ARTICLES OF ASSOCIATION
OF Bingshan Refrigeration & Heat Transfer
Technologies Co.Ltd.It will come into effect after being reviewed at
1st Extraordinary Shareholders’ General Meeting of 2025
[English translation for reference only. Should there be any
inconsistence between the Chinese and English version then the
Chinese version should prevail.]
1CONTENTS
Chapter 1 General Provisions…………………………………………………3
Chapter 2 Objectives Scope of Business and Method of Operation……. ….4
Chapter 3 Registered Capital Share and Share Certificates……….……. 5
Chapter 4 Shareholders……………………………………………………...….11
Chapter 5 General Meeting………………………………………………….…15
Chapter 6 Board of Directors……………..……………………………………25
Chapter 7 Special Committees of the Board of Directors…………………………35
Chapter 8 Business Management Structure……………………..……………36
Chapter 9 Labour and Personnel Management…………………..………….38
Chapter 10 Finance Accounting and Auditing……………………………39
Chapter 11 Profits Distribution……………………………………………. 41
Chapter 12 Merger and Divis ion…………………………………………44
Chapter 13 Dissolution and Liquidation……………………………………45
Chapter 14 Disclosure of Information……………………………………. 47
Chapter 15 Amendment of the Articles of Association……………….. 47
Chapter 16 Supplementary Provisions…………………………………… 48
2Chapter 1 General Provisions
Article 1. 1 Principles of the Articles of Association
Pursuant to the "Company Law of the People's Republic of China" (the "Company
Law") the Securities Law of the People's Republic of China (the “Securities Law”) and
other relevant laws rules and regulations the Articles of Association are prepared with a
view to establishing the legal status of Bingshan Refrigeration & Heat Transfer
Technologies Co.Ltd. (the "Company") regulating the operations management
organization and activities of the Company and protecting the legal interests of the
Company shareholders employees and creditors.Article 1.2 Name Address and Legal Representative of the Company
The registered Chinese name of the Company is: 冰山冷热科技股份有限公司
The English name of the Company is: Bingshan Refrigeration & Heat Transfer
Technologies Co.Ltd.The address of the Company is: 106 East Road of Liaohe Dalian City Economic and
Technological Development Zone with postcode 116630
The Chairman of the Company shall be the legal representative of the Company.Where a director who serves as the legal representative resigns it shall be deemed that he
or she has simultaneously resigned as the legal representative.If the legal representative resigns the Company will determine a new legal representative
within 30 days from the date of the legal representative's resignation.The legal consequences of civil activities conducted by the legal representative in the
name of the Company shall be borne by the Company.The restrictions imposed by this charter or the shareholders' meeting on the powers of the
legal representative shall not be enforceable against a bona fide counterparty.Where the legal representative causes damage to others in the course of performing his
duties the Company shall bear civil liability. After a Company assumes civil liability it
may in accordance with the law or the provisions of these articles of association seek
compensation from the legal representative who is at fault.Article 1. 3 Method of Establishing the Company
The Dalian Bingshan Group Company acted as the promoter pursuant to the document
No. (1993)7 issued by the Dalian Economic System Reform Committee converted the
stated-owned assets in Dalian Refrigeration Factory into state shares as authorized by the
Dalian State-owned Assets Administration Bureau and then set up the Company by way
of a initial public offer of legal person shares public individual shares and employee
shares with the approval of the China Securities Regulatory Commission.The Company was registered with the Dalian Administrative Bureau For Industry and
Commerce on 18th December 1993 and obtained a business license No. 24236130-0.Article 1. 4 Form of the Company
The Company takes the form of a Company limited by shares i.e. the entire capital of the
Company is divided into shares with equal nominal value and the liability of a
shareholder to the Company is limited to the nominal value of the shares held by the
shareholder. The Company commits its entire assets to assume its liabilities.Article 1. 5 Legal Status of the Company
The Company possesses the status of an independent legal person. The laws of the
People's Republic of China (the "PRC") govern the Company's activities and protect the
legal rights and interests of the Company. The Company shall enjoy exclusive proprietary
3rights over the assets injected into the Company by the shareholders (including the State).
The Company shall have independent autonomy over its operation management and
financial budget and shall enjoy civil rights and assume civil liabilities in accordance
with the laws.Article 1.6 Principle of Purchasing Shares in the Company
The Company shall ensure that the shares in the Company are purchased voluntarily and
that the same rights in relation to the sharing of profits and the assumption of risks shall
attach to shares of the same class.Article 1.7 External Investment
The Company has the right to invest in other limited companies or joint stock companies
and assumes liabilities as limited by the amount of investment.The Company shall not become a shareholder with unlimited liability of any profit-
making organizations.Article 1.8 External guarantee
The Company cannot guarantee for any entity without legal personality or personal.When a Company provides a guarantee it shall not only be approved by more than half
of all the directors but also be approved by more than two-thirds of the directors present
at the board meeting and a resolution shall be made and the guarantee shall be disclosed
to the public in a timely manner.The following external guarantee acts of the Company shall be subject to the approval of
the shareholders' meeting:
(1) Any guarantee provided by the Company and its wholly-owned subsidiaries after the
total amount of external guarantees exceeds 50% of the latest audited net assets;
(2) Any guarantee provided by the Company after the total amount of its external
guarantees exceeds 30% of the latest audited total assets;
(3) Guarantees provided by the Company to others within one year exceeding 30% of the
Company's latest audited total assets;
(4) Guarantees provided for guarantee objects with a debt-to-asset ratio exceeding 70%;
(5) Guarantees with a single guarantee amount exceeding 10% of the latest audited net
assets;
(6) Guarantees provided to shareholders actual controllers and their related parties.
Article 1.9 Term of Operation
The Company is deemed to be a joint stock Company with a going concern except in the
cases as described in Chapter 12 and Chapter 13.Article 1. 10 Legal Effect of the Articles of Association
The Articles of Association are the rules of highest authority for the Company's
organization and activities and shall be legally binding on the Company the Company's
shareholders directors and general manager. As the Articles of Association are a public
legal document any acts of subscribing for the shares of the Company (whether the
shares of the Company can be legally and successfully obtained or not) shall be
considered to have the legal effect that: the person subscribing for the Company's shares
has voluntarily accepted all the terms and conditions and the binding effect of the
Articles of Association on him without reservation.Chapter 2 Objectives Scope of Business and Method of Operation
Article 2.1 Objectives of the Company
4The objectives of the Company are: to follow the trend of the development of a socialist
market economy; to implement scientific management; to fully utilize the existing human
resources financial resources and material resources to enable a stable and rapid
development of the Company; to promote actively the development in refrigeration air-
conditioning and other businesses of the Company; to protect and increase its asset value;
to safeguard the legal rights and interests of all shareholders to enable them to receive a
satisfactory return on their investments.Article 2.2 Scope of Business
The scope of business of the Company is as follows:
Research and development design manufacture sale lease installation and maintenance
of refrigeration and heating equipment auxiliary equipment accessories and energy-
saving and environmental protection products; Technical service Technical consultation
and Technical popularization; Design construction installation repair and maintenance of
complete sets of refrigeration and air conditioning works mechanical and electrical
installation works steel structure works anti-corrosion and heat preservation works;
Housing lease; General cargo transport; Property management; Low temperature storage;
Import and export of goods and technologies. (with the exception of projects subject to
approval according to law the Company shall independently carry out business activities
according to law by virtue of its business license)
Article 2.3 Mode of Operation
The modes of operation of the Company include processing manufacturing wholesale
retail import and export investment selling agency buying agency leasing and
servicing.As required by the business development of the Company with the approval of the
relevant government departments the Company may establish joint ventures with
domestic and foreign companies or set up branches representative offices or agency
organizations within or outside the PRC.Article 2.4 Adjustment of the Scope of Business and the Mode of operation
As required by the changing conditions of the market and the business development of
the Company the Company may adjust its business scope and operation mode. If the
business scope and the operation mode is adjusted the Articles of Association shall be
amended accordingly and the amended Articles of Association shall be registered with
the companies registration authority. If the business scope adjusted falls within the
category of restricted business under the laws and regulations of the PRC the approval of
the relevant government departments shall be obtained.Chapter 3 Registered Capital Share and Share Certificates
Article 3.1 Registered Capital
The registered capital of the Company shall be the total paid up capital of RMB
843212507.
Article 3.2 Division of Registered Capital
The total registered capital of the Company shall be divided into shares with equal
nominal value 1 for which share certificates shall be issued.The Company has in issue 843212507shares in total with a par value of RMB1.00 each.Article 3.3 Types and Composition of Registered Capital
The shares issued by the Company are all ordinary shares. The shares of the Company are
5divided into Renminbi ordinary shares and domestically listed foreign investment shares.
All these stocks are put on trust to China Securities Registry & Settlement Co. Ltd.Shenzhen Branch.Renminbi ordinary shares ("A Shares ") shall be held by legal persons or other
organisations registered in the PRC natural persons of PRC nationality or entities
stipulated by the laws of the PRC or approved by the relevant government authorities of
the PRC. A Shares comprise State shares legal person shares and public individual
shares.Domestically listed foreign investment shares ("B Shares") shall be held by natural
persons legal persons and other organizations of foreign countries; legal persons natural
persons and other organizations of Hong Kong Macau and Taiwan; PRC nationals
residing overseas or eligible domestic investors as stipulated by the Securities Committee
of the State Council.The structure of the issued share capital of the Company is as follows:
Type of shares Number of shares
Renminbi ordinary shares 601712507
Domestically listed foreign investment shares 241500000
Article 3.4 Contribution of Share Capital
Shareholders may in accordance with the provisions of the Articles of Association and
the PRC laws make capital contributions to the Company in form of cash or by means of
injection of tangible assets such as buildings factories machinery equipment or
intangible assets such as industrial property rights non-patented technologies and land
use rights in exchange for the shares of the Company.A good legal title held by the shareholders over the assets to be injected shall be a pre-
requisite to the injection of assets in exchange for the shares of the Company. In addition
I such injection of assets in exchange for the Company's shares shall comply with the
Company Law and any conditions imposed by the Board of Directors of the Company.Article 3.5 Limitations on the Holding of Shares
Any investor who comes to hold 5 percent of the shares issued by the Company directly
or indirectly shall within three days from the date on which such shareholding becomes a
fact submit a written report to China Securities Regulatory Committee and Shenzhen
Stock Exchange notify the Company and make the fact known to the general public.Once an investor holds 5 percent of the shares issued by the Company he shall pursuant
to the provisions of the preceding paragraph report and make announcement of each 5
percent increase or decrease in the proportion of the issued shares he holds of the
Company through securities trading on a stock exchange. During the reporting period
and for two days after the report and announcement are made the investor may not
continue to purchase or sell shares of the Company.However where the amount of shares held by an investor exceeds the abovementioned
limitation of 5 per cent as a result of a decrease in the total number of shares of the
Company the above restrictions will not apply.Shareholders directors and senior management personnel holding more than 5% of the
Company's shares who sell the Company's stocks or other securities with equity nature
they hold within six months from the date of purchase or who buy them again within six
months from the date of sale the gains therefrom shall belong to the Company and the
Company's board of directors shall recover the gains therefrom. However this does not
6apply to securities companies that hold more than 5% of the shares due to underwriting
the remaining shares after purchase as well as other circumstances stipulated by the
China Securities Regulatory Commission.The stocks or other securities with equity nature held by directors senior management
personnel and natural person shareholders as mentioned in the preceding paragraph
include those held by their spouses parents and children or held through others' accounts.If the board of directors of the Company fails to act in accordance with the provisions of
the third paragraph of this article shareholders have the right to demand that the board of
directors act within 30 days. If the board of directors of the Company fails to execute
within the aforesaid period shareholders have the right to directly file a lawsuit with the
people's court in their own names for the benefit of the Company.Where the board of directors of a Company fails to act in accordance with the provisions
of the third paragraph of this Article the directors who are responsible shall bear joint
and several liability in accordance with the law.Article 3.6 Share Issue
The Company's shares are in the form of stocks. When a Company issues new shares all
the subscription fees must be paid in full at one time. Once shares are subscribed they
cannot be withdrawn.The issuance of Company shares shall be carried out in accordance with the principles of
openness fairness and impartiality. Each share of the same category has the same rights.Shares of the same category issued at the same time have the same issuance conditions
and prices per share. Each share subscribed by the subscriber shall be paid at the same
price.Article 3.7 Form and Registration of Share Certificates
The issued share capital of the Company takes the form of share certificates which
constitute the written evidence of the respective shareholdings of the shareholders and
are issued and signed by the Company. The Company uses the register of shareholders
registered by the securities registration authorities as the evidence of the existing
shareholdings. Registration records in the register of shareholders shall be conclusive
evidence for such shareholdings.Article 3.8 Transfer and Trading of Shares
The shares of a Company shall be transferred in accordance with the law.Shares issued by the Company before its public offering of shares shall not be transferred
within one year from the date when the Company's stocks are listed and traded on the
stock exchange.Directors and senior management personnel of the Company shall during their tenure
regularly report to the Company the shares they hold in the Company and any changes
thereto. During the tenure determined at the time of taking office the number of shares
they transfer each year shall not exceed 25% of the total number of shares of the same
category they hold in the Company. The shares held in the Company shall not be
transferred within one year from the date when the Company's stocks are listed and
traded. The above-mentioned personnel shall not transfer the shares they hold in the
Company within six months after their resignation.Article 3.9 Gift Pledge and Succession of Shares
7The Company's shareholders may transfer the shares of the Company held by them by
way of gift pledge and succession in accordance with the laws and regulations.Any transfer of the Company's shares by way of gift and succession shall be registered
with the statutory registration authorities upon presentation of valid and enforceable legal
documents. A mortgage over the Company's shares shall be registered with the
registration authorities as required by the laws and regulations.The Company shall not accept any pledge the subject of which are the Company's shares.Article 3.10 Amalgamation and Division of Shares
As required by the production operation and development of the Company the Company
may subject to the proposal of the Board of Directors and the resolutions passed at a
general meeting amalgamate or divide the Company's shares in a specified ratio.Article 3.11 Increase of Issued Share Capital
As required by business development of the Company the Company may subject to the
proposal of the Board of Directors the passing of a resolution by shareholders at a
general meeting and the approval of the relevant government departments increase the
Company's issued share capital by the followings means:
1. Issue shares to unspecified objects;
2. issuing shares in a non-public manner;
3. bonus issue to the existing shareholders; or
4. other methods as prescribed by laws administrative regulations and the China
Securities Regulatory Commission.Article 3.12Other Classes of Shares
Where necessary the Company may subject to the proposal of the Board of Directors
the passing of a resolution by shareholders at a general meeting and the approval of the
relevant government departments issue preference shares or other classes of shares and
corporate bonds (including but not limited to convertible bonds).Where preference shares or other classes of shares and corporate bonds are issued in
addition to the compliance with the relevant laws and regulations the shareholders at
general meeting shall lay down clear regulations to govern the rights and obligations of
the holders of such securities and the Articles of Association shall also be amended
accordingly subject to the passing of relevant resolutions at the general meeting.Article 3.13 Reduction of Registered Capital
In accordance with the laws regulations and the provisions of the Articles of Association
the Company may reduce its registered capital.In the event that the Company reduces its registered capital a balance sheet and a list of
properties shall be prepared.The Company shall notify its creditors within ten days from the date of making the
resolution to reduce its registered capital and make an announcement in the newspapers
as stipulated in Chapter 14 of these Articles of Association or on the National Enterprise
Credit Information Publicity System within thirty days. Creditors have the right to
demand that the Company settle its debts or provide corresponding debt repayment
guarantees within 30 days from the date of receiving the notice or within 45 days from
the date of the announcement if they have not received the notice.After the Company has made up for its losses in accordance with the second paragraph of
Article 10.11 of these Articles of Association if it still has losses it may reduce its
8registered capital to make up for the losses. Where the registered capital is reduced to
make up for losses the Company shall not distribute it to the shareholders nor shall it
relieve the shareholders of their obligation to pay the capital contribution or share price.Where the registered capital is reduced in accordance with the provisions of the
preceding paragraph the provisions of the second paragraph of 3.13 of these Articles of
Association shall not apply. However an announcement shall be made within 30 days
from the date when the shareholders' meeting makes a resolution to reduce the registered
capital in the newspapers as prescribed in Chapter 14 of these Articles of Association or
the National Enterprise Credit Information Publicity System.After a Company reduces its registered capital in accordance with the provisions of the
preceding two paragraphs it shall not distribute profits until the accumulated amount of
the statutory reserve fund and the discretionary reserve fund reaches 50% of the
Company's registered capital.Where the registered capital is reduced in violation of the Company Law and other
relevant regulations the shareholders shall return the funds they have received. Where
the shareholders' capital contributions are reduced or exempted the original state shall be
restored. Where losses are caused to the Company shareholders and directors and senior
management personnel who are responsible shall bear the liability for compensation.The Company's registered capital after reduction shall not be less than the statutory
minimum amount.Article 3.14 Increase the registered capital
When a Company issues new shares to increase its registered capital shareholders do not
have the right of first refusal to subscribe except as otherwise provided in these articles
of association or as determined by the shareholders' meeting resolution that shareholders
have the right of first refusal to subscribe.Article 3.15 Re-purchase of Shares
In the following circumstances the Company may re-purchase its issued shares in
accordance with the procedures prescribed in the Articles of Association or laid down by
the stock exchange where the shares are listed and with the approval of the relevant
government departments:
1. Cancellation of shares for the reduction of the Company's registered capital;
2. Merger with other companies holding the Company's shares;
3. Applying shares to employee stock ownership plan or equity incentive;
4. There is any shareholder who has objections on the general meeting’s decision for
mergence or split of the Company and requests the Company to repurchase his/her
shares;
5. Applying shares to convert corporate bonds convertible to stocks issued by listed
companies; or
6. The Companies maintains Company value and shareholders' rights and interests.
The circumstances referred to in item 6 of the preceding paragraph shall meet one of the
following conditions:
(1) The closing price of the Company's stock is lower than the net asset value per share in
9the most recent period;
(2) A cumulative decline of 20% in the closing price of the Company's stock for 20
consecutive trading days;
(3) The closing price of the Company's stock is less than 50 percent of the highest closing
price of the stock in the most recent year;
(4) Other conditions stipulated by the CSRC.
Except in the above circumstances the Company does not engage in trading in its stocks.The Company may repurchase shares in one of the following ways:
1. The way of centralized bidding in stock exchanges;
2. The mode of offer;
3. Other ways approved by CSRC.
Where the Company purchases its shares under the circumstances specified in items (3)
(5) and (6) of paragraph 1 of this article it shall adopt public centralized trading methods.
If the Company touches the conditions specified in paragraph 2 of this Article the board
of directors shall promptly understand whether there are major events and other factors
that may have a greater impact on the stock price take the initiative to communicate and
exchange with shareholders especially minority shareholders through various channels
and fully listen to the opinions and demands of shareholders on whether the Company
should implement share repurchase.Art. 3.16 Disposal of the Repurchased Shares
Where the Company purchases its shares under the circumstances of items (1) and (2) of
article 3.15 of the Articles of Association it shall be decided by the Board of directors in
accordance with law and submitted to the general meeting of shareholders for
deliberation and approval by more than two-thirds of the voting rights held by the
shareholders present at the meeting.Where the Company purchases its shares under the circumstances specified in items (3)
(5) and (6) of article 3.15 of the Articles of Association the decision of the board meeting
attended by more than two-thirds of the directors shall be adopted.Where the Company purchases its shares in accordance with article 3.15 of the Articles
of Association if it belongs to the case of item (1) it shall cancel them within 10 days
from the date of acquisition; if it belongs to items (2) and (4) it shall transfer or cancel
them within 6 months; if it belongs to items (3) (5) and (6) the total number of shares
held by the Company shall not exceed the number of 10% of the total shares the
Company has issued and shall transfer or cancel them within three years after disclosing
the results of repurchase and the announcement of changes in shares.After the acquisition of the Company's shares the Company shall fulfill its obligation of
information disclosure in accordance with the provisions of the Securities Law.The par value of the cancelled shares shall be reduced from the registered capital of the
Company.Article 3.17 Financial Assistance
A Company or its subsidiaries (including affiliated enterprises) shall not provide financial
assistance to others in obtaining shares of the Company or its parent Company in the
form of gifts advances guarantees loans etc. except where the Company implements
an employee stock ownership plan.For the benefit of the Company upon the resolution of the shareholders' meeting or the
resolution made by the board of directors in accordance with these articles of association
10or the authorization of the shareholders' meeting the Company may provide financial
assistance for others to acquire the shares of the Company or its parent Company but the
cumulative total amount of financial assistance shall not exceed 10% of the total issued
share capital. The resolution of the board of directors shall be passed by more than two-
thirds of all the directors.Article 3.18 Registration of Changes
When the increase or reduction of the Company's registered capital is subject to approval.such approval shall be sought from the approving authorities and the increase or
reduction must be registered with the companies registration authorities.Chapter 4 Shareholders
Article 4.1 Shareholders
The Company establishes a register of shareholders based on the certificates provided by
the securities registration and settlement institution. The register of shareholders is
sufficient evidence to prove that shareholders hold shares in the Company. Shareholders
enjoy rights and undertake obligations in accordance with the category of shares they
hold. Shareholders holding shares of the same category enjoy the same rights and bear
the same obligations.Article 4.2 Shareholders' rights
The shareholders of the Company's ordinary shares shall be entitled to the following
rights:
1. to receive dividends and benefits in other forms on their shares;
2. to request convene preside or attend the general meetings of the Company in person
or by proxy and exercise the rights to vote;
3. to conduct supervision give suggestions and make queries in respect of the operation
and financial management of the Company;
4. to transfer the shares held by them by way of transfer gift or mortgage in accordance
with the relevant laws and regulations and the Articles of Association;
5. Review and copy the Company's articles of association register of shareholders
minutes of shareholders' meetings resolutions of the board of directors and financial
accounting reports; Shareholders who meet the regulations may review the Company's
accounting books and accounting vouchers;
6. to be entitled to the net assets of the Company in proportion to their shareholdings in
the event that the Company becomes insolvent and is wound up;
7. to require the Company to acquire their shares for those shareholders who object to
resolution on the merger and separation of the Company made by the shareholders’
general meeting;
8. to enjoy other rights as stipulated by the relevant laws and regulations and the Articles
of Association.Shareholders who request to review and copy relevant materials of the Company shall
abide by the provisions of laws and administrative regulations such as the Company Law
and the Securities Law.Shareholders who have held 3% or more of the Company's shares either individually or
collectively for more than 180 consecutive days may request to review the Company's
accounting books and accounting vouchers but they shall submit a written request to the
company stating the purpose. If the Company has reasonable grounds to believe that
11shareholders' review of accounting books and accounting vouchers has improper
purposes and may harm the Company's legitimate interests it may refuse to provide the
review and shall reply in writing to the shareholders within 15 days from the date of their
written request explaining the reasons.Where a shareholder requests to review and copy relevant materials of a wholly-owned
subsidiary of the Company the provisions of Item 5 of the first paragraph and Paragraphs
2 and 3 of this Article shall apply.
If the resolutions of the shareholders' meeting or the board of directors of a Company
violate laws or administrative regulations shareholders have the right to request the
people's court to determine them invalid.If the convening procedures or voting methods of the shareholders' meeting or the board
of directors violate laws administrative regulations or these articles of association or if
the content of the resolution violates these articles of association shareholders have the
right to request the people's court to revoke it within 60 days from the date of the
resolution. However this does not apply if the convening procedures or voting methods
of shareholders' meetings or board meetings have only minor flaws that do not have a
substantive impact on the resolution.Where the board of directors shareholders and other relevant parties have disputes over
the validity of the resolution of the shareholders' meeting they shall promptly file a
lawsuit with the people's court. Before the people's court makes a judgment or ruling such
as a resolution to revoke the relevant parties shall implement the resolution of the
shareholders' meeting. The Company its directors and senior management personnel
shall earnestly perform their duties to ensure the normal operation of the Company.Where the people's court makes a judgment or ruling on relevant matters the Company
shall fulfill the obligation of information disclosure in accordance with laws
administrative regulations the provisions of the China Securities Regulatory Commission
and the stock exchange fully explain the impact and actively cooperate with the
enforcement after the judgment or ruling takes effect. Where corrections to previous
matters are involved they will be handled promptly and the corresponding information
disclosure obligations will be fulfilled.Where any of the following circumstances occurs the resolution of the shareholders'
meeting or the board of directors of the Company shall not be established:
(1) No shareholders' meeting or board meeting was held to make a resolution;
(2) The shareholders' meeting and the board of directors did not vote on the resolution
matters.
(3) The number of attendees at the meeting or the number of voting rights held does not
reach the number of attendees or the number of voting rights held as stipulated in the
Company Law or these articles of association;
(4) The number of people who agree to the resolution matters or the number of voting
rights they hold does not reach the number of people or the number of voting rights
12stipulated in the Company Law or these articles of association.
Where the Audit Committee or the board of directors refuses to file a lawsuit after
receiving a written request from a shareholder as prescribed in the preceding paragraph
or fails to file a lawsuit within 30 days from the date of receiving the request or where
the situation is urgent and failure to file a lawsuit immediately will cause irreparable
damage to the Company's interests the shareholder as prescribed in the preceding
paragraph has the right to file a lawsuit directly with the people's court in his or her own
name for the benefit of the Company.Where directors or senior management personnel other than members of the Audit
committee violate laws administrative regulations or the provisions of these articles of
association in the course of performing their duties for the Company and cause losses to
the Company shareholders who have held 1% or more of the Company's shares for a
continuous period of 180 days or more have the right to request the Audit committee in
writing to file a lawsuit with the people's court. If members of the Audit committee
violate laws administrative regulations or the provisions of these articles of association
in the course of performing their duties for the Company causing losses to the Company
the aforementioned shareholders may request the board of directors in writing to file a
lawsuit with the people's court.Where the Audit Committee or the board of directors refuses to file a lawsuit after
receiving a written request from a shareholder as prescribed in the preceding paragraph
or fails to file a lawsuit within 30 days from the date of receiving the request or where
the situation is urgent and failure to file a lawsuit immediately will cause irreparable
damage to the Company's interests the shareholder as prescribed in the preceding
paragraph has the right to file a lawsuit directly with the people's court in his or her own
name for the benefit of the Company.Where others infringe upon the legitimate rights and interests of the Company and cause
losses to it shareholders who have held 1% or more of the Company's shares for a
continuous period of 180 days or more may file a lawsuit with the people's court in
accordance with the provisions of the preceding two paragraphs.If the directors supervisors or senior management personnel of the Company's wholly-
owned subsidiary violate laws administrative regulations or the provisions of these
articles of association in the course of performing their duties for the Company causing
losses to the Company or if others infringe upon the legitimate rights and interests of the
Company's wholly-owned subsidiary and cause losses or if shareholders have held 1% or
more of the Company's shares alone or collectively for more than 180 consecutive days
One may in accordance with the first three paragraphs of Article 189 of the Company
Law request in writing the supervisory board or the board of directors of a wholly-owned
subsidiary to file a lawsuit with the people's court or directly file a lawsuit with the
people's court in one's own name.Article 4.3 Shareholders' Obligations
Shareholders holding ordinary shares shall perform the following obligations:
131. Comply with the provisions of laws administrative regulations and this charter;
2. Pay the share capital in accordance with the shares subscribed and the method of
contribution;
3. Except for the circumstances stipulated by laws and regulations its share capital shall
not be withdrawn.
4. Shareholders shall not abuse their rights to harm the interests of the Company or other
shareholders. The independent legal status of the Company and the limited liability of
shareholders shall not be abused to harm the interests of the Company's creditors.
5. Other obligations that should be undertaken as stipulated by laws administrative
regulations and these articles of association.Where a shareholder of a Company abuses his shareholder rights and causes losses to the
Company or other shareholders he shall bear the liability for compensation in accordance
with the law. Where shareholders of a Company abuse the independent legal status of the
Company and the limited liability of shareholders to evade debts and seriously damage
the interests of the Company's creditors they shall bear joint and several liability for the
Company's debts.Article 4.4 Behavior of controlling shareholders and Actual controller
The controlling shareholders and actual controllers of a Company shall exercise their
rights and fulfill their obligations in accordance with laws administrative regulations the
provisions of the China Securities Regulatory Commission and the stock exchange and
safeguard the interests of the listed Company.The controlling shareholders and actual controllers of a Company shall abide by the
following provisions:
Exercise shareholder rights in accordance with the law and do not abuse control rights or
use related-party relationships to damage the legitimate rights and interests of the
Company or other shareholders.
2. Strictly fulfill the public statements and all commitments made and do not change or
exempt them without authorization.
3. Strictly fulfill the obligation of information disclosure in accordance with relevant
regulations actively and proactively cooperate with the Company to do a good job in
information disclosure and promptly inform the Company of major events that have
occurred or are about to occur.
4. No Company funds shall be occupied in any way.
5. It is prohibited to force instruct or require the Company and relevant personnel to
provide guarantees in violation of laws and regulations.
6. It is prohibited to seek personal gain by taking advantage of the Company's non-public
material information to disclose any non-public material information related to the
Company in any way and to engage in insider trading short-term trading or
manipulation before and after the revision
Illegal and irregular behaviors such as market manipulation;
7. No legitimate rights and interests of the Company and other shareholders shall be
infringed upon through any means such as non-fair related-party transactions profit
distribution asset reorganization or external investment.
8. Ensure the integrity of the Company's assets the independence of personnel finance
institutions and business and do not affect the Company's independence in any way.
9. Other provisions of laws administrative regulations regulations of the China
14Securities Regulatory Commission business rules of the stock exchange and these
articles of association.Where the controlling shareholder or actual controller of a Company instructs a director
or senior management personnel to engage in acts that harm the interests of the Company
or its shareholders he or she shall bear joint and several liability with such director or
senior management personnel.Where a controlling shareholder or actual controller pledges the Company's stocks he or
she holds or actually controls he or she shall maintain the control of the Company and
the stability of its production and operation.Where the controlling shareholder or actual controller transfers the shares they hold in the
Company they shall abide by the restrictive provisions on share transfer as stipulated in
laws administrative regulations the China Securities Regulatory Commission and the
stock exchange as well as the commitments they have made regarding the restriction of
share transfer.Article 4.5 The Composition of the Register of Shareholders
The Company shall keep a complete register of its shareholders. The register of
shareholders shall be registered by the securities registration authorities.Article 4.6 Registration Day of Shareholding
Where the Company convenes a general meeting) distributes dividends) goes into
liquidation or engages in other acts which require confirmation of shareholder status the
Board of Directors shall fix a day as a reference date for registration of shareholdings for
confirmation purposes. At the close of such registration day) shareholders whose names
appear on the register of shareholders shall be deemed to be the shareholders of the
Company.The interval between the date of equity registration and the date of meeting shall be not
more than 7 working days. Once the date of equity registration is confirmed it shall not
be altered.Chapter 5 General Meeting
Article 5.1 General Meeting
All the shareholders of the Company who are entitled to exercise their rights and powers
of the Company in general meetings have the highest authority according to the Company
Law and the Articles of Association.Article 5.2 Annual General Meeting and Extraordinary General Meeting
A general meeting shall be either an annual general meeting or an extraordinary general
meeting. The general meeting shall be held at a designated place in a manner of on-site
meeting. The Company will also provide shareholders with the network facilities.Any
shareholder who attends the general meeting in one of the above manners shall be
regarded as his/her presence. The general meeting on site shall not end up until the
meeting in the network manner ends up. The general meeting shall be held at the location
of the Company or other locations specified in the meeting notice.Article 5.3 Annual General Meeting
The annual shareholders' meeting shall be held once a year and shall be held within six
months after the end of the previous fiscal year. At the annual shareholders' meeting the
board of directors shall report to the shareholders' meeting on its work in the past year.Each independent director should also make a report on their duties.
15Article 5.4 Extraordinary General Meeting
An extraordinary general meeting shall be convened within 2 months of the occurrence of
any of the following events:
1.When the number of directors is less than the number stipulated in the Company Law
or less than two-thirds of the number stipulated in the Company's articles of association
(9 persons);
2. When the Company's unremedied losses reach one-third of its total share capital;
3. When shareholders who hold 10% or more of the Company's shares either individually
or collectively (including preferred shares with restored voting rights etc.) request;
4. When the board of directors deems it necessary;
5. When the Audit Committee proposes to convene;
6. Other circumstances as prescribed by laws administrative regulations departmental
rules or these articles of association.Shareholders who hold 10% or more of the Company's shares either individually or
collectively (including preferred shares with restored voting rights etc.) and request the
board of directors to convene a temporary shareholders' meeting shall submit a written
application to the board of directors. The board of directors shall in accordance with the
provisions of laws administrative regulations and these articles of association provide a
written feedback within ten days after receiving the request indicating whether it agrees
or disagrees to convene a temporary shareholders' meeting.If the board of directors agrees to convene a temporary shareholders' meeting it shall
issue a notice of the shareholders' meeting within five days after making the resolution of
the board of directors. Any changes to the original request in the notice shall be subject to
the consent of the relevant shareholders.If the board of directors does not agree to convene a temporary shareholders' meeting or
fails to respond within ten days after receiving the request shareholders who hold 10% or
more of the Company's shares (including preferred shares with restored voting rights
etc.) either individually or collectively and propose to the Audit committee to convene a
temporary shareholders' meeting shall submit a written request to the Audit committee.If the Audit committee agrees to convene a temporary shareholders' meeting it shall
issue a notice of convening the shareholders' meeting within five days after receiving the
request. Any changes to the original request in the notice shall be subject to the consent
of the relevant shareholders.If the Audit committee fails to issue a notice of the shareholders' meeting within the
prescribed period it shall be deemed that the Audit committee does not convene and
preside over the shareholders' meeting. Shareholders who have held 10% or more of the
Company's shares (including preferred shares with restored voting rights etc.)
individually or collectively for more than 90 consecutive days may convene and preside
over the meeting on their own.With the consent of more than half of all independent directors independent directors
have the right to propose to the board of directors to convene a temporary shareholders'
meeting. In response to the proposal of an independent director to convene an
16extraordinary shareholders' meeting the board of directors shall in accordance with the
provisions of laws administrative regulations and these articles of association provide a
written feedback within ten days after receiving the proposal indicating whether it agrees
or disagrees to convene an extraordinary shareholders' meeting. If the board of directors
agrees to convene a temporary shareholders' meeting it shall issue a notice of convening
the shareholders' meeting within five days after making the resolution of the board of
directors. If the board of directors does not agree to convene a temporary shareholders'
meeting it shall explain the reasons and make an announcement.When the Audit Committee proposes to the board of directors to convene a temporary
shareholders' meeting it shall submit the proposal in writing to the board of directors.The board of directors shall in accordance with the provisions of laws administrative
regulations and these articles of association provide a written feedback within ten days
after receiving the proposal indicating whether it agrees or disagrees to convene a
temporary shareholders' meeting.If the board of directors agrees to convene an extraordinary shareholders' meeting it shall
issue a notice of the shareholders' meeting within five days after making the resolution of
the board of directors. Any changes to the original proposal in the notice shall be subject
to the consent of the Audit Committee.If the board of directors does not agree to convene a temporary shareholders' meeting or
fails to provide feedback within ten days after receiving the proposal it shall be deemed
that the board of directors is unable or does not perform its duty to convene the
shareholders' meeting. The Audit committee may convene and preside over the meeting
on its own.If the audit committee or shareholders decide to convene a shareholders' meeting on their
own they must notify the board of directors in writing and file with the stock exchange at
the same time.The audit committee or the convening shareholders shall submit relevant supporting
materials to the stock exchange when issuing the notice of the shareholders' meeting and
announcing the resolution of the shareholders' meeting.Before the announcement of the shareholders' meeting resolution the proportion of
shares held by the convening shareholders (including preferred stocks with restored
voting rights etc.) shall not be less than ten percent.For shareholders' meetings convened by the audit committee or by shareholders
themselves the board of directors and the secretary of the board of directors will
cooperate. The board of directors will provide the register of shareholders as of the record
date for equity.The expenses necessary for the shareholders' meeting convened by the audit committee
or the shareholders themselves shall be borne by the Company.Article 5.5 Functions and Powers of Shareholders in General Meeting
Shareholders in general meeting shall have the following functions and powers:
1. Elect and replace directors and determine matters related to the remuneration of
directors;
172. Review and approve the report of the board of directors;
3. Review and approve the Company's profit distribution plan and loss compensation
plan;
4. Make resolutions on increasing or decreasing the registered capital of the Company;
5. Make resolutions on the issuance of corporate bonds;
6. Make resolutions on the merger division dissolution liquidation or change of the
Company's form;
7. Amend this charter;
8. Make resolutions on the employment and dismissal of accounting firms undertaking
the Company's auditing business by the Company;
9. Review and approve the guarantee matters stipulated in Article 1.8 of these articles of
Association;
10. Review matters where the Company's purchase or sale of major assets within one
year exceeds 30% of the Company's latest audited total assets;
11. Review and approve matters concerning the change of the use of raised funds;
12. Review the equity incentive plan and the employee stock ownership plan;
13. Review other matters that should be decided by the shareholders' meeting as
stipulated by laws administrative regulations departmental rules or these articles of
association.The shareholders' meeting may authorize the board of directors to make resolutions on
the issuance of corporate bonds.Except as otherwise provided by laws administrative regulations the provisions of the
China Securities Regulatory Commission or the rules of the stock exchange the powers
of the above-mentioned shareholders' meeting shall not be exercised by the board of
directors or other institutions or individuals through authorization.Article 5.6 Proposals and notices of the General Meeting
For convening a general meeting of shareholders the convener shall inform all
shareholders 20 days in advance of the date when the meeting is held. For convening an
extraordinary general meeting the convener shall inform all shareholders 15 days in
advance of the date when the meeting is held.The convener shall ensure that the meeting of the general meeting of shareholders go in
succession until the final resolution is made. Where the general meeting of shareholders
is paused or no resolution can be made due to force majeure or any other special cause
necessary measures shall be taken to resume the meeting of the general meeting of
shareholders or the meeting shall be directly terminated and an announcement shall be
made in a timely manner. At the same time the convener shall report it to the dispatched
office of the CSRC at the locality of the Company and the stock exchange.The notice of the general meeting shall comply with the following requirements and shall
be published by way of an announcement in the newspapers as selected by the Board of
Directors in accordance with the laws and regulations and the Articles of Association:
1. The time place and duration of the meeting;
2. Matters and proposals submitted for deliberation at the meeting;
3. Clearly state in writing: All common shareholders (including preferred shareholders
whose voting rights have been restored) shareholders holding special voting rights
shares and other shareholders are entitled to attend the shareholders' meeting and may
18entrust agents in writing to attend the meeting and vote. Such shareholder agents do not
have to be shareholders of the Company.
4. The record date of equity for shareholders entitled to attend the shareholders' meeting;
5. The name and phone number of the permanent contact person for the conference
affairs;
6. Voting time and procedures through the Internet or other means.
The starting time of the network voting of shareholders' general meeting should not
earlier than 3:00 pm during the day before the shareholders' general meeting held and not
later than 9:30 am during the day the shareholders' general meeting held. The end time of
the network voting should not earlier than 3:00 pm during the day the shareholders'
general meeting finished.Upon the announcement of the notice of the general meeting all shareholders shall be
deemed to have received notice of the general meeting.After the notice of a general meeting is given the general meeting shall not be adjourned
or cancelled without good reason and the proposals set out in the notice of a general
meeting shall not be cancelled. In case of delay or cancellation the convener shall make
an announcement and explain the reasons at least two working days before the original
date.Except as provided in Article 5.18 of these Articles the convener shall not amend or add
new proposals as set out in the Notice of general meeting after the notice of notice of
general meeting has been issued.Article 5.7 Presiding of the General Meeting
The shareholders' meeting convened by the Audit committee on its own shall be presided
over by the convener of the audit committee. When the convener of the Audit committee
is unable to perform his duties or fails to perform his duties a member of the Audit
Committee jointly elected by more than half of the members of the Audit Committee
shall preside over the meeting.A shareholders' meeting convened by shareholders themselves shall be presided over by
the convener or the representative elected by the convener.Article 5.8 Attendence Notice
The shareholders who intend to attend the general meeting shall notify the Company of
their attendances before the convening of the general meeting. The attendance notice
shall specify the number of shares with the voting rights held by them and shall be
delivered in written form.Article 5.9 Attendence and Proxy
Where the shareholders' meeting requires directors and senior management personnel to
attend the meeting as non-voting participants such directors and senior management
personnel shall attend as non-voting participants and accept inquiries from shareholders.All common shareholders (including preferred shareholders with restored voting rights)
shareholders holding special voting rights shares and other shareholders or their agents
who are registered on the record date of equity are entitled to attend the shareholders'
meeting and exercise their voting rights in accordance with relevant laws regulations and
these articles of association.
19Shareholders may attend the shareholders' meeting in person or entrust an agent to attend
and vote on their behalf. Individual shareholders who attend the meeting in person shall
present their ID cards or other valid documents or certificates that can identify their
identities. Those who attend the meeting on behalf of others shall present their valid
identification documents and the power of attorney from shareholders.Corporate shareholders shall be represented at the meeting by their legal representatives
or agents entrusted by the legal representatives. If the legal representative attends the
meeting he/she shall present his/her ID card and valid proof that can prove his/her
qualification as the legal representative. If an agent attends the meeting the agent shall
present his/her own ID card and a written power of attorney issued by the legal
representative of the legal person shareholder unit in accordance with the law.The board of directors of a Company independent directors shareholders with more than
1% of the voting shares or investor protection institutions established in accordance with
laws administrative regulations or the provisions of the China Securities Regulatory
Commission may publicly solicit shareholders' voting rights. The collection of voting
rights should be conducted free of charge and specific voting intentions and other
information should be fully disclosed to the person being solicited. Except for the legal
conditions a Company shall not impose a minimum shareholding ratio limit on the
solicitation of voting rights.Article 5.10 Letter of Appointment of Proxy
The power of attorney issued by a shareholder to entrust another person to attend the
shareholders' meeting shall set forth the following contents:
1. The name or title of the principal the type and quantity of shares held in the Company;
2. The name or title of the agent;
3. Specific instructions from shareholders including instructions to vote in favor of
against or abstain from each matter on the agenda of the shareholders' meeting etc.
4. Date of issuance and validity period of the power of attorney;
5. Signature (or seal) of the principal. Where the principal is a legal person shareholder
the seal of the legal person entity shall be affixed.Where a proxy voting power of attorney is authorized by the principal to be signed by
another person the power of attorney or other authorization document authorized for
signing shall be notarized. The notarized power of attorney or other authorization
documents as well as the proxy power of attorney for voting must be kept at the
Company's domicile or at other places specified in the notice of convening the meeting.Article 5.11 Register of the Attendants
The shareholders' meeting shall prepare a register of the attendees. The register of the
meeting shall contain the names (or names of entities) ID numbers the number of voting
shares held or represented by the participants and the names (or names of entities) of the
principal among other matters.The convener and the lawyer hired by the Company will jointly verify the legality of the
shareholders' qualifications based on the shareholder register provided by the securities
registration and settlement institution and register the names (or titles) of the
shareholders and the number of shares they hold with voting rights. The registration of
20the meeting shall be terminated before the chairperson of the meeting announces the
number of shareholders and their agents present at the meeting and the total number of
shares they hold with voting rights.Article 5.12 Method of Voting
When voting at the shareholders' meeting shareholders (including shareholder proxies)
exercise their voting rights based on the number of voting shares they represent. Except
for the provisions of Article 5.13 of these articles of Association regarding the cumulative
voting system for the election of directors each common share has one vote except for
shareholders of class shares. However the shares of the Company held by the Company
itself have no voting rights and such shares are not included in the total number of shares
with voting rights present at the shareholders' meeting. The shareholders' meeting shall
vote by registered ballot. The same voting right can only be exercised through one of the
following methods: on-site online or other voting methods. In the event of duplicate
voting for the same voting right the result of the first vote shall prevail.While the shareholders’ general meeting considers significant matters affecting the
interests of small and medium investors small and medium investors should separate
vote counting. The result of separate vote counting should be disclosed publicly timely.Where a shareholder's purchase of shares involves violation of the provisions of Article
63 paragraphs 1 and 2 of the Securities Law the shares exceeding the prescribed
proportion shall not be allowed to exercise their voting rights within thirty-six months
after the purchase and shall not be included in the total number of shares with voting
rights attending the shareholders' meeting.Article 5.13 Election of Directors and Supervisors
Shareholders holding more than one percent of the total voting shares of the Company
have the right to propose a list of candidates for directors. The board of directors of the
Company and shareholders who hold 1% or more of the Company's issued shares either
individually or collectively have the right to nominate candidates for independent
directors.If the shareholders' meeting intends to discuss the election of directors the detailed
information of the director candidates will be fully disclosed in the notice of the
shareholders' meeting. At least include the following contents: educational background
work experience part-time jobs and other personal information; Whether there is any
affiliated relationship with the Company or its controlling shareholder and actual
controller; The number of shares held in the Company; Whether it has been punished by
the China Securities Regulatory Commission and other relevant departments or
disciplined by the stock exchange.The list of candidates for directors is submitted to the shareholders' meeting for voting in
the form of a proposal.If the shareholders' meeting passes the proposal on the election of directors the new
director shall take office on the date when the resolution of the shareholders' meeting is
passed.The following circumstances shall adopt the cumulative voting system:
(1) Elect two or more independent directors;
When the shareholding ratio held by a single shareholder and its concerted actors exceeds
30% the Company shall elect two or more directors.
Where the shareholders' meeting elects directors by cumulative voting the voting of
21independent directors and non-independent directors shall be conducted separately.
Where directors are not elected by cumulative voting each director candidate shall
submit a single proposal. The board of directors shall formulate detailed implementation
rules for the cumulative voting system in accordance with the provisions of these articles
of association and implement them after approval by the shareholders' meeting.Article 5.14 Voting on Ordinary Resolutions
When the shareholders' meeting makes an ordinary resolution it is passed if more than
half of the voting rights held by the shareholders present agree.The term "ordinary resolution" as mentioned in the preceding paragraph refers to a
resolution made on the following matters:
1. Work Report of the Board of Directors
2. The profit distribution plan and loss compensation plan drafted by the board of
directors;
3. Appointment and removal of board members as well as their remuneration and
payment methods;
4. Other matters that shall be passed by a special resolution as stipulated by laws
administrative regulations or the Company's articles of association.Article 5.15 Voting on Special Resolutions
When a shareholders' meeting makes a special resolution it shall be passed only if more
than two-thirds of the voting rights held by the shareholders present agree.The special resolution referred to in the preceding paragraph means the resolution made
on the following matters:
1. The Company increases or decreases its registered capital;
2. Company division spin-off merger dissolution and liquidation;
3. Amendment to this charter;
4. If the Company purchases sells major assets or provides guarantees to others within
one year and the amount exceeds 30% of the Company's latest audited total assets;
5. Equity incentive plan;
6. Other matters that are stipulated by laws administrative regulations or these articles of
association as well as those that the shareholders' meeting determines by an ordinary
resolution to have a significant impact on the Company and require special resolution
approval.Except in special circumstances such as a crisis the Company shall not enter into a
contract with any person other than directors or senior management personnel to entrust
the management of all or important business of the Company to such person without the
approval of a special resolution of the shareholders' meeting.Article 5.16 Results of the Voting
Except for the cumulative voting system the shareholders' meeting will vote on all
proposals item by item. If there are different proposals on the same matter they will be
voted on in the order of the time they were put forward. Except in cases where the
shareholders' meeting is suspended or unable to make a resolution due to force majeure or
other special reasons the shareholders' meeting will not suspend or refrain from voting on
proposals.When the shareholders' meeting reviews proposals no modifications will be made to the
proposals. If there are any changes they should be regarded as a new proposal and cannot
be voted on at this shareholders' meeting.
22The chairperson of the meeting shall announce the number of shareholders and their
proxies present at the meeting and the total number of shares with voting rights they hold
before the voting. The number of shareholders and their proxies present at the meeting and
the total number of shares with voting rights they hold shall be subject to the registration
of the meeting.Before the shareholders' meeting votes on a proposal it shall elect two shareholder
representatives to participate in the vote counting and supervision. Where the matters under
deliberation are related to shareholders the relevant shareholders and their agents shall not
participate in the vote counting or supervision.When the shareholders' meeting votes on proposals lawyers and shareholder
representatives shall jointly be responsible for counting and supervising the votes and the
voting results shall be announced on the spot. The voting results of the resolutions shall be
recorded in the meeting minutes.Shareholders of a Company or their agents who vote through the Internet or other means
have the right to check their voting results through the corresponding voting system.The chairperson of the meeting shall announce the voting situation and result of each
proposal and based on the voting result declare whether the proposal is passed.Shareholders attending the shareholders' meeting shall express one of the following
opinions on the proposals submitted for voting: agree oppose or abstain. Where a securities
registration and settlement institution as the nominal holder of stocks under the trading
interconnection mechanism between the mainland and Hong Kong stock markets makes a
declaration in accordance with the actual holder's intention it is excluded.Ballots that are not filled in filled in incorrectly or whose handwriting is illegible as well
as ballots that have not been cast shall all be regarded as the voter's waiver of the voting
right and the voting result of the number of shares held by the voter shall be counted as
"abstention".If the chairperson of the meeting has any doubts about the result of the resolution submitted
for voting she may organize a count of the votes cast. If the chairperson of the meeting
fails to count the votes shareholders or their proxies attending the meeting who have
objections to the results announced by the chairperson have the right to request a vote count
immediately after the announcement of the voting results and the chairperson shall
organize the vote count immediately.Before the official announcement of the voting results all relevant parties involved in the
on-site online and other voting methods of the shareholders' meeting including the
Company the counters the supervisors the shareholders and the network service providers
are obligated to keep the voting situation confidential.Article 5.17 Resolutions Proposed by Shareholders
When a Company holds a shareholders' meeting the board of directors the audit
committee and shareholders who hold one percent or more of the Company's shares
(including preferred shares with restored voting rights etc.) either individually or
23collectively have the right to submit proposals to the Company
Article 5.18 Conditions of Resolutions
Shareholders who hold one percent or more of the Company's shares either individually
or collectively (including preferred stocks with restored voting rights etc.) may submit a
temporary proposal in writing to the convener ten days before the shareholders' meeting
is held. The convener shall issue a supplementary notice to the shareholders' meeting
within two days after receiving the proposal announce the content of the temporary
proposal and submit the temporary proposal to the shareholders' meeting for
deliberation. However temporary proposals that violate laws administrative regulations
or the Company's articles of association or are not within the purview of the
shareholders' meeting are excluded.Except for the circumstances stipulated in the preceding paragraph the convener shall not
modify the proposals already listed in the notice of the shareholders' meeting or add new
proposals after issuing the notice of the shareholders' meeting.Proposals not listed in the notice of the shareholders' meeting or not in compliance with
the provisions of these articles of association shall not be voted on or resolved by the
shareholders' meeting.Article 5.19 Minutes of General Meeting
The shareholders' meeting should have records which shall be the responsibility of the
secretary of the board of directors.The meeting minutes record the following:
1. The time place agenda of the meeting and the name or title of the convener;
2. The names of the chairperson of the meeting and the directors and senior management
personnel attending the meeting as observers;
3. The number of shares with voting rights held by domestic shareholders and foreign
shareholders of domestic listed companies attending the shareholders' meeting as well as
the proportion of common shareholders (including preferred shareholders with restored
voting rights) and class shares in the total shares of the Company;
4. The review process of each proposal the key points of the speeches as well as the
voting situation of domestic shareholders domestic listed foreign shareholders common
shareholders (including preferred shareholders with restored voting rights) and class
shareholders on each resolution matter;
5. Shareholders' inquiries opinions or suggestions as well as the corresponding
responses or explanations;
6. Names of the lawyer the counters and the supervisors;
7. Other contents that should be included in the meeting minutes as stipulated in this
charter.The convener shall ensure that the content of the meeting minutes is true accurate and
complete. Directors the secretary of the board of directors the convener or his
representative and the chairperson of the meeting who attend or are present at the
meeting as observers shall sign the meeting minutes. The minutes of the meeting shall be
kept together with the signature book of the shareholders present at the scene the power
of attorney for proxy attendance and the valid materials of the voting situation through
the Internet and other means. The retention period shall be no less than ten years.Article 5.20 Witness of lawyers
24The Company's Board of Directors shall invite a lawyer holding the securities trade
qualification to attend the general meeting who shall give legal advice on concerned
problems and make announcement.Article 5.21 Rules of Procedure for Shareholders’ General Meeting
The Company may set out rules of procedure. including notification registration
consideration of proposals voting counting of votes announcement of voting results
formation of meeting resolutions meeting minutes and signing announcement etc. as
well as the principle of authorization of the board of directors by the general meeting of
shareholders the authorization content shall be clear and specific. The rules of procedure
shall be implemented after they have been examined and approved by the shareholders in
general meeting.Article 5.22 Announcement on the Resolution of the General Meeting of
Shareholders
The resolution of the general meeting of shareholders shall be announced in a timely
manner and the announcement shall indicate the number of shareholders and proxies that
attended the meeting the number of the total voting shares and its proportion to the total
voting shares of the Company the voting method the voting result of each proposal and
detailed contents of each resolution.The domestic-share holders and the foreign-share holders attending the meeting and their
voting are counted and announced separately.If a proposal is not adopted or the general meeting of shareholders modifies the resolution
of any previous general meeting of shareholders it shall give a special explanation in the
announcement on the resolution of the general meeting of shareholders.Chapter 6 Board of Directors
Article 6.1 Board of Directors
The Board of Directors of the Company is the standing executive organization of the
shareholders in general meeting and shall be accountable to the shareholders at the
general meeting.Article 6.2 Election of the Board of Directors
Directors must be natural persons. Directors (except employee directors) are elected by
the shareholders' meeting and can be either shareholders or non-shareholders.A person shall not serve as a director of the Company under any of the following
circumstances:
1. Lacking capacity for civil conduct or having limited capacity for civil conduct;
2. Where a person has been sentenced to criminal punishment for embezzlement bribery
misappropriation of property diversion of property or disruption of the socialist market
economic order or has been deprived of political rights due to a crime and the term of
execution has not exceeded five years and has been granted probation the period from
the expiration of the probation period has not exceeded two years.
3. Where a person has served as a director factory director or manager of a Company or
enterprise undergoing bankruptcy liquidation and bears personal responsibility for the
bankruptcy of such Company or enterprise and less than three years have passed since
the completion of the bankruptcy liquidation of such Company or enterprise;
4. Where a person has served as the legal representative of a Company or enterprise
whose business license has been revoked or which has been ordered to close down due to
25illegal activities and bears personal responsibility and less than three years have passed
since the date of revocation of the business license or order to close down of such
Company or enterprise;
5. An individual has a large amount of debt that has not been repaid upon maturity and
has been listed as a dishonest executive by the people's court.
6. Those who have been subject to securities market entry bans by the China Securities
Regulatory Commission and the ban period has not yet expired;
7. Those who have been publicly identified by the stock exchange as unsuitable to serve
as directors senior management personnel etc. of listed companies and whose terms
have not yet expired;
8. Other contents as prescribed by laws administrative regulations or departmental rules.
Where directors are elected or appointed in violation of the provisions of this Article
such election appointment or hiring shall be invalid. If a director falls under the
circumstances stipulated in this article during his or her tenure the Company will remove
him or her from office and suspend his or her performance of duties.Directors serve a term of three years for each term and may be re-elected but
independent directors may not be re-elected for more than six years. There may be no
more than one employee representative (i.e. employee director) among the members of
the Company's board of directors. The term of office of directors shall be calculated from
the date of assumption of office until the end of the term of the current board of directors.If the term of office of a director expires and a new director is not elected in a timely
manner before the newly elected director takes office the original director shall still
perform the duties of a director in accordance with the provisions of laws administrative
regulations departmental rules and these articles of association. Directors (except
employee directors) may be relieved of their positions by the shareholders' meeting
before the expiration of their terms of office.The employee representatives on the board of directors are democratically elected or
replaced by the Company's employees through the employee representative assembly
employee assembly or other forms without the need to submit to the shareholders'
meeting for deliberation.Directors may be concurrently held by senior management personnel but the total
number of directors concurrently holding senior management positions and directors
represented by employees shall not exceed half of the total number of directors of the
Company.Article 6.3 Responsibilities of Directors
Directors shall abide by the provisions of laws administrative regulations and the articles
of association of the Company have a duty of loyalty to the Company take measures to
avoid conflicts between their own interests and those of the Company and shall not use
their power to seek improper benefits.Directors have the following duties of loyalty to the Company:
1. It is prohibited to embezzle the Company's property or misappropriate the Company's
funds.
2. The Company's funds shall not be deposited in an account opened in one's personal
name or in the name of any other individual.
3. One must not use one's position to offer bribes or accept other illegal income.
264. Without reporting to the board of directors or the shareholders' meeting and obtaining
the resolution of the board of directors or the shareholders' meeting in accordance with
the provisions of these articles of association it shall not directly or indirectly enter into
contracts or conduct transactions with the Company.
5. One shall not take advantage of one's position to seek business opportunities belonging
to the Company for oneself or others except where the situation is reported to the board
of directors or the shareholders' meeting and approved by the shareholders' meeting
resolution or where the Company in accordance with laws administrative regulations or
the provisions of these articles of association is prohibited from taking advantage of such
business opportunities.
6. Without reporting to the board of directors or the shareholders' meeting and obtaining
the resolution of the shareholders' meeting it shall not engage in business of the same
type as that of the Company for itself or for others.
7. Do not accept commissions from others' transactions with the Company for your own
use.
8. Company secrets shall not be disclosed without authorization.
9. They shall not take advantage of their affiliated relationships to harm the interests of
the Company.
10. Other duties of loyalty as stipulated by laws administrative regulations departmental
rules and these articles of association.Income obtained by directors in violation of this provision shall belong to the Company.Those who cause losses to the Company shall bear the liability for compensation.The close relatives of directors and senior management personnel enterprises directly or
indirectly controlled by directors senior management personnel or their close relatives
as well as related parties with other associated relationships with directors and senior
management personnel when entering into contracts or conducting transactions with the
Company shall be subject to the provisions of Item 4 of the second paragraph of this
Article.Directors shall abide by the provisions of laws administrative regulations and these
articles of association and shall be diligent to the Company. When performing their
duties they shall exercise the reasonable care that a manager usually has for the best
interests of the Company.Directors have the following duties of diligence to the Company:
1. One should exercise the rights granted by the Company with caution diligence and
conscientiousness to ensure that the Company's business activities comply with the
requirements of national laws administrative regulations and various national economic
policies and that business activities do not exceed the business scope stipulated in the
business license.
2. All shareholders should be treated fairly;
3. Keep abreast of the Company's business operation and management status in a timely
manner;
4. A written confirmation opinion should be signed on the Company's regular reports to
ensure that the information disclosed by the Company is true accurate and complete.
5. Relevant information and materials shall be truthfully provided to the Audit
27Committee and shall not impede the Audit Committee from exercising its powers.
6. Other duties of diligence as stipulated by laws administrative regulations
departmental rules and these articles of association.Without the provisions of the Company's articles of association or the legal authorization
of the board of directors no director may act on behalf of the Company or the board of
directors in his or her personal capacity. When a director acts in his or her personal
capacity if a third party would reasonably believe that the director is acting on behalf of
the Company or the board of directors the director shall declare his or her position and
identity in advance.If a director causes damage to others while performing his duties for the Company the
Company shall bear the liability for compensation. Where a director has acted with intent
or gross negligence he or she shall also bear the liability for compensation.The provisions of this charter regarding the obligations of directors shall apply to the
senior management personnel of the Company.Where a director violates laws administrative regulations departmental rules or the
provisions of these articles of association in the course of performing his duties for the
Company and causes losses to the Company he shall bear the liability for compensation.Article 6.4 Candidates for Directors
Director candidates are nominated by the Company's shareholders either individually or
jointly. During the board of directors' re-election candidates nominated by the previous
board of directors may also serve as director candidates. Shareholders holding more than
one percent of the total voting shares of the Company have the right to propose a list of
candidates for directors. The board of directors of the Company and shareholders who
hold 1% or more of the Company's issued shares either individually or collectively have
the right to nominate candidates for independent directors.Article 6.5 Composition of the Board of Directors
The board of directors adopts an odd-numbered system and consists of nine directors
including independent directors and non-independent directors (including one employee
director). The board of directors shall consist of one chairman one vice chairman and
three independent directors (at least one of whom is an accounting professional). The
chairman and vice chairman of the board shall be directors nominated by shareholders
within the board of directors and shall be elected by more than half of all directors.The Board of Directors shall establish an audit committee and if necessary a
compensation and evaluation committee. The special committee shall be responsible to
the Board of Directors and perform its duties in accordance with the Articles of
Association and the authorization of the Board of Directors and the proposal shall be
submitted to the Board of Directors for consideration and decision. The members of the
special committee are all composed of directors. The audit Committee remuneration and
appraisal Committee are dominated by independent directors and serve as conveners. The
conveners of the audit Committee are accounting professionals. The Board of Directors
shall be responsible for formulating the working rules of the special committees and
regulating the operation of the special committees.Article 6.6 Convening of Board Meetings
The board meeting is held at least twice a year. The board meeting is convened and
presided over by the chairman of the board. When the chairman of the board is unable to
perform his duties and powers the vice chairman or other directors shall be authorized by
28the chairman to preside over the meeting.
All directors shall be notified in writing ten days before each meeting. Such meeting
notices shall specify the date and place of the meeting the duration of the meeting the
reasons and topics for the meeting and the date of issuance of the notice. Unless
otherwise stipulated in these articles of association a meeting of the board of directors
can only be held when more than half of the directors are present. If a director is unable
to attend a meeting for any reason he or she may entrust another director in writing to
attend on his or her behalf. The power of attorney should specify the name of the agent
the matters to be handled the scope of authorization and the validity period and be
signed or sealed by the principal. Directors attending meetings on behalf of others shall
exercise the rights of directors within the scope of authorization.If a director fails to attend a board meeting and does not entrust a representative to attend
it shall be deemed that he or she has waived his or her voting right at that meeting. If a
director is unable to attend the board meeting in person for two consecutive times and
does not entrust another director to attend it shall be deemed that he or she is unable to
perform his or her duties. The board of directors shall recommend to the shareholders'
meeting that the director be replaced.When the board of directors convenes an extraordinary meeting it shall notify all
directors in writing five days before the meeting. In the event that the circumstances
stipulated in Articles 2 3 and 4 of 6.7 of these Articles of Association occur and the
chairman of the board is unable to perform his duties or fails to perform his duties the
vice chairman of the board shall perform his duties. If the vice chairman of the board is
unable to perform his duties or fails to perform his duties a director shall be jointly
elected by more than half of the directors to perform his duties.Unless more than two-thirds of the directors of the board agree to hold the board meeting
at another location the meeting shall be held at the Company's domicile.Article 6.7 Extraordinary Meetings
Shareholders representing more than one-tenth of the voting rights more than one-third
of the directors or the audit committee may propose to convene a temporary meeting of
the board of directors. The chairman of the board shall convene and preside over a board
meeting within ten days from the date of receiving the proposal.Under the premise of ensuring that directors can fully express their opinions the
extraordinary meeting of the board of directors may be conducted and resolutions made
by means of communication voting and the resolutions shall be signed by the attending
directors.Article 6.8 Functions and Powers of the Board of Directors
The board of directors shall exercise the following powers and functions:
Be responsible for convening shareholders' meetings and reporting work to them.
2. Implement the resolutions of the shareholders' meeting;
3. Determine the Company's business plans and investment schemes;
4. Formulate the Company's profit distribution plan and loss compensation plan;
5. Formulate plans for increasing or decreasing the Company's registered capital issuing
bonds or other securities and going public;
6 Draft plans for major acquisitions of the Company the purchase of the Company's own
stocks or mergers divisions dissolutions and changes in the Company's form;
297. Within the scope authorized by the shareholders' meeting decide on matters such as
the Company's external investment acquisition and sale of assets asset mortgage
external guarantee entrusted wealth management related-party transactions and external
donations;
8 Decide on the establishment of the internal management structure of the Company;
9. Decide on the appointment or dismissal of the Company's manager the secretary of the
board of directors and other senior management personnel and determine their
remuneration and rewards and punishments. Based on the nomination of the manager
decide on the appointment or dismissal of senior management personnel such as deputy
managers and financial officers of the Company and determine their remuneration and
rewards and punishments.
10. Formulate the basic management systems of the Company;
11. Formulate the amendment plan for the Company's articles of association;
12. Manage the Company's information disclosure matters;
13. Request the shareholders' meeting to engage or replace the accounting firm for the
Company's audit.
14. Listen to the work report of the Company manager and inspect the manager's work;
15. Other powers as stipulated by laws administrative regulations departmental rules
these articles of association or granted by the shareholders' meeting.The board of directors shall explain to the shareholders' meeting the non-standard audit
opinions issued by the certified public accountants on the Company's financial reports.When the board of directors uses the Company's assets for venture capital investment it
should establish strict review and decision-making procedures. Major investment projects
should be reviewed by relevant experts and professionals and submitted to the
shareholders' meeting for approval.The board of directors shall determine the authority for external investment acquisition
and sale of assets asset mortgage external guarantee matters and entrusted wealth
management related-party transactions external donations etc. and establish strict
review and decision-making procedures. Major investment projects should be reviewed
by relevant experts and professionals and submitted to the shareholders' meeting for
approval.The review authority of the Company's board of directors on the above matters is the
same as the scope of "transactions that should be disclosed" as stipulated in the "Stock
Listing Rules of Shenzhen Stock Exchange". For those that meet the standards for review
by the shareholders' meeting they shall be submitted separately to the shareholders'
meeting for review and approval.Article 6.9 Duties and Powers of the Chairman
The principal duties and powers of the Chairman are as follows:
1. Preside over shareholders' meetings and convene and preside over board meetings;
2. Supervise and inspect the implementation of the board of directors' resolutions;
3. Other powers conferred by the board of directors.
The vice chairman of the Company assists the chairman in his work. If the chairman is
unable to perform his duties or fails to perform his duties the vice chairman shall
perform his duties. If the vice chairman of the board is unable to perform his duties or
30fails to perform his duties a director shall be jointly elected by more than half of the
directors to perform his duties.Article 6.10 Dismissal of Directors
The shareholders' meeting may resolve to remove a director and the removal shall take
effect on the date the resolution is made.If a director is removed from office before the expiration of his term without justifiable
reasons the director may demand compensation from the Company.Article 6.11 Resignation of Directors
Directors may resign before the expiration of his term of office. When a director resigns
he or she shall submit a written resignation report to the Company. The resignation takes
effect on the date the Company receives the resignation report and the Company will
disclose the relevant situation within two trading days. If a director is unable to resign
due to the fact that he or she has not yet been relieved of certain responsibilities and thus
causes losses to the Company he or she shall bear the liability for compensation.If the number of board members of the Company falls below the legally prescribed
minimum due to the resignation of a director the original director shall still perform the
duties of a director in accordance with laws administrative regulations departmental
rules and the provisions of these articles of association before the newly elected director
takes office.The Company has established a director departure management system clearly defining
safeguard measures for accountability and compensation for unfulfilled public
commitments and other unresolved matters. When a director resigns or his term of office
expires he shall complete all handover procedures with the board of directors. His
obligations to the Company and shareholders shall not be automatically relieved before
the resignation report takes effect or within six months after it takes effect or within six
months after the end of his term of office. His obligation to keep the Company's business
secrets confidential shall remain valid after his term of office ends until the secrets
become public information. The duration of other obligations shall be determined in
accordance with the principle of fairness depending on the length of time between the
occurrence of the event and the departure as well as the circumstances and conditions
under which the relationship with the Company ends.Directors whose terms of office have not yet ended shall be liable for compensation for
the losses caused to the Company due to their unauthorized departure.Article 6.12 Voting by the Board of Directors
The voting on the resolutions of the board of directors shall follow the system of one
person one vote. A resolution of the board of directors must be passed by more than half
of all the directors.If a director has an associated relationship with an enterprise or individual involved in the
matters resolved at the board meeting such director shall promptly submit a written
report to the board of directors. Directors with an associated relationship shall not
exercise the right to vote on the resolution nor shall they exercise the right to vote on
behalf of other directors. The board meeting can be held when more than half of the
directors without affiliated relationships are present. The resolutions made at the board
meeting must be passed by more than half of the directors without affiliated relationships.If the number of unaffiliated directors attending the board meeting is less than three the
matter shall be submitted to the shareholders' meeting for deliberation.
31Except for the approval of more than half of the directors of the board of directors
(excluding the relevant directors) or the shareholders' meeting directors shall not enter
into contracts or conduct transactions with the Company.Article 6.13 Written Resolutions
The Board of Directors may pass a written resolution without convening a board meeting
provided that the written resolution shall be circulated among and signed by all the
directors. A written resolution shall take effect from the day when it is signed by the last
director. A written resolution shall have the same effect as other resolutions passed by the
Board of Directors.Article 6.14 Rules of Decisions of the Board of Directors
The Board of Directors may set out rules of decisions to ensure that the Board of
Directors can operate effectively and perform their duties properly. The rules of decisions
of the Board of Directors shall be implemented after they have been examined and
approved by the shareholders in general meeting.Article 6.15 Minutes of Board Meeting
Minutes of board meeting shall be prepared which shall record the agenda and the
material contents of the board meeting including the date and venue of the board meeting
the name of the convener the names of the directors present the names of the directors
who appoint proxies to attend the board meeting and the names of the proxies the
agenda the voting method and result of every proposed resolution. The minutes shall be
signed by all the directors present at the meeting (including the proxies appointed by the
directors) and shall then be filed and shall not be destroyed for ten years.Directors are
entitled to request to have certain notes recorded in the minutes.Directors shall be responsible for the resolutions of the board meeting. When the
resolution of the Board of Directors is in contravention with the laws and regulations or
the Articles of Association and causes serious losses to the Company the directors
approving the resolution shall be liable to compensate the Company. However a director
may be exempted from liabilities if it is proved and recorded in the minutes of board
meeting that he objected to the relevant resolution during voting. Directors who neither
attended the meeting nor appointed proxies nor provided written opinions regarding the
relevant resolution at the time of the board meeting or prior to the board meeting shall be
regarded as not having expressed any objections and shall not be exempted from
liabilities.Article 6.16 Secretary of the Board of Directors
The Company has a secretary of the board of directors who is responsible for the
preparation of shareholders' meetings and board meetings the safekeeping of documents
the management of shareholder information and the handling of information disclosure
affairs etc.The secretary of the board of directors shall abide by the relevant provisions of laws
administrative regulations departmental rules and these articles of association.Article 6.17 Independent directors
Independent directors shall in accordance with laws administrative regulations the
China Securities Regulatory Commission the stock exchange and the provisions of these
articles of association conscientiously perform their duties play a role in participating in
decision-making supervision and checks and balances and professional consultation
within the board of directors safeguard the overall interests of the Company and protect
32the legitimate rights and interests of minority shareholders.
To serve as an independent director the following basic conditions must be met:
In accordance with laws administrative regulations and other relevant provisions one is
qualified to serve as a director of a listed Company.
2. Comply with the independence requirements stipulated in this charter;
3. Possess basic knowledge of the operation of listed companies and be familiar with
relevant laws administrative regulations rules and regulations;
4. Have more than five years of working experience in law accounting or economics etc.
necessary to perform the duties of an independent director;
5. Have good personal character and no major records of bad faith or other misconduct;
6. Other conditions as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission the business rules of the stock exchange and
these articles of association.Independent directors must maintain their independence The following persons are not
eligible to serve as independent directors:
1. Personnel employed by the Company or its affiliated enterprises as well as their
spouses parents children and major social relations;
2. Those who directly or indirectly hold more than 1% of the Company's issued shares or
are natural person shareholders among the top ten shareholders of the Company as well
as their spouses parents or children;
3. Personnel who are employed in shareholder units that directly or indirectly hold more
than 5% of the Company's issued shares or in the top five shareholder units of the
Company as well as their spouses parents and children;
4. Personnel employed in the affiliated enterprises of the Company's controlling
shareholder or actual controller as well as their spouses parents and children;
5. Personnel who have significant business dealings with the Company its controlling
shareholders actual controllers or their respective affiliated enterprises or personnel who
hold positions in units with significant business dealings their controlling shareholders or
actual controllers;
6. Personnel who provide financial legal consulting sponsorship and other services for
the Company and its controlling shareholders actual controllers or their respective
affiliated enterprises including but not limited to all members of the project team of the
intermediary institutions providing services review personnel at all levels personnel
signing the report partners directors senior management personnel and main responsible
persons;
7. Personnel who have had any of the circumstances listed in the first six items within the
last twelve months;
8. Other personnel who lack independence as stipulated by laws administrative
regulations the provisions of the China Securities Regulatory Commission the business
rules of the stock exchange and these articles of association.The affiliated enterprises of the Company's controlling shareholder or actual controller as
mentioned in the fourth to sixth items of the preceding paragraph do not include those
enterprises that are controlled by the same state-owned assets management institution as
the Company and have not formed an affiliated relationship with the Company in
accordance with relevant regulations.Independent directors shall conduct self-examinations of their independence every year
33and submit the self-examination results to the board of directors. The board of directors
shall assess the independence of the serving independent directors every year and issue a
special opinion which shall be disclosed simultaneously with the annual report.As members of the board of directors independent directors are obligated to be loyal and
diligent to the Company and all shareholders and shall prudently perform the following
duties:
Participate in the decision-making of the board of directors and express clear opinions on
the matters discussed;
2. Supervise potential major conflicts of interest between the Company and its controlling
shareholders actual controllers directors and senior management personnel and protect
the legitimate rights and interests of minority shareholders.
3. Provide professional and objective suggestions for the Company's operation and
development to promote the improvement of the board of directors' decision-making
level;
4. Other duties as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these Articles of Association.Independent directors exercise the following special powers:
Independently engage intermediary agencies to conduct audits consultations or
verifications on specific matters of the Company;
2. Propose to the board of directors to convene an extraordinary shareholders' meeting;
3. Propose to convene a board meeting;
4. Publicly solicit shareholder rights from shareholders in accordance with the law;
5. Express independent opinions on matters that may harm the rights and interests of the
Company's or its minority shareholders;
6. Other powers as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these articles of Association.Where an independent director exercises the powers listed in items 1 to 3 of the
preceding paragraph it shall be subject to the consent of more than half of all
independent directors. When independent directors exercise the powers listed in the
preceding paragraph the Company will disclose them in a timely manner. If the above-
mentioned powers cannot be exercised normally the Company will disclose the specific
circumstances and reasons.The following matters shall be submitted to the board of directors for deliberation after
being approved by more than half of all independent directors of the Company:
Related-party transactions that should be disclosed;
2. Plans for the Company and related parties to change or exempt commitments;
3. The decisions made and measures taken by the board of directors of the acquired listed
Company regarding the acquisition;
4. Other matters as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these articles of Association.The Company has established a special meeting mechanism attended by all independent
directors. When the board of directors deliberates on matters such as related-party
transactions it shall be approved in advance by the special meeting of independent
directors. The Company holds special meetings of independent directors on a regular or
irregular basis. Items 1 to 3 of the special powers of independent directors and all matters
listed in the preceding paragraph shall be deliberated at a special meeting of independent
34directors.
The special meeting of independent directors may study and discuss other matters of the
Company as needed.The special meeting of independent directors shall be convened and presided over by one
independent director jointly elected by more than half of the independent directors. When
the convener fails to perform his or her duties or is unable to do so two or more
independent directors may convene the meeting on their own and elect a representative to
preside over it.The special meeting of independent directors selects and reviews candidates for directors
and senior management personnel and their qualifications and makes suggestions to the
board of directors on the following matters:
1. Nominate or appoint directors;
2. Appoint or dismiss senior management personnel;
3. Other matters as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these articles of Association.The special meeting of independent directors shall be convened and presided over by one
independent director jointly elected by more than half of the independent directors. When
the convener fails to perform his or her duties or is unable to do so two or more
independent directors may convene the meeting on their own and elect a representative to
preside over it.The special meeting of independent directors shall make meeting minutes as prescribed
and the opinions of independent directors shall be recorded in the meeting minutes.Independent directors shall sign to confirm the minutes of the meeting.The Company provides convenience and support for the convening of special meetings
for independent directors.Chapter 7 Special Committees of the Board of Directors
Article 7. 1 Audit Committee
The Company's board of directors has established an audit committee.The Audit Committee consists of five members all of whom are directors who do not
hold senior management positions in the Company. Among them there are three
independent directors and the convener is an accounting professional among the
independent directors. Employee representatives among the board members can become
members of the audit committee.The Audit Committee is responsible for reviewing the Company's financial information
and its disclosure supervising and evaluating internal and external audit work and
internal control. The following matters shall be submitted to the Board of Directors for
deliberation after being approved by more than half of all members of the Audit
Committee:
Disclose financial information and internal control evaluation reports in financial
accounting reports and regular reports;
2. Engage or dismiss accounting firms undertaking the auditing business of listed
companies;
3. Appoint or dismiss the financial officer of a listed Company;
4. Making changes to accounting policies accounting estimates or corrections of
significant accounting errors for reasons other than changes in accounting standards;
355. Other matters as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these articles of Association.The Audit Committee holds at least one meeting every quarter. A temporary meeting may
be convened upon the proposal of two or more members or when the convener deems it
necessary. The meeting of the Audit Committee can only be held when more than two-
thirds of the members are present.The resolution of the Audit Committee shall be passed by more than half of the members
of the Audit Committee.The voting on the resolutions of the Audit committee shall be one vote per person.The resolutions of the Audit committee shall be recorded in accordance with the
regulations and the members of the audit Committee attending the meeting shall sign on
the minutes.The working procedures of the Audit Committee shall be formulated by the board of
directors.Article 7.2 Compensation and Appraisal Committee
The Remuneration and Appraisal Committee of the Board of Directors is responsible for
formulating and conducting the appraisal standards for directors and senior management
personnel formulating and reviewing the remuneration decision-making mechanism
decision-making process payment and stop-payment recovery arrangements and other
remuneration policies and plans for directors and senior management personnel and
making suggestions to the Board of Directors on the following matters:
Remuneration of directors and senior management personnel;
2. The achievements of formulating or amending equity incentive plans or employee
stock ownership plans and the granting of rights and the conditions for exercising such
rights to the incentive recipients;
3. Directors and senior management personnel arrange shareholding plans for the
subsidiaries to be spun off.
4. Other matters as stipulated by laws administrative regulations the provisions of the
China Securities Regulatory Commission and these articles of Association.If the board of directors fails to adopt or fully adopt the suggestions of the Compensation
and Appraisal Committee it shall record the opinions of the Compensation and Appraisal
Committee and the specific reasons for non-adoption in the board resolution and make a
disclosure.Chapter 8 Business Management Structure
Article 8.1 General Manager and Deputy General Manager
The Company shall adopt a system whereby the general manager assumes responsibility
under the leadership of the Board of Directors. There shall be one general manager and
several deputy general managers. Under the leadership of the Board of Directors the
general manager shall be responsible for the management of the day-to-day operations of
the Company. The deputy general managers shall assist the general manager in his work
and when the general manager is unable to perform his duties for any reason the Board
of Directors shall authorize a deputy general manager to perform the duties of the general
manager. The Company shall have several functional departments working under the
leadership of the general manager.The general manager is appointed for a term of 3 years and can serve consecutive terms if
36reappointed.
Article 8.2 Election
The general manager shall be nominated by the chairman and appointed by the Board of
Directors. The deputy general managers and other senior management personnel shall be
nominated by the general manager and appointed by the Board of Directors.The general
manager and deputy general managers may also be the members of the Board of
Directors.Any person who holds the position other than a director in the Company’s controlling
shareholder or actual controller’s unit shall not hold any position in the senior
management of the Company.Article 8.3 Resignation
The general manager and deputy general manager can resign before the expiry of his term
of office. A resignation report submitted to the Board of Directors shall only be effective
after an examination on the resignation report has been completed.Article 8.4 Duties and Powers of the General Manager
The general manager shall have the following duties and powers:
1. Preside over the Company's production operation and management work organize
and implement the resolutions of the board of directors and report work to the board of
directors;
2. Organize and implement the Company's annual business plan and investment scheme;
3. Draft the plan for the establishment of the Company's internal management
institutions;
4. Draft the basic management systems of the Company;
5. Formulate the specific regulations of the Company;
6. Propose to the board of directors the appointment or dismissal of the Company's
deputy manager and financial officer;
7. Decide on the appointment or dismissal of management personnel other than those
who should be appointed or dismissed by the board of directors;
8. Other powers conferred by this charter or the board of directors.
The manager attended the board meeting as an observer.When exercising his powers the general manager shall not change the resolutions of the
shareholders' meeting and the board of directors or exceed the scope of his authorization.A non-managing director has no voting rights on the board of directors.Article 8.5 Duties and Powers of the Deputy General Manager
The deputy general managers shall have the following duties and powers:
1. to assist in the work of the general manager and in the case where the general manager
cannot exercise his duties and powers to act on his behalf with the authorisation of the
Board of Directors.
2. to be responsible for the management of the work of the designated departments.
Article 8.6 Limitations on the Conduct of the Management Personnel
If senior management personnel cause damage to others while performing their duties in
the Company the Company will bear the liability for compensation. Senior management
personnel who have acted with intent or gross negligence shall also bear liability for
compensation.Senior management personnel who in the course of performing their duties for the
Company violate laws administrative regulations departmental rules or the provisions
37of these articles of association and cause losses to the Company shall bear the liability for
compensation.Senior management personnel of the Company shall faithfully perform their duties and
safeguard the maximum interests of the Company and all shareholders.Where senior management personnel of a Company fail to perform their duties faithfully
or violate their duty of good faith causing damage to the interests of the Company and
public shareholders they shall bear the liability for compensation in accordance with the
law.The Company should formulate detailed rules for the work of the general manager which
shall be implemented after being approved by the board of directors.The detailed rules for the general manager's work include the following contents:
The conditions procedures and participants of the general manager's meeting;
2. The specific responsibilities and divisions of labor of the general manager and other
senior management personnel respectively;
3. The Company's use of funds and assets the authority to sign major contracts and the
reporting system to the board of directors;
4. Other matters that the board of directors deems necessary.
The provisions of this charter regarding the circumstances under which one is not
allowed to serve as a director and the resignation management system shall also apply to
senior management personnel.The provisions of this charter regarding the duties of loyalty and diligence of directors
shall also apply to senior management personnel.Article 8.7 Penalties
Where the Company suffers economic losses as a result of the contravention of the laws
and regulations the Articles of Association or the resolutions passed by shareholders in
general meetings practice of favoritism malpractice or neglection of duties by senior
management personnel such as the directors or the general manager) depending on the
circumstances and upon approval by the Board of directors the following punishments
shall be imposed:
1. to restrict their rights;
2. to remove them from their office;
3. to hold them liable for any resulting economic loss;
4. where there is violation of law to initiate proceedings in a judicial authority pursuant
to the laws and to hold them legally liable.Chapter 9 Labour and Personnel Management
Article 9.1 Labour and Personnel Management and Salary
The Company is entitled to employ staff and to formulate its personnel management
policies at its own discretion in accordance with the Labour Law of the People's Republic
of China and statutory regulations and policies concerning labour and personnel
management of Liaoning Province and Dalian Municipality.The Company is entitled to determine the salaries of the salaried personnel and the
method of payment at its own discretion in accordance with the laws.Article 9.2 Employment Contracts
The Company shall enter into employment contracts with its staff and workers to provide
for the employment relationship and to clarify the rights and obligations of both parties.
38The Company is entitled to impose administrative penalties on unqualified staff even
to the extent of their dismissal or discharge from the Company. An employee who is
dismissed shall be given one month's notice and shall be entitled to address his
grievances to the relevant department of the Company and government department.Employees of the Company have the freedom to resign provided that necessary
procedures in accordance with the Company's personnel management policies must be
complied with. Resigning employees who fail to follow the prescribed procedures shall
be liable for any economic loss suffered by the Company.Article 9.3 Employees Welfare
The Company shall allocate funds to cover the insurance for the medical treatment
retirement and unemployment of its employees in accordance with the relevant laws and
regulations of the State and Liaoning Province. Employees shall enjoy the corresponding
insurance benefits.Article 9.4 Health and Safety at Work
Labour protection and the related disputes shall be dealt with in accordance with the
Labour Law of the People's Republic of China and other relevant statutory regulations.Article 9.5 Holidays
The staff of the Company shall be entitled to holidays in accordance with the provisions
of the laws and regulations of the State.Article 9.6 Labour Union
The Company's employees are entitled to form a labour union to organize union
activities and to safeguard their legal interests in accordance with the Labour Union Law
of the People's Republic of China and other relevant regulations.The labour union of the Company is the representative of the staff's interests. Its primary
objective is to protect the rights and material interests of the staff in accordance with the
laws to assist and supervise the use of the Company's reserves and public welfare fund
to organize the education of the staff on science and technology and to develop cultural
and sports activities.When the Board of Directors of the Company is deciding on matters concerning the
staff's personal interests including salaries benefits industrial safety labour protection
and labour insurance the labour union and the staff of the Company shall be consulted
and the representatives of labour union shall be invited to attend the relevant meetings.Chapter 10 Finance Accounting and Auditing
Article 10.1 Financial Systems
The Company shall formulate its financial and accounting system and internal auditing
system and shall prepare quarterly reports interim reports and annual reports in
accordance with the relevant laws and regulations of the State.Article 10.2 Accounting Year
The Company shall adopt the Gregorian calendar year as its accounting year which shall
begin on 1st January and end on 31st December of each year.Article 10.3 Book-keeping System
The Company shall adopt the accrual basis of accounting and the debit and credit double
entry system as commonly used worldwide.Article 10.4 Denomination of Currency
The Company shall adopt the Renminbi as the denomination of currency in preparation
39of its accounts. When converting Renminbi into other currencies the exchange rate shall
be fixed at the median of the buying and selling rates at the foreign exchange trading
market as published by the People's Bank of China on the actual day of conversion.Business conducted in currencies other than the Renminbi shall be processed in
accordance with the relevant laws and regulations relating to the foreign currency
administration of the State.Article 10.5 Language for Bookkeeping
The Company's vouchers account books and statements shall all be prepared in
Chinese.Books and statements may also be prepared in English if necessary but the
Chinese version shall prevail.Article 10.6 Quarterly Report Interim Report and Annual Report
The Company's annual financial report should be audited by an accounting firm
registered in China with the qualification to engage in securities business and the audit
report issued by it shall prevail.The Company shall submit and disclose its annual report to the dispatched institutions of
the China Securities Regulatory Commission and the stock exchange within four months
from the end of each fiscal year and submit and disclose its interim report to the
dispatched institutions of the China Securities Regulatory Commission and the stock
exchange within two months from the end of the first half of each fiscal year.The above-mentioned annual reports and interim reports have been prepared in
accordance with relevant laws administrative regulations the provisions of the China
Securities Regulatory Commission and the stock exchanges.Article 10.7Financial Report
For each accounting year the Company shall maintain its financial report audited by an
accounting firm at the registered address of the Company for the shareholders to inspect
and photocopy and shall publish the financial report in accordance with the laws and
regulations and the Articles of Association.Article 10.8Internal Audit
The Company implements an internal audit system clearly defining the leadership
system responsibilities and authorities personnel allocation financial guarantee
application of audit results and accountability for internal audit work.The internal audit system of the Company is implemented after being approved by the
board of directors and disclosed to the public.The internal audit institution of the Company supervises and inspects matters such as the
Company's business activities risk management internal control and financial
information.The internal audit institution is accountable to the board of directors.In the process of supervising and inspecting the Company's business activities risk
management internal control and financial information the internal audit institution shall
accept the supervision and guidance of the audit committee. When the internal audit
institution discovers any major issues or clues it shall immediately report them directly
to the Audit Committee.The specific implementation and organization of the internal control evaluation of the
Company shall be the responsibility of the internal audit institution. The Company issues
the annual internal control evaluation report based on the evaluation report issued by the
internal audit institution and reviewed by the audit committee as well as relevant
40materials.
When the Audit Committee communicates with external auditing units such as
accounting firms and national auditing institutions the internal auditing institutions
should actively cooperate and provide necessary support and collaboration.The Audit Committee participates in the assessment of the person in charge of internal
audit.Article 10.9 Common Reserves
When a Company distributes its after-tax profits for the current year it shall set aside ten
percent of the profits as the Company's legal reserve fund. If the accumulated amount of
the Company's legal reserve fund reaches more than 50% of the Company's registered
capital no further withdrawal is required.If the Company's legal reserve fund is insufficient to cover the losses of previous years
the losses shall be made up from the current year's profits before the legal reserve fund is
withdrawn in accordance with the provisions of the preceding paragraph.After the Company has set aside the statutory reserve fund from its after-tax profits it
may upon resolution of the shareholders' meeting also set aside discretionary reserve
funds from its after-tax profits.The remaining after-tax profits of the Company after making up for losses and setting
aside the reserve fund shall be distributed among shareholders in proportion to the shares
they hold except as otherwise provided in these articles of association.Where the shareholders' meeting violates the Company Law by distributing profits to
shareholders the shareholders shall return the profits distributed in violation of the
regulations to the Company. Where losses are caused to the Company shareholders and
directors and senior management personnel who are responsible shall bear the liability for
compensation.The shares of the Company held by the Company itself do not participate in the
distribution of profits.Article 10.10 Use of Common Reserves
The Company's reserve fund is used to cover the Company's losses expand the
Company's production and operation or be converted into an increase in the Company's
registered capital.The provident fund is used to make up for the Company's losses. The discretionary
provident fund and the statutory provident fund are used first. If it still cannot be made up
for the capital reserve fund may be used in accordance with the regulations.When the legal reserve fund is converted into an increase in registered capital the
remaining portion of such reserve fund shall be no less than 25% of the Company's
registered capital before the conversion.Article 10.11 Appointment of certified public accountants
The Company engages an accounting firm that complies with the provisions of the
Securities Law to conduct business such as auditing financial statements verifying net
assets and providing other related consulting services. The term of employment is one
year and can be renewed.The proposal for the Company to hire an accounting firm is put forward by the board of
directors and approved by the shareholders' meeting through voting. The audit fees of
accounting firms are determined by the shareholders' meeting. The board of directors
shall not appoint an accounting firm before the shareholders' meeting makes a decision.
41The Company guarantees to provide the hired accounting firm with true and complete
accounting vouchers accounting books financial accounting reports and other
accounting materials and shall not refuse conceal or misreport them.The decision on whether a Company dismisses or no longer rehires an accounting firm
shall be made by the shareholders' meeting. When a Company dismisses or no longer
rehires an accounting firm it shall notify the accounting firm 30 days in advance. The
accounting firm has the right to present its opinions to the shareholders' meeting. When
an accounting firm tenses a resignation it shall explain to the shareholders' meeting
whether the Company has engaged in any improper circumstances.Chapter 11 Profits Distribution
Article 11. 1 Paying Taxes in accordance with the Laws
The Company shall implement the relevant taxation system of the State shall pay taxes
to the government in accordance with the laws and to accept the examination and
supervision of the financial and taxation authorities of the State.Article 11.2 Distribution of After-tax Profits
The Company's annual after-tax profits shall be distributed according to the following
order and ratio:
1. for offsetting the losses of the previous year;
2. 10 per cent allocation to the statutory surplus common reserve;
3. allocation to discretionary surplus common reserve;
4. payment of dividends.
The distribution ratio of the after-tax profits shall be recommended by the Board of
Directors in accordance with the Company's business situation for the current year and
shall be submitted to the shareholders in general meeting for examination and approval.It shall not be drawn any more in case the Company’s accumulated legal reserve exceeds
50% of its registered capital.
The Company’s after-tax profit after any loss is made and the reserve is drawn should be
distributed according to the shareholding of the shareholders except that the profit can not
be distributed according to the shareholding as specified in the Articles of Association.If the shareholders general meeting breaks the above regulation and distributes profit to the
shareholders before making up the loss and drawing the legal public reserve the
shareholders must return to the Company the profit distributed by breaking the regulations.The shares held by the Company itself has nothing with the profit distribution.If the shareholders general meeting adopts resolutions on the profit distribution plan the
board of directors of the Company shall finish the distribution of dividend (or share)
within two months after the shareholders general meeting.Plan to repay the shareholders of the Company:
The Company emphasizes ratioal investment return of shareholders and considers
concurrently the sustainable development of the Company.The Company implements a positive profit distribution policy and maintains its continuity
and stability.In principle the Company distributes dividends once each year and does this by cash in
priority.The Company will strive to distribute dividends in cash at a proportion exceeding the
42minimum proportion as regulated by the Articles of Association of the Company.
Profit distribution decision-making procedure and mechanism of Company:
In drawing up the profit distribution preplan each year the Company should consider
comprehensively such factors as the characteristics of the industry it is in development
stage self operation mode profit level cash flow position and important fund disbursement
arrangement etc. The above profit distribution preplan can be submitted to the general
shareholder meeting for review subject to agreement by more than half of all directors and
independent directors expressing their explicit opinions on this.When the Board of Directors of the Company reviews the above profit distribution preplan
it should carefully study and demonstrate such matters as Company cash dividend
distribution opportunity condition and minimum proportion etc.When the Company reviews the above profit distribution preplan by holding a general
shareholders meeting it should communicate and exchange with shareholders especially
medium and small shareholders on its own initiative through multiple channels sufficiently
listen to the comments and appeals of medium and small shareholders and reply questions
that medium and small shareholder concern about.Condition decision-making procedure and mechanism for Company to adjust profit
distribution policy:
In case of any force majeure or a substantial change in the external operating environment
or self operation condition of the Company the Company may adjust the profit distribution
policy.The Board of Directors of the Company is under way of studying and demonstrating the
profit distribution policy. It should consider sufficiently the opinions of medium and small
shareholders; after adjustment the profit distribution policy should not violate related
regulations of China Securities Regulatory Commission and the securities exchange.An adjusted profit distribution policy can be submitted to the general shareholders meeting
for review only subject to agreement by more than half of all directors making explicit
comments. When the general shareholders meeting reviews an adjusted profit distribution
policy the voting method should meet related regulations of China Securities Regulatory
Commission and the securities exchange and be passed by over 2/3 of voting rights held
by the attending shareholders (including shareholder’s representatives).Article 11. 3 Dividends
In principle the Company distributes dividends once a year according to the shares after
the Company's final accounts at the end of the year except for the special resolution of
the general meeting of shareholders. Ordinary shares do not pay a fixed dividend.Dividend distributions may take the following forms individually or in combination:
1. Cash: Cash dividends shall be declared in Renminbi. Dividends in respect of domestic
shares shall be paid in Renminbi whereas dividends in respect of foreign investment
shares shall be paid in Hong Kong Dollars. The exchange rate of Renminbi to Hong
Kong Dollars shall be referred to the median exchange rate as quoted by the People's
Bank of China on the first business day after the date of the general meeting.
2. Shares: Shareholders may receive proportional bonus shares for the types of shares
they hold in accordance with the laws.When the Company distributes share dividends it shall adopt cash dividend distribution
43method in priority. The Company may under the prerequisite of meeting cash dividend
distribution proportion requirement distribute profits by presenting bonus shares. When
making profit distribution with bonus shares such true and reasonable factors as Company
growth dilution of net asset value per share etc. should be available.When the Company makes profit distribution the minimum proportion of cash dividend
distribution accounting for this profit distribution should reach 20%.The amount of dividend in cash distributed annually by the Company shall not be less
than 10% of the net profit of the Company in that year or the accumulated amount of
dividend in cash in the past three years shall not be less than 30% of the annual net profit
on the average made in the past three years.Article 11.4 Income Tax for Dividends
When distributing dividends and bonuses the Company shall withhold and pay on behalf
of the shareholders taxes payable on dividends in accordance with the laws.After payment of tax the dividends and other entitlements arising from the foreign
investment shares may be remitted abroad.Article 11. 5 Notice of Distribution of Dividends
The Company shall inform shareholders of distribution of dividends by publishing
announcements in the newspapers specified in Chapter 14 of the Articles of Association.Chapter 12 Merger and Division
Article 12.1 merger of Company
Company mergers can take the form of absorption mergers or new establishment
mergers.When a Company absorbs another Company it is called an absorption merger and the
absorbed Company is dissolved. When two or more companies merge to form a new
Company it is called a newly established merger and the merging parties shall dissolve.Where the price paid by a Company in a merger does not exceed 10% of the Company's
net assets it may not be subject to a resolution of the shareholders' meeting except as
otherwise provided in these articles of association.Where a Company undergoes a merger in accordance with the provisions of the
preceding paragraph without the resolution of the shareholders' meeting it shall be
subject to the resolution of the board of directors.The merger of companies shall be subject to the signing of a merger agreement by the
merging parties and the preparation of a balance sheet and a list of assets. The Company
shall notify its creditors within ten days from the date of making the resolution on merger
and make an announcement in the newspapers as stipulated in Chapter 14 of these articles
of Association or on the National Enterprise Credit Information Publicity System within
thirty days. Creditors may within 30 days from the date of receiving the notice or within
45 days from the date of the announcement if they have not received the notice demand
that the Company settle its debts or provide corresponding guarantees.When companies merge the debts and credits of the merging parties shall be assumed by
the surviving Company after the merger or the newly established Company.Article 12.2 separation of a Company
When a Company is divided its property should be divided accordingly.
44When a Company undergoes a split it will prepare a balance sheet and a list of assets.
The Company shall notify its creditors within ten days from the date of making the
resolution on division and make an announcement in the newspapers as stipulated in
Chapter 14 of these articles of Association or on the National Enterprise Credit
Information Publicity System within thirty days.The debts of a Company before its division shall be borne by the Company after the
division in accordance with the agreement reached. However this does not apply if the
Company has otherwise agreed in a written agreement with its creditors regarding the
settlement of debts before the division.Article 12.3 Registration of Change
Where a Company undergoes a merger or division and the registered items change it
shall in accordance with the law handle the change registration with the Company
registration authority. When a Company is dissolved it shall handle the cancellation
registration of the Company in accordance with the law. Where a new Company is
established the Company establishment registration shall be handled in accordance with
the law.When a Company increases or decreases its registered capital it shall in accordance with
the law handle the change registration with the Company registration authority.Chapter 13 Dissolution and Liquidation
Article 13.1 Conditions for Dissolution of the Company
The Company shall be dissolved and liquidated on the occurrence of one of the following
events:
1. The business term stipulated in these articles of association expires or any other
dissolution cause stipulated in these articles of association occurs;
2. Seriously violating national laws and regulations and endangering public interests and
being lawfully ordered to suspend business operations;
3. The shareholders' meeting resolves to dissolve.
4. Dissolution is required due to Company merger or division;
5. If the Company's operation and management encounter serious difficulties and its
continued existence would cause significant losses to the shareholders' interests and the
issue cannot be resolved through other means shareholders holding more than 10% of the
Company's voting rights may request the people's court to dissolve the Company.If a Company encounters the dissolution cause as prescribed in the preceding paragraph
it shall within ten days publicize the dissolution cause through the National Enterprise
Credit Information Publicity System.Where a Company has the circumstances as stipulated in Items 1 and 2 of Article 13.1 of
these articles of Association and has not yet distributed its property to shareholders it
may continue to exist by amending these articles of association or by resolution of the
shareholders' meeting.Where any amendment to these articles of association or a resolution of the shareholders'
meeting is made in accordance with the provisions of the preceding paragraph it shall be
approved by more than two-thirds of the voting rights held by the shareholders present at
the shareholders' meeting.Article 13.2 Liquidation after Dissolution
Where a Company is dissolved in accordance with the provisions of Items 1 2 4 and 5 of
45Article 13.1 of these Articles of Association it shall be liquidated. Directors are the
liquidation obligors of the Company and shall form a liquidation group to carry out
liquidation within fifteen days from the date when the cause for dissolution occurs.The liquidation group shall be composed of directors except as otherwise provided in
these articles of association or as resolved by the shareholders' meeting to elect others.If the liquidation obligor fails to perform the liquidation obligation in a timely manner
and causes losses to the Company or creditors it shall bear the liability for compensation.Article 13.3 Prohibition of New Business Activities
During the liquidation period the Company continues to exist but shall not engage in any
business activities unrelated to the liquidation.Article 13.4 Notice of and Application for Liquidation
After the liquidation group of the Company is established it shall notify the creditors
within ten days and make an announcement within sixty days in accordance with the
provisions of Chapter 14 of these articles of association. Creditors shall declare their
claims to the liquidation group within 30 days from the date of receiving the notice or
within 45 days from the date of the announcement if they have not received the notice.Creditors shall declare their claims to the liquidation group within the time limit
prescribed above. When creditors declare their claims they shall explain the relevant
matters of the claims and provide supporting materials. The liquidation group shall
register the claims.During the period for declaring claims the liquidation group shall not make any payment
to the creditors.Article 13.5 Duties and Powers of Liquidation Committee
The liquidation committee shall have the following duties and powers:
1. Clear the Company's assets prepare balance sheets and property lists;
2. Notify and announce creditors;
3. Handle the unfinished business of the Company related to liquidation;
4. Settle all outstanding taxes and taxes incurred during the liquidation process;
5. Clear debts and credits;
6. Handle the remaining assets of the Company after its debts have been settled;
7. Represent the Company in civil litigation activities.
Article 13.6 Limitations on the Duties and Powers of the Liquidation Committee
Members of the liquidation group shall perform their liquidation duties with the duty of
loyalty and diligence.If members of the liquidation group fail to perform their liquidation duties in a timely
manner and cause losses to the Company they shall bear the liability for compensation.Where losses are caused to creditors due to intentional acts or gross negligence the party
concerned shall bear the liability for compensation.After the liquidation group has cleared the Company's assets prepared the balance sheet
and the list of assets it shall formulate a liquidation plan and submit it to the
shareholders' meeting or the people's court for confirmation.After the liquidation is completed the liquidation group shall prepare a liquidation report
submit it to the shareholders' meeting or the people's court for confirmation and submit it
to the Company registration authority to apply for the cancellation of the Company's
registration..Article 13.7 Insolvency Declaration
46After the liquidation group has cleared the Company's assets prepared the balance sheet
and the list of assets if it deems that the Company's assets are insufficient to settle its
debts it shall apply to the people's court for bankruptcy liquidation in accordance with
the law.After the people's court accepts a bankruptcy application the liquidation group shall
transfer the liquidation affairs to the bankruptcy administrator designated by the people's
court.Article 13.8 Order of Payment
After the Company's assets have been used to pay liquidation expenses employees'
wages social insurance premiums and statutory compensation and to settle outstanding
taxes and Company debts the remaining assets shall be distributed by the Company in
proportion to the shares held by the shareholders.The Company's assets will not be distributed to shareholders until they are settled in
accordance with the provisions of the preceding paragraph.Article 13.9 Cancellation of Registration
Upon completion of liquidation the liquidation committee shall present a liquidation
report and shall prepare a statement of income and expenditure and various financial
account books for the liquidation period. Upon certification by an accounting firm and
approval by shareholders in general meeting and the relevant government department in
charge the liquidation committee shall lodge an application with the registration
authority for cancellation of registration within 30 days from the granting of the approval
and shall cancel the Company's registration at the taxation authority pay all outstanding
taxes cancel tax payment invoices and relevant papers issued by the taxation authority
and announce the winding-up of the Company.Chapter 14 Notices and announcements
Article 14.1 Notification
The Company's notice is sent out in the following form: by a designated person; Send it
by email; It will be conducted through an announcement. Other forms as stipulated in the
Company's articles of association.The notice issued by the Company if made in the form of an announcement shall be
deemed that all relevant personnel have received the notice once it is announced.The meeting notice of the shareholders' meeting convened by the Company shall be
conducted in accordance with Article 5.6 of these articles of association.The meeting notice of the Company's board of directors shall be held in accordance with
Article 6.6 of these articles of association.Article 14.2 Mode of Announcement
The Company designates China Securities Journal and Securities Times as newspapers
and periodicals for publishing Company announcements and other required information
disclosure.The Company's designated information disclosure website is: http://www.cninfo.com.cn
Article 14.3 Joint Liabilities
47The Board of Directors shall warrant that all information and documents disclosed to the
public is true and do not contain any statements which are severely misleading or have
important omission. All the members of the Board of Directors shall be jointly
responsible for this.Article 14.4 Management of Relationship with Investors
The Company shall establish and perfect the work system for investors’ relationship
management and shall strengthen actively communications and exchanges with
shareholders especially the social public ones in multiple ways. The secretary of the
Board of Directors of the Company shall be responsible concretely for the work of
investor’s relationship management.Chapter 15 Amendment of the Articles of Association
Article 15.1 Amendment to the Articles of Association
The Company may amend the Articles of Association as required by changes in the
relevant laws and regulations and the actual situation of the Company. Any amendment
to the Articles of Association shall be made in accordance with the procedures prescribed
herein.Article 15.2 Procedures for Amendments
Where the amendment to the articles of association passed by the shareholders' meeting
resolution is subject to the approval of the competent authority it shall be reported to the
competent authority for approval. Where the registration matters of a Company are
involved the change registration shall be handled in accordance with the law.The board of directors in accordance with the resolution of the shareholders' meeting to
amend the articles of association and the relevant supervisors
The approval opinion of the authority amends this charter.Article 15.3 Inspection and Filing
After the articles of association of a Company are revised the Company's legal domicile
shall be kept for shareholders to review. If the matters of the articles of association
revision fall under the information required to be disclosed by laws and regulations they
shall be announced in accordance with the regulations.Chapter 16 Supplementary Provisions
Article 16.1 paraphrase
(1) A controlling shareholder refers to a shareholder whose shares account for more than
50% of the total share capital of a joint stock limited Company. Or shareholders whose
shareholding ratio does not exceed 50% but the voting rights of the shares they hold are
sufficient to have a significant impact on the resolutions of the shareholders' meeting.
(2) The actual controller refers to a natural person legal person or other organization that
can actually control the Company's behavior through investment relationships
agreements or other arrangements.
(3) Related-party relationship refers to the relationship between the controlling
shareholder actual controller director senior management personnel of a Company and
the enterprises they directly or indirectly control as well as other relationships that may
lead to the transfer of the Company's interests. However state-controlled enterprises do
not have an affiliated relationship merely because they are all controlled by the state.Article 16.2 Parts of Articles of Association
48All supplementary resolutions articles of association and details relating to the Articles
of Association passed by the shareholders in general meeting of the Company shall be
integral parts of the Articles of Association.Article 16.3 Settlement of Matters Not Covered
The annexes to this charter include the rules of procedure for shareholders' meetings and
the rules of procedure for the board of directors. The board of directors may in
accordance with the provisions of the articles of association formulate detailed articles of
association. The articles of association must not conflict with the provisions of the
articles of association.Article 16.4Other Rules and Systems
All rules and systems adopted by the Company which are inconsistent with the Articles
of Association shall all be invalid.Article 16.5 Power of Interpretation of the Articles of Association
The Board of Directors may interpret the provisions of the Articles of Association but the
power of amendment shall be vested in the shareholders in general meetings.Disputes shall be dealt with in accordance with the procedures prescribed in the Articles
of Association.Article 16.6 Effect of Figures
The terms "above" "before" "at least" and "within" as mentioned in the Articles of
Association shall be construed as inclusive of the figure itself.Article 16.7 Taking Effect
The Articles of Association have been passed by the shareholders in general meeting.Article 16.7 Arbitration and Applicable Laws
Regarding disputes or claims of rights related to the Company's affairs arising between
shareholders of foreign capital shares listed domestically and the Company between
shareholders of foreign capital shares listed domestically and the Company's directors
and senior management personnel and between shareholders of foreign capital shares
listed domestically and shareholders of RMB ordinary shares based on the rights and
obligations stipulated in the Company's articles of association and relevant laws and
regulations Except for matters that are explicitly stipulated by law to be subject to
litigation in the people's court they shall be settled through arbitration at the China
International Economic and Trade Arbitration Commission in accordance with the
arbitration rules of that institution.Any disputes concerning the Articles of Association shall be governed by laws of PRC.
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