EXHIBIT 3.1
THE COMPANIES LAW (REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
AMENDED
MEMORANDUM OF ASSOCIATION
OF
CHINA GRENTECH CORPORATION LIMITED
(adopted by special resolution passed on 12 July, 2004)
1. The name of the Company is CHINA GRENTECH CORPORATION LIMITED.
2. The Registered Office of the Company is situated at the offices of Codan
Trust Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins
Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies.
3. The object for which the Company is established is to act and to perform
all the functions of a holding company and to co-ordinate the policy and
administration of Powercom (BVI) Limited and its subsidiaries and
affiliates in accordance with the terms of a Subscription and Shareholders'
Agreement dated 17 December 2003 between, among others, the Company, CDC
Group Plc, Standard Chartered Private Equity Limited and JAFCO Asia
Technology Fund.
4. The liability of each Shareholder is limited to the amount from time to
time unpaid on such Share(s) registered under the name of such Shareholder.
5. The authorised share capital of the Company is US$50,000 divided into
5,000,000 Shares of US$0.01 each.
6. The Company may amend this Memorandum of Association by a resolution of
Shareholders in accordance with the relevant provisions of the Subscription
and Shareholders Agreement and the Articles of Association.
7. Capitalised terms that are not defined in this Memorandum of Association
bear the same meanings as those given in the Articles of Association of the
Company.
COMPANIES LAW
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AN EXEMPTED COMPANY LIMITED BY SHARES
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ARTICLES OF ASSOCIATION
OF
CHINA GRENTECH CORPORATION LIMITED
(Adopted by written resolution passed on 12 July, 2005)
CONTENTS
PAGE
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CLAUSE
Preliminary.............................................................. 1
Share Capital............................................................ 9
The Preference Shares.................................................... 11
The Ordinary Shares...................................................... 17
Conversion............................................................... 18
General Provisions relating to Class Rights.............................. 19
Rights and Security Interests over Shares................................ 20
Transfer of Shares....................................................... 20
Tag-along Right.......................................................... 27
Proceedings at general meetings.......................................... 29
Votes of Members......................................................... 29
Number of Directors...................................................... 32
Alternate Directors...................................................... 32
Powers of Directors...................................................... 33
Delegation of Directors' powers.......................................... 33
Appointment and removal of Directors..................................... 34
Disqualification of Directors............................................ 34
Remuneration of Directors................................................ 34
Indemnity, benefits and insurance........................................ 35
Proceedings of Directors................................................. 35
The seal, deeds and certification........................................ 37
Record dates............................................................. 38
Notices.................................................................. 38
ii
COMPANIES LAW
----------
EXEMPTED COMPANY LIMITED BY SHARES
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ARTICLES OF ASSOCIATION
OF
CHINA GRENTECH CORPORATION LIMITED (the "COMPANY")
(Adopted by written resolution passed on 12 July, 2005)
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PRELIMINARY
1. The regulations in Table A in the schedule to the Act (Regulations for
Management of a Company Limited by Shares) (TABLE A) apply to the Company except
to the extent that they are excluded or modified by these Articles.
2. The following parts of Table A do not apply to the Company:
(a) in regulation 1, the final paragraph;
(b) regulations 18 to 21 (inclusive);
(c) regulations 33 and 34;
(d) regulation 51;
(e) regulations 53;
(f) regulations 58 to 60 (inclusive);
(g) regulations 63 to 65 (inclusive);
(h) regulation 70;
(i) regulation 71(e);
(j) regulations 72 to 82 (inclusive);
(k) regulation 84;
(l) regulation 95; and
(m) regulations 102 to 106 (inclusive);
3. In these Articles:
ACT means the Companies Law (2003 Revision) of the Cayman Islands including any
statutory modification or re-enactment thereof for the time being in force;
ARTICLES means these articles of association incorporating Table A (as
applicable to the Company), as altered from time to time by special resolution;
AUDITORS means the auditors of the Company from time to time;
BOARD OF DIRECTORS means the board of directors of the Company from time to time
or any duly appointed committee of it;
BUSINESS DAY means a day (other than Saturday or Sunday) on which banks
generally are open in Hong Kong for a full range of business;
BVI HOLDCOS means each of the Original BVI Holdcos together with any person
signing a Deed of Adherence as a result of a transfer by any of the Original BVI
Holdcos, in each case for so long as such BVI Holdco or its Permitted Transferee
remains a Shareholder (and BVI HOLDCO shall be construed accordingly);
CHANGE-OF-CONTROL means, with respect to a BVI Holdco or its Permitted
Transferee, any sale, assignment, transfer, pledge, hypothecation, mortgage,
encumbrance or other type of disposal, whether through one or a series of
transactions, by which a Founding Shareholder (or other BVI Holdco shareholder
who executes a deed of adherence to the transfer restrictions in the Articles)
ceases to hold 100% of the legal and beneficial interest of such BVI Holdco that
such shareholder holds as of the date of execution of the Subscription and
Shareholders Agreement;
COMPANY GROUP means the Company and the Subsidiaries from time to time;
COMPETITOR means any business operator on a list prepared by the Company that
the Company shall update each quarter (or more frequently, if necessary to
reflect the emergence of new competitors as a result of corporate mergers and
acquisitions, strategic alliances or joint ventures) and provide to the
Investors, provided that such list may consist of only those domestic PRC
business operators that are actual competitors and/or have similar customer base
as that of the Company Group in the markets in the PRC in which the Company
operates in respect of its principal products;
CONNECTED PERSON means:
(a) in relation to an individual, that individual's spouse, co-habitee,
children, grand-children, any Permitted Transferee of that individual and
any person to whom such individual has transferred; and
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(b) in relation to an undertaking, any member of that undertaking's group, any
Permitted Transferee of that undertaking;
CONTROLLING INTEREST in relation to an undertaking means:
(a) the ownership or control (directly or indirectly) of shares in that
undertaking carrying more than fifty per cent. (50%) of the votes
exercisable at general meetings of that undertaking on all, or
substantially all, matters; or
(b) the right to appoint or remove directors of that undertaking having a
majority of the voting rights exercisable at meetings of the board of
directors of that undertaking on all, or substantially all, matters;
CORPORATION means any body corporate or association of persons whether or not a
company within the meaning of the Act;
CO-SALE NOTICE has the meaning given to it in Article 44;
DEED OF ADHERENCE means a valid deed of adherence to the Subscription and
Shareholders' Agreement;
DIRECTOR means a director of the Company and THE DIRECTORS means the Company's
directors or any of them acting as the Board of Directors;
DIVIDEND means dividend or any other distribution;
ELECTRONIC COMMUNICATION means, unless the contrary is stated, an electronic
communication (as defined in the U.K. Electronic Communications Act 2000)
comprising writing;
ELECTRONIC SIGNATURE has the meaning given by section 7(2) of the U.K.
Electronic Communications Act 2000;
EB DIVIDEND means the amount of any dividend declared on the Ordinary Shares and
payable to the BVI Holdcos equal to amounts due and payable by the BVI Holdcos
to the Investors under the EB Subscription Agreement at the end of the Financial
Year for which such dividend on Ordinary Shares is declared;
EB PREMIUM means the amount of the EB Dividend corresponding to the entitlement
of the Exchangeable Bonds triggered by a dividend on Ordinary Shares that
produces Excess Return;
EB SUBSCRIPTION AGREEMENT means the agreement between the Original BVI Holdcos
and the Investors for the subscription of Exchangeable Bonds at an issue price
of US$20,700,000.
EMPLOYEE SCHEME means any scheme, trust or arrangement established by any member
of the Company Group for the benefit of the employees or former employees of the
Company and/or employees or former employees of any other member of the Company
Group;
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ENCUMBRANCE means any security interest, option, equity, claim or other third
party right (including, without limitation, right of pre-emption) of any nature
whatsoever;
EXCHANGEABLE BONDS means the bonds issued by the Original BVI Holdcos to the
Investors under the EB Subscription Agreement;
FAIR PRICE means the price agreed between a selling holder and the Board of
Directors (acting with I Director Consent) in respect of the Shares of such
selling holder or, in the absence of such agreement, in respect of each Ordinary
Share or Preference Share the price certified in writing by the Auditors as
being in their opinion the fair value of such Ordinary Share or Preference Share
as between a willing seller and a willing buyer provided that the Auditors, in
determining the fair value of any of such Share, shall:
(i) determine the sum which a willing buyer would offer to a willing
seller for all the Shares; and
(ii) for the Preference Shares, make such adjustment as they consider
necessary to allow for any rights attaching to the Preference Shares
to be transferred which may be outstanding including dividend,
redemption and conversion rights,
but so that there shall be no addition or subtraction of any premium or discount
by reference to the size of the holding the subject of the relevant transfer, or
in relation to any restrictions on the transferability of, or on the voting
rights attributable to, the Shares and provided further that the Auditors shall,
in determining the fair value, take into account any bona fide take-over offer
from any third party to purchase any holdings the subject of a transfer. In
certifying a fair value, the Auditors shall act as experts and not as
arbitrators;
FINANCIAL YEAR means a financial period of the Company commencing, other than in
the case of its initial financial period, on 1 January and ending on 31 December
and, in the case of the initial financial period, the Financial Year shall be
from the date of incorporation of the Company until 31 December 2004 (or as
amended from time to time with I Director Consent);
FOUNDING SHAREHOLDERS means Mr. Gao Yingjie (a PRC citizen with identification
number: 220103551226061 and Mr. Zhuang Kunjie (a PRC citizen with identification
number: 320102360606161);
GROUP means in relation to an undertaking (a) that undertaking and its
Subsidiaries from time to time and (b) the ultimate Holding company (if any) of
that undertaking from time to time and (c) every other company which from time
to time is a Subsidiary of the same ultimate Holding company;
HOLDING COMPANY means an undertaking which in relation to another undertaking, a
SUBSIDIARY:
(a) owns or controls (directly or indirectly) shares in the Subsidiary carrying
more than fifty per cent. (50%) of the votes exercisable at general
meetings of the Subsidiary on all, or substantially all, matters; or
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(b) has a right to appoint or remove a majority of its board of directors; or
(c) has the right to exercise a dominant influence over the Subsidiary:
(i) by virtue of the provisions contained in the Subsidiary's
constitutional documents; or
(ii) by virtue of a control contract; or
(d) controls alone or pursuant to an agreement with other shareholders or
members, a majority of the voting rights in the Subsidiary,
for the purposes of this definition:
(i) an undertaking shall be treated as a member of another undertaking if
(X) any of its Subsidiaries is a member of that undertaking; or (Y)
any shares in that undertaking are held by a person acting on behalf
of it or any of its Subsidiaries;
(ii) an undertaking shall be taken to have the right to exercise a dominant
influence over an undertaking only if it has a right to give
directions with respect to the operating and financial policies of
that other undertaking with which its directors are obliged to comply
whether or not they are for the benefit of that other undertaking;
(iii) control contract means a contract in writing conferring a dominant
influence right which:
(A) is of a kind authorised by the memorandum or articles of
association of the undertaking in relation to which the right is
exercisable; and
(B) is permitted by the law under which that undertaking is
established; and
(iii) any undertaking which is a Subsidiary of another undertaking shall
also be a Subsidiary of any further undertaking of which that other is
a Subsidiary;
I DIRECTORS means the Directors appointed by the Investors under these Articles
in accordance with the terms of the Subscription and Shareholders' Agreement or
their alternates from time to time (and I DIRECTOR shall be construed
accordingly);
I DIRECTOR CONSENT means the written consent of any two I Directors;
INTEREST includes an interest of any kind whatsoever in or to any Share or any
right to control the voting or other rights attributable to any Share,
disregarding any conditions or restrictions to which the exercise of any right
attributed to such interest may be subject;
INVESTORS means each of the Original Investors together with any person signing
a Deed of Adherence as an "Investor", in each case for so long as such Investor
or his
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Permitted Transferee and/or any member of the Investor's group remains a
Shareholder (and INVESTOR shall be construed accordingly);
INVESTOR CONSENT means the written approval by or on behalf of the holders of
85% of the Preference Shares and Exchangeable Bonds (calculated on an
as-converted, as-exchanged basis);
LIBOR means, in respect of any unpaid amount, the British Bankers' Association
Interest Settlement Rate for US Dollars for an interest period of three months
as displayed on the appropriate Reuters screen. If the agreed page is replaced
or ceases to be available the Preference Share holders may specify another page
or service displaying the appropriate rate after consultation with the Company;
LISTING means a listing of the Ordinary Shares on the Main Board of The Stock
Exchange of Hong Kong Limited or the Singapore Exchange with Investor Consent in
accordance with the Subscription and Shareholders Agreement;
MONTH means 30.4 days with any period of months summed and truncated to the
nearest whole day for purposes of calculating multi-month periods;
NON-LISTING REDEMPTION AMOUNT means the amount calculated as follows:
S
Non-Listing Redemption Amount = (I X -------------)-(D_PF + D_PT)
US$26,000,000
where:
I is an amount equivalent to 33 per cent. of 10 times the consolidated,
audited net profit after taxation of the Company for the most recent
Financial Year preceding the Redemption Notice Date;
S is the Subscription Price of outstanding Preference Shares held by the
relevant Preference Share holder;
D_PF is the amount of any Preference Dividends that have been accrued,
declared or paid on the outstanding Preference Shares up to the Redemption
Date; and
D_PT is the amount of any Participating Preference Dividends that have been
accrued, declared or paid on the outstanding Preference Shares up to the
Redemption Date;
OFFICER means any director, manager or secretary of the Company or of any member
of the Company Group;
ORIGINAL BVI HOLDCOS means Heng Xing Yue Investments Limited, Drag Investments
Limited and Guoren Industrial Developments Limited (and ORIGINAL BVI HOLDCO
shall be construed accordingly);
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ORIGINAL INVESTORS means (1) CDC Group PLC, (2) Standard Chartered Private
Equity Limited, and (3) JAFCO Asia Technology Fund (and ORIGINAL INVESTOR shall
be construed accordingly);
ORDINARY SHARES means the ordinary shares of US$0.01 each in the Company's share
capital;
PAID UP means paid up or credited as paid up;
PARTICIPATING COMMON DIVIDEND means the portion of Excess Return (as defined in
Article 12(f)) which is declared (but only payable upon resolution of the Board)
to the holders of Ordinary Shares;
PARTICIPATING PREFERENCE DIVIDEND has the meaning as defined in Article 12(f);
PERMITTED TRANSFEREE means a person to whom Shares or an Interest in Shares may
be transferred in accordance with Article 28;
PREFERENCE DIVIDEND has the meaning given in Article 12(a);
PREFERENCE DIVIDEND INTEREST has the meaning given in Article 12(b);
PREFERENCE SHARES means the cumulative, participative, redeemable convertible
preference shares of US$0.01 each in the Company;
REDEMPTION DATE means any date when Preference Shares are redeemed in accordance
with Article 12(h) to (o) (inclusive) or 12(i) as the case may be or the
completion date of the Sale referred to in Article 12(j);
REDEMPTION NOTICE DATE means the date of the notice of redemption served by the
Investors or the Company pursuant to Article 12(h) or 12(i) as the case may be;
RELEVANT SHARES has the meaning set out in Article 26;
REMUNERATION COMMITTEE means the Company's remuneration committee from time to
time;
SALE means the acquisition (whether through a single transaction or a series of
transactions) by a person or his Connected Persons (other than by an Original
Investor) of Shares or of an Interest in Shares as a result of which such
person(s) acquire(s) a Controlling Interest in the Company;
SEAL means the common seal of the Company and includes any official seal kept by
the Company;
SECURITY INTEREST means any mortgage, charge, pledge, lien (other than a lien
arising by operation of law), right of set-off, encumbrance or other security
interest whatsoever, however created or arising (including any analogous
security interest under the law of any jurisdiction outside of the Cayman
Islands);
SHAREHOLDERS means the holders of the Shares (and SHAREHOLDER shall be construed
accordingly);
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SHARES means shares in the Company's share capital;
SUBSCRIPTION PRICE means, in relation to a Share, the amount paid up upon that
Share, plus the amount of any premium at which that Share was issued, to the
extent the same has not been distributed by way of bonus issue or repayment of
capital to the holder of, and in respect of, that Share;
SUBSCRIPTION AND SHAREHOLDERS' AGREEMENT means the subscription and
shareholders' agreement made between (1) the Company, (2) the Original Investors
and (3) the Original BVI Holdcos, (4) Mr Gao Yingjie, (5) Mr Zhuang Kunjie (6)
Shenzhen Powercom Co, Ltd. and (7) Powercom (BVI) Limited dated 17 December
2003, as supplemented and amended and in force from time to time;
SUBSIDIARIES means any undertaking in which the Company (or persons acting on
its behalf for the time being) directly or indirectly holds or controls either:
(a) a majority of the voting rights exercisable at general meetings of the
members of that undertaking on all, or substantially all, matters; or (b) the
right to appoint or remove directors having a majority of the voting rights
exercisable at meetings of the board of directors of that undertaking on all, or
substantially all, matters;
SUBSIDIARY has the meaning given to it in the definition of Holding company;
TRANSFER NOTICE has the meaning given to it in Article 32; and
UNDERTAKING means a body corporate or partnership or an unincorporated
association carrying on trade or a business with or without a view to profit.
4. In these Articles:
(a) words or expressions contained in these Articles which are not defined in
these Articles but are defined in the Act have the same meaning as in the
Act (but excluding any statutory modification of the Act not in force at
the date of adoption of these Articles) unless inconsistent with the
subject or context;
(b) references to an ADDRESS, in relation to electronic communications, include
any number or address used for the purposes of such communications;
(c) references to a DOCUMENT include, unless the context otherwise requires,
references to an electronic communication;
(d) references to a document being EXECUTED include references to its being
executed under hand or under seal or, in the case of an electronic
communication, by electronic signature;
(e) references to an INSTRUMENT mean, unless the contrary is stated, a written
document having tangible form and not comprised in an electronic
communication;
(f) references to a notice or other document being SENT or GIVEN to or by a
person mean such notice or other document, or a copy of such notice or
other document, being sent, given, delivered, issued or made available to
or by, or
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served on or by, that person by any method authorised by these Articles and
SENDING and GIVING shall be construed accordingly;
(g) references to WRITING mean the representation or reproduction of words,
symbols or other information in a visible form by any method or combination
of methods, whether comprised in an electronic communication or otherwise,
and WRITTEN shall be construed accordingly;
(h) subject to paragraph (a), references to any provision of any enactment or
of any subordinate legislation include any modification or re-enactment of
that provision for the time being in force;
(i) words denoting the singular number include the plural number and vice
versa, words denoting the masculine gender include the feminine gender and
the neuter gender and words denoting persons include corporations;
(j) headings and marginal notes are inserted for convenience only and do not
affect the construction of these Articles;
(k) powers of delegation shall not be restrictively construed but the widest
interpretation shall be given to them;
(l) the word DIRECTORS in the context of the exercise of any power contained in
these Articles includes any committee consisting of one or more Directors,
any Director holding executive office and any local or divisional
Directors, manager or agent of the Company to which or, as the case may be,
to whom the power in question has been delegated;
(m) no power of delegation shall be limited by the existence or, except where
expressly provided by the terms of delegation, the exercise of that or any
other power of delegation; and
(n) except where expressly provided by the terms of delegation, the delegation
of a power shall not exclude the concurrent exercise of that power by any
other body or person who is for the time being authorised to exercise it
under these Articles or under another delegation of the power.
5. If at any time and for so long as the Company has a single member, all the
provisions of these Articles shall (in the absence of any express provision to
the contrary) apply with such modification as may be necessary in relation to a
Company with a single member.
SHARE CAPITAL
6. The authorised share capital of the Company at the date of adoption of these
Articles is US$50,000, divided into 5,000,000 Shares of US$0.01 each. The issued
share capital of the Company upon completion of the Subscription and
Shareholders Agreement is 932,731 Ordinary Shares and 67,269 Preference Shares.
7. The Directors are hereby generally authorised pursuant to the Act to allot
shares up to an aggregate nominal amount equal to the authorised share capital
of the Company at the date of adoption of these Articles provided, that the
authorised but
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unissued Ordinary Shares at the time of execution of these Articles shall only
be issued for purpose of conversion of the Preference Shares. Any increase in
the authorised share capital of the Company other than for the purpose of an
issue of Ordinary Shares permitted under Article 10.2(a) of the Subscription and
Shareholders' Agreement as falling outside of Reserved Matters, requires I
Director Consent. The Directors are required to register a transfer of shares
pursuant to enforcement of any pledge of the Shares.
8. Before issuing any new Shares (with the exception of (i) Shares issued upon
conversion of the Preference Shares and (ii) any issue that falls outside of
Reserved Matters under Clause 10.2(a) of the Subscription and Shareholders'
Agreement), the Company shall offer the new Shares for subscription to each of
the Investors in accordance with Articles 8 to 10 (inclusive);
(a) the Shares shall be offered for subscription in cash and on the same terms
to each Investor in proportion to the number of issued Preference Shares
and Exchangeable Bonds (on an as-converted, as-exchanged basis) held by
such Investor as at the close of business on the date prior to such offer
on the basis that an Investor may take up all or part or none of the Shares
offered to it;
(b) each offer from the Company pursuant to Article 8(a) shall be made by
notice in writing (the NEW ISSUE NOTICE) specifying the number of Shares to
which the Investor is entitled and a time limit (being not less than
fourteen (14) days from the date of the Notice) within which if the offer
is not accepted in writing it will be deemed to be declined;
(c) any Investor who accepts the offer shall confirm in its acceptance either:
(i) that it would accept, on the same terms, Shares (specifying a maximum
number) that have not been accepted by other Investors (EXCESS NEW ISSUE
SHARES); or
(ii) that it would not accept any Excess New Issue Shares;
(d) if an Investor who accepts the offer fails to make a confirmation in the
terms of Article 8(c)(i), he shall be deemed to have made a confirmation in
the terms of Article 8(c)(ii).
(e) Excess New Issue Shares shall be allotted to each relevant Investor who has
indicated that he will accept Excess New Issue Shares in proportion to the
number of issued Preference Shares and Exchangeable Bonds (on an
as-converted, as-exchanged basis) it holds, as compared with the aggregate
number of issued Preference Shares and Exchangeable Bonds (on an
as-converted, as-exchanged basis) held by all those Investors who have
indicated that they would accept Excess Shares provided that no such
Investor shall be allotted more Excess New Issue Shares than the maximum
number of Excess New Issue Shares such Investor has indicated he is willing
to accept.
9. Upon expiry of the time limit for acceptance of an offer made pursuant to
Article 8(b) or upon receipt by the Company of an acceptance or refusal of each
offer made by the Company, the Board shall only be entitled to dispose of any
Shares
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offered to Investors and which are not required to be allotted in accordance
with the foregoing provisions on the same (or better) terms as those offered to
the Investors, within ninety (90) days of the date of the offer and in such
manner as the Board may think most beneficial to the Company.
10. Where any allotment referred to in Article 9 would result in a fractional
allotment, the Board may in its absolute discretion round up or down such
fractional allotments provided that the aggregate number of Shares allotted by
the Company is not greater than the number of Shares whose issue the Investor
accepted and provided that such rounding does not result in an Investor being
allotted more Shares than he has indicated he is willing to accept.
11. For Share issues which fall outside of Reserved Matters under Clause 10.2(a)
of the Subscription and Shareholders' Agreement, the Investors shall be offered
such portion of the issue to maintain the percentage of the Ordinary Shares to
which they would be entitled prior to such issue assuming full conversion and
exchange of the Preference Shares and the Exchangeable Bonds and Articles 8 to
10 shall apply mutatis mutandis.
THE PREFERENCE SHARES
12. The rights attaching to the Preference Shares are as follows:
(a) the holders of Preference Shares shall be entitled, in priority to the
holders of any other class of Shares in the Company's share capital, a
fixed cumulative preferential dividend (in aggregate, the PREFERENCE
DIVIDEND) at the rate of five per cent. per annum on the Subscription Price
of each Preference Share held by them respectively;
(b) the Preference Dividend shall accrue on a daily basis and shall be payable,
together with any accrued Preference Dividend Interest, in cash in US
dollars annually in arrears on the date that is three Business Days after
31 December in respect of the year ending on that date. The first such
payment shall be made on the date that is three Business Days after 31
December 2004 in respect of the period from the date of issue of the
Preference Shares concerned until 31 December 2004. If the Preference
Dividend (or any part of it) is not paid on any such date there shall
accrue to the holder of each Preference Share an entitlement to receive a
further dividend (the PREFERENCE DIVIDEND INTEREST) of an amount of LIBOR
(on the date on which such Preference Dividend becomes payable) plus three
per cent. per annum of the Preference Dividend which is due but not paid
from the relevant dividend payment date until the date of actual payment,
compounded annually. The Preference Dividend and Preference Dividend
Interest shall be paid to the holders of the Preference Shares on the
relevant dividend payment date;
(c) the provisions of Articles 12(a) and (b) are subject to any restrictions on
the payment of dividends imposed by law. Where, because of such
restrictions, the Company cannot pay the full amount of the Preference
Dividend and Preference Dividend Interest it shall on the due date pay (on
a pro-rata basis) so much thereof as, subject to such restrictions, it can
and the balance when such restrictions cease to apply. On the date that
such restrictions cease to
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apply, the Preference Dividend and Preference Dividend Interest shall,
without the need for any resolution of the Board of Directors or the
Company in general meeting (and notwithstanding anything contained in
regulations 88 to 94 (inclusive) of Table A), become a debt due from and
immediately payable by the Company to the relevant holders pro rata to the
numbers of Preference Shares held by each of them;
(d) so far as permitted by law, the Company shall cause each of its
Subsidiaries to make such distributions to the Company as shall enable it
to pay the Preference Dividend, Preference Dividend Interest and redemption
entitlements on the dates specified in Articles 12(a), (h) and (i)
(e) on a distribution of assets of the Company among its members on a winding
up or other return of capital (other than a redemption or purchase by the
Company of the Preference Shares), the holders of the Preference Shares
shall be entitled, in proportion to the numbers of Preference Shares held
by each of them and in priority to any holder of any other class of Shares,
to receive an amount equal to the aggregate of the Subscription Price of
each Preference Share and a sum equal to any arrears and accruals of the
Preference Dividend and Preference Dividend Interest (whether earned or
declared or not) remaining unpaid on such Preference Shares calculated up
to and including the date of the commencement of the winding up or (in any
other case) the date of the return of capital;
(f) in addition to the rights specified in Articles 12(a) to (e) (inclusive),
for any Financial Year in which the Company intends to make a distribution
to Shareholders, in the event that the distribution produces Excess Return
as defined below, the Preference Shares shall be entitled to an additional
participating dividend (PARTICIPATING PREFERENCE DIVIDEND) in accordance
with the following formula:
(1-b)
EXCESS RETURN = D_O-(D_PF+D_EB)-(----- X (D_PF+D_EB))
b
P
PARTICIPATING PREFERENCE DIVIDEND = (---) X Excess Return (declared and
TSC
payable)
EB
EB PREMIUM = (---) X Excess Return (declared and payable)
TSC
(OS)
PARTICIPATING ORDINARY DIVIDEND = (----) X Excess Return (declared and
TSC
payable)
where,
D_O = The total amount for distribution to Shareholders in a Financial Year
(regardless of whether such dividend is paid out) including the Preference
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Dividend, Participating Preference Dividend and all dividends on the
Ordinary Shares (including the EB Dividend)
D_PF = Preference Dividend that has been paid in such Financial Year
D_EB = EB Dividend (less any EB Premium) that has been paid in such
Financial Year
b = Percentage of outstanding shareholdings held by Investors on an as-
(P + EB)
converted, as-exchanged basis = (--------)
TSC
P = Number of Ordinary Shares that would result from the conversion of all
Preference Shares outstanding
EB = Number of Ordinary Shares that would result from the exchange of all
exchangeable Bonds outstanding
OS = Number of Ordinary Shares outstanding less EB
TSC = Total number of Ordinary Shares that would be outstanding when
Investors have fully converted their Preference Shares = P + OS + EB
If for example, D_O = US$6,000,000
Excess Return = US$6,000,000 - ($265,000+$1,035,000) - ((1-33%)/33%)*
($265,000+$1,035,000) = $2,060,606
Participating Preference Dividend = (67,269/1,000,000) * $2,060,606 = $138,615
EB_Premium = (262,731/1,000,000) * $2,060,606 = $541,385
Participating Ordinary Dividend = (670,000/1,000,000) * $2,060,606 = $1,380,606
(g) the holders of Preference Shares shall be entitled to receive notice of and
to attend any general meetings of the Company, and every holder of
Preference Shares shall be entitled to present in person or by proxy (or,
being a corporation, by a duly authorised representative or by proxy) and
shall have one vote for every Preference Share held by him;
(h) the Company shall, upon written demand from one or more holders of the
Preference Shares copied to all other holders of Preference Shares, redeem
all or some of the Preference Shares of such holder(s), in accordance with
the written demand of such holder(s), provided that the Company shall be
required to redeem at least 30% of the total outstanding Preference Shares
of such holder(s) within the initial three-month period following such
demand. The remaining Preference Shares (if any) for which such holder has
requested redemption shall be redeemed within six months after the issuance
of the initial written demand. If the Company cannot redeem such remaining
Preference Shares after the expiry of such six-month period, the redeeming
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Preference Share holder(s) may, at its sole discretion, extend another
three months. Such demand may be made by a holder of Preference Shares
either
(i) at any time after the third anniversary of the date of issuance of the
Preference Shares;
(ii) at any time after the Company or any of its Subsidiaries receives a
demand letter in respect of any loan or guarantee obligation or other
financial indebtedness which causes the cumulative outstanding obligations
of the Company Group under all such demand letters to exceed RMB50,000,000;
(iii) within ninety (90) days after the failure to remedy a breach of the
post-completion undertaking listed under Clauses 6.1(h) or 10.1 of the
Subscription and Shareholders' Agreement;
(iv) the consolidated, audited after-tax net profit of the Company for the
2003 Financial Year is below US$13,647,343; or
(v) at any time after the third anniversary of the date of issuance of the
Preference Shares if during the three-year period after such issuance, any
of the BVI Holdcos or their appointed Director(s) object to a proposed
Listing for which the Company is eligible, and the Company has not
completed a Listing as a result thereof.
Upon the date on which any of the Preference Share holders make demand
under Article 12(h)(ii), the redemption entitlements shall become a debt
due from and payable by the Company to the relevant holders pro rata to the
numbers of Preference Shares held by each of them to the extent the Company
has distributable profits. For the avoidance of doubt, the exercise of
redemption rights under the conditions in Articles 12(h)(i), (ii), (iv) or
(v) shall not be subject to any time limitation or implied waiver;
(i) the Company may at any time after the expiry of 45 months from the date of
issuance of the Preference Shares serve written notice of mandatory
redemption of all (but not part) of the outstanding Preference Shares by
not less than three months' notice to holders of the Preference Shares. For
the avoidance of doubt, each of the Preference Share holders shall be
entitled to exercise its conversion rights by notice to the Company in
accordance with Article 14, and such conversion shall take precedence over
the proposed redemption. If the Company redeems at least 50% of the
outstanding Preference Shares within three months after the date of
issuance of such written notice, the conversion rights of all outstanding
Preference Shares shall lapse. The remaining Preference Shares (if any)
shall be redeemed six months after the issuance of the initial written
demand by the Company. If any Issuer of Exchangeable Bonds issues a notice
pursuant to Condition 9(b) in the Bond Certificate (as defined in the EB
Subscription Agreement), the Company shall be deemed to have served notice
to redeem all of the outstanding Preference Shares;
(j) upon a Sale, without prejudice to the right of each holder of Preference
Shares to exercise conversion rights prior to the Sale, all outstanding
Preference
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Shares for which the holders have not exercised conversion rights shall be
redeemed and if the Company is not in a position to redeem all outstanding
Preference Shares at the time of a proposed Sale, then no Sale shall be
permitted unless on such Sale the proposed transferee or some other party
acquires all the Preference Shares at an amount per Preference Share equal
to the amount payable on redemption (the redemption date being the
completion date of the Sale) as calculated in accordance with Article
12(m)(ii), such amount to be payable in full on completion of the Sale;
(k) immediately prior to completion of a Listing, all the outstanding
Preference Shares shall be converted into Ordinary Shares;
(l) the Company shall be able to use all funds available for the purpose of
redeeming Shares under the Act, including making payments out of capital,
as the Directors may in their discretion determine. Redemption of the
Preference Shares is subject to any restrictions on redemption set out in
the Act. Where, because of such restrictions, the Company is unable to
redeem Preference Shares otherwise required to be redeemed by these
Articles, the Company shall redeem on a pro-rata basis as many of the
Preference Shares as, subject to such restrictions, it can and the balance
as soon as possible after the date when those restrictions cease to apply.
For the avoidance of doubt, any Preference Shares for which a redemption
notice is served under Articles 12(h) or 12(i) which the Company fails to
redeem in accordance with the redemption schedules set out in 12(h) and
12(i) shall remain outstanding until redeemed in cash, and all rights of
such Preference Shares shall continue save for any lapse of conversion
rights as provided under Article 12(i) for redemption exercised by the
Company;
(m) each Preference Share shall be redeemed in cash at either:
(i) the higher of (a) the Subscription Price plus the amount required to
produce an 8 percent annually compounded return on the Subscription
Price (less any Preference Dividends or Participating Preference
Dividends accrued, declared or paid up to the Redemption Date) for the
period from the date of Subscription to the Redemption Date, or (b) an
amount equivalent to the Non-Listing Redemption Premium divided by the
number of Preference Shares outstanding; or
(ii) the Subscription Price plus the amount required to produce an 8
percent annually compounded return on the Subscription Price (less any
Preference Dividends or Participating Preference Dividends accrued,
declared or paid up to the Redemption Date) for the period from the
date of Subscription to the Redemption Date.
The redemption amount for the Preference Shares shall be calculated in
accordance with Article 12(m)(i) in the event that redemption is exercised
at any time after a redemption triggering event in Article 12(h)(v) has
occurred. Otherwise, the redemption amount for the Preference Shares shall
be calculated in accordance with Article 12(m)(ii). For the purposes of
Article 12(h)(v), "eligibility" with respect to a Listing shall only be met
if:
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(1) the relevant stock exchange has approved the Listing in principle with
no condition, liability or commitment on any of the Shareholders
and/or the Directors and/or their affiliates;
(2) the underwriting syndicate has been formed;
(3) the offer price shall be made on the basis that the market
capitalisation of the Company shall not be less than (i)
US$115,000,000 and (ii) a price/earnings ratio of 8.6 with respect to
the audited net profit after tax of the Company for the previous
Financial Year prior to the Listing; and
(4) the Investors have agreed to lock-ups required by the underwriters.
The redemption shall be without prejudice to the right of the holder
thereof to receive the Preference Dividend and Preference Dividend Interest
(together with any arrears and accruals of the Preference Dividend and
Preference Dividend Interest (whether earned or declared or not) calculated
up to and including the Redemption Date) due in accordance with Articles
12(a) and 12(b) on the Redemption Date of that Preference Share. The
Preference Dividend and Preference Dividend Interest on the Preference
Shares to be redeemed will cease to accrue on the Redemption Date of such
Preference Shares;
(n) each redemption of some but not all of the Preference Shares shall be made
amongst the holders thereof pro rata to their holdings of Preference
Shares, subject to rounding up or down at the Directors' absolute
discretion if the allocation results in any fractions;
(o) a holder of Preference Shares that also holds outstanding Exchangeable
Bonds shall exercise redemption rights on its Preference Shares and
Exchangeable Bonds pro rata (on an as-converted, as-exchanged basis) to
ensure that its Exchangeable Bonds and Preference Shares are redeemed
simultaneously. The Company shall also procure that upon making a demand
for redemption of all outstanding Preference Shares in accordance with
Article 12(i), the BVI Holdcos shall simultaneously make a demand for
redemption of all outstanding exchangeable bonds with the completion of
redemption for the Preference Shares and Exchangeable Bonds to occur
simultaneously. Any redemption of Preference Shares (whether by demand of
the Company, demand by a Preference Share holder or otherwise) shall be
conditional on the performance by the BVI Holdcos of their obligations to
redeem the Exchangeable Bonds unless such condition is waived by the
relevant Preference Share holder(s);
(p) upon delivery of a Preference Share certificate to the office for
redemption (or an indemnity in a form reasonably satisfactory to the Board
of Directors in respect of any lost Preference Share certificate) the
Company shall pay to the holder thereof (or the first named holder in the
register of members of the Company if more than one) the amount due to him
in respect of such redemption (and any Preference Dividend and Preference
Dividend Interest
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(together with any arrears and accruals of the Preference Dividend and
Preference Dividend Interest (whether earned or declared or not) calculated
up to and including the Redemption Date) due in accordance with Articles
12(a) and 12(b)) and shall cancel the share certificate. Pending delivery
of such Preference Share certificate or indemnity in respect of any
Preference Shares to be redeemed, the Company shall on the Redemption Date
pay the amount due in respect of the redemption of those Preference Shares
(and any Preference Dividend and Preference Dividend Interest (together
with any arrears and accruals of the Preference Dividend and Preference
Dividend Interest (whether earned or declared or not) calculated up to and
including the Redemption Date) due in accordance with Articles 12(a) and
12(b)) into a separate bank account in the Company's name and if and when
the holder shall deliver up his Preference Share certificate or
certificates and/or indemnity for the relevant Preference Shares to the
Company he shall thereupon be paid such amount, without interest. If any
Preference Share certificate and/or indemnity so delivered to the Company
includes any Preference Shares which are not to be redeemed on that
occasion a fresh Preference Share certificate for such unredeemed
Preference Shares shall be issued to the holder, without charge, as soon as
practicable and in any event within fifteen (15) Business Days of
redemption.
THE ORDINARY SHARES
13. The rights and restrictions attaching to the Ordinary Shares are as follows:
(a) subject to the terms of the Subscription and Shareholders' Agreement and
the rights of the holders of any other class of Shares as provided in these
Articles, the holders of Ordinary Shares shall be entitled to receive such
dividends out of the profits or share premium of the Company available for
distribution as are resolved under the Articles to be distributed in
respect of any Financial Year, provided that the EB Dividend portion of any
declared dividend payable to the BVI Holdcos or their transferees shall be
paid by the Company directly to the Investors on behalf of the BVI Holdcos
or their transferees;
(b) Notwithstanding Article 13(a) and save as provided in the Subscription and
Shareholders' Agreement, no dividend shall be declared or paid to a holder
of the Ordinary Shares (excluding the EB Dividend) if there are any
Preference Shares in issue unless and until:
(i) the Preference Dividend and any accrued Preference Dividend and any
accrued Preference Dividend Interest have been paid in full in respect
of that financial year and in respect of all previous financial years
of the Company;
(ii) all Preference Shares for which redemption has been demanded in
accordance with Article 12 have been duly redeemed and the redemption
monies have been paid in full to the persons entitled thereto; and
(iii) the Participating Preference Dividend for such Financial Year (if
any) is simultaneously declared and paid.
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(c) on a distribution of assets of the Company among its members on a winding
up or other return of capital (other than a redemption or purchase by the
Company of its own Shares), the holders of Ordinary Shares shall be
entitled (such entitlement ranking after satisfaction in full of the rights
of the holders of the Preference Shares) to:
(i) receive the amount paid up on their holdings of Ordinary Shares; and
(ii) participate in any surplus so arising in proportion to the number of
Ordinary Shares held by each of them;
(d) subject to regulation 56 of Table A, on a show of hands and on a poll every
holder of an Ordinary Share who (being an individual) is present in person
or by proxy or (being a corporation) is present by a duly authorised
representative or by proxy shall have one vote for every Ordinary Share of
which he is the holder.
CONVERSION
14. Conversion rights of the Preference Shares shall be handled as follows:
(a) each holder of Preference Shares shall have the right at any time to
convert part or all of the Preference Shares held by him into Ordinary
Shares at the rate calculated in Article 14(b) by delivering a notice to
that effect to the Company;
(b) the rate at which the Preference Shares shall be converted into Ordinary
Shares shall be one Ordinary Share for every one Preference Share as
adjusted as provided in Article 14(g) (the CONVERSION RATE);
(c) if any holder of Preference Shares wishes to exercise his right to convert
the same into Ordinary Shares under Article 14(a), he shall deliver written
notice of the election, together with the certificate or certificates for
the Preference Shares to be converted, to the Company at least fourteen
(14) days prior to the date on which he proposes that conversion should
take place. The Company shall issue and deliver to such holder a
certificate or certificates for the number of Ordinary Shares to which such
holder is entitled. In the meantime, transfers shall be certified against
the register;
(d) on the date of conversion the Company shall pay a dividend in accordance
with the provisions of the Act and these Articles to the holders of the
Preference Shares being converted of a sum equal to any arrears or accruals
of the Preference Dividend and Preference Dividend Interest calculated on a
daily basis to the date of conversion provided that, if the Company has
insufficient profits available for distribution and the Company is thereby
prohibited from paying dividends by the Act, such arrears or accruals shall
(notwithstanding, regulations 88 to 94 inclusive contained in Table A or
any other provision of the Articles and in particular notwithstanding that
there has not been a recommendation of the directors or resolution of the
Company in general meeting) be a debt due from the Company and the cash
equivalent thereof shall be payable in priority to any other dividend;
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(e) if a holder of Preference Shares gives notice of conversion to the Company
under Article 14(a) within forty-five (45) days after commencement of the
winding up of the Company, he shall be treated as if his Preference Shares
had been converted into Ordinary Shares immediately prior to commencement
of the winding up, and his entitlement in the liquidation of the Company
shall be calculated accordingly;
(f) upon conversion, the Preference Shares shall be redeemed in exchange for
Ordinary Shares authorized for that purpose which shall be issued in
accordance with the Conversion Rate specified in Article 14(b) and the
Company shall be able to use all funds available for the purpose of
redeeming shares under the Act, including making payments out of capital,
as the Directors may in their discretion determine.
(g) upon the happening of any of the events specified in this Article 14(g)
while any Preference Shares remain capable of being converted into Ordinary
Shares, the following provision shall apply:
if the Company shall make an issue of Ordinary Shares by way of
capitalisation of profits or reserves (including any share premium
account and capital redemption reserve) to the holders of Ordinary
Shares, then the Conversion Rate shall be adjusted by agreement
between the Board of Directors (with I Director Consent) (acting
reasonably) and the holder(s) of the Preference Shares which are yet
to be converted of, as determined by the Auditors provided that such
holder(s) shall not in any way be prejudiced by such issue; and
if the Ordinary Shares shall be subdivided into a greater number of
Shares or consolidated into a lesser number of Shares, the Conversion
Rate shall, concurrently with the effectiveness of such subdivision or
consolidation, as applicable, be adjusted by agreement between the
Board of Directors (with I Director Consent) (acting reasonably) and
the holder(s) of the Preference Shares which are yet to be converted
or, in default of agreement, as determined by the Auditors provided
that such holder(s) shall not in any way be prejudiced by such issue.
GENERAL PROVISIONS RELATING TO CLASS RIGHTS
15. Subject to the provisions of the Act, if at any time the capital of the
Company is divided into different classes of Shares, all or any of the rights
for the time being attached to any class of Shares in issue may (unless
otherwise provided by the terms of allotment of the Shares of that class) from
time to time (whether or not the Company is being wound up) be varied or
abrogated either:
(a) with the consent in writing of the holders of three-fourths in nominal
value of the issued Shares of each class, which consent shall be by means
of one or more instruments or contained in one or more electronic
communications sent to such address (if any) for the time being notified by
or on behalf of the Company for that purpose or a combination of both; or
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(b) with the sanction of an extraordinary resolution passed at a separate
general meeting of the holders of each class of Shares.
16. For the purposes of Article 15, if at any time the capital of the Company is
divided into different classes of Shares, unless otherwise expressly provided by
the terms of their issue, the rights attached to any class of Shares shall not
be deemed to be varied by:
(a) the creation or issue of further Shares ranking or equally with, or
subsequent to, that class of Shares; or
(b) the purchase or redemption by the Company of its own Shares.
17. All the provisions of these Articles relating to general meetings of the
Company or to the proceedings at general meetings shall apply, mutatis mutandis,
to every such separate general meeting referred to in Article 15 above, except
that:
(a) at an adjourned meeting the necessary quorum shall be one person holding
Shares of the class or his proxy;
(b) every holder of Shares of the class shall, on a poll, have one vote in
respect of every Share of the class held by him; and
(c) a poll may be demanded by any one holder of Shares of the class whether
present in person or by proxy.
RIGHTS AND SECURITY INTERESTS OVER SHARES
18. Save with prior Investor Consent and save for (i) transfers of Shares
permitted to be registered in accordance with the terms herein and (ii) a pledge
of Shares to the Investors in connection with the EB Subscription Agreement, no
BVI Holdco shall:
(a) grant, declare, create or dispose of any Interest in any Shares or deal, in
any other manner, with the legal title to, or the beneficial ownership of
any Shares; or
(b) create or permit to exist any Security Interest over any Shares or any
Interest in any Share.
TRANSFER OF SHARES
19. No BVI Holdco nor any of its Permitted Transferees shall transfer any Shares
or any interest in any Share until after (i) the third anniversary of the date
of issuance of the Preference Shares and (ii) all Preference Shares for which a
holder has made written demand for redemption have been redeemed by the Company,
save:
(a) with prior Investor Consent (which consent may be given subject to
conditions or restrictions); or
(b) to a Permitted Transferee.
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20. Save with prior Investor Consent, the person acquiring any Share (if such
person is not already a party to the Subscription and Shareholders' Agreement
whether as an original party or by having executed a Deed of Adherence) shall
enter into and deliver to the Company a Deed of Adherence in a legally binding
manner.
21. The Directors shall not register the transfer of any Share or any Interest
in any Share if:
(a) for any of the BVI Holdcos, the transfer is not effected in compliance with
the terms herein (including Article 19 (Initial Lock-up), Articles 33 to 39
(inclusive) (Pre-emption) and Articles 44 to 50 (inclusive) (Tag-Along) ;
or
(b) for any of the Investors as the transferor, the transfer is to a
Competitor,
and any transfer made in breach of these Articles shall be void.
22. The Directors may refuse to register any transfer of Shares which are not
fully paid or on which the Company has a lien.
23. For the purposes of these Articles, the following shall be deemed (but
without limitation) to be a transfer by a holder of Shares of an Interest
in Shares:
(a) for the BVI Holdcos, a Change-of-Control;
(b) any direction (by way of renunciation or otherwise) by a holder
entitled to an allotment or transfer of Shares that a Share be allotted or
issued or transferred to some person other than himself; and
(c) any sale or any other disposition (including by way of mortgage, charge
or other Security Interest) of any Interest in a Share (including any
voting right attached to it), (i) whether or not by the relevant holder,
(ii) whether or not for consideration, and (iii) whether or not effected by
an instrument in writing,
24. To enable the Board of Directors to determine whether or not there has been
any transfer of Shares or an Interest in Shares in breach of these Articles, the
Board of Directors may, and shall if so requested with Investor Consent, require
any holder or the legal personal representatives of any deceased holder or any
person named as transferee in any transfer lodged for registration, or such
other person as the Board of Directors may reasonably believe to have
information relevant to such purpose, to furnish to the Company such information
and evidence as the Board of Directors may think fit regarding any matter which
they deem relevant to such purpose.
25. Failing such information or evidence being furnished to enable the Board of
Directors to determine to its reasonable satisfaction that no such breach has
occurred, or if as a result of such information and evidence the Board of
Directors is reasonably satisfied that such breach has occurred, the Board of
Directors shall forthwith notify the holder of such Shares or Interest in Shares
in writing of that fact and, if the holder fails to provide such information or
evidence or remedy such breach within ten (10) Business Days of receipt of such
written notice, then:
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(a) the relevant Shares shall cease to confer upon the holder thereof (or any
proxy thereof) any rights:
(i) to vote (whether on a show of hands or on a poll and whether
exercisable at a general meeting of the Company or at any separate
meeting of the class in question);
(ii) to receive dividends or other distributions (other than the amount
paid-up (including any premium) on the relevant Shares upon a return
of capital);
(iii) otherwise attaching to such Shares; or
(iv) to any further Shares issued in right of such Shares or in pursuance
of an offer made to the relevant holder; and
(b) the holder may be required (by notice in writing to such holder from the
Board of Directors) at any time following such notice to transfer some or
all of his Shares to such person(s) and at a Fair Price.
The rights referred to in (a) above shall be reinstated by the Board of
Directors once the failure to provide information satisfactory to the Board, or
to remedy the breach, is remedied and may be reinstated by the Board of
Directors with Investor Consent or, if earlier, upon the completion of any
transfer referred to in (b) above.
26. If a holder defaults in transferring Shares to be transferred pursuant to
Article 25(b) (the RELEVANT SHARES):
(a) the chairman for the time being of the Company or, failing him, one of the
I Directors, shall be deemed to be the duly appointed agent of the holder
with full power to execute, complete and deliver in the name and on behalf
of the holder all documents necessary to give effect to the transfer of the
Relevant Shares to the relevant transferee;
(b) the appointment referred to in Article 26(a) shall be irrevocable and is
given by way of security for the performance of the obligations of the
holder of the Relevant Shares under these Articles;
(c) the Board of Directors may receive and give a good discharge for the
purchase money on behalf of the holder and enter the name of the transferee
in the register of members or other appropriate register as the holder by
transfer of the Relevant Shares;
(d) the Board of Directors shall forthwith pay the purchase money into a
separate bank account in the Company's name and if and when the holder
shall deliver up his share certificate or certificates for the Relevant
Shares to the Company (or an indemnity in a form reasonably satisfactory to
the Board of Directors in respect of any lost share certificate) he shall
thereupon be paid the purchase money, without interest and less any sums
owed to the Company by the holder pursuant to these Articles or otherwise;
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(e) if such share certificate (or indemnity) shall comprise any Shares which
the holder has not become bound to transfer as aforesaid the Company shall
issue to him a balance share certificate for such Shares; and
(f) the Company shall ratify and confirm whatever the person appointed pursuant
to Article 26(a) shall do or purport to do by virtue of Article 26 and the
Company shall indemnify such person against all actions, proceedings,
claims, costs, expenses and liabilities of every description arising from
the exercise or the purported exercise in good faith of any of the powers
conferred by this Article 26 and notwithstanding that they may have arisen
as a result of a lack of care on the part of such person.
27. An obligation to transfer a Share under these Articles shall be deemed to be
an obligation to transfer the entire legal and beneficial interest in such Share
free from any lien, charge or other encumbrance.
28. Subject to Articles 19 to 30 (inclusive), and Article 43, a Shareholder may
at any time transfer any of the Shares held by it in the following ways:
(a) Shares may be transferred by a Shareholder to a person who is to hold such
Shares as his nominee but any transfer by such nominee shall be subject to
the same restrictions as though it were a transfer by the original
Shareholder itself;
(b) Shares may be transferred by a nominee to the beneficial owner of such
Shares or to another nominee of the same beneficial owner;
(c) Shares held by Heng Xing Yue Investments Limited may be transferred to
employees of the Company Group;
(d) any member to whom Shares have been transferred by any person pursuant to
this Article 28 may transfer all or any Shares back to the original
transferor or to any other person to whom the original transferor, if it
still held such Shares, would have been able to transfer them under this
Article 28; and
(e) transfer among the BVI Holdcos provided that Guoren Industrial Developments
Limited may only acquire rather than dispose of Shares. For the avoidance
of doubt, the Investors shall not be subject to any transfer restrictions
under these Articles other than transfer to a Competitor and may freely
transfer their shares to any transferee other than a Competitor regardless
of whether such transferee is a Permitted Transferee.
29. Save in the case of transfers made in accordance with Article 28, in the
event that any person to whom Shares are transferred pursuant to Article 28
ceases to be within the required relationship to the original holder of such
Shares, the holder of such Shares shall without delay notify the Company that
such change of relationship has occurred and transfer such Shares back to the
member who originally held them or to such other person if any (designated by
such original member) to whom such original member, if it still held such
Shares, would have been able to transfer them under Article 28. If the holder of
such Shares fails to transfer the Shares pursuant to this Article 29 within ten
(10) Business Days of such change of relationship, the
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provisions of Article 26 (references therein to the holder, Relevant Shares,
transferee and documents being construed in accordance with the provisions of
this Article) shall apply mutatis mutandis.
30. In the event that any BVI Holdco passes a resolution to commence a
liquidation or winding up or has a winding up petition presented which is not
discharged or contested in good faith within thirty (30) Business Days or has a
receiver or administrator appointed to it (or any analogous proceedings in any
jurisdiction), the holder of such Shares shall without delay notify the Company
of such event and transfer such Shares back to the member who originally held
such Shares or to such other person if any (designated by such member) to whom
such original member, if it still held such Shares, could transfer such Shares
pursuant to Article 28. If the holder of such Shares fails to transfer the
Shares pursuant to this Article 30, within ten (10) Business Days of such event,
the provisions of Article 26 (references therein to the holder, Relevant Shares,
transferee and documents being construed in accordance with the provisions of
this Article) shall apply mutatis mutandis.
31. The price at which Shares referred to in Articles 27 and 30 shall be
transferred pursuant to Article 26 shall be the Fair Price as at the Business
Day immediately following the end of the ten (10) Business Day period referred
to in Articles 26 and 30.
32. Save in the case of transfers of Shares made:
(a) in accordance with the Investor Consent; or
(b) in accordance with Article 28 (Permitted Transfers); or
(c) in accordance with Articles 25, to 31 (inclusive) (Forced Transfers);
any BVI Holdco (the OFFEROR) proposing to transfer any Shares, before
transferring such Shares, shall serve a transfer notice on the Company (the
TRANSFER NOTICE).
33. The Transfer Notice:
(a) shall specify:
(i) the number of Shares proposed to be transferred (the OFFERED SHARES);
(ii) the name and address of the third party to whom the Shares are to be
transferred;
(iii) the nature of such transfer; and
(iv) the price (which, unless prior Investor Consent to the contrary is
obtained, shall be a cash price) at which the transfer of the Shares
is proposed to be made (the PRICE);
(b) shall be accompanied by the share certificate(s) in relation to the Offered
Shares;
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(c) may include a provision that unless all the Shares comprised therein are
sold none shall be sold in which case the Offeror shall not be obliged to
complete any sales pursuant to Articles 32 to 41 (inclusive) unless such
provision is satisfied in full;
(d) may not include any provisions not specified in this Article 33; and
(e) shall constitute the Company as agent of the Offeror for the sale of the
Offered Shares at the Price in accordance with the provisions of Articles
32 to 42 (inclusive)
(the OFFERED TERMS).
34. Subject to Article 33, no Transfer Notice once given in accordance with
these Articles shall be withdrawn unless the Offeror is obliged to procure the
making of an offer pursuant to Article 34 and is unable to procure it. In that
event the Offeror shall be entitled to withdraw such Transfer Notice, without
liability to any person, prior to completion of any transfer.
35. As soon as practicable (and not longer than five (5) Business Days after
receipt of the Transfer Notice, the Company shall give notice (the OFFER NOTICE)
in writing to each of the Investors of their right to purchase the Offered
Shares at the Price in proportion to the numbers of Preference Shares and
Exchangeable Bonds (calculated on an as-converted, as-exchanged basis) held by
them as at the close of business on the date prior to the date of the Offer
Notice. The Offer Notice shall:
(a) specify the number of Offered Shares that are offered to the relevant
Shareholder and the price per Share (being the Price (or, if applicable,
the Fair Price), at which the Offered Shares are offered;
(b) be expressed to be open for acceptance for twenty (20) Business Days from
the date of service;
(c) be irrevocable, save with respect to the circumstances described in Article
34; and
(d) be subject to no other terms save for the Offered Terms and shall specify
that it shall be governed by the laws of Hong Kong and that completion of
the sale of the Offered Shares shall be effected at the office by delivery
of the duly executed transfers in respect of the Offered Shares accompanied
by share certificates in respect thereof, against a bankers' draft in
respect of the purchase price therefor together with any stamp duty payable
thereon.
36. Each of the Investors may at any time before the expiry of the period
specified in Article 35(b) either (i) serve written notice (the BUY NOTICE) upon
the Company of its desire to purchase all or any of the Offered Shares offered
to it on the terms set out in the Offer Notice or (ii) serve written demand on
the Company for redemption of part or all of its Shares in accordance with
Article 12(h). If any Investor fails to serve a Buy Notice within the terms of
this Article 36 it shall be deemed to have declined the offer constituted by the
Offer Notice. Investors who serve a Buy Notice shall confirm in the Buy Notice
either:
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(a) that they would accept, on the same terms, Offered Shares (specifying a
maximum number) that have not been accepted by other Shareholders (EXCESS
OFFERED SHARES); or
(b) that they would not accept any Excess Offered Shares; and
if any Investor who serves a Buy Notice fails to make a confirmation in the
terms of (a) or (b) above, he shall be deemed to have made a confirmation in the
terms of (b). A Buy Notice shall be irrevocable without the written consent of
the Board of Directors.
37. Any Excess Offered Shares shall be allocated to each of the Investors who
have made a confirmation in the terms of Article 36(a) in proportion to the
number of Preference Shares and Exchangeable Bonds (on an as-converted,
as-exchanged basis) held by such Investor as at the close of business on the
date prior to the date of the Offer Notice as a proportion of the total number
of Shares (on an as-converted, as-exchanged basis) held by the Investors who
have made a confirmation in the terms of Article 36(a), providing that any
apportionment shall be made so as not to result in any Investor being allocated
more Excess Offered Shares than the maximum number of Excess Offered Shares such
Investor has indicated he is willing to accept. Excess Offered Shares shall
continue to be allocated on this basis until either all Offered Shares are
allocated or all requests for Excess Offered Shares have been satisfied.
38. Upon expiry of the acceptance period pursuant to Article 35(b):
(a) if Buy Notices are served in respect of all of the Offered Shares, the
Offeror shall be bound to sell, and the relevant Investors shall be bound
to purchase, the respective numbers of Offered Shares specified in such Buy
Notices (as scaled back in accordance with Article 37, if applicable) upon
the Offered Terms;
(b) if Buy Notices are served in respect of less than the number of Offered
Shares offered for sale, the Offeror shall:
(i) if it has not stated in the Transfer Notice that unless all the
Offered Shares are sold none shall be sold, transfer to the relevant
Investors the respective numbers of Offered Shares specified in such
Buy Notices by way of sale upon the Offered Terms and may either
retain the remaining Offered Shares or sell them to a third party in
accordance with Article 41; or
(ii) if it has stated in the Transfer Notice that unless all the Offered
Shares are sold none shall be sold, either retain the Offered Shares
(including any allocated under Article 37) or sell them to a third
party in accordance with Article 41.
39. The Company shall within ten (10) Business Days of the expiry of the
acceptance period pursuant to Article 35(b) serve notice on each of the
Investors and the Offeror setting out which of the options in Article 38
applies, how many Offered Shares the relevant Investor is required to acquire
and on what terms (the FINAL NOTICE).
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40. The Investors who gave a Buy Notice shall be bound to buy the Offered Shares
that they are required to purchase pursuant to Article 38 within ten (10)
Business Days of the Final Notice.
41. If the Offeror is entitled to sell any Offered Shares to a third party
purchaser pursuant to Article 38(b), the Offeror may transfer the Offered Shares
to the third party purchaser identified in the Transfer Notice for cash
consideration at a price not less than the Price provided that:
(a) the third party purchaser (or any undertaking within its group) is not a
Competitor and its shareholding would not, in the Directors' reasonable
opinion, be materially detrimental to the Company Group's interests;
(b) the transfer is completed within three (3) months after the expiry of the
acceptance period referred to in Article 35(b);
(c) the terms applying to such transfer are no more beneficial to the third
party purchaser than the Offered Terms; and
(d) the Board of Directors shall refuse registration of the proposed third
party purchaser:
(i) if such transfer obliges the Offeror to procure the making of an offer
pursuant to Article 44, until such time as such offer has been made
and completed; or
(ii) if the Offeror had stated in the Transfer Notice that unless all the
Shares comprised therein are sold none shall be sold, unless the third
party purchaser acquires all the Offered Shares.
42. Where any allocation referred to in Articles 37 to 41 (inclusive) would
result in a fractional allocation, the Directors may in their absolute
discretion round up or down such fractional allocations providing that the
number of Offered Shares allocated does not exceed the total number of Offered
Shares and provided that such rounding does not result in an Investor being
allotted more Shares than he has indicated he is willing to accept.
43. If a transfer of Shares is proposed to be made pursuant to these Articles
but cannot be completed prior to the fulfilment of such regulatory approvals as
may be required to enable the Shares to be acquired without breach of any
relevant law or regulation, any time period stated in the procedure to be
followed under these Articles to effect such transfer shall be deemed to be
extended until such time as the relevant regulatory approvals are obtained.
TAG-ALONG RIGHT
44. To the extent that any of the Investors has not exercised its pre-emptive
rights under Articles 33 to 39 (inclusive) with respect to all the Offered
Shares, such Investor shall have the right, exercisable upon written notice (the
CO-SALE NOTICE) to the Offeror, the Company and each other Investor within
fourteen (14) days after expiry of the Offer Notice (the CO-SALE RIGHT PERIOD),
to participate in such sale of the Offered Shares with its Preference Shares
and/or Exchangeable
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Bonds on the same terms and conditions as set forth in the Transfer Notice. The
Co-Sale Notice shall set forth the number of Preference Shares and/or
Exchangeable Bonds (on an as-converted, as-exchanged basis) that such Investor
wishes to include in such sale or transfer, which amount shall not exceed the
Co-Sale Pro Rata Portion (as defined below) of such Investor and shall contain
confirmation by each accepting Investor either:
(i) that it would exercise in respect of its own Shares or Exchangeable
Bonds co-sale rights pursuant to this Article 44 (specifying a maximum
number) that have not been exercised by other Investors (EXCESS
CO-SALE RIGHTS); or
(ii) that it would not exercise Excess Co-Sale Rights.
45. To the extent one or more of the Investors exercise such right of
participation in accordance with the terms and conditions set forth below, the
number of Shares that the Offeror may sell in the transaction shall be
correspondingly reduced.
46. Each Investor may sell all or any part of that number of Shares or
Exchangeable Bonds (calculated on an as-converted, as-exchanged basis) held by
it up to the product obtained by multiplying (x) the aggregate number of the
Offered Shares for which pre-emptive rights under Articles 33 to 39 (inclusive)
have not been exercised by (y) a fraction, the numerator of which is the number
of Preference Shares and/or Exchangeable Bonds (on an as-converted, as-exchanged
basis) owned by the Investor at the time of the sale or transfer and the
denominator of which is the aggregate of the numerator and the number of
Ordinary Shares held by the Offeror (CO-SALE PRO RATA PORTION).
47. To the extent that any Investor does not participate in the sale to the full
extent of its Co-Sale Pro Rata Portion, the Offeror and the participating
Investors shall, within five (5) days after the end of such Co-Sale Right Period
adjust the Co-Sale Pro Rata Portion of the Investors exercising Excess Co-Sale
Rights pro rata in accordance with the proportion with the number of Preference
Shares and/or Exchangeable Bonds (on a post-conversion, post-exchange basis)
held by each Investor exercising Excess Co-Sale Rights,
48. Each participating Investor shall effect its participation in the sale by
promptly delivering to the Offeror for transfer to the prospective purchaser one
or more certificates, properly endorsed for transfer, which represent the number
of Shares and/or Exchangeable Bonds which such Investor elects to sell.
49. The share certificate or certificates (or other instruments, as the case may
be) that the participating Investor delivers to the Offeror pursuant to Article
48 shall be transferred to the prospective purchaser in consummation of the sale
of the Shares pursuant to the terms and conditions specified in the Transfer
Notice, and the Offeror shall concurrently therewith remit to such Investor that
portion of the sale proceeds to which such Investor is entitled by reason of its
participation in such sale. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase shares or
other securities from an Investor exercising its co-sale right hereunder, the
Offeror shall not sell to such
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prospective purchaser or purchasers any Shares unless and until, simultaneously,
with such sale, the Offeror shall purchase such Shares from such Investor.
50. To the extent the Investors do not elect to purchase, or to participate in
the sale of the Offered Shares subject to the Transfer Notice by exercising its
co-sale rights, the Offeror may, not later than ninety (90) days following
delivery to the Company and each of the Investors of the Transfer Notice,
conclude a transfer of the Shares covered by the Transfer Notice and not elected
to be purchased by the Investors or reduced by the exercise of co-sale rights on
terms and conditions not materially different from those described in the
Transfer Notice. Any proposed transfer on terms and conditions materially
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer of any Shares by the Offeror, shall again be subject to the
pre-emptive rights and the co-sale rights of the Investors and shall require
compliance by the Offeror with the procedures described in Articles 32 to 49
(inclusive).
PROCEEDINGS AT GENERAL MEETINGS
51. No business shall be transacted at any meeting unless a quorum is present.
Duly authorised representatives of four Shareholders (with one Shareholder being
permitted to appoint one representative for such meeting) shall constitute a
quorum provided that if a quorum is not present, the Shareholders meeting shall
be automatically postponed for five Business Days at the same time and place
(and notice to that effect shall be given to all Directors), and a quorum shall
be formed when any three Shareholders are present in the manner as aforesaid.
52. A resolution in writing executed by or on behalf of each member who would
have been entitled to vote on it if it had been proposed at a general meeting or
a meeting of the relevant class of holders of Shares at which he was present
shall be as effective as if it had been passed at a general meeting or a meeting
of the relevant class of holders of Shares duly convened and held. Such a
resolution shall be by means of an instrument or contained in an electronic
communication sent to such address (if any) for the time being notified by or on
behalf of the Company for that purpose and may consist of several instruments or
several electronic communications, each executed in such manner as the Directors
may approve by or on behalf of one or more members, or a combination of both.
53. Where for any purpose an ordinary resolution of the Company is required, a
special or extraordinary resolution shall also be effective. Where for any
purpose an extraordinary resolution is required a special resolution shall also
be effective.
VOTES OF MEMBERS
54. The appointment of a proxy, whether by means of an instrument or contained
in an electronic communication, shall be executed in such manner as the
Directors may approve. Subject thereto, the appointment of a proxy shall be
executed by the appointor or his attorney or, if the appointor is a corporation,
executed by a duly authorised officer, attorney or other authorised person or
under its common seal. For the purposes of this Article and Articles 55, 56 and
57, an electronic communication which contains a proxy appointment need not
comprise writing if the Directors so determine and, in such a case, if the
Directors so determine the appointment need not
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be executed but shall instead be subject to such conditions as the Directors may
approve.
55. The appointment of a proxy shall be in any usual form or in any other form
which the Directors may approve. Subject thereto, the appointment of a proxy may
be:
(a) by means of an instrument; or
(b) contained in an electronic communication sent to such address (if any) for
the time being notified by or on behalf of the Company for that purpose,
provided that the electronic communication is received in accordance with
Article 56 before the time appointed for holding the meeting or adjourned
meeting or, where a poll is taken more than 48 hours after it is demanded,
after the poll has been demanded and before the time appointed for the
taking of the poll.
The Directors may, if they think fit, but subject to the provisions of the Act,
at the Company's expense send forms of proxy for use at the meeting and issue
invitations contained in electronic communications to appoint a proxy in
relation to the meeting in such form as may be approved by the Directors. The
appointment of a proxy shall not preclude a member from attending and voting in
person at the meeting or poll concerned. A member may appoint more than one
proxy to attend on the same occasion.
56. The appointment of a proxy shall:
(a) in the case of an instrument, be delivered personally or by post to the
office or registered agent within the Cayman Islands as may be specified by
or on behalf of the Company for that purpose:
(i) in the notice convening the meeting, or
(ii) in any form of proxy sent by or on behalf of the Company in relation
to the meeting,
before the time appointed for holding the meeting or adjourned meeting at
which the person named in the appointment proposes to vote; or
(b) in the case of an appointment contained in an electronic communication, be
received at the address specified by or on behalf of the Company for the
purpose of receiving electronic communications:
(i) in the notice convening the meeting, or
(ii) in any form of proxy sent by or on behalf of the Company in relation
to the meeting, or
(iii) in any invitation contained in an electronic communication to appoint
a proxy issued by or on behalf of the Company in relation to the
meeting,
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before the time appointed for holding the meeting or adjourned meeting
at which the person named in the appointment proposes to vote; or
(c) in either case, where a poll is taken more than 48 hours after it is
demanded, be delivered or received as aforesaid after the poll has been
demanded and before the time appointed for the taking of the poll; or
(d) in the case only of an instrument, where the poll is not taken forthwith
but is taken not more than 48 hours after it was demanded, be delivered at
the meeting at which the poll was demanded to the chairman or to the
secretary or to any Director;
and any proxy appointment which is not delivered or received in a manner so
permitted shall be invalid.
57. Any power of attorney or other written authority under which a proxy
appointment is executed or an office or notarially certified copy or a copy
certified in accordance with relevant Cayman law of such power or written
authority shall be:
(a) delivered personally or by post to the office or registered agent within
the Cayman Islands as may be specified by or on behalf of the Company in
accordance with Article (a), before the time for holding the meeting or
adjourned meeting at which the person named in the appointment proposes to
vote; or
(b) where a poll is taken more than 48 hours after it is demanded, be delivered
as aforesaid after the poll has been demanded and before the time appointed
for taking the poll; or
(c) in the case only of a proxy appointment by means of an instrument, where a
poll is not taken forthwith but is taken not more than 48 hours after it
was demanded, be delivered at the meeting at which the poll was demanded to
the chairman or to the secretary or to any Director together with the proxy
appointment to which it relates.
58. A vote given or poll demanded by proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the previous
determination of the authority of the person voting or demanding the poll unless
notice of the determination was delivered or received as mentioned in the
following sentence before the start of the meeting or adjourned meeting at which
the vote is given or the poll demanded or (in the case of a poll taken otherwise
than on the same day as the meeting or adjourned meeting) the time appointed for
taking the poll. Such notice of determination shall be either by means of an
instrument delivered to the office or registered agent within the Cayman Islands
as may be specified by or on behalf of the Company in accordance with Article
(a) or contained in an electronic communication at the address (if any)
specified by the Company in accordance with Article (b), regardless of whether
any relevant proxy appointment was effected by means of an instrument or
contained in an electronic communication. For the purpose of this Article, an
electronic communication which contains such notice of determination need not
comprise writing if the Directors have determined that the
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electronic communication which contains the relevant proxy appointment need not
comprise writing.
59. A proxy appointment shall be deemed to include the right to demand, or join
in demanding, a poll but shall not confer any further right to speak at a
meeting, except with the permission of the chairman. The proxy appointment shall
also be deemed to confer authority to vote on any amendment of a resolution put
to the meeting for which it is given as the proxy thinks fit. The proxy
appointment shall, unless it provides to the contrary, be valid for any
adjournment of the meeting as well as for the meeting to which it relates.
NUMBER OF DIRECTORS
60. The number of Directors (other than alternate Directors) shall be seven as
appointed pursuant to the Subscription and Shareholders' Agreement.
ALTERNATE DIRECTORS
61. A Director (other than an alternate Director) may appoint any other Director
and an I Director may appoint any other person (whether or not a Director) who
is willing to act to be an alternate Director and may remove from office an
alternate Director so appointed by him.
62. A person may act as alternate Director to represent more than one Director,
and an alternate Director shall be entitled at meetings of the Directors or any
committee of the Directors to one vote for every Director whom he represents
(and who is not present) in addition to his own vote (if any) as a Director, but
he shall count as only one for the purpose of determining whether a quorum is
present.
63. An alternate Director may be reimbursed by the Company for such expenses as
might properly have been reimbursed to him if he had been a Director but shall
not be entitled to receive any remuneration from the Company in respect of his
services as an alternate Director except such part (if any) of the remuneration
otherwise payable to his appointor as such appointor may by notice in writing to
the Company from time to time direct. An alternate Director shall be entitled to
be indemnified by the Company to the same extent as if he were a Director.
64. An alternate Director shall cease to be an alternate Director:
(a) if his appointor ceases to be a Director; or
(b) if his appointor revokes his appointment pursuant to Article 58; or
(c) on the happening of any event which, if he were a Director, would cause him
to vacate his office as Director; or
(d) if he resigns his office by notice to the Company.
65. Any appointment or removal of an alternate Director shall be by notice to
the Company executed by the Director making or revoking the appointment and
shall take effect in accordance with the terms of the notice on receipt of such
notice by the Company which shall:
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(a) in the case of a notice contained in an instrument, be delivered personally
to the secretary or to a Director other than the Director making or
revoking the appointment; or
(b) in the case of a notice contained in an instrument, be at the office or at
another address designated by the Directors for that purpose; or
(c) in the case of a notice contained in an electronic communication, be at
such address (if any) as may for the time being be notified by or on behalf
of the Company for that purpose.
POWERS OF DIRECTORS
66. The Directors may exercise the voting power conferred by the shares in any
body corporate held or owned by the Company in such manner in all respects as
they think fit (including without limitation the exercise of that power in
favour of any resolution appointing any of the Directors or any representatives
of its members or any of them directors of such body corporate, or voting or
providing for the payment of remuneration to the directors of such body
corporate).
DELEGATION OF DIRECTORS' POWERS
67. Save as provided in the Subscription and Shareholders' Agreement, the
Directors may with I Director Consent delegate any of their powers to any
committee consisting of one or more Directors. The Directors may also delegate
to any Director holding any executive office such of their powers as the
Directors consider desirable to be exercised by him. Any such delegation shall,
in the absence of express provision to the contrary in the terms of delegation,
be deemed to include authority to sub-delegate all or any of the powers
delegated to one or more Directors (whether or not acting as a committee) or to
any employee or agent of the Company. Any such delegation may be made subject to
such conditions as the Directors may specify, and may be revoked or altered. The
Directors may, with I Director Consent, co-opt persons other than Directors on
to any such committee. Such co-opted persons may enjoy voting rights in the
committee. The co-opted members shall be less than one-half of the total
membership of the committee and a resolution of any committee shall be effective
only if a majority of the members present are Directors. Subject to any
conditions imposed by the Directors, the proceedings of a committee with two or
more Directors shall be governed by these Articles regulating the proceedings of
Directors so far as they are capable of applying.
68. The Directors may appoint any person to any office or employment having a
designation or title including the word "director" or attach such a designation
or title to any existing office or employment with the Company and may terminate
any such appointment or the use of any such designation or title. The inclusion
of the word "director" in the designation or title of any such office or
employment shall not imply that the holder is a Director, and the holder shall
not thereby be empowered in any respect to act as, or be deemed to be, a
Director for any of the purposes of these Articles.
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DIRECTORS' EXPENSES
69. The Company shall, upon request, reimburse the Directors all reasonable
travelling, hotel and other expenses properly incurred by them in connection
with their attendance at meetings of Directors or committees of Directors or
general meetings or separate meetings of the holders of any class of shares or
otherwise in connection with the discharge of their duties.
APPOINTMENT AND REMOVAL OF DIRECTORS
70. Subject to the Subscription and Shareholders' Agreement, the members may by
ordinary resolution appoint (or remove) any person or persons who is or are
willing to act to be a Director, either to fill a vacancy or as an additional
Director, subject to any maximum for the time being in force. Any Director so
appointed shall hold office until he is removed by ordinary resolution or under
regulation 71 of Table A (as amended by these Articles).
71. Subject to the Subscription and Shareholders' Agreement, the Directors shall
have the power to appoint any person who is willing to act to be a Director,
either to fill a vacancy or as an addition to the existing Directors, subject to
any maximum for the time being in force. Any Director so appointed shall hold
office until he is removed by ordinary resolution or under regulation 71 of
Table A (as amended by these Articles).
72. The Directors shall not be subject to retirement by rotation and all
references in Table A (other than in regulations 72 to 79 which are excluded) to
retirement by rotation are modified accordingly.
DISQUALIFICATION OF DIRECTORS
73. Regulation 71 of Table A is amended by adding before the final full stop the
following words:
(a) he is removed in accordance with Article 70; or
(b) save if he is an I Director or as provided in the Subscription and
Shareholders' Agreement, he is requested to resign in writing by not less
than three quarters of the other Directors. In calculating the number of
Directors who are required to make such a request to the Director, (i) an
alternate Director appointed by him acting in his capacity as such shall be
excluded; and (ii) a Director and any alternate Director appointed by him
and acting in his capacity as such shall constitute a single Director for
this purpose, so that the signature of either shall be sufficient."
REMUNERATION OF DIRECTORS
74. The remuneration of the Directors shall be determined by the Board of
Directors upon recommendation of the Remuneration Committee.
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INDEMNITY, BENEFITS AND INSURANCE
75. No Director or other officer shall be liable for any loss, damage or
misfortune which may happen to or be incurred by the Company in the proper
execution of the duties of his office or in relation thereto. This Article 75
shall only have effect in so far as its provisions are not avoided by the Act.
76. The Directors may exercise all the powers of the Company to purchase and
maintain insurance for or for the benefit of any person who is or was:
(a) a Director, other officer, employee or Auditor of the Company, or any body
which is or was the Holding company or Subsidiary of the Company, or in
which the Company or such Holding company or Subsidiary has or had any
interest (whether direct or indirect) or with which the Company or such
Holding company or Subsidiary is or was in any way allied or associated;
(b) a trustee of any pension fund in which employees of the Company or any
other body referred to in Article 76(a) is or has been interested; or
(c) any trustee or corporate nominee of any Employee Scheme;
including without limitation insurance against any liability incurred by such
person in respect of any act or omission in the actual or purported execution or
discharge of his duties or in the exercise or purported exercise of his powers
or otherwise in relation to his duties, powers or offices in relation to the
relevant body or fund.
77. No Director or former Director shall be accountable to the Company or the
members for any benefit provided pursuant to Article 76. The receipt of any such
benefit shall not disqualify any person from being or becoming a Director of the
Company.
PROCEEDINGS OF DIRECTORS
78. Subject to the provisions of these Articles, the Directors may regulate
their proceedings as they think fit. Any three Directors may call a meeting of
the Directors. At least fourteen (14) days' written notice shall be given to
each Director entitled to vote at any meeting of the Directors, unless at least
four Directors, including two I Directors, (or their alternates) approve a
shorter period. Any Notice shall include an agenda identifying in reasonable
detail the matters to be discussed at the meeting together with copies of any
relevant papers to be discussed at the meeting. If any matter is not identified
in reasonable detail in the agenda the Board of Directors shall not decide on it
unless all the Directors agree in writing to waive such notice
79. Notice of a meeting of the Directors shall be deemed to be properly sent to
a Director if it is sent to him personally, or sent by registered mail to him at
his last known address or such other address (if any) as may for the time being
be notified by him or on his behalf to the Company for that purpose and sent by
facsimile or other electronic communication to such address (if any) as may for
the time being be notified by him or on his behalf to the Company for that
purpose. Notice by means of registered mail and electronic communication shall
be deemed sent on the latter of (i)
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the date of transmission of a facsimile or other electronic communication and
(ii) three days after the date of postage on registered mail. Any Director may
waive notice of a meeting and any such waiver may be retrospective. Any
electronic communication pursuant to this Article need not comprise writing if
the Directors so determine.
80. Subject to Article 10.2 of the Subscription and Shareholders' Agreement,
questions arising at a meeting shall be decided by a the affirmative vote of a
simple majority of Directors present. Each Director shall have one vote.
81. Subject to the Subscription and Shareholders' Agreement, the quorum for
transacting business at any Board meeting shall be five Directors (including at
least two I Directors) (whether in person or by means of a conference telephone
or any other equipment which allows all participants in the meeting to speak to
and hear each other simultaneously) when the relevant business is transacted. If
a quorum is not present, the Board meeting shall be automatically postponed for
five Business Days at the same time and place (and notice to that effect shall
be given to all Directors), and a quorum shall be formed when any four of the
Directors are present in the manner as aforesaid. A Director shall be regarded
as present for the purposes of a quorum if represented by an alternate Director.
Any Director who ceases to be a Director at a Directors' meeting may continue to
be present and to act as a Director and be counted in the quorum until the
termination of the Directors' meeting if no Director objects.
82. Without prejudice to the first sentence of Article 78, a person entitled to
be present at a meeting of the Directors or of a committee of the Directors
shall be deemed to be present for all purposes if he is able (directly or by
telephonic communication) to speak to and be heard by all those present or
deemed to be present simultaneously. A Director so deemed to be present shall be
entitled to vote accordingly, and shall be counted in a quorum. Such a meeting
shall be deemed to take place where it is convened to be held or (if no Director
is present in that place) where the largest group of those participating is
assembled or, if there is no such group, where the chairman of the meeting is.
The word MEETING in these Articles shall be construed accordingly.
83. A resolution in writing executed by all the Directors entitled to receive
notice of a meeting of Directors or of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of Directors or (as
the case may be) a committee of Directors duly convened and held. For this
purpose:
(a) a resolution may be by means of an instrument or contained in an electronic
communication sent to such address (if any) for the time being notified by
the Company for that purpose;
(b) a resolution may consist of several instruments or several electronic
communications, each executed by one or more Directors, or a combination of
both;
(c) a resolution executed by an alternate Director need not also be executed by
his appointor; and
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(d) a resolution executed by a Director who has appointed an alternate Director
need not also be executed by the alternate Director in that capacity.
84. Without prejudice to his obligations of disclosure under the Act and these
Articles, provided that he has disclosed to the Directors the nature and extent
of any material interest of his (and any of his Connected Persons), a Director
may vote at any meeting of the Directors or of a committee of the Directors on,
and be counted in the quorum present at a meeting in relation to, any resolution
concerning a transaction or arrangement with the Company or in which the Company
is interested, or concerning any other matter in which the Company is
interested, notwithstanding that he is interested in that transaction,
arrangement or matter or has in relation to it a duty which conflicts or may
conflict with the interests of the Company.
THE SEAL, DEEDS AND CERTIFICATION
85. The seal shall only be used by the authority of a resolution of the
Directors. The Directors may determine who shall sign any instrument executed
under the seal. If they do not, it shall be signed by at least one Director and
the secretary or by at least two Directors. Any document may be executed under
the seal by impressing the seal by mechanical means or by printing the seal or a
facsimile of it on the document or by applying the seal or a facsimile of it by
any other means to the document. A document signed, with the authority of a
resolution of the Directors, by a Director and the secretary or by two Directors
and expressed (in whatever form of words) to be executed by the Company has the
same effect as if executed under the seal. The Directors may by resolution
determine, either generally or in any particular case, that in respect of
certificates for Shares or debentures or other securities of the Company, the
signature of any Director or of the secretary or other person authorised by the
Directors as aforesaid forming part of the sealing process may be applied or
effected by non-autographic means and in favour of any registered holder or
other person acquiring any such Shares or debentures of other securities in good
faith a certificate executed in any of the modes of execution authorised herein
shall be as valid and effective as if such certificate was issued under the seal
or the official securities seal kept pursuant to the Act, as the case may be, of
the Company pursuant to these Articles.
86. The Company may exercise the powers conferred by the Act with regard to
having an official seal for use abroad.
87. Any Director or the secretary or any person appointed by the Directors for
the purpose shall have power to authenticate and certify as true copies of and
extracts from:
(a) any document comprising or affecting the constitution of the Company,
whether in physical form or electronic form;
(b) any resolution passed by the Company, the holders of any class of Shares in
the capital of the Company, the Directors or any committee of the Directors
whether in physical form or electronic form; and
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(c) any book, record and document relating to the business of the Company
whether in physical form or electronic form (including without limitation
the accounts).
If certified in this way, a document purporting to be a copy of a resolution, or
the minutes of or an extract from the minutes of a meeting of the Company, the
holders of any class of Shares in the capital of the Company, the Directors or a
committee of the Directors, whether in physical form or electronic form, shall
be conclusive evidence in favour of all persons dealing with the Company in
reliance on it or them that the resolution was duly passed or that the minutes
are, or the extract from the minutes is, a true and accurate record of
proceedings at a duly constituted meeting.
RECORD DATES
88. Notwithstanding any other provision of these Articles, the Company or the
Directors may fix any date as the record date for any dividend, distribution,
allotment or issue, which may be on or at any time before or after any date on
which the dividend, distribution, allotment or issue is declared, paid or made.
NOTICES
89. Any notice to be sent to or by any person pursuant to these Articles (other
than a notice calling a meeting of the Directors) shall be in writing, may be
sent by electronic communication to such address (if any) for the time being
notified for that purpose to the person sending the notice by or on behalf of
the person to whom the notice is sent.
90. The Company shall send any notice or other document pursuant to these
Articles to a member by whichever of the following methods it may in its
absolute discretion determine:
(a) personally; or
(b) by posting the notice or other document in a prepaid envelope addressed, in
the case of a member, to his registered address, or in any other case, to
the person's usual address; or
(c) by leaving the notice or other document at that address; or
(d) by sending the notice or other document by electronic communication to such
address (if any) for the time being notified to the Company by or on behalf
of the member for that purpose; or
(e) by any other method approved by the Directors.
91. Unless otherwise provided by these Articles, a member or a person entitled
to a Share in consequence of the death or bankruptcy of a member shall send any
notice or other document pursuant to these Articles to the Company by whichever
of the following methods he may in his absolute discretion determine:
(a) by posting the notice or other document in a prepaid envelope addressed to
the office; or
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(b) by leaving the notice or other document at the office; or
(c) by sending the notice or other document by electronic communication to such
address (if any) for the time being notified by or on behalf of the Company
for that purpose.
92. A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of Shares in the capital of the Company
shall be deemed to have been sent notice of the meeting and, where requisite, of
the purposes for which it was called.
93. The Directors may from time to time issue, endorse or adopt terms and
conditions relating to the use of electronic communications for the sending of
notices, other documents and proxy appointments by the Company to members or
persons entitled to a Share in consequence of the death or bankruptcy of a
member or otherwise by operation of law and by members or such persons entitled
by transmission to the Company.
94. Every person who becomes entitled to a Share shall be bound by any notice in
respect of that Share which, before his name is entered in the register of
members, has been duly given to a person from whom he derives his title.
95. In the case of joint holders of a Share, all notices or other documents
shall be sent to the joint holder whose name stands first in the register in
respect of the joint holding. Any notice or other document so sent shall be
deemed for all purposes sent to all the joint holders.
96. A notice or other document sent by the Company to a member contained in an
electronic communication shall be deemed sent to the member on the latter of (i)
the date of transmission of a facsimile or other electronic communication and
(ii) three days after the date of postage on registered mail through which such
notice is also sent. the day following that on which the electronic
communication was sent to the member. Such a notice or other document shall be
deemed sent by the Company to the member on that day notwithstanding that the
Company becomes aware that the member has failed to receive the relevant notice
or other document for any reason and notwithstanding that the Company
subsequently sends a copy of such notice or other document by post to the
member.
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