Stock code: 000039/200039 Stock Abb.: CIMC Group/CIMC B
Listing location: Shenzhen Stock Exchange
Plan for Listing Location Change and Listing &
Trading on Main Board of The Stock Exchange Of
Hong Kong Limited by way of Introduction
of
Domestic listed foreign Investment Shares
of
China International Marine Containers (Group) Co.,
Ltd.
Financial Advisor
No. 618, Shangcheng Road, Pudong New District, Shanghai
August, 2012
1
Statement
The Company and its Board of Directors warrant the authenticity, accuracy and completeness of
this Plan and its abstract, and further undertake that they will bear joint and several liabilities for
any false record, misleading representation or material omissions in such Plan and abstract.
The principals for the Company, accounting work and accounting institution warrant that all
financial and accounting reports in this Plan and abstract are true, accurate and complete.
Any decision or advice made with respect to this Plan by China Securities Regulatory
Commission and other governmental agencies will not constitute their substantial judgment or
warranty on the value of this Company’s stock or the profits of investors. Any statement contrary
to it shall be deemed as false representation.
Upon the change of listing location of the Company’s domestic listed foreign investment shares (B
shares), the listing, trading and clearing rules of Hong Kong shall apply, while relevant listing and
trading rules of Shenzhen Stock Exchange, as well as relevant depository and clearing rules of
China Securities Depository and Clearing Corporation Limited will no longer be applicable.
However, the relevant rules applicable to the Company’s RMB common stock (A shares) remain
unchanged.
The Company will independently be responsible for the changes in its operation and profits after
the completion of this Plan. Any investment risk arising out of this Plan shall be fully borne by
investors.
In case of any doubt about this Plan, investors shall seek advice from their respective stock
brokers, lawyers, professional accountants or other professional consultant.
2
About Major Issues
I. By July 13, 2012, CIMC Group has issued 1,430,480,509 B shares. This Plan is
drafted to change the listing location of B shares issued, and to list and trade them on
the main market of SEHK through introduction. The original investors holding B
shares may exercise their cash option to request purchasing the shares from the third
party arranged by the Company, or continue to hold such shares. However, the listing
location is changed into SEHK, and the nature of shares is converted from domestic
listed foreign investment shares into overseas listed foreign investment shares.
II. For investors in CIMC B shares who are inactive and have not applied for cash
option, their CIMC B shares will be changed the listing location and be listed and
traded by introduction on the main market of SEHK after the approval and
implementation of this Plan.
For the part of shares held by all shareholders for B shares after the implementation of
cash option plan, Guotai Junan Securities will be authorized as their nominal holders
to open an H shares account in Guotai Junan (Hong Kong) (for agent trade and
depository & clearing for investors only), to trust the Company’s H shares and to
handle relevant matters. (More announcements will be issued to disclose the specific
operation rules and powers and duties of stakeholders.)
The overseas investors with complete information may apply for opening independent
H shares accounts to Guotai Junan (Hong Kong) or other overseas securities
companies after the listing of H shares.
The trading manner for future shareholders trading through the trading systems of
domestic securities companies will remain substantially unchanged, except for stock
trading code. However, limited by relevant regulations, they may only have the right
to hold or sell shares. The stock trading code after change will be further announced.
III. After the review by CIMC shareholders' meeting (shareholders of B shares
included) and the approval of voting by all shareholders attending such shareholders’
meeting and two thirds of the shareholders of B shares entitled to vote, as well as the
ratification by China Securities Regulatory Commission, The Stock Exchange Of
Hong Kong Limited and other relevant governmental departments and agencies (if
necessary), the shareholders of B shares intended to exercise cash option have the
right to declare the execution of such option within the declaration period as specified
by CIMC Group in such manners and procedures as regulated. Those having
effectively declared and agreed to accept the purchase price may request purchasing
shares from the third party arranged by the Company; besides, upon the Company’s
receipt of listing approval from SEHK, such third party shall pay the cash
consideration to the above shareholders of B shares. The shareholders of CIMC B
shares exercising cash option may obtain the cash paid by cash option provider with
respect to each B share effectively declared on the implementation date of cash option.
The detailed price shall be determined as 9.83 HKD/share based on the closing price
of the Company’s B shares on the day immediately preceding the suspension date
3
(July 13, 2012) – 9.36 HKD/share at a premium of 5%. In case of any ER to the
Company’s shares during the period from the announcement date of this Board
resolution and the implementation date of case option, the price of such cash option
shall be accordingly adjusted. The exercise currency for the cash option under this
Plan shall be Hong Kong Dollar (HKD).
The detailed arrangement of plan for cash option of shareholders of CIMC B shares
(including but not limited to the declaration period, implementation date, declaration,
application, registration and clearing of cash option) will be disclosed in accordance
with then applicable laws, regulations and relevant listing rules. In the event that this
Plan can not be implemented due to the failure of approval from related parties, the
shareholders of CIMC B shares shall not exercise such cash option.
IV. According to relevant regulations, domestic residents shall not purchase overseas
shares directly. Therefore, after the implementation of this Plan, the domestic
residents shall not acquire the Company’s and other H shares or other overseas shares,
except holding or selling the Company’s H shares duly held as a result of the change
in listing location of the Company’s shares. The capital from its sale of the
Company’s H shares shall be promptly remitted to the territory. The Company
promises not to finance via share allotment before domestic residents are able to
subscribe foreign shares.)
Meanwhile, if overseas investors have not opened H shares account directly in
overseas securities companies after the implementation of this Plan, but continue to
trade through the trading systems of domestic securities companies instead of those of
overseas securities companies, such investors may also hold or sell the Company’s H
shares duly held as a result of the change in listing location of the Company’s shares.
But the capital from the sale of their H shares duly held shall be promptly remitted to
the territory.
V. The Company will draft Articles of Association of China International Marine
Containers (Group) Co., Ltd. (A+H) in accordance with Mandatory Provisions for
Articles of Association of Companies Listed Overseas, Letter of Comment on
Supplementary Amendment to Articles of Association of Companies Listed in Hong
Kong (―ZJHH [1995] No.1‖) and Opinions on Promotion of Standard Operation and
Strengthened Reforming of Companies Listed Overseas, and with reference to relevant
requirements of Guidelines for the Articles of Association of Listed Companies as
amended in 2006 and Listing Rules, and will submit it to the approval of shareholders’
meeting. Such Articles of Association, with the approval from the shareholders’
meeting and relevant competent departments, will come into effect as of the listing
date of the Company’s H shares. The Company, upon the listing of its H shares, will
convene separate shareholders’ meeting based on the circumstances specified in
Articles of Association. Prior to the listing of H shares, the Company’s current articles
of association shall continue to survive.
VI. The significant time points for this Plan are set out as below. The detailed
schedule and operational procedure about cash option will be further announced.
4
Time point Item
1. Announce the Board’s resolution and relevant documents of this
Plan
T
2. Give notice of an extraordinary shareholders’ meeting
3. Resume the Company’s A shares and B shares
Convene extraordinary shareholders’ meeting and review relevant
T+15
proposals of this Plan
T+16 Announce the resolution of extraordinary shareholders’ meeting
Obtain the approval from China Securities Regulatory Commission
Hearing by Listing Commission of The Stock Exchange Of Hong
Kong Limited
1. SEHK, in principle, approves the listing of H shares
2. B shares are suspended (the day immediately preceding such day is
the last trading date of B shares)
Publish the announcement of B shares’ cash option
Notes
Announce the result of cash option declaration
Obtain the approval paper officially approving the listing of H shares
from SEHK
Implement the cash option
Implementation of cash options
CIMC Group’s H shares are traded in SEHK
Note: Uncertainty may occur to the above schedule due to either of the following, in which case
the Company will make adjustment accordingly:
1. This Plan needs to be approved by relevant governmental departments and agencies, but the
performance of such legal proceedings may be uncertain.
2. Since the current trading systems of domestic securities companies are unable to support
domestic residents’ holding and selling H shares, related parties will upgrade such trading systems,
for which the time essential is uncertain.
VII. Risk of failure to obtain approvals: On August 14, 2012, the Company held the
13th meeting of the sixth session of the board meeting, on which this Plan and relevant
matters are reviewed and approved. However, this Plan shall also be subject to the
following:
1. This proposal shall be reviewed by the extraordinary shareholders’ meeting, and
5
obtain the consent of all shareholders attending the shareholders’ meeting and at least
two thirds of the shareholders of B shares entitled to vote;
2. The Company shall submit relevant documents with respect to apply for the B
shares' listing and trade on the main market of SEHK through introduction as
secondary shares to China Securities Regulatory Commission, and obtain its approval;
3. The Company shall submit relevant documents with respect to apply for the B
shares' listing and trade on the main market of SEHK through introduction as
secondary shares to SEHK, and obtain its approval;
4. Review or approval from other governmental departments and agencies (if
necessary).
This Plan will not come into effect if it fails to obtain the approval from any one of
the above or any other relevant governmental departments or agencies.
VIII. Cash option-related risk: Under this Plan, the cash option will be provided by a
third party to all shareholders of B shares. The Company’s shareholders – CMHIT,
COSCO and its associated enterprise Long Honour undertake to waive the cash
option.
1. The declaration period of the cash option for this Plan is from the approval of
hearing after the submission of listing application by CIMC to SEHK to the official
trade of the shares in SEHK. The detailed declaration period will be further
announced. The shareholders of CIMC B shares must declare within valid declaration
period. Any declaration of cash option beyond such period shall be invalid.
2. The shareholders of B shares having effectively declared and agreed to accept the
purchase price may request purchasing shares from the third party arranged by the
Company; but it is not necessary to implement the cash option plan if the Company
has not obtained the final listing approval from SEHK.
3. If the investors have not declared the cash option or their declaration is invalid, the
shares held by them will be changed the listing location and be listed and traded by
introduction on the main market of SEHK upon the approval and implementation of
this Plan.
IX. Risk of different investment environments between B shares and H shares: B
6
shares market and H shares market have different trading features (including volume
and negotiability) and investor basis, including the different participation extent
between retailing investors and institutional investors. Due to the existence of such
differences, the trading prices of the Company’s B shares and H shares are not
necessarily to be the same. The Company can not warrant that the price of further H
shares will be higher than or equal to the price prior to B shares’ change of listing
location. In addition, the price fluctuation of the Company’s B shares may exert
influence on the price of the Company’s H shares, vice versa.
X. Risk of uncontrollable execution time:
1. The implementation of this Plan shall be subject to the following: the review by
CIMC shareholders' meeting (shareholders of B shares included) and the approval of
voting by all shareholders attending such shareholders’ meeting and two thirds of the
shareholders of B shares entitled to vote, as well as the ratification by China
Securities Regulatory Commission, The Stock Exchange Of Hong Kong Limited and
other relevant governmental departments and agencies (if necessary), but the
performance of such legal proceedings may be uncertain.
2. Since the current trading systems of domestic securities companies are unable to
support domestic residents’ holding and selling H shares, related parties will upgrade
such trading systems, for which the time essential is uncertain.
Therefore, this Plan may be exposed to the risk of uncontrollable execution time.
XI. Risk of inconvenient trade: after the implementation of this Plan, for investors
who continue to trade through the trading systems of domestic securities companies,
their operational manners, compared with those for B shares trades through the
trading systems of domestic securities companies, basically remain unchanged;
however, the change of stock code may give rise to risk of inconvenient trade.
XII. Attention to increase in trading expenses
1. After the implementation of this Plan, the investors who continue to trade through
the trading systems of domestic securities companies shall pay corresponding
7
commissions to such domestic securities companies, and bear all trading expenses
with respect to H shares.
2. After the implementation of this Plan, the investors shall also be liable for certain
special trading expenses on H shares market, including depository and transfer fees,
dividend fees and bonus shares fees.
3. For the investors who continue to trade through the trading systems of domestic
securities companies, Guotai Junan (Hong Kong) will collect and remit the payment
from selling shares in Hong Kong to the territory. Such capital shall then be
transferred to the settlement reserve account of the domestic securities companies by
China Securities Depository and Clearing Corporation Limited. The remittance of
capital from the investors’ selling shares by Guotai Junan (Hong Kong) requires
certain transfer cost cross territories, especially when the volume on that day is very
small, which may lead to relatively high transfer cost for each share on that day. Such
cost will finally be borne by the investors who trade through the trading systems of
domestic securities companies.
XIII. Attention to different trading hours
After the implementation of this Plan, for investors who continue to trade through the
trading systems of domestic securities companies, their trading hour is different from
that of overseas investors who directly open overseas H shares account:
1. The trading hour for H shares is 5.5 hours/day, from 9:30 am – 12:00 and 1:00 pm
– 4:00 pm; the trading hour for domestic shares is 4 hours/day, from 9:30 am – 11:30
am and 1:00 pm– 3:00 pm;
2. The public holidays may vary within territory and Hong Kong.
The above differences will lead to unequal trading rights between the investors
trading the Company’s H shares through the trading systems of domestic securities
companies and those directly through the trading systems of overseas securities
companies.
XIV. Risk of trading system: After the successful listing and trading on the main
market of SEHK, the original investors in the Company’s B shares, while trading
8
shares listed in Hong Kong, may trade through the trading systems of domestic
securities companies or the trading systems of overseas securities companies based on
their respective identity, situation and voluntariness within the scope permitted by
applicable laws, regulations and trading rules.
The technical realization of this Plan may involve several links including domestic &
overseas communication proceeding and relevant technical services, and each link
may be exposed to network disconnection, server break down and software troubles.
The service provider will not be liable for any direct or indirect loss arising out of the
risks due to technical problems, such as disconnection, delay, errors of news and trade,
or failure to sell shares promptly. The service provider will not bear any director or
indirect loss caused thereof.
XV. Suggestion on part of shares being pledged and frozen: up to 8 Aug. 2012, except
for 5,852 B-shares held by three domestic residents were judicially frozen, no other
B-shares of the Company were pledged or frozen upon check.
The above judicially frozen B-share holders or relevant right holders as well as the
shareholders and right holders of B-share pledged or judicially frozen due to various
reasons before the exercise date of future cash option shall dispose their stocks timely
and legally (including exercise the cash option in time).
Investors are hereby advised to pay close attention to the above major issued and read
relevant chapters in this Plan.
9
Table of Contents
Statement..........................................................................................................................
About Major Issues ..........................................................................................................
Table of Contents .............................................................................................................
Definition .........................................................................................................................
Section One About Listed Company ............................................................................
1. Company overview .....................................................................................
2. Establishment and material changes in stock right ......................................
3. Main business and major data .....................................................................
4. Major shareholders......................................................................................
Section Two Plan Overview ..........................................................................................
1. Basic information ........................................................................................
2. Background analysis ...................................................................................
3. Shareholders' equity protection scheme ....................................................
4. Handling of inactive accounts .....................................................................
5. Decision-making .........................................................................................
6. Company’s capital change before and after the impementation of this
Plan
Section Three Compliance Analysis of this Plan ..........................................................
Section Four Risk Elements of this Plan.......................................................................
1. Risk of failure to obtain approvals ..............................................................
2. Cash option-related risk ..............................................................................
3. Risk of different investment environments between B shares and H
shares
4. Risk of uncontrollable execution time ........................................................
5. Risk of inconvenient trade ..........................................................................
6. Risk of increase in trading expenses ...........................................................
10
7. Risk of different trading hours ....................................................................
8. Risk of trading system ................................................................................
9. Risk of trading right limitation ...................................................................
10. Risk of inactive accounts ............................................................................
Section Five Special Notes to Investors........................................................................
1. Investors trading through the trading systems of domestic securities
brokers may only hold or sell the Company’s H shares, shall not purchase any
shares, and their trading right is limited....................................................................
2. Difference in trading hour ...........................................................................
3. Difference in trading costs ..........................................................................
4. Difference in tax incidence .........................................................................
5. Limitation to rise/drop ranges .....................................................................
6. Difference in rotary trading system ............................................................
7. Difference in settlement system ..................................................................
8. Difference in minimum fluctuation price e .................................................
9. Difference in call auction mechanism .........................................................
10. Margin financing .........................................................................................
Section Six Miscellaneous ............................................................................................
1. Opinions from independent directors..........................................................
2. Opinions from finance consultant ...............................................................
3. Legal advice from lawyers ..........................................................................
4. Notes about the purchase or sale of the Company’s shares by the
directors, supervisors and officials ...........................................................................
11
Definition
Unless otherwise noted in the content, meaning of below abbreviations are as
follows in this proposal:
CIMC, the company, the refers to China International Marine Containers (Group) Ltd
company, listed company
the original company refers to China International Marine Containers Ltd
This proposal refers to moving of listing place as well as main board listing
and listed trading in The Stock Exchange Of Hong
Kong Limited as stock by introduction for the
1,430,480,509 domestic
listed foreign shares issued by CIMC
CIMC B Stock , B Stock refers to Domestic listed foreign shares issued by CIMC
CIMC A Stock ,A Stock refers to Common Renminbi stocks issued by CIMC
H shares refers to Overseas listed foreign shares listed in Hong Kong
China Merchants Holdings refers to China Merchants (CIMC) Investment Limited
COSCO refers to COSCO Container Industries Limited
Long Honour refers to Long Honour Investments Limited
CSRC refers to China Securities Regulatory Commission
SZSE refers to Shenzhen Stock Exchange
CSDCC refers to China Securities Depository And Clearing Company
Limited
SEHK refers to The Stock Exchange Of Hong Kong Limited
HKSCC refers to Hong Kong Securities Clearing Co. Ltd
Financial Advisor, Guotai refers to Guotai Junan Securities Co., Ltd.
Junan Securities
Guotai Junan Hong Kong refers to Guotai Junan Securities Co., Ltd(Hong Kong)
Legal counsel in China, refers to Beijing Commerce& Finance Law Offices
Commerce & Finance Law
Legal counsel in Hong refers to Paul, Hastings, Janofsky & Walker LLP
Kong, Paul Hastings
Listing rules refers to Security listing rules of SEHK
Company Law refers to Company Law of the People’s Republic of China
The Securities Law refers to The Securities Law of the People's Republic of China
Domestic securities trading refers to Stock trading system provided by domestic stockbroker
system
Overseas securities trading Refers to Stock trading system provided by overseas stockbroker
system
Yuan, ten thousand yuan, refers to RMB Yuan, ten thousand yuan, one hundred million
one hundred million yuan yuan
Note: Due to rounding, in this proposal there’re discrepancies on the mantissa between part
of the total sum and the sum of all addends added directly, or part of the proportion indexes and
the result of relevant numbers added directly.
12
Chapter I Basic information of the listing company
I. Basic information of the company
Chinese name: 中国国际海运集装箱（集团）股份有限公司
English Name: China International Marine Containers (Group) Co., Ltd
Stock in short form: CIMC, CIMC B; stock code: 000039, 200039
Registered capital: 26,623,960,510 Yuan
Legal representative: Li Jianhong
Date of establishment: January 14, 1984
Registration No. of corporate business license: 440301501119369
Registered address: CIMC R&D Center, 2 Gangwan Avenue, Shekou, Nanshan
District, Shenzhen City, Guangdong Province
Board secretary: Yu Yuqun
Postal code: 518067
Tel: (86) 755-2669 1130
Main business scope: The company and its subsidiaries (hereinafter referred to as "the
group") is mainly engaged in modern transportation equipment, energy, food,
chemical, marine engineering and other equipment manufacturing and services,
including design, manufacture and service of ISO dry cargo containers, reefer
containers, special container, tank container, container floor board, modular building,
road tanker, gas equipment ,static storage tanks, road transport vehicle and Marine
engineering equipment. In addition, the group has also engaged in the business of
logistics equipment manufacturing and services, airport equipment, railway wagons
manufacturing, real estate development and financial leasing. It strives to actively
expand application field in related business industrial chain to provide quality and
safe products and other technical services like system solutions etc.
II. Foundation of the company and significant changes of shareholding
(I) Foundation of the company and share capital change after listing
1. On January 14, 1980, CMSN, EAC and ASC signed a general agreement to
establish the original company in Shekou, Shenzhen in the form of joint venture. On
13
Oct.10, the above joint venture of the three foreign investors opened upon approval of
Shenzhen Municipal Government under document No. [1983] 393 with the registered
capital of US$ 3,000,000. ASC, after signing the general agreement, assigned all of its
equities to EAC.
2. On September 17, 1987, China Ocean Shipping (Group) Company was made a new
shareholder of the original company and the shareholder CMSN was modified to
China Merchants Group upon approval of Shenzhen Municipal Government under
document No. [1987]92 .The registered capital remained US$ 3,000,000, among
which China Ocean Shipping (Group) Company held 45%, China Merchants Group
held 45% and EAC held 10%. So far, the original company officially registered as a
Sino-foreign joint venture enterprise.
3. On August 13, 1988, the original company raised paid-up capital to US$ 4 million,
upon approval of Shenzhen Municipal Government under document No.[1988] 123.
Three shareholders maintained the same proportion of shares. On June 11, 1990, the
original company raised paid-up capital to US$ 10 million, upon approval of
Shenzhen Municipal Government under document No.[1990] 91. Three shareholders
maintained the same proportion of shares
4. Joint-stock venture reform
On May 7, 1992, upon approval of Shenzhen Municipal Government economic
restructuring office under document No. [1992]7, China Ocean Shipping (Group)
Company, China Merchants Group and EAC launched the joint-stock restructure of
the original company.
In December 1992, upon the approval of Shenzhen Municipal Government economic
restructuring office under document No. [1992]1736 and Shenzhen Special Economic
Zone branch, BOC under document no.(1992)261, the three institutional shareholders
of the original company worked as sponsors to restructure the original company to
joint stock company with directional collection. Upon completion of the directional
collection, total capital stock of the company was 64 million shares with 1 RMB per
share, and the stock net assets was evaluated as 58.24 million shares, which were held
by three institutional shareholders in a certain proportion. Among them, China Ocean
14
Shipping (Group) Company held 40.95% of the total l capital stock, China Merchants
Group held 40.95%, EAC held 9.1% and the CIMC staff held 5.76 million shares
which was 9% of the total capital stock.
5. On September 22, 1993, the Board of the company made the resolution to
restructure the company to public company. On Dec.31st, 1993, upon the approval of
Shenzhen Municipal Government under document NO. [1993]925 (Approval on
CIMC restructured to public company), the company conducted restructuring of
standardized public company.
6. On January 17, 1994, upon the approval of Shenzhen Municipal Securities
Regulation office under document [1994]22 ,the company made a public offering of
12,000,000 A stock to the public and an offering of 13,000,000 B stock to foreign
investors. Upon completion of the offering, the total capital stock of the company
reached 89,000,000 shares.
7. On June 28, 1995, upon the approval of Shenzhen Municipal Securities Regulation
office under document [1995]46 ,the company implemented the 1994 annual dividend
distribution scheme, in which one can get 4 bonus shares and 4 yuan of cash for every
10 shares held, upon the dividend distribution, the total capital stock raised to 124.6
million shares.
8. On August 25, 1995, the Shenzhen Municipal Administrative Bureau for Industry
and Commerce approved in notification that the company to be renamed as ―中国国
际 海 运 集 装 箱 （ 集 团 ） 股 份 有 限 公 司 ‖with English name of CHINA
INTERNATIONAL MARINE CONTAINERS（GROUP）CO.，LTD.
9. On April 3, 1996, upon the approval of Shenzhen Municipal Securities Regulation
office under document [1996]10, the company issued 30,000,000 new B stock, which
were listed for trading on SZSE on Apr.23rd,1996.Upon completion of this issue, the
total capital stock of the company reached 154.6 million shares.
10. On May 24, 1996, upon the approval of Shenzhen Municipal Securities
Regulation office under document [1996]17, the company implemented the 1995
annual dividend distribution scheme, in which one can get 3 bonus shares and 3
yuan of cash for every 10 shares held, upon the dividend distribution, the total capital
15
stock raised to 200.98 million shares.
11. On December 30, 1996, upon the approval of Shenzhen Municipal Securities
Regulation office under document [1996]106, China Merchants Group transferred all
shares of the company it held, 47,698,560 shares in total, to its wholly-owned
subsidiary China Merchants Container Services Co., Ltd.
12. On June 3, 1997, upon the approval of Shenzhen Municipal Securities Regulation
office under document [1997]45 ,the company implemented the 1996 annual dividend
distribution scheme, in which one can get 3 bonus shares and1 yuan of cash for every
10 shares held, upon the dividend distribution, the total capital stock raised to 261.274
million shares.
13. In October 1997, with the approval of the Securities Committee of the State
Council under document NO. [1997]62, the company made a new issue of
480,000,000 shares of B Stock. Upon completion of the issue, total capital stock of
the company reached 3,092,740,000 shares with ING Bank subscribed for all
480,000,000 new shares of B Stock. After issuing, the stock ING Bank held was
15.52％ of the total capital stock of the company by then, and such B Stock was held
through HG ASIALIMITED—CLIENT.
14. On June 29, 1998, upon the approval of Shenzhen Municipal Securities
Regulation office under document [1998]34 ,the company implemented the 1995
annual profit distribution scheme, in which one can get 1 bonus share and3 yuan of
cash for every 10 shares held, upon the profit distribution, the total capital stock raised
to340,201,398 shares.
15. On December 18, 1998, wholly-owned subsidiary of China Ocean Shipping
(Group) Company, China Ocean Shipping (Group) Company Hong Kong’s
wholly-owned subsidiary LON GHONOUR purchased 26.4 million B-share of the
company held by ING Bank through SZSE, it was 7.76% of the company’s issued
stock. Until then, the stock of the company directly and indirectly held by China
Ocean Shipping (Group) Company has increased to 94,608,940 shares, which was
27.81% of the issued stock.
On December 18, 1998, wholly-owned subsidiary of China Merchants Group, FAIR
16
OAKS DEVELOPMENT LIMITED purchased 26.4 million B-share of the company
held by ING Bank through SZSE, it was 7.76% of the company’s issued stock. In
addition, China Merchants Group already held 20.05% of the issued stock through
China Merchants Container Services Co., Ltd. Until then, the stock of the company
indirectly held by China Merchants Group amounted to 94,608,940 shares, which was
27.81% of the issued stock.
16. On May 31, 2002, with the approval of shareholders meeting, the company
implemented the 2001 annual profit distribution scheme, in which one can get 5 bonus
shares and 5 yuan of cash for every 10 shares held, upon the profit distribution, the
total capital stock raised to 510,302,096 shares.
17. On November 20, 2003, with the approval of CSRC under document No.
[2003]121, the company made a new public issue of 120,000,000 shares A Stock to
investors, upon this issuing, the total capital stock of the company raised to
630,302,096 shares
18. On May 26, 2004, with the resolution of shareholders meeting, there’s an increase
of share capital at the proportion of increasing 6 shares for every 10 shares, upon the
increasing, the total capital stock rose to1,008,483,353 shares.
19. On August 9, 2004, China Ocean Shipping (Group) Company signed equity
transfer agreement with COSCO to transfer the 163,701,456 shares of non-circulating
state-owned stock to COSCO at the transfer price of 1,056,383.927.00 Yuan. The
transfer formalities of this equity transfer were handled in CSDCC Shenzhen Branch
on December 31, 2004.
20. On March 3, 2012, its unlisted foreign capital shares, totally 200,079,557 shares,
were listed and circulated in Shenzhen Stock Exchange B-share market. This share
changing matter was approved on July 25th, 2003 in SZERP [2003] No. 444
by the Ministry of Commerce of China. One year later since Dec 5th, 2003, the
shareholders, China Merchants Container Industry Company Limited and Profit
Crown Assets Limited, listed and turned their unlisted nonnegotiable foreign legal
shares, 102,313,410 and 22,736,313 respectively, into domestic listed foreign capital
shares (B-share). This was approved by China’s Securities Regulatory Commission in
17
ZJGSZI (2003) No.51.
21. On April 25, 2005, as agreed in the shareholders’ meeting, every ten shares were
doubled to increase the capital stock, which was increased to 2,016,966,706 shares.
22. In 2005, the shareholders, China Merchants Container Industry Company Limited
and Profit Crown Assets Limited ( both are fully-owned subsidiaries of China
Merchants Int’l Co., Ltd), changed their company names. The former is changed to
China Merchants (CIMC) Investment Limited while the latter is changed to China
Merchants (CIMC) Holdings Limited.
23. On March 31, 2006, the company’s split share reform scheme was approved by
the Property Right Bureau of the State Owned Assets Supervision and Administration
Commission in document CQH [2006] No.15. On April 4, 2006, CIMC announced its
Split Share Reform Instruction. On April 28th, CIMC held an reformed A share
negotiable shareholders’ meeting, which discussed and approved the Split Share
Reform Scheme of CIMC. On May 22, 2006, CIMC issued the Split Share Reform
Implementation Announcement, which stated that all negotiable A share holders
would be granted with 7 Bermuda Style Put Warrants for every 10 negotiable A-share.
On May 24th, 2006, the A share resumed trading and the consideration shares paid by
the innegotiable shareholders to negotiable shareholders were circulated in the
market.
24. On July 20, 2006, as agreed in the shareholder’s meeting, the capital stock was
increased by one share for every ten shares. After conversion, CIMC’s total capital
stock was increased to 2,218,663,376 shares.
25. On June 1, 2007, as agreed in the shareholder’s meeting, the capital stock was
increased by two shares for every ten shares. After conversion, CIMC’s total capital
stock was increased to 2,662,396,051shares.
26. From December 10, 2007 to March 6, 2008, COSCO purchased 113,067,401
B-share from CIMI, which takes up 4.25% of the total issued capital stock. Together
with the 432,171,843 A-share held by COSCO Pacific Limited and its subsidiaries
(16.23% of the total issued capital stock), the share of COSO Pacific Limited and its
subsidiaries in CIMC has increased to around 20.48%.
18
27. On September 17, 2010, CIMC’s first temporary shareholder’s meeting of 2010
discussed and approved the CIMC Stock Option Incentive Plan, which granted the
incentive parties 60 million share options, every share option is valid to buy a CIMC’s
A share in its exercising period at the exercise date under exercise conditions. The
correspondent share quantity is 60 million, taking up 2.25% of CIMC’s total capital
stock (266,239.60 million shares). The stocks in this incentive plan are from the 60
million shares issued by CIMC to its incentive parties, with the validity time of ten
years, counting from the first share options granting date (September 28, 2010). Two
years after the granting date, the granted share options, if satisfied the exercising
conditions, can be exercised by the holders in two periods. The first period is from the
first trading date of the 25th month to the last trading date of the 48th month from the
granting date, which can exercise no more than 25% of the total granted share options.
The second period is from the first trading date of the 48th month to the last trading
date of the exercising period, which can exercise no more than 75% of the total share
options. Till now this share options incentive plan has not entered its exercising
period.
(II) The controlling power changing condition for the latest three years
There is no controlling shareholder in CIMC. In the late three years, the two major
shareholders, China Merchants Int’l and COSCO, that hold over 10% shares stay
unchanged.
(III) Top Ten Shareholders
By June 30th, 2012, the top ten shareholders of CIMC are as follows:
Shareholdi Number of Stock capital Shareho
No.
Shareholders name ng ratio holdings (shares) property lder
type
1 Foreign
China Merchant Int’l (CIMC) Investment Co., Ltd. 25.54% 679,927,917 Negotiable B capital
share
2 Negotiable A
COSCO Container Industry Co. Ltd. (Note1) 16.23% 432,171,843 share Foreign
capital
3 COSCO Container Industries Limited 5.57% 148,320,037 Negotiable B Foreign
19
share capital
4 Foreign
CMBLSA RE FTIF TEMPLETON ASIAN GRW FD
3.42% 91,120,810 Negotiable B capital
GTI 5496
share
5 Negotiable B Foreign
LONG HONOUR INVESTMENTS LIMITED 0.95% 25,322,106
share capital
6 Negotiable B
GUOTAI JUNAN SECURITIES (HONGKONG)
0.91% 24,329,264.00 share Foreign
LIMITED
capital
7 New China Life Insurance Holding Co., Ltd – 0.9% 23,916,943.00 Negotiable A Others
dividend-personal dividend- FH002 share
8 China Construction Bank-uaxia Advantage Growth others
Equity Securities Investment Fund 0.7% 18,769,117.00 Negotiable A
share
9 Bank of China- Yifangda SZ 100 open trading index
securities investment fund 0.55% 14,734,716.00 Negotiable A Others
share
10 TEMPLETON EMERGING MARKETS Negotiable B
INVESTMENT TRUST 0.48% 12,801,432.00 share Foreign
capital
11 BBH A/C VANGUARD EMERGING MARKETS
STOCK INDEX FUND 0.44% 11,839,498.00 Negotiable B Foreign
share capital
Total 55.69% 1,483,253,683 - -
Note 1: 中远集装箱工业有限公司 refers to COSCO Container Industries Limited. As there are
two types of shares, A share and B share, so the shareholders names as listed in Chinese and
English are same as the following ones.
Among which, the shares of the top ten shareholders are not in pledge or frozen.
III. Main Business Overview and Main Data Info
(I) Main business overview
Our group mainly focuses on the manufacturing and supply of modern transportation
equipment, energy, food, chemical and oceaneering facilities, including the designing,
manufacturing and service of international standard dry cargo containers, refrigerated
containers, specific purpose containers, tank containers, container wood flooring,
module container houses, tank trucks, gas equipment and static storage tank,
transportation vehicles and oceaneering facilities. Besides, we engage in
manufacturing and supplying of logistics facilities, airport and port equipments,
20
railway truck, real estate development, and financial business, aiming at providing
high quality safe products and systematic technical solutions to customers by focusing
on relevant business while expanding the application area.
Containers: Enjoying a leading position in the industry, CIMC can produce a whole
series of container products with completely owned intellectual property rights. The
products and service include ISO dry cargo containers, ISO refrigerate containers,
special purpose refrigerate containers, other special purpose containers, pallet
containers, module container houses as well as container wood flooring and container
service. The annual capacity is over 2 million TEU. We have expanded to 18
container manufacturing industrial areas around South China, East China, North
China and Chongqing, including over 10 dry cargo container bases in the coastal area
and Chongqing, refrigerate containers manufacturing bases in Shanghai, Yangzhou
and Qingdao, and special purpose containers manufacturing base in Nantong,
Yangzhou, Xinhui, Qingdao. Container wood flooring is made in several production
bases located in Shenzhen, Jiangmen, Xuzhou, Jiashan, etc. The container yard
business has operated with many container service companies, forming a service
network covering all main coastal ports of China.
Road transport vehicles industry: CIMC has more than 1000 lines of products in 11
series, which including container chassis, flatbed trailer, bulk lorry, tanker,
self-dumper, reefer trailer, van, curtain side trailer, mixer, pump truck, car carrier
vehicle, fire engine, sanitation vehicle, etc. With over 200 thousand units of annual
output capacity, CIMC has taken the leading position at home and broad. At present,
the Group has established 22 production bases, 24 4S stores and more than 400
service stations throughout North America, Thailand, Mid-China, East China, South
China, North China, Northwest China and Northeast China. With renowned
production in US and Japan markets, it has formed the industrial layout with
reasonable distribution and mutual support in Sino-US interaction and Sino-Europe
interaction. In 2010, CIMC heavy duty truck project was officially put into
production.
Energy, chemical and food equipment: its main products and services, in this area,
21
include storage tank, transportation tank, processing equipment and project EPC
services.
The main product categories are as follows:
(1) Storage tank, including LNG and industrial gas cryogenic storage fixed tanks,
liquid food stainless steel tanks and chemical storage tanks, etc.;
(2) Transportation tank, including international-standard/special liquid tank container
and gas tank container, LPG tank truck, LNG and industrial gas cryogenic tank truck
with storage tank, CNG trailer and CNG High pressure bottle-type pressure vessel;
(3) Processing equipment, including food and beverage fermentation tank, bright
beer tank, etc., as well as chemical reaction axe, columns, heat exchanger, gasifier and
so on;
(4) EPC technical services, including liquid food (beer, fruit juice, etc.) processing,
distribution of EPC project, LNG city Diaofeng satellite station, LNG gasification
station, LNG automobile gas-filling station, LNG cylinders gas supply station, LNG
vehicle system modification and every kinds of LNG application projects and
industrial gas application projects. In addition, it includes CNG, LNG gas-filling
system, natural gas compressor and special compressor. In large-scale LNG receiving
station, LPG and the domain in storage as well as processing station of other
petroleum gas provides some technical engineering services like EP+CS (design,
purchase and build supervisor) for our clients;
At present, the energy, chemical and food equipment unit has 15 manufacturing bases
and R&D centers across China and Europe, shaping an industrial layout with
reasonable distribution and mutual support in Sino-Europe interaction.
Up to now, the main holding enterprises of CIMC include CIMC Enric Holdings
Limited and TGE GAS ENGINEERING GmbH. The latter one is a German
independent contractor with over 26 years of experience in EPC of cryogenic storage
facilities and terminals for liquefied gases. The Enric business bases are located at
some cities in China, such as Langfang, Shijiazhuang, Bengbu, Jingmen, Beijing,
Nantong and Zhangjiagang, as well as the Netherlands, Belgium and Denmark in
Europe. Particularly, Nantong CIMC Tank Equipment Co., Ltd. has become the
22
world’s largest manufacturer for tank containers providing the most wide-ranging
products.
Offshore engineering equipment industry: The offshore manufacturing bases are
currently located at Yantai, Haiyang, and Longkou (cities in Shandong province). In
January, 2010, CIMC became the controlling shareholder of Yantai Raffles Shipyard
Limited which founded in Singapore in 1994. The Raffles Shipyard is a leading
offshore and marine fabrication specialist in oil and natural gas market. It specializes
in the jack-up drilling, semi-submersible drilling platform, heavy lift vessel, pipe
laying vessel, FPSO, FSO, offshore tender vessel, offshore steel structure, shuttle
propelled tug, luxury yacht, etc. It is equipped with the Yantai Ocean Engineering
Research Institute and Shanghai CIMC offshore research center. In addition, the State
Energy and Offshore Drilling Platform R&D Centre settled in CIMC, which make
CIMC an important member in the State offshore industry.
The airport equipment manufacturing bases are located in Shenzhen and Beijing.
The Group's airports and relative equipment business involves the development,
design, manufacture, installation and maintenance services of passenger boarding
bridges, boarding bridges, aircraft parking bays booting system, aviation specialty
vehicles, airport shuttle bus, air cargo handling systems, automated storage and
logistics systems, automated parking system, etc. The Group's subsidiary, Shenzhen
CIMC Airport Equipment Co., Ltd. (hereinafter referred to as "CIMC Tianda ") is one
of the world's leading suppliers of airport ground equipments.
Other businesses: The logistics equipment manufacturing bases are located in Dalian
and Tianjin; the railway equipment manufacturing base is in Dalian; the financial
business is in Shenzhen; the real estate development business are mainly in Shanghai,
Yangzhou, Zhenjiang, Guangdong Jiangmen, etc.
(II) Major accounting data and financial indicators
The accounting data and financial indicators of the company for recent 3 years
(consolidated statements) are as follows:
Unit: 0,000 yuan
Project Year 2011 Year 2010 Year 2009
23
Total assets 6,436,171.4 5,413,064.9 3,735,838.3
Owners' equity attributable to shareholders of listed companies 1,863,315.4 1,622,305.7 1,419,820.8
6,412,505.3 5,176,831.6 2,047,550.7
Total revenue
Total profit 502,270.6 367,460.7 146,538.5
Net profit attributable to shareholders of listed companies 369,092.6 300,185.1 95,896.7
Note: The above data is from the Company's annual report from 2009 to 2011
IV. Major shareholders
There is no controlling shareholder in the company. China Merchants Holdings
(CIMC) Investment Co., Ltd. and COSCO Container Industries Limited are two
shareholders holding more than 5% shares. Other shareholders are taking less than
5%.
Registered Ownership Business
Name of the shareholder share-holding rate Date of establishment
capital structure Scope
China
Merchants
Holdings Investment,
China Merchants Holdings 25.54% January 17, 1995 HK$10,000
(International) holding
Co., Ltd. is
wholly owned
COSCO
Pacific
COSCO 21.8% April 26, 2004 US$1 Investment,
Limited is
holding
wholly owned
(I) China Merchants Holdings is a wholly owned subsidiary of China Merchants
Holdings (International) Limited. China Merchants Group Limited holds 55.14% of
the shares of China Merchants Holdings (International) Limited. China Merchants
Holdings (International) holds a 25.54% stake in the Company.
(II) COSCO, a limited liability company established in the British Virgin Islands
(British Virgin Islands), is a wholly-owned subsidiary of COSCO Pacific Limited.
COSCO Pacific investment holding Co., LTD, a wholly-owned subsidiary of China
ocean holdings Co., LTD, holds a 42.96% stake in COSCO Pacific Limited. While,
China Ocean shipping (group) corp. holds a 52.80% stake of China ocean holdings
Co., LTD. COSCO holds a 21.80% stake in the Company. Long Honour is a
wholly-owned subsidiary of COSCO (Hong Kong) Group Co., Ltd., holding 0.95% of
the shares.
(III) Until December 31, 2011, the property rights and control relationship between
the main shareholders and the company is as shown below:
24
100% 100%
State-owned Assets Supervision and
Administration Commission in the State
Council
China Ocean Shipping (Group) China Merchants Group Limited
Corporation 100%
52.80%
China Ocean Holdings Co., LTD. 55.14%
100% COSCO (Hong Kong) Group Co., Ltd.
COSCO Pacific Investment Holding China Merchants Holdings
Co., LTD (International) Co. , Ltd.
42.96% 100%
COSCO Pacific Limited 100%
100% Long Honour Investment Limited
COSCO Container Industries Limited
China Merchants Holdings
0.95%
(International) Investment Co.,
Ltd.(CIMC)
21.8% 25.54%
CIMC Group
Chapter II Program Overview
I. Basic information about the program
CIMC intends to apply for conversion listing to The Stock Exchange Of Hong Kong
Limited for its 1,430,480,509 domestically listed shares by way of introduction and
traded on the main board listing. Later, these shares will change to overseas listed
foreign shares. CIMC will not issue new shares.
In order to fully protect the legitimate rights and interests of the investors, the
company will arrange the third party to offer cash option to all the B-share
shareholders, including China Merchants Holdings, COSCO and its affiliated
enterprises. Long Honour commits to give up exercising cash option. B shareholders,
intending to exercise the cash option, can exercise the right through prescribed
manners and procedures during the reporting period identified in the CIMC. For those
B shareholders who are with effective declaration and agree to the purchase price, a
25
requirement for selling the stock should be submitted to the arranged third-party. After
the company officially listed to the Stock Exchange of Hong Kong Limited, the
third-party will pay the cash consideration to the B shareholders.
In this program, B-share investors, holding the CIMC B-share, may choose to
exercise the cash option before the listing to the Stock Exchange of Hong Kong
Limited and transfer all or part of their B-share to the arranged third-party; or choose
to continually hold the shares and retain the stock after being listed to the Stock
Exchange of Hong Kong Limited.
After the implementation cash option program, all the shares of the B-share
shareholders will be authorized to Guotai Junan Securities, which will opened H share
accounts as the name holder on Guotai Junan (Hong Kong) (the account used only for
investors to apply for agency trading, registration and settlement). Guotai Junan
Securities will handle the H shares and the related matters for the company. (More
announcements will be issued to disclose the specific operation rules and the powers
and duties of stakeholders.)
Foreign investors with complete information can apply for the opening of independent
H-share accounts after the listing of H shares by Guotai Junan Hong Kong or other
overseas securities companies.
In the future, the trading operation modes of the shareholders in the trading systems of
domestic securities companies remain unchanged apart from the changing of Stock
trading code. But by the relevant laws and regulations, the rights of holders are
limited, and can only hold or sell the stocks. The changed Stock trading code will be
in Prior announcement.
II. Background analysis of the program
1. The B-share are not active
The total capitalization of the company is 2,662,396,051 shares, with 1,231,915,542
A-share and 1,430,480,509 B-share. Although the issue turnover of B-share in the
company is more than that of A-share, B-share have been in the extremely inactive
state, and its volume of transaction, turnover, turnover rate and other indicators are
much lower than those of the A-share. Applying the transaction data of suspension
26
dates during January 1 to July 13, 2012 for example, as shown in the table below:
Trading Stock
Volume in the Stock turnover in the turnover in
Abbreviation Turnover in the Period
Period Period the Period
of the stock （0,000 yuan）
（0,000 (%) Per day
Shares） (%)
CIMC B 21,814 187,440 15.25 0.12
CIMC 157,894 2,306,369 128.21 1.03
Rate of
B-share in
A-share 13.82% 8.13% 11.89% 11.65%
(Data source: wind information)
The shares in circulation in the market are not active in transaction, which will
directly lead to the abnormal play of the appraisement function and resource-orienting
function of the market.
2. The circulation of the company's shares in Hong Kong will help promote the
company's internationalization
The clients of the corporate are wildly spread in the world. Trading in Hong Kong,
after the implementation of this program, will enhance the popularity of the company,
strengthen the company's expansion of international business, construction and
improve the company's domestic and overseas marketing network, service system and
support system, thereby accelerate the process of internationalization of the company;
at the same time, the overseas capital markets can provide the company broader
financing platform and value realization platform, which will promote the foreign
capital operation, make fully use of overseas capital resources and market to further
enhance the core competitiveness, and promote industrial structure development to a
high-class direction.
III. Equity protection mechanisms within this program
1. Voting in the general meeting of shareholders
(1) The special resolution of general meeting of shareholders is required, with the
agreement of more than two-thirds of the B-share shareholders who are with the
voting rights.
According to Company Law and The Articles of Association, this program belongs to
the special situation of ―having a significant impact on the company, need a special
27
resolution‖. Therefore, when a general meeting of shareholders is held to consider the
related matters of this program, a special resolution should be voted by the
shareholders.
Since the program involves the change of B shareholders’ right, in order to protect the
rights of B-share shareholders, apart from the normal procedures of the general
meeting of shareholders, the special resolution should pass with more than two-thirds
votes of B shareholders, attending the general meeting, with voting rights.
The company will separately count the votes of both the shareholders and B
shareholders. Before the implementation of this program, more than two-thirds of the
votes of all shareholders and B shareholders with voting rights, attending the general
meeting, are required.
(2) On-site voting and Internet voting combined
General meeting of shareholders convenes a combination of on-site voting and
Internet voting. General meeting of shareholders accepts Internet voting. By Shenzhen
shareholders' meeting network voting system, the company offers the voting platform
for all the shareholders in the network form. The shareholders may exercise voting
rights by the system within the on-line voting time. Notice of general meeting of
shareholders will demonstrate the voting procedure for shareholders to vote on line.
(3) Use of independent directors voting rights collecting mechanisms
In order to enhance the participation of minority shareholders in voting, the general
meeting of shareholders will apply independent directors voting rights collecting
mechanisms.
2. Cash option
In order to fully protect the legitimate rights and interests of CIMC B shareholders,
the company provides the cash option for all the CIMC B shareholders by arranging
the third parties to cash in the shares. B shareholders, with the cash option, registered
on the date of record can partially or fully exercise the cash option, except in the
following circumstances: (1) restricted shares held by the directors, supervisors and
senior management; (2) waive the cash option by its lawful holder.
China Merchants Holdings (International), COSCO and its affiliated enterprises Long
28
Honour had issued by a commitment to renounce to give up exercising the cash
option.
(1) Implementation method
CIMC B shareholders, applying the specified methods and procedures, have the right,
during the reporting period, to exercise the cash option after this program being
passed on the shareholders meeting. For those B shareholders who are with effective
declaration and agree to the purchase price, a requirement for selling the stock should
be submitted to the arranged third-party. After the company officially listed to The
Stock Exchange of Hong Kong Limited, the third-party will pay the cash
consideration to the B shareholders.
(2) Executive Price
CIMC B shareholder, who exercises the cash options, can obtain HK $9.828/ share on
the basis of a premium of 5% determined by the closing price HK $9.36/share in
respect of effective declaration of each share of CIMC shares on the implementation
day of the cash options. The closing price is the price of the day before the suspension
of the class B-share (July 13, 2012) and it is paid by the provider of the cash options.
If the shares have the ex-right, ex-dividend or other mattes between the announcement
day of the decision of the board and the implementation day of the cash option rights
of the CIMC B shareholders, the price of the cash options also adjusted accordingly.
(3) The Currency for Authority
The currency being selected in the cash option in this program is the Hong Kong
dollar.
(4) Relevant information disclosure
All the detailed arrangement of the cash option in CIMC (including but not limited
only in the declaration of cash option, the date for implementation, the declaration,
application, registration and clearing of cash option) will be disclosed in accordance
with the laws, regulations and also provisions of Shenzhen Stock Exchange.
If the program has failed to obtain approval of the relevant parties, which cause that
the program ultimately cannot be implemented, and the B-share shareholders of
CIMC shall not exercise the cash option.
29
IV. Disposal of inactive accounts
For inactive accounts, not involved in the declaration of the cash option in the set of
B-share investors to convert B-share will be held in the set in the program through all
the approval process and begin implementation of the listing to the Hong Kong Stock
Exchange and listed for trading by introduction.
V. Decision-making process of the program
(I) The program has been authorized and approved
On August 14, 2012, the company held a 13th meeting of the 6th Board of Directors
considered and adopted the program and relevant matters.
（II）Authorization and approval that still need to obtain for this program
1. The Extraordinary Shareholder Meeting examined this motion, and at the same
time more than two-thirds of the voting rights of the shareholders and the B-share
held by shareholders attending the general meeting of shareholders need to agree to;
2. B-share, as shares of stock, applies to list in The Stock Exchange Of Hong Kong
Limited by way of introduction and is traded on matters submitted the relevant
documents to the China Securities Regulatory Commission and obtain approval;
3. B-share, as shares of stock, applies to list in The Stock Exchange Of Hong Kong
Limited by way of introduction and is traded on matters submitted the relevant
documents to the China Securities Regulatory Commission and obtain approval;
4. Reviewing and approval by other government departments and agencies (if
required)
VI. Company’s structure changes before and after the implementation of the
program
The implementation of the program before and after comparison of the company's
capital structure as shown in the following table:
Before implementation of program After implementation of program
Number of The Number of The
shares (0,000 proportion of shares (0,000 proportion of
shares) total share shares) total share
A-share 123,191.55 46.27% A- share 123,191.55 46.27%
Include
30
COSCO 43,217.18 16.23% COSCO 43,217.18 16.23%
Public
79,974.37 30.04% Public shareholders 79,974.37 30.04%
shareholders
B-share 143,048.05 53.73% H-share 143,048.05 53.73%
Include
China
Merchants China Merchants
Holdings 67,992.79 25.54% Holdings International 67,992.79 25.54%
International
COSCO 14,832.00 5.57% COSCO 14,832.00 5.57%
Long Honour 2,532.21 0.95% Long Honour 2,532.21 0.95%
The third parties of cash
Public
57,691.04 21.67% option and the other 57,691.04 21.67%
shareholders
public shareholders
Total 266,239.61 100.00% total 266,239.61 100.00%
31
Chapter III Compliance analysis of the program
(I) The relevant provisions of the program in line with the State Council on
domestically listed foreign shares (State Council Decree [No. 189]
According to the State Council on Domestically listed foreign shares, (State Council
Decree [No. 189]) (issued in 1995) Article 24 Domestically listed foreign shares
approved by the Securities Commission of the State Council, or its derived forms can
circulate outside the transfer referred to in the preceding paragraph derived form of a
stock, stock options and offshore deposit and share certificates.
Therefore, after being approved by the China Securities Regulatory Commission, the
company domestically listed foreign shares into the listing and complies with these
requirements in the Hong Kong Stock Exchange and is traded on.
(II) The company listed overseas for trading can apply to the China Securities
Regulatory Commission.
1. In accordance with the provisions of the Securities Act, to apply for shares listed for
trading to the stock exchange should submit the relevant shareholders' meeting
resolution ";
2. According to the China Securities Regulatory Commission on enterprises to apply
for overseas listing related issues notice "(the word of the SFC issued the relevant
provisions of [1999] No. 83)," to support Chinese enterprises to enter the international
capital markets, the future of state-owned enterprises, collective enterprises and other
forms of ownership enterprises by restructuring limited liability company, and in
accordance with the conditions of overseas listing, the overseas listing application
available to the China Securities Regulatory Commission on a voluntary basis.
Therefore, select the listing (including overseas listing), and other matters, the
General Meeting of Shareholders, the Company may apply to the China Securities
Regulatory Commission proposed overseas listing applications.
(III) The company may apply for a stock exchange listing to The Stock
Exchange of Hong Kong Limited in way of introduction
According to the Listing Rules of The Stock Exchange of Hong Kong Limited,
32
―introduction‖ is an application for listing of security already in issue where no
marketing arrangements are required because the securities for which listing is sought
are already of such an amount and so widely held that their adequate marketability
when listed can be assumed.
Introductions will normally be appropriate in the following circumstances:
―(1) Where the security for which listing is sought are already listed on another stock
exchange;
(2) Where the securities of an issuer are distributed in specie by a listed issuer to the
shareholders of that listed issuer or to the shareholders of another listed issuer; or
(3) Where a holding company is formed and its securities are issued in exchange for
those of one or more listed issuers. Any reorganization by way of scheme of
arrangement or by any other revenue whereby securities are issued by an overseas
issuer in exchange for the securities of one or more listed Hong Kong issuers and the
listing of the latter issuer or issuers is withdrawn at the same time as the securities of
the overseas issuer are listed must first be approved by a special resolution of the
shareholders of the listed Hong Kong issuer or issuers.
Meanwhile, the requirements of Listing Rules by The Stock Exchange of Hong Kong
Limited regard to the list of equity securities are as follows:
1. Financial requirements
A new applicant must have a trading record of not less than three financial years and
meet one of the following three financial criteria:
Profit test Market capitalization Marker capitalization /
/revenue test revenue / Cash flow test
Profit At least HK$50 million in the last
Attributable to 3 financial years (with profits of
Shareholders at least HK$30 million recorded
in the 2 years before that)
Market Cap At least HK$200 million at the At least HK$2 billion at At least HK$2 billion at
time of listing the time of listing the time of listing
Revenue At least HK$500 million At least HK$500 million
for the most recent audited for the most recent
financial year audited financial year
Cash flow Positive cashflow from
33
operating activities of at
least HK$100 million in
aggregate for the three
preceding financial
years
2. Suitability for listing
Both the issuer and it business must be suitable for listing in the opinion of the
Exchange.
An issuer or its group (other than an investment company) whose assets consist
wholly or substantially of cash or short dated securities will nor normally be regarded
as suitable for listing, except where the issuer or group is solely or mainly engaged in
the securities brokerage business.
3. Operating history and management
A new applicant must have been under substantially the same management and
ownership during the 3-year track record period. In practice, this revenue that the
company has had management continuity for at least the 3 preceding years; and
ownership continuity and control for at least the most recent audited financial year.
Exception: Under the market value/revenue test, the Stock Exchange of Hong Kong
Limited may accept a shorter trading record period under substantially the same
management if the new applicant can demonstrate that its directors and management
have sufficient and satisfactory experience of at least three years in the line of
business and industry of the new applicant and management continuity for the most
recent audited financial year.
4. Minimum market capitalization:
The expected market capitalization of a new application at the time of listing must be
at least HK$200 million.
5. Market capitalization of public float
The expected market capitalization at the time of listing of the securities of a new
applicant which are held by the public must be at least HK$50 million.
6. Public float
At least 25% of the issuer’s total issued share capital must at all times be held by the
34
public.
If the issuer has the one class of securities or more, the total securities of the issuer
held by the public at the time of listing must be at least 25% of the issuer’s total
issued share capital. However, the class of security for which listing is sought must
not be less than 15% of the issuer’s total issued share capital, having an excepted
market capitalization at the time of listing of not less than HK$50 million.
7. Spread of shareholders
The equity securities in the hands of the public should be held among at least 300
holders. Not more than 50% of the securities in public hands at the time of listing can
be beneficial owned by the three largest public shareholders.
Refer to Listing Rules of The Stock Exchange of Hong Kong Limited for the detailed
requirements, and the public can accesses to the websites: http://www.hkex.com.hk
Our company will implement this project under the circumstance that satisfies the
Listing Rules and requirements of Exchange Stock of Hong Kong and without
violation of the relevant laws.
Chapter IV Risk Factors of the Scheme
In assessing the scheme, investors should carefully consider following risk factors
besides other contents in the scheme and disclosed documents.
I. Unapproved risks
On August 14, 2012, the Company held 13th session of 6th board meeting. It
deliberated and approved the scheme and related matters. But the scheme still needs
to be authorized and approved.
1. Extraordinary general meeting would deliberate the scheme and acquire agreement
of all shareholders attending meeting and two thirds of shareholders who hold B
Stock.
2. The Company would apply for approval from China Securities Regulatory
Commission on the matters of main-board listing and trading of B Stock as stock
application.
35
3. The Company would apply for approval from The Stock Exchange of Hong Kong
Limited on the matters of main-board listing and trading of B Stock as stock
application.
4. It would be verified and approved by other government departments and
organizations (if necessary).
If the scheme could not acquire any approval above or any other authorization from
related government departments or organizations, the scheme would not come into
force henceforward.
II. Risks related to Cash Option
The scheme would provide cash option from the third party to all shareholders of B
Stock. The Company’s shareholders, Merchants International, COSCO and affiliated
enterprise Long Honour, promise to give up performing rights of cash option.
1. Reporting period of cash option in the scheme is from CIMC submits listing
application to The Stock Exchange of Hong Kong Limited to the stock is officially
listed and traded after public hearing. Detailed reporting period should be announced
separately.
Shareholders of CMIC B stock should report and apply during effective period. Any
other application of cash option is ineffective.
2. Shareholders with B stock who have submit effective application and agreed with
purchasing price could make requests to the third party for acquisition. However, if
the Company is not approved by The Stock Exchange of Hong Kong Limited for
listing, cash option scheme could not take into implementation.
3. If investors are not participating in applying for cash option or the application is
ineffective, the held shares would be transferred to listing exchange for main-board
listing and trading by introduction after going through all approval procedures.
III. Risks from different investment environment between B Shock and H Shock
B Shock and H Shock have different trading characters (including turnover and
negotiability) and investor foundation, including degree of participation of retail
investors and institutional investors. Due to the differences, prices of B Shock and H
Shock are not the same. The Company could not guarantee that price of H Stock
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could be higher or equal to price of B Stock before listing in the future. Meanwhile,
fluctuation of A Stock price would have influence on H Stock. Price of H Stock would
also have influence on A Stock.
IV. Uncontrollable risks of execution time
1. Implementation of the scheme is on condition of acquiring following
authorization or approval: deliberation in CIMC shareholders meeting (including
shareholders of B Stock), agreement by two thirds of all shareholders in general
meeting and shareholders of B Stock; verification and approval by China Securities
regulatory Commission, The Stock Exchange Of Hong Kong Limited and other
government departments and organizations(if necessary). Time schedule of execution
of above legal procedures would be uncertain.
2. The current domestic securities trading systems could not support inland residents
to hold and sell H Stock. Relative parties are trying to upgrade the trading system.
Time of upgrading would be uncertain.
In conclusion, scheme execution has uncontrollable risks.
V. Risks of inconvenient trading
After implementation of the scheme, for investors who conduct transactions by inland
securities company trading system, the trading operation mode would be the same
with B Stock in inland securities company trading system. However, changes in
trading stock codes could be inconvenient.
VI. Risks in increasing transaction costs
1. When the scheme is implemented, investors who conduct transactions by inland
securities company trading system should still pay commission charges to inland
securities companies and undertake all transaction costs for H Stock.
2. When the scheme is implemented, investors should also undertake special
transaction charges in H Stock market, including registration and transfer fees,
dividends collection fees, bonus shares collection fees, etc.
3. For investors who conduct transactions by inland securities company trading
system, all funds from selling stocks in Hong Kong would be summarized and
remitted back to inland by Guotai Junan Hong Kong. Then CSDCC would remit all
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funds to the settlement reserve account of the domestic securities companies. But,
fund remittance by Guotai Junan Hong Kong has trans-boundary commission charges.
Especially under the condition of very small transactions during the day, it would
cause relatively higher trans-boundary commission charges for each stock. All the
costs could be undertaken by investors who conduct transactions by inland securities
company trading system.
VII. Risks in differences of transaction time
When the scheme is implemented, for investors who conduct transactions by inland
securities company trading system in the future, its transaction time is different from
that of the investors opening overseas H stock account.
1. Transaction time of H Stock is 5.5 Hr/D, including 9:30- 12:00 AM and
13:00-16:00 PM. Transaction time of overseas stock is 4 Hr/D, including
9:30-11:30AM and 13:00-15:00 PM.
2. Different public holidays in inland and Hong Kong.
All the differences would result in non-equivalence for investors who conduct
transactions by inland securities company trading system and who conduct transaction
directly by overseas securities company trading system.
VIII. Risks of transaction system
1. After succeeding in main-board listing and trading in The Stock Exchange Of Hong
Kong Limited, when original B stock investors trade listing stocks in Hong Kong,
on condition of conforming with all suitable provisions of laws and regulations,
investors could use inland securities company transaction system or overseas
transaction system to trade in accordance with own status, situations and principle of
will.
2. Because the techniques of the scheme could involve several links of overseas
communication processing and technical services, possibility of network interruption,
server halt and software failure could exist. Due to direct or indirect losses from risks
of transaction discontinuing, delays, failure or selling stocks not on time caused by
techniques, The service provider will not bear any director or indirect loss caused
thereof.
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.
IX. Risks in limited transaction rights
In accordance with related laws and regulations, inland residents could not purchase
overseas stocks directly. After execution of the scheme, inland residents could only
hold or sell H Stock legally which changes listing exchange, but could not purchase
other H stocks or overseas stock. All funds from selling H stock of the Company
should be remitted to China.
Meanwhile, if overseas investors do not open account for H stock, but continue
conduct transactions through inland securities trading company instead of overseas
securities company trading system directly, they could legally hold or sell H stock of
the Company which changes listing exchange. All funds from selling H stock of the
Company should be remitted to China.
X. Risks of inactive accounts
For investors of CMIC B stock with inactive accounts or not participating in cash
option application, the holding B stock would be executed after going through all
approval procedures. Then it would transfer to The Stock Exchange Of Hong Kong
Limited for main-board listing and trading by introduction.
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Chapter V Precautions for Investors
For the matters of regarding B stock as inventory shares for main-board listing and
trading in The Stock Exchange of Hong Kong Limited by introduction and changes
related to preliminary B stock stakeholders, investors could conduct the inland trading
system or overseas trading system in accordance with own conditions, situation and
principle of free will.
I. Investors who hold or sell H stocks of the Company by inland securities
trading system could not purchase shares and their transaction rights are
limited.
In accordance with related laws and regulations, inland residents could not purchase
overseas stocks. After execution of the scheme, inland residents could hold or sell H
Stock legally which changes listing exchange, but could not purchase other H stocks
or overseas stock. All funds from selling H stock of the Company should be remitted
to China.
Meanwhile, after implementation of the plan, if any overseas investor hasn’t open an
H-share account directly in an overseas securities company and continue to trade
through the transaction system of domestic securities company but not that of
overseas securities company directly, he/she can only hold or sell his/her H-shares of
the Company legally held due to the Company changes the listing place of stocks; and
the relevant funds from selling the legal H-shares will be transfer to domestic in time.
II. Risks in differences of transaction time
When the scheme is implemented, for investors who conduct transactions by inland
securities trading system in the future, its transaction time and time of opening
overseas H stock account would be different.
1. Transaction time of H Stock is 5.5 Hr/D, including 9:30- 12:00 AM and
13:00-16:00 PM. Transaction time of overseas stock is 4 Hr/D, including
9:30-11:30AM and 13:00-15:00 PM.
2. Different public holidays in inland and Hong Kong.
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All the differences would result in non-equivalence for investors who conduct
transactions by inland securities trading system and who conduct transaction directly
by overseas securities trading system.
(1). Limited transaction time: for example, investors who conduct transactions
through overseas securities trading system could continue the trade at 11；40; but
investors who conduct transactions through inland securities trading system could not
continue the trade at that time. Or due to inland public holidays, investors who
conduct transactions through overseas securities trading system could not continue the
trade; but investors who conduct transactions through inland securities trading system
could continue the trade at that time.
(2) Delayed trade settlement and payment collection: when encountering public
holidays, trade settlement and payment collection would be delayed for investors who
conduct transactions through inland securities trading system.
III. Different transaction costs
Due to different markets, stock transaction costs are different. Contrasts of costs are as
follows:
(1) Contrast of general transaction costs
Item Rate of B Stock in Shenzhen Stock Rate of H Stock in The Stock
Exchange Exchange of Hong Kong Limited
Commissions Less than 0.3% of turnover amounts, more Commissions could be discussed
than transaction charges and impost, with broker’s agency. Refer to
starting from 5 HKD. Current Guotai Junan Hong Kong is 0.20%.
commissions are far less than 0.3%. Could be decreased to 0.1%.
Suppose Guotai Junan Hong Kong is
0.1%.
Brokerage of Security 0.301‰ 0.005%
Exchange (―Transaction
Charges‖ in Hong Kong)
Supervision Charges of 0.004% 0.003%
Security Exchange
(―Transaction Impost‖ in
Hong Kong)
Stamp Tax of Security Collect 1‰ of turnover amounts from Collect 0.1% of turnover amounts
Exchange transferor. from transferor and transferee.
Clearing Charges 0.05% 0.002%of each gross value in The
41
Stock Exchange Of Hong Kong
Limited. Lowest and highest
charges from seller and buyer are 2
Yuan and 100 Yuan.
Total 0.25% 0.21%
From the perspective of general transaction charges, transaction costs of H stock are
lower than B stock in Shenzhen Stock Exchange. Investors who would place orders
and entrustment through inland securities trading system should pay commissions to
inland securities compoanys’ agent. Other charges of brokerage, supervision fees,
stamp tax and clearing charges would not exist. It means that those investors should
undertake inland commissions and all transaction fees of H stock.
(2) Extraordinary expenditure of H stock
Item B Stock of H Stock of The Stock Exchange of Hong Kong Limited
Shenzhen
Stock
Exchange
Registration and transfer None 1.5 HKD for one
fees
Collection of dividends None 0.12% of cash dividends
Collection of bonus shares None 2 HKD for one. Lowest- 2 HKD; highest- 5,000 HKD
Hong Kong Clearing Company would charge registration and transfer fees of 1.5
HKD from broker’s agent until deadline of distributed dividends announced by listed
company. Base number of charges is between last and current deadline. Agent
Company holds the rate of increase of share numbers. Some agent company would
charge the fees during the period; others would charge more additional charges. The
charges are suitable for first interests right registration bought from secondary market.
Investors who conduct transactions through inland securities trading system could
only sell out. Thus the charges are not suitable for those investors. By any investors
who conduct transactions through overseas broker trading system would pay the
charges.
(3) Costs of odd lots caused by different transaction units
One stock is 100 of B Stock. Sold numbers have no lower limit. Any less than one
stock is odd lot. In market of B stock, odd lost could be sold by transaction system
directly and report for selling at one time.
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Minimum unit of shares in Hong Kong is one stock and each stock has no same
numbers. As usual, each transaction amount in Stock Exchange Company is more
than 2,000 HKD. Each listed company could determine the numbers in accordance
with each condition. Any less than one stock is odd lot. If investors decide to sell odd
lot, it could be sold to professional organizations at the price lower than market price.
Transfer charges are 85%-90% of market price. Price differences consist transaction
costs. Current minimum unit of B stock is 100. The minimum unit of H stock would
be different from preliminary B stock. Execution of the scheme would probably result
in odd lots for investors.
After public hearing in The Stock Exchange of Hong Kong Limited, it should
determine the share numbers marketed in Hong Kong and makes announcement to
investors. Investors could determine the numbers of odd lot.
If investors who conduct the transaction through inland securities trading system want
to sell H stock more than one stock, any odd lot could be dealt with Guotai Junan
Hong Kong at the prices of 10% of market price. If entrusted number is less than one
stock, Guotai Junan Hong Kong would guarantee the price at a discount of 10% of
market price.
(4) Tran-boundary transfer charges of foreign currency
For investors who conduct transactions by inland securities trading system, all funds
sold in Hong Kong would be summarized and remitted back to inland by Guotai
Junan Hong Kong. Then it would remit all funds to investors account by preliminary
clearing system of domestic securities company by entrusting China clearing company.
But, fund remittance by Guotai Junan Hong Kong has trans-boundary commission
charges. Especially under the condition of very small transactions in the day, it would
cause trans-boundary commission charges for each stock be higher. All the costs
could be undertaken by investors who conduct transactions by inland securities
trading system.
IV. Tax differences
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Current investors of CMIC B stock are mainly inland individual investors, overseas
individual, overseas organizations, etc. Donated taxes for related investors are mainly
income tax in bonus and dividends distribution. Tax rate is as follows:
Income tax in bonus and dividends Inland individuals Overseas Overseas organization
distribution individuals investors
Taxes of B Stock 10% 0% 10%
Taxes of H Stock 10% 0% 10%
1. Individual income tax
Foreign individual investors: according to Notice from Ministry of Finance and State
Bureau of Taxation of Several Issues of Individual Income Tax (No. CSZ[1994]020),
foreign individual who acquire bonuses and dividends from foreign invested
companies would free of individual income tax.
Inland individual investors: according to Notice from Ministry of Finance and State
Bureau of Taxation on Policies of Bonuses, Dividends and Individual Income Tax (No.
CS[2005]102), individual investors who acquire bonuses and dividends from listed
company would collect individual income tax of 50% of the whole income. Individual
income tax should be collected according to current tax law.
In conclusion, foreign individual investors would not donate individual income tax for
distributed B stock and H stock. However, inland individual investors should be
collected individual income tax at the rate of 10% for distributed B stock and H stock.
2. Business income tax
Foreign institutional investors: in accordance with provisions in Notice from State
Bureau of Taxation on Several Matters of Chinese Residents Withholding and
Remitting Business Income Tax to Foreign H Stock Non-resident Company
Shareholders (No.GSH[2008]897) and Reply of State Bureau of Taxation on Matters
of Withholding Business Income Tax from Non-resident Company Acquiring Bonus
Share of B Stock (No.GSH[2009]394), Chinese resident companies who public issue
and list stock in China should withhold business income tax at the rate of 10% when
distributing bonus after 2008 to non-resident company shareholders. Non-resident
company shareholders who would enjoy the treatment of tax convention should be
conducted in accordance with relevant provisions in taxation. Withholding taxes
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would be abated according to suitable double taxation treaty.
In conclusion, when foreign institutional investors acquire bonus of B stock and H
stock distributed from listed companies, listed companies should withhold income tax
at rate of 10%. Foreign institutional shareholders who would enjoy the treatment of
tax convention should be conducted in accordance with relevant provisions in taxation.
Withholding taxes would be abated according to suitable double taxation treaty.
If foreign individual investors hold bonus in the name of Guotai Junan securities
account, the bonus from CIMC would be withheld tax at the rate of 10% and residual
funds would be remitted to China.
If inland individual investors hold bonus in the name of Guotai Junan securities
account, the bonus from CIMC would be withheld tax at the rate of 10% and residual
funds would be remitted to China after withheld individual income tax at the rate of
10%.
Relevant taxes will be executed by the withholding obligor designated by relevant
laws.
V. Price limit
CMIC B stock adopts price limit at rate of 10%.
H stock has no price limit. All fluctuation in prices is depended on market.
VI. System differences of day trade
Day trade system of B stock is T+1, which means purchased stock on the day could
not be sold on the right day.
Day trade system of H stock is T+0, which means it could be purchases and sold on
one day without limits. For those stocks listed in short selling (such as large blue chip
stocks) could be sold first and then purchases. Investors who conduct transaction
through overseas trading system could conduct day trade according to regulations of
H stock.
For investors who conduct transaction through inland securities trading system, all
held shares could be continuing held or sold. Therefore, day trade does not exist.
VII. Differences in settlement system
T+3 settlement system of B stock, which means delivery on the fourth trading day
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after entrusted purchasing (including entrusted day) and official settlement for funds
and shares on fourth trading day after delivery to achieve delivery vs payment.
Beforehand, investors could not draw shares or deposit of purchased shares.
Settlement time of shares and funds in H stock T+2 settlement system is before 3:45
PM of the second working day after trading day. Before T+2, clients could not draw
cash, physical scrip or deposit purchased stocks. Investors who conduct transaction
through overseas trading system would make settlement and delivery according to H
stock regulations.
VIII. Minimum fluctuating price variance
Minimum fluctuating price of B stock is 0.01 HKD.
H stock has no uniform price. Minimum fluctuating price is different with different
price range of listed shares.
Unit: HKD
Range of security price Minimum fluctuating price
0.01-0.25 0.001
0.25-0.5 0.005
0.5-10 0.01
10-20 0.02
20-100 0.05
100-200 0.1
200-500 0.2
500-1000 0.5
1000-2000 1
2000-5000 2
5000-9995 5
IX. Call auction system differences of opening quotation
1. B stock Trading scheme of cal action in Shenzhen
At 9:20-9:25 AM and 14:57-15:00PM of each trading day, mainframe of Shenzhen
Stock Exchange does not receive revocation and application of auction. During other
time, unsettled declaration could be revoked. At 9:25- 9:30 PM of each trading day,
mainframe only receives declaration, but does not dispose any business declaration or
revocation.
Opening price of securities is produced by call auction. Any opening price that could
46
not be produced by call auction could be produced by continuous auction.
2. Trading scheme of opening quotation in stock market of Hong Kong
It includes four different periods before opening quotation (9:00-9:30):
Order input period (9:00-9:15): general at-action order could be input, changed or
cancelled. If it is to reduce stock number, waiting matching time and orders could not
be influenced. If it is to change appointed prices or increase stock numbers, original
waiting matching time would be absent.
Pre-order matching period (9:15-9:20): only at-auction order could be input. All
orders could not be changes or cancelled.
Order matching period (9:20-9:28): automatic matching of general at-auction order
should be done according to Section 517 (1) (a)1. During the period, any trade is
regarded as the one started before order matching period.
Pausing period (9:28-9:30): the system is static so that it could enter continuing
trading time. During pausing period, it could not input, change or cancel any orders.
X. Margin financing
In general, investors in B stock market could not open margin account. But in Hong
Kong shares market, it has become a mature and perfect transaction means. Investors
could select to open cash account or margin account. If investors open margin account,
it could be used to purchase stocks or apply for purchasing new stocks by financing.
In Hong Kong shares market, by using margin financing, investors just need to pay
part of the fund and apply for loaning from bank of deposit and Securities Company
to purchase stocks. Whether investors who conduct transactions through overseas
trading system could make margin financing should depend on related services
provided by overseas bank and entrusted securities companies.
Investors who conduct transactions through inland securities trading system could not
execute the margin financing.
The above are differences in transactions of H stock and B stock. If investors want to
know all detailed differences of B stock and H stock, please refer to our website.
Shenzhen Stock Exchange: http://www.szse.cn
The Stock Exchange of Hong Kong Limited: http://www.hkex.com.hk
47
XI. Situations of pledge and freezing for partial shareholders
It refers that, until August 8, 2012, except 5,852 of B Stock held by 3 inland residents
are freezing, other B stocks do not exist the situation of pledge and freezing.
Above shareholders and related obliges held B stock whose shares are freezing, or any
other shareholders whose shares are freezing before execution of cash option should
handle the shares in a timely manner (including exercising the cash option in a timely
manner.)
In conclusion, it is warned to above shareholders and related obliges to manage the
shares legally in time.
Chapter VI Other Important Particulars
I. Opinions of Independent Directors
For the scheme, independent directors of the Company think:
1. The scheme is made on the basis of necessity of circulation of B stock,
main-board listing and trading in The Stock Exchange Of Hong Kong Limited. The
scheme conforms to development strategies of the Company, whole interests of the
Company and shareholder and benefits the long-term development of the Company.
2. The scheme makes arrangements in protecting shareholders interests.
3. Voting procedure in board meeting is in conformity with relevant provisions of
laws, regulations, normative documents, articles of association and Rules of
Procedure in Board Meeting.
4. Independent directors agree with the whole arrangement of changing listing
exchange of B stock, main-board listing and trading in The Stock Exchange Of Hong
Kong Limited by introduction.
II. Financial Advisory Opinions
Financial consultant of the scheme, Guotai Junan Securities, thinks:
1. Transformation of listing exchange of foreign shares in China by CIMC and
main-board listing and trading by introduction in The Stock Exchange Of Hong Kong
48
Limited do not violate provisions of relevant laws and regulations.
2. Implementation of the scheme has benefits of solving inactivity of B stock trade
and promoting internationalization of the company to landing on foreign capital
market. It conforms to the company development strategies and whole interests of the
Company and shareholders.
III. Legal Opinions of Lawyers
Chinese legal adviser of the scheme, Lawyer Tong Shang, thinks:
According to the Company Law, the general meeting is the organ of authority for a
stock company, which performs its powers and duties according to laws. A general
meeting resolution can only be made when it is passed by over half of the voting
rights held by the shareholders attending the general meeting. But if the general
meeting is making a resolution on a few significant events, it can only be made when
it is passed by two thirds of the voting rights held by the shareholders attending the
general meeting. Our office believes that the project proposal does not violate the
Company Law, the Securities Act and other laws and regulations. It belongs to the
aforesaid significant event, so it still needs to be approved at the relevant board
session and the general meeting (including B-share holders) held by the Company
according to laws; for the general meeting, it needs to be approved by over two thirds
of the voting rights held by all shareholders and at the same time B-share holders
attending the general meeting. It also needs approval or consent from the China
Securities Regulatory Commission and other relevant official departments.
IV. Explanations of whether directors, supervisors, or senior managers in listed
company sell corporate stock
During the first six months beforedecisions, directors, supervisors, or senior managers
in company could neither sell nor purchase corporate stock. Any of them would not
solely or unite others for insider transactions or market manipulation.
49
