Circulars - Letter from the Board

RNS Number : 2783J
Air China Ld
02 April 2015
 



 

 

If  you  are  in  any  doubt  as  to  any  aspect  of  this  circular,  you  should  consult  a  stockbroker  or  other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

 

If you have sold or transferred all your shares of Air China Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 AIR CHINA LIMITED

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

 

 

 

(I) GENERAL MANDATE TO ISSUE SHARES

(II) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS (III) PROPOSED PAYMENT OF FINAL DIVIDENDS

(IV) PROPOSED APPOINTMENT OF DIRECTOR AND

NOTICE OF ANNUAL GENERAL MEETING

 

 

 

 

 

A letter from the Board is set out on pages 3 to 10 of this circular.

 

 

A notice convening the annual general meeting of the Company to be held at 2:00 p.m. on Friday, 22 May

2015  at  The  Conference  Room  One,  29/F,  Air  China  Building,  36  Xiaoyun  Road,  Chaoyang  District, Beijing, PRC, is set out on pages IV-1 to IV-4 of this circular. Whether or not you are able to attend the AGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for convening the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment should you so wish.

 

2 April 2015


 

 

 

Page

 

 

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1

 

 

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    3

 

 

Appendix I            -     2014 Work Report of the Board of Directors . . . . . . . . . . . . . . . . . . . .                  I-1

 

 

Appendix II           -     2014 Work Report of the Supervisory Committee . . . . . . . . . . . . . . . . .                II-1

 

 

Appendix III         -     2014 Duty Report of The Independent Non-Executive Directors . . . . . . .                  III-1

 

 

Appendix IV         -     Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .                IV-1


 

 

In this circular, the following expressions have the following meanings, unless the context requires otherwise:

 

"A Shares"            

ordinary shares in the share capital of the Company with a nominal value  of  RMB1.00  each,  which  are  subscribed  for  and  traded  in RMB on the Shanghai Stock Exchange

 

"AGM"

the 2014 annual general meeting of the Company to be held at 2:00 p.m.  on  Friday,  22  May  2015  at  The  Conference  Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC for the Shareholders to consider and approve the resolutions set out in the notice of the annual general meeting

 

"Articles of Association"

the articles of association of the Company

 

"Board"

the board of directors of the Company

 

"Cathay Pacific"

Cathay Pacific Airways Limited

 

"Company"

Air China Limited, a company incorporated in the PRC, whose H Shares are listed on the Stock Exchange as its primary listing venue and  on  the  Official  List  of  the  UK  Listing  Authority  as  its secondary listing venue, and whose A Shares are listed on the Shanghai Stock Exchange

 

"CSRC"

China Securities Regulatory Commission of the PRC

 

"Debt Financing Instruments"                

the  debt  financing  instruments  denominated  in  RMB  or  foreign currencies to be issued by the Company and/or its controlled or wholly-owned subsidiary in one or multiple tranches, including but not limited to corporate bonds, ultra-short-term commercial paper, short-term commercial paper, mid-term notes, domestic non-public targeted  debt  financing  instruments,  overseas  non-public  targeted debt financing instruments and overseas bonds/notes

 

"Director(s)"

the director(s) of the Company

 

"Group"

the Company and its subsidiaries

 

"H Shares"                                                

overseas listed foreign shares of RMB1.00 each in the share capital of the Company

"Hong Kong" or "HKSAR"

Hong Kong Special Administrative Region of the PRC

 

"Latest Practicable Date"                        

means 30 March 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

 

"Listing Rules"

The  Rules  Governing  the  Listing  of  Securities  on  The 

Stock Exchange of Hong Kong Limited

 

 

 

"PRC"

the People's Republic of China, excluding, for the purpose of this circular only, Hong Kong, Macau and Taiwan

 

"Shareholder(s)"

registered holder(s) of the shares of the Company

 

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

 

Supervisory Committee"

the supervisory committee of the Company

 

 

 

 

                                                                          

 

 

                                                                          

 

                                                                              

 


 

 

 

 

 

 

 

 

 

 

 

 

 AIR CHINA LIMITED

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

 

 


Directors:

Non-Executive Directors: Cai Jianjiang (Chairman) Wang Yinxiang

Cao Jianxiong

Feng Gang

John Robert Slosar

Sai Cheung Shiu, Ian

 

 

Executive Directors:

Song Zhiyong (President)

Fan Cheng

 

 

Independent Non-Executive Directors:

Fu Yang

Yang Yuzhong

Pan Xiaojiang

To Chi Keung, Simon


Registered Address:

Blue Sky Mansion

28 Tianzhu Road Airport Industrial Zone Shunyi District

Beijing, PRC

 

 

Principal Place of Business in Hong Kong:

5th Floor, CNAC House

12 Tung Fai Road

Hong Kong International Airport

Hong Kong

 

 

 

 

 

 

 

 

 

2 April 2015


 

 

To the Shareholders

 

 

Dear Sir or Madam,

 

 

(I) GENERAL MANDATE TO ISSUE SHARES

(II) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS (III) PROPOSED PAYMENT OF FINAL DIVIDENDS

(IV) PROPOSED APPOINTMENT OF DIRECTOR AND

NOTICE OF ANNUAL GENERAL MEETING


 

 

I.          INTRODUCTION

 

 

It is proposed that at the annual general meeting of the Company to be held on Friday, 22 May 2015, the notice of which is set out on pages IV-1 to IV-4 of this circular, resolutions will be proposed to, among others, (i) give general mandates to the Directors to issue shares and increase the registered capital of the Company; (ii) give a general mandate to the Directors to issue debt financing instruments; (iii) approve the proposed  payment  of  final  dividends  for  the  year  ended  31  December  2014;  and  (iv)  appoint  a  new independent non-executive Director.

 

II.         GENERAL MANDATE TO ISSUE SHARES

 

 

In order to ensure flexibility and to give discretion to the Directors in the event that it becomes desirable to issue any shares, a special resolution will be proposed at the AGM to give an unconditional general mandate to the Directors during the Relevant Period (as defined in the accompanying notice of the AGM), to separately or concurrently, allot, issue, and deal with additional A Shares and/or H Shares of the Company and to make or grant offers, agreements or options in respect thereof, with an aggregate nominal value of not exceeding 20% of the aggregate nominal amount of each of the existing A Shares and H Shares of the Company in issue as at the date of the relevant resolution to be proposed and passed at the AGM (the "Share Issue Mandate"). The Share Issue Mandate will lapse at the conclusion of the Relevant Period. The Company shall obtain the approval of the CSRC and other relevant authorities for any issue of new shares under the Share Issue Mandate.

 

The special resolution will also propose to give a conditional general mandate to the Directors to increase the registered capital of the Company to reflect the issuance of shares authorised under the Share Issue Mandate, and to make such appropriate and necessary amendments to the Articles of Association as they think fit to reflect such increase in the registered capital of the Company and to take any other action and complete any formality required to effect such increase of the registered capital of the Company.

 

III.       GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS

 

 

1.         Background

 

 

Given the general mandate to issue debt financing instruments granted by Shareholders at the last annual general meeting will lapse at the conclusion of the AGM, a special resolution will be proposed  at  the  AGM  to  grant  a  general  mandate  to  the  Directors  to  issue  the  Debt  Financing Instruments (the "Debt Financing Instrument Issue Mandate").


 

 

2.         Particulars of Debt Financing Instruments

 

 

Particulars regarding the proposed issuance of the Debt Financing Instruments are as follows:

 

(i)

Issuer:

the  Company  and/or  its  wholly-owned  or  controlled

 

 

 

(ii)

 

 

 

Placing arrangement:

subsidiary

 

 

no preferential placement to the Shareholders

(iii)

Issue size

the  total  balance  of  the  Debt  Financing  Instruments outstanding will fall within the requirements under relevant laws and regulations as well as those specified by regulatory authorities

 

(iv)

Term and type

not more than 15 years for one single-term instrument or a portfolio of instruments with various terms

 

(v)

Use of proceeds:

the proceeds to be raised from the issuance are intended to be used towards meeting the demand of the Company's operations, adjusting its debt structure, replenishing   its   working   capital   and/or   funding   its capital investments, among others

 

(vi)

Term   of   validity   of   the resolution:

from the date of the passing of the resolution at the AGM

to the date of the annual general meeting of the Company for the year ending 31 December 2015

 

 

 

 

 


 


 


 

If the Board and/or its authorised person have resolved to issue the Debt Financing Instruments within the term of the Debt Financing Instrument Issue Mandate and the Company has obtained the approval, permission or registration for the issuance from the relevant regulatory authorities within the same period, the Company may complete the issuance within the validity period of such approval, permission or registration.

 

3.         Authorisation to the Board

 

 

3.1       It is proposed to the Shareholders at the AGM to authorise the Board, generally and unconditionally, to deal with the following in accordance with the specific needs of the Company and market conditions:

 

(i)         to  determine  the  issuer,  issue  size,  type,  specific  instruments,  detailed  terms, conditions and other matters relating to the issuance (including, but not limited to,  the  issue  size,  principle  amount,  currency,  issue  price,  interest  rate  or mechanism  for  determining  the  interest  rate,  issue  place,  issue  timing,  term, whether or not to issue in multiple tranches and number of tranches, whether or not to set repurchase or redemption terms, credit rating, guarantee, repayment term, specific fund-raising arrangements within the scope approved at a general meeting, detailed placing arrangements, underwriting arrangements and all other matters relating to the issuance);

 

(ii)        to carry out all necessary and ancillary actions and procedures (including, but not limited to, select and engage intermediary institutions, handle all approval, registration and filing procedures with the relevant regulatory authorities in connection with the issuance on behalf of the Company, execute all necessary documents, select bonds trustee manager for the issuance, formulate rules for the bondholders' meeting and handle any other matters relating to the issuance and trading);

 

(iii)       to approve, confirm and ratify any action or procedure relating to the issuance as mentioned above already taken by the Company;

 

(iv)       to make adjustments to the specific proposals for the issuance in accordance with the comments from the relevant regulatory authorities or the market conditions within the authority granted at a general meeting, in the case of any change in policies of regulatory bodies in relation to the issuance, or any change of market conditions, except where voting at a general meeting is required by any relevant laws and regulations and the articles of association of the Company;

 

(v)        to determine and handle all relevant matters relating to the listing of the Debt

Financing Instruments upon the completion of the issuance;

 

 

(vi)       in  the  case  of  issuance  of  corporate  bonds,  to  determine  not  to  distribute dividends to the Shareholders to safeguard repayment of debts as required under the relevant laws and regulations in the event that the Company expects to, or does fail to pay the principal and/or coupon interests of such bonds as they fall due; and

 

(vii)      to approve, execute and dispatch any announcements or circulars relating to the issuance and make any related disclosure in accordance with the listing rules of the relevant jurisdictions where the shares of the Company are listed.

 

3.2       Upon  the  approval  of  paragraph  3.1  above  at  the  AGM,  it  is  proposed  that  the Shareholders shall authorise the Board to delegate the authorisations set forth in items (i) to (vi) of paragraph 3.1 above to the president and/or the general accountant of the Company.

 

3.3       Upon  the  approval  of  paragraph  3.1  above  at  the  AGM,  it  is  proposed  that  the Shareholders shall authorise the Board to delegate the authorisation set forth in item (vii) of paragraph 3.1 above to the secretary of the Board.


 

 

IV.       PROPOSED PAYMENT OF FINAL DIVIDENDS

 

 

Reference is made to the results announcement of the Company dated 26 March 2015 in respect of the recommended payment of a final dividend of RMB0.5223 (including tax) per ten shares for the year ended 31 December 2014.

 

Based on the 2014 profit distribution proposal of the Company, the Company will appropriate 10% of the balance of the net profit of the Company of the year 2014 as set out in the financial statements prepared under the PRC Accounting Standards into the discretionary surplus reserve and distribute a cash dividend of RMB683 million, or RMB0.5223 (including tax) per ten shares based on the total number of 13,084,751,004 shares of the Company as at the Latest Practicable Date, for the year 2014.

 

The proposed payment of the 2014 final dividends is subject to shareholders' approval at the AGM. The 2014 final dividends will be paid to shareholders whose names appear on the register of members of the Company at the close of business on Friday, 29 May 2015. Dividends payable to the Shareholders shall be denominated  and  declared  in  Renminbi.  Dividends  payable  to  the  holders  of  A  shares  shall  be  paid  in Renminbi while dividends payable to the holders of H shares shall be paid in Hong Kong dollars. The amount of Hong Kong dollars payable shall be calculated on the basis of the average of the middle rate of Renminbi to Hong Kong dollars as announced by the People's Bank of China for the calendar week prior to the declaration of the 2014 final dividends (if approved) at the AGM.

 


In accordance with the "Enterprise Income Tax Law of the People's Republic of China" and the "Rules for the Implementation of the Enterprise Income Tax Law of theople's Republic of China" (中華人民共和國企業所得稅法實施條例》), both implemented on 1 January 2008 and the "Notice of the State Administration of Taxation on Issues Relevant to the Withholding of Enterprise Income Tax on Dividends Paid by PRC Enterprises to Offshore Non-resident Enterprise Holders of H Shares" (Guo Shui Han[2008] No. 897) (關於中國居民企業向境外H股非居民企業股東派發股息代扣代繳企業所得稅有關問題的通知》 (國稅函[2008]897))   promulgated   on   6   November   2008,   the Company is obliged to withhold and pay PRC enterprise income tax on behalf of non-resident enterprise shareholders at a tax rate of 10% from 2008 onwards when the Company distributes any dividends to non- resident  enterprise  shareholders  whose  names  appear  on  the  register  of  members  of  H  Shares  of  the Company. As such, any H shares of the Company which are not registered in the name(s) of individual(s) (which,  for  this  purpose,  includes  shares  registered  in  the  name  of  HKSCC  Nominees  Limited,  other nominees, trustees, or other organisations or groups) shall be deemed to be H shares held by non-resident enterprise shareholder(s), and the PRC enterprise income tax shall be withheld from any dividends payable thereon. Non-resident enterprise shareholders may wish to apply for a tax refund (if any) in accordance with the relevant requirements, such as tax  agreements (arrangements), upon receipt of any dividends.

 

In accordance with the "Circular on Certain Issues Concerning the Policies of Individual Income Tax"(Cai Shui Zi [1994] No. 020) (關於個人所得稅若干政策問題的通知》(財稅字[1994]020)) promulgated by the Ministry of Finance and the State Administration of Taxation on 13 May 1994, overseas individuals are, as an interim measure, exempted from the PRC individual income tax for dividends or bonuses received from foreign-invested enterprises. As the Company is a foreign-invested enterprise, the Company will not withhold  and  pay  the  individual  income  tax  on  behalf  of  individual  shareholders  when  the  Company distributes  the  2014  final  dividends  to  individual  shareholders  whose  names  appear  on  the  register  of members of H shares of the Company.


 

 

Shareholders are recommended to consult their tax advisors regarding the ownership and disposal of

H shares of the Company in the PRC and in Hong Kong and other tax effects.

 

 

V.        PROPOSED APPOINTMENT OF DIRECTOR

 

 

On 26 March 2015, the Board resolved to propose that Mr. Stanley Hui Hon-chung be appointed as an independent non-executive Director. Mr. Hui has confirmed that he has fulfilled the independence requirements  as  set  out  in  Rule  3.13  of  the  Listing  Rules.  The  Company  considered  Mr.  Hui  to  be independent pursuant to the independence guidelines under the Listing Rules. An ordinary resolution to consider  and  approve  the  appointment  of  Mr.  Stanley  Hui  Hon-chung  as  an  independent  non-executive Director will be proposed at the AGM.

 

Mr.  Stanley  Hui  Hon-chung,  aged  65,  holds  a  Bachelor  Degree  of  Science  from  the  Chinese University of Hong Kong. He joined Cathay Pacific in 1975 and held a range of management positions in Hong Kong and overseas. From 1990 to 1992, he served as General Manager of Planning and International Affairs of Hong Kong Dragon Airlines Limited. In 1992, he became Chief Representative of John Swire & Sons (China) in Beijing. From 1994 to 1997, he worked as the President of AHK Air Hong Kong Limited. From  1997  to  2006,  he  joined  Hong  Kong  Dragon  Airlines  Limited  as  Chief  Executive  Officer.  From February 2007 to July 2014, he served as Chief Executive Officer of Airport Authority Hong Kong. Mr. Hui was appointed as member of the Greater Pearl River Delta Business Council twice by the Chief Executive of the HKSAR, and held civic duties including member of the Commission on Strategic Development of the HKSAR Government, member of the Hong Kong Government's Aviation Development Advisory Committee and member of the Hong Kong Tourism Board. Mr. Hui is currently the member of the 12th National Committee of Chinese People's Political Consultative Conference and the General Committee of the Hong Kong General Chamber of Commerce. In July 2006, Mr. Hui was appointed as a Justice of the Peace by the Chief Executive of the HKSAR.

 

Save as disclosed above, Mr. Hui has not held any directorship in public companies the securities of which are listed on any securities market in Hong Kong or overseas or taken up a position in any affiliated companies of the Company over the past three years, nor does Mr. Hui have any relationship with any other Directors, senior management, substantial or controlling shareholders of the Company. As at the date of this announcement, Mr. Hui does not have any interest in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

 

Mr. Hui will enter into a service contract with the Company and will receive an annual emolument of RMB150,000 (before taxation) from the  Company as the independent non-executive Director during his tenure. The term of Mr. Hui's office shall commence on the date of approval by the Shareholders of his appointment and shall end on the expiry of the term of the current session of the Board.

 

Save as disclosed above, there is no information to be disclosed on items (h) to (v) in Rule 13.51(2) of the Listing Rules, and there are no other matters in respect of the proposed appointment of Mr. Hui that need to be brought to the attention of the Shareholders.


 

 

VI.     2014 WORK REPORT OF THE BOARD OF DIRECTORS

 

 

An ordinary resolution will be proposed at the AGM to approve the 2014 work report of the Board, the full text of which is set out in Appendix I to this circular.

 

VII.    2014 WORK REPORT OF THE SUPERVISORY COMMITTEE

 

 

An  ordinary  resolution  will  be  proposed  at  the  AGM  to  approve  the  2014  work  report  of  the

Supervisory Committee, the full text of which is set out in Appendix II to this circular.

 

 

VIII.  RECOMMENDATION

 

 

The Directors consider that the proposed resolutions set out in the notice of the AGM are in the best interests of the Company and the Shareholders as a whole and accordingly recommend the Shareholders to vote in favour of all the resolutions at the AGM.

 

IX.     DUTY REPORT OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS

 

 

At the AGM, the Shareholders will be presented with the 2014 duty report of the independent non- executive Directors of the Company, the full text of which is set out in Appendix III to this circular.

 

X.       AGM

 

 

The Company will convene the AGM at The Conference Room One, 29/F, Air China Building, 36

Xiaoyun Road, Chaoyang District, Beijing, PRC at 2:00 p.m. on Friday, 22 May 2015. A notice of AGM, a form of proxy and an attendance notice will be dispatched to the Shareholders in accordance with the Listing Rules on Thursday, 2 April 2015. The notice of AGM is reproduced on pages IV-1 to IV-4 of this circular.

 

Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy in accordance with the instruction printed thereon. If you intend to attend the AGM, you are required to complete and return the notice of attendance to the Company's H share registrar, Computershare Hong Kong Investor Services Limited on or before Saturday, 2 May 2015.

 

Completion and return of the form(s) of proxy will not preclude you from attending and voting in person at the meetings or at any adjournment should you so wish and completion and return of the notice of attendance do not affect the right of a shareholder to attend the respective meeting.

 

XI.     GENERAL INFORMATION

 

 

The Company will close its register of members and suspend the registration of transfer of shares from Wednesday, 22 April 2015 to Friday, 22 May 2015 (both days inclusive) in order to determine the shareholders list of the Company who will be entitled to attend and vote at the AGM.


 

 

Shareholders of the Company whose names appear on the register of members of the Company on the close  of  business  of  Tuesday,  21  April  2015  may  attend  the  AGM  after  completing  the  registration procedures. In order to qualify for attendance at the AGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H share registrar, Computershare Hong Kong Investor Services Limited, by 4:30 p.m. on Tuesday, 21 April 2015.

 

Shareholders  who  intend  to  attend  the  AGM  have  to  deliver  the  notice  of  attendance  to  the Company's H share registrar, Computershare Hong Kong Investor Services Limited in person or by post or fax on or before Saturday, 2 May 2015.

 

By order of the Board Cai Jianjiang Chairman

 

Beijing, the PRC


 

 

The civil aviation industry witnessed a slowdown in its growth in 2014, against the backdrop of slow recovery  of  the  global  economy  and  China's  ongoing  structural  adjustments  with  stabilised  economic growth. In such a sophisticated operating environment, the Board of Directors of the Company made well- grounded judgments on the situation, led the management to cope with challenges through reforms and innovations, and maintained stable progress and achieved satisfactory results in various aspects, such as safety, efficiency, service and management. With regard to corporate governance, the Board of Directors earnestly performed the duties conferred upon it by the Company Law of the PRC and other laws and regulations as well as the Articles of Association, the Rules of Procedures for the Shareholders' General Meeting and the Rules of Procedures for Meetings of the Board of Directors, and constantly enhanced its decision-making expertise in the interests of the Shareholders and the Company as a whole. The Board of Directors hereby presents the work report for the year 2014 as follows:

 

I.          CONVENING   THE   GENERAL   MEETINGS   TO   EFFECTIVELY   PROTECT   THE INTERESTS OF OUR SHAREHOLDERS.

 

Upon proposal and request of the Board of Directors, the Company held a total of one annual general meeting and two extraordinary general meetings in 2014, which were organised and convened legally and in strict accordance with the relevant procedures. The meetings produced 12 resolutions, including those approving the work report of the Board of Directors, the work report of the Supervisory Committee, the financial statements of the Company, the 2013 profit distribution plan, the reappointment of our auditors, the increase of remunerations of independent Directors, the election of Directors, the general mandate to issue shares and debt financing instruments, and the renewal of trademark licensing framework agreement for

2015-2017 with China National Aviation Holding Company, and authorised the Board of Directors and/or the relevant authorities to deal with the specific issues.

 

The Board of Directors has carefully implemented the resolutions of the general meetings, including but not limited to distribution of the final dividends for 2013 within the time frame set forth in the Articles of Association, adjustment to remunerations of independent Directors, appointment of three Directors nominated  to  the  general  meeting,  and  performance  of  the  renewed  trademark  licensing  framework agreement with China National Aviation Holding Company. As at 31 December 2014, all resolutions passed at the general meetings had been implemented.

 

To establish effective communication channels with our shareholders, especially the minority shareholders, the Board of Directors actively created opportunities for the minority Shareholders to meet face-to-face with the Board members during the general meetings. At the general meetings, the Directors and members  of  the  senior  management  of  the  Company  also  answered  the  questions  of  the  Shareholders' common interest and listened to their opinions and suggestions. Meanwhile, the Board of Directors took initiatives to promote online voting during the general meetings and further reviewed and standardised the online vote counting procedures, leading to the improvement in quality and efficiency of meetings. As a result, we ensured that all our shareholders enjoy equal opportunities in their exercise of rights of timely knowledge, participation and voting on the significant events of the Company, which has effectively safeguarded the interests of all our shareholders.


 

 

II.         ORGANISING  AND  ATTENDING  THE  BOARD  MEETINGS,  DULY  PERFORMING  ITS DECISION-MAKING DUTIES.

 

The Board of Directors performed its decision-making duties mainly by organising and attending the Board meetings. In 2014, the Board of Directors held 12 meetings and considered and approved a total of 43 motions,  including  but  not  limited  to  the  annual  financial  plans,  the  capital  expenditure  plans,  the  fuel hedging strategies, regular reports, profit distribution scheme, the election of Chairman of the Board of Directors, the nomination of director candidates, the adjustment to the composition of the special committees of the Board of Directors, the appointment of senior management members, the capital injection into Air China Cargo Co., Ltd. together with Cathay Pacific Airways Limited, the provision of guarantee to our subsidiary  Total  Transform  Group  Ltd.,  the  introduction  of  60  aircraft  of  the  B737  series,  the  capital increase in China National Aviation Finance Co., Ltd., and the approval of the Management Measures on Internal Control Evaluation of Air China Limited. The meetings were all prepared and convened in strict accordance with the provisions of the Articles of Association and the Rules of Procedure for Meetings of the Board of Directors of the Company, and the procedures and agenda of the meeting were reasonable and efficient. In order to ensure quality and efficiency of decision-making, the Directors would go through and study the proposals carefully before the meetings, and would communicate with the management or the relevant departments when necessary, or hold a "pre-meeting meeting" to discuss the matter thoroughly. The Directors tried their best to be present, or attend the meeting via electronic means. In each meeting, the Directors would discuss the proposals thoroughly and actively participate in decision-making.

 

While performing their duties in a diligent manner, the Directors also attached great importance to the tracking and monitoring of implementation of their resolutions. The Board of Directors would regularly review the report on implementation of Board resolutions submitted by the management, so as to catch up with the progress of resolution implementation, address the problems arising therefrom, and come up with requirements on the following steps. From the feedback of implementation of the resolutions in 2014, we believed that most of them have been properly implemented.

 

III.       THE   SPECIAL   COMMITTEES   PERFORMING   THEIR   DUTIES   DILIGENTLY   IN ASSISTING THE BOARD OF DIRECTORS IN DECISION-MAKING.

 

The special committees under the Board of Directors are supporting bodies whose duties are to ensure effective  decision-making  by  the  Board,  mainly  by  holding  committee  meetings,  attending  important meetings at the corporate level and carrying out targeted inspections and investigations.

 

The Audit and Risk Management Committee held 6 meetings in 2014, reviewed and approved a total of 21 motions, in which it had made recommendations to the Board of Directors, including but not limited to regular reporting on financial accounts, financial planning, fuel hedging strategy, re-appointment of our auditors, internal control evaluation, external guarantees and connected transactions. To obtain a better knowledge of the Company down to the bottom, the Audit and Risk Management Committee carried out an inspection  of  the  Company's  Australian  segment  in  2014,  focusing  on  production  and  management, marketing, profitability and internal control of its overseas operations, and came up with specific comments and recommendations, which provided valuable support to the management in its development, adjustment and improvement of the relevant management and marketing strategies.


 

 

The Nomination and Remuneration Committee held 7 meetings in 2014, nominated to the Board of Directors 1 candidate of Chairman, 3 candidates of Directors, 6 candidates of senior management, reviewed the  proposal  on  adjustment  to  remuneration  of  independent  Directors  and  made  recommendation  to  the Board of Directors. The Strategy and Investment Committee held 3 meetings in 2014, mainly considering the annual capital expenditure plans, annual fuel hedging strategy, the capital injection into Air China Cargo Co., Ltd. together with Cathay Pacific Airways Limited, the introduction of 60 aircraft of the B737 series, and the capital increase in China National Aviation Finance Co., Ltd. In 2014, Mr. Feng Gang was elected as new chairman of the Aviation Safety Committee.

 

In addition, the special committees actively attended the semi-annual and annual meetings of the Company to hear the report of the management on corporate strategy implementation, production, operation and profitability management, so as to catch up with the Company's development and better assist the Board of Directors in their performing of duties.

 

IV.       CONSTANTLY   OPTIMISING   OUR   CORPORATE   GOVERNANCE   SYSTEM,   AND CONSOLIDATING THE FOUNDATION FOR CORPORATE GOVERNANCE.

 

In accordance with the requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited, the Company held for the first time a meeting of Chairman and non-executive Directors in the absence  of  the  management  in  October  2014.  The  participating  non-executive  Directors,  especially independent Directors, offered their valuable opinions and suggestions on external environment, business development, corporate governance and work of the management, and undertook that they would duly fulfil the responsibilities and obligations of independent Directors to contribute to the healthy development and better corporate governance of the Company. The meeting achieved a positive outcome.

 

To ensure the integrity of corporate governance structure, in 2014, the Board of Directors re-elected a Chairman, appointed a new President, nominated candidates that were elected by the general meeting as one executive Director and two executive Directors and appointed one Vice President, one Chief Accountant, one Chief Economist, one Chief Pilot and two assistants to President, laying a foundation for the Company's production, operation and compliance.

 

V.        CONSTANTLY  IMPROVING  THE  QUALITY  OF  OUR  INFORMATION  DISCLOSURE WITH PROPER COMPLIANCE TRANSPARENCY.

 

In 2014, the Board of Directors completed four high-quality periodic reports as scheduled, namely the

2013 annual report, the first and third quarterly reports in 2014 and the 2014 interim report. The 2013 annual report and the 2014 interim report adopted format and contents consistent for disclosure to A-share and  H-share  markets,  thus  further  enhancing  the  fairness  of  information  disclosure.  Based  on  in-depth analysis of market interests, the reports gave a full view of the Company's strengths and uniqueness to facilitate  better  understanding  of  the  Company  among  the  market.  In  addition,  the  Company  further improved the workflows for quarterly reports, hence reinforcing the foundation for preparing regular reports.

 

In 2014, the Board of Directors published 43 domestic extraordinary announcements, 74 overseas extraordinary  announcements  and  2  circulars  in  relation  to,  among  others,  change  of  Chairman  and President, appointment of Directors, annual fuel hedging strategy, capital injection into Air China Cargo Co., Ltd., approval of the management measures on internal control evaluation, honouring of medium-term notes


 

 

upon maturity, payment of dividends, provision of credit guarantee to subsidiaries, appointment of senior management members and connected transactions. These announcements were prepared and published in accordance  with  the  Listing  Rules  and  relevant  requirements,  allowing  investors  on  the  market  to  keep informed of the Company's updates. In a review in 2014 by the Shanghai Stock Exchange on information disclosure of listed companies, the Company was rated "A", the highest level, which consolidated its good reputation of compliance and integrity in the market.

 

VI.       IMPROVING  INVESTOR  RELATIONS  MANAGEMENT  TO  EFFECTIVELY  MAINTAIN MARKET CAPITALISATION.

 

The Board of Directors attaches much importance to investor relations management. Given the grim supply  and  demand  in  the  industry  and  complicated  capital  market  environment  in  the  context  of  slow recovery of the global economy, the Company continued to improve and strengthen its investor relations activities in 2014. Based on regular results briefings and roadshows, the Company staged reverse roadshows, an investor conference for 10th anniversary of listing and other activities, to proactively cement the liaisons with institutional investors, publicise the Company's business updates and assist investors in establishing a positive  recognition  of  the  Company's  solid  fundamentals.  We  also  exchanged  views  with  investors  on outlook of the industry and the Company, analysed and discussed the industry challenges and opportunities to  advise  investors  on  our  initiatives  to  address  market  changes  and  stay  competitive,  while  collecting valuable  insights  from  investors  for  decision-making  by  the  management.  Moreover,  the  Company maintained frequent interaction with its investors, so as to identify the market trends and hotspots. Through multiple channels such as official website for investor relations, hotline, e-mail, conference calls, company visits and participation in investor conference, we made timely delivery of our corporate information and strengthened the relationship with investors, which effectively enhanced the Company's image in capital market.

 

VII.    PROMOTING THE CONSTRUCTION OF INTERNAL CONTROL SYSTEM.

 

 

In 2014, the Board of Directors supervised and guided the Company to, based on risk control and cost management under the laws and regulations and in a holistic approach, make rational plans on and carry forward the construction of an internal control system. Firstly, we strictly implemented the Management Measures  on  Internal  Control  Evaluation  of  the  Company  (Trial)  and  met  the  requirements  on  internal control self-evaluation of listed companies specified in the Basic Rules on Internal Control of Enterprises and the Guidelines on Internal Control Evaluation of Enterprises, thus standardising the Company's internal control evaluation activities. Secondly, we issued the Provisional Requirements on Management of Rules and Regulations of the Company, aiming to standardise the formulation, implementation, amendment and repeal of the Company's rules and regulations, improve the management system for rules and regulations and ensure the compliance practices in operation. Thirdly, we amended and issued a series of management systems at business level to further improve the Company's rules and regulations and strengthen internal control, in order to achieve the management objectives of "consisting rights and responsibilities, integrated management and control". Fourthly, we formulated and issued the Implementation Measures on Accountability of  Party  Conduct  and  Integrity  and  Supervisory  Responsibilities  (Trial),  to  push  forward the prevention of integrity risk and effectively bolster the integrity management system.


 

 

VIII.  CONTINUING TO FULFIL CORPORATE SOCIAL RESPONSIBILITY.

 

 

Responding to the new characteristics and responsibilities in the new normal, the Directors are always committed  to  fulfilling  social  responsibility  and  developing  together  in  harmony  on  an  informed, conscientious and due diligence basis. In 2014, while staying ahead among peers in terms of profitability, the Company refined its safety management system and strengthened risk management in a bid to improve service  quality.  Our  Golden  Phoenix  crew  was  honoured  as  the  "Role  Models  of  the  Times"  by  the Propaganda Department of the Central Committee of the CPC. We continued to improve energy utilisation efficiency through refining management to minimise the environmental impact of development. We set up a staff service centre to convey our respect and cares to the staff. Through targeted poverty alleviation and charitable  activities,  we  aimed  to  contribute  more  to  society.  We  accomplished  important  transportation tasks, highlighting our mission as a national flag carrier and the image of a good corporate citizen.

 

In 2014, the Board of Directors performed its duties in a diligent and pragmatic manner, fulfilling all its responsibilities and effectively enhancing the level of our corporate governance. In 2015, the Board of Directors will concentrate its efforts on enhancing its rational decision-making capacity, carefully organise the general meetings and Board meetings, adequately and effectively perform all its functions, and continue to  search  for  well-developed  corporate  governance  practices,  so  as  to  further  improve  its  operational efficiency, enhance the level of our corporate governance and create greater value for our shareholders.

 

By order of the Board

Air China Limited

 

 

26 March 2015


 

 

In 2014, with the concerted efforts of all supervisors, the Supervisory Committee of the Company diligently performed its duties stipulated in the PRC Company Law and applicable laws and regulations, the Company's  Articles  of  Association  and  the  Rules  of  Procedures  for  the  Supervisory  Committee.  To safeguard the best interests of all Shareholders, the Supervisory Committee of the Company also convened and attended relevant meetings and conducted special inspections, researches and investigations. Through these and other means, the Committee managed to understand the major decisions made by the Company and supervised the legal compliance of the Company's operations and the performance of duties by the Board  of  Directors  and  its  members  as  well  as  the  senior  management.  The  work  performed  by  the Supervisory Committee in 2014 is presented as follows:

 

I.          MEETINGS OF THE SUPERVISORY COMMITTEE

 

 

In 2014, in accordance with relevant laws and regulations, the Supervisory Committee convened six meetings  as  of  31  December  2014,  at  which  it  studied  and  deliberated  various  important  matters  and approved  16  proposals,  thereby  diligently  performing  its  supervision  duties  and  contributing  to  the completion of production targets and the implementation of strategies of the Company. The details of the meetings are as follows:

 

The 2nd meeting of the fourth session of the Supervisory Committee held on 20 February 2014 considered and approved the Company's 2014 financial plan (including the cash flow and fund-raising plan), capital expenditure plan, fuel hedging strategies and the scheme of capital injection into Air China Cargo Co., Ltd., a subsidiary of the Company, with Cathay Pacific Airways Limited.

 

The  3rd  meeting  of  the  fourth  session  of  the  Supervisory  Committee  held  on  24  March  2014 considered and approved the 2013 work report of the Supervisory Committee, the work report of the Board of Directors, the 2013 annual report (including the financial statements), the statement of the implementation of connected transactions for 2013, the special explanation on the receivables from controlling shareholders and related parties for 2013, 2013 profit distribution proposal, the special report on the proceeds from the issue of A shares and its actual use for 2013 and 2013 internal control evaluation report and internal control audit report.

 

The  4th  meeting  of  the  fourth  session  of  the  Supervisory  Committee  held  on  28  April  2014 considered and approved the Company's first quarterly report of 2014 (including the financial statements).

 

The  5th  meeting  of  the  fourth  session  of  the  Supervisory  Committee  held  on  25  August  2014 considered and approved the Company's 2014 interim report (including the financial statements) and the resolution on the grant of credit guarantee to Total Transform Group Ltd., a subsidiary of the Company.

 

The  6th  meeting  of  the  fourth  session  of  the  Supervisory  Committee  held  on  27  October  2014 considered and approved the Company's third quarterly report of 2014 (including the financial statements), the  implementation  of  certain  new  accounting  standards  and  the  resolution  on  entering  into  the  new trademark licensing framework agreement for 2015-2017 with China National Aviation Holding Company.


 

 

The 7th meeting of the fourth session of the Supervisory Committee held on 24 December 2014 considered and approved the resolution relating to the acquisition of the equity interests in China National Aviation Finance Co., Ltd. by the Company.

 

In addition, members of the Supervisory Committee attended three general meetings and sat in on 12 board  meetings,  thereby  effectively  performing  supervision  of  the  procedures  for  convening  general meetings  and  board  meetings  as  well  as  the  topics  for  discussion  and  the  procedures  for  voting  at  the meetings. During the year, members of the Supervisory Committee reinforced the performance of its duty to supervise the Company's management by attending the Company's interim and annual work meetings and hearing the report of the Company's management on production operations and financial benefits.

 

II.         EXAMINATIONS,   INVESTIGATIONS   AND   STUDIES   OF   THE   SUPERVISORY COMMITTEE

 

In line with the 2014 strategic objectives and focus of the Company, the Supervisory Committee conducted on-site inspections and studies on the domestic departments in Guangxi region and overseas departments in Madrid and St. Paul throughout the year. All supervisors attained a deep understanding of the operations, management, business developments and problems and difficulties of domestic and overseas business  departments  through  debriefs,  discussions  and  visits.  They  prepared  an  investigation  report  to provide concrete opinions and suggestions and reported to the Board of Directors and management. The management   attached   great  importance   to   the   investigation   report   and  pressed   for  the   commerce commissions of related departments to conduct research and rectification in respect of the opinions and suggestions in the report. After the item-by-item review on the suggestions proposed by the supervisors, the commerce commissions provided feedback on the research and rectification to the Supervisory Committee, establishing a good supervision and rectification mechanism. The investigation and research conducted by the supervisors offered better supervision for the sustainable and healthy development of the Company.

 

III.     ATTENDING TRAINING BY THE SUPERVISORY COMMITTEE

 

 

To continuously improve the executing ability of supervisors and strengthen their capabilities, the Supervisory Committee attaches great importance to the continuous learning and training as well as keeping abreast of regulation dynamics and focus in a timely manner. In this year, Mr. Shen Zhen, a supervisor of the Company, participated in the special training courses for directors and supervisors held by Beijing Securities Regulatory Bureau and the training records have been recorded in the executive integrity system of Beijing Securities Regulatory Bureau, which further enhanced the performance ability of supervisors.

 

IV.     EVALUATION OF DIRECTORS' PERFORMANCE BY THE SUPERVISORY COMMITTEE

 

 

In  2014,  on  the  basis  of  daily  supervision,  the  Supervisory  Committee  conducted  evaluation  of directors' performance on an annual basis. Members of the Supervisory Committee carefully reviewed the

2013 work report of the Board of Directors and organised an assessment of performance of directors. The Supervisory Committee considered that members of the Board of Directors were able to consciously abide by the laws, regulations and the Articles of Association, were honest and trustworthy, faithfully performed their duties, consciously accepted supervision, and actively safeguarded the interests of the Company, Shareholders, employees and other stakeholders. Members of the Board of Directors exercised their rights


 

 

within  the  scope  of  their  functions  and  powers,  giving  full  play  to  their  own  expertise,  and  expressing opinions independently and objectively. The evaluation result is good. The monitoring and evaluation of the performance of directors by the Supervisory Committee has played a positive role in driving the Board of Directors to efficiently perform their duties in accordance with laws and improving the Company's corporate governance mechanism.

 

V.       SPECIAL OPINIONS OF THE SUPERVISORY COMMITTEE

 

 

(i)        Independent opinions on the operation of the Company in accordance with laws

 

 

In this year, the Supervisory Committee conducted supervision on the compliance of decision- making procedures of the Company's general meeting and the Board of Directors in accordance with the relevant laws, regulations and the Articles of Association, and reviewed the implementation of the resolutions  adopted  at  the  shareholders'  general  meeting  and  the  performance  of  members  of  the Board of Directors and management of the Company. The Supervisory Committee deemed that the Company has complied with the relevant laws and regulations, with legitimate decision-making procedures and complete internal control system; the Company has formed the restriction, linkage and counterbalance among the authority organ, decision-making mechanism, execution organ and supervisory authority. The Company's directors and senior management were found to be under no violation of laws, regulations and Articles of Association in performing their duties, nor were they found to have committed any acts harmful to the interests of the Company and Shareholders. The information disclosed by the Company was true, accurate and complete, prompt and fair, and there was no misleading and false information.

 

(ii)       Independent opinions on the inspection of the financial condition of the Company

 

 

In 2014, the Supervisory Committee believed that the standard unqualified annual auditor's report issued by the accounting firms gave a true view of the financial position and operating results of the Company after they focused on considering the first and third quarterly and interim financial reports for 2014 and annual financial report for 2013.

 

(iii)      Independent opinions on the connected transactions of the Company

 

 

During the year, the capital injection into Air China Cargo Co., Ltd., a controlled subsidiary of the Company, with Cathay Pacific Airways Limited, the entering into the new trademark licensing framework agreement for 2015-2017 with China National Aviation Holding Company and the acquisition  of  the  equity  interests  in  China  National  Aviation  Finance  Co.,  Ltd.  constituted  the connected  transactions  of  the  Company.  After  considering  the  connected  transactions  mentioned above and the implementation of the connected transactions of the Company in the year of 2013, the Supervisory Committee believed that the connected transactions between the Company and the connected persons were conducted in the ordinary course of business of the Company and on normal commercial terms. The rights and obligations of all relevant parties were determined by agreements on  an  arm's  length  basis,  and  the  transaction  prices  were  fair  and  reasonable  and  the  relevant


 

 

transactions were conducted in line with business practice. Directors and shareholders who had an interest in the transactions had abstained from voting; the voting procedure was legitimate and valid, and there was no action that has prejudiced the interests of the Shareholders as a whole.

 

(iv)     Reviews and opinions on the internal control self-evaluation report

 

 

During the year, after considering the 2013 internal control evaluation report of the Company and the internal control auditor's report issued by the internal control auditor, the Supervisory Committee  believed  that  the  internal  control  evaluation  report  of  the  Company  gave  a  true  and accurate view of the internal control situation of the Company.

 

(v)      Independent opinions on the use of proceeds from the latest capital raising activity

 

 

In 2014, the Company has prepared a special report on the proceeds from the issue of A shares and its actual use during 2013. After carefully checking the special report, the Supervisory Committee believed that no non-compliance conducts in the deposit and actual use of raised funds were found.

 

(vi)       Opinions on the implementation of registration and administration system for persons with insider information sources

 

According to the Rules for the Management of Insider Information, the Company registered and filed the matters related to insider information. The Supervisory Committee did not identify any situation where the Directors, supervisors, senior management and relevant persons with insider information  sources  traded  shares  using  insider  information  prior  to  the  disclosure  of  the  major sensitive information which could affect the Company's share price.

 

In 2014, the Supervisory Committee fully exercised its functions of inspection and supervision, safeguarded  the  legitimate  rights  and  interests  of  the  Company  and  its  Shareholders  as  a  whole,  and completed a number of targets set at the beginning of the year. Looking forward to 2015, the Supervisory Committee will, as always, continue to perform its duties earnestly and diligently and strengthen inspection and  supervision,  so  as  to  bring  into  full  play  the  role  of  the  Supervisory  Committee  and  make  new contributions to improving the Company's corporate governance and fostering the Company's sustainable and healthy development.

 

The Supervisory Committee

Air China Limited

 

 

25 March 2015


 

 

Being the independent non-executive directors of Air China Limited (the "Company"), we have diligently carried out our duties and functions and provided objective opinions in strict compliance with the PRC  Company  Law,  the  PRC  Securities  Law,  the  Guidelines  on  the  Establishment  of  Independent Directorship of Listed Companies, the Code of Corporate Governance for Listed Companies, the listing rules of both the domestic and overseas listing venues of the Company, as well as the relevant requirements of the Articles of Association and the Work Procedures of Independent Non-executive Directors of the Company, thereby protecting the overall interests of the Company as well as the legitimate interests of all shareholders, especially those of its minority shareholders. Our performance of duties and functions in 2014 is hereby reported as follows:

 

I.          BASIC INFORMATION OF INDEPENDENT DIRECTORS

 

 

The Board currently has four independent non-executive directors, more than one-third of the number of Board members, who are professionals in the legal, finance and management areas. The proportion of independent directors and professional qualification comply with the requirements of relevant laws and regulations.

 

In accordance with the requirements of the PRC and overseas listing rules, we have submitted a declaration of independence to the Company, confirming the independence of the independent non-executive directors.

 

In November 2014, Mr. Yang Yuzhong resigned from his position due to age reason, but he would continue to perform his duties until a new independent director is elected at the general meeting of the Company. As of 31 December 2014, the independent non-executive directors of the Company are Mr. Fu Yang, Mr. Yang Yuzhong, Mr. Pan Xiaojiang and Mr. To Chi Keung, Simon. Biographies of the current independent directors are as follows:

 

Mr. Fu Yang, aged 65, previously served as deputy director of the Economic Law Office of the National People's Congress Law Committee, Vice President of the third, fourth and fifth sessions of the All China  Lawyers  Association,  a  visiting  professor  of  Center  for  Environment  Law  at  the  Law  School  of Renmin University of China. He is a partner and the director of Kang Da Law Firm in Beijing. He is also an arbitrator of China International Economics and Trade Arbitration Commission. Mr. Fu has been serving as an independent non-executive director of the Company since June 2009.

 

Mr.  Yang  Yuzhong,  aged  70,  graduated  from  Beijing  Aeronautical  Institute  majoring  in  aircraft design and manufacturing. Mr. Yang served as Deputy General Manager of China Aviation Industry Corporation I from July 1999 to July 2006, as well as head of Chinese Aeronautical Establishment and chairman of AVIC1 Commercial Aircraft Co., Ltd. during the same period. He has been a consultant of Aviation Industry Corporation of China since August 2006. He served as independent non-executive director of China National Materials Company Limited from June 2007 to December 2009 and that of China South Locomotive & Rolling Stock Corporation Limited from December 2007 to June 2014. Mr. Yang also served as an external director of China National Materials Group Corporation Ltd. since December 2009. Mr. Yang has been serving as an independent non-executive director of the Company since May 2011.


 

 

Mr. Pan Xiaojiang, aged 62, holds a Ph.D. degree in Management from Tsinghua University and is a senior  economist  and  China  Certified  Public  Accountant.  He  has  served  as  Deputy  Director  of  the Accounting  Management  Department  of  the  Ministry  of  Finance  ("MOF");  Deputy  Director  of  Chinese Institute  of  Certified  Public  Accountants;  Deputy  Director,  Director  and  Deputy  Director-general  of  the World Bank Department of the MOF; and Deputy Director-general of the International Department of the MOF. Mr. Pan was appointed as supervisor and office deputy director of the supervisory committee of Bank of China in July 2000, supervisor and office director of the supervisory committee of Bank of China in November 2001 and supervisor and office director of the supervisory committee of Agricultural Bank of China in July 2003. Mr. Pan was appointed as supervisor representing shareholders and office director of the supervisory committee of Agricultural Bank of China Limited from January 2009 to January 2012; he was also appointed as leader of the fifth patrol team of the Communist Party Committee of Agricultural Bank of China  Limited  from  March  2012  to  January  2013.  Since  May  2013,  Mr.  Pan  has  been  serving  as  an independent director of Tsinghua Tongfang Limited. Mr. Pan has been serving as an independent non- executive director of the Company since October 2013.

 

Mr. To Chi Keung, Simon, aged 63, holds a First Class Bachelor's Honours Degree in Mechanical Engineering  from  the  Imperial  College  of  Science  and  Technology  (London  University)  and  a  Master's degree in Business Administration from Stanford University's Graduate School of Business. He served as divisional manager of the Industrial Project Division of Hutchison Whampoa (China) Limited in 1980 and managing director of Hutchison Whampoa (China) Limited in 1981, independent non-executive director of China Southern Airlines Company Limited from 1999 to 2005, non-executive director of Shenzhen International Holdings Limited from 2000 to 2011. He is currently the managing director of Hutchison Whampoa  (China)  Limited  and  chairman  of  Hutchison  China  MediTech  Limited,  vice  chairman  of Guangzhou Aircraft Maintenance & Engineering Co. Ltd., director of China Aircraft Services Limited, chairman  of  Beijing  Greatwall  Hotel,  chairman  of  Hutchison  Whampoa  (China)  Commerce  Limited, chairman of Guangzhou Hutchison Logistics Services Company Limited, chairman of Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited, vice chairman of Shanghai Hutchison Pharmaceuticals Limited, chairman of Hutchison Optel Telecom Technology Co., Ltd. and chairman of Shanghai Hutchison Whitecat Co., Ltd. Mr. To has been serving as an independent non-executive director of the Company since October 2013.

 

II.         ATTENDANCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS AT MEETINGS

 

 

As  independent  non-executive  directors,  we  have  actively  participated  in  each  Board  meetings, attended general meetings and presided over meetings of special committees of the Board in accordance with the principles of diligence and integrity. Prior to any Board meeting, we carefully reviewed all information provided by the Company, attentively listened to the reports of relevant departments when necessary, and made full preparation for discussion of all proposals and decision-making at Board meetings. At Board meetings, we carefully considered each of the proposals based on our experience and expertise, actively participated in discussions, made relevant recommendations and expressed our independent opinions with objective attitude.


 

 

In 2014, the Company convened 3 general meetings, 12 Board meetings, 6 meetings of the audit and risk management committee, 7 meetings of the nomination and remuneration committee, with the attendance

of each of the independent non-executive director as shown below:

 

 

 

 

Name

 

Expected attendance at the Board

meetings (12)

 

Attendance at the Board meetings in

person

 

Attendance via telecommunications

 

Attendance

by proxy

Absence

Attendance at general meeting (3)

 

Meetings of the audit and risk

management

committee (6)

 

Meetings of the nomination and remuneration

committee (7)

 

Fu Yang

12

12

7

0

0

1

6

7

Yang Yuzhong

12

12

7

0

0

2

N/A

N/A

Pan Xiaojiang

12

12

6

0

0

2

6

7

To Chi Keung Simon

12

12

9

0

0

2

N/A

7

 

In addition, by attending the annual and semi-annual working meetings of the Company and receiving special reports and information delivered by the Company on a regular basis, we developed an in-depth understanding of the Company's business and financial operations as well as service guarantee, etc. We also made various recommendations on areas such as corporate strategic development, risk management and regulated operations. In view of the above, we have demonstrated our professional strength and played an active role in the decision-making process of the Board and the regulated operations of the Company.

 

III.       PERFORMANCE OF DUTIES AND FUNCTIONS IN REVIEWING 2014 ANNUAL REPORT

 

 

We have performed our duties and functions with prudence during the auditing of 2014 annual report of the Company. We held a special communication meeting for discussing the annual report before auditing by the certified public accountants (CPAs). At the meeting, we comprehensively listened to priorities and plans for auditing from the financial department and reporting accountant of the Company, and considered and discussed the financial statements. After the CPAs joined, we were kept updated of the auditing progress by receiving regular briefing about auditing work. In the meantime, we procured relevant accounts to submit their auditing  opinion on  our  annual  report in  agreed  period while  maintaining high  auditing  quality to ensure that orderly implementation and timely completion of the auditing work of various stages. After CPAs issued their preliminary audit opinion, we conducted a review of the draft financial report and formed written opinion. Ultimately, the 2014 annual report and financial report were approved at the Board meeting held on 26 March 2015.

 

IV.       PHYSICAL INSPECTION AND INVESTIGATION

 

 

To better understand the situation of the company's daily operations, financial management and other standardised operation, the independent directors carried out on-site inspections on the Company's sales departments in Sydney and Auckland during the year. Through listening to verbal reports, meetings and site visits, we had in-depth understanding of the business of and the problems and difficulties faced by our overseas sales departments. The Board and management of the Company have been informed of the report which  would  serve  as  a  reference  for  decision-making  and  management  and  provide  support  for  the Company's management to formulate, adjust and improve relevant management and marketing strategies, thus enhancing the sustainable and healthy development of the Company.


 

 

V.        MEETING WITH CHAIRMAN OF THE BOARD WITHOUT ANY MANAGEMENT

 

 

Pursuant to requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited, the chairman of the Board held a meeting with non-executive directors at which there was no attendance of any management. We actively expressed our opinions about, among others, external environment, strategy, competition, internationalisation and corporate governance and management, and made a number of recommendations. The chairman of the Board attached great attention to our comments and recommendations, and instructed the Company's management to study and implement thereof.

 

VI.       IMPORTANT   CONCERNS   DURING   THE   PERFORMANCE   OF   DUTIES   BY INDEPENDENT NON-EXECUTIVE DIRECTORS DURING THE YEAR

 

In 2014, we paid special attention to the following issues, made independent objective judgments in connection  with  the  legality  and  conformity  of  the  decision,  implementation  and  disclosure  of  relevant issues, and expressed our independent opinions. The details are as follows:

 

(1)       Connected transactions

 

 

We provided independent opinions in connection with the joint capital injection into Air China Cargo  Co.,  Ltd.,  a  controlled  subsidiary  of  the  Company,  by  the  Company  and  Cathay  Pacific Airways  Limited,  a  connected  party,  the  entering  into  the  new  trademark  licensing  framework agreement  (2015-2017)  between  the  Company  and  China  National  Aviation  Holding  Company increased its shareholding in China National Aviation Finance Co., Ltd. as well as the performance of connected  transactions  by  the  Company  in  2013.  We  considered  that  the  connected  transactions between the Company and connected persons were in the ordinary course of business of the Company and of proper business transactions. The rights and obligations of all relevant parties were determined by written agreements on an arm's length basis, and considerations for such transactions were fair and reasonable and the relevant transactions were conducted on normal commercial terms and practice. Directors and shareholders who had an interest in the transactions had abstained from voting respectively, the voting procedures were legitimate and effective, and there was no action which has prejudiced the interests of the shareholders as a whole.

 

(2)       Guarantees in favor of external parties and appropriation of funds

 

 

In order to prepare 2013 annual report, we reviewed the guarantees in favor of external parties provided by the Company as of 31 December 2013 and issued special explanation. In August 2014, we reviewed a proposal in respect of providing guarantees for Total Transform Group Limited, a controlled subsidiary of the Company. After our review, we are of the opinion that the decision- making process in connection with the offer of external guarantee complied with the requirements of relevant laws and regulations and the Articles of Association. We also paid great attention to any appropriation of funds by the controlling shareholder or its connected parties for reasons other than operations. Following our inquiries, we concluded that there was no appropriation of funds by the controlling shareholder or its connected parties for reasons other than operations.


 

 

(3)       Use of proceeds

 

 

During this year, we reviewed the special report on the condition of the disposal and actual utilisation  of  proceeds  raised  through  the  A  Share  issue  in  the  year  of  2013.  After  careful examination, we are of the opinion that there is no non-compliance in relation to the disposal and use of proceeds raised through the A Share issue.

 

(4)       Nomination and remuneration of senior management personnel

 

 

During  the  year,  the  Company  held  a  Board  meeting  to  elect  chairman  of  the  Board  and nominate directors and appoint president, vice president, chief accountant, chief pilot and chief economist.   We   carefully   reviewed   the   qualifications   of   candidates   for   directors   and   senior management, the nomination and review processes, and issued an independent opinion expressing that the nomination and appointment of directors and senior management personnel complied with the employment criteria set out in the Company Law and Articles of Association, and the Board member appointment procedures complied with the relevant laws and regulations.

 

(5)       Appointment or change of our auditors

 

 

We expressed independent opinions on re-appointment of KPMG and KPMG Huazhen as the international  and  domestic  auditors  of  the  Company  for  the  year  2014,  respectively,  and  re- appointment of KPMG Huazhen as the internal control auditor for the year 2014. We are of the opinion that, the re-appointment of the abovementioned auditors of the Company was in the interests of the Company and its shareholders, which has been considered and approved in a legitimate and effective  procedure,  and  in  line  with  the  requirements  of  relevant  laws  and  regulations  and  the Articles of Association.

 

(6)       Cash dividends

 

 

During the year, we reviewed and expressed independent opinions on the profit distribution plan for 2013. We are of the opinion that, the Company has attached great importance to giving reasonable investment returns to shareholders while maintaining sound and sustainable development. It has established a policy of profit distribution in a sustainable and steady way, and constructive to protecting the legitimate rights and interests of the investors. No acts were found detrimental to the interests of the Company or the interests of minority shareholders.

 

(7)       Fulfilment of undertakings by the Company and shareholders

 

 

The Company had sorted out the undertakings made by the Company and the controlling shareholder in previous years, the fulfilment progress of which had been disclosed in the periodic reports in 2014 as required. Having conducted careful review, we believe that neither the Company nor the controlling shareholder has breached their respective undertakings as of 31 December 2014.


 

 

(8)       Implementation of information disclosure

 

 

In 2014, the Company prepared and published four periodic reports (including financial statements) and 43 domestic announcements. We have monitored the information disclosure implemented by the Company in 2014. We are of the opinion that the Company has followed the principles of "open, just and fair" in respect of its information disclosure which was in line with the relevant  provisions  under  the  Rules  Governing  the  Listing  of  Securities  on  the  Shanghai  Stock Exchange and the Information Disclosure Guidelines of the Company. Therefore, the Company has duly  fulfilled  its  obligation  of  ensuring  the  disclosure  of  true,  accurate,  complete  and  timely information.

 

(9)       Internal controls

 

 

The Company continued to improve its internal control system and steadily proceeded with the construction of the internal control system in strict accordance with regulatory requirements. During the year, we considered the internal control evaluation reports and the internal audit reports issued by the internal control auditor. We are of the opinion that the internal control evaluation report has truly reflected the situation of the Company's internal control.

 

(10)     Operation of the Board of Directors and its special committees

 

 

In  compliance  with  the  provisions  of  the  Articles  of  Association,  the  Board  of  Directors consists of 12 directors, including 6 non-executive directors, 2 executive directors and 4 independent directors, the number and composition of which have satisfied the requirements of relevant laws and regulations. In 2014, the Board of Directors and its special committees have carried out their duties and functions effectively in strict compliance with the requirements of the Articles of Association, Rules and Procedures for Board Meeting and the terms of reference for each special committee.

 

In 2015, we will continue to follow the principles of prudence, diligence and integrity and the spirit of being accountable to the Company and all shareholders. In addition, we will enhance communications with  the  directors,  supervisors  and  management  of  the  Company  and  pay  special  attention  to  important issues including connected transactions, external guarantees and information disclosures, thereby protecting the legitimate interests of our investors, especially protecting the minority shareholders from any damage, and providing strong support for the sustainable and healthy development of the Company.

 

Independent Directors: Fu Yang, Yang Yuzhong, Pan Xiaojiang, To Chi Keung Simon

 

 

26 March 2015


 

 

 

 

 

 

 

 

 

 

 

 

 

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

 

 

NOTICE OF ANNUAL GENERAL MEETING

 

 

NOTICE IS HEREBY GIVEN that an annual general meeting ("AGM") of Air China Limited (the "Company") for the year ended 31 December 2014 will be held at 2:00 p.m. on Friday, 22 May 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC for the following purposes:

 

ORDINARY RESOLUTIONS

 

 

1.         To consider and approve the 2014 work report of the board of directors (the "Board") of the

Company;

 

 

2.         To consider and approve the 2014 work report of the supervisory committee of the Company;

 

 

3.         To consider and approve the audited consolidated financial statements of the Company for the year 2014 prepared under the PRC Accounting Standards and the International Financial Reporting Standards;

 

4.         To consider and approve the profit distribution proposal for the year 2014 as recommended by the Board (including approving the appropriation of 10% of the balance of the net profit of the Company of the year 2014 as set out in the financial statements prepared under the PRC Accounting  Standards  into  the  discretionary  surplus  reserve  of  the  Company  and  the distribution of a cash dividend of RMB683 million, or RMB0.5223 (including tax) per ten shares based on the total number of 13,084,751,004 shares of the Company, for the year 2014 and to authorise the Board to implement such proposals;

 

5.         To consider and approve the re-appointment of KPMG as the Company's international auditor and KPMG Huazhen (Special General Partnership) as the Company's domestic auditor and internal control auditor respectively for the year ending 31 December 2015 and to authorise the management of the Company to determine their remunerations for the year 2015;

 

6.         To consider and approve the appointment of Mr. Stanley Hui Hon-chung as an independent non-executive director of the Company.


 

 

SPECIAL RESOLUTIONS

 

 

To consider and approve the following resolutions as special resolutions (items 7 to 8):

 

 

7.         "THAT

 

 

(a)        the authorisation of the Board of the Company to allot, issue and deal with additional shares of the Company be and is hereby approved:

 

(1)        subject  to  paragraph  (3)  of  this  resolution,  the  exercise  by  the  Board  of  the Company  during  the  Relevant  Period  (as  defined  in  paragraph  (4)  of  this resolution)  of  all  the  powers  of  the  Company  to  allot,  issue  and  deal  with additional A Shares and/or H Shares of the Company (hereinafter referred to as "Shares")  and  to  make  or  grant  offers,  agreements  and  options  which  might require the exercise of such powers be and is hereby generally and unconditionally approved;

 

(2)        this  approval  shall  authorise  the  Board  of  the  Company  during  the  Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

 

(3)        the amount of additional A Shares and H Shares (as the case may be) allotted, issued and dealt with or agreed conditionally or unconditionally to be allotted, issued  and  dealt  with  either  separately  or  concurrently  by  the  Board  of  the Company pursuant to the approval in paragraph (1) of this resolution shall not exceed 20% of each of the Company's existing A Shares and H Shares (as the case may be) in issue at the date of passing this resolution; and

 

(4)        for the purpose of this resolution:

 

 

"Relevant Period" means the period from the passing of this resolution until the earlier of:

 

(i)         the conclusion of the next annual general meeting of the Company;

 

 

(ii)        the  expiration  of  the  12  months  period  following  the  passing  of  this resolution; and

 

(iii)       the  revocation  or  variation  of  the  authority  given  to  the  Board  of  the Company under this resolution by a special resolution of the Company's shareholders in general meetings; and

 

(b)       the Board of the Company be and is hereby authorised to increase the registered capital of the Company to reflect the issue of Shares authorised under this resolution, and to make such appropriate and necessary amendments to the Articles of Association of the


 

 

Company  as  they  think  fit  to  reflect  such  increases  in  the  registered  capital  of  the Company and to take any other action and complete any formality required to effect such increase of the registered capital of the Company;"

 

8.         "THAT the Board of the Company be and is hereby authorised, generally and unconditionally, to issue, in one or multiple tranche(s), debt financing instruments within the permissible size under  the  applicable  laws  and  regulations.  Debt  financing  instruments  include  but  are  not limited to corporate bonds, ultra-short- term commercial papers, short-term commercial papers, mid-term notes, domestic non-public targeted debt financing instruments, overseas non-public targeted debt financing instruments and overseas bonds/notes denominated in RMB or foreign currencies."

 

By order of the Board Air China Limited Cai Jianjiang Chairman

 

Beijing, PRC, 2 April 2015

 

 

As at the date of this notice, the directors of the Company are Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr. Song Zhiyong, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Yang Yuzhong*, Mr. Pan Xiaojiang* and Mr. Simon To Chi Keung*.

 

*          Independent non-executive director of the Company

 

Notes:

 

1.         Closure of Register of Members

 

(i)         Eligibility for attending the AGM

 

Holders of H Shares of the Company are advised that the register of members of the Company will close from Wednesday, 22 April 2015 to Friday, 22 May 2015 (both days inclusive), during which time no transfer of H Shares  of  the  Company  will  be  effected  and  registered.  In  order  to  qualify  for  attendance  at  the  AGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H Share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716,

17/F., Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, by 4:30 p.m. on Tuesday, 21 April

2015.

 

Shareholders of the Company whose names appear on the register of members of the Company on the close of business on Tuesday, 21 April 2015 are entitled to attend the AGM.

 

(ii)        Eligibility for receiving 2014 final dividends

 

The Board of the Company has recommended the payment of a final dividend of RMB0.5223 (including tax) per ten shares for the year 2014. If the final dividend is payable by the passing of Resolution No. 4 by the shareholders, it will be paid to shareholders whose names appear on the register of members of the Company at the close of business on Friday, 29 May 2015.


 

 

The register of members of the Company will be closed from Saturday, 30 May 2015 to Thursday, 4 June 2015 (both dates inclusive) during which period no transfer of H shares of the Company will be registered. In order to be entitled to receive the 2014 final dividends (if approved), all transfers of H shares of the Company accompanied  by  the  relevant  share  certificates  and  appropriate  transfer  forms  must  be  lodged  with  the Company's  H  shares  registrar,  Computershare  Hong  Kong  Investor  Services  Limited  at  Shops  1712-1716,

17/F., Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Friday, 29

May 2015.

 

2.         Notice of attendance

 

H Share shareholders who intend to attend the AGM should complete and lodge the accompanying notice of attendance and return it to the Company's H Share registrar on or before Saturday, 2 May 2015. The notice of attendance may be delivered by hand, by post or by fax to the Company's H Share registrar Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong. Completion and return of the notice of attendance do not affect the right of a shareholder to attend the AGM. However, the failure to return the notice of attendance may result in an adjournment of the AGM, if the number of shares carrying the right to vote represented by the shareholders proposing to attend the AGM by the notice of attendance does not reach more than half of the total number of shares of the Company carrying the right to vote at the AGM.

 

3.         Proxy

 

Every shareholder who has the right to attend and vote at the AGM is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his behalf at the AGM.

 

A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointer or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company's H Share registrar for holders of H Shares not less than 24 hours before the time appointed for the holding of the AGM. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company's H Share registrar.

 

4.         Other businesses

 

(i)         The AGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be responsible for their own traveling and accommodation expenses.

 

(ii)        The address of Computershare Hong Kong Investor Services Limited is:

 

17M Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

Tel No.: (852) 2862 8628

Fax No.: (852) 2865 0990

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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