EXHIBIT 2
=========================================================
ARTICLES OF ASSOCIATION
OF
CHINA TELECOM CORPORATION LIMITED
=========================================================
(Adopted by shareholders' annual general meeting on 20 June, 2003)
CONTENTS
CLAUSE PAGE
CHAPTER 1: GENERAL PROVISIONS ................................................................... 1
CHAPTER 2: THE COMPANY'S OBJECTIVES AND SCOPE OF BUSINESS ....................................... 3
CHAPTER 3: SHARES AND REGISTERED CAPITAL ........................................................ 4
CHAPTER 4: REDUCTION OF CAPITAL AND REPURCHASE OF SHARES ........................................ 6
CHAPTER 5: FINANCIAL ASSISTANCE FOR THE ACQUISITION OF SHARES ................................... 9
CHAPTER 6: SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS ...................................... 10
CHAPTER 7: SHAREHOLDERS' RIGHTS AND OBLIGATIONS ................................................. 15
CHAPTER 8: SHAREHOLDERS' GENERAL MEETINGS ....................................................... 18
CHAPTER 9: SPECIAL PROCEDURES FOR VOTING BY A CLASS OF SHAREHOLDERS ............................. 26
CHAPTER 10: BOARD OF DIRECTORS ................................................................... 29
CHAPTER 11: SECRETARY OF THE BOARD OF DIRECTORS .................................................. 35
CHAPTER 12: GENERAL MANAGER ...................................................................... 37
CHAPTER 13: SUPERVISORY COMMITTEE ................................................................ 39
CHAPTER 14: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS,
GENERAL MANAGER AND OTHER SENIOR OFFICERS OF THE COMPANY ............................. 41
CHAPTER 15: FINANCIAL AND ACCOUNTING SYSTEMS AND PROFIT DISTRIBUTION ............................. 48
CHAPTER 16: APPOINTMENT OF ACCOUNTANCY FIRM ...................................................... 51
CHAPTER 17: MERGER AND DIVISION OF THE COMPANY ................................................... 54
CHAPTER 18: DISSOLUTION AND LIQUIDATION .......................................................... 55
CHAPTER 19: PROCEDURES FOR AMENDMENT OF THE COMPANY'S ARTICLES OF ASSOCIATION .................... 58
CHAPTER 20: NOTICES .............................................................................. 59
CHAPTER 21: DISPUTE RESOLUTION ................................................................... 59
CHAPTER 22: SUPPLEMENTARY ........................................................................ 60
App
13d
1(a)
ARTICLES OF ASSOCIATION OF
CHINA TELECOM CORPORATON LIMITED
CHAPTER 1: GENERAL PROVISIONS
MP1
Article 1. China Telecom Corporation Limited (the "Company") is a joint
stock limited company MP1 established in accordance with the
Company Law of the People's Republic of China (the "Company Law"),
the State Council's Special Regulations Regarding the Issue of
Shares Overseas and the Listing of Shares Overseas by Companies
Limited by Shares (the "Special Regulations") and other relevant
laws and regulations of the State.
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 on 10 September 2002, as evidenced by approval
document Guo Jing Mao Qi Gai [2002] no. 656 of 2002. It is
registered with and has obtained a business licence from the State
Administration Bureau of Industry and Commerce on 10 September
2002. The Company's business licence number is: 1000001003712.
The promoter of the Company is: China Telecommunications
Corporation.
MP2
Article 2. The Company's registered Chinese name:[Chinese name of the
company]
The Company's registered English name: China Telecom Corporation
Limited.
MP3
Article 3. The Company's address : 31 Jinrong Street
Xicheng District
Beijing
China
Telephone number : 6642-8166
Facsimile number : 6641-5280
Postal code : 100032
MP4
Article 4. The Company's legal representative is the Chairman of the board of
directors of the Company.
MP5
Article 5. The Company is a joint stock limited company which has perpetual
existence.
The liability of a shareholder is limited to the value of the
shares held by him, while the Company undertakes all of its
liabilities with all of its assets.
1
The Company is an independent corporate legal person, governed by,
and existing under the protection of, the laws and regulations of
the People's Republic of China.
Article 6. In accordance with the provisions of the Company Law, the Special
Regulations and the Mandatory Provisions for Articles of
Association of Association of Companies to be Listed Overseas (the
"Mandatory Provisions") and other PRC laws and administrative
regulations, the Company convened its general meeting on 20 June,
2003 to amend the original Articles of Association of the Company
(the "Original Articles of Association") and adopt these Articles
of Association (the "Articles of Association" or "these Articles
of Association").
MP6
Article 7. The Original Articles of Association took effect from the
corporation date of the Company.
These Articles of Association shall take effect after being
adopted by a special resolution at the Company's general meeting
and upon approval of the companies approving department authorized
by the State Council. After these Articles of Association come
into effect, the Original Articles of Association shall be
superseded by these Articles of Association.
MP6
Article 8. From the date on which the Company's Articles of Association come
into effect, the Company's Articles of Association constitute
the legally binding document regulating the Company's organisation
and activities, and the rights and obligations between the Company
and each shareholder and among the shareholders.
MP7
Article 9. The Company's Articles of Association are binding on the Company
and its shareholders, directors, supervisors, general manager and
other senior management personnel; all of whom may, according to
the Company's Articles of Association, assert rights in respect of
the affairs of the Company.
Subject to Chapter 21 of these Articles of Association, a
shareholder may take action against the Company pursuant to the
Company's Articles of Association, and vice versa. A shareholder
may also take action against another shareholder, and may take
action against the directors, supervisors, general manager and
other senior officers of the Company pursuant to the Company's
Articles of Association.
The actions referred to in the preceding paragraph include court
proceedings and arbitration proceedings.
MP8
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.
2
The Company may not be a shareholder with unlimited liabilities
of any other organisations operating for profits.
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 clause 2 of Article 12 of the Company Law.
Article 11 Subject to compliance with PRC laws and regulations, the Company
shall have the right to raise funds, including (but not limited
to) taking loans and issuing company bonds, and have the right to
charge or pledge its assets.
CHAPTER 2: THE COMPANY'S OBJECTIVES AND SCOPE OF BUSINESS
MP9
Article 12. The Company's objectives are: comply with state laws and
regulations, be market driven, actively adopt advanced
communications technologies, and develop telecommunications and
information businesses; strengthen management and increase
service quality; provide fast, convenient and accurate
communication services to society and satisfy the needs of
society; improve enterprise efficiency, increase enterprise
competitiveness and create profits for shareholders.
MP10
Article 13. 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 operation of
various domestic and international fixed telecommunications
networks and facilities (including the local wireless ring
circuit) in the region of Shanghai, Guangdong, Jiangsu and
Zhejiang provinces and municipality; operate voice, digital,
image and multi media communications and information services on
the foundation of the fixed telecommunication networks; make
settlements with foreign telecommunications operators in relation
to international telecommunication businesses in accordance with
the State provisions; engage in system integration, technology
development, technology services, information consulting,
advertising, equipment manufacture, sale, design and construction
in connection with communications and information businesses.
Article 14 The Company may, based on its business development needs,
establish subsidiaries, controlled subsidiaries, branches,
representative offices and other branch organisations.
Based on its business development needs and upon approval of the
relevant
3
governmental authorities, the Company may adjust its scope of
business and manner of operation from time to time, and may
establish branch organisations and/or representative offices
(irrespective of whether controlled or owned by it) in Hong Kong
Special Administrative Region, Macau Special Administrative
Region and Taiwan Region.
CHAPTER 3: SHARES AND REGISTERED CAPITAL
MP11
App.3
9
Article 15. There must, at all times, be ordinary shares in the Company. The
ordinary shares issued by the Company include domestic-invested
shares and 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.
MP12
Article 16. The shares issued by the Company shall each have a par value of
Renminbi one (1.00) yuan.
"Renminbi" referred to in the previous paragraph means the legal
currency of the PRC.
MP13
Article 17. Subject to the approval of the securities authority of the State
Counsel, the Company may issue shares to Domestic Investors and
Foreign Investors.
"Foreign Investors" referred to in the previous paragraph mean
those investors who subscribe for the shares issued by the
Company and who are located in foreign countries and in the
regions of Hong Kong, Macau and Taiwan. "Domestic Investors" mean
those investors who subscribe for the shares issued by the
Company and who are located within the territory of the PRC.
MP14
App.3
9
Article 18. Shares which the Company issues to Domestic Investors for
subscription in Renminbi shall be referred to as
"Domestic-Invested Shares". Shares which the Company issues to
Foreign Investors for subscription in foreign currencies shall be
referred to as "Foreign-Invested Shares". Foreign-Invested Shares
which are listed overseas are called "Overseas-Listed
Foreign-Invested Shares". Both holders of Domestic-Invested
Shares and holders of Overseas-Listed Foreign-Invested Shares are
holders of ordinary shares, and have the same obligations and
rights.
"Foreign currencies" mean the legal currencies of countries or
districts outside the PRC which are recognised by the foreign
exchange authority of the State and which can be used to pay the
share price to the Company.
Article 19 Foreign-Invested Shares issued by the Company and which are
listed in Hong Kong shall be referred to as "H Shares". H Shares
are shares which
4
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.
MP15
Article 20. By the approval of the relevant companies department authorised
by the State Council, the Company may issue a total of
75,614,186,503 ordinary shares, of which 68,317,270,803 were
issued to the promoter of the Company at the time when the
Company was established, representing 90.35% of the entire issued
share capital.
MP16
App.3
9
Article 21. All the 7,296,915,700 ordinary shares issued by the Company after
its incorporation are the overseas-listed foreign-invested shares
(H Shares). A total of 730,494,300 shares have been reduced from
the respective shareholdings of the State-owned shareholders of
the Company, namely, China Telecommunications Corporation,
Guangdong Rising Assets Management Co., Ltd., Jiangsu Guoxin
Investment Group Co., Ltd. and Zhejiang Financial Development
Company during the global offering and all the reduced shares
have become the overseas-listed foreign-invested shares (H
Shares). The total of the overseas-listed foreign-invested shares
(H Shares) issued by the Company shall be 8,027,410,000 shares,
representing 10.62% of the issued share capital of the Company.
The share capital structure of the Company is as follows: there
are a total of 75,614,186,503 ordinary shares issued, of which
58,809,120,182 shares are held by the promoter, China
Telecommunications Corporation, representing 77.78% of the total
of the ordinary shares issued by the Company. The other holders
of the domestic shares are Guangdong Rising Assets Management
Co., Ltd., holding a total of 5,658,608,387 shares representing
7.48% of the total of the ordinary shares issued by the Company,
Jiangsu Guoxin Investment Group Co., Ltd., holding a total of
964,621,836 shares representing 1.27% of the total of the
ordinary shares issued by the Company and Zhejiang Financial
Development Company, holding a total of 2,154,426,098 shares
representing 2.85% of the total of the ordinary shares issued by
the Company. A total of 8,027,410,000 overseas-listed
foreign-invested shares are held by holders of overseas-listed
foreign-invested shares, representing 10.62% of the total of the
ordinary shares issued by the Company.
MP17
Article 22. The Company's board of directors may take all necessary action
for the issuance of Overseas-Listed Foreign-Invested Shares and
Domestic-Invested Shares after proposals for issuance of the same
have been approved by the securities authority of the State
Counsel.
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 China Securities Regulatory Commission (the
"CSRC").
5
MP18
Article 23. Where the total number of shares stated in the proposal for
the issuance of shares includes 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 authority of the
State Counsel, be issued in separate branches.
MP19
Article 24. The registered capital of the Company shall be RMB
75,614,186,503.
MP20
Article 25. 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 issuing new shares to its existing shareholders;
(3) by allotting bonus shares to its existing
shareholders;
(4) by any other means which is permitted by law and
administrative regulation.
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 State
laws and administrative regulations.
MP21
App.31(2)
Article 26. Except as provided for by other provisions of law and
administrative regulations, shares of the Company may be
freely transferred without any right of lien.
CHAPTER 4: REDUCTION OF CAPITAL AND REPURCHASE OF SHARES
MP22
Article 27. According to the provisions of the Company's Articles of
Association, the Company may reduce its registered capital.
MP23
Article 28. 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
6
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.
MP24
Article 29. 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 issued 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's repurchase of its issued shares shall comply
with the provisions of Articles 30 to 33.
MP25
Article 30. 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 a general offer for the repurchase of shares
to all its shareholders on a pro rata basis;
App.38(2)
(2) by repurchasing shares through public dealing on a
stock exchange;
(3) by repurchasing shares outside of the stock exchange by
means of an agreement.
MP26
Article 31. 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 of the stock exchange by means of
an agreement. The Company may, by obtaining the prior
approval of the shareholders in a general meeting (in the
same manner), release, vary or waive its rights under an
agreement which has been so entered into.
An agreement for the repurchase shares referred to in the
preceding paragraph includes (but is not limited to) an
agreement to become liable to repurchase shares or an
agreement to have the right to repurchase shares.
The Company may not assign an agreement for the repurchase
of its shares or any right contained in such an agreement.
MP27
Article 32. Shares which have been legally repurchased by the Company
shall be
7
cancelled within the period prescribed by law and
administrative regulation, and the Company shall apply to
the original companies registration authority for
registration of the change in its registered capital and
make a public announcement.
The aggregate par value of the cancelled shares shall be
deducted from the Company's registered share capital.
MP28
Article 33. Unless the Company is in the course of liquidation, it must
comply with the following provisions in relation to
repurchase of its issued shares:
(1) where the Company repurchases shares at par value,
payment shall be made out App.3 of book surplus
distributable profits of the Company or out of
proceeds of a 8 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
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:
(i) if the shares being repurchased were issued at
par value, payment shall be made out of the
book surplus distributable profits of the
Company;
(ii) if the shares being repurchased were issued at
a premium to its par value, payment shall be
made out of the book surplus 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:
(i) payment for the acquisition of the right to
repurchase its own shares;
(ii) payment for variation of any contract for the
repurchase of its shares;
(iii) payment for the release of its obligation(s)
under any contract for the repurchase of its
shares;
8
(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 THE ACQUISITION OF SHARES
MP29
Article 34. 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 "Obligor").
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 Obligor.
This Article shall not apply to the circumstances specified
in Article 36 of this Chapter.
MP30
Article 35. 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 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 agreement;
(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
9
Obligor or jointly with other persons) or by any other means
which results in a change in his financial position.
MP31
Article 36. The following actions shall not be deemed to be activities
prohibited by Article 34 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 some larger
purpose of the Company;
(2) the lawful distribution of the Company's assets by
way of dividend;
(3) the allotment of bonus shares as dividends;
(4) a reduction of registered capital, a repurchase of
shares of the Company or a reorganisation of the
share capital structure of the Company effected in
accordance with the Company's Articles of
Association;
(5) the lending of money by the Company within its scope
of business and in the ordinary course of its
business, where the lending of money is 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 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
MP32
Article 37. Share certificates of the Company shall be in registered
form.
The share certificate of the Company shall contain following
main particulars:
(1) the name of the Company;
(2) the corporation date of the Company;
(3) the class of shares, par value and number of shares
it represents;
(4) the share certificate number;
10
(5) other matters required to be stated therein by the
Company Law, Special Regulations and the stock
exchange(s) on which the Company's shares are listed.
App.31(1)
Article 38. Share certificates of the Company may be assigned, given as
a gift, inherited or charged in accordance with relevant
provisions of laws, administrative regulations and these
Articles of Association
For assignment and transfer of share certificates, relevant
registration shall be carried out with the share
registration institution authorized by the Company.
MP33,
C.1 Zheng Jian Hai Han] App.32(1)
Article 39. Share certificates 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 senior officer(s) of the Company to sign on
the share certificates, the share certificates shall also be
signed by such senior officer(s). The share certificates
shall take effect after being imprinted with the seal of the
Company (including the seal of the Company especially for
securities). The share certificate shall be imprinted with
the seal of the Company or the seal of the Company
especially for securities under the authorization of the
board of directors. The signatures of the Chairman of the
board of directors or other senior officer(s) of the Company
may be printed in mechanical form.
MP34
Article 40. 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 entered in the
register 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.
MP35,
Article 41. The Company may, in accordance with the mutual understanding
and
11
C.2 Zheng Jian Hai Han App.13 Pt.D 1(b)
agreements made between the securities authority of the
State Council and overseas securities regulatory
organisations, 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 for holders of Overseas-Listed
Foreign-Invested Shares listed in Hong Kong 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.
MP36
Article 42. 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 are maintained
in such other place as the board of directors may
consider necessary for the purposes of the listing
of the Company's shares.
MP37
Article 43. 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.
C.12
Zheng Jian Hai Han 1 App.31(1)
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 recognise
any instrument of transfer and would not need to provide any
reason therefore:
App.31(1)
(1) a fee of HK$2.50 per instrument of transfer or such
higher amount agreed from time to time by the Stock
Exchange for registration of the instrument of
transfer and other documents relating to or which
will affect the right of ownership of the shares;
12
(2) the instrument of transfer only relates to Foreign-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;
App.3
1(3)
(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);
(6) the Company does not have any lien on the relevant shares.
The transfer of Overseas-Listed Foreign Invested Shares in the
Company listed in Hong Kong shall be carried out in writing on
normal or standard instruments of transfer or on a form acceptable
to the Board of Directors; and such transfer instrument can be
signed only by hand or, if the transferor or transferee is a
securities clearing institution or its representative recognised
in accordance with section 37 of the Securities and Futures
Ordinance (Hong Kong Law Chapter 571), signed by hand or signed in
printed mechanical form. All the transfer instruments shall be
maintained in the legal address of the Company or other place the
Board of Director may designate from time to time.
Any change or correction to various parts of the register of
shareholders shall be carried out in accordance with the law of
the place where such parts of the register of shareholders are
maintained.
MP38
Article 44. 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 record date for the Company's distribution of dividends.
MP39
Article 45. When the Company needs to determine the rights attaching to shares
in the Company for the purposes of convening a shareholders'
meeting, for dividend distribution, for liquidation or for any
other purpose, the board of directors shall decide on a date for
the determination of rights attaching to shares in the Company.
The shareholders of the Company shall be such persons who appear
in the register of shareholders at the close of such determination
date.
MP40
Article 46. Any person aggrieved and claiming to be entitled to have his name
(title) entered in or removed from the register of shareholders
may apply to a court of competent jurisdiction for rectification
of the register.
MP41
Article 47. 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
13
shares in the Company may, if his share certificate (the "original
certificate") relating to the shares is lost, apply to the Company
for a replacement share certificate in respect of such shares (the
"Relevant Shares").
Application by a holder of 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 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.
App.3
2(2)
The issue of a replacement share certificate to a holder of H
Shares, who has lost his share certificate, shall comply with the
following requirements:
(1) The applicant shall submit an application to the Company in a
prescribed form accompanied by a notarial certificate or a
statutory declaration, stating the grounds upon which the
application is made, the circumstances and evidence of the
loss; and declaring that no other person is entitled to have
his name entered in the register of shareholders in respect
of the Relevant Shares.
(2) The Company has not received any declaration made by any
person other than the applicant declaring that his name shall
be entered into the register of shareholders in respect of
such shares before it decides to issue a replacement share
certificate to the applicant.
App. 3
7(1)
(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.
14
(5) If, by the expiration of the 90-day period referred to in
paragraphs (3) and (4) of this Article, the Company has not
have received any challenge 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
security is provided by the applicant therefore.
MP42
Article 48. Where the Company issues a replacement share certificate pursuant
to the Company's Articles of Association and a bona fide purchaser
acquires or becomes the registered owner of such shares, his name
(title) shall not be removed from the register of shareholders.
MP43
Article 49. 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
MP44,
App.39
Article 50. 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.
Opinion of Hong Kong Clearing
In the case of the joint shareholders, if one of the joint
shareholders is deceased, only the other existing shareholders of
the joint shareholders shall be deemed as the persons who have the
ownership of the relevant shares. But the board of directors has
the power to require them to provide a certificate of death as
necessary for the purpose of modifying the register of
shareholders, or any of the joint shareholders of the shares, only
the joint shareholders ranking first in the register of
shareholders have the right to accept certificates of the relevant
shares, receive notices of the Company, attend and vote at
shareholders' general meetings of the Company. Any notice which is
delivered to the shareholder shall be considered as all the
15
joint shareholders of the relevant shares who have been delivered.
MP45
Article 51. The ordinary shareholders of the Company shall enjoy the following
rights:
App.39
(1) the right to receive dividends and other distributions in
proportion to the number of shares held;
(2) the right to attend or appoint a proxy to attend
shareholders' general meetings and to vote thereat;
(3) the right of supervisory management over the Company's
business operations and the right to present proposals or to
raise queries;
(4) the right to transfer shares in accordance with laws,
administrative regulations and provisions of the Company's
Articles of Association;
(5) the right to obtain relevant information in accordance with
the provisions of the Company's Articles of Association,
including:
(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:
(a) all parts of the register of shareholders;
(b) personal particulars of each of the Company's
directors, supervisors, general manager and other
senior officers, including:
(aa) present and former name and alias;
(bb) principal address (place of residence);
(cc) nationality;
(dd) primary and all other part-time occupations
and duties;
(ee) identification documents and the numbers
thereof;
(c) report on the state of the Company's share
capital;
(d) 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 end
16
of the last accounting year and the aggregate
amount paid by the Company for this purpose;
(e) minutes of shareholders' general meetings;
(6) in the event of the termination or liquidation of the
Company, the right to participate in the distribution of
surplus assets of the Company in accordance with the number
of shares held;
(7) other rights conferred by laws, administrative regulations
and the Company's Articles of Association.
MP46
Article 52. The ordinary shareholders of the Company shall assume the
following obligations:
(1) to comply with the Company's Articles of Association;
(2) to pay subscription monies according to the number of shares
subscribed and the method of subscription;
(3) other obligations imposed by laws, administrative regulations
and the Company's 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.
MP47
Article 53. 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) to relieve a director or supervisor of his duty to act
honestly in the best interests of the Company;
(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 (but not limited 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 rights of other shareholders, including (but not
limited to) rights to distributions and voting rights (save
pursuant to a restructuring which has been submitted for
approval by the shareholders in a general meeting in
accordance with the Company's Articles of Association).
17
MP48
Article 54. 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 or 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.
CHAPTER 8: SHAREHOLDERS' GENERAL MEETINGS
MP49
Article 55. The shareholders' general meeting is the organ of authority of the
Company and shall exercise its functions and powers in accordance
with law.
MP50
Article 56. 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 of directors;
(3) to elect and replace supervisors who represent the
shareholders and to decide on matters relating to the
remuneration 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 proposed preliminary and
final annual financial budgets;
(7) to examine and approve the Company's profit distribution
plans and loss recovery plans;
(8) to decide on the increase or reduction of the Company's
registered capital;
(9) to decide on matters such as merger, division, dissolution
and
18
liquidation of the Company;
(10) to decide on the issue of debentures by the Company;
(11) to decide on the appointment, dismissal and non-reappointment
of the accountants of the Company;
(12) to amend the Company's Articles of Association;
(13) to consider motions raised by shareholders who represent 5 %
or more of the total number of voting shares of the Company;
(14) to decide on other matters which, according to law,
administrative regulation or the Company's Articles of
Association, need to be approved by shareholders in general
meetings;
The shareholders in a general meeting may authorize the board of
directors to carry out matters on their behalf, or may
sub-delegate the carrying out of such matters to the board of
directors.
MP51
Article 57. The Company shall not, without the prior approval of shareholders
in a general meeting, enter into any contract with any person
(other than a director, supervisor, general manager and other
senior officers) 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.
MP52
Article 58. Shareholders' general meetings are divided into annual general
meetings and extraordinary general meetings. Shareholders' general
meetings shall be convened by the board of directors. Annual
general meetings are held once every year and within six (6)
months from the end of the preceding financial year.
The board of directors shall convene an extraordinary general
meeting within two (2) months of 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) holding 10 % or more of the Company's
issued and outstanding voting shares request(s) in writing
for the convening of an extraordinary general meeting;
(4) whenever the board of directors deems necessary or the
supervisory committee so requests;
19
Opinion
C6
MP53
(5) whenever two or more independent directors so request.
Article 59. When the Company convenes a shareholders' general meeting,
written notice of the meeting shall be given forty-five (45)
days 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. A shareholder who intends to attend the meeting
shall deliver to the Company his written reply concerning
his attendance at such meeting twenty (20) days before the
date of the meeting.
MP54
Article 60. When the Company convenes a shareholders' annual general
meeting, shareholder(s) holding 5% or more of the total
voting shares of the Company shall have the right to propose
new motions in writing, and the Company shall place such
proposed motions on the agenda for such annual general
meeting if they are matters falling within the functions and
powers of shareholders in general meetings.
MP55
Article 61. The Company shall, based on the written replies which it
receives from the shareholders twenty (20) days before
the date of the shareholders' general meeting, calculate the
number of voting shares represented by the shareholders 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 meeting; if not,
then the Company shall, within five (5) days, notify the
shareholders 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 meeting after publication of such
announcement.
A shareholders' extraordinary general meeting shall not
decide on any matter not stated in the notice for the
meeting.
MP56
Article 62. A notice of a meeting of the shareholders of the Company
shall satisfy the following criteria:
(1) be in writing;
(2) specify the place, date and time of the meeting;
(3) state the matters to be discussed at the meeting;
(4) provide such information and explanation as are
necessary for the shareholders to make an informed
decision on the proposals put before them. Without
limiting the generality of the foregoing, where a
proposal is made to amalgamate the Company with another,
to repurchase the shares of the Company, to reorganise
its share capital, or to restructure the Company in any
other way, the terms of the proposed transaction must be
provided in detail
20
together with copies of the proposed agreement, if any,
and the cause and effect of such proposal must be
properly explained;
(5) contain a disclosure of the nature and extent, if any,
of the material interests of any director, supervisor,
general manager and other senior officers 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 conspicuous statement that a shareholder
entitled to attend and vote at such meeting is entitled
to appoint one (1) or more proxies to attend and vote at
such meeting on his behalf and that a proxy need not be
a shareholder;
(8) specify the time and place for lodging proxy forms for
the relevant meeting.
MP57,
App.3
7 (1)
Article 63. Notice of shareholders' general meetings shall be served
on each shareholder (whether or not such shareholder is
entitled to vote at the meeting), by personal delivery or
prepaid airmail to the address of the shareholder as shown
in the register of shareholders. For the holders of
Domestic-Invested Shares, notice of the meetings may also be
issued by way of public announcement.
The public announcement referred to in the preceding
paragraph shall be published in one (1) or more national
newspapers designated by the securities authority of the
State Council within the interval of forty-five (45) days to
fifty (50) days before the date of the meeting; after the
publication of such announcement, the holders of
Domestic-Invested Shares shall be deemed to have received
the notice of the relevant shareholders' general meeting.
MP58
Article 64. The accidental omission to give notice of a meeting to, or
the failure to receive the notice of a meeting by, any
person entitled to receive such notice shall not invalidate
the meeting and the resolutions adopted thereat.
MP59
Article 65. 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 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;
21
(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.
Opinion of,
Hong Kong
Clearing
If the shareholder is the recognized clearing house defined by
the Securities and Futures (Clearing Houses) Ordinance (Hong Kong
Law Chapter 420), such shareholder is entitled to appoint one or
more persons as his proxies to attend on his behalf at a general
meeting or at any class meeting, but, if one or more persons have
such authority, the letter of authorization shall contain the
number and class of the shares in connection with such
authorization. Such person can exercise the right on behalf of
the recognized clearing house (or its attorney) as if he is the
individual shareholder of the Company.
MP60
App.3
11(2)
Article 66. The instrument appointing a proxy shall be in writing under the
hand of the appointor or his attorney duly authorized in writing,
or if the appointor is a legal entity, either under seal or under
the hand of a director or a duly authorized attorney. The letter
of authorization shall contain the number of the shares to be
represented by the attorney. If several persons are authorized as
the attorney of the shareholder, the letter of authorization
shall specify the number of shares to be represented by each
attorney.
MP61
Article 67. The instrument appointing a voting proxy and, if such instrument
is signed by a person under a power of attorney or other
authority on behalf of the appointor, a notarially certified copy
of that power of attorney or other authority shall be deposited
at the residence of the Company or at such other place as is
specified for that purpose in the notice convening the meeting,
not less than twenty-four (24) hours before the time for holding
the meeting at which the proxy propose to vote or the time
appointed for the passing of the resolution.
If the appointor is a legal person, its legal representative or
such person as is authorized by resolution of its board of
directors or other governing body may attend any meeting of
shareholders of the Company as a representative of the appointor.
MP62
App.3
11(1)
Article 68. Any form issued 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.
MP63
Article 69. A vote given in accordance with the terms of a proxy shall be
valid notwithstanding the death or loss of capacity of the
appointor or revocation
22
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.
MP63
Article 70. A proxy attending a shareholder's general meeting shall present
his identity certification and the proxy form signed by the
appointor or the legal representative of the appointor. The proxy
form shall specify the issuing date. If a shareholder as a legal
person appoints its legal representative to attend a meeting,
such legal representative shall present his identity
certification and a notarially certified copy of the resolutions
of such shareholder's board of directors or other authorities in
respect of the appointment of the proxy or any other copy
certified in a manner accepted by the Company.
MP64
Article 71. 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 proxies) 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 proxies) present at the meeting.
Shareholders (including proxies) shall expressly specify they are
in favour of or against any matter under voting. Any abstention
from or waiver of voting shall not be regarded as valid votes
when the Company counts the votes in respect of the relevant
matter.
MP65
Article 72. 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. Each share
shall have one (1) vote.
MP66
Article 73. 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 (including proxies)
representing 10 % or more of shares (held solely or in
combination) carrying the right to vote at the meeting,
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
23
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.
MP67
Article 74. 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.
MP68
Article 75. 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.
MP69
Article 76. 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.
MP70
Article 77. 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) election or removal of members of the board of directors
and members of the supervisory committee, their
remuneration and manner of payment;
(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.
MP71
Article 78. 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;
24
(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) amendment to rights of shareholders of any class; and
App.3
6(2)
(6) any other matter considered by the shareholders in general
meeting, and resolved by way of an ordinary resolution,
which is of a nature which may have a material impact on
the Company and should be adopted by special resolution.
Article 79 Any resolution adopted by a shareholders' general meeting shall
comply with relevant provisions of PRC laws, administrative
regulations and these Articles of Association.
MP72
Article 80. Shareholders who request for the convening of an extraordinary
general meeting or a class meeting shall comply with the
following procedures:
(1) Two (2) or more shareholders holding in aggregate 10 % or
more of the shares carrying the right to vote at the
meeting sought to be held shall sign one (1) or more
counterpart requisitions stating the object of the meeting
and requiring the board of directors to convene a
shareholders' extraordinary general meeting or a class
meeting thereof. The board of directors shall as soon as
possible proceed to convene the extraordinary general
meeting of shareholders or a class meeting thereof after
receipt of such requisition(s). The amount of
shareholdings referred to above shall be calculated as at
the date of deposit of the requisition(s).
(2) If the board of directors fails to issue a notice of such
a meeting within thirty (30) days from the date of receipt
of the requisition(s), the requisitionists may themselves
convene such a meeting (in a manner as similar as possible
to the manner in which shareholders' meetings are convened
by the board of directors) within four (4) months from the
date of receipt of the requisition(s) by the board of
directors.
Any reasonable expenses incurred by the requisitionists by reason
of failure by the board of directors to duly convene a meeting
shall be repaid to the requisitionists by the Company and any sum
so repaid shall be set-off against sums owed by the Company to
the defaulting directors.
MP73
Article 81 The Chairman of the board of directors shall convene and chair
every shareholders' general meeting. If the Chairman is unable to
attend the meeting for any reason, the vice-chairman of the board
of directors shall convene and chair the meeting. If both the
Chairman and vice-chairman of the board of directors are unable
to attend the meeting, then the board of
25
directors may designate a director to convene and chair the
meeting. If no chairman of the meeting has been so designated,
shareholders present shall choose one (1) person to act as the
chairman of the meeting. If for any reason, the shareholders
shall fail to elect a chairman, then the shareholder (including a
proxy) holding the largest number of shares carrying the right to
vote thereat shall be the chairman of the meeting.
MP74
Article 82. 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 minute book.
MP75
Article 83. 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.
MP76
Article 84. If votes are counted at a shareholders' general meeting, the
result of the count shall be recorded in the minute book.
The Company secretary shall make the record of the shareholders'
general meeting, which shall be signed by directors attending the
meeting.
Resolutions adopted by a shareholders' general meeting shall be
included in the minutes of the meeting. The record and minutes of
the meeting shall be in Chinese. Such record and minutes,
shareholders' attendance lists and proxy forms shall be kept at
the Company's place of residence.
MP77
Article 85. 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
MP78
Article 86. 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
26
Association.
MP79
App.3
6(2)
Article 87. Rights conferred on any class of shareholders 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 convened in accordance with
Articles 89 to 93.
MP80
Article 88. 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 equal
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 particular currencies attached to shares of
that class;
(7) to create a new class of shares having voting or equity
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 allot and 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.
27
MP81
Article 89. Shareholders of the affected class, 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 88, 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 30, a "controlling shareholder" within the
meaning of Article 54;
(2) in the case of a repurchase of shares by an off-
market agreement pursuant to Article 30, 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.
MP82
Article 90. 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 89, are entitled to vote
thereat.
MP83
Article 91. 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. 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.
MP84
Article 92. Notice of class meetings need only be served on shareholders
entitled to vote thereat.
28
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 93. 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:
MP85
C.3 Zheng
Jian Hai
Han
App.13 Pt.D 1f
(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
App.13 Pt.D 1f(ii)
(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 authority of the State Counsel.
CHAPTER 10: BOARD OF DIRECTORS
MP86
Opinions 6
Article 94. The Company shall have a board of directors. The board of
directors shall consist of eleven to twelve (11-12)
directors, of which at least two shall be independent
(non-executive) directors (meaning directors who are
independent from the Company's shareholders and do not hold
office in the Company hereinafter).
The board of directors shall have one (1) Chairman.
Where necessary, the board of directors may establish audit,
wages and other specialised committees.
MP87,
C.4 Zheng
Jian Hai
Han [1995]
No. 1
App.3
4(4),4(5)
Article 95. Directors shall be elected at the shareholders' general
meeting each for a term of three (3) years. At the expiry of
a director's term, the term is renewable upon re-election.
A written notice of the intention to propose a person for
election as a director and a notice in writing by that
person indicating his acceptance of such election shall have
been given to the Company seven (7) days before the date of
such shareholders' general meeting.
29
Nine (9) members of the first board of directors shall be
nominated by the promoters of the Company and elected at the
Company's inaugural meeting. The number of directors elected
for each subsequent board of directors shall not be less
than that stipulated in Article 94 or more than the maximum
determined at the shareholders' general meeting by an
ordinary resolution. Where the number of directors elected
by voting exceeds the maximum number of directors proposed,
directors shall be appointed according to the maximum number
proposed and on the basis that those who get the highest
votes shall be appointed.
C4 Zheng Jian
Hai Han No. 1
App3
4(3)
Subject to compliance with all relevant laws and
administrative regulations, the shareholders' general
meeting may by ordinary resolution remove any director
before the expiration of his term of office. However, the
director's right to claim for damages which arises out from
his removal shall not be affected thereby.
The Chairman shall be elected and removed by more than
one-half of all of the members of the board of directors.
The term of office of each of the Chairman is three (3)
years, which term is renewable upon re-election.
The outside directors shall have sufficient time and
necessary knowledge and ability to perform its duties. When
an outside director performs his duties, the Company must
provide necessary information and independent
(non-executive) directors may directly report to the
shareholders' meeting, the securities regulatory authority
under the State Council and other relevant departments
thereon.
Opinions 6
The executive directors shall handle matters as authorized
by the board of directors.
The Directors shall not be required to hold shares in the
Company.
MP88
Article 96. The board of directors is accountable to the shareholders in
general meeting and exercises 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 preliminary and final
annual financial budgets;
30
(5) to formulate the Company's profit distribution
proposal and loss recovery proposal;
(6) to formulate the Company's debt and financial
policies, proposals for the increase or reduction of
the Company's registered capital and for the issuance
of the Company's debentures;
(7) to draw up the Company's material acquisition and
disposal proposals and plans for the merger, division
or dissolution of the Company;
(8) to decide on the Company's internal management
structure;
(9) to appoint or remove the Company's general manager
and to appoint or remove the deputy general managers,
and financial deputy general manager of the Company),
based on the recommendations of the general manager;
to appoint and remove the secretary of the board of
directors, and to decide on their remuneration;
to appoint or replace members of the board of
directors and supervisory committee of the Company's
wholly-owned subsidiaries, to appoint, replace or
recommend shareholders' representatives, directors
and supervisors of the subsidiaries controlled by the
Company or subsidiaries in which the Company holds
interest;
(10) to decide on the establishment of the Company's
branch organisations;
(11) to formulate proposals for any amendment of the
Company's Articles of Association;
(12) to formulate the basic management structure of the
Company;
(13) except matters that the Company Law and these
Articles of Association require to be resolved by the
shareholders in general meeting, to decide on other
important and administrative matters of the Company
and to execute other important agreements;
(14) to exercise any other powers conferred by the
shareholders in general meetings.
Other than the board of directors' resolutions in respect of
the matters specified in sub-paragraphs (6), (7) and (11) 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.
31
Opinions 6
Resolutions made by the board of directors on the Company's
connected transactions shall come into effect only after
they are signed by the independent (non-executive)
directors.
MP89
Article 97. The board of directors shall not, without the prior approval
of shareholders in a general meeting, dispose or agree to
dispose of any fixed assets of the Company where the
aggregate of the amount or value of the consideration for
the proposed disposition, and the amount or value of the
consideration for any such disposition of any fixed assets
of the Company that has been completed in the period of four
(4) months immediately preceding the proposed disposition,
exceeds 33 % of the value of the Company's fixed assets as
shown in the latest balance sheet which was tabled at a
shareholders' general meeting.
For the purposes of this Article, "disposition" includes an
act involving the transfer of an interest in assets but does
not include the usage of fixed assets for the provision of
security.
The validity of a disposition by the Company shall not be
affected by any breach of the first paragraph of this
Article.
Opinions 4
Before the board of directors makes a decision on market
development, merger and acquisition, investment in new
areas, etc., in relation to projects involving investment or
acquisition or merger amounting to more than 10% of the
total assets of the Company, an independent consulting
agency shall be engaged to provide professional opinions
which shall be an important basis of the decisions of the
board of directors.
MP90
Article 98. The Chairman of the board of directors shall exercise the
following powers:
(1) to preside over shareholders' general meetings and to
convene and preside over meetings of the board of
directors;
(2) to organise the implementation of the duties of the
board of directors and to check on the implementation
of resolutions passed by the board of directors at
directors' meetings;
(3) to sign the securities certificates issued by the
Company;
(4) to exercise other powers conferred by the board of
directors.
When the Chairman is unable to exercise his powers, such
powers shall be exercised by the executive director who has
been designated by the Chairman to exercise such powers on
his behalf.
MP91
Article 99. Meetings of the board of directors shall be held at least
twice every year and shall be convened by the Chairman of
the board of directors. All of the directors should be
notified about the meeting ten (10) days beforehand. Where
there is an urgent matter, an extraordinary meeting of the
board of
32
directors may be held if it is so requested by six (6) of
the directors, the Chairman of the board of directors or the
Company's general manager, not subject to the provisions of
Article 100 on notice of the meetings.
The meetings of the board of directors shall be conducted in
Chinese and where necessary, may have an interpreter to
provide Chinese and English translation during the meetings.
MP92
Article 100. Notice of meetings of the board of directors shall be
delivered as follows:
(1) For regular meetings of the board of directors of
which the time and venue have been stipulated by the
board of directors beforehand, no notice of the
convening of such meetings will be needed.
(2) For meetings of the board of directors of which the
time and venue have not been decided by the board of
directors beforehand, the Chairman of the board of
directors shall notify the directors of the time and
venue of such meeting 10 days in advance by telex, by
telegram, by facsimile, by express delivery service
or by registered mail or in person, unless otherwise
provided for in Article 99.
(3) Notice of meetings may be served in Chinese, with an
English translation attached thereto when necessary,
and in each case accompanied by a meeting agenda. A
director may waive his right to receive notice of a
board meeting.
Opinions 3
Article 101. All the executive and outside directors must be notified
about the important matters that must be decided by the
board of directors within the time limit stipulated in
Article 100 and sufficient materials must be provided at the
same time in strict compliance with the required procedures.
Directors may request for supplementary information. If more
than one-fourth of the directors or more than two outside
directors consider that the materials provided are not
sufficient or supporting arguments are not clear, they may
jointly propose to postpone the meeting or postpone the
discussion of certain matters on the agenda of the meeting
and the board of directors shall accept such proposal.
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.
Any regular or extraordinary meeting of the board of
directors may be held by way of telephone conferencing or
similar communication equipment so long as all directors
participating in the meeting can clearly hear and
communicate with each other. All such directors shall be
deemed to be present in person at the meeting.
MP93
Article 102. A board of directors meeting shall only be convened if more
than half of the board of directors are present (including
any directors appointed
33
pursuant to Article 103 to attend the meeting as the
representatives of other directors). Each director has one
vote. Any resolution requires the affirmative votes of more
than half of all the board of directors in order to be
passed. In the case of equal division of votes, the Chairman
of the board of directors is entitled to a casting vote.
MP94
Article 103. 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
the authorization.
A Director appointed as the 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 the
representative to attend the meeting on his behalf, he shall
be deemed to have waived his right to vote at the meeting.
Expenses incurred by a director for attending a meeting of
the board of directors shall be paid by the Company. These
expenses include the costs of transportation between the
premises of the director and the venue of the meeting in
different cities and accommodation expenses during the
meeting. Rent of the meeting place, local transportation
costs and other reasonable out-of-pocket expenses shall be
paid by the Company.
Article 104. The board of directors may accept a written resolution in
lieu of a board meeting provided that a draft of such
written resolution shall be delivered to each director in
person, by mail, by telegram or by facsimile. If the board
of directors has delivered such proposed written resolution
to all the directors and the directors who signed and
approved such resolution have reached the required quorum,
and the same have been delivered to the secretary of the
board of directors, such resolution shall become a board
resolution and there is no need to hold a board meeting.
MP95
Opinions 6
Article 105. The board of directors shall keep minutes of resolutions
passed at meetings of the board of directors in Chinese.
Opinions of the independent (non-executive) directors shall
be clearly stated in the resolutions of the board of
directors. The minutes of each board meeting shall be
provided to all the directors promptly, Directors who wish
to amend or supplement the minutes shall submit the proposed
amendments to the Chairman in writing within one week after
receipt of the meeting minutes. The minutes shall be signed
by the directors present at the meeting and the person who
recorded the minutes after they are finalised. The minutes
of board meetings shall be kept at the premises of the
Company in the PRC and a complete copy of the minutes shall
be promptly sent to each director.
The directors shall be liable for the resolutions of the
board of directors. If a resolution of the board of
directors violates the laws, administrative
34
regulations or the Company's Articles of Association and the
Company suffers serious losses as a result thereof, the directors
who participated in the passing of such resolution are liable to
compensate the Company therefor. However, if it can be proven
that a director expressly objected to the resolution when the
resolution was voted on, and that such objection was recorded in
the minutes of the meeting, such director may be released from
such liability.
CHAPTER 11: SECRETARY OF THE BOARD OF DIRECTORS
MP96
Article 106. The Company shall have one (1) secretary of the board of
directors. The secretary shall be a senior officer of the
Company.
Where necessary, the board of directors may establish a
secretariat of the board of directors.
MP97
Article 107. 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 appointed by the board of directors.
Practice Guide
for Secretary
Chapter 1
The main tasks of the secretary of the board of directors
include:
(1) assist the directors in the day-to-day work of the board of
directors, continuously provide the directors with, warn
the directors of and ensure that the directors understand
the regulations, policies and requirements of the foreign
and domestic regulatory authorities on the operation of the
Company, assist the directors and the general manager in
effectively implement relevant foreign and domestic laws,
regulations, the Company's Articles of Association and
other relevant regulations;
(2) responsible for the organization and preparation of
documents for board meetings and shareholders' meetings,
take proper meeting minutes, ensure that the resolutions
passed at the meetings comply with statutory procedures and
know about the implementation of the resolutions of the
board of directors;
(3) responsible for the organization and coordination of
information disclosure, coordinate the relationship with
investors and increase transparency of the Company;
(4) participate in the structuring of financing through capital
market;
(5) deal with intermediaries, regulatory authorities and media,
maintain good public relations work.
35
Practice
Guide for
Secretary
Chapter 2
Duties of the secretary of the board of directors include:
(1) to organise and prepare for the board meetings and
shareholders' meetings, to prepare documents for the
meetings, to make relevant arrangements for the meetings,
to be responsible for taking meeting minutes, to keep
meeting documents and minutes and take initiative to know
about the implementation of relevant resolutions; to report
to and advise the board of directors on important issues in
implementation.
(2) to ensure that important decisions of the board of
directors will be implemented in strict compliance with the
required procedures; to participate in, and organise the
consultation and analysis of matters to be decided by the
board of directors and provide relevant advice and
recommendations thereon; to carry out the day-to-day work
of the board of directors and its relevant committees upon
authorization.
(3) to act as a contact between the Company and securities
regulatory authority, to be responsible for the
organisation of the preparation and timely submission of
documents required by the regulatory authorities,
responsible for undertaking the tasks given by the
regulatory authorities and organising the accomplishment
thereof.
(4) to be responsible for coordinating and organizing the
Company's information disclosure, to set up a sound
information disclosure system, participate in all the
meetings of the Company in relation to information
disclosure, to timely obtain import important business
decisions and relevant information of the Company.
(5) to be responsible for keeping confidential price sensitive
information of the Company and formulating effective
confidentiality rules and measures; to take necessary
remedial measures in the event of the disclosure for
whatever reasons of any price sensitive information of the
Company, to make prompt explanations and clarifications and
notify the regulatory authority of the overseas listing
place and CSRC thereof.
(6) to be responsible for the coordination and organisation of
market promotions, to coordinate visits to the Company, to
deal with relationship with investors, to maintain contact
with investors, intermediaries and media, to be responsible
for coordinating and answering questions raised by the
public, to ensure that the investors promptly obtain the
information disclosed by the Company; to organise and
prepare for marketing and promotion activities outside and
in the PRC, to draw up a summary report on market promotion
activities and important visits to the Company and organise
the reporting of the same to CSRC.
36
(7) to be responsible for administering and keeping the
register of the members of the Company, register of the
directors of the Company, shareholding of major
shareholders and directors and list of the holders of the
outstanding debentures of the Company in issue.
(8) to assist the directors and the general manager in
implementing foreign and domestic laws, regulations, the
Company's Articles of Association and other relevant
regulations in exercising their powers. After becoming
aware that any resolutions made or likely to be made by the
Company are in breach of relevant regulations, the
secretary is obliged to give prompt warnings and entitled
to report such facts to CSRC and other regulatory
authorities.
(9) to coordinate the provision of necessary information
required for exercising supervisory functions to the
Company's supervisory committee and other examination body.
(10) to exercise other powers and duties authorized by the board
of directors and other powers and duties required in the
overseas listing jurisdiction.
MP98
Article 108. A director or other senior officer of the Company may also act as
the secretary of the board of directors. The certified public
accountancy firm which has been appointed by the Company to act
as its auditors shall not act as the secretary of the board of
directors.
Where the office of secretary is held concurrently by a director,
and an act is required to be done by a director and a secretary
separately, the person who holds the office of director and
secretary may not perform the act in a dual capacity.
Article 109. The secretary of the board of directors shall diligently exercise
his duties in accordance with the relevant provisions of these
Articles of Association.
The secretary of the board of directors shall assist the Company
in complying with the relevant PRC laws and the rules of the
securities exchange on which the shares of the Company are
listed.
CHAPTER 12: GENERAL MANAGER
MP99
Article 110. The Company shall have a general manager who shall be appointed
or dismissed by the board of directors.
The Company shall have several deputy general managers and one
financial deputy general manager who shall assist the General
Manager. The deputy general managers and financial deputy general
manager shall be nominated by the general manager and appointed
or dismissed by the board of the directors.
37
A member of the board of directors may act concurrently as the
general manager or a deputy general manager.
MP100
Article 111. The general manager shall be accountable to the board of
directors and shall exercise the following functions and powers:
(1) to be in charge of the Company's production, operation and
management and to organise the implementation of the
resolutions of the board of directors;
(2) to organise 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 Company's
branch organisations;
(5) to draft the Company's basic management system;
(6) to formulate basic rules and regulations for the Company;
(7) to propose the appointment or dismissal of the deputy
general managers and financial deputy general manager of
the Company;
(8) to appoint or dismiss management personnel other than those
required to be appointed or dismissed by the board of
directors;
(9) other powers conferred by the Company's Articles of
Association and the board of directors.
MP101
Article 112. The general manager who is not a director shall be entitled to
attend meetings of the board of directors and receive relevant
documents. The general manager who is not a director does not
have any voting rights at board meetings.
Article 113. In performing their duties and powers, the general manager,
deputy general managers and financial deputy general manager
shall not depart from the resolutions of the shareholders'
meetings and the board of directors or exceed their authority.
MP102
Article 114. In performing their duties and powers, the general manager,
deputy general managers and financial deputy general manager
shall act honestly and diligently and in accordance with laws,
administrative regulations and the Company's Articles of
Association.
38
Article 115. The general manager, deputy general managers, financial deputy
general manager and other senior officers who wish to resign
shall give a three- month written notice to the board of
directors. Department managers who wish to resign shall give a
two-month written notice to the general manager.
CHAPTER 13: SUPERVISORY COMMITTEE
MP103
Article 116. The Company shall have a supervisory committee. The supervisory
committee is a permanent supervisory body of the Company
responsible for supervising the board of directors and its
members, the general manager, deputy general managers, financial
deputy general manager and other senior officers of the Company
to prevent them from abusing their powers and infringing the
legitimate rights and interests of the shareholders, the Company
and its employees.
MP104,
Opinions 7
Article 117. The supervisory committee shall compose of five (5) supervisors
including one outside supervisor (hereinafter meaning supervisors
who do not hold office in the Company).
The supervisory committee shall have one (1) chairman. Each
supervisor shall serve for a term of three (3) years, which term
is renewable upon re-election and re-appointment.
The election or removal of the chairman of the supervisory
committee shall be determined by the affirmative votes of
two-thirds or more of the members of the supervisory committee.
C.5 Zheng
Jian Hai Han
APP 13 Pt D
1d(i)
The chairman of the supervisory committee shall organise the
implementation of the duties of the supervisory committee.
MP105
Opinions 7
Article 118. The supervisory committee shall include four (4) supervisors who
shall represent the shareholders (hereinafter including qualified
outside supervisors and independent supervisors) and one (1)
supervisor who shall represent the employees. Supervisors who
represent the shareholders shall be elected or removed by the
shareholders in general meetings, and the supervisor who
represents employees shall be elected or removed by the employees
democratically.
Where necessary, the supervisory committee may establish an
office responsible for the day-to-day work of the supervisory
committee.
MP106
Article 119. The directors, general manager, deputy general managers and
financial deputy general manager of the Company shall not act
concurrently as supervisors.
MP107
Article 120. Meetings of the supervisory committee shall be held at least
twice every year, and shall be convened by the chairman of the
supervisory committee.
39
MP108
Article 121. The supervisory committee shall be accountable to the
shareholders in a general meeting and shall exercise the
following functions and powers in accordance with law:
(1) to review the Company's financial position;
(2) to supervise the directors, general manager, deputy general
managers, financial controller and other senior officers to
ensure that they do not act in contravention of any law,
regulation or the Company's Articles of Association;
(3) to demand any director, general manager, deputy general
manager, financial controller or any other senior officer
who acts in a manner which is harmful to the Company's
interest to rectify such behaviour;
(4) to check 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 accountants and
practising auditors to assist in the re-examination of such
information should any doubt arise in respect thereof;
(5) to propose to convene an extraordinary general meeting;
(6) to represent the Company in negotiations with or in
bringing actions against a director;
(7) other functions and powers specified in the Company's
Articles of Association.
Opinions 7
The supervisory committee may provide its opinions on the
appointment of accountancy firm by the Company, may appoint
another accountancy firm in the name of the Company when
necessary to examine financial affairs of the Company
independently, and may directly report relevant information to
the securities authorities of the State Council and other
relevant authorities.
Outside supervisors shall report independently to the
shareholders' meeting on whether the senior officers perform
their duties honestly and diligently.
Supervisors shall attend meetings of the board of directors as
observers
MP109,
C.6 Zheng
Jian Hai
Han [1995]
Article 122. Resolutions of the supervisory committee shall be passed by the
affirmative vote of more than two-thirds of all of its members.
40
No. 1
App.13 Pt.D
1(d)(ii)
MP110
Article 123. All reasonable fees incurred in respect of the employment of
professionals (such as, lawyers, certified public accountants or
practising auditors) which are required by the supervisory
committee in the exercise of its functions and powers shall be
borne by the Company.
MP111
Article 124. A supervisor shall carry out his duties honestly and faithfully
in accordance with laws, administrative regulations and the
Company's Articles of Association.
CHAPTER 14: THE QUALIFICATIONS AND DUTIES OF THE DIRECTORS,
SUPERVISORS, GENERAL MANAGER AND OTHER SENIOR OFFICERS OF
THE COMPANY
MP112
Article 125. A person may not serve as a director, supervisor, general manager
or any other senior officer of the Company if any of the
following circumstances apply:
(1) a person who does not have or who has limited capacity for
civil conduct;
(2) a person who has been sentenced for corruption, bribery,
infringement of property or misappropriation of property or
other crimes which disrupt the social economic order, where
less than a term of five (5) years has lapsed since the
sentence was served, 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
manager 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 revocation of the business licence;
(5) a person who has a relatively large amount of debts which
have become overdue;
41
(6) a person who is currently under investigation by judicial
organs for violation of criminal law;
(7) a person who, according to laws and administrative
regulations, cannot act as a leader of an enterprise;
(8) a person other than a natural person;
(9) a person who has been convicted by the competent authority
for violation of relevant securities regulations and such
conviction involves a finding that such person has acted
fraudulently or dishonestly, where less than five (5) years
have lapsed from the date of such conviction.
MP113
Article 126. The validity of an act carried out by a director, the general
manager, deputy general managers, financial controller or other
senior officers of the Company on behalf of the Company as
against a bona fide third party, shall not be affected by any
irregularity in his office, election or any defect in his
qualification.
MP114
Article 127. 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, general manager and other senior officers
owes a duty to each shareholder, in the exercise of the functions
and powers entrusted to him by the Company:
(1) not to cause the Company to exceed the scope of business
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 (but not limited to) usurpation of opportunities
which benefit the Company;
(4) not to expropriate the individual rights of shareholders,
including (but not limited to) rights to distribution and
voting rights, save and except pursuant to a restructuring
of the Company which has been submitted to the shareholders
for approval in accordance with the Company's Articles of
Association.
MP115
Article 128. Each of the Company's directors, supervisors, general manager and
other senior officers 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.
MP116
Article 129. Each of the Company's directors, supervisors, general manager and
other senior officers shall exercise his powers or perform his
duties in accordance with the fiduciary principle; and shall not
put himself in a position where
42
his duty and his interest may conflict. This principle includes
(without limitation) discharging the following obligations:
(1) to act honestly 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 delegate
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 exploit his position to accept bribes or other
illegal income or expropriate the Company's property in
any way, including (but not limited 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 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 release any confidential information which he has
obtained during his term of office, without the informed
consent of the
43
shareholders in a general meeting; nor shall he use such
information otherwise than for the Company's benefit, save
that disclosure of such information to the court or other
governmental authorities is permitted if:
(i) disclosure is made under compulsion of law;
(ii) public interests so warrants;
(iii) the interests of the relevant director, supervisor,
general manager or other senior officer so
requires.
MP117
Article 130. Each director, supervisor, general manager and other senior
officer 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 child of the director, supervisor,
general manager or other senior officer;
(2) the trustee of the director, supervisor, general manager
or other senior officer or of any person described in
sub-paragraph (1) above;
(3) the partner of that director, supervisor, general manager
or other senior officer or any person referred to in
sub-paragraphs (1) and (2) of this Article;
(4) a company in which that director, supervisor, general
manager or other senior officer, 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, general manager and other senior
officers, has de facto controlling interest;
(5) the directors, supervisors, general manager and other
senior officers of a company which is being controlled in
the manner set out in sub-paragraph (4) above.
MP118
Article 131. The fiduciary duties of the directors, supervisors, general
manager and other senior officers of the Company do not
necessarily cease with the termination of their tenure. The duty
of confidentiality in respect of trade secrets of the Company
survives the termination of their tenure. Other duties may
continue for such period as the principle of fairness may require
depending on the amount of time which has lapsed between the
termination and the act concerned and the circumstances and the
terms under which the relationship between the relevant director,
supervisor, general manager and other senior officer on the one
hand and the Company on the other hand was terminated.
44
MP119
Article 132. Subject to Article 53 hereof, a director, supervisor, general
manager or other senior officer 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.
MP120
Article 133. Where a director, supervisor, general manager or other senior
officer 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 therefore is
otherwise subject to the approval of the board of directors.
APP 3
4(1)
A director shall not vote in respect of any contract, transaction
or arrangement in which he is materially interested and he shall
not be counted as part of the quorum of such meeting.
Unless the interested director, supervisor, general manager or
other senior officer discloses his interests in accordance with
the preceding sub-paragraph of this Article and he is not counted
as part of the quorum and refrains from voting, such contract,
transaction or arrangement 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 director,
supervisor, general manager or other senior officer.
A director, supervisor, general manager or other senior officer
of the Company is deemed to be interested in a contract,
transaction or arrangement in which his associate is interested.
MP121
Article 134. Where a director, supervisor, general manager or other senior
officer 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 declaration 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.
MP122
Article 135. The Company shall not pay taxes for or on behalf of a director,
supervisor, general manager or other senior officer in any
manner.
MP123
Article 136. 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, general manager or other senior officer
of the Company or of the Company's holding company or any of
their respective associates.
45
The foregoing prohibition shall not apply to the following
circumstances:
(1) the provision by the Company of a loan or a guarantee in
connection with the making of a loan 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 any of its directors, supervisors, general
manager and other senior officers 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 any of the
relevant directors, supervisors, general manager and other
senior officers or their respective associates in the
ordinary course of its business on normal commercial
terms.
MP124
Article 137. 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.
MP125
Article 138. A guarantee for the repayment of a loan which has been provided
by the Company acting in breach of Article 136(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 any of the directors,
supervisors, general manager and other senior officers of
the Company or 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.
MP126
Article 139. 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.
MP127
Article 140. In addition to any rights and remedies provided by the laws and
administrative regulations, where a director, supervisor, general
manager or other senior officer of the Company breaches the
duties which he owes to the Company, the Company has a right:
46
(1) to demand such director, supervisor, general manager or
other senior officer 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 director,
supervisor, general manager or other senior officer or
between the Company and a third party (where such third
party knows or should have known that such director,
supervisor, general manager other senior officer
representing the Company has breached his duties owed to
the Company);
(3) to demand such director, supervisor, general manager or
other senior officer to account for profits made as result
of the breach of his duties;
(4) to recover any monies which should have been received by
the Company and which were received by such director,
supervisor, general manager or other senior officer
instead, including (without limitation) commissions; and
(5) to demand repayment of interest earned or which may have
been earned by such director, supervisor, general manager
or other senior officer on monies that should have been
paid to the Company.
MP128
Article 141. The Company shall, with the prior approval of shareholders in a
general meeting, enter into a contract in writing with a director
or supervisor wherein his emoluments are stipulated. The
aforesaid emoluments include:
(1) emoluments in respect of his service as director,
supervisor or senior officer of the Company;
(2) emoluments in respect of his service as director,
supervisor or senior officer 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.
MP129
Article 142. 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
47
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 54 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 AND PROFIT
DISTRIBUTION
MP130
Article 143. 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.
MP131
Article 144. The fiscal year of the Company shall be on the basis of the solar
calendar beginning on 1 January and ending on 31 December of the
same year.
The Company shall use Renminbi as its standard unit of account.
The accounts shall be prepared 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.
MP132
App.3
5
Article 145. 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. Such
reports must be verified and certified.
MP133,
C.7 Zheng
Jian Hai
Han [1995]
No. 1
App.3
5
Article 146. 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 obtain a copy of the financial
reports referred to in this Chapter.
C.7 Zheng
The Company shall deliver or send to each shareholder of
Overseas-Listed
48
Jian Hai
Han [1995]
No. 1
App.3
5
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 before the date of every annual general
meeting of the shareholders.
MP134
Article 147. 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
after-tax profits, the lower of the two amounts shown in the
financial statements shall be adopted.
MP135
Article 148. 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.
MP136
Article 149. The Company shall publish its financial reports twice every
fiscal year, that is, the interim financial report shall be
published within sixty (60) days after the expiration of the
first six (6) months of each fiscal year; the annual financial
report shall be published within one hundred and twenty (120)
days after the expiration of each fiscal year.
MP137
Article 150. The Company shall not keep accounts other than those required by
law.
Article 151. When distributing its after-tax profits in a given year, the
Company shall contribute 10% of the profits to the Company's
statutory common reserve fund and 5% to 10% to the Company's
statutory welfare fund. Where the accumulated amount of the
statutory common reserve fund reaches 50% or more of the
registered capital of the Company, no further contribution is
required.
Where the statutory common reserve fund is insufficient to make
for the losses of the Company in the previous year, before making
contribution to the statutory common reserve fund and the
statutory welfare fund, the profits made in the current year
shall be used to make up for the losses first.
After making contribution to the statutory common reserve fund
from its after-tax profits, the Company may, subject to
resolutions adopted at a general meeting, make contributions to
discretionary common reserve funds.
After making up for the losses and making contributions to the
common reserve fund and statutory welfare fund, any remaining
profits shall be distributed to the shareholders in proportion to
their respective
49
shareholders.
APP 3
3(1),(2)
Article 152. The Company shall not allocate dividends or carry out other
allocations in the form of bonuses before it has compensated for
its losses and made allocations to the statutory common reserve
fund and the statutory common welfare fund. Dividends paid by the
Company shall not carry any interest except where the Company has
failed to pay the dividends to the shareholders on the date on
which such dividends become payable.
Any amount paid up in advance of calls on any share shall carry
interest, but shall not entitle the holder of the share to
receive, by way of advance payment, the dividend declared and
distributed thereafter
MP138
Article 153. Capital surplus fund includes the following items:
(1) premium on shares issued at a premium price;
(2) any other income designated for the capital surplus fund by
the regulations of the finance regulatory department of the
State Council.
Article 154. The common reserve funds (including the statutory common reserve
fund, discretionary common reserve funds and capital surplus
fund) of the Company shall be applied for making up for losses,
expanding the Company's production and operation or
capitalisation.
If a general meeting of the Company resolves to capitalise any
common reserve fund, the Company shall issue new shares to the
existing shares in proportion to their respective shareholdings
or increase the par value of each share provided that when
capitalising the statutory common reserve fund, the balance of
such fund shall not be less than 25% of the registered capital.
Article 155. The Company's statutory common welfare fund is used for the
collective welfare of the Company's employees.
MP139
Article 156. The Company may distribute dividends in the form of:
(1) cash;
(2) shares.
Article 157. The Company shall declare and pay cash dividends and other
amounts which are payable to holders of Domestic-Invested Shares
in Renminbi. The Company shall calculate and declare cash
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. The foreign exchange
required by the Company to pay cash
50
dividends and other amounts to holders of Overseas-Listed
Foreign-Invested Shares shall be obtained in accordance with the
relevant foreign exchange administrative regulations of the
State.
Article 158. Unless otherwise provided for in relevant laws and administrative
regulations, where cash dividends and other amounts are to be
paid in Hong Kong dollars, the applicable exchange rate shall be
the average closing rate for the relevant foreign currency
announced by the Peoples' Bank of China during the week prior to
the announcement of payment of dividend and other amounts.
Article 159. Subject to Article 56(2) and 96(14) of these Regulations, the
board of directors may decide to distribute interim or special
dividends.
Article 160. When distributing dividends to its shareholders, the Company
shall withhold and pay on behalf of its shareholders the taxes
levied on the dividends in accordance with the provisions of the
PRC tax law.
MP140,
App.13 Pt.D
1(c)
Article 161. 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.
C.8 Zheng
Jian Hai
Han [1995]
No. 1
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.
CHAPTER 16: APPOINTMENT OF ACCOUNTANCY FIRM
MP141
Article 162. 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 report and review the Company's other
financial reports.
The first auditors of the Company may be appointed before the
first annual general meeting of the Company at the inaugural
meeting. Auditors so appointed shall hold office until the
conclusion of the first annual general meeting.
If the inaugural meeting does not exercise the powers under the
preceding paragraph, those powers shall be exercised by the board
of directors.
MP142
Article 163. The accountancy firm appointed by the Company shall hold office
from the
51
conclusion of the annual general meeting of shareholders at which
they were appointed until the conclusion of the next annual
general meeting of shareholders.
MP143
Article 164. The accountancy firm 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,
general manager and other senior officers 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 accountancy firm.
MP144
Article 165. If there is a vacancy in the position of accountant of the
Company, the board of directors may appoint an accountancy firm
to fill such vacancy before the convening of the shareholders'
general meeting. Any other accountancy firm which has been
appointed by the Company may continue to act during the period
during which a vacancy arises.
MP145
Article 166. The shareholders in a general meeting may by ordinary resolution
remove the Company's accountancy firms before the expiration of
its term of office, irrespective of the provisions in the
contract between the Company and the Company's accountant firm.
However, the accountancy firm's right to claim for damages which
arise from its removal shall not be affected thereby.
MP146
Article 167. The remuneration of an accountancy 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
accountancy firm appointed by the board of directors shall be
determined by the board of directors.
MP147,
C.9 Zheng
Jian Hai
Han
App.13 Pt.D
1(e)
Article 168. The Company's appointment, removal or non-reappointment of an
accountancy firm shall be resolved by the shareholders in a
general meeting. Such resolution shall be filed with the
securities authority of the State Counsel.
Where a resolution at a general meeting of shareholders is passed
to appoint as accountant a person other than an incumbent
accountancy firm to fill a casual vacancy in the office of
accountant, to reappoint as accountant a retiring accountancy
firm that was appointed by the board of directors to fill
52
a casual vacancy, or to dismiss an accountancy firm before the
expiration of its term of office, the following provisions shall
apply:
(1) A copy of the appointment or removal proposal shall be sent
(before notice of meeting is given to the shareholders) to
the accountancy firm proposed to be appointed or proposing
to leave its post or the firm which has left its post in
the relevant fiscal year (leaving includes leaving by
removal, resignation and retirement).
(2) If the accountancy 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:
(a) in any notice of the resolution given to
shareholders, state the fact of the representations
having been made; and
(b) 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 send out the accountancy firm's
representations in the manner set out in sub-paragraph (2)
above, such accountancy firm may require that the
representations be read out at the meeting.
(4) An accountancy firm which is leaving its post shall be
entitled to attend the following shareholders' general
meetings:
(a) the general meeting at which its term of office
would otherwise have expired;
(b) the general meeting at which it is proposed to fill
the vacancy caused by its removal; and
(c) the general meeting which convened as a result of
its resignation,
and to receive all notices of, and other communications
relating to, any such meeting, and to speak at any such
meeting which concerns it as former auditor of the Company.
MP148,
C.10 Zheng
Jian Hai
Han [1995]
No. 1
App.13 Pt.D
1(e)
Article 169. Prior notice should be given to the accountancy firm if the
Company decides to remove such accountancy firm or not to renew
the appointment thereof. Such accountancy firm shall be entitled
to make representations at the shareholders' general meeting.
Where the accountancy firm resigns from its position, it shall
make clear to the shareholders in a general meeting whether there
has been any impropriety on the part of the
53
Company.
An accountancy firm may resign its office by depositing at the
Company's legal address 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.
The Company shall, within fourteen (14) days after receipt of the
notice referred to in the preceding paragraph, 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 accountancy 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
MP149
Article 170. In the event of the merger or division of the Company, a plan
shall be presented by the Company's board of directors and shall
be approved in accordance with the procedures stipulated in the
Company's Articles of Association. The Company shall then go
through the relevant approval process. 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.
MP150,
App.3
Article 171. The merger of the Company may take the form of either merger by
absorption or merger by the establishment of a new company.
54
7(1)
In the event of a merger, the merging parties shall execute a
merger agreement and prepare a balance sheet and an inventory of
assets. The Company shall notify its creditors within ten (10)
days of the date of the Company's merger resolution 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.
Upon the merger, rights in relation to debtors and indebtedness
of each of the merged parties shall be assumed by the company
which survives the merger or the newly established company.
MP151,
App.3
7(1)
Article 172. 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 of the date of the Company's
division resolution and shall publish a public notice in a
newspaper at least three (3) times within thirty (30) days of the
date of the Company's division resolution.
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.
MP152
Article 173. 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
MP153
Article 174. The Company shall be dissolved and liquidated upon the occurrence
of any of the following events:
(1) a resolution for 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
55
(4) the Company is ordered to close down because of its
violation of laws and administrative regulations.
MP154
Article 175. A liquidation committee shall be set up within fifteen (15) days
of the Company being dissolved pursuant to sub-paragraph (1) of
the preceding Article, and the composition of the liquidation
committee of the Company shall be determined by an ordinary
resolution of shareholders in a general meeting. If the Company
fails to set up the liquidation committee within the time limit,
the creditors may apply to the People's Court for appointment of
relevant persons to form a liquidation committee and carry out
liquidation.
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 organise the shareholders,
relevant organisations and relevant professional personnel to
establish a liquidation committee to carry out the liquidation.
Where the Company is dissolved under sub-paragraph (4) of the
preceding Article, the relevant governing authorities shall
organise the shareholders, relevant organisations and
professional personnel to establish a liquidation committee to
carry out the liquidation.
MP155
Article 176. 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 for the liquidation of the Company, all functions
and powers of the board of directors 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.
MP156,
Article 177. 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 in
a newspaper at least three (3) times.
MP157
Article 178. During the liquidation period, the liquidation committee shall
exercise the
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following functions and powers:
(1) to sort out 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 the
Company's debts have been repaid;
(7) to represent the Company in any civil proceedings.
MP158
Article 179. After it has sorted out 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 payment of liquidation expenses with priority, the
Company's assets shall be distributed in accordance with the
following sequence: (i) salaries and labour insurance expenses of
employees of the Company; (ii) outstanding taxes; (iii) bank
loans, and company bonds and other debts of the Company.
Any surplus assets of the Company remaining after payment
referred to in the preceding paragraph shall be distributed to
its shareholders according to the class of shares and the
proportion of shares held in the following sequence:
(1) In the case of preferential shares, distribution shall be
made to holders of such preferential shares according to
the par value thereof; if the surplus assets are not
sufficient to repay the amount of preferential shares in
full, the distribution shall be made to holders of such
shares in proportion to their respective shareholdings.
(2) In the case of ordinary shares, distribution shall be made
to holders of such shares in proportion to their respective
shareholdings.
During the liquidation period, the Company shall not commence any
new business activities.
MP159
Article 180. If after putting the Company's assets in order and preparing a
balance sheet
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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.
MP160
Article 181. 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
such confirmation, 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
MP161
Article 182. 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 183. In addition to provisions of Articles 60 and 80 hereof, the
following procedure shall be followed when amending the Company's
Articles of Association:
(1) The board of directors shall adopt a resolution thereon in
accordance with these Articles of Associations and prepare
a proposal for amendment of the Articles; or shareholders
may present a motion for amendment of the Articles;
(2) The foregoing proposal shall be furnished to the
shareholders and a shareholders' meeting shall be convened
for voting on it;
(3) The amendments presented to the shareholders' meeting shall
be adopted through a special resolution.
MP162
Article 184. Amendment of the Company's Articles of Association which involve
the contents of the Mandatory Provisions of Overseas-Listed
Companies'
58
Articles of Association shall become effective upon receipt of
approvals from the companies approving department authorized by
the State Council.
Article 185. Where amendments of the Articles of Association involve the
registered particulars of the Company, procedures for alteration
of registration shall be handled in accordance with the law.
CHAPTER 20: NOTICES
App.3
7(3)
Article 186. Unless as otherwise provided for in these Articles of
Association, all the notices, materials or written statements
issued by the Company to holders of Overseas-Listed
Foreign-Invested Shares shall be delivered by messenger or by
pre-paid mails to the registered address of each holder of such
shares.
Article 187. Where the notice is sent by mail, if it is clearly addressed,
pre-paid and put into an envelop, it shall be deemed delivered
when such envelop is put into a mail box, and shall be deemed
received 48 hours thereafter.
CHAPTER 21: DISPUTE RESOLUTION
MP163
Article 188. The Company shall abide by the following principles for dispute
resolution:
C.11 Zheng
Jian Hai
Han
(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, general
manager or other senior officers; or holders of the
Overseas-Listed Foreign-Invested Shares and holders of
Domestic-Invested Shares, in respect of any rights or
obligations arising from these Articles of Association, the
Company Law or any rights or obligations conferred or
imposed by the Company Law and other relevant laws and
administrative regulations concerning the affairs of the
Company, 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, the Company's
shareholders, directors, supervisors, general manager, or
other senior officers of the Company, comply with 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.
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(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 Centre 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 Centre, 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 Centre.
(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 award of an arbitral body shall be final and conclusive
and binding on all parties.
CHAPTER 22: SUPPLEMENTARY
App.3
7(2)
Article 189. The newspapers required by these Articles of Association for the
publication of announcements shall be those designated or
required by the relevant State laws and administrative
regulations. If it is necessary to make an announcement to
holders of Overseas-Listed Foreign-Invested Shares as required by
these Articles of Association, the relevant announcement shall at
the same time be published in the newspapers designated by the
Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited in accordance with the stipulation for
"press announcements" set out therein.
Article 190. The board of directors of the Company shall be responsible for
the interpretation of these Articles of Association, and the
shareholders in general meeting shall have the right to amend the
Articles of Association.
Article 191. These Articles of Association are written in Chinese. If there is
any discrepancy between the Chinese version and any other
translated versions, the Chinese version shall prevail.
Article 192. In these Articles of Association, reference to "accountancy firm"
shall have MP165 the same meaning as "auditor".
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