Exhibit 3.8
ARTICLES OF ASSOCIATION
OF
SICHUAN CATHAYONLINE TECHNOLOGIES CO. LTD.
A Wholly Foreign-Owned Enterprise
Established in Chengdu, Sichuan Province, the PRC
Stikeman, Elliott
Suite 1103, China Building
29 Queen's Road Central
Hong Kong
Ref : GIZ/13741-001/rl
ARTICLES OF ASSOCIATION
OF
SICHUAN CATHAYONLINE TECHNOLOGIES CO. LTD.
Pursuant to the Law of the People's Republic of China on Wholly
Foreign-owned Enterprise, its implementing regulations and other
relevant PRC Law, CathayOnline Technologies (Hong Kong) Ltd. wishes to
establish in Chengdu, the People's Republic of China (the "PRC") a
wholly foreign owned enterprise named Sichuan CathayOnline Technologies
Co. Ltd. and therefore formulates these Articles of Association (the
"Articles").
ARTICLE 1 INTERPRETATION
1.1 In these Articles, unless the context otherwise indicates, the
following definitions apply:
(a) "Board" means the board of directors of the Company, formed in
accordance with these Articles;
(b) "Company" means the wholly foreign-owned enterprise
established in accordance with these Articles and named
Sichuan CathayOnline Technologies Co. Ltd.;
(c) "PRC Law" means all written laws, regulations, ordinances,
rules, measures, provisions and guidelines enacted by the PRC
central and various local governments, including those that
are temporarily in force or on trial implementation, but
excluding all internal documents the disclosure of which is
prohibited to foreign business.
1.2 Words importing the singular only also include the plural and vice
versa where the context requires. Words importing the masculine only
also include the feminine and vice versa where the context requires.
1.3 Headings used herein are for ease of reference only and shall not
affect interpretation of these Articles.
ARTICLE 2 THE FOREIGN INVESTOR
2.1 The foreign investor to the Company is CathayOnline Technologies (Hong
Kong) Ltd. (the "Investor") with the following particulars:
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Registered Office: 1103 China Building,
29 Queen's Road Central,
Hong Kong
The Investor is wholly-owned beneficially by CathayOnline Inc., a
company incorporated under the laws of the State of Nevada, the United
States of America.
ARTICLE 3 ESTABLISHMENT OF THE COMPANY
3.1 The name of the Company shall be "_______________" in Chinese and
Sichuan CathayOnline Technologies Co. Ltd. in English. The Company is
established on the date when its business licence is issued by
appropriate level of State Administration of Industry and Commerce.
3.2 The legal residence of the Company shall be ________________________,
610041, Chengdu, the PRC.
3.3 The Company is hereby formed as a Chinese enterprise legal person with
limited liability status under the PRC Law and shall only be liable for
its debts to the extent of its assets. The liability of the Investor
shall be limited to its capital contributions to the Company's
registered capital.
ARTICLE 4 OBJECTIVE, SCOPE AND SCALE OF OPERATION
4.1 The objective of the Company shall be to strengthen the introduction
and use of advanced technology, equipment and scientific management
methods from the international market into Sichuan in order to promote
the economic development of Sichuan Province by using competitive
advantages of the Investor.
4.2 The Company's scope of business shall be importing advanced electronic
communication technology and equipment; providing value added services
in relation to data processing and computer networking related
planning, designing and implementation; providing services relating to
computer and electronic communication related project development,
consulting and management and selling related computer software and
hardware.
4.3 The Company is projected to reach an annual service volume of around
RMB9,000,000.
ARTICLE 5 TOTAL INVESTMENT AND REGISTERED CAPITAL
5.1 The Company's total amount of investment is US$1,000,000, of which
US$700,000 is the registered capital. The amount of US$300,000, being
the difference between the total investment and the registered capital,
will be funded by a loan from the Investor or other third parties to be
approved by the Board.
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5.2 The Investor's contribution to the Company's registered capital will be
made in accordance with the following terms and conditions:
(a) Contributing to the Company US$105,000 cash by transferring
such amount to an account designated by the Company within 90
days of the establishment of the Company; and
(b) Contributing to the Company the balance of the registered
capital in US dollar cash and/or in the form of computer
hardware/software at such time(s) determined by the Board
within 18 months of the establishment of the Company.
5.3 The Company shall appoint a PRC chartered accountant to verify the
capital contribution made by the Investor and issue a capital
verification report, on the basis of which the Company shall issue to
the Investor an investment certificate.
5.4 The Company shall not reduce its registered capital during its term of
operation.
ARTICLE 6 PROFIT DISTRIBUTION
6.1 The Company's profits shall be distributed to the Investor in
accordance with relevant provisions of the PRC Law.
ARTICLE 7 BOARD OF DIRECTORS
7.1 The Board shall be established on the date when the Company is
established. It shall be comprised of three (3) directors appointed by
the Investor for a term of three (3) years. One of the directors will
be appointed by the Investor as the Chairman of the Board and one as
Vice-Chairman.
7.2 The Chairman of the Board is the legal representative of the Company.
Where the Chairman is unable to perform his functions, he shall appoint
in writing the Vice-Chairman to act on his behalf. Where the
Vice-Chairman is unable to perform such function, the Chairman may
appoint in writing any director to act on his behalf.
7.3 A secretary of the Board (the "Secretary") may be appointed by the
Board to handle all administrative matters relating to the Board. The
Secretary shall keep minutes of the Board meeting, maintain records and
files of all Board resolutions and generally perform all functions
delegated to the Secretary by the Board.
7.4 In performing their powers and functions, the directors shall act in
good faith and in the best interest of the Company. Without prior
written consent of the Board and exclusive of performing his functions
within the scope of the Investor, no director may (a) receive personal
gains other than salary and related benefits by using his position or
solely by virtue of his position; (b) engage in any activity which
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competes with that of the Company; (c) request and obtain from a third
party commissions, kick-backs or any other form of remuneration; and
(d) disclose confidential information to any person external to the
Company other than the Investor, unless compelled to do so as required
by law. Where the Board examines or votes on any resolutions concerning
a particular director, such director shall refrain from the examination
and shall request permission of the Chairman to leave the meeting.
7.5 The Board is the highest authority of the Company and shall decide all
important matters for the Company. Resolutions in respect of the
following matters shall require a unanimous vote of all directors
present at the Board meetings:
(a) Amendments of these Articles;
(b) Termination or dissolution of the Company; and
(c) Increase of the Company's registered capital.
All other matters shall be decided by a simple majority vote of
directors present at the Board meeting.
7.6 Meetings of the Board shall be convened at least twice a year. The
first meeting of the Board shall be held within one (1) month from the
date of the establishment of the Company which shall be called for and
chaired by the Chairman. The Chairman shall call for a special meeting
of the Board at the request of at least one-third (1/3) of the
directors and such meeting shall be held within forty-five (45) days of
receipt of the request.
7.7 The Chairman or the Secretary of the Board shall issue written notice
of the Board meeting to each of the directors at least twenty-one (21)
days prior to the meeting unless all directors agree to a shorter
notice period. Such notice shall state the agenda, time and place of
the meeting.
7.8 Meetings of the Board shall be held at the legal address of the Company
and English language shall be the working language of such meetings.
The Board meeting may be held in person or by way of telephone
conference call or other communication facilities which enable all the
participants to communicate with efficient means with each other. A
resolution in writing (including by fax transmission) signed by all the
directors is as valid as if it had been passed at the Board meeting.
7.9 The directors of the Board may attend and vote at the Board meeting in
person or by appointing in writing proxies on their behalf or by
telephone or other means of communication as referred to in Section 7.8
herein.
7.10 The quorum for meetings of the Board shall be two-thirds (2/3) of all
directors of which one must be the Vice-Chairman or a person
representing the Vice-Chairman by proxy and the other one the Chairman
or a person representing the Chairman by proxy. Resolutions adopted at
a Board meeting without a quorum shall have no legal force or effect.
7.11 All resolutions and minutes of the Board shall be kept by the Secretary
of the Board, copies of which shall be sent to all directors and
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proxies who attended the meeting. The minutes shall be approved by all
directors and proxies by signing their names thereto, or by a
resolution at the next Board meeting. The minutes shall be written in
English and may be translated into Chinese. In case of conflict between
the two language versions, the English version shall prevail.
7.12 With the consent of the Board, the directors may be reimbursed by the
Company for their reasonable costs, expenditures, travel and other
expenses incurred in the performance of their functions, including
attending the Board meetings.
ARTICLE 8 OPERATION AND MANAGEMENT
8.1 The Board will set up a management body in charge of day-to-day
operation and management of the Company. Such management body may
consist of a General Manager, a Deputy General Manager and a Financial
Controller (collectively, the "Officers"), whose term of office and job
description shall be decided by the Board.
8.2 In performing their functions, all Officers shall act in good faith and
for the best interest of the Company. The Officers shall refrain from
any actual or potential conflict of their personal interests with those
of the Company. No officer may (a) receive personal gains other than
salary and related benefits by using his position or solely by virtue
of his position; (b) engage in any activity which competes with that of
the Company; (c) request and obtain from a third party commissions,
kick-backs or any other form of remuneration; and (d) disclose
confidential information to any person external to the Company other
than the Investor, unless compelled to do so by law or with prior
written approval of the Board.
8.3 The duties of the General Manager shall include implementing
resolutions of the Board and organizing and directing the ordinary
operation and management of the Company. The Deputy General Manager
shall report to the General Manager, assist the General Manager and
conduct other affairs entrusted to them by the General Manager or the
Board through and with the full knowledge of the General Manager. The
rights and duties of the General Manager shall be stipulated in the
Articles or prescribed by the Board and those of the Deputy General
Manager determined by the General Manager and the Board.
8.4 The Financial Controller shall be responsible for the accounting and
financial matters of the Company. The Financial Controller shall assist
the General Manager in handling the needs, transfer and use by the
Company of its funds. The Financial Controller shall report from time
to time to the General Manager and the Board on the accounting and
financial state of the Company and carry out accounting and financial
assignments entrusted by the General Manager and the Board through and
with the full knowledge of the General Manager.
8.5 The Board shall, within the terms of office of the General Manager and
the Financial Controller, carry out annual evaluation of their
performances against the targets set by the Board.
8.6 The remuneration of employees of foreign nationality and of senior
employees of the Company shall be fixed by the Board.
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8.7 The Board may at any time dismiss or replace any Officer and other
management personnel who has abused his powers for personal gains,
embezzled corporate funds, neglected his duties, or failed to carry out
his assignments, or for any other just cause. No officers, senior
management personnel (as determined by the Board from time to time) of
the Company may hold any position in any other economic entity while in
the employ of the Company without prior written approval of the Board.
ARTICLE 9 PURCHASE OF GOODS
9.1 The Company shall purchase all required machinery, equipment and other
necessary goods from sources in the PRC where the conditions are
competitive in terms of quality, price, availability and other normal
commercial considerations.
ARTICLE 10 LABOUR MANAGEMENT
10.1 In respect of the recruitment, employment, dismissal, wages, salary,
working hours, labour insurance, welfare, rewards and punishment of the
employees of the Company, a proposal shall be formulated through
deliberation by the Board in accordance with the PRC Law and be
ascertained by labour contracts to be collectively or individually
entered into by the Company and the individual employee or the labour
union concerned. The labour contracts, upon execution, shall be
submitted to the local labour department for record.
ARTICLE 11 TRADE UNION
11.1 The employees of the Company (the "Employees") have rights, pursuant to
the PRC Law, to organize grass-root trade union (the "Union") and carry
out activities in relation thereto.
11.2 The Union represents the interests of the Employees and shall have
rights to enter, on behalf of the Employees, into collective labour
contracts with the Company and supervise the performance of such
contracts.
11.3 The rights, responsibilities and activities of the Union shall be in
accordance with relevant provisions of the PRC Law, which include
upholding legitimate interests of the Employees; assisting the Company
in proper allocation and use of employee welfare and reward funds;
organizing study sessions for the Employees in relation to politics,
science, technology and business; organizing sports and arts events;
and educating the Employees to comply with labour discipline and to
make great efforts to fulfil various economic tasks assigned by the
Company.
11.4 Where the Company is discussing matters in relation to the Employee's
reward and punishment, wage system, welfare, labour protection and
insurance, the Union has rights to participate in such meetings as an
observer (but without right to vote) and express its opinions thereon.
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11.5 The company shall support the works of the Union and shall, pursuant to
relevant PRC Law, provide the Union facilities necessary as office
premise and necessary for meeting, and collective welfare, cultural and
sporting activities. The company shall also, in accordance with the PRC
Law, allocate funds for the Union's activities.
ARTICLE 12 TAXATION, FINANCE AND AUDITING
12.1 The Company shall pay all taxes in accordance with the PRC Law and
shall enjoy preferential treatment granted to foreign investment
enterprises with respect to taxation including reduction in and
exemption from taxation.
12.2 The staff of the Company shall pay personal income tax and personal
income adjustment tax in accordance with relevant PRC Law.
12.3 The Company shall withdraw from its after-tax profits reserve funds and
employee bonus and welfare funds in accordance with relevant PRC Law.
The annual amount allocated for the reserve funds shall not be less
than 10% of the Company's after tax profit, provided that the Company
may choose not to make any allocation to the reserve funds if the
accumulated amounts allocated reach 50% of its registered capital. The
amount allocated to employee bonus and welfare funds shall be decided
by the Board with reference to the operations and other circumstances
of the Company.
12.4 The financial year of the Company shall be from the first day of
January to the thirty-first day of December of each year. The first
financial year of the Company shall be from the establishment of the
Company to the thirty-first day of December of that year. The last
financial year of the Company shall be from the first day of January of
the last year to the date of termination of the Company.
12.5 The Company shall keep its accounts in accordance with relevant PRC Law
as required by any laws and/or regulations to which the Investor is
subject and by using the internationally recognized, generally accepted
accounting principles. The Company may use RMB as the accounting unit
for all internal accounting purposes but both the RMB and the US dollar
shall be used as the currency accounting unit for all annual, quarterly
and monthly accounting and financial statements.
12.6 During the first one (1) month of each financial year, the Financial
Controller shall organise and draw up a balance sheet, a profit and
loss account and available profit distribution for the preceding
financial year and submit the same to the Board for approval. The
Financial Controller shall present to the Board within ten (10) working
days of the end of each month management accounts showing the financial
performance for the preceding month period.
12.7 At the end of each financial year, the Company may hire chartered
accountants registered in the PRC and internationally to audit the
accounts and books of the Company in accordance with the generally
accepted accounting principles in the PRC and internationally.
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12.8 The Company shall provide, within the time frame requested by the
Investor, full data needed by the Investor to file tax returns and meet
other legal and regulatory requirements in the jurisdiction of its
registration.
ARTICLE 13 ANNUAL OPERATION PLAN AND BUDGET
13.1 The General Manager shall prepare quarterly operation plans and budget
of the Company. Such plans and budget (including balance sheet, income
statement and cash flow projections) shall be submitted before the 10th
day of April, July, October and January of each year to the Board for
review and shall include, in addition to financial statements, the
following details:
(a) purchase of machinery, equipment and other assets;
(b) raising and use of funds (including foreign currency and Renminbi):
(c) marketing plans;
(d) repair and maintenance of assets;
(e) profit projections;
(f) personnel training plans; and
(g) supply of water, electricity and other utilities for the next
accounting year.
ARTICLE 14 FOREIGN EXCHANGE MANAGEMENT
14.1 All matters relating to foreign exchange of the Company shall be dealt
with in accordance with relevant PRC Law. The Company will use its best
efforts to balance its foreign exchange revenues and expenditures.
14.2 The use of foreign exchange legally retained in its foreign exchange
settlement account by the Company shall be made in the following order
of priority, unless otherwise decided by the Board:
(a) salary and other expenses of foreign employees of the Company
that must be paid in foreign currency;
(b) payment of interest or repayment of principal on a foreign
exchange loan where such amounts fall due or the Company may
prepay such amounts without penalty and the Company decides to
do so;
(c) expenses that must be paid in foreign exchange for purchasing
equipment, parts and services which are required for the
operation of the Company;
(d) administrative expenses that must be paid in foreign exchange
which are required for the operation of the Company; and
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(e) payment of profits allocated to the Investor.
ARTICLE 15 TERM OF THE COMPANY
15.1 The term of the Company is Twenty (20) years, commencing from the date
when the Company's business license is issued. The Board may adopt a
resolution to apply to the competent PRC authorities for extension of
the Company's term in accordance with relevant PRC Law.
ARTICLE 16 AMENDMENT TO THESE ARTICLES
AND TERMINATION OF THE COMPANY
16.1 Any amendment to these Articles must be in writing and signed by the
Investor and shall only be effective upon approval by competent
authorities.
16.2 Should any of the following events occur, the Company may be terminated
and its accounts settled pursuant to relevant PRC Law:
(a) The term of the Company expires;
(b) The Company cannot meet its liabilities as they become due or
the Company's assets, if liquidated at fair market value,
would not be sufficient to satisfy its debts and obligations
as they become due, and the Company is unable to remedy such
situation and become profitable in a reasonably foreseeable
future;
(c) The Company is rendered unprofitable by force majeure or by
serious and irreparable harm or damages inflicted upon the
Company;
(d) Other circumstances where the Board decides that it is
necessary to terminate the Company; or
(e) Other circumstances prescribed by relevant PRC Law.
ARTICLE 17 LIQUIDATION
17.1 Where the Company is terminated in accordance with Article 16, its
assets shall be liquidated in accordance with relevant PRC Law,
including Foreign Investment Enterprise Liquidation Measures (the
"Liquidation Measures").
17.2 The liquidation committee, established in accordance with the
Liquidation Measures, shall make its best efforts to obtain the highest
price possible for the Company in disposing its assets, including
conducting an auction sale.
17.3 Subject to Article 17.1, after paying the Company's debts and
liabilities, if any, the proceeds of the liquidation shall be
distributed to the Investor in accordance with relevant PRC Law.
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ARTICLE 18 INSURANCE
18.1 The insurance of the Company shall be underwritten by the People's
Insurance Company of China or any other insurance company licensed to
carry on insurance business in the PRC and approved by the Board. The
coverage, insured value and term of such insurance shall be determined
by the Board and in accordance with the provisions of the insurance
company chosen.
ARTICLE 19 LANGUAGE
19.1 These Articles shall be written in Chinese and English and both
language versions shall have equal force and effect. These Articles are
made in Five (5) original copies in each language version.
ARTICLE 20 COMING INTO EFFECT
20.1 These Articles will come into force upon approval by the
Ministry of Foreign Trade and Economic Co-operation or it
entrusted authorities.
THESE ARTICLES ARE SIGNED on the______ day of __________, 1999 by the
representatives of the Investor in ___________________.
CathayOnline Technologies (Hong Kong) Ltd.
- --------------------------------------
Authorized Signatory: _____________________________
Name: _____________________________
Title: _____________________________
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TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION.................................................-1
ARTICLE 2 THE FOREIGN INVESTOR...........................................-1
ARTICLE 3 ESTABLISHMENT OF THE COMPANY...................................-2
ARTICLE 4 OBJECTIVE, SCOPE AND SCALE OF OPERATION .......................-2
ARTICLE 5 TOTAL INVESTMENT AND REGISTERED CAPITAL........................-2
ARTICLE 6 PROFIT DISTRIBUTION............................................-3
ARTICLE 7 BOARD OF DIRECTORS.............................................-3
ARTICLE 8 OPERATION AND MANAGEMENT.......................................-5
ARTICLE 9 PURCHASE OF GOODS..............................................-6
ARTICLE 10 LABOUR MANAGEMENT..............................................-6
ARTICLE 11 TRADE UNION....................................................-6
ARTICLE 12 TAXATION, FINANCE AND AUDITING.................................-7-
ARTICLE 13 ANNUAL OPERATION PLAN AND BUDGET...............................-8-
ARTICLE 14 FOREIGN EXCHANGE MANAGEMENT....................................-8
ARTICLE 15 TERM OF THE COMPANY............................................-9-
ARTICLE 16 AMENDMENT TO THESE ARTICLES
AND TERMINATION OF THE COMPANY ...........................-9-
ARTICLE 17 LIQUIDATION....................................................-9
ARTICLE 18 INSURANCE.....................................................-10
ARTICLE 19 LANGUAGE......................................................-10
ARTICLE 20 COMING INTO EFFECT............................................-10