by the shareholders' general meeting, the board of
directors shall examine and approve such disposal, and
the Chairman of the beard of directors is authorised to
examine and approve those fixed asset disposals of less
than 10%.
(3) As regards others (including but not limited to the
entering into, varying and termination of important
contracts relating to entrustment of operation,
entrusted operation, entrusted financial management,
contracting and leasing), the relevant amount or the
amount accumulate in twelve months shall be calculated
according to one of four testing indices referred to in
paragraph (1) of this Article.
Projects with a ratio of not more than 5% according to all the
above four testing indices shall be examined and approved by
the board of directors. The chairman of the board of directors
is authorised to examine and approve projects with a ratio of
not more than 1% according to all the above four testing
indices.
Article 8 The powers and authority of the board of directors on debt
liabilities shall include the following:
(1) The board of directors shall examine and approve the
amount of the long-term loans for the current year
according to the annual investment plan as approved by
the shareholders' general meeting. The chairman of the
board of directors is authorised to make adjustments of
not more than 10% of the total amount of the long-term
loans for the current year as approved by the board of
directors. Within the total amount of the long-term
loans as approved by the board of directors, the
chairman of the board of directors is authorised to
approve and sign the contract for every single long-term
loan for the amount exceeding RMB1 billion, and the
president is authorised to approve and sign the contract
for every single long-term loan for the amount not
exceeding RMB1 billion.
(2) Within the total amount of the working capital loans for
the current year as approved by the board of directors,
the Chairman of the board of directors is authorised to
sign the overall short-term loan facility contracts for
raising working capitals required by the operation and
management of the Company according to the demand of the
Company. Within the amount limit as fixed by these loan
facility contracts, the chairman of the board of
directors is authorised to approve and sign the working
capital short-term loan contracts where the amount of
one single loan exceeds RMB1 billion, and the president
is authorised to approve and sign the working capital
short-term loan contracts where the amount of one single
loan does not exceed RMB1 billion.
(3) The Company shall not provide any guarantees for its
shareholders, controlling subsidiaries of its
shareholders, subsidiary enterprises of shareholders or
personal liability. If the Company provides guarantees
to others, the guaranteed person shall provide
counter-guarantee to the Company or take other necessary
risk preventive measures.
If the guarantee amount does not exceed 5% of the latest
audited net asset value of the Company, such guarantees
shall be examined and approved by the board of
directors. The chairman of the board of directors is
authorised to approve and sign the external guarantee
contracts the guaranteed amount of which does not exceed
1% of the latest audited net asset value of the Company
but more than RMB100 million. The president is
authorised to approve and sign the external guarantee
contracts the guaranteed amount of which does not exceed
RMB100 million.
Article 9 If, when applying the relevant standards as set out above, the
approving offices of any investment, asset disposal and
external guarantee matters as referred to above include the
board of directors, chairman of the board of directors and/or
president, such matters shall be submitted to the approving
offices of the highest level for approval. If the above
investment, asset disposal and loan matters constitute
connected transactions according to the regulatory
stipulations of the places where the Company is listed, the
relevant matters shall be dealt with according to the relevant
stipulations.
Article 10 The board of directors authorises the chairman to determine
the following matters: (1) internal management structure of
the Company; (2) the establishment of branch offices by the
Company; (3) to appoint or replace the members of the board of
directors and the members of the supervisory committee of the
wholly-owned subsidiaries of the Company; and (4) to appoint,
replace or recommend the shareholders' representatives,
director (candidates) and supervisors (candidates) of the
subsidiaries which are controlled or invested by the Company.
CHAPTER 3 COMPOSITION OF THE BOARD OF DIRECTORS AND ITS SUBORDINATED
OFFICES
Article 11 The board of directors shall consist of thirteen directors.
The board of directors shall have one chairman and one
vice-chairman.
Article 12 The board of directors shall establish strategic
decision-making sub-committee, auditing sub-committee,
remuneration and evaluation sub-committee and other special
committees. These special committees shall conduct research on
specific matters and provide opinions and suggestions on these
matters to the board of directors for the reference.
Members of the special committees shall be directors of the
Company. The majority of the membership of the auditing
sub-committee, and remuneration and evaluation sub-committee
shall consist of the independent directors, who shall also act
as convenors. The auditing sub-committee shall have at least
one independent director who is also an accounting
professional.
Article 13 The major responsibilities of the strategic decision-making
sub-committee shall be to conduct research and put forward
proposals on the long-term development strategy and
significant investment decisions of the Company.
Article 14 The major responsibilities of the auditing sub-committee
shall include the following:
(1) to propose the appointment or replacement of the
external auditor of the Company;
(2) to oversee the Company's internal auditing system and
its implementation;
(3) to be responsible for the communication between the
internal auditing department of the Company and the
external auditor;
(4) to examine and approve the Company's financial
information and it disclosure;
(5) to examine the internal control system of the Company.
Article 15 The major responsibilities of the remuneration and evaluation
sub-committee shall include the following:
(1) to research on the criteria for the evaluation of
directors and the president, to conduct evaluation of
them and make necessary suggestions;
(2) to research on and review the policies and proposals in
respect of the remuneration of directors, supervisors,
president, vice-president, Chief Financial Officer and
secretary of the board of directors.
Article 16 The special committees of the board of directors shall
formulate detailed working rules, which shall come into effect
upon the submission to, and the approval of, the board of
directors.
CHAPTER 4 SECRETARY OF THE BOARD OF DIRECTORS
Article 17 The Company shall have one secretary of the board of
directors. The main duty of the secretary of the board of
directors is to promote and improve the Company's corporate
governance standards and properly deal with the matters
regarding disclosure of information.
Article 18 The main duties of the secretary of the board of directors
include:
(1) to organize and arrange for board meetings and
shareholders' general meetings, prepare the meeting
materials, handle the meeting related affairs, to be
responsible for record of meetings, ensure the accuracy
and completeness of records, keep the meeting documents
and records and take initiative to keep abreast of the
execution of the related resolutions; and submit reports
to the board of directors and put forward the proposals
for importance issues arising during the implementation;
(2) to ensure that the material issues concerning the
resolutions of the board of directors can be strictly
implemented in accordance with the specified procedures;
to participate and organize the consultation and
analysis on the decision-making matters of the board in
accordance with its requirements, and put forward the
related opinions and suggestions; to deal with the daily
matters of the board of directors and its related
committees if authorised;
(3) to be the contact person of the Company with the
securities regulatory authorities, be responsible for
organisation, preparation and timely submission of
related documents as required by the regulatory
authorities, and be responsible for related tasks
assigned by the regulatory authorities and to organise
and complete these tasks, and to ensure that the Company
prepares and submits the reports and other documents as
required by the regulatory authorities in accordance
with law;
(4) to be responsible for the co-ordination and organization
of the matters on disclosure of information of the
Company, establish and perfect the system concerning
information disclosure, participate in all related
meetings of the Company concerning information
disclosure, and keep abreast of the important business
policies and related information of the Company in a
timely manner;
(5) to be responsible for keeping confidential of the
sensitive materials concerning the share price of the
Company, and formulate effective and enforceable secrecy
systems and measures. For the divulgence of the
sensitive materials concerning the share price of the
Company due to various reasons, he shall take necessary
remedial measures, make timely explanation and
clarification, and notify the regulatory organizations
in the places where the shares of the Company are listed
as well as the securities regulatory authority of the
State Council;
(6) to be responsible for the co-ordination and organization
of market promotion, coordinate the visit and interview,
deal with the relationship with investors, maintain the
relationship with investors, intermediary organs and
news agencies, be responsible for the co-ordination and
explanation of the inquiries of the public, and ensure
the investors to obtain the information as disclosed by
the Company in a timely manner, organize and arrange the
promotion and advertising activities of the Company
inside and outside the PRC, prepare and work out the
summary report on market promotion and other important
visiting activities, and report the related matters to
the securities regulatory authorities of the State
Council; to establish effective communication channels
between the Company and its shareholders, including
designating a staff and/or establishing (a) special
office(s) to keep sufficient and necessary contacts with
the shareholders, and to relay, in a timely manner, all
the feedbacks including opinions and suggestions of the
shareholders to the board of directors or the
management team of the Company;
(7) to ensure the proper preparation of the register of
shareholders, to be responsible for the management and
proper maintenance of the materials concerning register
of shareholders, directors' register, quantity of shares
held by majority shareholders and record of shares held
by directors, as well as the name list of the
beneficiaries of the outstanding debentures of the
Company;
(8) to assist directors and the president to practically
implement the domestic and foreign laws, regulations,
the Company's Articles of Association and other
provisions in discharge of their duties and exercise of
their powers; be liable to remind directors and the
president timely on becoming aware that the Company
passes or may pass resolutions which may breach the
relevant regulations, and be entitled to report the
related matters to securities regulatory authorities of
the State Council and other regulatory authorities
according to the facts;
(9) to provide the related information necessary for the
supervisory committee of the Company and other approving
authorities to discharge their duties and to exercise
their powers, assist the investigation on the Chief
Financial Officer, directors and the president of the
Company concerning the performance of their fiduciary
duties;
(10) to ensure the complete organizational documents and
records of the Company are kept properly, and the
persons who have the rights of access to the relevant
documents and records of the Company obtain those
documents and records in a timely manner; and
(11) to discharge other duties and to exercise other powers
as conferred by the board of directors, as well as other
duties and powers as required by the listing rules of
the stock exchanges on which the Company's shares are
listed.
Article 19 The board of directors of the Company shall have a
secretarial office, which shall be a daily working body
assisting the secretary of the board of directors in
performing his duties.
Article 20 The Company shall formulate the "Work Regulations for the
Secretary of the Board", which shall set out detailed
provisions in respect of the duties and responsibilities,
roles, and the daily working body of the secretary of the
board of directors. Those Regulations shall come into effect
upon the submission to, and the approval of, the board of
directors.
CHAPTER 5 RULES OF THE BOARD OF DIRECTORS' MEETING
Article 21 The board of directors' meetings shall be divided into
regular meetings and provisional meetings according to the
regularity of such meetings.
Article 22 The regular meetings shall include the following:
(1) The board meetings approving financial reports of the
Company:
(i) The annual results meetings
The annual results meetings shall be convened
within 120 days from the end of the accounting
year of the Company. The directors shall approve
the Company's annual reports and deal with other
relevant matters at such meetings. The timing of
such meetings shall ensure that the annual reports
of the Company will be despatched to the
shareholders within the time limit specified by
the relevant regulations and the Articles of
Association, and shall ensure that the preliminary
annual financial results of the Company will be
announced within the time limit specified by the
relevant regulations of the Company, and shall
ensure that the AGM will be convened within 180
days from the end of the accounting year of the
Company.
(ii) The interim results meetings The interim results
meetings shall be convened within 60 days from the
end of the first six months of the accounting year
of the Company. The directors shall approve the
Company's interim reports and deal with other
relevant matters at such meetings.
(iii) The quarterly results meetings The quarterly
results meetings shall be held in the first month
of each of the second and fourth quarter of the
Gregorian calendar year. The directors shall
approve the Company's quarterly reports for the
preceding quarters at such meetings.
(2) The year-end review meetings
The year-end review meetings shall be convened in
December of each year. The directors shall listen to
and approve the president's report in respect of the
expected performance of the Company in the year and the
work arrangements for the following year at such
meetings.
Article 23 The chairman of the board of directors shall approve the
issue of a notice convening the provisional board of
directors' meeting within seven days in any one of the
following events:
(1) where the chairman of the board of directors considers
necessary;
(2) where more than one-third of the directors propose in
their joint names;
(3) where more than one-half of the independent directors
propose in their joint names;
(4) where the supervisory committee proposes;
(5) where the president proposes.
Article 24 The board of directors' meetings shall be divided into
meetings at which all directors must be physically present and
meetings which the directors may authorise other directors to
attend on their behalf, according to whether the directors are
physically present at the meetings.
The meetings which all directors must be physically present
shall be held at least once every six months, and such
meetings shall not be held by way of written resolutions or
video-telephone meetings.
Article 25 The board of directors' meetings shall be divided into on-site
meetings, video-telephone meetings and meetings by way of
written resolutions.
All the meetings of the board of directors may be held by the
way of on-site meetings.
The board of directors' meetings may be held by the way of
video-telephone meetings, provided that the attending
directors are able to hear clearly the director who speaks at
the meeting and communicate amongst themselves. The meetings
convened by this way shall be recorded and videotaped. In the
event that the attending directors are unable to sign for the
resolutions on site, they shall express their opinions orally
during the meeting and shall complete the signing procedures
as soon as practicable. The verbal voting by a director shall
have the same effect as signing in the voting sheet, provided
that there is no discrepancy between the opinions expressed by
such director in completing signing procedure and the opinions
orally expressed by him during the meeting.
In the case of urgency (limiting to cases where an on-site
meeting or a video-telephone meeting is impractical), and the
matters to be examined are comparatively procedural and unique
so that the a discussion of the motions proves to be
unnecessary, the board of directors' meeting may be held by
written resolutions, in which case the motions shall be passed
by way of circulating the motions for directors' review.
Unless otherwise expressed by the directors, signing on the
written resolutions by the directors shall be sufficient
evidence that they have agreed to the resolutions.
CHAPTER 6 PROCEEDINGS OF THE BOARD OF DIRECTORS' MEETING
Article 26 Putting forward Motions
The motions of the board of directors' meetings shall be put
forward in the following circumstances:
(1) matters proposed by the directors;
(2) matters proposed by the supervisory committee;
(3) motions from the special committees of the board of
directors;
(4) matters proposed by the president;
(5) matters to be considered by the shareholders of the
subsidiaries controlled or invested by the Company in
their shareholders' meetings (shareholders' general
meetings).
Article 27 Collecting Motions
The secretary of the board of directors shall be responsible
for collecting the draft motions in respect of the matters to
be considered at the meeting. Each person who puts forward the
relevant motion(s) shall submit the motions and relevant
explanatory materials before the date of the meeting. Motions
concerning material connected transactions (which are
determined according to the standards promulgated by the
relevant regulatory authorities from time to time) shall first
be approved by the independent directors. The relevant
materials shall be submitted to the chairman of the board of
directors after scrutinized by the secretary of the board of
directors, who shall also set out the time, place and agenda
of the meeting in the materials submitted.
Article 28 Convening the Meetings
A board of directors' meeting shall be convened by the
chairman of the board of directors, who shall also approve the
issue of the notice convening the meeting. If the chairman of
the board of directors is unable to convene the meeting due to
special reasons, he shall designate the vice-chairman or other
director(s) to convene the meeting. Where the chairman fails
to convene a meeting with no reason or designate specific
personnel to act on his behalf, a director chosen by the
vice-chairman and one-half of the directors jointly shall
convene the meeting. The convenors of the meeting shall be
responsible for approving the issue of the notice of the
meeting.
Article 29 Notice of the Meetings
(1) The notice of a board of directors' meeting shall be
delivered to all directors, supervisors and other
personnel attending the meeting before the date of the
meeting. The notice of the meeting shall generally set
out the following:
i. the time and place of the meeting;
ii. the duration of the meeting;
iii. the agenda, reasons, subject matters and other
relevant particulars of the meeting;
iv. the date of the issue of the notice.
(2) The board of directors' meetings shall be noticed
according to the following requirements and form:
i. the notice of the meeting may be served on the
directors by courier, facsimile, electronic means,
telegraph or mail;
ii. the notice of the board of directors' meeting
shall be delivered to the directors ten days
before the date of the meeting;
iii. the notice shall be written in Chinese, if
necessary, the English version can be attached.
Any director may waive the right to receive the notice of
board meeting.
Notice of a meeting shall be deemed to have been given to any
director who attends the meeting without protesting against,
before or at its commencement, any lack of notice.
Article 30 Communication before the Meetings
After the issue of the notice of a meeting and before the date
of the meeting, the secretary of the board of the directors
shall be responsible for, and shall communicate and liaise
with all supervisors, to seek their opinions or suggestions in
respect of the motions of the meeting, and shall pass on these
opinions or suggestions to the persons put forward the
motions, so as to enable necessary amendments to be made to
them. The secretary of the board of directors shall also, in a
timely manner, arrange for the provision of the supplemental
materials which are required for the directors to make
decisions on the motions of the meeting, including the
background information relating to the subject of the meeting
and other information which will assist the directors in
making scientific, immediate and prudent decisions.
Where more than one-fourth of the directors or two external
directors are of the opinion that the materials provided are
insufficient or unclear, they may make a proposal jointly
concerning the postponement of holding of the board meeting or
the postponement of discussions on the part of the issues put
forward by the board of directors, and the board of directors
shall adopt such a proposal. Unless such a proposal is put
forward during the meeting, the secretary of the board of
directors shall serve a notice on the directors, supervisors
and other personnel attending the meeting upon receiving a
written request concerning the postponement of holding of the
meeting or the postponement of discussions on part of the
issues put forward by the board of directors.
Article 31 Attendance of the Meetings
Meetings of the board shall be held only if more than half of
the directors are present.
Directors shall attend the meetings of the board of directors
in person. Where a director is unable to attend a meeting for
any reason, he may by a written power of attorney appoint
another director to attend the meeting on his behalf (where an
independent director is unable to attend in person, he shall
appoint another independent director to attend on his behalf).
The power of attorney shall set out the name of the attorney,
the particulars and the scope of authorisation, duration of
the validity of such authorisation, and shall be signed or
sealed by the principal.
In the event that an independent director does not attend the
board of directors' meeting for three consecutive meetings,
the board of directors may propose to the shareholders'
general meeting to have such independent directors dismissed.
The board of directors' meeting shall be chaired by the
chairman of the board of directors. Where circumstances
preclude the Chairman, he may designate the vice-chairman or
other directors to act on his behalf. Where the chairman of
the board fails to chair the meeting without reason or
designate specific personnel to act on his behalf, a director
chosen by the vice-chairman or more than half of the directors
shall chair the meeting. Upon the expiry of the term of office
of the directors and the re-election of the new directors at
the shareholders' general meeting, the directors who obtains
the largest number of votes at such re-election (if more than
one, one shall be chosen amongst them) shall chair such
meeting, at which the chairman of the new board of directors
shall be elected.
Article 32 Examining the Motions
The chairman of the meeting shall declare the commencement of
the meeting as scheduled. The directors in presence shall
reach an agreement on the agenda of the meeting thereafter.
Where more than one-fourth of the directors or more than two
external directors are of the opinion that the materials of
the meeting are insufficient or unclear, they may make a
proposal jointly concerning the postponement of holding of the
board meeting or the postponement of discussions on the part
of the issues put forward by the board of directors, and the
board of directors shall adopt such a proposal.
When an agreement is reached in respect of the agenda of the
meeting by the directors present at the meeting, the chairman
of the meeting shall direct the motions to be examined one by
one. Persons who put forward the motions or their attorneys
shall first report to the board of directors their work or
make statements in respect of the motions.
In reviewing the relevant proposals, motions and reports, in
order to understand the main points and the background
information of the motions in detail, the board of directors'
meeting may require the heads of the departments which are
responsible for handling the motions to attend the meeting to
listen to and make inquiries of the relevant statements made
at the meeting, so that proper decisions can be made at the
meeting. If, in the course of the meeting, any motions
examined are found to be unclear or infeasible, the board of
directors shall require the departments which are responsible
for handling the motions to give a statement at the meeting,
and the motions can be returned to such departments for
re-handling and their examination and approval shall be
postponed.
The independent directors shall give their independent
opinions to the board of directors on the following matters:
(1) the nomination, appointment and removal of the
directors;
(2) the appointment and dismissal of the president,
vice-president, Chief Financial Officer and secretary of
the board of directors;
(3) the remuneration of the directors, the president,
vice-president, Chief Financial Officer and secretary of
the board of directors of the Company;
(4) the loans made by the Company to its shareholders, the
person in actual control of the Company or the
associated enterprises of the Company or other money
transfer between them, the amounts of which are
equivalent to or exceed the relevant thresholds of the
Company's material connected transactions (which shall
be determined in accordance with the standards
promulgated from time to time by the relevant regulatory
authorities) which must be examined by the board of
directors or shareholders' general meeting according to
law, and whether the Company has taken effective
measures to recover such debts;
(5) any matters which the independent shareholders consider
to be detrimental to the interests of minority
shareholders.
An independent director shall give his opinion on the
above-mentioned matters in the following manner:
(1) consent;
(2) opinion reserved and reasons;
(3) opposition and its reasons;
(4) no opinion can be expressed and the obstacles.
Article 33 Voting on the Motions
In reviewing the motions at the board of directors' meeting,
all attending directors shall deliver their opinions in
respect of approval or objection to such motions or abstention
from voting.
The directors who are acting as proxies of others shall
exercise the rights of voting within the authorisation.
Where a director is not present at a board of directors'
meeting and fails to appoint a proxy to act on his behalf,
such director shall be deemed to have waived his rights to
vote at the meeting.
In reaching resolutions by the board of directors, except the
following matters the resolutions of which shall be passed by
the consent of more than two-thirds of the directors, the
other matters shall be passed by the consent of more than
one-half of the directors:
(1) to formulate proposals for the credit and financial
policies of the Company, the increase or reduction of
the registered capital of the Company and the issuance
of debentures and securities of any kind (including but
without limitation to the debentures of the Company) and
the listing or repurchase of the shares of the Company;
(2) to draw up plans for significant acquisition or disposal
proposals, the merger, division or dissolution of the
Company;
(3) to formulate proposals for any amendment to the
Company's Articles of Association.
The resolutions of the board of directors may be decide on a
poll or show of hands. Each director shall have one vote.
Where the votes for an against a resolution are equal, the
chairman of the board of directors is entitled to cast one
more vote.
In voting on the Company's connected transactions by the board
of directors, the connected directors who have interests in
the transactions shall abstain from voting. Where resolutions
cannot be reached due to the abstention from voting of the
connected directors, the relevant motions shall be submitted
directly to the shareholders' general meeting for examination.
Article 34 Liability of Directors in respect of Resolutions of the Board
of Directors' Meetings
A written resolution of the board of directors shall not take
effect as a resolution of the board of directors if it has not
been formulated in accordance with the stipulated procedures,
notwithstanding all the directors have already expressed their
opinions in different ways. The directors shall be responsible
for the resolutions passed at the meetings of the board of
directors. Any director who votes for a resolution which
contravenes the laws, administrative regulations or the
Articles of Association thus causing serious damages to the
Company shall be directly liable (including the compensation
of damages) for all the loss incurred by the Company as a
result. A director who votes against the resolution, and who
has been proved as having expressed dissenting opinions on the
resolution and such opinions are recorded in the minutes of
the meeting can be exempt from liability. A director who
waives his right of voting, or who fails to attend the meeting
and fails to appoint a proxy to act on his behalf, cannot
escape liability. A director who explicitly express his
objection in the course of discussion but fails to cast an
objection vote in the voting cannot escape liability.
Article 35 Resolutions of the Meeting
In principle, the board of directors' meeting shall resolve on
all the matters examined at the meeting. A resolution on the
Company's connected transaction shall not be valid until it is
signed by all directors. The independent directors' opinions
shall be set out in the resolutions of the board of directors
meetings.
Article 36 Minutes of the Meetings
Minutes of the board of directors' meeting are proof of the
resolutions on the matters examined at the meeting. Detailed
minutes in respect of the matters examined at the meeting
shall be recorded. The minutes of the board of directors'
meeting shall state the following:
(1) the date, place, names of the convenors and chairman of
the meeting;
(2) the names of the attending directors and the names of
the present, the names of appointing directors and their
attorneys;
(3) the agenda of the meeting;
(4) the essential points of the directors' presentations
(for the written resolution meeting, the version
containing the directors' feedbacks in writing shall
prevail);
(5) the voting methods and outcome for each proposal (the
outcome of the voting shall set out the respective
number of assenting or dissenting votes or votes that
were waived);
(6) the directors' signature.
The secretary of the board of directors shall take initiative
to arrange for the matters examined at the meeting to be
recorded. The minutes of each meeting shall be provided to the
directors for review without delay. Those directors who wish
to make supplementary revision on the minutes shall report
their opinions on the revision to the chairman of the board of
directors in written form within one week after the receipts
of the minutes of the board meeting. After the minutes of
board meeting are finally determined, the attending directors,
the secretary of the board of directors and the minute-taking
officer shall sign the minutes of the board meeting. The
secretary of the board of directors shall deliver the complete
duplicate of the minutes to all directors. The minutes of the
board meeting, being an important document, shall be properly
kept at the business address of the Company.
CHAPTER 7 DISCLOSURE OF INFORMATION RELATING TO THE BOARD
OF DIRECTORS' MEETING
Article 37 The board of directors of the Company shall strictly comply
with the requirements of the regulatory authorities and the
stock exchanges on which the Company's shares are listed in
relation to the disclosure of information. It shall ensure
that matters examined or resolutions passed at the board of
directors' meeting which are discloseable are disclosed
accurately and in a timely manner. Information relating to
significant matters of the Company must be reported to the
stock exchanges on which the Company's shares are listed at
the earliest opportunity, and shall be submitted to relevant
regulatory authorities for filing.
Article 38 Where a matter which requires the independent opinions of the
independent directors is discloseable, the Company shall
disclose such opinions in the relevant announcement. If the
independent directors are of divergent views and cannot reach
any consensus, the board of directors shall disclose the
respective opinions of each of the independent directors.
Article 39 Regarding confidential information, the attendees of the
meeting must keep such information confidential. Punishment
shall be imposed on those who are in breach of this duty.
CHAPTER 8 IMPLEMENTATION OF THE RESOLUTIONS OF THE
BOARD OF DIRECTORS' MEETING AND FEEDBACKS
Article 40 The following matters shall not be implemented until they
are examined and preliminarily approved by the board of
directors and submitted to the shareholders' general meeting
for approval thereafter:
(1) the formulation of the Company's annual preliminary and
final financial budgets;
(2) the formulation of Company's profit distribution
proposals and loss recovery proposals;
(3) the increase or reduction of the registered capital of
the Company and the issue of debentures or other
securities, as well as the listing or repurchase of the
shares of the Company;
(4) the formulation of plans for merger, division or
dissolution of the Company;
(5) the formulation of proposals for any amendment to the
Articles of Associations; and
(6) proposal to be submitted to the shareholders in general
meeting for the appointment or replacement of the
accounting firm auditing the accounts of the Company.
Article 41 After resolutions are passed at a board of directors'
meeting, the president shall implement the resolutions which
fall within the scope of the authority of the president, or
which the board of directors authorises the president to
handle, and shall report the status of implementation to the
board of directors.
Article 42 The chairman of the board shall have the power to, or
authorize the vice-chairman or the directors to, urge, examine
and supervise the implementation of the resolutions of the
meeting.
Article 43 At each board of directors' meeting, the president shall
deliver a written report to the meeting in relation to the
status of implementation of the matters which, according to
the resolutions of the previous meeting, must be implemented.
Article 44 Under the direction of the board of directors and the
chairman, the secretary of the board of directors shall take
initiative to obtain information in respect of the progress on
the implementation of the resolutions, and shall, in a timely
manner, report to and submit proposals to the board of
directors and the chairman in relation to the important issues
to be implemented.
CHAPTER 9 SUPPLEMENTAL ARTICLES
Article 45 Where these Rules fail to comply with relevant laws,
regulations and other regulatory documents as promulgated from
time to time, these laws, regulations and other regulatory
documents shall prevail.
Article 46 Upon the unanimous consensus of all directors of the
Company, the formulation of and the amendment to these Rules
shall come into effect if they are adopted by the
shareholders' general meeting by a special resolution and
approved by the relevant authorities.
Article 47 The right to interpret these Rules shall vest with the board
of directors.
APPENDIX IV RULES AND PROCEDURES FOR THE SUPERVISORS' MEETINGS
CHAPTER 1 GENERAL PROVISIONS
Article 1 In order to standardize the operation of the supervisory
committee of China Petroleum & Chemical Corporation (the
"Company"), to ensure the supervisory committee implementing
the duties and responsibilities conferred by all shareholders
of the Company, these Rules are formulated according to the
"Company Law of the People's Republic of China" (the "Company
law"), "Mandatory Provisions for the Articles of Association
of Companies to be Listed Overseas", "Guidelines for the
Articles of Association of Listed Companies", "Standards for
the Governance of Listed Companies" and other relevant laws
and regulations regulating listed companies inside and outside
the PRC and the Articles of Association of China Petroleum &
Chemical Corporation ("Articles of Association").
Article 2 The supervisory committee is accountable to the shareholders'
general meetings. It shall be responsible for supervising the
financial affairs of the Company and the lawfulness of the
performance of their duties by the directors, president,
vice-president, Chief Financial Officer and secretary of the
board of directors of the Company so as to safeguard the
legitimate interests of the Company and its shareholders.
Article 3 The Company shall take measures to ensure the supervisors'
rights to know the Company's affairs, and provide them with
necessary information and materials, so as to enable the
supervisory committee to conduct effective supervision,
inspection and evaluation of the financial status and
management situation of the Company.
The president shall report to the supervisory committee the
entering into of, and the enforcement of, material contracts
by the Company, the use of capitals and the profitability of
the Company upon the request of the supervisory committee. The
president shall ensure the truthfulness of such report.
CHAPTER 2 COMPOSITION OF THE SUPERVISORY COMMITTEE AND ITS
ADMINISTRATIVE OFFICE
Article 4 The supervisory committee shall compose of twelve
supervisors. Of which, eight of them shall be shareholder
representatives (including those who are eligible to be
external supervisors); four of them shall be representatives
of workers and staff of the Company.
The election and removal of the chairman of the supervisory
committee shall be determined by two-thirds or more of the
members of the supervisory committee.
Article 5 The term of the office of a supervisor shall be three years.
The supervisors representing the shareholders shall be elected
and removed by the shareholders' general meeting. The
supervisors representing the workers and staff of the Company
shall be elected and removed democratically by those workers
and staff of the Company. The term of a supervisor is
renewable upon re-election and re-appointment.
Article 6 Except for complying with the eligibility requirements as
set out in the Company Law and the Articles of Association,
the supervisors shall possess professional knowledge and work
experience in the field of law or accounting.
Article 7 A supervisor may resign before the expiry of his term of
office by submitting a written resignation letter to the
supervisory committee.
Provisions in respect of the resignation of directors as set
out in the Articles of Association shall be applicable to the
resignation of supervisors, including (but without limitation
to) where a supervisor's resignation will result in the number
of supervisors of the Company falling below the quorum as
provided by law, the resignation letter of such supervisor
shall not be effective until the vacancy created by his
resignation has been filled.
Article 8 The supervisory committee shall have an administrative
office responsible for handling daily affairs of the
supervisory committee.
CHAPTER 3 FUNCTIONS AND POWERS OF THE SUPERVISORY COMMITTEE
Article 9 The supervisory committee shall exercise the following
functions and powers in accordance with law:
(i) to review the Company's financial position. Where
necessary, the supervisory committee may appoint
another accounting firm on behalf of the Company to
carry out independent audit;
(ii) to supervise the directors, president, vice-president,
Chief Financial Officer and secretary of the board of
directors of the Company in order to ensure that they
do not act in contravention of any law, regulation or
the Articles of Association in performing their
duties;
(iii) to demand the directors, president, vice-president,
Chief Financial Officer and secretary of the board of
directors of the Company who acts in a manner which is
harmful to the Company's interest to rectify such
acts, and report to the shareholders' general meeting
and relevant authorities of the State when necessary;
(iv) to check and inspect the financial information such as
the financial report, business report and plans for
distribution of profits to be submitted by the board
of directors to the shareholders' general meetings and
to authorize, in the Company's name, publicly
certified and practicing accountants to assist in
reviewing such information should any doubt arise in
respect thereof;
(v) to give opinions on the appointment of an accounting
firm of the Company;
(vi) to propose to convene an extraordinary general
meeting, and may put forward provisional motions at
the shareholders' annual general meeting;
(vii) to propose to convene provisional board meetings;
(viii) to represent the Company in negotiations with or in
bringing actions against a director;
(ix) other duties and powers provided for in the Articles
of Association.The supervisors shall attend meetings
of the board of directors.
Article 10 The supervisory committee shall declare the Company's
supervisory report for the preceding year at the AGM. Such
report shall include the following matters:
(i) the review of the Company's financial position;
(ii) the implementation of relevant laws, regulations,
Articles of Association and the resolutions of the
shareholders' general meetings by the directors,
president, vice-president, Chief Financial Officer and
secretary of the board of directors of the Company;
(iii) the evaluation of the performance of the directors,
president, vice-president, Chief Financial Officer and
secretary of the board of directors of the Company by
the supervisory committee, in particular the specific
opinions of the external supervisors;
(iv) other significant events which in the opinion of the
supervisory committee shall be reported to the
shareholders' general meeting.
Where the supervisory committee thinks necessary, it may
express its opinions on the motions examined at the
shareholders' general meetings, and may submit an independent
report to the shareholders' general meetings.
Article 11 All reasonable fees incurred in respect of the employment
of professionals such as lawyers, certified public accountants
or practicing auditors which are required by the supervisory
committee in the exercise of its functions and powers shall be
borne by the Company.
The expenses incurred by the supervisors in attending the
supervisors' meeting shall be borne by the Company. These
expenses shall include the transport fares incurred by the
supervisors in travelling from their own addresses to the
places of the meetings, and fees for the accommodation and
meals during the meeting.
Article 12 The chairman of the supervisory committee shall exercise
the following functions and powers:
(i) to convene and chair the meetings of the supervisory
committee;
(ii) to organise and carry out the duties of the
supervisory committee;
(iii) to review and approve, and signing the reports of the
supervisory committee and other important documents;
(iv) to represent the supervisory committee to report to
the shareholders' general meetings;
(v) other duties that shall be performed by him in
accordance with law or the Articles of Association.
Where special circumstances preclude the chairman from
exercising his functions and powers, these functions and
powers shall be exercised by a supervisor designated by him.
Article 13 In performing its duties, the supervisory committee may report
to the board of directors and the shareholders general
meetings the breach of laws and rules relating to the
Company's financial affairs and the acts of the directors,
president, vice-president, Chief Financial Officer and
secretary of the board of directors of the Company which are
in violation of laws, regulations or the Articles of
Association. It may also directly report the same to the
securities regulatory authorities of the State Council and
other relevant authorities.
Article 14 A supervisor shall abide by the laws, regulations and the
Articles of Association, and shall perform his duties
faithfully and diligently.
CHAPTER 4 RULES OF THE SUPERVISORS' MEETINGS
Article 15 The supervisors' meetings shall be divided into regular
meetings and provisional meetings according to the regularity
of such meetings.
Article 16 The regular meetings shall be convened at least four times
each year, including the interim results meeting, the annual
results meeting, the year-end review and the arrangement
meetings for supervisors financial management meetings.
The interim results meetings shall be convened within sixty
days from the end of the first six months of the accounting
year of the Company. The supervisors shall listen to and
approve the Company's interim reports and deal with other
relevant matters at such meetings.
The annual results meetings shall be convened within 120 days
from the end of the accounting year of the Company. The
supervisors shall listen to and approve the Company's annual
reports and deal with other relevant matters at such meetings.
The year-end review and arrangement meetings shall be convened
in December of each year. The supervisors shall listen to and
approve the president's report in respect of the expected
performance of the Company in the year and the work
arrangements for the following year at such meetings.
The financial management meetings shall be convened within 30
days from the end of the annual financial work meeting of the
Company. The supervisors shall listen to and approve the
report of the Company's financial department in respect of
conducting the overall budget management and strengthening
financial control by the Company.
Article 17 A provisional supervisors' meeting shall be convened in any
one of the following events:
(i) here the chairman of the supervisory committee
considers necessary;
(ii) where more than two-thirds of the supervisors propose
in their joint names;
(iii) where the Company has suffered or is suffering loss of
substantial assets causing the shareholders' interests
to be damaged;
(iv) where the directors, president, vice-president, Chief
Financial Officer and secretary of the board of
directors of the Company act in a way which is in
contravention of laws, regulations or the Articles of
Association causing the Company's interests to be
seriously damaged.
Article 18 The supervisors' meetings shall be divided into on-site
meetings, video-telephone meetings and meetings by way of
written resolutions.
All the meetings of the supervisory committee may be held by
the way of on-site meeting.
The meetings of the supervisory committee may be held by the
way of video-telephone meetings, provided that the attending
supervisors are able to hear clearly the supervisor who speaks
at the meeting and communicate amongst themselves. In the
event that the attending supervisors are unable to sign for
the resolutions on site, they shall express their opinions
orally during the meeting and shall complete the signing
procedures as soon as practicable.
Where an on-site meeting or a video-telephone meeting is
impractical, the supervisors' meeting may be held by way of
written resolutions, in which case details of the motions to
be discussed and examined at the meeting, which are in the
written form, shall be despatched to the supervisors for
decision. Unless otherwise expressed by the supervisors,
signing on the written resolutions by the supervisors shall be
sufficient evidence that they have agreed to the resolutions.
Article 19 A supervisors' meeting shall be validly convened by the
presence of not less than two-thirds of the supervisors.
The supervisors shall be physically present at the
supervisors' meetings. If for any reason a supervisor is
unable to attend the meeting, he shall by written
authorisation appoint another supervisor to act as his proxy
to attend the meeting and exercise his functions and powers.
The written authorisation shall state the name of the proxy,
the scope of the authorisation, the authority of the proxy and
the period of validity. It shall also be signed by the proxy
or affix the seal of the proxy.
In the event that a supervisor does not attend the
supervisors' meeting in person for two consecutive meetings,
he shall be deemed to be unable to perform his duties, and the
shareholders' general meeting or the staff representative
meeting shall dismiss such supervisor.
CHAPTER 5 PROCEEDINGS OF THE SUPERVISORS' MEETING
Article 20 The supervisory committee shall put forward motions according
to the matters to be examined by the board of directors and
matters proposed by the supervisors.
Article 21 The administrative office of the supervisory committee shall
be responsible for gathering the matters to be examined by the
board of directors and the matters proposed by the
supervisors, and shall submit these matters to the chairman of
the supervisory committee in time. The chairman of the
supervisory committee shall determine whether to submit these
matters to the supervisory committee for review according to
the importance and urgency of these matters.
Article 22 The chairman of the supervisory committee shall be responsible
for convening the supervisors' meeting, and shall sign the
notice of the meeting. Such notice shall state the date,
place, duration, agenda, reasons and subject matters of the
meeting and other relevant information, as well as the date of
the issuance of such notice.
The notice of a supervisors' meeting shall be delivered to the
supervisors ten days before the date of the meeting. Any
supervisor may waive his right to demand the notice of the
meeting.
The notice of the meeting may be served on the supervisors by
courier, facsimile, telegraph or mail.
Article 23 After the issue of the notice of a meeting and before the date
of the meeting, the administrative office of the supervisory
committee shall be responsible for, and shall communicate and
liaise with all supervisors, to seek their opinions or
suggestions in respect of the motions of the meeting, so as to
enable necessary amendments to be made to them.
Where more than one-fourth of the members of the supervisors
or two external supervisors are of the opinion that the
information in respect of a specific motion is insufficient to
allow judgment to be made, or the motion is not convincing,
they may in their joint name propose to postpone the
examination of such a motion, and the supervisory committee
shall adopt such a proposal.
Article 24 The supervisors' meeting shall be chaired by the chairman of
the committee. Where circumstances preclude the chairman to
chair the meeting, he may designate a supervisor to chair the
meeting. Upon the expiry of the term of office of the
supervisory committee and the re-election of the new
supervisors by the shareholders' general meeting, the
supervisor who obtains the largest number of approval votes at
such re-election (if more than one, one shall be chosen
amongst them) shall chair such meeting, at which the chairman
of the new supervisory committee shall be elected.
Article 25 The chairman of the meeting shall declare the commencement of
the meeting as scheduled. The supervisors in presence shall
reach an agreement on the agenda of the meeting thereafter.
Where more than one-fourth of the supervisors or two external
supervisors are of the opinion that the information in respect
of one specific motion is insufficient to allow judgment to be
made, or the motion is not convincing, they may in their joint
name propose to postpone the examination of such a motion, and
the chairman of the meeting shall adopt their proposal.
Where an agreement is reached in respect of the agenda of the
meeting by the supervisors present at the meeting, the
chairman of the meeting shall direct the motions to be
examined one by one.
Article 26 In reviewing the relevant motions and reports, the
supervisors' meeting may require the directors, president,
vice-president, Chief Financial Officer, secretary of the
board of directors and the internal and external auditors of
the Company to attend the meeting to give necessary
explanations to the relevant matters, and to answer the
questions which the supervisory committee is concerned with.
Article 27 In reviewing the motions at supervisors' meetings, all
attending supervisors shall deliver their opinions in respect
of approval or objection to such motions or abstention from
voting.
The supervisors who are acting as proxies of others shall
exercise the rights of voting within the authorization.
Where a supervisor is not present at a supervisors' meeting
and fails to appoint a proxy to act on his behalf, such
supervisor shall be deemed to have waived his rights to vote
at the meeting.
Article 28 In principle, resolutions shall be made on the matters
examined at the supervisors' meeting. Such resolutions shall
be decided on a poll or show of hands. No resolution shall be
effective unless approved by more than two-thirds of all the
supervisors.
Article 29 Detailed minutes of a supervisors' meeting shall be recorded
as proof of the resolutions on the matters examined at the
meeting.
The minutes of the meeting shall state the date and place of
the meeting, name of the chairman of the meeting, names of the
attending supervisors and names of the principals and proxies
who have fulfilled the necessary procedures for attending the
meeting, agenda of the meeting, main points of each
supervisor's speech, the methods of voting for each matter to
be resolved on and the voting result (the result shall state
the number of votes for approval or objection to the motion or
abstention).
The administrative office of the supervisory committee shall
designate staff to arrange for the matters examined at the
meeting to be recorded. The minutes of each meeting shall be
provided to the attending supervisors for review without
delay. Supervisors present at the meeting and the
minutes-taking officer shall sign the minutes of that meeting.
A supervisor shall have the right to request an explanatory
note be made for his speech at the meeting.
Article 30 Minutes of a supervisors' meeting and the resolutions passed
at such meeting, being important documents, shall be properly
kept by the administrative office of the supervisory committee
at the Company's place of business.
CHAPTER 6 DISCLOSURE OF INFORMATION RELATING TO THE SUPERVISORS' MEETING
Article 31 The supervisory committee shall strictly comply with the
requirements of the regulatory authorities and the stock
exchanges on which the Company's shares are listed in relation
to the disclosure of information. It shall ensure that matters
examined or resolutions passed at supervisors' meetings which
are discloseable are disclosed accurately and in a timely
manner.
Article 32 Regarding confidential information, the attendees of the
meeting must keep such information confidential. Punishment
shall be imposed on those who are in breach of this duty.
CHAPTER 7 IMPLEMENTATION OF THE RESOLUTIONS OF THE SUPERVISORS'
MEETING AND FEEDBACKS
Article 33 The supervisory committee may pass resolutions and make
proposals to the board of directors and the shareholders'
general meetings. These resolutions and proposals shall be
implemented by the relevant departments of the Company under
the direction of the board of directors.
Article 34 The administrative office of the supervisory committee shall,
under the direction of the committee and its chairman, take
initiative to obtain the information in respect of the
implementation of the relevant resolutions, and shall report
and make proposals to the supervisory committee and the
chairman of the committee.
Article 35 Where resolutions concerning the proposals to convene a
provisional board meeting or shareholders' extraordinary
general meeting, or the submission of provisional motions to
the AGM are passed by the supervisory committee, the
supervisory committee shall, within a specified period, submit
to the board of directors the subjects of such meetings and
the detailed motions in writing, and shall ensure that the
contents of the motions comply with relevant laws, regulations
and the Articles of Association.
CHAPTER 8 SUPPLEMENTARY ARTICLES
Article 36 The right to interpret these Rules shall vest with the
supervisory committee.
Article 37 Where these Rules fail to comply with relevant laws,
regulations and other regulatory documents as promulgated from
time to time, these laws, regulations and other regulatory
documents shall prevail.