Articles of Association of ADAMA Ltd.October 2025
(Amended)Catalog
Chapter 1 General Provisions .........................1
Chapter 2 The Business Purpose and Scope of the Co... 3
Chapter 3 Shares .................................... 4
Section 1 Share Offering ............................ 4
Section 2 Share Increase Decrease and Repurchase .... 5
Section 3 Share Transfer .............................6
Chapter 4 Shareholders and Shareholders’ meetings ... 7
Section 1 General Rules on Shareholders ............. 7
Section 2 Controlling Shareholders and Actual Cont.. 12
Section 3 General Provisions of Shareholders’Meeti...15
Section 4 Convening of Shareholders’ meetings ...... 18
Section 5 Proposal and Notice of Shareholders’ mee.. 20
Section 6 Holding of Shareholders’Meetings ..........22
Section 7 Vote and Resolution of Shareholders’ mee...26
Chapter 5 Directors and Board of Directors ..........32
Section 1 General Rules on Directors ............... 32
Section 2 Board of Directors ....................... 37
Section 3 Independent Directors .................... 45
Section 4 Specialized Committees under Board of Di...49
Chapter 6 Party Committee .......................... 51
Chapter 7 Senior Executives ........................ 52
Chapter 8 Financial and Accounting Systems Profit .. 55
Section 1 Financial and Accounting Systems ......... 55
Section 2 Internal Audit ............................59
Section 3 Appointment of Accounting Firms ...........60
Chapter 9 Notices and Announcements ................ 61
Section 1 Notice ....................................61
Section 2 Announcement ..............................62
Chapter 10 Merger/Consolidation Spin-off Capital Increase Capital Reduction Dissolution and
Liquidation .........................................62
Section 1 Merger/Consolidation Spin-off Capital In.. 62
Section 2 Dissolution and Liquidation .............. 64
Chapter 11 Amendments to the Articles of Associati...67
Chapter 12 Supplementary Provisions ..............sions
Article 1 These Articles of Association of ADAMA Ltd.(hereinafter referred
to as “Company”) are formulated pursuant to the Company Law of the People's
Republic of China (hereinafter referred to as “Company Law”) the Securities Law of
the People's Republic of China (hereinafter referred to as “Securities Law”) and other
related provisions with a view to safeguarding the legitimate rights and interests of
the Company its shareholders employees and creditors and regulating the
organizational structures and acts of the Company.In accordance with the Charter of the Communist Party of China (“CPC”) and the
Regulation on the work at primary-level Party organizations of State-owned
enterprises (for Trial Implementation) the Company shall establish the organization
of the CPC the Party Committee shall act as a leading role lead the direction take
charge of overall situations and ensure the implementation of the decisions and
discuss and decide major issues of the enterprise in accordance with regulations. The
Company shall establish the working organization of the Party have Party personnel
in accordance with the law and guarantee there are adequate funds for the work of
Party organization.Article 2 The Company was restructured from former Shashi Pesticide
Factory of Hubei Province as a company limited by shares in accordance with the
Company Law and other relevant provisions.As approved in “E Gai [1992]02” Document issued by the Commission for Economic
Restructuring of Hubei Province the company is established as per raising capital by
private placement registered with the Jingzhou Municipal Administration for Market
Regulation and obtained its business license. The social credit code of the Company
is 91420000706962287Q.Article 3 With the approval of the China Securities Regulatory Commission
(hereinafter referred to as “CSRC”) in “Zheng Jian Fa Shen [1993] 70” Document
dated September 27 1993 the Company initially offered 30000000 ordinary
Renminbi common shares which shall be subscribed by inbound investors by
Renminbi to the public and was listed on Shenzhen Stock Exchange on December 3
1993; on April 25 1997 with the approval of the Securities Commission of the State
Council in “Zheng Wei Fa[1997]23” Document the Company initially offered
115000000 domestically listed foreign-funded shares which shall be listed
domestically and subscribed by foreign currency to outbound investors and was listed
on Shenzhen Stock Exchange on May 15 and 25 1997.Article 4 Registered name of the Company
Full name in Chinese: 安道麦股份有限公司
1Full name in English: ADAMA Ltd.
Article 5 Domicile of the Company: No. 93 Beijing East Road Jingzhou
Hubei Province Postal code: 434001. Manufacture address of the Company are: No.
93 Beijing East Road Jingzhou Hubei Province and No. 16 Hongtang Road
Jingzhou Development Zone Jingzhou Hubei Province.Article 6 Registered capital of the Company shall be Renminbi
2329811766.
Article 7 The Company shall be a permanent company limited by shares.Article 8 The manager who represents the company to execute corporate
affairs shall serve as the legal representative of the Company holding the position of
President and CEO.Where the President and CEO who serves as the legal representative resigns he/she
shall be deemed to have resigned from the position of the legal representative at the
same time.Where the legal representative resigns the Company shall appoint a new legal
representative within 30 days after the date of his/her resignation.Article 9 The Company shall bear the legal consequences arising from the
civil activities conducted by the legal representative in the name of the Company.Any restrictions on the functions and powers of the legal representative imposed by
the Articles of Association or the shareholders' meeting shall not be asserted against a
bona fide third party.Where the legal representative of the Company causes damage to others while
performing his/her duties the Company shall assume the civil liability. After
assuming the civil liability the Company may in accordance with the provisions of
law or the Articles of Association claim indemnification against the legal
representative who is at fault.Article 10 Shareholders shall bear responsibilities to the Company to the extent
of their shares and the Company shall be liable for the Company's debts with all of its
assets.Article 11 These Articles of Association shall as of the date when they come
into force become a document legally binding upon the organizational structure and
acts of the Company upon the relationship of rights and obligations between the
Company and its shareholders and between or among shareholders themselves and
2upon the Company its shareholders directors and senior executives. The shareholders
may in accordance with these Articles of Association bring lawsuits against other
shareholders or the Company's directors and senior executives or the Company.The Company may also bring lawsuits against its shareholders directors and senior
executives.Article 12 “Senior executives” where used in these Articles of Association shall
refer to the President and CEO Chief Financial Officer and the secretary of the board
of directors following their appointment as senior executives by the board of
directors.Chapter 2 The Business Purpose and Scope of the Company
Article 13 The business purpose of the Company is to take the comprehensive
advantages promote technological progress strengthen the development of
agricultural chemicals and related industries improve the domestic and foreign
market share strengthen enterprise management improve economic efficiency and
ensure asset value increase.Article 14 Subject to registration according to the law the Company's business
scope is: Licensed items: pesticide production pesticide wholesale pesticide retail
production of specific organic chemicals containing phosphorus sulfur and fluorine in
the second third and fourth categories of monitored chemicals operation of the
second category of monitored chemicals production of hazardous chemicals
operation of hazardous chemicals import and export of toxic chemicals power
generation business power transmission business power supply (distribution)
business non-coal mineral resources mining. (Items subject to approval in accordance
with the law can only be carried out after approval by the relevant departments and
the specific business items are subject to the approval documents or licenses of the
relevant departments.)
General items: production of Class II non-pharmaceutical chemicals easy to
manufacture poisons operation of Class II non-pharmaceutical chemicals easy to
manufacture poisons production and operation of Class III non-pharmaceutical
chemicals easy to manufacture poisons production of chemical products (excluding
licensed chemical products) sale of chemical products (excluding licensed chemical
products) manufacture of special chemical products (excluding hazardous chemicals)
sale of special chemical product sales (excluding hazardous chemicals) oil refining
manufacturing of special equipment for chemical production sales of special
equipment for oil refining and chemical production heat production and supply
import and export of goods import and export of technology technical services
technology development technology consulting technology exchanges technology
3transfer technology promotion new materials technology research and development
bio-pesticide technology research and development bio-chemical products
technology research and development agricultural scientific research and
experimental development metal structure manufacturing and sales loading
unloading and freight general cargo warehousing services (excluding hazardous
chemicals and other projects requiring licensing approval). (In addition to the licensed
business it can independently operate business involving non-prohibited or restricted
projects in accordance with the laws and regulations.)
Chapter 3 Shares
Section 1 Share Offering
Article 15 The shares of the Company shall take the form of stocks.Article 16 The shares of the Company are offered in an open impartial and fair
manner. Shares of the same kind shall enjoy the same and equal rights.For shares of the same kind offered at the same time the issuing conditions and prices
of each of such shares shall be the same; for shares subscribed by the subscribers
each of such shares shall be paid at the same value.Article 17 The face value of each shares offered by the Company shall be
Renminbi 1.Article 18 Shares issued by the Company shall be uniformly deposited at
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.Article 19 In August 1992 the Bureau for State Property Administration of
Shashi Hubei Province converted net operating assets in total amount of Renminbi
60764900 into capital contribution as 59663400 State shares and raised capital by
private placement from the employees who subscribed 15270500 shares to establish
the Company.Article 20 The total number of the shares issued by the Company is
2329811766 among which 2177071961 Renminbi ordinary shares 152739805
domestically listed foreign-funded shares.Article 21 The Company or its subsidiaries (including its affiliated enterprises)
shall not by such means as donation advancement guarantee loan or otherwise
4provide anyone who obtains the Company's shares or the parent company's shares
with financial assistance except where the employee stock ownership plan is
implemented.For the interests of the Company upon resolution of a shareholders' meeting or
resolution by the board of directors pursuant to the Articles of Association or the
authorization of the shareholders' meeting the Company may provide financial
assistance to others for obtaining of the company's shares or the parent company's
shares provided that the total cumulative amount of financial assistance shall not
exceed 10% of the total issued share capital. A board resolution shall be passed by
more than two-thirds of all the directors.Section 2 Share Increase Decrease and Repurchase
Article 22 The Company may for the purpose of its operation and development
and in accordance with the laws and regulations adopt the following means for
increase in its capital following resolutions respectively adopted by the shareholders’
meeting:
(1) issuance of shares to unspecified objects;
(2) issuance of shares to specified objects;
(3) issuing bonus shares to current shareholders;
(4) converting the common reserve fund into the share capital; or
(5) other means as prescribed by laws and administrative regulations and the CSRC.
Article 23 The Company may reduce its registered capital. If its registered
capital is reduced the Company shall comply with the Company Law and other
relevant provisions and procedures as prescribed in these Articles of Association.Article 24 The Company shall not acquire its own shares except under any of
the following circumstances:
(1) decreasing the Company's registered capital;
(2) merging/consolidating with other companies holding the shares of the Company;
(3) Use of shares for employee stock ownership plans or equity incentives;
(4) where shareholders raise objections to resolutions by the shareholders’ meeting on
the merger or spin off of the Company and thus require it to acquire its own shares;
(5) Use of shares for conversion of convertible corporate bonds issued by the
Company; or
(6) It is necessary for maintaining the value of the Company and shareholders' equity.
Article 25 Buyback of shares by the Company may be carried out through open
centralized trading or via any other method recognized by laws and administrative
regulations and the CSRC.
5A share buyback by the Company under the circumstances stipulated in item (3) item
(5) or item (6) of Article 24 shall be carried out via an open centralized trading
method.Article 26 A resolution of a shareholders meeting is required for a share
buyback by the Company under any of the circumstances stipulated in item (1) and
item (2) of Article 24; a resolution of the Board meeting presented by two-thirds or
more of the directors is required for a Company's share buyback under any of the
circumstances stipulated in item (3) item (5) and item (6) of Article 24.Where a share buyback by the Company pursuant to the provisions of Article 24 falls
under the circumstances set out in item (1) the shares shall be deregistered within 10
days from the date of buyback; where a share buyback by the Company pursuant to
the provisions of Article 24 falls under the circumstances set out in item (2) or item
(4) the shares shall be transferred or deregistered within six months; where a share
buyback by the Company pursuant to the provisions of Article 24 falls under the
circumstances set out in item (3) item (5) or item (6) the total number of shares held
by the Company shall not exceed 10% of the total number of shares issued by the
Company and the shares shall be transferred or deregistered within three years.Section 3 Share Transfer
Article 27 The Company shares shall be transferred according to the law.Article 28 The Company shall refuse to have its own shares as the collateral of
pledge.Article 29 The directors and senior executives of the Company shall report to
the Company their shares in the Company and any alterations to the shares so held
and the shares transferred annually by them during their terms of office determined at
the time of appointment shall not exceed 25% of their total shares of the same type of
shares of the Company; their shares in the Company shall not be transferred within
the first year after the Company's stocks are listed. The aforesaid persons shall not
transfer their shares in the Company for the period of six months after they resign
from the Company.Article 30 Where the Company's shareholders which hold more than 5% of the
total shares of the Company directors and senior executives sell their stocks or other
securities of equity nature within six months after having bought them or repurchase
them within six months after having sold them all earnings thus obtained shall be
confiscated by the Company and be revoked by the board of directors of the Company.However exception applies where a securities company holds more than 5% of the
6Company’s shares due to purchase of any remaining shares in a best efforts
underwriting or where there are any other circumstances stipulated by the CSRC.Shares or other securities of equity nature held by directors senior executives and
natural-person shareholders referred to in the preceding paragraph shall include shares
or other securities of equity nature held by their spouse parents children and held by
them using other's accounts.Where the board of directors refuses to comply with the provisions of this Article 30
the shareholders shall have the right to order the enforcement by the board of directors
of the said provisions within 30 days. Where the board of directors fails to observe the
provisions of this Article 30 within the aforesaid time limit the shareholders shall be
entitled to in their own names directly file a suit with the people's court for the
benefits of the Company.Where the board of directors refuses to comply with the first paragraph of this Article
the responsible directors shall bear joint and several liabilities according to law.Chapter 4 Shareholders and Shareholders’ meetings
Section 1 General Rules on Shareholders
Article 31 The Company shall according to the evidence provided by
Shenzhen Branch of China Securities Depository and Clearing Corporation Limited
prepare a register of shareholders which serves as sufficient evidence for the
Company's shares held by the shareholders. Shareholders shall enjoy rights and bear
responsibilities according to the kinds of shares held by them; shareholders with the
same kind of shares shall enjoy equal rights and bear the same obligations.Article 32 When the Company holds the shareholders’ meeting distributes
stock dividends goes into liquidation proceedings or conducts other acts requiring the
identification of shareholders the board of directors or the convener of the
shareholders’ meeting shall decide on the equity registration date and shareholders
who are recorded in the said register after the closing of the equity registration date
shall be the shareholders entitled to the relevant rights and interests.Article 33 Shareholders of the Company are entitled to the following rights:
(1) obtaining the dividends or other forms of interest distributions according to the
numbers of shares held by them;
(2) legally requesting to hold convening presiding over attending or entrusting
7shareholders' proxies to attend the shareholders’ meeting and exercising the
relevant voting rights;
(3) supervising over giving recommendations on or inquiring about the business
operation of the Company;
(4) transferring donating or pledging their shareholdings in accordance with laws
administrative regulations and the provisions hereof;
(5) having access to and making copies of these Articles of Association register of
shareholders minutes of the shareholders’ meeting resolutions of the board of
directors and financial and accounting statements; qualified shareholders may
consult the Company's accounting books and accounting vouchers;
(6) participating in the distribution of the Company's remaining properties in
accordance with their shareholdings upon the termination or liquidation of the
Company;
(7) demanding the Company to acquire the shares of the shareholders who raise
objections to the merger/consolidation and spin-off resolutions adopted by the
shareholders’ meeting; and
(8) other rights prescribed in laws administrative regulations and other regulations of
ministries and commissions and the provisions of these Articles of Association.Article 34 The shareholders who request to consult or make copies of the
relevant materials of the Company shall comply with the provisions of the Company
Law the Securities Law and related laws and administrative regulations.When a shareholder requests to consult or copy the relevant materials specified in
Item (5) of Article 33 of these Articles of Association the shareholder shall submit a
written request to the Company stating the purpose specific content and time of
consulting or copying the relevant materials and provide the Company with the
following materials:
(1) Shareholder identification documents (natural person shareholders shall provide a
copy of their identity certificate; legal person shareholders shall provide a copy of
their business license and the legal representative's identity certificate and present the
original documents to the Company on the day of inspecting or copying the relevant
materials); if the consulting or copying is conducted by proxy the proxy's own
identity certificate and the shareholder's written power of attorney shall also be
provided;
(2) Written documents proving the type and quantity of the Company's shares held by
8the shareholder;
(3) A written statement for consulting or copying the Company's relevant materials
clearly stating the direct relevance between the consulting or copying of the
Company's relevant materials and the shareholder's legitimate rights and interests and
containing no content related to unfair competition damage to the Company's
interests or other improper purposes.The Company shall give a reply within 10 working days from the date of receiving
the shareholder's written request and the above-mentioned materials. After verifying
the shareholder's identity and confirming the purpose of the application if the
Company approves the shareholder's request to consult or copy the relevant materials
it shall notify the shareholder to conduct on-site inspection at the place designated by
the Company after signing a confidentiality agreement. If the shareholder needs to
copy the relevant materials it shall obtain the prior consent of the Company and make
the copy on the company's premises. If the Company has reasonable grounds to
believe that the shareholder's consulting or copying of the Company's relevant
materials is not relevant to the shareholder's legitimate rights and interests or that the
shareholder has improper purposes which may damage the Company's legitimate
interests the Company may reject the request and explain the reasons to the
shareholder.From the time the shareholder submits the application to the day when the relevant
materials are formally consulted or copied the shareholder shall continuously meet
the requirements on shareholding ratio and shareholding period for shareholders to
have the right to consult and copy relevant materials as stipulated in laws and
administrative regulations such as the Company Law and the Securities Law.Article 35 Where the resolutions adopted by the shareholders’ meeting and the
meeting of the board of directors violate laws and administrative regulations the
shareholders shall be entitled to request judgment by the people's court that such
resolutions are null and void.Where the convening procedures and voting methods of the shareholders’ meeting
and board of directors violate laws administrative regulations or these Articles of
Association or the contents of the resolutions adopted by the shareholders’ meeting
and the meeting of the board of directors contravene these Articles of Association the
shareholders shall be entitled to within 60 days from the date of such resolutions are
made request their revocation by the people's court except where the convening
procedures or voting method of a shareholders' meeting or a board meeting has only
minor defect which does not have a substantial impact on the resolution.Where the relevant parties such as the board of directors the shareholders etc. dispute
over the validity of resolution passed by the shareholders' meeting they shall
promptly file a lawsuit with a people's court. Before the people's court makes a
9judgment or ruling on revocation of the resolution the relevant parties shall
implement the resolution passed by the shareholders' meeting. The Company its
directors and senior executives shall perform their duties pragmatically and ensure
normal operations of the Company.Where the people's court has made a judgment or ruling on the relevant matter the
Company shall perform information disclosure obligation pursuant to the provisions
of laws administrative regulations the CSRC and the Stock Exchanges provide
adequate explanation on the impact and actively cooperate in enforcement of the
judgment or ruling upon its validity. Where a correction of preliminary matter is
involved the correction shall be promptly made and the corresponding information
disclosure obligation shall be performed.Article 36 Under any of the following circumstances a resolution passed by a
shareholders' meeting or a board meeting is not valid:
(1) the resolution is passed without holding a shareholders' meeting or a board
meeting;
(2) the resolution is not voted on at a shareholders' meeting or a board meeting;
(3) the number of persons present at the meeting or the number of votes held does not
attain the number stipulated in the Company Law or the Articles of Association or
the number of votes held; or
(4) the number of persons who consent to the resolution or the number of votes held
does not attain the number stipulated in the Company Law or the Articles of
Association or the number of votes held.Article 37 Where the directors and the senior executives other than the audit
committee members violate any laws administrative regulations or any of Articles of
Association in fulfilling their duties and thereby cause losses to the Company the
shareholders who for more than 180 consecutive days hold singly or jointly over 1%
of the Company's shares shall be entitled to request in writing the audit committee to
file a suit with the people's court; where a member of the audit committee violates any
laws administrative regulations or any of Articles of Association in fulfilling its
duties and thereby causes losses to the Company the aforesaid shareholders may
request in writing the board of directors to file a suit with the people's court.Where the audit committee or the board of directors refuse to file lawsuits after
having received a written request from the shareholders as described in the preceding
paragraph or fail to file a suit with the people's court within 30 days after their receipt
of such requests or under any emergency failure to immediately file lawsuits may
possibly cause irreparable losses to the Company the shareholders as prescribed in
10the preceding paragraph shall be entitled to file suits directly to the people's court in
their own names.Where the infringement of the lawful rights and interests of the Company by any
other person has caused losses to the Company the shareholders as prescribed in the
first paragraph of this Article may in line with the provisions described under the
preceding two paragraphs file a suit with the people's court.Where a director or senior executive of a wholly-owned subsidiary of the Company
when performing his/her duties contravenes the laws administrative regulations or
the Articles of Association resulting in losses to the Company or another person
infringes upon the legal rights and interests of a wholly-owned subsidiary of the
Company resulting in losses a shareholder individually or jointly holding 1% or
more of the shares of the Company for more than 180 consecutive days may
according to the first three paragraphs of Article 189 of the Company Law request in
writing the directors or board of directors of the wholly-owned subsidiary to file a
lawsuit with a people's court or may directly file a lawsuit with the people's court in
his/her own name.Article 38 Where the violation of laws administrative regulations or the
provisions hereof by the directors and senior executives has caused losses to the
shareholders the shareholders may file a suit with the people's court.Article 39 The shareholders of the Company shall bear the following
obligations:
(1) observing laws administrative regulations and these Articles of Association;
(2) paying the capital according to the shares subscribed by them and the method of
their capital contributions;
(3) not to withdraw their shares unless otherwise specified by laws rules and
regulations; and
(4) not to abuse shareholder's rights to harm the interests of the Company or other
shareholders; not to abuse the independent legal person status of the Company and
the limited liabilities of shareholders to harm the interests of the creditors of the
Company;
(5) other obligations which shall be born in line with the laws administrative
regulations and the provisions hereof.Article 40 Where abuse by the Company's shareholders of their rights has
caused losses to the Company or other shareholders such shareholders shall bear the
11compensation liabilities in accordance with the law.
Where the abuse by the Company's shareholders of the Company's independent legal
person status and the shareholders' limited liabilities for evasion of their debts has
seriously damaged the interests of the creditors such shareholders shall bear several
and joint liabilities for the debts of the Company.Section 2 Controlling Shareholders and Actual Controllers
Article 41 Controlling shareholders and actual controllers of the Company shall
exercise their rights and perform their obligations in accordance with the laws
administrative regulations the provisions of the CSRC and the Stock Exchanges to
protect the interests of the Company.Article 42 Controlling shareholders and actual controllers of the Company shall
comply with the following provisions:
(1) exercising shareholder's rights in accordance with the law not abusing the
controlling right or making use of related-party relationships to damage the legitimate
rights and interests of the Company or other shareholders;
(2) strictly performing the declarations and various commitments made without
unauthorized alteration or exemption;
(3) performing information disclosure obligations strictly in accordance with the
relevant provisions taking the initiative to cooperate with the Company in
information disclosure and notifying the Company promptly of material events which
have occurred or will occur;
(4) not occupying the Company's funds in any way;
(5) not compelling instigating or requesting the Company and its relevant personnel
to provide guarantee in violation of laws and regulations;
(6) not making use of the Company's undisclosed material information to seek gains
not divulging undisclosed material information relating to the Company in any way
and not engaging in insider trading short-swing trading and market manipulation or
other acts in violation of laws and regulations;
(7) not impairing the legitimate rights and interests of the Company and other
shareholders through unfair related-party transactions profit distribution asset
restructuring outbound investment or other means;
12(8) ensuring the integrity of the Company's assets staff independence financial
independence organizational independence and business independence and not
affecting the Company's independence in any way; and
(9) other provisions of laws administrative regulations the provisions of the CSRC
the business rules of the Stock Exchanges and the Articles of Association.Where the controlling shareholders and actual controllers of the Company instruct the
directors and senior executives to damage the interests of the Company or
shareholders they shall bear joint and several liability with the directors and senior
executives.Article 43 The transaction between the Company and the controlling
shareholders or actual controllers regarding provision of funds commodities and
services and other asset shall strictly comply with decision-making procedures of
affiliate transaction and fulfilling examination and deliberation procedure of the board
of directors and shareholders’ meeting the affiliated director and shareholder shall
withdraw from voting. The Company shall not provide funds commodities services
or other asset to the shareholder and actual controller without consideration or on
manifestly unfair terms; or provide guarantee to a shareholder or actual controller that
is noticeably unable to make repayment; or provid guarantee to a shareholder or
actual controller without justifiable reasons; or relinquish debt against a shareholder
or actual controller without justifiable reasons; or assume debts of a shareholder or
actual controller without justifiable reasons.The directors and senior executives of the Company shall have the obligation to
preclude the asset of the Company from being occupied by a controlling shareholder
or its affiliated enterprise. Where the directors and senior executives of the Company
assist and connive a controlling shareholder or its affiliated enterprise to
misappropriate the asset of the Company the board of directors of the Company shall
in the light of the seriousness of the circumstances circulate a notice of criticism or
warn against the direct responsible person and submit the issue of whether to remove
a director who bears serious responsibility to the shareholders’ meeting for vote. Theboard of directors of the Company shall establish the mechanism “freezing uponembezzlement” applicable to the shares held by the controlling shareholder namely
in case that the controlling shareholder and its subsidiaries are discovered to embezzle
the Company’s assets an application shall be immediately submitted to the judicial
authority pursuant to the law for the judicial freezing of the shares held by the
controlling shareholder so that the embezzled assets which cannot be recovered in
cash may be recovered through the sale of the frozen shares. The chairman of the
board of directors of the Company shall be the person undertaking the primary
responsibilities for the mechanism “freezing upon embezzlement” and the Chief
Financial Officer the secretary of the board of directors shall assist the chairperson of
the board of directors in conducting the work of “freezing upon embezzlement”
13The specific implementing procedures are as follows:
1. The Chief Financial Officer upon discovering that a controlling shareholder
misappropriate the asset of the Company shall report to the chairman of the
board of directors in writing on the same day of such discovery; where the
chairman of the board of directors is a controlling shareholder the Chief
Financial Officer shall report to the chairman of the board of directors and at the
same time report to the secretary of the board of directors and chairperson of the
audit committee in writing on the day of discovering that a controlling
shareholder misappropriated the asset of the Company; the content of the report
shall include the name of the controlling shareholder which occupies the asset
the name of the occupied asset the time period of occupation the amount of
money involved and estimated term of compensation etc.; where it is discovered
that a director or senior executive assist or connive a controlling shareholder or its
affiliated enterprise to misappropriate the asset of the Company the Chief
Financial Officer shall specify the name and the circumstances of assistance and
connivance to the controlling shareholder or its affiliated enterprise to
misappropriate the asset of the Company of the director or senior executive
involved in the written report.
2. The chairman of the board of directors shall urge the secretary of the board of
directors to inform the directors in writing or by email and convene an interim
meeting of the board of directors to examine and deliberate the term of
compensation for the controlling shareholder the decision of punishment against
the responsible director or senior executive and application for freeze of the
shares of the controlling shareholder with judicial department etc. according to
the written report of the Chief Financial Officer; if the chairman of the board of
directors is a controlling shareholder or a controlling shareholder of a controlling
shareholder of the Company the secretary of the board of directors shall
immediately inform the directors in writing or by email following the receipt of
the written report of the Chief Financial Officer and convene an interim meeting
of the board of directors according to the Company Law and these Articles of
Association to examine and deliberate the term of compensation for the
controlling shareholder the decision of punishment against responsible director
or senior executive and application for freeze of the shares of the controlling
shareholder with judicial department etc. and affiliated directors shall withdraw
from examination and deliberation; for directors who bears serious responsibility
the board of directors shall submit them to shareholders’ meeting for vote after
examining and deliberating relevant punishment decision.
3. The secretary of the board of directors shall send compensation notice within
given time period to the controlling shareholder execute the punishment decision
against relevant director or senior executive and apply for judicial freeze of the
14shares of the controlling shareholder with judicial department etc. and conduct
information disclosure thereof according to the resolution of the board of the
directors; the Company and the board of directors of the Company shall provide
convenience to the secretary of the board of directors for the said items including
issuing letter of authorization provide guarantee for judicial freeze approve the
secretary of the board of directors to engage professional parties to assist and bear
the cost etc.; the secretary of the board of directors shall inform the director who
bears serious responsibility in time after relevant items are examined deliberated
and approved by the shareholders’ meeting and draft relevant punishment
documents and handle with relevant procedures.
4. If the controlling shareholder fails to compensate within the given time period
the Company shall apply relevant judicial department to realize the shares frozen
to compensate the misappropriated asset within 30 days after the expiration of the
given time period and the secretary of the board of directors shall conduct
relevant information disclosure.Article 44 Where controlling shareholders and actual controllers pledge the
Company's shares held or actually controlled by them they shall maintain the control
of the Company and the stability of production and operation.Article 45 Any controlling shareholder or actual controller that transfers
Company shares held by it shall abide by any restrictive provisions on share transfers
set forth in laws administrative regulations the rules of the CSRC and the Stock
Exchanges and any commitment it makes with respect to the restricted share
transfers.Section 3 General Provisions of Shareholders’Meetings
Article 46 The shareholders' meeting of the Company is composed of all
shareholders. The shareholders’ meeting is the organ of power of the Company and
shall exercise the following powers and functions:
(1) electing and replacing the posts of the directors and deciding on the
remunerations of such directors;
(2) examining deliberating and approving the board of directors' report;
(3) examining deliberating and approving the Company's profit distribution plan and
plan to recover the Company's losses;
(4) adopting resolutions on increase or decrease in the Company's registered capital;
15(5) adopting resolutions on issuance of the Company bonds;
(6) adopting resolutions on the merger/consolidation spin-off dissolution liquidation
or change of Company type of the Company;
(7) amending these Articles of Association;
(8) making resolutions on the appointment or dismissal by the Company of an
accounting firm that undertakes the auditing of the Company;
(9) examining deliberating and approving the guarantee particulars prescribed in
Article 47 hereof;
(10)examining deliberating matters regarding the purchase and sales within one year
by the Company of major assets which exceed 30% of the latest audited total
assets of the Company;
(11)examining deliberating and approving changes in the usage of the funds raised;
(12)examining and deliberating the stock incentive plan and employee stock
ownership plans; and
(13)examining and deliberating other matters which shall be decided by the
shareholders’ meetings according to the laws administrative regulations
regulations of ministries and commissions or provisions hereof.A shareholders' meeting may authorize the board of directors to decide on the
issuance of company bonds.Article 47 The below listed external guarantee of the Company shall be
approved by the shareholders’ meeting after examination and deliberation:
(1) Any guarantee made by the Company after the total amount of external guarantees
offered by the Company and any of the Company's controlled subsidiaries exceeds
50% of the latest audited net assets;
(2) Any guarantee made by the Company after the total amount of external guarantees
offered by the Company and any of the Company's controlled subsidiaries exceeds
30% of the latest audited total assets;
(3) The amount of external guarantees provided by the Company to others within one
year exceeds 30% of the Company's latest audited total assets;
(4) Any guarantee provided to any party whose asset-liability ratio exceeds 70%;
16(5) Any single guarantee with amount exceeding 10% of the latest audited net assets;
or
(6) Any guarantee provided to the shareholders the actual controllers or their
affiliated parties.If the Company's external guarantee violates the approval authority and deliberation
procedure causing losses to the Company the relevant responsible person shall bear
the responsibility of compensation and the Company will give the relevant
responsible person corresponding punishment according to the economic loss suffered
by the Company and the severity of the situation.Article 48 There are the annual shareholders’ meeting and the interim
shareholders’ meeting. The annual shareholders’ meeting shall be held once a year
and within six months from the end of the last fiscal year.Article 49 The interim shareholders’ meeting shall be held by the Company
within two months of when one of the following circumstances occurs:
(1) The number of directors is less than the number stipulated under the Company
Law or 2/3 of the number of directors in Article 110 of this AOA;
(2) The number of independent directors is less than 1/3 of the number of all
directors;
(3) Unrecovered Company losses have reached 1/3 of the total amount of the capital;
(4) Shareholders that separately or jointly hold more than 10% of the Company's
shares request to hold an interim shareholders’ meeting;
(5) The board of directors deems it necessary to hold an interim shareholders’
meeting;
(6) The audit committee proposes to hold an interim shareholders’ meeting; or
(7) Other circumstances prescribed in laws administrative regulations regulations of
ministries and commissions or these Articles of Association.Article 50 The location of the shareholders’ meeting shall be the domicile of
the Company or other place as set forth in the notice of the shareholders’ meeting.The shareholders' meeting will be on-site meeting. The Company will also provide
online voting to facilitate the shareholders in attending the meeting. If shareholders
17attend the shareholders' meeting by the aforesaid means they shall be deemed to have
been present.Article 51 The Company shall engage a law firm to issue legal opinions on the
following matters when holding the shareholders’ meeting:
(1) Whether the convention of the meeting and holding procedures are in line with
laws administrative regulations and the provisions hereof;
(2) Whether the qualifications of the attendees and convener are lawful and effective;
(3) Whether the voting procedures and results of the meeting are lawful and effective;
and
(4) Legal opinions issued upon the request of the Company on other relevant issues.
Section 4 Convening of Shareholders’meetings
Article 52 The board of directors shall convene a shareholders' meeting within
the prescribed period.Upon consent by more than half of all the independent directors the independent
directors shall have the right to propose the convening of the interim shareholders’
meeting to the board of directors. With regard to such proposal the board of directors
shall in accordance with the provisions of the laws administrative regulations and
provisions of these Articles of Association provide its feedback in writing on
approval or disapproval within 10 days from the date of the receipt of the said
proposal.Where the board of directors approves the convening of the interim shareholders’
meeting it shall give notice thereof within five days after the said approval resolution
of the board of directors; otherwise the reasons for such disapproval shall be stated
and announced.Article 53 The audit committee shall have the right to propose the convening of
the interim shareholders’ meeting and shall submit its proposal to the board of
directors in writing. The board of directors shall in accordance with the provisions of
the laws administrative regulations and these Articles of Association provide
feedback in writing on approval or disapproval within 10 days from the date of the
receipt of the said proposal.Where the board of directors approves the convening of interim shareholders’
18meetings it shall send a notice thereof within five days after the approval resolution
of the board of directors. Where the notice changes the original proposal the approval
of the audit committee shall be required.Where the board of directors disapproves the convening of the interim shareholders’
meeting or fails to provide its feedback within 10 days from the date of the receipt of
the said proposal it shall be deemed incapable or fail to fulfill the obligation of
convening the shareholders’ meeting; the audit committee may thereby convene and
preside over the meeting on its own.Article 54 The shareholders singly or jointly holding more than 10% of the
shares of the Company shall propose in writing to the board of directors the
convening of the interim shareholders’ meeting. The board of directors shall in
accordance with the provisions in laws administrative regulations and these Articles
of Association provide feedback in writing on the approval or disapproval within 10
days from the date of the receipt of such proposal.Where the board of directors approves the convening of the interim shareholders'
meeting it shall within five days after the approval resolution of the board of
directors give notice thereof. Where the notice alters the original proposal the
approval of the relevant shareholders shall be required.Where the board of directors disapproves the convening of the interim shareholders'
meeting or fails to provide feedback within 10 days from the date of the receipt of the
said proposal the shareholders which singly or jointly hold more than 10% of the
shares of the Company shall propose in writing the convening of the interim
shareholders’ meeting to the audit committee and shall raise their request in writing to
the audit committee.Where the audit committee approves the convening of the interim shareholders’
meeting it shall within five days from the date of the receipt of the said written
request give notice thereof. If the notice changes the original proposal the approval of
the relevant shareholders shall be required.Where the audit committee fails to send the said notice within the prescribed time
limit it shall be deemed that they failed to convene and preside over the shareholders’
meeting and shareholders which singly or jointly hold more than 10% of the
Company's shares for more than 90 consecutive days may convene and preside the
meeting independently.Article 55 Where the audit committee or the shareholders decide to convene the
shareholders' meeting independently they shall notify the board of directors in
writing to such effect and file with the stock exchange.
19The audit committee or the convening shareholders shall upon sending the notice of
the shareholders’ meeting and announcing the resolutions of the shareholders’
meeting submit related certificates to the stock exchange.Prior to the announcement of the resolution of the shareholders’ meeting the total
shares of the convening shareholders shall not be less than 10%.Article 56 With respect to shareholders’ meetings independently convened by
the audit committee or the shareholders the board of directors and the secretary of the
board of directors shall give their cooperation. The board of directors shall provide the
register of shareholders of equity registration date.Article 57 Where the shareholders’ meeting is held independently by the audit
committee or shareholders all necessary costs and expenses of the meeting shall be
borne by the Company.Section 5 Proposal and Notice of Shareholders’meetings
Article 58 The contents of a proposal shall be amongst the functions and powers
of the shareholders’ meeting have clear topics for discussion and detailed resolution
matters and be in line with the relevant provisions of the laws administrative
regulations and these Articles of Association.Article 59 Where the Company holds the shareholders’ meeting the board of
directors the audit committee and the shareholders that singly or jointly hold more
than 1% of the Company's shares shall have the right to raise proposals to the
Company.The shareholders that singly or jointly hold more than 1% of the Company's shares
may 10 days prior to the convention of the shareholders’ meeting raise the interim
proposals and submit them in writing to the convener. The convener shall within two
days after receipt of such proposals issue a supplementary notice of the shareholders’
meeting and announce the contents of the interim proposals and submit the interim
proposals to the shareholders' meeting for deliberation except where interim
proposals contravene the provisions of laws administrative regulations or the
Articles of Association or do not fall within the scope of duties and powers of the
shareholders' meeting.Except for the circumstances prescribed in the preceding paragraph the convener
after having issued the notice of the shareholders’ meeting shall not amend proposals
which have been expressly set out or add new proposal to the said notice.
20Proposals which are not listed in the said notice or are inconsistent with the Articles
of Association shall not be voted on or resolved on the shareholders’ meeting.Article 60 For the annual shareholders’ meeting the convener shall by
announcement notify all the shareholders 20 days prior to the convention of the said
meeting. For the interim shareholders’ meeting the convener shall by announcement
notify all the shareholders 15 days in advance. When calculating the notice period the
day when the meeting is held shall not be included.Article 61 The notice of the shareholders’ meeting shall include the following
contents:
(1) time place and time limit of the shareholders’ meeting;
(2) matters and proposals submitted to the shareholders’ meeting for its examination
and deliberation;
(3) clearly written explanation: all shareholders shall have the right to attend the
shareholders’ meeting and may in writing entrust their proxies to attend the
meeting and participate in votes. The proxies of the shareholders may not
necessarily be the shareholders of the Company;
(4) equity registration date of any shareholder entitled to attend the shareholders’
meeting;
(5) name and telephone number of the contact person in charge of shareholders’
meeting matters; and
(6) the time and procedure of voting online or by any other means.
Article 62 Where the shareholders’ meeting intends to discuss matters related to
the election of directors the notice of the shareholders’ meeting shall fully disclose
detailed information about such directors including at least the following contents:
(1) such personal information as the education background working experience
part-time job and so on;
(2) whether the candidates for directors have affiliated relationship with the Company
or its controlling shareholders and the actual controllers；
(3) the number of Company shares held by the candidates for directors; and
(4) whether candidates for directors have received punishments by the CSRC or other
departments or warning reprimands from the stock exchange.
21Except for the election of directors by means of a cumulative voting system each
director candidate shall be nominated in a single proposal.Article 63 Once the notice of the shareholders’ meeting is issued the
shareholders’ meeting shall not be postponed or canceled without justifiable cause
nor shall the proposals set out in the shareholders’ meeting notice be canceled. In the
case of the said postponement or cancellation the convener shall make an
announcement stating reasons for such postponement or cancellation at least two
working days in advance of the original date for holding the shareholders’ meeting.Section 6 Holding of Shareholders’Meetings
Article 64 The board of directors and other conveners of the Company shall take
necessary measures to ensure the normal order of the shareholders’ meetings. The
board of directors and other conveners of the Company shall take measures to prevent
acts which interfere with the shareholders’ meeting cause disturbance or infringe on
the lawful rights of the shareholders and shall promptly report such acts to the
relevant departments for investigation and punishment.Article 65 All shareholders recorded in the register of shareholders on the equity
registration date or their proxies shall have the right to attend the shareholders’
meeting and exercise their voting rights in accordance with the relevant laws rules
and these Articles of Association. A shareholder may attend the shareholders' meeting
in person or appoint a proxy to attend or vote on his/her behalf.The interval between the equity registration date and the date of meeting shall not be
more than seven working days. The equity registration date shall not be changed once
it is determined.Article 66 Where the individual shareholders personally attend the shareholders’
meeting they shall present their identification cards or other valid certificates which
verify their identities; where the individual shareholders entrust their proxies to attend
the meeting on their behalf said proxies shall present their valid identity certificates
and the power of attorney from the shareholder.In the case of legal person shareholders their legal representatives or proxies
entrusted by such legal representatives shall attend the meeting. The legal
representatives if attending the meeting shall present their identification cards and
valid certificates which verify their qualifications as legal representative; where
proxies are entrusted by such legal representatives to attend the meeting such proxies
shall present their identification cards and the written power of attorney as issued
22legally by the legal representatives of the legal person shareholders.
Article 67 The power of attorney as issued by the shareholders shall indicate
that proxies are entrusted to attend the shareholders’ meeting and shall contain the
following items:
(1) name or title of the principal and the type and number of shares held;
(2) the name or title of each proxy;
(3) specific instructions given by the shareholder including instructions for
affirmative negative or abstention vote upon every matter which is listed in the
agenda of and shall be examined and deliberated at the shareholders’ meeting;
(4) issuing date and term of validity of the power of attorney;
(5) signature (or seal) of the principal. Where the principal is a legal person
shareholder the official seal of the legal person shareholder shall be affixed.Article 68 Where the power of attorney granted for voting by proxy is signed by
a person entrusted by the principal the authorization letter signed by authorization or
other authorization documents shall be notarized. The notarized authorization letter or
other authorization documents as well as the power of attorney granted for voting by
proxy shall be kept at the domicile of the Company or at any other place prescribed in
the Notice for convening the shareholders’ meeting.Article 69 The register of attendants of the shareholders’ meeting shall be
prepared by the Company. The register shall expressly record such matters as the
name of the attendant (or of the unit thereof) the identification card number the
number of voting shares held or represented by the attendant and the name of the
principal (or the unit thereof).Article 70 The convener and the lawyer engaged by the Company shall in
accordance with the register of shareholders provided by Shenzhen Branch of China
Securities Depository and Clearing Corporation Limited jointly verify the legality of
the qualification of each shareholder and register the full name of and number of
voting shares held by each shareholder. Prior to the announcement by the presider of
the total number of shareholders who attend the on-site shareholders’ meeting and the
total number of the voting shares held by the attending shareholders and proxies the
registration shall be ceased.Article 71 If the shareholders' meeting requires the directors and senior
executives to attend the meeting without voting rights the directors and senior
executives shall attend the meeting without voting rights and answer the shareholders'
23inquiries.
Article 72 The shareholders’ meeting shall be presided over by the chairman of
the board of directors. Where the chairman is unable to or fails to perform his duties
the shareholders’ meeting shall be presided over by a director jointly elected by more
than half of the directors.If independently convened by the audit committee the shareholders’ meeting shall be
presided over by the convener of the audit committee. Where the convener of the
audit committee unable to or fails to perform his duties the shareholders’ meeting
shall be presided over by a member of the audit committee jointly elected by more
than half of the members of the audit committee.Shareholders’ meetings independently convened by the shareholders shall be presided
over by the convener or the representative appointed thereby.Where the presider violates the procedural rules while the shareholders’ meeting is
being held so that the meeting is unable to continue a presider may with the approval
by more than half of the shareholders with voting rights present at the meeting be
elected by the shareholders’ meeting to preside the meeting.Article 73 The Company shall formulate the procedural rules of the shareholders’
meeting which shall prescribe the detailed holding and voting procedures of said
meeting including the notice registration examination and deliberation of proposals
ballot vote calculation announcement of voting results formulation of meeting
resolutions meeting minutes and signature announcement and other items as well as
the principles by which the shareholders’ meeting authorizes the board of directors.The authorized content shall be definite and specific. The procedural rules of the
shareholders’ meeting shall be attached as an appendix to the Company's Articles of
Association and shall be drafted by the board of directors and approved by the
shareholders’ meeting.Article 74 The board of directors shall at the annual shareholders’ meeting
report their work for the last year to such meeting. Each independent director shall
also report his work.Article 75 Directors and senior executives shall at the shareholders’ meeting
give explanations and clarifications on the inquiries and recommendations raised by
the shareholders.Article 76 The presider of the shareholders’ meeting shall prior to vote
announce the total number of attending shareholders and proxies and the total voting
shares held by them. The total number of attending shareholders and proxies and the
total voting shares held by them shall be subject to registration before the
24shareholders’ meeting.
Article 77 The shareholders’ meeting shall have meeting minutes and these shall
be the responsibility of the secretary of the board of directors. The meeting minutes
shall record the following items:
(1) time place agenda and name of the convener of the meeting;
(2) name of the presider and each of the directors and senior executive who sit on the
meeting;
(3) total number of voting shares held by shareholders (including their proxies) by the
domestic shares and shareholders (including their proxies) of domestically listed
foreign-funded shares and proportion of such total number in the Company's
shares;
(4) examination and deliberation procedure main speech points and voting result of
each proposal by shareholders of the domestic shares and shareholders of
domestically listed foreign-funded shares;
(5) inquiries or recommendations of the shareholders and the relevant replies or
explanations thereto;
(6) name of lawyers vote counters and vote supervisor; and
(7) other items shall be recorded in the meeting minutes in accordance with the
provisions hereof.Article 78 The convener shall ensure the authenticity accuracy and
completeness of the minutes of the shareholders’ meeting. The directors secretary of
the board of directors convener or representative thereof and the meeting presider
present at the meeting with or without voting rights shall sign the meeting minutes.Meeting minutes shall together with the register of the present shareholders and the
powers of attorney for attendance by proxy and valid materials concerning votes
through the internet and other means shall be kept together for a period of no less than
ten years.Article 79 The convener shall ensure the continuity of the shareholders’ meeting
until the final resolutions are formed. Where such specific reasons as force majeure or
other special causes result in the suspension of the shareholders’ meeting or the
failure to adopt a resolution at the meeting the necessary measures shall be taken to
resume the shareholders’ meeting as soon as possible or to directly close the meeting
and make an immediate announcement. At the same time the convener shall report to
the CSRC office in the place where the Company is located and the stock exchange.
25Section 7 Vote and Resolution of Shareholders’meetings
Article 80 There shall be two types of resolutions of the shareholders’ meeting:
ordinary resolution and special resolution.Ordinary resolutions made by the shareholders’ meeting shall require more than half
of the voting rights represented by the attending shareholders (including proxies
thereof).Special resolutions made by the shareholders’ meeting shall require at least 2/3 of the
voting rights represented by the attending shareholders (including proxies).Article 81 The following matters shall require the approval of the shareholders’
meeting by ordinary resolution:
(1) work report of the board of directors;
(2) profit distribution plan and plan to recover Company losses as drafted by the
board of directors;
(3) appointment and dismissal of members of the board of directors remunerations to
them and the method for payment of such remunerations;and
(4) other matters which shall be passed by special resolution in accordance with the
provisions of the laws administrative regulations or these Articles of Association.Article 82 The following matters shall be passed at the shareholders’ meeting by
special resolution:
(1) increase or decrease in the registered capital of the Company;
(2) spin-off split merger/consolidation dissolution and liquidation of the Company;
(3) amendment to these Articles of Association;
(4) where within the period of one year purchases or sales by the Company or the
amount of the guarantee provided by the Company to others exceeds 30% of the
latest audited total assets of the Company;
(5) stock incentive plan; and
26(6) other matters which are prescribed in the provisions of the laws administrative
regulations or these Articles of Association as well as the matters which are
deemed if passed by means of ordinary resolution by the shareholders’ meeting
that they may have significant potential influences upon the Company and shall be
passed by special resolution.Article 83 Shareholders (including proxies thereof) shall exercise their voting
rights as represented by the number of voting shares held by them and each share
shall have one voting right.The votes casted by minority investors shall be separately counted when material
matters affecting the interests of minority investors are being examined and
deliberated at the shareholders’ meeting. The results of the separate vote-counting
shall be publicly disclosed in a timely manner.The shares held by the Company shall have no voting rights in themselves and shall
not be calculated into the total number of voting shares held by the attending
shareholders.Where the shareholder violates the provisions of Paragraphs 1 and 2 of Article 63 of
the Securities Law in purchasing voting shares the voting right of the part that has
exceeded the prescribed proportion shall not be exercised within 36 months after the
purchase and such part of shares will not be included in the total number of voting
shares held by the attending shareholders.The board of directors independent directors shareholders holding more than 1% of
the voting shares or the investor protection institutions statutorily set up may publicly
collect the voting rights of shareholders. When soliciting shareholders' voting rights
the specific voting intent and other information shall be fully disclosed to the solicited
party. It is prohibited to solicit shareholders' voting rights in a paid or disguised paid
manner. Except for the statutory criteria the company shall not set minimum
shareholding percentage restrictions for solicitation of voting rights.Article 84 The board of directors shall decide whether the relevant items
proposed to be submitted to the shareholders’ meeting for examination and
deliberation constitute affiliated transaction according to the laws rules and the
Listing Rules of Shenzhen Stock Exchange. Where the board of directors decide that
the items proposed to be submitted to the shareholders’ meeting for examination and
deliberation constitute affiliated transaction it shall inform the affiliated shareholders
in writing.The board of directors shall complete the aforesaid work before sending the notice of
the shareholders’ meeting and disclose the details of the affiliated party in connection
with the item proposed to be submitted to the shareholders’ meeting for examination
27and deliberation.
When the shareholders’ meeting examines and deliberates affiliated transactions the
affiliated shareholders shall submit the application to refrain from voting upon such
affiliated transactions and other parties shall have the right to require such
shareholders to refrain from voting. The affiliated shareholders may explain and
clarify the affiliated transaction concerning themselves and whether such transaction
is fair and legal and reason thereof to the shareholders’ meeting but such shareholders
shall not have right to vote with regard to this affiliated transaction and the number of
voting rights represented by them shall not be calculated in the total number of valid
votes; the announcement of the shareholders’ meeting shall fully disclose the votes of
the non-affiliated shareholders.Article 85 Except for under unusual circumstances such as crisis and otherwise
the Company shall not sign a contract with any person other than the directors and
senior executives which specifies the entrustment by the Company of the
management of all or important businesses to such person.Article 86 The nomination and election of non-staff representative directors.(I) The methods and procedures of nomination and election:
The incumbent board of directors and shareholders which meet certain conditions
may nominate candidates of directors in accordance with the provisions in laws
administrative regulations and these Articles of Association.
1. The Board of Directors of the Company or the shareholders singly or jointly
holding more than 1% of the shares of the Company may nominate candidates to
serve as non-independent directors who are not employee representatives.
2. The Board of Directors of the Company or the shareholders singly or jointly
holding more than 1% of the shares of the Company may nominate candidates to
serve as independent directors. An investor protection institution established in
accordance with the laws may publicly request shareholders to entrust it to
exercise the right to nominate independent directors on their behalf. The
above-mentioned nominators shall not nominate individuals with interests or
other closely related individuals who may affect independent performance as
independent director candidates.The nominator of an independent director shall nominate the nominee with such
nominee’s prior consent. The nominator shall adequately understand the profession
academic qualifications professional titles detailed work experience all part-time
jobs of the nominee and whether the nominee has any negative record of material
dishonesty and express his opinion on the independence and other qualifications of
the nominee’s serving as an independent director and the nominee shall make a
28public statement on his independence and other qualifications serving as an
independent director. Before the convening of the shareholders’ meeting relating to
the election of the independent director the board of directors shall announce said
content according to relevant regulations.
3. In addition to other items provided in this article the board of directors shall
announce the resume and basic information of each candidate director to the
shareholders.(II) The method and procedure to vote upon the election
When the shareholders’ meeting votes upon the election of directors in accordance
with these Articles of Association or the resolution adopted by the shareholders’
meeting the cumulative voting system may be used. When a shareholders' meeting
elects two or more directors the cumulative voting system shall be adopted.The "cumulative voting" stated in the preceding paragraph shall mean when the
shareholders’ meeting is electing directors each share shall have the same number of
voting rights as the number of candidate directors who are up for election and the
voting rights of all the shareholders may be exercised in a centralized manner or
distributed to two or more candidate directors with all votes and the candidate who
obtained more votes shall be elected.
1. The specific voting method to vote upon the election of directors shall be:
(1) The voting upon the election of independent directors and common directors shall
be separated. The specific method is:
When voting upon the election of independent directors the number of voting
rights of each shareholder shall be the product of the shares he held multiplies the
number of independent directors he is entitled to vote and such numbers of voting
right shall only be voted to independent directors.When voting upon the election of common directors the number of voting rights
of each shareholder shall be the product of the shares he held multiplies the
number of common directors he is entitled to vote and such numbers of voting
right shall only be voted to common directors.
(2) When filling out the ballot a shareholder may distribute to one candidate directors
with all voting power he held or distributed to several candidate directors and
indicate the voting power distributed to each candidate thereafter. If a shareholder
specifically disapproves any one or more candidates and vote for others the name
of the person being voted shall be filled in and indicating with the voting power
distributed to such candidate thereafter.
29(3) Where the total number of voting power on a vote exceeds the legitimate number
of voting power of a shareholder such vote shall be deemed invalid.
(4) Where the total number of voting power on a vote is no more than the legitimate
number of voting power of a shareholder such vote shall be deemed valid.
(5) After the voting the votes shall be counted and the votes obtained by each
candidate shall be announced and the directors elected shall be determined based
upon the number of votes obtained by candidate directors.
(6) The principle of election of directors: the final directors elected shall be
determined based upon the number of votes obtained by candidate directors but
the lowest votes obtained by each director elected shall be more than half of the
voting power of the shareholders attending the shareholders’ meeting (including
proxies thereof).
(7) Where the number of candidate directors is more than the number of candidate
directors to be elected the director elected shall be determined according to the
votes obtained by them in descending order. However the number of voting rights
of a director elected shall meet the requirement as set forth in Item (6) hereof.
(8) If the number of candidate directors obtained the same votes exceed such kind of
directors to be elected the said candidate directors shall be voted again according
to the procedures set forth in this article until the director is elected.
(9) If a cumulative voting fails to elect required number of a kind of directors required
according to Articles of Association the candidate directors with inadequate
amount of votes shall be voted again and if the number of directors elected still
fails to meet the requirement then it shall be voted in next shareholders’ meeting.
(10)Before the shareholders voted upon the election of directors the board of
directors shall be responsible in construing the specific method of cumulative
voting set forth in these Articles of Association and ensure the shareholders to
execute their voting rights correctly.Article 87 In addition to the cumulative voting the shareholders’ meeting may
take a vote on all the proposals item by item. Where different proposals are submitted
for the same matter votes shall be cast in the sequence that such proposals are
submitted. The shareholders’ meeting shall not postpone or refuse voting upon the
said proposals unless the meeting is suspended or they are unable to adopt a resolution
as a result of particular reasons such as force majeure and otherwise.Article 88 The shareholders’ meeting when examining and deliberating the
30proposals shall not amend them where there is any amendment the relevant
amendment shall be deemed as a new proposal which shall not be voted on at the
same shareholders’ meeting.Article 89 Each voting right shall choose only one of such means including
onsite through the internet or otherwise. The first voting result prevails if repeated
votes arise by the same voting right.Article 90 Votes at the shareholders’ meeting shall be by means of open ballot.Article 91 Prior to vote on proposals at the shareholders’ meeting two
shareholders shall be elected by the shareholders’ meeting to participate in the vote
calculation and supervision. If shareholders have any relation with the matters to be
examined and deliberated on the concerned shareholders and proxies thereof shall not
take part in the vote calculation and supervision.When the shareholders’ meeting is voting on proposals the lawyers and
representatives of shareholders shall be jointly responsible for the vote calculation and
supervision thereof and for the announcement of the voting results which shall be
recorded into the minutes of the meeting.Shareholders of Company or their proxies who cast votes via internet or through any
other means shall have the right to examine their voting results by accessing to the
corresponding voting system.Article 92 The onsite shareholders’ meeting shall not be terminated earlier than
the shareholders’ meeting held through the internet or by any other means. The
presider of the onsite shareholders’ meeting shall announce the votes and voting
results of each proposal and announce if the proposals have been passed according to
the voting results.Prior to the formal announcement of the voting results the companies vote counters
vote supervisors shareholders and the internet service providers and other related
parties involved in the shareholders' meeting held onsite through the internet or by
any other means shall bear obligation of confidential on the voting results.Article 93 The attending shareholders shall give their opinions on the proposals
submitted for vote being: affirmative negative or abstention vote except that a
securities registration and settlement institution serving as the nominal holder of the
stocks under Inter-connected Mechanism for Trading on Stock Markets in the
Mainland and Hong Kong make declaration according to the intention of the actual
holders.The blank falsely-filled and unreadable votes as well as votes that are not made shall
31be deemed as abstention and the voting results represented by the shares of the
abstention voter shall be filled with "abstention".Article 94 Where the presider has any doubt about the voting results he may
organize to have the number of votes counted; where the presider fails to do so and
the attending shareholders or the proxies thereof challenge the voting results
announced by the presider they are entitled to require the counting of votes
immediately upon the announcement of the voting results and the presider shall
organize the vote calculation without delay.Article 95 The resolutions of the shareholders’ meeting shall be announced
promptly and such announcement shall indicate the number of shareholders of
domestic shares and foreign-funded shares which attend the meeting the number of
voting shares held by them the proportions of their voting shares in the total voting
shares of the Company the voting methods the vote results of each proposal and so
on.Article 96 Where the proposals fail to be passed by the shareholders’ meeting or
the previous resolutions of the last shareholders’ meeting are altered at the current
shareholders’ meeting special indications shall be made in the announcement of the
said meeting.Article 97 Where the shareholders’ meeting passes a proposal concerning
election of directors the starting time of their assumption of office shall be the date of
resolution of the shareholders’ meeting is made and in the case of a director as a
representative of the employees shall be the date of resolution of the employee
representatives' meeting is made.Article 98 Where the shareholders’ meeting passes a proposal regarding the
distribution of cash dividends share granting or conversion of common reserve fund
into share capital the Company shall implement the detailed plan for such proposals
within two months from the closing of the shareholders’ meeting.Chapter 5 Directors and Board of Directors
Section 1 General Rules on Directors
Article 99 The directors of the Company shall be natural persons they shall not
act in the capacity of director under any of the following circumstances:
(1) having no civil capacity or limited civil capacity;
32(2) having been sentenced to criminal penalties due to committed offences of
corruption bribery infringement of property misappropriation of property or
sabotaging the social economic order or having been deprived of their political
rights due to criminal offences where less than five years have elapsed since the
date of the completion of the execution of the penalty; where a probation has been
declared and not more than 2 years have elapsed since the expiry date of the
probation;
(3) having served in the capacity of director factory chief or manager of a company
or enterprise which has gone into bankruptcy or liquidation proceeding and being
personally responsible for such bankruptcy where less than three years have
elapsed since the closing of the said bankruptcy or liquidation;
(4) having served as the legal representative of a Company or enterprise whose
business license has been revoked or which has been order to close down due to
the violation of law and being personally responsible for such revocation and
closing down where less than three years have elapsed since the said revocation
or closure of the company or enterprise;
(5) being listed as a dishonest person subject to enforcement by the people's court due
to a relatively large amount of outstanding personal debt;
(6) having been prohibited from accessing the securities market by the CSRC where
the specified prohibition period has not yet finished;
(7) having been announced by the Stock Exchange that it is not appropriate for him to
be the director or senior executive of a listed company and the period has not
elapsed; or
(8) other content as prescribed in the laws administrative regulations or regulations of
ministries and commissions.In the case of election or appointment of directors in violation of this Article such
election appointment or employment shall be null and void. Where the circumstances
as prescribed in this Article take place during the term of any director such director
shall be dismissed by the Company and stop performing his/her duties.Article 100 Directors shall be elected or replaced by the shareholders' meeting
and may be removed by the shareholders' meeting before the expiration of their term
of office. The term of office of the directors shall be three years. The directors may
serve consecutive terms if reelected upon expiration of their term of office. The term
of office of each director shall commence as of his assumption of office until the
expiration of the current board of directors. Where the new directors fail to be
33promptly elected upon the expiration of the term of office then before the newly
elected directors assume office the original directors shall retain their directorship in
accordance with the laws administrative regulations rule and these Articles of
Association.Directors can serve concurrently as senior executives however the directors who
concurrently serve as senior executives and directors who are employee
representatives shall not exceed half of all the directors of the Company.Article 101 The directors shall abide by laws administrative regulations and these
Articles of Association and be faithful to the Company. He/she shall take steps to
avoid his/her own interests conflicting with the Company's interests and may not take
advantage of position to seek improper benefits.The directors have the following duties of loyalty to the Company:
(1) not misappropriate the Company’s assets or embezzle the Company’s funds;
(2) not open accounts in their own name or in the names of others for depositing the
funds of the Company;
(3) not abuse their functions and powers to offer bribery or receive other illegal
income;
(4) not directly or indirectly enter into any contract or trade with the Company
without reporting to the board of directors or shareholders' meeting and being
approved by the board of directors or shareholders' meeting in accordance with
these Articles of Association;
(5) not abuse their powers and functions to seek business opportunities for themselves
or others as should belong to the Companyexcept if reporting to the board of
directors or shareholders' meeting and being approved by resolution at the
shareholders' meeting or if according to the laws administrative regulations or
these Articles of Association the Company cannot use such opportunity
(6) nor operate for themselves or others businesses similar to those of the Company
without reporting to the board of directors or shareholders' meeting and after
being approved by resolution at the shareholders' meeting;
(7) not accept commission derived from transactions between other parties and the
Company as personal gains;
(8) not reveal the Company's secrets without authorization;
34(9) not abuse affiliated relationships to impair the interests of the Company; and
(10)other faithful obligations as prescribed in the laws administrative regulations
regulations of ministries and commissions and these Articles of Association.Any income of the directors arising from their acts aforesaid mentioned shall be
confiscated by the Company; where the directors cause losses to the Company they
shall bear compensation liabilities.When a close relative of the directors or senior executives an enterprise directly or
indirectly controlled by the directors senior executives or their close relative or a
related party having other related-party relationship with the directors or senior
executives enters into a contract or carries out transaction with the Company the
requirement of Item (4) paragraph 2 of this Article applies.Article 102 The directors shall abide by the laws administrative regulations and
these Articles of Association and shall act with due diligence towards the Company.When performing duties they shall exercise reasonable care as the manager for the
best interest of the Company.The directors have the following duties of diligence towards the Company:
(1) prudently earnestly and diligently exercising the rights conferred by the Company
so as to ensure the compliance of the Company's business acts with the
requirements of the laws administrative regulations and the various State
economic policies and that business activities shall not exceed the business scope
mentioned in the business license;
(2) treating all the shareholders fairly;
(3) promptly gaining understanding of the business operation and management
conditions of the Company;
(4) signing written confirmation opinion to the Company's periodic report and
ensuring that the information disclosed by the Company is true accurate and
complete;
(5) providing the relevant information and materials to the audit committee faithfully
and not impeding the audit committee in exercising their functions and powers;
and
(6) other obligations of diligence as prescribed in the relevant laws administrative
regulations regulations of ministries and commissions and these Articles of
Association.
35Article 103 Where the directors fail to attend in person two consecutive
meetings of the board of directors and further fail to entrust other directors to attend
the meeting they shall be deemed incapable of performing their duties and the board
of directors shall propose a shareholders' meeting to replace such directors.Article 104 The directors may submit the resignation in advance of expiration of
the term of office. The directors may submit their resignation report in writing to the
Company to resign and the resignation is effective on the date the Company receives
the resignation report. The Company shall disclose the relevant information within
two trading days thereafter.Where the total number of members of the board of directors is lower than the
minimum number of members required by law due to the resignation of any director
then before the newly elected director assumes office the former director shall still
retain their directorship in accordance with the relevant laws administrative
regulations regulations of ministries and commissions and these Articles of
Association.Article 105 The Company shall set up a management system for the departure of
directors clearly specifying measures to ensure accountability and compensation
concerning public commitments which have not been completed and other uncovered
matters. Where the director resigns comes into force or his term of office expires his
obligations to the Company and shareholders shall not be discharged before the
resignation report comes into effect nor be discharged within 6 months following the
effectiveness of the resignation report or expiration of term of office and his
obligations to the trade secrets of the Company shall survive his term of office till the
trade secrets becomes public information. The duration of his other obligations shall
be determined according to the principle of fairness depending on the intervals
between the occurrence of the event and his resignation and the situations and
conditions under which the director terminates his relationship with the Company.The responsibility of the director due to performance of his duties during the term of
office will not terminate or be discharged due to leave of office.Article 106 A shareholders' meeting may resolve to remove a director. The
removal takes effect on the date of the resolution made.If without proper reason a director is removed before expiry of term of office he
may request compensation from the Company.Article 107 Without the legal authorization by these Articles of Association or
the board of directors no director shall represent the Company or the board of
directors to act in his own name. If any director acts in his own name and further if in
the reasonable opinion of a third party such acts represent those of the Company or
the board of directors the director shall declare his standpoint and identity at first.
36Article 108 When the directors perform their duties in the Company causing
harm to others the Company shall be liable for compensation. If the directors are
intentional or have gross negligence they shall also be liable for compensation.Where the law administrative regulations regulations of ministries and commissions
or these Articles of Association are violated by the directors in performing duties for
the Company thus causing losses to the Company the directors shall be liable for
compensation.Section 2 Board of Directors
Article 109 The board of directors established by the Company shall be
responsible to the shareholders' meeting.Article 110 The board of directors shall be composed of seven [7] directors
with three [3] independent directors therein. The board of directors shall have one
board chairman. The chairman of the Company shall be elected by more than half of
all the directors. The board of directors shall have one [1] director as the
representative of the staff and workers.The employee representative is elected democratically by the Company employees
through the employee representative congress employee congress or other method
without submission to the shareholders' meeting for deliberation.Article 111 The board of directors shall exercise the following functions and
powers:
(1) convening the shareholders' meeting and reporting its work to the shareholders'
meeting;
(2) implementing the resolutions of the shareholders’ meeting;
(3) deciding on the business plan and investment scheme of the Company;
(4) formulating profit allocation plan and plan to recover losses of the Company;
(5) formulating plans of the Company regarding the increase or decrease in the
registered capital the issuance of bonds or other securities and the listing of the
Company;
(6) drawing up Company plans concerning major acquisitions the acquisition of
Company stocks or merger/consolidation spin-off dissolution and alteration in
37corporate form;
(7) within the scope of authorization granted by the shareholders' meeting deciding
on such matters as external investment acquisition and sale of assets mortgage of
assets external guarantee entrusted management of wealth affiliated transactions
and external donations;
(8) deciding on the establishment of the internal management organizations of the
Company;
(9) deciding on such matters as appointing or dismissing President & Chief Executive
Officer and the secretary of the board of directors of the Company as well as their
remuneration and reward/punishment; according to nominations by President &
Chief Executive Officer deciding on appointing or dismissing senior executives
including Chief Financial Officer and deciding on the remuneration reward and
punishment particulars of the preceding persons;
(10)formulating the basic management system of the Company;
(11)formulating the plan for amendment to these Articles of Association;
(12)managing the information disclosure of the Company;
(13)proposing to the shareholders' meeting the appointment or replacement of the
accounting firm which renders audit service to the Company;
(14)hearing the President and CEO’s work report and examining the work of the
President and CEO;
(15)other functions and powers conferred by the laws administrative regulations
regulations of ministries and commissions these Articles of Association or the
shareholders' meeting.Article 112 The Board of Directors shall hear the opinions of the Party
Committee of the Company before making decisions on the appointment and removal
of important personnel and material business and management matters of the
Company.Article 113 The board of directors of the Company shall explain to the
shareholders' meeting any non-standard audit opinions on the Company's financial
statements issued by the certified public accountants.Article 114 The board of directors shall set forth the procedural rules of the
board of directors to ensure its implementation of the resolutions adopted by the
38shareholders' meeting and to improve the work efficiency and guarantee scientific
decision making.Article 115 The board of directors shall have powers regarding the transactions
which meet one of the following criteria:
(1) The total amount of assets involved in the transaction exceeds 20% of the latest
audited total assets of the Company. If the assets involved in the transaction have
book value and appraisal value concurrently the higher value shall be used for
calculation;
(2) The net assets involved in the target of the transaction (i.e. equity transaction)
exceed 20% of the latest audited net assets of the Company and the absolute
amount is more than RMB 20 million. If the assets involved in the transaction
have book value and appraisal value concurrently the higher value shall be used
for calculation;
(3) The revenue of the target of the transaction (i.e. equity interests) in the latest year
exceeds 20% of the latest audited revenue of the Company and the absolute
amount is more than RMB 20 million;
(4) The net profit of the target of the transaction (i.e. equity interests) in the latest year
exceeds 20% of the latest audited net profit of the Company and the absolute
amount is more than RMB 2 million;
(5) The amount of the transaction (including indebtedness and expenses) exceeds
20% of the latest audited net assets of the Company and the absolute amount is
more than RMB 20 million;
(6) The profit of the transaction exceeds 20% of the latest audited net profit of the
Company and the absolute amount is more than RMB 2 million;
(7) External guarantee: any guarantee other than the guarantee stipulated under
Article 47;
(8) Affiliated transaction: the affiliated transaction between the Company and
affiliated natural person exceeds RMB 300000; the affiliated transaction between
the Company and affiliated legal person (or other organizations) exceeds RMB 3
million and exceeds 0.5% of the latest audited net assets of the Company;
(9) Securities investment: the total amount exceeds 10% of the latest audited net
assets of the Company and the absolute amount being more than RMB 10 million.Securities investment foresaid includes placement or subscription of new shares
securities repurchase stock investment bond investment entrusted financial
39management (including bank financial products trust products) and other
investment behavior identified by the Shenzhen Stock Exchange.If any amount involved in this Article is negative amount the absolute amount shall
be used for calculation purpose.The board of directors shall perform the duty to disclose as required by the Listing
Rules of Shenzhen Stock Exchange in executing the power set forth aforesaid.The board of directors shall establish strict reviewing and decision-making procedures;
with regard to the major investment projects the functional department of the
Company or branch manager shall conduct feasibility analysis and demonstration and
the Company shall organize experts and professionals including lawyers and
accountants etc. to review and issue professional opinions from the financial and
legal perspectives and such projects shall be submitted to the shareholders meeting
for discussion after review and approval by the board of directors and shall be
executed after the shareholders meeting approved such transaction. The shareholders
meeting shall have powers regarding transactions which meet one of the following
criteria:
(1) The total amount of assets involved in the transaction exceeds 50% of the
latest audited total assets of the Company. If the assets involved in the transaction
have book value and appraisal value concurrently the higher value shall be used for
calculation;
(2) The net assets involved in the target of the transaction (i.e. equity transaction)
exceed 50% of the latest audited net assets of the Company and the absolute amount
is more than RMB 50 million. If the assets involved in the transaction have book
value and appraisal value concurrently the higher value shall be used for calculation;
(3) The revenue of the target of the transaction (i.e. equity interests) in the latest
year exceeds 50% of the latest audited revenue of the Company and the absolute
amount is more than RMB 50 million;
(4) The net profit of the target of the transaction (i.e. equity interests) in the latest
year exceeds 50% of the latest audited net profit of the Company and the absolute
amount is more than RMB 5 million;
(5) The amount of the transaction (including indebtedness and expenses)
exceeds 50% of the latest audited net assets of the Company and the absolute amount
is more than RMB 50 million;
(6) The profit of the transaction exceeds 50% of the latest audited net profit of
the Company and the absolute amount is more than RMB 5 million;
40(7) Affiliated transaction: the affiliated transaction (except for the transactions
that the Company receives cash as gift and the Company provides guarantee) between
the Company and affiliated person exceeds RMB 30 million and exceeds 5% of the
latest audited net assets of the Company;
(8) Securities investment: the total amount exceeds 50% of the latest audited net
assets of the Company and the absolute amount being more than RMB 50 million.Regarding to the purchase or sale of assets transaction the Company shall use the
total amount of the assets or the amount of the transaction whichever is higher as the
calculation criteria and the amount shall be cumulative in the twelve consecutive
months according to the type of the transaction. If the amount reaches 30% of the
latest audited total assets the transaction shall be submitted to the shareholders’
meeting for consideration and shall be adopted by more than two thirds of the voting
rights held by the shareholders present at the meeting.If any amount involved in this Article is negative amount the absolute amount shall
be used for calculation purpose.The term "transaction" as mentioned in this Article includes the following: (1) the
purchase of assets; (2) the sale of assets; (3) external investment (including entrusted
financial management investment in subsidiaries etc.); (4) providing financial
support (including entrusted loans etc.); (5) providing guarantee(including guarantee
for controlled subsidiaries etc.); (6) renting or leasing assets ; (7) entrusting others or
being entrusted for management of assets or business; (8) gifting assets or being
gifted; (9) claims or debt restructuring; (10) transferring or acquiring by transfer
research and development projects; (11) signing a license agreement; (12) waiver of
rights (including without limitation waiver of preemptive rights or the privilege to
subscribe for capital contributions); (13) other transactions identified by the Shenzhen
Stock Exchange.The abovementioned purchase or sale of assets exclude the purchase of raw materials
fuel and power and the sale of products commodities and other assets related to daily
operations but the purchase and sale of such assets involved in the assets swap is still
included.The external donation shall comply with the External Donation Management
Measures of ADAMA Ltd.When the Company purchases or sells equity interests it shall apply the provisions of
this Article to the relevant financial indicators calculated based on the proportion of
changes in the equity interests held by the Company. If the transaction results in a
change in the scope of the Company's consolidated financial statements the
provisions of this Article shall apply to the relevant financial indicators of the target
41company corresponding to such equity interests.
Article 116 The external guarantee of the Company shall comply with the
following rules:
(1) the Company shall not provide guarantee to any entity that is not a legal person or
an individual;
(2) the Company shall not provide external guarantee without the approval of the
board of directors or the shareholder’s meeting;
(3) the external guarantee which requires the approval of the board of directors shall
be examined and approved by more than 1/2 of all the directors and 2/3 of the
directors who attend the meeting and the directors shall adopt resolutions on such
guarantee;
(4) If the Company provides an external guarantee to the controlling shareholder
actual controller and their associates the counter-guarantee from the warrantee
shall be required;
(5) If the Company or its subsidiary provides an external guarantee to a controlled
subsidiary not fully owned by the Company (directly or indirectly) the minority
shareholder of the guaranteed subsidiary shall provide a corresponding guarantee
based on its share percentage in the guaranteed subsidiary.Article 117 The chairman of the board of directors has the following functions
and powers:
(1) presiding over the shareholders' meeting and convening and presiding over the
meeting of the board of directors;
(2) supervising and inspecting for the execution of resolutions adopted by the board
of directors;
(3) signing important document of the board of directors;
(4) execute special disposing right in accordance with the laws and the interest of the
Company with regard to the business and affairs of the Company where the force
majeure events including severe natural disasters etc. happen and report to the
board of directors and shareholder’s meeting afterwards; and
(5) other power entrusted by the board of directors.
Article 118 Where the chairman of the board of directors is unable to or fails to
42perform his duties a director jointly elected by more than half of the directors shall
perform his duties.Article 119 The board of directors shall hold at least two meetings a year which
shall be convened by the chairman of the board of directors. The board of directors
shall notify all directors and President and CEO ten days in advance of the meeting.Article 120 Shareholders representing more than 1/10 of the voting rights the
directors accounting for more than 1/3 of all the members of the board of directors
more than half of the independent directors the audit committee or the President and
CEO may propose to hold an interim meeting of the board of directors. The chairman
of the board shall within 10 days after the receipt of the proposal convene and
preside over the meeting of the board of directors. The Chairman of the board may
propose to hold an interim meeting of the board of directors at any time if it deems
necessary.Article 121 The method of giving notice that the board of directors shall hold
the interim meeting thereof: oral or written notice; time of the notice: 2 days before
the meeting.With the unanimous consent of all the directors the convening of the interim board
meeting may not be restricted by the aforementioned notice time limit provided that a
record thereof shall be made in the minutes of the board of directors and signed by all
participating directors.Article 122 The notice on the meeting of the board of directors shall include the
following:
(1) meeting date and place;
(2) time limit of the meeting;
(3) matters for discussion; and
(4) issuing date of the notice.
Article 123 The meeting of the board of directors may not be held unless it is
attended by more than half of all the directors. Any resolution made by the board of
directors shall require the approval of more than half of all the directors.As to the resolutions of the board of directors each director shall have one vote.Article 124 Where directors have affiliated relationship with the enterprises or
individuals mentioned in any resolution made by the board of directors the director
43shall promptly submit a written report to the board of directors. The affiliated
directors shall neither vote on the said resolutions nor act as proxies for other directors
to exercise their voting right upon the said resolutions. Such meetings of the board of
directors may not be held unless attended by more than half of all the non- affiliated
directors and resolutions adopted at such meeting shall be passed by more than half
of all the non-affiliated directors. Where the number of the non-affiliated directors
attending the meeting of the board of directors is less than three the matters shall be
submitted to the shareholders' meeting for examination and deliberation.Article 125 Voting method at the meeting of the board of directors: disclosed
vote.The meeting of the board of directors on the precondition of ensuring the full
expression by directors of their opinions may adopt resolutions by electronic
communication methods such as video conferences telephone conferences emails or
written resolution. All the attending directors shall sign the resolutions.Article 126 The meeting of the board of directors shall require the attendance of
the directors in person; where the directors are with good reason unable to attend the
meeting they may in writing entrust other directors to do so. The written power of
attorney shall indicate the name of each proxy entrusted matters scope of
authorization and validity and shall be signed by or marked with the seal of each
principal but independent director shall not be entrusted by non-independent director
non-independent director shall also not be entrusted by independent director.Directors who attend the meeting of the board of directors as proxies shall exercise
their rights in capacity of director within the scope of authorization. Where the
directors fail to attend the meeting of the board of directors and further fail to entrust
representatives to do so on their behalf it shall be deemed that they have waived their
voting rights at such meeting.Article 127 The board of directors shall prepare minutes of its meeting in respect
to matters to be examined and deliberated at such meeting and the attending directors
shall sign such minutes.The minutes of the meeting of the board of directors shall be kept on file at the
Company for a period of no less than 10 years.Article 128 The minutes of the meeting of the board of directors shall include
the following:
(1) date place of meeting and name of the convener and presider;
(2) names of the attending directors and of the directors (proxies thereof) who are
44entrusted by others to attend the meeting;
(3) meeting agenda;
(4) main points of speeches by directors; and
(5) methods and results for votes upon each matter to be examined and deliberated
(the voting results shall set forth the number of affirmative negative or abstention
votes).Section 3 Independent Directors
Article 129 Independent directors shall perform their duties seriously pursuant
to the provisions of laws administrative regulations the CSRC the Stock Exchanges
and the Articles of Association play a role of participation in decision-making
supervision and checks and balances and professional consultancy in the board of
directors safeguard the Company's overall interests and protect the legitimate rights
and interests of minority shareholders.The Company should establish the independent director policy. The independent
director policy should comply with laws administrative regulations the provisions of
the CSRC and the business rules of the Shenzhen Stock Exchange. The independent
director policy should be drafted by the board of directors and approved by the
shareholders' meeting. The Company should provide necessary guarantees for
independent directors to perform their duties in accordance with the law.Article 130 Independent directors shall maintain their independence. The following
persons shall not be appointed as independent directors:
(1) persons who hold posts in the Company or its affiliates and their spouses parents
children and main social relations;
(2) natural person shareholders who hold 1% or more of the Company's issued shares
directly or indirectly or who rank in the top 10 shareholders of the Company and their
spouses parents and children;
(3) persons who hold posts in shareholders that hold 5% or more of the Company's
issued shares directly or indirectly or that rank in the top five shareholders of the
Company and their spouses parents and children;
(4) persons who hold posts in affiliates of the Company's controlling shareholder or
actual controller and their spouses parents and children;
45(5) persons who have significant business dealings with the Company and its
controlling shareholder actual controller or their respective affiliates or persons who
hold positions in organisations which have significant business dealings with the
Company and its controlling shareholder or actual controller;
(6) persons who provide financial legal advisory sponsorship services etc. to the
Company and its controlling shareholder actual controller or their respective affiliates
including but not limited to all members of engagement team of an intermediary
providing services all levels of reviewers persons signing the report partners
directors senior executives and principals;
(7) persons who fell under the circumstances of item (1) to item (6) during the past 12
months; or
(8) any other non-independent personnel stipulated by laws administrative
regulations the provisions of the CSRC business rules of the Stock Exchanges and
the Articles of Association.Affiliates of the Company's controlling shareholder or actual controller referred to in
item (4) to item (6) of the preceding paragraph shall exclude enterprises which are
controlled by the same State-owned assets management agency as the Company and
are not related to the Company pursuant to the relevant provisions.Independent directors shall conduct annual self-examination of independence and
submit the self-examination findings to the board of directors. The board of directors
shall evaluate the independence of incumbent independent directors annually issue a
specific opinion and disclose the same simultaneously with the annual report.Article 131 A person appointed as an independent director of the Company shall
satisfy the following criteria:
(1) possessing the qualifications to act as an independent director of a listed company
pursuant to laws administrative regulations and other relevant provisions;
(2) satisfying the independence requirements stipulated in the Articles of Association;
(3) possessing basic knowledge of operation of listed companies and being familiar
with the relevant laws regulations and rules;
(4) having five or more years of work experience in legal accounting or economics
required for performance of the duties of independent director;
(5) having good moral character without bad records of significant dishonest conduct;
and
46(6) any other criteria stipulated by laws administrative regulations the provisions of
the CSRC business rules of the Stock Exchanges and the Articles of Association.Article 132 Independent directors shall as members of the board of directors
bear the obligations of loyalty and diligence towards the Company and all its
shareholders and perform the following duties prudently:
(1) participating in decision-making by the board of directors and issuing specific
opinions on the deliberated matters;
(2) supervising the potential significant conflict of interests between the Company and
its controlling shareholders actual controllers directors senior executives and
protecting the legitimate rights and interests of minority shareholders;
(3) providing professional and objective suggestions on the Company's business
development and promoting the improvement of the decision-making level of the
board of directors; and
(4) any other duties stipulated by laws administrative regulations the provisions of
the CSRC and the Articles of Association.Article 133 Independent directors shall exercise the following special powers:
(1) independently engaging intermediaries to carry out audit advisory or verification
of the Company's specific matters;
(2) proposing to the board of directors on convening of an interim shareholders'
meeting;
(3) proposing to convene a board meeting;
(4) openly soliciting shareholder's rights from shareholders pursuant to the law;
(5) issuing independent opinions on matters which may harm the rights and interests
of the Company or minority shareholders; and
(6) any other powers stipulated by laws administrative regulations the provisions of
the CSRC and the Articles of Association.An independent director exercising the powers stipulated in item (1) to item (3) of the
preceding paragraph shall obtain the consent of more than half of all the independent
directors.
47Where an independent director exercises the powers stipulated in the first paragraph
the Company shall promptly make disclosure. Where the powers are unable to be
exercised the Company shall disclose the specific circumstances and reason.Article 134 The following matters shall upon consent by more than half of all
the independent directors of the Company be submitted to the board of directors for
deliberation:
(1) related-party transactions which shall be disclosed;
(2) plan for change or waiver of undertaking by the Company and the relevant parties;
(3) decisions made and measures adopted by the board of directors of the target listed
company in respect of the acquisition; and
(4) any other matters stipulated by laws administrative regulations the provisions of
the CSRC and the Articles of Association.Article 135 The Company shall establish a mechanism for specialized meetings
attended solely by independent directors. Where the board of directors deliberates on
related-party transactions etc. the approval shall be obtained at a specialized meeting
of independent directors.The Company shall hold specialized meetings of independent directors on a regular or
ad hoc basis. The matters stipulated in item (1) to item (3) of the first paragraph of
Article 133 and Article 134 of the Articles of Association shall be deliberated by a
specialized meeting of the independent directors.A specialized meeting of independent directors may study and discuss other matters
of the Company where necessary.A specialized meeting of independent directors shall be convened and chaired by an
independent director jointly elected by more than half of independent directors; where
the convener does not or is unable to perform his duties two or more independent
directors may convene a meeting and elect a representative to chair the meeting.Minutes shall be prepared for specialized meeting of independent directors pursuant
to the provisions stating the opinions of the independent directors. The independent
directors shall sign on the minutes for confirmation.The Company shall provide convenience and support for holding of specialized
meetings of independent directors.
48Section 4 Specialized Committees under Board of Directors
Article 136 The board of directors of the Company shall establish an audit
committee to exercise the official powers of the board of supervisors stipulated by the
Company Law.Article 137 The members of the audit committee shall comprise four directors
who are not senior executives of the Company among them there are three
independent directors and an accounting professional among the independent
directors shall act as the convener.Article 138 The audit committee shall be responsible for review of the
Company's financial information and disclosure thereof supervision and evaluation of
internal and external audit and internal control. The following matters shall upon
consent by more than half of all the members of the audit committee be submitted to
the board meeting for deliberation:
(1) disclosure of financial information in financial accounting reports and periodic
reports internal control evaluation report;
(2) appointment or dismissal of accounting firm which undertakes audit engagement
of a listed company;
(3) appointment or dismissal of financial controller of a listed company;
(4) change in accounting policies or accounting estimates or correction of material
accounting error for a reason other than change in accounting standards; and
(5) any other matters stipulated by laws administrative regulations the CSRC and the
Articles of Association.Article 139 The audit committee shall hold at least one meeting each quarter.Upon proposal by two or more members or where the convener deems necessary an
extraordinary meeting may be convened. The meeting of an audit committee shall be
held after two-thirds or more of the members are present.Resolutions of the audit committee shall be passed by more than half of the audit
committee members.Each member shall have one vote for voting on resolutions of the audit committee.Minutes of meeting shall be prepared for resolutions of the audit committee pursuant
to the provisions and the audit committee members present at the meeting shall sign
on the minutes.
49The working procedures of the audit committee shall be formulated by the board of
directors.Article 140 The board of directors of the Company shall establish nomination
committee remuneration and assessment committee and other specialized committees
to perform duties pursuant to the Articles of Association and the authorization of the
board of directors. Proposals of specialized committees shall be submitted to the
board of directors for deliberation and decision. The working procedures of
specialized committees shall be formulated by the board of directors.All members of the nomination committee and the remuneration and assessment
committee shall be composed of directors. Among them the number of independent
directors shall be more than half and an independent director shall serve as the
convener.Article 141 The nomination committee shall be responsible for formulation of
selection criteria and procedures for directors and senior executives conduct selection
and examination of candidates for directors and senior executives and their
appointment qualifications and make recommendations to the board of directors on
the following matters:
(1) nomination or appointment and removal of directors;
(2) appointment or dismissal of senior executives; and
(3) any other matters stipulated by laws administrative regulations the rules of CSRC
and the Articles of Association.Where the board of directors does not adopt or does not fully adopt the
recommendation of the nomination committee it shall record in a board resolution the
opinions of the nomination committee and the specific reason for non-adoption and
disclose the same.Article 142 The remuneration and assessment committee shall be responsible for
formulation of appraisal standards and performance appraisal for directors and senior
executives formulate and examine remuneration decision mechanism
decision-making procedures payment and stop-payment recourse arrangements and
other remuneration policies and schemes for directors and senior executives and make
recommendations to the board of directors on the following matters:
(1) remuneration of directors and senior executives;
(2) formulation or change of share option incentive plan or employee stock ownership
plan; achievement of grant of share options to and exercise of share options by
50participants of share option incentive scheme;
(3) arrangement of shareholding plan for the subsidiary proposed to be split by the
directors and senior executives; and
(4) any other matters stipulated by laws administrative regulations the rules of CSRC
and the Articles of Association.Where the board of directors does not adopt or does not fully adopt the
recommendation of the remuneration and assessment committee it shall record in a
board resolution the opinions of the remuneration and assessment committee and the
specific reason for non-adoption and disclose the same.Chapter 6 Party Committee
Article 143 The Company shall establish the Party Committee. The Party
Committee shall have one Secretary one Vice Secretary and several committee
members. The Chairman of the Board of Directors and the Secretary of the Party
Committee shall be the same person in principle there shall be a full-time Vice
Secretary in charge of the Party work of the Company (if needed). The qualified
member of the Party Committee may act a member of the Board of Directors and
Management though legal procedure and the qualified Party member of the Board of
Directors and Management may act as a member of the Party committee according to
relevant rules and procedures Further a Discipline Inspection Committee shall be
established.Article 144 The Party Committee of the Company shall perform its duty
according to the Charter of the CPC and the Work Regulations of the CPC
Regulation on the work at primary-level Party organizations of State-owned
enterprises (for Trial Implementation) and other Party regulations.
(1) Ensure and supervise the implementation of the policies of the Party and Nation at
the Company implement the strategic decision of the CPC Central Committee
the State Council and the work arrangement of the Party Committee of the
State-owned Assets Supervision and Administration Commission (“SASAC”)
and the higher Party organization.
(2) Insist the principle that the Party shall manage the officers and that the Board of
Directors shall have the right to select the managers according to the law and that
the managers shall have the right to select employees according to the law to be
integrated. The Party Committee shall consider the candidates nominated by the
Board of Directors or President and CEO and raise opinions or recommend
candidates to the Board of Directors or President and CEO. The Party Committee
51shall examine the candidates with the Board of Directors and raise opinions after
collective examination.
(3) Research and discuss the stability of development and reform material
management issue employee benefits of the Company and raises opinions and
recommendations.
(4) Undertake the main responsibility of implementing the principle of “StrictManagement of the Party”. Take the lead of the ideological and political work of
the Company the United Front work the construction of spiritual civilization the
construction of company culture and work of the Union the Communist Youth
League and other organizations. Lead construction of a clean Party and
government and support the work of Discipline Inspection to perform the duty of
oversight.Article 145 The funds for the work of Party organization shall be included in the
budget of the Company and be disbursed from the management cost of the Company.Chapter 7 Senior Executives
Article 146 The Company has one President and CEO who is subject to
appointment or dismissal by the board of directors.The Company has Chief Financial Officer who shall be nominated by the President
and CEO and subject to appointment or dismissal by the board of directors.The President and CEO Chief Financial Officer and the secretary of board of
directors shall be the senior executives of the Company.Article 147 Circumstances concerning the disqualification of directors and the
departure management system as prescribed in these Articles of Association are also
applicable to the senior executives. Provisions concerning the duty of loyalty and duty
of care of directors as prescribed in these Articles of Association are also applicable to
the senior executives.Article 148 Those persons take administrative posts except for directors and
supervisors in the units of the controlling shareholders of the Company shall not
serve as senior executives of the Company.The Company's senior executives are paid only by the Company (and/or its
subsidiaries) and are not paid by the controlling shareholder on behalf of the
Company.
52Article 149 The term of office of President and CEO shall be three years and
President and CEO may be reappointed and reelected.Article 150 The President and CEO shall be responsible to the board of directors
and exercise the following functions and powers:
(1) presiding over the production operation and management of the Company and its
subsidiaries organizing the implementation of the resolutions adopted by the
board of directors and reporting work to the board of directors;
(2) organizing the implementation of annual business plans debt and investments
plan of the Company;
(3) drafting plans for establishment of the Company's internal management
organizations;
(4) signing documents which shall be signed by the legal representative of the
Company and executing the functions and powers of the legal representative;
(5) drafting the basic management system of the Company;
(6) formulating the specific rules and regulations of the Company;
(7) proposing for the board of directors to appoint or dismiss the Chief Financial
Officer of the Company;
(8) deciding on the appointment or dismissal of other management personnel other
than those who shall be appointed or dismissed by the board of directors;
(9) deciding on the senior executives dispatched by the Company to the controlled
subsidiaries and non-controlled subsidiaries of the Company;
(10)proposing for convening an interim meeting of the board of directors;
(11)advancing proposals to meeting of the board of directors;
(12)approving transactions of the Company that do not meet the criteria for
submission to the board of directors for approval as set out in Article 115 of these
Articles of Association; and
(13)other functions and powers conferred by these Articles of Association or the
board of directors.The President and CEO shall sit on the meeting of the board of directors.
53Article 151 The work particulars applicable to the President and CEO shall be
prepared by the President and CEO and may not be implemented unless approved by
the board of directors.Article 152 The work particulars applicable to the President and CEO shall
include:
(1) conditions procedures for holding the meeting of the President and CEO and the
people attending such meeting;
(2) respective duties and functions and powers of the President and CEO ;
(3) powers delegated by the board of directors to the President and CEO and the way
to convene the President and CEO meeting ; and
(4) other matters deemed necessary by the board of directors.
Article 153 The President and CEO may resign prior to the expiry of his term of
office. The specific procedures and measures for such resignation shall be set forth in
the labor contract between the President and CEO and the Company.Article 154 Chief Financial Officer shall assist the President and CEO in his
work.Article 155 The Company shall have a secretary of the board of directors who
shall be responsible for preparing the shareholders' meeting and the meeting of the
board of directors keeping documents conducting management of information
regarding shareholders of the Company and dealing with information disclosure
matters etc. The secretary of the board of directors shall abide by the related
provisions of the laws administrative regulations regulations of ministries and
commissions and these Articles of Association.The work particulars applicable to the secretary of the board of directors shall be
prepared by the Company which includes the position main duty and qualification
functions and powers supervision legal liability and resignation of the secretary of
the board of directors. The work particulars applicable to the secretary of the board of
directors shall be approved by the meeting of the board of directors.Article 156 Where the senior executives performs their duties in the Company
causing harm to others the Company shall be liable for compensation. If the senior
executives have been intentional or have gross negligence they shall also be
responsible for compensation.
54Where the senior executives violate laws administrative regulations regulations of
ministries and commissions or these Articles of Association when performing their
duties thus causing losses to the Company they shall be liable for compensation
according and subject to any applicable laws and regulations.Article 157 The senior executives of the Company shall faithfully perform their
duties and act in the best interests of the Company and all shareholders. Where any
senior executive fails to perform his/her duties faithfully or breaches his/her
obligation of good faith and thereby causes damage to the Company's interests or the
shareholders of public shares he/she shall be liable for compensation according and
subject to any applicable law.Chapter 8 Financial and Accounting Systems Profit Distribution and Auditing
Section 1 Financial and Accounting Systems
Article 158 The Company shall formulate its financial and accounting systems
in accordance with the laws administrative regulations and the provisions of relevant
State authorities.Article 159 The Company shall submit and disclose its annual report to the local
agency of the CSRC and the stock exchange concerned within four months after the
end of each fiscal year and submit and disclose an interim report to the local agency
of the CSRC and the stock exchange concerned within two months after the end of the
first half of each fiscal year.The aforesaid annual and interim reports shall be prepared according to the relevant
laws administrative regulations provisions of the CSRC and the stock exchange
concerned.Article 160 The Company shall not establish any other accounting books except
for the statutory ones. No funds of the Company shall be deposited in any account
opened in the name of any individual.Article 161 When distributing each year's after-tax profits the Company shall
withdraw 10% of its after-tax profits for the Company's statutory common reserve
fund. When the aggregate balance in the statutory common reserve fund is 50% or
more of the registered capital of the Company it is not necessary to withdraw any
profits.When the Company's statutory common reserve fund is not sufficient to make up for
55the Company's losses of the previous year profits of the current year shall be used to
make up for the losses before allocations are made for the statutory common reserve
fund in accordance with the previous paragraph.After having withdrawing the statutory common reserve fund from the after-tax
profits the Company may also with the approval of the resolution of the
shareholders' meeting withdraw any common reserve fund from the after-tax profits.After the Company has made up its losses and made allocations to its common reserve
fund the remaining after-tax profits shall be distributed in proportion to the number of
shares held by the shareholders unless otherwise specified by these Articles of
Association.If the shareholders' meeting violates the Company Law by distributing profits to
shareholders the shareholders shall return the distributed profits to the Company. If
losses are caused to the Company the shareholders and the responsible directors and
senior executives shall be liable for compensation.The shares held by the Company itself shall not participate in profit distribution.Article 162 The common reserve fund of the Company is used to make up its
losses expand its production and operations or for conversion into additional
registered capital of the Company.For making up losses of the Company by the reserve fund the common reserve fund
and statutory common reserve fund shall first be used; where there is still no way to
make up losses the capital reserve fund may be used pursuant to the provisions.When the statutory common reserve fund is converted to capital the balance of such
fund shall be no less than 25% of the registered capital prior to such conversion.Article 163 After the shareholders’ meeting has adopted the resolution on the
plan for distribution of the Company's profits the board of directors of the Company
shall complete the distribution of dividends (or shares) within two months from the
date of the shareholders' meeting.The dividends or other payment distributed to the shareholders of the domestic shares
by the Company shall be calculated and announced in RMB and paid in RMB; the
dividends or other payment distributed to the shareholders of domestically listed
foreign-funded shares by the Company shall be calculated and announced in RMB
and paid in Hong Kong Dollar; dividends of domestically listed foreign-funded shares
may be remitted out of China according to provision of laws and rules.The required Hong Kong dollars regarding the dividends or other payment distributed
56to the shareholders of domestically listed foreign-funded shares shall be settled
according to relevant provision of foreign exchange of China. The applicable
exchange rate shall be the intermediate price of the Hong Kong Dollar in exchange to
RMB announced by the People’s Bank of China on the first working day after the
resolution of the shareholder’s meeting.Article 164 The Policy and Decision-making Process of Distributing Profits of
the Company
(I) General principles of distributing profits of the Company
1. The Company shall fully consider the return to investors and distribute the profits
of shares to the shareholders according to the proportion of the profit available for
distribution as set forth in the consolidated statements of the current year.
2. The Company shall implement a continuous and stable profit distribution policy
taking into account the long-term interests of the Company the overall interests of
all shareholders and the sustainable development of the Company;
3. Where a shareholder occupied the Company's funds in violation of rules when the
Company distributes profits those funds occupied by the shareholder shall be
deducted from cash dividends supposed to be allocated to him.(II) The interval of distribution of profits
Where the Company is profitable and its profit available for distribution is positive in
the current year the Company shall distribute the profits once a year generally. Where
the Company's profit scale cash flow status and demand for funds in the current
period allows interim dividends may be distributed.(III) The specific policies for distribution of profits are as follows:
1. The form of distribution of profits: the Company may use cash shares or cash and
shares in combination or other ways permitted by laws and regulations to
distribute profits.
2. The conditions and proportion of distributing cash dividends of the Company:
The Company shall distribute cash dividends if the Company is profitable and its
accumulated undistributed profits are positive in the current year and there are no
significant investment plans or major cash disbursements which will affect the
distribution of profits.The standard of the abovementioned significant investment plans or major cash
57disbursements shall be construed with relevant provisions as required by the
Listing Rules of Shenzhen Stock Exchange.The annual cash distribution of profits of the Company shall not be less than 10%
of profit available for distribution of the year and the cumulative cash distribution
of profits of the Company shall not be less than 30% of average annual profit
available for distribution during the last three years.
3. The conditions of distributing stock dividends of the Company
Where the Company well operates and the board of directors believes that the
issuance of stock dividends is beneficial to the overall interests of all shareholders
of the Company the board of directors may in the case of satisfying the
conditions of abovementioned cash dividends propose a stock distribution plan
for dividend of the Company.(IV) The examination and deliberation procedure of profit distribution plan:
1. The board of directors shall according to the situation of profitability the supply
and demand of funds propose a plan for the distribution of profits and discuss the
reasonableness of such plan and submit to the specialized meeting of the
independent directors for deliberation. Independent directors who believe that the
profit distribution plan may harm the interests of the Company or minority
shareholders shall have the right to express independent opinions. The profit
distribution plan shall be submitted to the audit committee and the board of
directors for examination deliberation and approval and after approved by the
audit committee and the board of directors the plan shall be submitted to the
shareholders' meeting for examination and deliberation.When examining and deliberating the profit distribution plan the voting method
adopted by the shareholders' meeting may be online voting under special
circumstances in addition to on-site voting.Minority shareholders and independent directors may collect voting rights
according to these Articles of Association for the full exercise of shareholders'
voting rights by the shareholders. When the shareholders’ meeting examines and
deliberate the cash dividend plan it should communicate with shareholders
especially minority shareholders through a variety of channels ensure that
communication channels are smooth fully listen to the views and claims of
minority shareholders and answer questions of minority shareholders promptly.
2. Where the Company is profitable and accumulated undistributed profit of the
Company of the current year is positive but fails to propose a cash profit
distribution plan the board of directors should make special clarifications as to the
58specific reasons for not distributing cash profit the specific use of the retained
earnings of the Company and expected return on such investment etc. which
shall be submitted to the shareholder’s meeting for examination and deliberation
after opined on by the independent directors.(V) Adjustment of profit distribution policy
Where due to major changes in external business environment or its own operating
conditions the Company does need to alter the profit distribution policy set forth in
the Articles of Association. Such alteration shall be approved by the board of directors
after examination and deliberation thereof and then submitted to the shareholders’
meeting for examination and deliberation and shall be approved by more than 2/3 of
the voting rights of shareholders (or proxies thereof) who attend the shareholders'
meeting. The adjusted profit distribution plan shall not violate the relevant provisions
of the CSRC and Shenzhen Stock Exchange. When examining and deliberating such
alteration the Company shall provide shareholders with way of online voting.Section 2 Internal Audit
Article 165 The Company shall implement the internal auditing system
specifying leadership system duties and limit of authority staffing budget assurance
application of audit findings and accountability etc. for internal audit work.The internal auditing system of the Company shall be implemented upon approval by
the board of directors and disclosed to the public.Article 166 The internal auditing department of the Company shall supervise
and inspect the Company's business activities risk management internal control
financial information etc.Article 167 The internal auditing department shall be responsible to the board of
directors.The internal auditing department shall in the course of supervision and inspection of
the Company's business activities risk management internal control financial
information accept supervision and guidance of the audit committee. Upon discovery
of the relevant significant issues or clues the internal auditing department shall
forthwith report directly to the audit committee.Article 168 The internal auditing department shall be responsible for organizing
implementation of the Company's internal control assessment. The Company shall
issue an annual internal control assessment report based on the assessment report
59issued by the internal auditing department and deliberated by the audit committee and
the relevant materials.Article 169 When the audit committee communicates with the external audit
organisations such as accounting firms and State audit organisations etc. the internal
auditing department shall cooperate actively and provide the requisite support and
cooperation.Article 170 The audit committee shall participate in appraisal of head of internal
audit.Section 3 Appointment of Accounting Firms
Article 171 Accounting firms that conforms to the provisions of the Securities
Law shall be engaged by the Company to render such services as the auditing of
accounting statements verification of net assets and other relevant consulting matters.The appointment of accounting firms will be valid for one year and may be renewed.Article 172 The appointment or dismissal of accounting firms by the Company
shall be decided by the shareholders' meeting and the board of directors shall not
appoint the accounting firm before the resolution is adopted by the shareholders'
meeting.Article 173 The Company shall ensure to provide the engaged accounting firm
with authentic and complete accounting evidence accounting books financial and
accounting reports and other accounting materials and shall not refuse to provide
conceal or falsely report them.Article 174 The auditing fee for the accounting firm shall be decided by the
shareholders' meeting.Article 175 Where the Company dismisses or does not renew the mandate of the
accounting firm it shall inform the accounting firm 30 days in advance to such effect.Where the shareholders’ meeting votes on the dismissal of the accounting firm the
accounting firm shall be permitted to state its opinions.Where the accounting firms resign the accounting firm shall report to the
shareholders' meeting whether there is any abnormal situation found in the Company.
60Chapter 9 Notices and Announcements
Section 1 Notice
Article 176 Any notice of the Company shall be sent out by the following
means:
(1) personal delivery;
(2) mail;
(3) e-mail or fax;
(4) announcement;
(5) any other means prescribed in these Articles of Association.
Article 177 Where the notice of the Company is sent out by the means of
announcement upon the said announcement the notice shall be deemed to have been
effectively served to all parties concerned.Article 178 The notice of the shareholders' meeting held by the Company shall
be sent out by means of announcement.Article 179 The notice of the meeting of the board of directors shall be sent out
by means of personal delivery mail e-mail or fax except as provided otherwise in
this Article.Article 180 Where the notice is sent out by personal delivery it shall be deemed
effectively served on the day when the receiver signs (seals) the return receipt; where
by mail on the fifth working days after being turned over to the post office; where by
means of email and fax and there are evidence proving such sending out on the day
of sending out; where by means of announcement on the day of the first public
announcement.Article 181 Where the meeting notice is not sent to the person entitled to receive
the same due to any accidental omission or where no meeting notice is received by
such person the validity of the meeting and of any resolution adopted at the meeting
shall not be thus invalid.
61Section 2 Announcement
Article 182 The Company designates China Securities Journal and Securities
Times as the Chinese newspaper for release of Company's announcement and
disclosure of other information; The Company designates http://www.cninfo.com.cn
as the website for the publication of Company's announcement and disclosure of other
information.Chapter 10 Merger/Consolidation Spin-off Capital Increase Capital Reduction
Dissolution and Liquidation
Section 1 Merger/Consolidation Spin-off Capital Increase and Capital
Reduction
Article 183 Company mergers/consolidations may be classified into mergers or
consolidations.Merger is where one Company merges with another Company whereby the absorbed
Company shall be dissolved. Consolidation is where at least two companies are
consolidated into a new Company whereby the consolidated parties are dissolved
respectively.Article 184 Where the consideration paid for the merger/consolidation does not
exceed 10% of the Company's net assets a resolution of a shareholders' meeting may
be waived unless otherwise stipulated in the Articles of Association.Where a shareholders' meeting is not required for a merger/consolidation pursuant to
the provisions of the preceding paragraph a resolution of a board of directors shall be
passed.Article 185 The merger/consolidation of companies shall require a
merger/consolidation contract signed by all the merger/consolidation parties and the
balance sheet and inventory of properties shall be prepared. The Company shall
within 10 days from the date of the merger/consolidation resolution is made notify its
creditors and make the announcement in relevant medias or the National Enterprise
Credit Information Publicity System within 30 days. The creditors may within 30
days from the date of the receipt of the said notice or if receiving no notice within 45
days from the date of the said announcement ask the Company to discharge the
62Company's debts or provide the relevant guarantees.
Article 186 Upon the merger/consolidation of the Company the credit and debts
of all the relevant merger/consolidation parties shall be succeeded by the Company
surviving the said merger/consolidation or the newly-established Company.Article 187 In the case of the spin-off of the Company its assets shall be divided
correspondingly.In the case of the spin-off of the Company the balance sheet and the inventory of
properties shall be prepared. The Company shall inform its creditors within 10 days
from the date of division resolution and make an announcement in relevant medias or
the National Enterprise Credit Information Publicity System within 30 days.Article 188 For the debts of the Company prior to the said spin-off the
Company existing thereafter shall bear the joint and several liabilities unless
otherwise specified in the written agreement which is concluded before the said
spin-off by the Company with its creditors on the discharge of the Company's debts.Article 189 Where the Company needs to reduce its registered capital it shall
prepare the balance sheet and the inventory of properties.The Company shall notify its creditors within 10 days from the date of resolution on
decrease in the registered capital by the shareholders' meeting and make the
announcement in relevant media or the National Enterprise Credit Information
Publicity System within 30 days. The creditors shall within 30 days from the date of
the receipt of the said notice or if failing to receive such notice within 45 days from
the date of the said announcement have the right to ask the Company to discharge the
Company's debts or provide the relevant guarantees.The Company proposing to reduce its registered capital shall reduce the capital
contribution amount or shares correspondingly in accordance with the shareholding
percentage of the shareholders unless otherwise stipulated by the laws or in the
Articles of Association.Article 190 Where there are still losses following making up of losses pursuant
to the provisions of the second paragraph of Article 162 the Company may reduce its
registered capital to make up the losses. Where the Company reduces its registered
capital to make up the losses it shall not make distribution to its shareholders and
shall not waive the obligations of shareholders to make capital contribution or share
capital.The provisions of the second paragraph of Article 189 shall not apply to reduction of
registered capital pursuant to the provisions of the preceding paragraph but an
63announcement shall be made in relevant media or the National Enterprise Credit
Information Publicity System within 30 days from passing of the resolution on
reduction of registered capital by the shareholders' meeting.After the Company has reduced its registered capital pursuant to the provisions of the
preceding two paragraphs no profit shall be distributed before the accumulated
amount of the statutory common reserve fund and the common reserve fund accounts
for 50% of the Company's registered capital.Article 191 Where the registered capital is reduced in violation of the Company
Law or other relevant provisions shareholders shall refund the capital received
thereby; where the shareholders' capital contributions are exempted or reduced the
original status shall be restored; where the Company suffers any loss the shareholders
and the responsible directors and senior executives shall bear the liability for
compensation.Article 192 When the Company issues new shares to increase its registered
capital its shareholders do not enjoy the pre-emptive right unless otherwise specified
in the Articles of Association or decided by the resolution of a shareholders' meeting
that the shareholders enjoy the pre-emptive right.Article 193 Where the Company undertakes merger/consolidation or spin-off
thus altering its registration items it shall handle according to the law the formalities
of alteration of its registration with the Company registration authority; where the
Company is dissolved it shall cancel its registration legally; where a new Company is
established it shall deal with Company establishment registration formalities in
accordance with the law.The Company shall if increasing or decreasing its registered capital handle the
alteration registration formalities with the Company registration authority in
accordance with the law.Section 2 Dissolution and Liquidation
Article 194 The Company may be dissolved due to any of the followings
reasons:
(1) pursuant to these Articles of Association the operational period of the Company
has expired or one of the other events which are grounds for dissolution has
occurred;
(2) resolution of dissolution made by the shareholders' meeting;
64(3) dissolution is necessary due to the merger/consolidation or spin-off of the
Company;
(4) business license is revoked canceled or it is ordered to close down according to
the law; or
(5) if the Company has great difficulties in business operation and management and
its continuation may incur significant losses to the shareholders which cannot be
solved by other means then the shareholders holding more than 10% of the voting
shares of the Company may request to the people's court for dissolution of the
Company.Upon occurrence of an event which triggers dissolution as stipulated in the preceding
paragraph an announcement shall be made through the National Enterprise Credit
Information Publicity System within 10 days.Article 195 The Company may survive by amending its Articles of Association
or passing a resolution by the shareholders' meeting in the case of the circumstance
mentioned in Item (1) and (2) of Article 194.Any amendment of Articles of Association or resolution passed by the shareholders'
meeting pursuant to the preceding paragraph shall require the approval of more than
2/3 of the voting rights represented by the shareholders attending the shareholders'
meeting.Where the Company is dissolved in accordance with the provisions in Items (1) (2)
(4) and (5) of Article 194 hereof it shall undergo liquidation. As the liquidation
obligors of the Company directors shall form a liquidation team to carry out
liquidation within 15 days from occurrence of the event which triggers dissolution.The liquidation team shall comprise directors unless otherwise provided in the
Articles of Association or as resolved by a shareholders' meeting to elect others.Where the liquidation obligors fail to perform liquidation obligations promptly and
cause the Company or its creditors to suffer losses they shall be liable for
compensation.Article 196 The liquidation group shall discharge the follows duties during its
liquidation:
(1) liquidating the Company's assets and respectively preparing the balance sheet and
the inventory of assets;
(2) notifying and making an announcement to the creditors;
65(3) transacting the unfinished businesses of the Company in connection with the
liquidating;
(4) making full payment of taxes owed and taxes imposed during the process of
liquidation;
(5) clearing the creditor's claims and debt;
(6) distributing the residual properties after the Company has discharged its debts;
and
(7) representing the Company in any civil litigations.
Article 197 The liquidation group shall notify the creditors within 10 days from
the date of its establishment and make the announcement within 60 days in newspaper
appointed by the CSRC or the National Enterprise Credit Information Publicity
System. The creditors shall within 30 days from the date of the receipt of the said
notice or if failing to receive such notice within 45 days from the date of the said
announcement declare their creditors' rights to the liquidation group.When reporting claims the creditors shall explain matters relevant to their claims and
shall provide evidentiary materials. The liquidation group shall register creditor's
claims.During the declaration of the creditor's claims the liquidation group shall not
discharge the debts of creditors.Article 198 The liquidation group shall after having liquidated the Company'
assets and prepared the balance sheet and the inventory of properties formulate the
liquidation plan and submit it to the shareholders' meeting or the people's court for
confirmation.The portion of the Company's properties remaining after they are used to pay for the
liquidation expense salary of the staff and workers social insurance expense
statutory compensation and the taxes and debts in arrears shall be distributed by the
Company in proportions to shares held by the shareholders.The Company shall during the liquidation period remain in existence but shall not
carry out activities irrelevant to the liquidation. The Company's properties before
they are used to discharge the Company's debts in accordance with the preceding
paragraph may not be distributed to the shareholders.Article 199 Where after liquidating the Company's properties and preparing the
66balance sheet and the inventory of properties the liquidation group discovers that the
Company's properties are insufficient to repay the Company's debts it shall apply for
bankruptcy liquidation to the people's court.Upon acceptance of a bankruptcy application by a people's court the liquidation team
shall hand over the liquidation matters to the bankruptcy administrator designated by
the people's court.Article 200 After the completion of the liquidation the liquidation group shall
devise a liquidation report and submit it to the shareholders' meeting or the people's
court for confirmation and also to the Company registration authority for cancellation
of the Company's registration.Article 201 Members of the liquidation team shall perform liquidation duties
and bear the obligations of loyalty and diligence.Where the liquidation team members are negligent in performance of liquidation
duties and cause the Company to suffer losses they shall be liable for compensation;
where they cause losses to creditors due to intentional misconduct or gross negligence
they shall be liable for compensation.Article 202 Where the Company is lawfully declared bankrupt it shall carry out
bankruptcy liquidation in accordance with laws concerning the bankruptcy of
enterprises.Chapter 11 Amendments to the Articles of Association
Article 203 The Company shall amend these Articles of Association in any of
the following circumstances:
(1) after the Company Law or other relevant laws or administrative regulations are
amended the matters specified under these Articles of Association are in conflict
with the provisions of the laws or administrative regulations as amended;
(2) any change occurs in the Company and it is thus not in conformity with the
matters recorded in the Company's Articles of Association; or
(3) any amendment to the Articles of Association of the Company is decided by the
shareholders' meeting.Article 204 Where any amendment to the Articles of Association of the
Company as passed by resolution of the shareholders' meeting requires the
examination and approval of the competent authority such amendment shall be
67submitted to the competent authority for approval; where registration matters are
involved the formalities of amending registration shall be handled according to the
law.Article 205 The board of directors shall amend these Articles of Association in
accordance with the resolutions adopted by the shareholders' meeting on amendment
to the Company's Articles of Association and pursuant to the approval opinions of the
competent authority.Article 206 Where any amendment to these Articles of Association is related to
information required by laws and regulations to be disclosed such amendment shall
be announced in accordance with the relevant provisions.Chapter 12 Supplementary Provisions
Article 207 Definitions
(1) The "controlling shareholders" shall refer to the shareholders whose holdings of
shares account for more than 50% of the total shares in the Company; or
shareholders who does not hold more than 50% of the total shares in the Company
but whose shares can represent such voting rights as sufficient to greatly affect the
resolutions made by the shareholders' meeting.
(2) The "actual controllers" shall refer to the natural persons legal persons or any
other organisations who are able to actually control the acts of the Company
through investment relationship according to agreement or by any other
arrangement.
(3) The "affiliated relationship" shall refer to the relationship between the Company's
controlling shareholders actual controllers directors senior executives and
enterprises directly or indirectly under their control as well as any other
relationship which may cause transfer of the Company's interests. However the
relationship between State-controlled enterprises is not an affiliated relationship
due to the fact that such enterprises are under the common control of the State.Article 208 The board of directors may in accordance with its Articles of
Association formulate detailed rules for implementation of these Articles of
Association which shall not go against the provisions thereof.Article 209 These Articles of Association shall be written in Chinese. Where a
version in any other language or a different version is in conflict with these Articles of
Association the most recently approved Chinese version as registered with Jingzhou
Municipal Administration for Market Regulation shall prevail.
68Article 210 Such terms as "no less than" "within" and "no more than" used in
these Articles of Association shall include the given figures; such terms as
"exceeding" "beyond" "less than" and "more than" used in these Articles of
Association shall exclude the given figures.Article 211 These Articles of Association shall be interpreted by the board of
directors of the Company.Article 212 Any appendix to these Articles of Association shall include the
procedural rules of the shareholders' meeting and the meeting of the board of
directors.Article 213 These Articles of Association shall come into effect on the date of
resolution of shareholder’s meeting thereof.ADAMALtd.
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