this document is in draft form, incomplete and subject … · subject to the authorisation of the...

This Appendix sets out summaries of the main clauses of our Articles of Associationadopted on [●], which shall become effective as of the date on which the H shares are listed onthe Stock Exchange. As the main purpose of this Appendix is to provide potential investors withan overview of the Articles of Association, it may not necessarily contain all information that isimportant for prospective investors. As discussed in the appendix headed “Appendix VII —Documents Delivered to the Registrar of Companies and Available for Inspection” to thisDocument, the full document of the Articles of Association in Chinese is available forexamination.

1 DIRECTORS AND BOARD OF DIRECTORS

(1) Power to allocate and issue shares

The Articles of Association does not contain clauses that authorise the Board ofDirectors to allocate or issue shares. The Board of Directors shall prepare suggestions forshare allotment or issue, which are subject to approval by the Shareholders at the generalShareholders’ meeting in the form of a special resolution. Any such allotment or issueshall be in accordance with the procedures stipulated in appropriate laws, administrativeregulations and supervision rules of shares listed region, the Board of Director shall notdispose of or agree to dispose of assets before the approval of the general shareholder ’smeeting.

(2) Power to dispose assets of our Company or any subsidiary

In any case that the Board of Directors intends to dispose assets, if the sum of theexpected value of the fixed assets to be disposed of, and the amount or value of the costreceived from the fixed assets of our Company disposed of within the four monthsimmediately preceding this suggestion for disposal exceeds 33% of the value of fixedassets of our Company indicated on the latest audited balance sheet submitted at theShareholders’ meeting.

For the purposes of the Articles of Association, a disposition of fixed assets includescertain acts of transfer of interests in assets but does not include the provision of fixedassets as security.

The validity of the transactions with respect to the disposal of fixed assets of ourCompany shall not be affected by the violation of the above restrictions contained in theArticles of Association.

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED "WARNING" ON THE COVER OF THIS DOCUMENT.

APPENDIX V SUMMARY OF THE ARTICLES OF ASSOCIATION OF OUR COMPANY

– V-1 –

(3) Emoluments or compensation for loss of office

As provided in the written contract entered into between our Company and theDirectors or Supervisors in connection with their emoluments, they are entitled tocompensation or other payments for loss of office or retirement as a result of theacquisition of our Company, subject to the approval of the Shareholders at the generalShareholders’ meeting in advance.

Acquisition of our Company refers to any of the following circumstances:

i. An offer made by any person made to all Shareholders; or

ii. An offer is made by any person with a view to the offeror becoming thecontrolling shareholder of our Company.

The definition of controlling shareholder is the same as defined in the Articles ofAssociation.

If the relevant Director or Supervisor fails to comply with the above requirements,any payment received shall belong to the person who sells the shares for accepting theaforesaid offer. The Director or Supervisor shall bear all expenses arising from thedistribution of such payments to the person in a proportional manner and all relatedexpenses shall not be deducted from these payments distributed.

(4) Loans or guarantees of loans to Directors, Supervisors or other management

personnel

Our Company shall neither provide the Directors, Supervisors or seniormanagement of our Company or our parent company with loans or loan guarantees eitherdirectly or indirectly nor provide persons related to the above personnel with loans orloan guarantees. The following circumstances are exempted from the above clauses:

(i) Our Company provides our subsidiaries with loans or loan guarantees;

(ii) Our Company provides any of the Directors, Supervisors or seniormanagement with loans, loan guarantees or any other fund pursuant to theemployment contracts approved at the Shareholders’ meeting to pay allexpenses incurred for the purpose of our Company or performing his dutiesowed to our Company; and

(iii) In case that the normal scope of business of our Company covers the provisionof loans or loan guarantees, our Company may provide any of the Directors,Supervisors or senior management and other related personnel with loans orloan guarantees, provided that the conditions governing the above loans orloan guarantees shall be normal commercial conditions.



– V-2 –

In the event that our Company provides loans in violation of this restriction, theperson who receives the loan(s) must pay off the loan(s) immediately, regardless of theconditions of loans. Any loan guarantee provided by our Company in violation of theabove requirements shall not be mandatorily enforced against us, unless under thefollowing circumstances:

i. The loan provider unknowingly provides loans to personnel related to theDirectors, Supervisors or senior management of our Company; or

ii. The collateral provided by our Company is sold lawfully by the lender to thebuyer in good faith.

(5) Provide financial assistance for acquiring the shares of the Company or shares of

any subsidiary

Subject to the Articles of Association, our Company or our subsidiaries (includingour affiliated enterprises) shall not provide any financial assistance at any time or in anykind to personnel that acquires or plans to acquire our shares. Such personnel include anywho undertake obligations, directly or indirectly, from acquiring the shares; and ourCompany or any of our subsidiaries (including our affiliated enterprises) shall notprovide personnel mentioned in the preceding paragraph with financial aid at any time orin any manner, to mitigate or exempt the obligations of the above personnel.

For the purpose of the above provisions, “Financial aid” includes, but is not limited to:

i. Gifts;

ii. Guarantees (including acts of the guarantor assuming liabilities or providingproperties to ensure that the obligor performs the obligations), compensation(excluding compensation arising from mistakes of our Company), release orwaiver of rights;

iii. Provision of loans or signing of contracts whereby our Company performssome obligations before others, change of the parties to the loans/contracts aswell as the assignment of the rights in the loans/contracts; and

iv. Financial aid provided by our Company in any other manner when it isinsolvent, has no net assets, or will suffer significant decreases in net assets.

“Assuming obligations” includes obligator undertaking obligations by way ofcontract or the making of an arrangement (whether enforceable or not, and whether madeon its own account or with any other persons), or changing its financial status in any othermanner.



– V-3 –

The following transactions are not deemed to be prohibited:

i. Related financial aid provided by our Company which is in good faith in ourinterest and the main purpose of the financial aid is not to acquire our sharesor is an incidental part of a master plan of our Company;

ii. The lawful distribution of our properties by way of dividend;

iii. The allotment of bonus shares as shares;

iv. Reducing the registered capital, redeeming the shares or adjusting the equitystructure pursuant to the Articles of Association;

v. Our Company granting loans within our scope of business and in the ordinarycourse of our business, provided that such loans shall not result in reductionin the net assets of our Company or even if the net assets are reduced, suchfinancial aid is paid from the profit available for distribution; and

vi. Our Company providing the employee stock ownership plan with fund,provided that such loans shall not result in reduction in the net assets of ourCompany or, even if the net assets are reduced, such financial aid is paid fromthe profit available for distribution.

(6) Disclosure of interests in contracts, transactions or arrangements with theCompany

Where a Directors, Supervisors and senior management has material interests in thecontracts, transactions or arrangements that our Company has entered into or plans toenter into directly or indirectly (except for employment contracts that our Company hasentered into with the Directors, Supervisors and senior management), the abovepersonnel shall disclose the nature and degree of their interests to the Board of Directorsas soon as possible no matter whether the above contracts, transactions, arrangements orsuggestions are subject to the approval of the Board of Directors in normal circumstances.

With respect to any contract, transaction or arrangement in which a Director or hisassociates have a material interest, the Director shall not vote and shall not be included inthe quorum. Unless the Directors, Supervisors and senior management who have interestshave made disclosure to the Board of Directors in accordance with the above requirementsand the Board of Directors approves the matters at the meeting in which they are notincluded in the quorum nor participate in voting, our Company shall have the right tocancel the contracts, transactions or arrangements, except where the opposite party is aparty in good faith without knowledge of the acts of related Directors, Supervisors andsenior management violating their obligations.

Where related personnel of the Directors, Supervisors and senior management haveinterests in certain contracts, transactions and arrangements, the relevant Directors,Supervisors and senior management shall be deemed to have interests.



– V-4 –

Prior to our Company’s first considering the relevant contracts, transactions orarrangements, if the Directors, Supervisors and senior management have notified theBoard of Directors in writing and stated that with regard to the content of such notice, theyhave interest in certain contracts, transactions and arrangements thereafter. And withinthe scope specified by such notice, the relevant Directors, Supervisors and seniormanagement have made disclosures which are in accordance with this Article ofAssociation.

(7) Remuneration

Our Company shall sign written agreements with the Directors and Supervisorsregarding remuneration, which shall be subject to prior approval of the generalShareholders’ meeting. The aforesaid remuneration include:

i. Emoluments in respect of his service as a Director, Supervisor or seniormanagement of our Company;

ii. Emoluments in respect of his service as a Director, Supervisor or seniormanagement of any subsidiary of our Company;

iii. Emoluments in respect of other service in relation to the management of ourCompany and any subsidiary of our Company; and

iv. Payment by way of compensation for loss of office or retirement from office ofa Director or Supervisors.

(8) Appointment, resignation and dismissal

The Board of Directors consists of eight Directors, three of which are independentnon-executive Directors. The Board of Directors has one chairman and one vice chairman.Directors are elected at the general Shareholders’ meeting. The Directors need not holdany of our shares.

The chairman and vice chairman of the Board shall be elected and dismissed by avote of more than one half of the Directors. Provided that it is in compliance with relevantlaws, regulations and rules as well as the Listing Rules, the general Shareholders’ meetingmay remove any Director whose term has not expired by an ordinary resolution withoutaffecting any claim for damages that may be made pursuant to any contract.

The chairman, vice chairman of the Board and other Directors serve three-yearterms. Upon expiration of the term, the Director may be re-elected. Director can be thegeneral manager or other senior management personnel at the same time. However, thenumber of the Directors who are also general manager or other senior managementpersonnel and the Director who represents employees shall not be more than half of thetotal number of Directors.



– V-5 –

None of the following persons shall serve as our Director, Supervisor or seniormanagement:

i. A person who has no civil capacity or has limited civil capacity;

ii. A person who has been imposed penalty for the offense of corruption, bribery,embezzlement, larceny, or disrupting the social economic order and is withinfive years of the expiry date of punishment or has been deprived of politicalrights because of this conviction and is within five years of the expiry date ofthe sentence;

iii. A person who is a former director, factory manager or manager of a companyor enterprise that is bankrupt and liquidated, was personally liable for thebankruptcy of such company or enterprise, and is within three years of thedate of completion of bankruptcy and liquidation of such company orenterprise;

iv. A person who has served as the legal representative of a company orenterprise whose business license was revoked or was ordered to close due toviolation of laws, was personally liable, and is within three years of the dateon which the business license of such company or enterprise was revoked;

v. A person who has a relatively large sum of debt, which was not paid atmaturity;

vi. A person who is investigated by the judicial agencies for violation of criminallaw and whose case is pending;

vii. A person who is subject to the competent authority of securities of the StateCouncil’s punishment which prohibited them from entering into the securitiesmarket for a period which has not yet expired;

viii. A person judged by the competent agencies to have violated the provisions ofrelevant securities laws, has been involved in deceptive or dishonest acts andis within five years of the date on which the judgment was made;

ix. A person who is not a natural person; or

x. Any other person who is otherwise not eligible under laws or rules set out bythe securities regulatory bodies or stock exchanges on which Shares of theCompany are listed.

The validity of an act of the Directors or senior management on behalf of ourCompany to bona fide third parties shall not be affected by any irregularities in theirappointment, election or qualifications.



– V-6 –

(9) Borrowing powers

The Articles of Association do not contain any specific provision regarding themanner in which the Directors may exercise the right to borrow money or the manner inwhich such a right is given provided that the Board of Directors shall be entitled todevelop proposals for our Company to issue bonds and to list its Shares, and that suchbond issues must be approved by the Shareholders by a special resolution at the generalShareholders’ meeting.

(10) Duties

The Directors, Supervisors and senior management shall bear the obligations ofgood faith and diligence towards our Company. In the event of violation of obligationsowed to our Company by the Directors, Supervisors and senior management, we shallhave the right to take the following measures in addition to various rights and remedialmeasures stipulated in legal and administrative regulations:

i. Require related Directors, Supervisors or senior management to compensateour Company for losses sustained as a result of their neglect of duty;

ii. Cancel any contract or transaction entered into between our Company andrelated Directors, Supervisors or senior management as well as any contractor transaction entered into between our Company and third person when thethird person knew or should have known that the Directors, Supervisors orsenior management acting on behalf of our Company violated theirobligations owed to our Company;

iii. Require the relevant Directors, Supervisors or senior management to turnover the proceeds obtained from the violation of their obligations;

iv. Recover funds collected by the relevant Directors, Supervisors or seniormanagement that should have been collected for our Company, including butnot limited to commissions;

v. Require the relevant Directors, Supervisors or senior management to returnthe interest earned or that may be earned from funds that should have beenpaid to our Company;

vi. Require the Directors, Supervisors or senior management to return to theCompany properties obtained from violation of their obligations throughlegal procedure and verdicts.



– V-7 –

When performing their duties, the Directors, Supervisors and senior management ofthe Company must comply with the principle of integrity and shall not put themselves insituations where their own interests may conflict with the obligations they haveundertaken. This principle includes, without limitation, performing the followingobligations:

i. Acting honestly in the best interests of our Company as the starting point ofany action;

ii. Exercising powers within but not exceeding the scope of authority;

iii. Exercising conferred discretionary powers personally without beingmanipulated by others; not transferring discretionary powers to other personsunless permitted by laws, administrative regulations or with the informedconsent given in a general Shareholders’ meeting;

iv. Treating Shareholders of the same class equally and Shareholders of differentclasses fairly;

v. Entering into contract, transaction or arrangement with our Company is notallowed, unless in line with the Articles of Association or otherwise by theapproval of the general Shareholders’ meeting with its full knowledge;

vi. Seeking private gain using the properties of our Company in any manner isnot allowed, unless agreed by the general Shareholders’ meeting with its fullknowledge;

vii. Using one’s position to take bribes or other illegal income is not allowed, noris any form of embezzlement of our property, including, but not limited to,opportunities beneficial to our Company;

viii. Accepting commissions associated with transactions of our Company is notallowed unless agreed by the general Shareholders’ meeting with its fullknowledge;

ix. Compliance with the Articles of Association, faithfully execute one’s dutiesand protect the Company’s interests, and not to exploit one’s position andpower in the Company to advance one’s own private interests;

x. Unless agreed at the general Shareholders’ meeting with its full knowledge,take advantage of position, take business opportunity which should havebelonged to our Company for themselves or others, conduct business that issimilar with our company by themselves or cooperating with others is notallowed, or competing with our Company in any manner is not allowed,either;

xi. Misappropriation of our funds is not allowed, nor is depositing the assets orfunds of our Company in an account opened in one’s own name or othernames;



– V-8 –

xii. Not to, in violation of the provisions of this Articles of Association, lend ourCompany’s funds to any other person or provide security for our Company’sshareholders or other persons with properties of our Company, without theconsent of the general Shareholders’ meeting or Board of Directors;

xiii. Not to harm the interests of our Company through use of his/her connectedrelationship; and

xiv. Disclosure of confidential information relating to our Company obtainedduring employment without the consent of the general Shareholders’ meetingwith its full knowledge; unless in the interest of our Company, using suchinformation is also not allowed; however, under the following circumstancesthe information may be disclosed to a court or other competent governmentagencies as required by:

(i) The provisions of the law;

(ii) For the public interests;

(iii) The interests of the Directors, Supervisors or senior management.

The relevant personnel shall return the income obtained from violation of the aboveprovisions to our Company and shall bear the liability of compensation if our Companysuffers damage.

The Directors, Supervisors and senior management may not direct the followingpersonnel or institutions (“related personnel”) to do what they are prohibited from doing:

i. Spouses or minor children of the Directors, Supervisors and seniormanagement;

ii. Trustors of the Directors, Supervisors and senior management or the personsmentioned in the preceding paragraph;

iii. Partners of the Directors, Supervisors and senior management or personsmentioned in i and ii above;

iv. Our Company under de facto control by the Directors, Supervisors and seniormanagement individually or jointly with the persons or other directors,supervisors and senior management of companies mentioned in i, ii and iiiabove; and

v. Directors, Supervisors or senior management of the controlled companiesmentioned in the preceding paragraph.



– V-9 –

The good faith obligation of the Directors, Supervisors and senior management maynot necessarily cease with the termination of their terms; their obligation to keep the tradesecrets of our Company in confidence shall survive the termination of their terms. Otherduties may continue for such period as fairness may require depending on the time lapsebetween the termination and the act concerned and any circumstance and condition underwhich the relationships between them and the Company are terminated.

Unless otherwise provided in the Articles of Association, liabilities of Directors,Supervisors and senior management arising from the violation of specific duties may bedissolved by informed general Shareholders’ meeting.

Apart from the obligations set forth in related laws, administrative regulations orthe Listing Rules, where the shares of the Company are listed, the Directors, Supervisorsor senior management shall assume the following obligations for each of the Shareholderswhen exercising their rights and performing their responsibilities:

i. They shall not cause our Company to operate beyond the scope of businessindicated on our business license;

ii. They shall sincerely take the best interests of our Company as the startingpoint of any action;

iii. They may not deprive our Company of our assets in any manner, including,but not limited to, opportunities beneficial to our Company; and

iv. They shall not deprive the Shareholders of personal rights and interests,including, but not limited to, the right to receive dividends and to vote, exceptfor restructuring of our Company approved at the Shareholders’ meetingpursuant to the provisions of the Articles of Association.

The Directors, Supervisors and senior management of the Company have theresponsibility when exercising their rights or carrying out their obligations to act with thecare, diligence and skill due from a reasonably prudent person under similarcircumstances.

In the event of any loss caused to our Company as a result of violation of any laws,administrative rules and regulations, or Articles of Association by the Directors or seniormanagement when performing their duties in our Company, the Shareholders holding 1%or more shares separately or jointly for over 180 consecutive days may submit a writtenrequest to the Board of Supervisors to file an action with the people’s court. Wheresupervisors violate laws, administrative regulations or the Articles of Association in theirduty performance and cause loss to our Company, the Shareholders may submit a writtenrequest to the Board of Directors to file an action with the people’s court.

In the event that the Board of Supervisors or the Board of Directors refuse to file anaction upon receipt of the Shareholders’ written request specified in the precedingparagraph, or fail to file an action within 30 days upon receipt thereof, or in the event thatthe failure to immediately file an action in an emergency case will cause irreparable



– V-10 –

damage to the interests of our Company, the Shareholder(s) specified in the precedingparagraph may, in their own name, directly file an action to the court for the interest of ourCompany.

In the event of any other person infringes upon the legitimate rights and interests ofour Company and causes losses thereto, the shareholder(s) specified in this Articles ofAssociation may file an action with the competent court pursuant to the provisions of thepreceding two paragraphs.

In the event of a Director or senior management person violates laws,administrative regulations or our Company’s Articles of Association, thereby damagingthe interests of the Shareholder(s), the Shareholder(s) may file an action with the court.

2 MODIFICATION OF THE ARTICLES OF ASSOCIATION

Our Company may amend the Articles of Association based on the provisions of the laws,administrative regulations and Articles of Association.

Where the amendments to the Articles of Association passed by the general Shareholders’meetings need the examination and approval of the competent authorities, these amendmentsshall be submitted hereto for approval. Where the amendment of the Articles of Associationinvolves registration, it shall be necessary to carry out the lawfully prescribed procedures forregistration change.

3 VARIATION OF RIGHTS OF EXISTING SHARES OR CLASSIFIED SHARES

Any plan of our Company of changing or abolishing the rights of a classified Shareholderis subject to the approval of the general Shareholders’ meeting in the form of a special resolutionand the approval of the affected classified Shareholders at a separately convened theShareholders’ meeting before it can be implemented.

The rights of a classified Shareholder shall be deemed as changed or abolished under thefollowing circumstances:

i. Increase or decrease the number of the classified shares, or increase or decrease thenumber of classified shares with equal or more voting rights, distribution rights,other privileges than this type of classified shares;

ii. Convert all or part of the classified shares into other classes or convert another classof shares, partly or wholly, into the shares of such class or grant such conversionright;

iii. Remove or reduce the right of the classified shares to accrued dividends generatedor rights to cumulative dividends;

iv. Reduce or remove a dividend preference or a liquidation preference attached toshares of such class;



– V-11 –

v. Add, remove or reduce the right of the classified shares to convert share rights,options rights, voting rights, transfer rights, and pre-emptive rights, or the right toobtain the securities of our Company;

vi. Remove or reduce the right of the classified shares to receive funds payable of ourCompany in specified currencies;

vii. Create new classified shares entitled to equal or more voting rights, distributionrights, or other privileges than the classified shares;

viii. Restrict the transfer or ownership of the classified shares or increase suchrestrictions;

ix. Issue subscription or conversion rights for this or other classified shares;

x. Increase the rights and privileges of other classes of shares;

xi. The restructuring plan of our Company may constitute different classes ofShareholders to assume responsibilities disproportionately in restructuring; and

xii. Amend or abolish clauses stipulated in our Articles of Association.

Whether or not the affected classified Shareholders have voting rights at the Shareholders’meeting, in the event of matters described above from ii through viii, xi to xii, they have votingrights at the classified Shareholders’ meeting, but the Shareholders that have interests at stakeshall have no voting rights at the classified Shareholders’ meeting.

Shareholders that have interests at stake include:

i. Where the Company makes an offer to all the Shareholders at the same ratioaccording to this Articles of Association or purchase their own shares throughpublic transaction in the Stock Exchange, Shareholders that have interests at stakerefer to controlling shareholders as defined in this Articles of Association;

ii. Where our Company purchase its own shares through reaching an agreementoutside the Stock Exchange and in accordance with the Articles of Association,Shareholders that have interests at stake shall mean the Shareholders who arerelevant to such agreement;

iii. In our Company’s re-organisation plan, Shareholders that have interests at stakeshall mean Shareholder who bear liability at a rate that is lower than otherShareholders in the same class or who hold different interests with otherShareholders in the same class.



– V-12 –

The quorum required for holding the classified Shareholders’ meeting must be at leastone-third of the holders of the issued shares of that class. The resolution of the classifiedShareholders’ meeting shall be passed by votes representing more than two thirds ofshareholding with voting rights attending the classified Shareholders’ meeting.

When convening a classified Shareholders’ meeting, the time limit for issuing a writtennotice shall be the same as that for convening a non-classified shareholders’ meeting togetherwith the classified Shareholders’ meeting.

Where there are special rules in the listing rules of the stock exchange where the shares arelisted, the special rules prevails. The notice of the classified Shareholders’ meeting needs only tobe sent to the Shareholders who have the right to vote at the meeting.

Insofar as possible, any classified Shareholders’ meeting shall be held in accordance withthe same procedures as those of the Shareholders’ meeting, and unless otherwise provided inthe Articles of Association, any clause that relates to the procedures for convening theShareholders’ meeting in the Articles of Association shall apply to classified Shareholders’meeting.

Classified Shareholders are the Shareholders who hold different classes of shares. Apartfrom the holders of other classified shares, the holders of Domestic Shares are deemed asdifferent classified Shareholders with the holders of overseas listed foreign shares.

The special procedures for voting by the classified Shareholders shall not apply under thefollowing circumstances:

i. Upon the approval by a special resolution at the general Shareholders’ meeting, ourCompany either separately or concurrently issues Domestic Shares and overseaslisted foreign shares once every 12 months, and the number of those DomesticShares and overseas listed foreign shares to be issued shall not account for morethan 20% of each of its outstanding shares;

ii. The plan to issue Domestic Shares and overseas listed foreign shares upon theestablishment of our Company is completed within 15 months of the date ofapproval by the securities regulatory authorities of the State Council; and

iii. Upon the approval by the securities regulatory authorities of the State Council, theunlisted Domestic Shares are converted into foreign shares and listed and traded onoverseas market.



– V-13 –

4 SPECIAL RESOLUTIONS NEEDED TO BE ADOPTED BY ABSOLUTE MAJORITYVOTE

The resolutions of the Shareholders’ meeting shall be divided into ordinary resolutionsand special resolutions.

An ordinary resolution may be adopted by a simple majority of the votes held by theShareholders (including proxies of Shareholders) attending the general Shareholders’ meeting.

A special resolution can be adopted by a two-thirds majority of the votes held by theShareholders (including proxies of Shareholders) attending the general Shareholders’ meeting.

5 VOTING RIGHTS

The ordinary Shareholders have the right to attend or appoint a proxy to attend and voteat the general Shareholders’ meeting. When voting at the general Shareholders’ meeting, theShareholder (including proxy) may exercise his or her voting rights in accordance with thenumber of shares with voting power held with each share representing one vote.

General Shareholders’ meeting adopt vote by hands or open ballot. When voting at ageneral Shareholders’ meeting, Shareholders (including their proxies) who are entitled to two ormore votes are not required to vote against or in favour with their total number of votes.

When the number of dissenting votes equals the number of supporting votes, regardlessof voting by ballot or show of hands, the chairman of the meeting is entitled to one additionalvote.

6 RULES ON GENERAL SHAREHOLDERS’ MEETINGS

The general Shareholders’ meetings are divided into annual general Shareholders’meetings and extraordinary general Shareholders’ meetings. The annual general shareholders’meeting shall be convened once a year and be held within six months of the end of the previousfiscal year.

7 ACCOUNTING AND AUDITS

(1) Financial and accounting policies

Our Company shall develop its financial accounting policies pursuant to laws,administrative rules and regulations, as well as PRC accounting standards developed bythe competent department in charge of finance under the State Council.

The Board of Directors shall submit the financial reports to Shareholders, asrequired by the laws, administrative rules and regulations or directives promulgated bylocal governments and competent authorities to be prepared by our Company, at everyannual general Shareholders’ meetings.



– V-14 –

Apart from the PRC accounting standards and regulations, the financial statementsof our Company shall also conform to international accounting standards or theaccounting standards of overseas areas where the shares are listed. In the event of anymajor discrepancy between the financial statements prepared in accordance with the twotypes of accounting standards, such difference must be provided in the notes to thefinancial statements. As to the distribution of after-tax profits of our Company in a fiscalyear, the after-tax profits indicated on the two financial reports, whichever is lower shallprevail.

Our Company shall make its financial reports available at the Company forinspection by the Shareholders 20 days before the annual general Shareholders’ meeting isconvened. Each Shareholder is entitled to obtain one copy of the financial report.

Our Company shall send the financial reports to each of the holders of overseaslisted foreign shares by postage-paid mail or by the manner (including publication on theCompany’s website or website designated by the Stock Exchange where the Company’sshares are listed or by electronic means) as allowed by the stock exchange where ourCompany lists shares at least 21 days before the annual general Shareholders’ meeting(but in any event not later than 4 months after the end of the relevant fiscal year) isconvened and the recipient’s address shall be the address as registered in the register ofShareholders.

The interim results or financial information published or disclosed by our Companyshall at the same time be prepared in accordance with the PRC accounting standards, rulesand regulations as well as international accounting standards or the accounting standardsof the overseas area in which the shares are listed.

Our Company shall publish the financial reports twice in each accounting year.Interim financial reports shall be published within 60 days of the end of the first sixmonths of a fiscal year, while the annual financial report shall be published within 120days of the end of each accounting year.

(2) Appointment and dismissal of accountants

Our Company shall appoint an independent accounting firm that meets appropriaterequirements of the relevant regulations of the PRC to be responsible for auditing itsannual financial report and reviewing its other financial reports.

The first accounting firm of our Company can be appointed by the foundingmeeting before the first annual general Shareholders’ meeting and the term of theappointment will expire at the close of the first annual general Shareholders’ meeting. Inevent that the founding meeting does not exercise such power, the Board of Directors shalltake it.

The term of the accounting firm appointed by our Company shall start at the close ofsuch annual general Shareholders’ meeting of the Company and continue until the close ofthe next annual general Shareholders’ meeting.



– V-15 –

If the position of an appointed accounting firm is vacant, the Board of Directors mayappoint an accounting firm before the start of general Shareholders’ meeting. However, ifduring the vacant period, our Company has other incumbent accounting firm, suchaccounting firm may take the vacant.

Except the circumstances as above said, our Company shall appoint an accountingfirm by the decision of the Shareholders’ meeting. The Board of Directors shall not appointaccounting firm before decisions made at Shareholders’ meeting. The Shareholders mayreplace the accounting firm through an ordinary resolution at the general Shareholders’meeting prior to the expiration of the term of any accounting firm notwithstanding theterms and conditions of the contract howsoever entered into between our Company andthe accounting firm. With respect to the compensation rights against the Company by therelevant accounting firm due to dismissal shall not be affected thereof.

8 NOTICE AND AGENDA OF GENERAL SHAREHOLDERS’ MEETINGS

The general Shareholders’ meeting is the authorised organ of our Company that performsduties and exercises powers in accordance with the law.

Apart from unusual circumstances such as where our Company is in crisis, without theapproval of a special resolution of the general Shareholders’ meeting, our Company shall notenter into a contract with any person other than the Directors, Supervisors and seniormanagement that would make a person responsible for the management of all or part of themajor business of our Company.

Under any of the following circumstances, the Board of Directors shall convene anextraordinary general Shareholders’ meeting within two months:

i. The number of Directors is less than the number specified in the PRC Company Lawor less than two thirds of the number required in the Articles of Association;

ii. The uncovered losses of our Company reach one-third of its total paid-in sharecapital;

iii. The Shareholders with 10% or more shares of the Company separately or jointlyrequest to convene an extraordinary general Shareholders’ meeting in writing;

iv. The Board of Directors considers it necessary;

v. The Board of Supervisors considers it necessary; or

vi. Any other circumstances stipulated in laws, administrative regulations, the listingrules of the place where the Company’s shares are listed or regulations of thecompetent authorities and the Articles of Association.



– V-16 –

Independent non-executive Directors and the Board of Supervisors may make a proposalto the Board of Directors about convening an extraordinary general Shareholders’ meeting. TheBoard of Directors shall issue a written feedback about whether it agrees with such proposal ornot within 10 days after receiving such proposal in accordance with laws, administrativeregulations and the Articles of Association.

In the event that the Board of Director agree to convene an extraordinary generalShareholders’ meeting, the notice of convening extraordinary general Shareholders’ meetingshall be issued within 5 days after the Board of Directors made a resolution. With regard to theproposal of convening an extraordinary general Shareholders’ meeting made by theindependent non-executive Director, the Board of Directors shall explain the reasons andannounce if rejection was made.

With regard to the proposal of convening an extraordinary general Shareholders’ meetingmade by the Board of Supervisors, if the Board of Directors made a rejection or does not respondwithin 10 days after it receiving the proposal, it shall be view as the Board of Directors is unableto or fails to perform its meeting duty of convening the general Shareholders’ meeting and theBoard of Supervisors may convene and preside over the meeting by its own.

In the event that the general shareholders’ meeting is convened, the Board of Directors,the Board of Supervisors and shareholders who separately or jointly hold more than 3% of theshares of our Company may submit a proposal.

When convening a annual general shareholders’ meeting, our Company shall send awritten notice to inform all registered shareholders of the matters to be deliberated at themeeting as well as the date and venue of the meeting 20 days before it is convened. And awritten meeting notice shall be sent to the registered shareholders 15 days prior to theextraordinary general Shareholders’ meetings. When calculating the time limit for issuingnotice, the day on which the meeting is held shall be excluded.

The Shareholders’ meeting shall not decide on issues which are not listed in the notice.

The notice of the general shareholders’ meeting shall include the following contents:

i. Specify the date, the place and the hour of the meeting;

ii. State the matters to be discussed at the meeting;

iii. Provide the shareholders with such information and explanations as are necessaryfor the shareholders to exercise an informed judgment on the proposals before them.It principally includes (but is not limited to), where a proposal is made toamalgamate the Company, to repurchase shares, to reorganise the share capital or torestructure our Company in any other way, the conditions of the proposedtransaction must be provided in detail together with the proposed contract (if any),and the cause and consequence of such proposal must be properly explained;



– V-17 –

iv. Contain a disclosure of the nature and extent, if any, of the material interests of anyDirector, Supervisor, senior management in the transaction proposed and the effectof the proposed transaction on such Director, Supervisor, or senior management intheir capacity as shareholders in so far as it is different from the effect on theinterests of the shareholders of the same class;

v. Contain the full text of any special resolution proposed to be voted at the meeting;

vi. Contain conspicuously a statement that all shareholders are entitled to attend theshareholders’ meeting and they can appoint a proxy in writing to attend the meetingand vote instead of him and that the proxy need not be a shareholder;

vii. List out the share registration date of shareholders who are entitled to attend thegeneral shareholders’ meeting;

viii. Contain the names and phone numbers of the long-term contact persons for themeeting; and

ix. Specify the time and place for lodging proxy forms for the relevant meeting.

The notice of the general shareholders’ meeting shall be sent in person or by postage-paidmail to the shareholders (regardless of whether such shareholders have the right to vote at theshareholders’ meeting), whereas recipient’s address shall be according to the address registeredwith the register of shareholders or subject to applicable laws, regulations and listing rules, postsuch information at our Company website or a site specified by the stock exchange of the placein which our Company’s shares are listed. For domestic shareholders, the notice of ourshareholders’ meeting may be given in the form of an announcement.

Abovementioned announcement shall be published in one or more newspapersdesignated by the securities governing authority of the State Council. Once the announcement ismade, all domestic shareholders shall be deemed to have received the notice of the generalshareholders’ meeting.

The resolution of the general shareholders’ meeting includes ordinary resolution andspecial resolution. The following matters shall be approved by the general shareholders’meeting through ordinary resolutions:

i. The business plan and investment plan of the Company;

ii. Appointment or dismissal of the members of the Board of Directors, and paymentmethods of Directors;

iii. Appointment or dismissal of the members of the Board of Supervisors asSupervisors who are not assumed by staff representatives, and payment methods ofthe Supervisors;

iv. Work report of the Board of Directors;



– V-18 –

v. Work report of the Board of Supervisors;

vi. Annual financial budget plans and final account plans;

vii. Plans of earnings distribution and loss make-up schemes;

viii. Appointment and Dismissal of Accountants;

ix. Any external guarantee other than those to be approved by the shareholders’general meeting through a special resolution in accordance with Articles of theAssociation;

x. Alter the usage of raised funds; and

xi. Other matters in addition to those approved by special resolution stipulated in thelaws, administrative regulations, listing rules of the stock exchange where theshares are listed or the Articles of Association.

The following matters shall be approved by special resolution at the general shareholders’meeting:

i. the increase or decrease of the registered capital;

ii. Division, merger, dissolution and liquidation of our Company and the change ofform of our Company;

iii. Plans of bond issuance, or other securities and listing of our Company;

iv. Amendment of the Articles of Association;

v. Substantial assets acquired or disposed of or guarantee granted for an amountexceeding 25% of the latest audited total assets of our Company within one year; incase such purchase or sale exceeds 30%, the purchase or sale shall comply with therelevant requirements under the Company Law;

vi. Share equity incentive plan;

vii. Any change in the use of the funds raised;

vii. Other matters as required by the laws, administrative regulations, listing rules ofthe stock exchange where the shares are listed and the Articles of Association, and asapproved by ordinary resolution of the general shareholders’ meeting which arebelieved could materially affect our Company and need to be approved by specialresolution.



– V-19 –

In the event that any resolution of the general Shareholders’ meeting or resolution of theBoard of Directors violates laws or administrative regulations, any shareholder is entitled torequest the court to deem it as invalid.

In the event that the convening procedure or voting formula of the shareholders meetingor meeting of the Board of Directors violates any of laws, administrative regulations or theArticles of Association, or resolution of which violates the Articles of Association, anyshareholder is entitled to ask the court to overturn within 60 days after the resolution wasadopted.

9 SHARE TRANSFERS

The shares of our Company holding by the promoters thereof shall not be transferredwithin one year of the date of establishment of our Company. The shares issued before the publicissuance of shares by our Company shall not be transferred within one year of the date on whichthe stocks of our Company are listed and traded on a securities exchange.

The Directors, Supervisors, and senior management of our Company shall declare, to ourCompany, information on their holdings of the shares of our Company and the changes thereto.The shares transferrable by them during each year of their term of office shall not exceed 25percent of their total holdings of the shares of our Company. The shares that they held in ourCompany shall not be transferred within one year of the date on which the stocks of ourCompany are listed and traded.

Where a Director, Supervisor or senior management of our Company, or a shareholderwho holds 5% or more of the shares of our Company sells the shares of our Company within sixmonths of purchasing such shares, or repurchases the shares within six months of selling suchshares, the gains therefrom shall belong to our Company, and the Board of Directors of ourCompany shall recover such gains.

Where the Board of Directors of our Company fails to take comply with the provisions ofthe preceding paragraph, the shareholders shall have the right to demand it to act within 30days. Where the Board of directors of our Company fails to take action within the said time limit,the shareholders shall have the right to initiate, in their own name, a lawsuit directly in apeople’s court for the benefit of our Company.

With regard to the H Shares that capital of which has been full-paid, transfer without anylimitation is allowed in accordance with the Articles of Association. However, unless meetingthe following conditions, the Board of Directors may refuse to recognise any transfer documentwithout giving any reason:

i. Document that related to any share ownership or transfer documents that may affectthe ownership of the shares shall be registered and shall pay to our Companycorresponding fees (calculated per item of transfer document) or a higher feerequired by the Board of Director, but such payment shall not exceed the maximumfee provided by the Stock Exchange of Hong Kong in its Listing Rules from time totime;

ii. The transfer documents only involve H Shares listed in Hong Kong;



– V-20 –

iii. The stamp duty chargeable on the transfer documents has been paid;

iv. The relevant share certificate, and upon the reasonable request of the Board ofDirectors, any evidence in relation to the right of the transferor to transfer the shareshas been submitted;

v. If the shares are to be transferred to joint holders, the number of the joint holdersshall not exceed four;

vi. Our Company does not have any lien on the relevant shares; and

vii. The shares shall not be transferred to minors or the person who is insane or is foundto be of unsound mind, or the person who is incapacity for civil conduct.

Respective parts of shareholder register ‘s revision or rectification shall be subject to thelaws of region where respective parts the revised or rectified shareholder register is stored. Nochange may be made to the information in the register of shareholders as a result of the sharetransfer within 30 days before the general shareholders’ meeting is convened or within five daysprior to the benchmark date on which our Company has decided to distribute dividends.

10 RIGHTS OF OUR COMPANY TO PURCHASE OUR OUTSTANDING ISSUED

SHARES

Under any of the following circumstances, our Company may submit to relevantcompetent authorities for approval to buy back our outstanding issued shares according to legalprocedures with the approval of procedures stipulated in the Articles of Association:

i. Reduce our Company’s share capital;

ii. Merger with other companies which hold our shares;

iii. Using the shares for employee stock ownership plans or stock ownership incentives;

iv. Requesting the Company to buy back its shares from shareholders who vote againstany resolutions adopted at the general shareholders’ meeting concerning the mergerand division of the Company;

v. Other circumstances as permitted by the laws, administrative regulations.

vi. The use of shares for the conversion of corporate bonds convertible into sharesissued by listed companies; or

vii. It is necessary for our Company to maintain our value and protect our shareholders’equity.



– V-21 –

After approved by the State relevant competent authorities, our Company may buy backshares in any of the following ways:

i. Making a comprehensive buyback offer in the same proportion to all shareholders;

ii. Buying back shares through public trading on the securities exchange;

iii. Buying back shares by an agreement outside a stock exchange;

iv. In other ways approved by the relevant regulatory authorities.

Where our Company buys back the shares by an agreement outside a stock exchange, itshall obtain prior approval at the general shareholders’ meeting pursuant to the Articles ofAssociation. Likewise, subject to the prior approval of the general shareholders’ meeting, ourCompany may cancel or amend the contract signed in the aforesaid manner or waive any of itsrights in the contract.

The contract that buys back the shares includes (but is not limited to) an agreement thatconsents to undertake the obligation to buy back the shares and obtain the rights to buy themback.

Our Company shall not transfer any contract that buys back the shares or any rightsconferred under the contract.

Unless our Company has entered into the liquidation process, we must observe thefollowing provisions for the buyback of issued shares:

i. Where our Company buys back shares at book value, the funds shall be deductedfrom the book balance of our distributable earnings and the proceeds obtained fromthe issue of new shares to buy back the old shares.

ii. Where our Company buys back the shares at a premium to the book value, theportion equivalent to book value shall be deducted from the book balance of ourdistributable earnings and the proceeds obtained from the issue of new shares madefor the purpose of buying back of old shares, while the portion higher than bookvalue shall be dealt with in the following manner:

(i) Where the shares bought back were issued at book value, the funds shall bededucted from the book balance of our distributable revenue;

(ii) Where the shares bought back were issued at a premium to the book value, thefunds shall be deducted from the book balance of our distributable revenueand the proceeds obtained from the issue of new shares made for the purposeof buying back of old shares. However, the amount deducted from theproceeds obtained from the issue of new shares shall not exceed the totalpremium amount obtained when the shares bought back were issued or theamount in our premium account (or capital reserve account) when the oldshares are bought back (including the premium amount of the issue of newshares).



– V-22 –

iii. The funds paid by our Company for the following purposes shall be expensed fromour distributable earnings:

(i) To obtain the right to buy back the shares;

(ii) To modify contract to buy back the shares;

(iii) To release obligation of our Company under the share buyback contract.

iv. After the total book value of the cancelled shares is deducted from our registeredcapital pursuant to the relevant provisions, the amount deducted from thedistributable earnings for paying up the book value portion of the shares boughtback shall be credited to our premium account (or capital reserve account).

11 POWER FOR ANY SUBSIDIARY OF OUR COMPANY TO OWN SHARES IN ITS

PARENT

There are no provisions in the Articles of Association relating to ownership by subsidiaryof our Company of shares in its parent.

12 DIVIDEND AND OTHER DISTRIBUTION METHODS

The Company may distribute dividends in the following manner (or adopt both wayssimultaneously):

i. cash; or

ii. Stock.

A shareholder is entitled to receive interest with regard to payment of the shares whichwas paid before reminder notice. However, advance payment of the shares is not subject to anyfurther dividend thereof.

Our Company shall appoint one or more receiving agents in Hong Kong on behalf ofshareholders holding overseas listed foreign shares.

Receiving agents shall receive dividends and other payable funds that are distributedwith respect to our overseas listed foreign shares for relevant shareholders. Receiving agentsappointed by Our Company shall on behalf of shareholders of shares listed in Stock Exchangeshall be a trust company registered under the Trustee Ordinance of Hong Kong.

After the shareholders’ meeting of our Company make a resolution on dividendsdistribution plan, the Board of Directors shall complete the distribution within 2 months afterthe convening of the shareholders’ meeting.



– V-23 –

13 SHAREHOLDER PROXIES

Any shareholder who is entitled to attend and vote at general shareholders’ meeting hasthe right to appoint one or more persons (who may not necessarily be shareholders) as his or hershareholder proxy to attend and vote at the meeting in his or her place. Pursuant to theauthorisation of the shareholder, the proxy may exercise the following rights:

i. Speak for the shareholder at the general shareholders’ meeting;

ii. Demand a poll individually or with others;

iii. Except otherwise provided by the applicable listing rules or other securities lawsand regulations, exercise the right to vote by a show of hands or a poll, but theshareholder proxy may only exercise the right to vote by a poll when more than oneproxy is appointed.

The proxy appointment shall be in writing and shall be signed by the appointor or aperson duly authorised in writing. Where the appointor is a legal person, the stamp of the legalperson shall be affixed, or signed by its Director or a duly authorised agent.

The power of attorney must be kept at the residential address or other location designatedin the notice convening the meeting no later than 24 hours before the meeting at which thepower of attorney is put to vote is convened or 24 hours before the designated time. If the powerof attorney is signed by another person authorised by the appointor, the power of attorney orother instrument must be verified by a notary. The power of attorney or other instrumentverified by the notary must be kept together with the power of attorney at our residentialaddress or other location designated at the notice convening the meeting.

A legal person shareholder should attend the meeting by its legal representatives orpersons authorised by Board of Directors or other decision-making authorities.

Any power of attorney form sent by the Board of Directors to the shareholder forappointing a shareholder proxy shall allow the shareholder, according to his or her free will, toinstruct the proxy to vote and provide instructions separately for matters to be put to vote oneach item on the meeting agenda. The power of attorney shall specify that the shareholder proxymay vote at his or her own discretion if the shareholder does not provide specific instructions.

The votes of the shareholder proxy given pursuant to the terms of the power of attorneyshall remain valid notwithstanding the previous death, loss of capacity of the appointor orrevocation of the proxy or of the authority under which the proxy was executed, or the transferof the shares in respect of which the proxy is given, provided that our Company does not receivewritten notice concerning such matters before the related meeting is convened.



– V-24 –

14 REVIEW THE REGISTER OF SHAREHOLDERS AND OTHER RIGHTS OF

SHAREHOLDERS

Our Company shall make a register of shareholders in accordance with evidentiarydocuments provided by the securities registration authorities.

Pursuant to the understanding reached and agreement entered into between thecompetent agency in charge of securities of the PRC and the overseas securities regulatoryauthorities, our Company may keep the original register of the shareholders of the overseaslisted foreign shares overseas and entrust an overseas entity to manage it. The original registerof the shareholders of the overseas listed foreign shares listed in Hong Kong shall be kept inHong Kong.

Our Company shall keep a copy of the register of the holders of the overseas listed foreignshares at our residential address. The overseas entrusted agency shall at all times maintainconsistency between the original and copy of the register of the holders of the overseas listedforeign shares.

In case of inconsistency between the original and copy of the register of the holders of theoverseas listed foreign shares, the original shall prevail.

Our Company must keep a complete register of shareholders. The register of Shareholdersshall include the following:

i. Register of shareholders kept at our residential address other than those specified inii and iii below;

ii. Register of the holders of our overseas listed foreign shares kept at the location ofthe stock exchange where such shares are listed; and

iii. Register of shareholders kept in other locations according to the decision of theBoard of Directors as required for the listing of the shares.

Different parts of the shareholders’ register shall not overlap. The transfer of sharesregistered in a certain part of the register of shareholders shall not be registered elsewhere in theregister of shareholders as long as the shares remain registered.

Any alteration or rectification to any part of the register of shareholders shall be made inaccordance with the laws in the place where such part of the register of shareholders ismaintained.

No change of the register of shareholders as a result of share transfer shall be made within30 days before the general shareholders’ meeting is convened or within five days prior to therecord date on which our Company decides to pay dividends.



– V-25 –

When our Company convenes the general shareholders’ meeting, pays dividends, goesinto liquidation or is involved in other actions that require the confirmation of identities, theBoard of Directors or the Convener of the Shareholders’ Meeting shall fix a date as the equityregistration date, upon expiration of which the shareholders whose names register on theregister of shareholders shall be the shareholders entitled to relevant equity.

Any person who objects to the register of shareholders and requests to register his or hername (title) in the register of shareholders or to remove his or her name (title) from the registerof shareholders may apply to the court with jurisdiction to amend the register of shareholders.

15 RESTRICTIONS ON RIGHTS OF CONTROLLING SHAREHOLDERS

Apart from the obligations required in laws, administrative regulations, or the listingrules of the stock exchange on which our shares are listed, our Controlling Shareholders shallnot make any decision that is detrimental to the interest of all or part of the shareholders on thefollowing issues by exercising his or her shareholder voting rights:

i. Releasing the Directors and Supervisors from the responsibility of acting honestly inthe best interest of our Company;

ii. Permitting the Directors and Supervisors (for their own or others’ interests) todeprive our Company of assets in any form, including, but not limited to, anyopportunity that is beneficial to our Company; and

iii. Permitting the Directors and Supervisors (for their own or others’ interests) todeprive other shareholders of their personal rights and interests, including, but notlimited to, any distribution or voting right, but excluding the restructuring of theCompany approved at the general shareholders’ meeting pursuant to the Articles ofAssociation.

16 PROCEDURES FOR LIQUIDATION

Under any of the following circumstances, our Company shall be lawfully dissolved andliquidated:

i. The term of business of our Company has expired;

ii. The general shareholders’ meeting adopts a resolution to dissolve our Company;

iii. Our Company needs to be dissolved for the purpose of merger or division;

iv. Our Company is declared legally bankrupt as a result of failure to pay debts as theyfall due;

v. The business license is revoked, or our Company is ordered to close or be eliminatedaccording to applicable law;



– V-26 –

vi. Where our Company encounters significant difficulties in business andmanagement, continuous survival may be significantly detrimental to the interestsof the shareholders, and the difficulties may not be overcome through other means,shareholders who hold more than 10% of all voting rights of the Company’sshareholders may request the People’s Court to dissolve the Company and thePeople’s Court shall order the company to be dissolved pursuant to the law; or

vii. Occurrence of any other trigger for dissolution stipulated in the Articles ofAssociation.

Where our Company is dissolved due to the provisions set forth in i, ii, v, and vi above, theliquidation team shall be established within 15 days from the liquidation date to commencedissolution and the personnel of the liquidation team shall be consist of the persons determinedby the Directors or the general shareholders’ meeting. In the event the liquidation team is notestablished to conduct liquidation during such period, the creditors can request the people’scourt to appoint relevant personnel to establish the liquidation team for liquidation. In the eventthat our Company is dissolved in accordance with the provisions set forth in iv above, thepeople’s court shall organise the shareholders, related agencies and professionals to form theliquidation team pursuant to relevant provisions of the law.

If the Board of Directors decides to liquidate our Company (except where our Company isliquidated after declaring bankruptcy), the Board of Directors shall state in the notice of thegeneral shareholders’ meeting convened for this purpose that the Board of Directors hasperformed a comprehensive investigation of the status of our Company and believes that ourCompany is able to pay off all of our debts within 12 months of the commencement of theliquidation.

After the resolution to liquidate our Company is adopted by the general shareholders’meeting, the powers of the Board of Directors shall terminate immediately.

In accordance with the instructions of the general shareholders’ meeting, the liquidationteam shall at least once a year report at the general shareholders’ meeting on the income andexpenditure of the liquidation team, progress of the business and liquidation of our Company,and submit a final report at the general shareholders’ meeting upon completion of liquidation.

Within 10 days of the establishment of the liquidation team, the creditors shall be notifiedand an announcement shall be published in newspaper recognised the stock exchange whereour Company listed within 60 days. The creditors shall declare their claims to the liquidationteam within 30 days of the date on which the notice is received or 45 days of the date ofannouncement if the notice is not received.

Creditors who declare claims shall state relevant issues related to the claims and provideproofs. The liquidation team shall carry out registration of the claims. During the period fordeclaration of claims, the liquidation group shall not make any repayment to the creditors.



– V-27 –

During the liquidation, our Company shall continue to exist, but shall not carry outbusiness activities irrelevant to the liquidation. The property of our Company shall not bedistributed to any shareholder before full payments have been made out of the propertyaccording to the aforesaid provision.

Upon liquidation for the purpose of company dissolution, in the event the liquidationteam finds that, after taking stock of our Company’s property and preparing the balance sheetand list of property, that the assets are insufficient to pay the debts, it shall immediately apply tothe people’s court to declare bankruptcy.

After our Company is declared bankrupt by ruling of the people’s court, the liquidationteam shall turn over matters regarding the liquidation to the people’s court.

Upon closure of liquidation of our Company, the liquidation team shall prepare aliquidation report, income and expenditure statement and financial record during theliquidation period, which, after being verified by a China-registered accountant, shall besubmitted to our general shareholders’ meeting or the people’s court for recognition. Within 30days of the date of confirmation by the shareholders’ meeting or people’s court, the liquidationteam shall submit the above-mentioned documents to our Company registration authority andapply for cancellation of our registration and publish an announcement on our termination.

17 OTHER IMPORTANT PROVISIONS FOR OUR COMPANY OR THE SHAREHOLDERS

(1) General Provisions

Our Company is a permanently existing joint stock limited company.

Our Company may invest in other limited liability companies or joint stock limitedcompany, provided that except as otherwise provided by law, our Company shall not actas a capital contributory which bears joint liability of an investee enterprise.

The Articles of Association regulate our Company’s organisation and conductguidance and is binding on our Company, the shareholders, Directors, Supervisors andsenior management. Subject to no violation of the relevant provisions of the Articles ofAssociation, shareholders may sue shareholders; shareholders may sue the Directors,Supervisors and senior management; shareholders may sue our Company, and ourCompany may sue shareholders.

The above said suing includes filing an action and applying for an arbitration withan arbitral institution.

In the event of any discrepancy between the Promoters’ Agreement, the ShareholderContribution Agreement or other shareholders’ agreements and the Articles ofAssociation, the Articles of Association shall prevail.



– V-28 –

(2) Share and Transfer

Our Company may increase stock capital by the following means:

i. Issuing new shares to unspecified investors;

ii. Placing new shares with existing shareholders;

iii. Giving new shares to existing shareholders;

iv. Converting the reserve funds into share capital;

v. Other means approved by the laws, administrative regulations, regulations ofthe authorities.

Upon approval to increase our Company’s capital via an issue of new sharesaccording to the provisions of the Articles of Association, the matter shall be dealt with inaccordance with the procedures of related laws and administrative regulations of the PRC.

Our Company may decrease our registered share capital and shall comply with theprocedures stipulated in Company Law of the PRC, other related regulations and theArticles of Association.

If our Company decreases our registered capital, we shall prepare a balance sheetand a list of properties.

Our company shall notify creditors, publish an announcement, repay the debts orprovide the corresponding guaranty when required by the creditors in accordance withCompany Law of the PRC when undertaking reduction of the registered capital.

After our Company’s reduction in capital, our registered capital may not be lessthan the statutory minimum amount.

Upon approval by the competent securities department of the State Council, ourCompany may issue shares to domestic and overseas investors.

For the purpose of the preceding paragraph, overseas investors shall refer toinvestors from foreign countries and Hong Kong, Macao or Taiwan region who subscribefor shares issued by our Company; domestic investors shall refer to investors within theterritory of the PRC apart from above-mentioned region who subscribe for shares issuedby our Company.

Upon approval by the competent securities department of the State Council, theDomestic Shares of the Company can be converted into foreign shares which are listedoverseas. After the conversion, these foreign shares can be listed and traded on theoverseas stock exchange, in compliance with the regulatory procedures, provisions andrequirements of overseas securities market.



– V-29 –

(3) Shareholders

The shareholders of our Company are persons lawfully holding the Company’sshares and whose names (titles) are already listed in the register of shareholders.Shareholder is entitled to rights and assumes obligations pursuant to the classificationand ratio of his or her shares. Shareholder holding the same classified share has the samerights and assumes the same obligations.

The rights of our ordinary shareholders are as follows:

i. To receive distribution of dividends and other forms of benefits according tothe number of shares held;

ii. To legally require, convene, preside over, participate in or appoint ashareholder proxy to participate in and exercise corresponding voting rightsat the Shareholders’ meeting;

iii. To supervise business and operational activities of our Company, providesuggestions or submit queries;

iv. To transfer, grant and pledge the Company’s shares held according to theprovisions of the laws, administrative regulations, listing rule of the stockexchange where our stocks are listed and the Articles of Association;

v. To obtain relevant information according to the provisions of the Articles ofAssociation;

vi. To participate in the distribution of the remaining assets of our Companyaccording to the proportion of shares held upon our termination orliquidation;

vii. To ask our Company to acquire the shares from Shareholders voting againstany resolutions adopted at the general Shareholders’ meeting concerning themerger and division of the Company; and

viii. Other rights conferred by laws, administrative regulations, department rulesor the Articles of Association.

When any person is interested directly or indirectly in the shares of our Company,our Company shall not freeze or otherwise impair any of the rights attaching to any shareby reason only that the person has not disclosed his interests to our Company.

The share certificates are signed by the chairman of the Board of Directors. Wherethe stock exchange on which our Company’s shares are listed requires our other seniormanagement to sign the share certificates, they shall also be signed by other suchpersonnel. The share certificates shall become effective after being affixed with the stampof our Company or print-stamped. Affixing our Company stamp to the share certificates is



– V-30 –

subject to the authorisation of the Board of Directors. The signature of the chairman of theBoard of Directors or other related senior management may also be printed. Underconditions of paperless issuance and trading, the provisions of securities administrativeauthorities of the region where the Company’s shares listed shall apply.

If any person whose name appears in the register of shareholders or requests toregister his or her name (title) in the register of shareholders loses his or her sharecertificates (that is, “original share certificates”), he or she may apply to our Company toreissue new share certificates for those shares.

In the event holder of Domestic Shares applies to our Company for a reissue afterlosing the share certificates, the matter shall be dealt with pursuant to related provisionsof the Company Law.

In the event a holder of overseas listed foreign shares applies to our Company for areissue after losing the share certificates, the matter may dealt with pursuant to the laws,regulations and rules of the stock exchange where the original register of holders of theoverseas listed foreign shares is kept, or other related provisions.

If a H shareholder loses share certificates and applies to the Company for areplacement issue, the share certificates shall be issued in compliance with the followingrequirements:

i. The applicant shall submit the application in the standard format designatedby our Company and attach a notary certificate or legal declaration. Thecontents of the notary certificate or legal declaration shall include the reasonfor the applicant’s request, circumstances and evidence of loss of sharecertificates, as well as a statement that nobody else may request to beregistered as a shareholder with respect to the pertinent shares;

ii. Before deciding to issue new share certificates, our Company does not receiveany statement in which any person other than the applicant requests to beregistered as the shareholder with respect to the shares;

iii. If our Company decides to issue new share certificates to the applicant, weshall publish an announcement in newspapers designated by the Board ofDirectors indicating that we plan to reissue new share certificates. Theannouncement period shall be 90 days and the announcement shall bepublished at least once every 30 days;

iv. Before publishing the announcement indicating that we plan to re-issue newshare certificates, our Company shall submit a copy of the announcement tobe published to the stock exchange on which the shares are listed and maypublish the announcement after receiving a reply from the stock exchangeconfirming that the announcement has been displayed at the stock exchange.The period of displaying the announcement at the stock exchange is 90 days. Ifthe registered shareholders of the related shares do not approve theapplication for reissue of new share certificates, our Company shall mail thecopy of the announcement to be repeatedly published to the Shareholders;



– V-31 –

v. In the event that nobody raises any objection to the reissue of new sharecertificates to our Company, upon expiration of the 90-day display period ofthe announcement specified in iii and iv above, the new share certificates maybe reissued according to the application made by the applicant;

vi. When re-issuing new share certificates according to the Articles ofAssociation, our Company shall immediately cancel the original sharecertificates and register the cancellation and replacement issue on the registerof shareholders;

vii. All expenses incurred by our Company from the cancellation of the originalshare certificates and replacement issue of the new share certificates shall beborne by the applicant. Before the applicant has provided reasonable security,our Company shall have the right to refuse to take any action.

(4) Shareholders Failing to be Contacted

In compliance with the provisions of related laws and regulations of the PRC, ourCompany may exercise expropriate right to unclaimed dividend. However, our Companycan only exercise such right after the expiration of the applicable corresponding validperiod which started after the distribution of dividend was declared.

Our Company may terminate sending dividend coupons by mail to any holder ofthe overseas listed foreign shares. However, the said termination can only be made afterthe holder fails to withdraw from the dividend coupons for consecutive two times or thedividend coupons cannot be delivered to the receiver and returned thereof.

In compliance with the conditions indicated below, Our Company disposed thestock held by overseas listed foreign shareholders whom we fail to contact in accordancewith appropriate manner as considered by the Board of Directors:

i. Our Company has paid dividends at least three times on these Shares within12 years, but no one has claimed the dividends during that period;

ii. Upon expiration of the 12-year period, our Company publishes anannouncement in one or more newspaper of the Company’s listing place,indicating our intention to sell the Shares and notifies the stock exchangewhere such Shares are listed of such intention.



– V-32 –

(5) The Board of Directors

The Board of Directors is responsible to the general Shareholders’ meeting andexercises the following powers:

i. To convene the general Shareholders’ meeting and report on work to thegeneral Shareholders’ meeting;

ii. Implement the resolutions of the general Shareholders’ meeting;

iii. Determine the business and investment plans of our Company;

iv. Devise the annual financial budget and closing account plans of ourCompany;

v. Devise the earnings distribution and loss offset plans of our Company;

vi. Formulate the plans for increasing or decreasing our Company’s registeredcapital, the issuance of corporate bonds or other securities, as well as thelisting of the stock of our Company;

vii. Formulate plans for corporate merger, separation of our Company, changingthe form and dissolution of our Company;

viii. Formulate plans for major acquisitions of the Company, the acquisition ofshares of our Company;

ix. Determine such matters as the Company’s external investment, purchase orsale of assets, asset pledge, external guarantee, entrusting wealthmanagement and connected transaction within the scope authorised by thegeneral Shareholders’ meeting;

x. Decide on the setup of our Company’s internal management organisation;

xi. Decide on the establishment of special committees under the Board ofDirectors and appoint or dismiss the chairmen (convener) of the specialcommittees under the Board of Directors;

xii. Appoint or dismiss the general manager of our Company, the secretary of theBoard of Directors and the Secretary of our Company; based on thenomination of the general manager, appoint or dismiss senior management ofour Company such as vice manager, the chief financial officer, and determinetheir remuneration and punishment;

xiii. Set the basic management systems of our Company;

xiv. Make the modification plan to the Articles of Association;



– V-33 –

xv. Decide on the equity incentive scheme;

xvi. Manage the disclosure of company information;

xvii. Propose the appointment or replacement of the accounting firm that performsaudits for our Company at the general Shareholders’ meeting;

xviii. Attend to the work report of our Company’s general manager and review thework of the general manager;

xix. Review and decide on external guarantees of our Company excluding thoseshall be approved by the general Shareholders’ meeting pursuant to theArticles of Association;

xx. Formulate and review the corporate governance policies and practices of theCompany;

xxi. Review and monitor our Company’s policies and practices in relation tocompliance with laws and regulatory requirements;

xxii. Review and supervise the training and ongoing professional development ofthe Directors and senior officers;

xxiii. Review our Company’s compliance with corporate governance rules as setforth in the Main Board Listing Rules and disclosure thereof in corporategovernance reports;

xxiv. Decide on major matters and administrative affairs other than those on whicha resolution shall be made at the general Shareholders’ meeting in accordancewith laws, administrative regulations, regulations of the authorities, listingrules of the place where the shares of our Company are listed, and the Articlesof Association, and sign other important agreements; and

xxv. Other powers and duties authorised by the laws, administrative regulations,regulations of the authorities, listing rules of the place where the shares of ourCompany are listed and the Articles of Association as well as the generalShareholders’ meeting.

The aforesaid matters that can be exercised by the Board of Directors, or othertransactions or arrangements, if according to the listing rules of the stock exchange wherethe shares of our Company are listed, shall be considered by the general Shareholders’meeting, and submitted to the general Shareholders’ meeting for consideration.

The above resolutions adopted by the Board of Directors, except those in vi, vii andxiv must be approved by more than a two-thirds vote of the Directors, may be approvedby more than half of the votes by the Directors.



– V-34 –

Meetings of the Board of Directors shall be attended by more than one-half of theDirectors (including proxies) before the Board of Directors meeting can be convened,except for the review of connected transactions in accordance with the relevant terms ofthe Articles of Association.

(6) Independent Non-executive Director

At least one-third of member of the Board of Directors of the Company shall be theindependent non-executive Directors and the amount shall not be less than three. At leastone independent non-executive Director shall have applicable professional qualificationor are equipped with applicable accounting or relevant financial management expertise.At least one independent non-executive Director usually resides in Hong Kong.

(7) Secretary of the Board of Directors

Our Company shall have one secretary of the Board of Directors. The secretary ofthe Board of Directors must be a natural person with the requisite expertise andexperience and be appointed by the Board of Directors.

(8) Board of Supervisors

Our Company shall set up a Board of Supervisors.

The Board of Supervisors consists of three Supervisors and includes one chairman.The chairman of the Board of Supervisors shall be elected and dismissed by more than atwo-thirds vote of the members of the Board of Supervisors.

The Board of Supervisors shall consist of Shareholder ‘s representatives andemployee’s representatives which account for no less than one-third of the Board ofSupervisors of our Company. The Supervisors assumed by the employee representativesshall be elected and dismissed democratically by the employees.

Meetings of the Board of Supervisors shall be attended by more than half of theSupervisors before it may be convened. Resolutions of the Board of Supervisors shallrequire approval from two-third of all the Supervisors. The Supervisors serve three-yearterms.

The Supervisors may, after the expiration of the term of office, be re-elected andre-appointed.

The Directors and senior management shall not also serve as Supervisors.



– V-35 –

The Board of Supervisors is responsible to the general Shareholders’ meeting andlawfully exercises the following powers:

i. Examine the financial standing of our Company;

ii. Supervise the Company’s duties performing of Directors and seniormanagement so as to ensure that said Directors and senior management shallnot act in violation of any laws, administrative regulations or the Articles ofAssociation of the Company when performing their duties, and put forwardsuggestions for dismissing any Directors or senior management who are inbreach of the laws, administrative regulations, the Articles of Association orresolutions of the general Shareholders’ meetings;

iii. Require the Directors and senior management to take corrective measureswhen their actions are detrimental to the Company’s interests;

iv. Verify the financial information such as the financial reports, business reportsand profit distribution plans to be submitted by the Board to the generalShareholders’ meetings and, should any queries arise, to authorise, in thename of our Company, a re-examination by the certified public accountantsand practising auditors;

v. Propose to convene an extraordinary general Shareholders’ meeting, wherethe Board of Directors fails to perform the duties in relation to convening orpresiding over the general Shareholders’ meeting, to convene and presideover the general Shareholders’ meeting;

vi. Submit proposals at the general Shareholders’ meetings;

vii. Propose to convene extraordinary meetings of the Board of Directors;

viii. Represent our Company in bringing actions against the Directors and seniormanagement in accordance with Company Law;

ix. Investigate into any abnormalities in operation of our Company; if necessary,to engage accounting firms, law firms and other professional institutions toassist its work, and the expenses shall be borne by our Company;

x. Other powers and duties stipulated in the Articles of Association.

The Supervisors may attend the meetings of the Board of Directors, query orprovide suggestions on the resolution matters of the Board meeting.



– V-36 –

(9) General Manager

Our Company has one general manager, appointed or dismissed by the Board ofDirectors. The general manager of our Company is responsible to the Board of Directorsand exercises the following powers:

i. Be in charge of the producing and operational management of our Companyand report to the Board of Directors on work;

ii. To organise the enforcement of resolutions of the Board of Directors;

iii. Organise the implementation of the annual operation plans and investmentschemes decided by the Board of Directors;

iv. Draft and propose to the Board of Directors the annual financial budgets andfinal accounts of our Company;

v. Formulate the structure scheme of the internal management agency of ourCompany;

vi. Draw up a plan for setting up a branch office;

vii. Formulate the fundamental management system of our Company;

viii. Formulate the rules and policies of our Company;

ix. Propose the appointment or dismissal of the Company’s vice generalmanager, financial officer to the Board of Directors;

x. Appoint or dismiss other management personnel except those who shall beappointed or dismissed by the Board of Directors;

xi. Formulate the salaries, benefits, rewards and punishment for the staff of ourCompany, and decide the employment and dismissal of the staff of ourCompany; and

xii. Other responsibilities authorised by the Articles of Association and the Boardof Directors.



– V-37 –

(10) Reserves

When the annual after-tax earnings of our Company are distributed, our Companymust allocate 10% of the earnings to the statutory reserve of the Company.

When the total amount of the statutory reserve exceeds 50% of our Company’sregistered capital, no more allocations need to be provided.

If the Company’s statutory reserve is insufficient to offset our losses during theprevious year, the earnings generated during the current year must be used to make up thelosses before allocating the statutory reserve in accordance with the requirements set forthabove.

After allocation to the statutory reserve from the after-tax earnings of our Company,we may also allocate to the reserves at will from after-tax earnings in line with theresolution(s) adopted at the general Shareholders’ meeting.

After our Company has made up for its losses and made allocations to its statutoryreserve fund, the remaining profits are distributed in proportion to the number of sharesheld by the Shareholders, unless otherwise specified by the Articles of Association.

If the general Shareholders’ meeting violates the above provisions and profits aredistributed to the Shareholders before the Company makes up for losses or makesallocations to the statutory reserve fund, the profits distributed in violation of theprovisions must be returned by such Shareholders to the Company.

The shares held by our Company itself shall not be subject to profit distribution.

The Company’s reserves must be used only for offsetting losses of the Company,expanding the scale of business and operations or for conversion into capital to increaseour capital, but the capital reserve shall not be used to offset losses of the Company.

Where the statutory reserve converses into capital, the remaining statutory reserveshall not be less than 25% of the registered capital of our Company before suchconversion.



– V-38 –

(11) Settlement of Disputes

Our Company shall comply with the following rules governing the settlement ofdisputes:

i. Whenever there occur any dispute or claim between (i) our Company and itsDirectors or other senior management and (ii) shareholders of the overseaslisted foreign Shares and our Company, shareholders of the overseas listedforeign Shares and our Company’s Directors, Supervisors, general manager orother senior management, or shareholders of the overseas listed foreignShares and shareholders of Domestic Shares regarding the rights orobligations relating to the affairs of our Company conferred or imposed by theArticles of Association, the Company Law or any other relevant laws andadministrative regulations, such disputes or claims shall be referred by therelevant parties to arbitration.

Where the aforesaid dispute or claim of rights is referred to arbitration, theentire claim or the dispute as a whole must be referred to arbitration, and anyparties who have a cause of action based on the same facts giving rise to thedispute or the claim or whose participation is necessary for the settlement ofsuch dispute or claim, are bound by the award of the arbitration provided thatsuch person is our Company or a shareholder of our Company, a Director, aSupervisor, general manager or other senior management.

Disputes in relation to the definition of shareholders and disputes in relationto the shareholders’ register need not be resolved by arbitration;

ii. A claimant may elect for arbitration at either the China InternationalEconomic and Trade Arbitration Commission in accordance with its rules orthe Hong Kong International Arbitration Centre in accordance with itsarbitration rules. Once a claimant refers a dispute or claim to arbitration, theother party must submit to the arbitral body so elected by the applicants.

If a claimant elects for arbitration at HKIAC, any party to the dispute or claimmay request the arbitration to be conducted in Shenzhen in accordance withthe Securities Arbitration Rules of the HKIAC;

iii. The laws of the PRC are applicable to the arbitration for the disputes or claimsof rights referred to in paragraph (i) above, unless otherwise provided in thelaws and administrative regulations;

iv. The award of an arbitration body shall be final and binding on all parties.



– V-39 –