A shares Listing - Part 1

Beijing Datang Power Generation Com 01 June 2004 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in DATANG INTERNATIONAL POWER GENERATION CO., LTD., you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. Datang International Power Generation Co., Ltd. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) Proposed application to issue A Shares in the PRC Proposed amendments to the Articles of Association and Connected transactions Independent financial adviser to the independent board committee of Datang International Power Generation Co., Ltd. in respect of the connected transactions DBS IT IS IMPORTANT TO NOTE THAT THE PURPOSE OF DISTRIBUTING THIS CIRCULAR IS TO PROVIDE THE SHAREHOLDERS OF THE COMPANY WITH ADDITIONAL INFORMATION ON, AMONG OTHER THINGS, THE PROPOSED ISSUE OF A SHARES BY THE COMPANY, SO THAT THE SHAREHOLDERS OF THE COMPANY MAY MAKE AN INFORMED DECISION ON VOTING IN RESPECT OF CERTAIN RESOLUTIONS TO BE TABLED AT THE EXTRAORDINARY GENERAL MEETING AND THE CLASS SHAREHOLDERS MEETINGS OF THE COMPANY. THE A SHARES WILL BE ISSUED ONLY TO SUBSCRIBERS IN THE PEOPLE'S REPUBLIC OF CHINA. THIS CIRCULAR DOES NOT CONSTITUTE AN OFFER OF, OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE A SHARES, NOR IS THIS CIRCULAR CALCULATED TO INVITE OFFERS FOR ANY SHARES OR OTHER SECURITIES OF THE COMPANY. A letter from the board of directors of the Company is set out on pages 4 to 15 of this circular. A letter from the Independent Board Committee is set out on page 16 of this circular. A letter from DBS Asia Capital Limited, the independent financial adviser to the Independent Board Committee, is set out on pages 17 to 20 of this circular. A notice dated 6 May 2004 convening the extraordinary general meeting, the H Shares class meeting and the domestic shares class meeting of the Company to be held at Conference Room No. 804, No. 482 Guanganmennei Avenue, Xuanwu District, Beijing, the People's Republic of China at 11:00 a.m. 11:30 a.m. and 12:00 noon respectively on 22 June 2004 (copy of all of which are set out on pages 75 to 84 of this circular), together with the relevant reply slip for attendance and proxy form, has been despatched to the shareholders of the Company. If you are eligible, and intend, to attend the extraordinary general meeting and/or the class shareholders meeting of the Company, please complete and return the relevant reply slip for attendance enclosed with the notice of extraordinary general meeting and/or the class shareholders meeting of the Company in accordance with the instructions printed thereon as soon as possible and in any event not later than 1 June 2004. Whether or not you will attend the extraordinary general meeting and/or the class shareholders meeting of the Company, you are requested to complete and return the relevant proxy form enclosed with the notice of extraordinary general meeting and/or the class shareholders meeting of the Company in accordance with the instructions printed thereon. Completion and return of the proxy form will not precluded you from attending and voting in person at the extraordinary general meeting and/or the class shareholders meeting of the Company (as the case may be) or any adjournment thereof should you so wish. 27 May 2004 CONTENTS Page Definitions 1 Letter from the board 1. Introduction 4 2. Proposed application to issue A Shares in the PRC 6 3. Proposed amendments to the articles of association 13 4. General information 13 5. Recommendation 15 6. Additional information 15 Letter from the independent board committee 16 Letter from DBS Asia 17 Appendix I - PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION 21 Appendix II - GENERAL INFORMATION 72 NOTICE OF EXTRAORDINARY GENERAL MEETING 75 NOTICE OF H SHARES CLASS MEETING 79 NOTICE OF DOMESTIC SHARES CLASS MEETING 82 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the following meanings: 'A Share(s)' means the domestic ordinary share(s) of the Company with a nominal value of RMB1.00 each which are to be subscribed in RMB and are proposed to be issued by the Company to (i) part of the existing holders of domestic shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading); and (ii) natural person and institutional investors in the PRC; 'A Share Issue' means the proposed issue of A Shares to (i) part of the existing holders of domestic shares of the Company (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading); and (ii) natural person and institutional investors in the PRC, by the Company. The A Shares to be issued under the Public Subscription Tranche are proposed to be listed on the Shanghai Stock Exchange; 'Articles of Association' or means the articles of association of the Company; 'Articles' 'Associate(s)' has the meaning ascribed thereto in the Listing Rules; 'BIPDIC' means Beijing International Power Development and Investment Company(Chinese Characters), a state-owned enterprise established under the laws of the PRC and a substantial shareholder of the Company holding approximately 13.01% of the issued share capital of the Company; 'Board' means the board of Directors; 'CDGC' means China Datang Corporation(Chinese Characters), a state-owned enterprise established under the laws of the PRC and a substantial shareholder of the Company holding approximately 35.43% of the issued share capital of the Company; 'Company' means Datang International Power Generation Co., Ltd. (Chinese Characters), a joint stock limited company incorporated in the PRC on 13 December 1994, the H Shares of which are listed on the Hong Kong Stock Exchange and the London Stock Exchange; 'Convertible Bond' means the convertible bond issued by the Company on 3 September 2003 which can be converted into new H Shares; 'CSMs' means the class shareholders meeting of the Company for each of the holders of H Shares and holders of domestic shares of the Company, each proposed to be held on 22 June 2004; 'DBS Asia' means DBS Asia Capital Limited, the independent financial adviser to the Independent Board Committee and is a deemed licensed corporation to carry out regulated activities of advising on securities and corporate finance under the SFO; 'CSRC' means China Securities Regulatory Commission; 'Directors' means the directors of the Company; 'EGM' means the extraordinary general meeting of the Company proposed to be held on 22 June 2004; 'Guide for Articles of means the Guide for Articles of Association of Listed Companies promulgated by the CSRC Association' on 16 December 1997; 'HCIC' means Hebei Construction Investment Company (Chinese Characters) a state-owned enterprise established under the laws of the PRC and a substantial shareholder of the Company holding approximately 13.01% of the issued share capital of the Company; 'H Shares' means the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each which are listed on the Hong Kong Stock Exchange and the London Stock Exchange; 'HK$' means Hong Kong dollars, the lawful currency of Hong Kong; 'Hong Kong' means Hong Kong Special Administrative Region of the PRC; 'Hong Kong Stock Exchange' means The Stock Exchange of Hong Kong Limited; 'Independent Board Committee' means a committee of the Board comprising the two independent non-executive Directors (namely, Mr. Xu Daping and Mr. Wu Zhentao) established for the purpose of advising the Independent Shareholders in respect of the Private Placement Arrangements; 'Guiding Opinions' means the Guiding Opinions Concerning the Establishment of the System of Independent Directors for Listed Companies promulgated by the CSRC on 16 August 2001; 'Independent Shareholders' means shareholders of the Company other than CDGC and TJIC; 'Latest Practicable Date' means 18 May 2004, being the latest practicable date for ascertaining certain information referred to in this circular prior to the printing of this circular; 'Listing Rules' means the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange; 'London Stock Exchange' means the London Stock Exchange Limited; 'PRC' means the People's Republic of China; 'Private Placement means the proposed private placing of A Shares to part of the existing holders of Arrangements' domestic shares of the Company at the same issue price as the A Shares to be issued under the Public Subscription Tranche. Such A Shares will not be listed and traded on the Shanghai Stock Exchange for the time being; 'Public Subscription Tranche' means the public offer of A Shares to natural persons and institutional investors in the PRC. Such A Shares are proposed to be listed on the Shanghai Stock Exchange; 'Regulatory Opinions' means the Regulatory Opinions on Standardising Shareholders' General Meetings of Listed Companies promulgated by the CSRC on 18 May 2000; 'RMB' means Renminbi, the lawful currency of the PRC; 'SFO' means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong); 'Shanghai Stock Exchange' means Shanghai Stock Exchange of the PRC; 'Standards' means the Standards for the Governance of Listed Companies jointly promulgated by the CSRC and the former State Economic and Trade Commission of the PRC on 7 January 2002; 'substantial shareholders' has the meeting ascribed thereto in the Listing Rules; 'TJIC' means Tianjin Jinneng Investment Company (Chinese Characters), a state-owned enterprise established under the laws of the PRC and a substantial shareholder of the Company holding approximately 10.84% of the issued share capital of the Company; and '%' percent. For the purpose of this circular, where amounts in HK$ have been derived from RMB, such translations are for the convenience of the reader only, and except as otherwise indicated, have been made at the rate of RMB1.06 to HK$1.00. No representation is made that RMB amounts could have been or could be converted into HK$ at this rate or any other rate or at all. LETTER FROM THE BOARD Datang International Power Generation Co., Ltd. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) Executive Directors: Legal address: YU Hongji No. 482 Guanganmennei ZHANG Yi Avenue, Xuanwu District YANG Hongming Beijing, 100053 WANG Xianzhou People's Republic of China Non-executive Directors: Principal place of business ZHAI Ruoyu in Hong Kong: HU Shengmu c/o Simmons & Simmons YANG Jiayi 35th Floor LIU Haixia Cheung Kong Center SU Tiegang 2 Queen's Road Central YE Yonghui Central TONG Yunshang Hong Kong ZHANG Wantuo 27 May 2004 Independent non-executive Directors: XU Daping WU Zhentao To the shareholders of the Company Dear Sir or Madam, PROPOSED APPLICATION TO ISSUE A SHARES IN THE PRC PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND CONNECTED TRANSACTIONS 1. INTRODUCTION A Share Issue Reference was made to the announcement dated 6 May 2004 issued by the Company, in which it was announced that the Company intends to apply to the CSRC for the issue of a maximum of 1,000,000,000 A Shares. The A Share Issue will involve (i) the issue of a maximum of 301,704,761 A Shares and 92,358,600 A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) to CDGC and TJIC, respectively, at the same issue price as the A Shares to be issued under the Public Subscription Tranche; and (ii) the issue of a maximum of 605,936,639 A Shares to natural persons and institutional investors in the PRC. The A Shares to be issued under the Public Subscription Tranche are proposed to be listed on the Shanghai Stock Exchange. The A Share Issue is subject to be approved by the shareholders of the Company at the EGM and the CSMs. As each of CDGC and TJIC is a substantial shareholder of the Company holding approximately 35.43% and 10.84% respectively of its entire issued share capital, the proposed issue of any of the A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) under the Private Placement Arrangements to each of CDGC and TJIC, if materialised, will constitute connected transactions of the Company under the Listing Rules, and is subject to be approved by the Independent Shareholders at the EGM with CDGC and TJIC and their respective Associates abstaining from voting in the resolution regarding the Private Placement Arrangements. The Independent Board Committee has been established to consider each of the Private Placement Arrangements and to advise the Independent Shareholders in respect of the same. DBS Asia has been appointed as the independent financial adviser to advise the Independent Board Committee. Proposed amendments to the Articles of Association Due to the change of the Company's name from '(Chinese Characters) Beijing Datang Power Generation Co. Ltd.' to ' (Chinese Characters) Datang International Power Generation Co., Ltd.' effective from 15 March 2004 (the stock short name of the Company was also changed from '(Chinese Characters) Beijing Datang' to '(Chinese Characters) Datang Power' effective from 7 May 2004), the proposed A Share Issue and the recent amendments to the Listing Rules, amendments are proposed to be made to the Articles of Association. Such proposed amendments to be made to the Articles of Association are subject to be approved by the shareholders of the Company at the EGM, and are conditional upon obtaining any approval or registration as may be necessary from the relevant PRC authorities. EGM The EGM will be held on Tuesday, 22 June 2004 to consider and, if thought fit, approve, inter alia, the resolution authorising the Board to issue A Shares not exceeding 1,000,000,000 A Shares and to determine the implementation details of the A Shares Issue, the Private Placement Arrangements and the amendments proposed to be made to the Articles of Association. CSMs In accordance with Rule 19A.38 of the Listing Rules and the Articles of Association, for the purpose of approving the A Share Issue, CSM will be held for each of the holders of H Shares and holders of domestic shares of the Company on 22 June 2004, at which certain resolutions will be proposed to consider and, if thought fit, approve, inter alia, the resolution authorising the Board to issue A Share not exceeding 1,000,000,000 A Shares and to determine the implementation details of the A Share Issue. The purpose of this circular is to provide shareholders of the Company with further information in relation to the A Share Issue, the Private Placement Arrangements and amendments proposed to be made to the Articles of Association, so as to enable the shareholders of the Company to vote on the resolutions set out in the Company's notices of EGM and CSMs issued on 6 May 2004. The recommendations of the Independent Board Committee to the independent shareholders of the Company are set out on page 16 of this circular. A copy of the letter from DBS Asia containing its advice to the Independent Board Committee is set out on page 17 to 20 of this circular. 2. PROPOSED APPLICATION TO ISSUE A SHARES IN THE PRC On 29 April 2004, the Board resolved that the Company shall apply to the CSRC for the issue of a maximum of 1,000,000,000 A Shares (with no minimum number of A Shares proposed to be issued). The A Share Issue will involve (i) the issue of a maximum of 301,704,761 A Shares and 92,358,600 A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) to CDGC and TJIC, respectively, at the same issue price as the A Shares to be issued under the Public Subscription Tranche; and (ii) the issue of a maximum of 605,936,639 A Shares to natural persons and institutional investors in the PRC. The Board also resolved that the A Shares to be issued under the Public Subscription Tranche are proposed to be listed on the Shanghai Stock Exchange. In connection with the Private Placement Arrangements, each of CDGC and TJIC issued a written commitment in favour of the Company that CDGC and TJIC respectively will fully subscribe in cash in full, at the same issue price as the A Shares to be issued under the Public Subscription Tranche, for a maximum of 301,704,761 A Shares and 92,358,600 A Shares respectively (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) to be allocated to it under the Private Placement Arrangements. Such A Shares to be subscribed by CDGC and TJIC respectively pursuant to the Private Placement Arrangements cannot be listed on the Shanghai Stock Exchange until such time when the PRC government releases any new policy regulating the exchange trading of State-owned shares and legal person shares. To the best knowledge of the Directors, they are not aware as to whether and, if so, when any such new policy may be released. The numbers of A Shares to be placed to CDGC and TJIC will be adjusted accordingly with reference to the actual total number of A Shares to be issued. 2.1 Structure of the A Share Issue The structure of the A Share Issue is set out below: (1) Type of securities to be issued: RMB denominated ordinary shares (2) Number of A Shares to be issued: Not more than 1,000,000,000 A Shares, the exact number of which shall be determined by the Board as proposed to be authorised by the shareholders of the Company at the EGM and CSMs (3) Par value: RMB1.00 per A Share (4) Target subscribers: Part of the existing holders of domestic shares of the Company, natural persons and institutional investors (who and which have established shareholders account and except those prohibited by PRC laws or regulations) in the PRC. (i) CDGC and TJIC, being part of the existing holders of domestic shares of the Company, intended to subscribe at the same issue price as the A Shares to be issued under the Public Subscription Tranche for not more than 301,704,761 A Shares and 92,358,600 A Shares (based on the issue of 1,000,000,000 A Shares), respectively, representing approximately 30.17% and 9.24% of the total number of A Shares to be issued (based on the issue of 1,000,000,000 A Shares), respectively. The number of A Shares to be placed to each of CDGC and TJIC will be adjusted accordingly with reference to the actual total number of A Shares to be issued so that the shareholding of each of CDGC and TJIC in the enlarged issued share capital of the Company upon completion of the A Share Issue will be approximately 33.40% and 10.22%, respectively. Such A Shares will not be listed and traded on the Shanghai Stock Exchange for the time being. (ii) The Company intends to issue not more than 605,936,639 A Shares to natural persons and institutional investors (who and which have established shareholders account and except those prohibited by PRC laws or regulations) in the PRC. (5) Issue price and pricing process: The issue price of the A Shares will be determined in accordance with strict market principles based on the PRC securities market condition at the time when the A Share Issue takes place. The final issue price as well as the pricing mechanism will, as may be required under the relevant PRC laws and regulations, be subject to be approved by all relevant PRC regulatory authorities including the CSRC. (6) Use of proceeds: It is currently expected that the net proceeds from the A Share Issue will not be more than RMB6 billion (approximately HK$5.7 billion). The Board currently intend to use the net proceeds from the A Share Issue in instalment in following projects: (a) approximately RMB248 million (approximately HK$234 million) to complete phase II of the Datang Tuoketuo power generation project; (b) approximately RMB350 million (approximately HK$330 million) to complete the Datang Shentou power generation project; (c) approximately RMB211 million (approximately HK$208 million) to complete the Datang Liancheng power generation project; (d) approximately RMB323 million (approximately HK$305 million) to complete phase II of the Datang Tangshan power generation project; (e) approximately RMB347 million (approximately HK$327 million) to complete the Datang Honghe power generation project; (f) approximately RMB854 million (approximately HK$806 million) to complete the Datang Pengshui power generation project; (g) approximately RMB609 million (approximately HK$575 million) to complete phase III of the Datang Tuoketuo power generation project; (h) approximately RMB1,094 million (approximately HK$1,032 million) to complete the Datang Chaozhou power generation project; (i) approximately RMB546 million (approximately HK$515 million) to complete phase I of the Fujian Datang Ningde power generation project; and (j) approximately RMB999 million (approximately HK$942 million) to complete phase I of the Zhejiang Datang Wushashan power generation project. To the extent that the net proceeds from the A Share Issue are not sufficient to fund the above projects, the Company will use its internal resources, if necessary. To the extent that the net proceeds from the A Share Issue are not immediately required for the above projects, the Company may place such funds in deposits with banks. To the extent that the net proceeds exceed the funds required for the above projects, the Company may use such funds as working capital or to repay outstanding loan facilities of the Company. A resolution will be proposed at the EGM that the Board shall be authorised to make appropriate adjustments to the use of proceeds from the A Share Issue within the scope of the 10 projects stated above which will be approved by the shareholders of the Company in the EGM and to determine the final plan for the use of proceeds from the A Share Issue, including, but not limited to, determining each specific project and the amount of funds to be used, and to sign any contracts relating to the projects. In the event that any adjustments are to be made to the use of proceeds from the A Share Issue which fall outside the scope of the 10 projects stated above as approved by the shareholders of the Company in the EGM, the Company will make an announcement as and when appropriate. The A Share Issue (including the proposed issue of A Share (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) to each of CDGC and TJIC) shall be conducted in accordance with the requirements of the CSRC. It should be noted that the A Share Issue and the structure thereof, is also subject to the approval and/or endorsement of the CSRC, and that of the Shanghai Stock Exchange in respect of the listing and trading on the Shanghai Stock Exchange of such A Shares to be issued under the Public Subscription Tranche. 2.2 Ancillary matters relating to the A Share Issue 2.2.1 Sharing of unappropriated accumulated profits After completion of the A Share Issue, the existing and new shareholders of the Company shall, subject to be approved by the shareholders of the Company at the EGM and CSMs, be entitled to mutual sharing of the Company's unappropriated accumulated profits when the A Share Issue takes place. 2.2.2 Taking of necessary action by the Directors The Directors shall, under circumstances that do not violate any PRC laws, regulatory requirements and the Articles of Association and subject to be approved by the shareholders of the Company at the EGM and CSMs, be authorised to sign all documents, carry out all procedures and take any other action as are necessary to effect, for the purpose of or otherwise in connection with, and upon, the A Share Issue and the proposed listing of such A Shares to be issued under the Public Subscription Tranche on the Shanghai Stock Exchange. 2.2.3 Shareholders' approvals to be sought at the EGM and CSMs and effective period of such approvals The A Share Issue, including, but not limited to, the proposal relating to the A Share Issue, the listing of such A Shares to be issued under the Public Subscription Tranche on the Shanghai Stock Exchange, the mutual sharing of the Company's unappropriated accumulated profits between its existing and new shareholders when the A Share Issue takes place, and the authorisation of the Directors in such terms and in such manner as set out above, are subject to be approved by the shareholders of the Company at the EGM and each of the holders of the H Shares and the holders of the domestic shares of the Company at the respective CSM. Moreover, the use of proceeds of the A Share Issue, the proposed amendments to the Articles of Association and the authorisations for the Board to implement the above matters are also subject to the approval of the shareholders of the Company at the EGM. All resolutions to be proposed and sought at the EGM and CSMs in respect of or otherwise relating to the A Share Issue, if passed by the shareholders of the Company thereat, are, in compliance with and legally required under the relevant PRC laws, proposed to be effective for a period of one year from the date on which the relevant resolutions are being approved in the EGM and CSMs, such that if the A Share Issue is not completed within such one year period, the relevant resolutions passed at each of the EGM and CSMs will no longer be effective and fresh resolutions relating to the A Share Issue will then be required to be sought at the general meeting and class shareholders meetings of the Company to be convened for that purposes. Having said that, it is the current intention of the Board that the A Share Issue will, subject to the approval(s) by all relevant PRC regulatory authorities including the CSRC being obtained, take place within one year following each of the EGM and CSMs. As at the Latest Practicable Date, as each of CDGC and TJIC is a substantial shareholder of the Company holding approximately 35.43% and 10.84% respectively of its entire issued share capital, the proposed issue of any of the A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) under the A Share Issue to each of CDGC and TJIC, if materialised, will constitute a connected transaction of the Company under the Listing Rules, and is subject to be approved by the Independent Shareholders at the EGM with CDGC and TJIC abstaining from voting in the resolution regarding the Private Placement Arrangements. As confirmed by the Company's legal advisers as to PRC laws and Hong Kong laws, the Board is of the view that under the applicable laws, regulation, rules and the Articles of Association, except for the resolution regarding the proposed issue of A Shares to each of CDGC and TJIC under the Private Placement Arrangements, each of CDGC and TJIC is not required to abstain from voting in respect of all other resolutions relating to the A Share Issue and to be sought at the EGM or the CSMs. Further, in the event that the resolution to approve the proposed issue by the Company of a maximum of 1,000,000,000 A Shares under the A Share Issue is not passed or approved at the EGM and/or the CSMs and/or by the CSRC, the resolution regarding the proposed issue of A Shares to CDGC and TJIC under the Private Placement Arrangements, even if passed, will not become effective as no A Shares will be issued by the Company under such circumstances. The Board has appointed the Independent Board Committee to consider and advise the Independent Shareholders on, among other things, the terms of the proposed issue of A Shares to each of CDGC and TJIC under the Private Placement Arrangements, and has appointed DBS Asia as the independent financial adviser to advise the Independent Board Committee on the terms of the Private Placement Arrangements insofar the Independent Shareholders are concerned. 2.2.4 Regulatory requirements for holding of A Shares According to the current PRC laws and regulations, unless specifically approved, A Shares can only be subscribed by natural persons and institutional investors in the PRC. Accordingly, the Company is effectively not allowed to extend similar private placement arrangements to the holders of H Shares due to the restrictions of the relevant PRC laws and regulations for A Shares. 2.3 Reasons for and the benefits of the A Share Issue The Directors believe that with the proceeds raised from the A Share Issue, the Company could further develop its business in the development, construction and operation of power plants in the PRC. The A Share Issue will also provide the Company with an alternative channel to raise further capital and will enhance the shareholders base and enlarge the capital base of the Company. It will also enhance the profile of the Company in the PRC. 2.4 Effects of the A Share Issue on the Company's capital structure Set out below is a summary of the changes in the shareholding percentage of the Company prior to and immediately upon completion of the A Share Issue based on the assumption that the entire 1,000,000,000 A Shares will be issued and the Convertible Bond issued by the Company will be fully converted into 215,812,558 H Shares (based on the conversion price of HK$5.558 per H Shares) immediately upon completion of the A Share Issue: Shareholding Immediately Shareholding upon Shareholders of Prior to the percentage completion of percentage (%) (%) the Company A Share Issue (approximate) the A Share Issue (approximate) 1. Unlisted domestic shares: CDGC 1,828,768,200 35.43 2,130,472,961 (1) 33.40 BIPDIC 671,792,400 13.01 671,792,400 10.53 HCIC 671,792,400 13.01 671,792,400 10.53 TJIC 559,827,000 10.84 652,185,600 (2) 10.22 2. Listed domestic and foreign shares: Public holders of A Shares - - 605,936,639 9.50 Public holders of H Shares 1,430,669,000 27.71 1,646,481,558 (3) 25.81 Total 5,162,849,000 100.00 6,378,661,558 100.00 Notes: 1. Include the 301,704,761 A Shares to be issued under the Private Placement Arrangements. 2. Include the 92,358,600 A Shares to be issued under the Private Placement Arrangements. 3. Include the Convertible Bond issued by the Company assumed to be fully converted into 215,812,558 H Shares. 3. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION To cater for the A Share Issue, amendments will, in accordance with laws and regulations prescribed by the relevant PRC authorities including the CSRC stipulating provisions mandatory or otherwise recommended for inclusion in Articles of Associations of PRC listed companies (including the Guide for Articles of Association, the Standards, the Regulatory Opinions and the Guiding Opinions), be made to the Articles of Association in compliance or otherwise in accordance with all such legal and regulatory requirements. The proposed amendments to be made to the Articles of Association primarily aim to enhance the corporate governance of the Company and, in accordance with the above-mentioned PRC laws and regulations, deal with matters relating to a number of areas including: rights of shareholders, authority of, and procedures at, shareholders' general meetings, qualifications of Directors and supervisors of the Company, authority of, and procedures for, the Board, procedures for nominating and electing Directors, duties of the Company secretary, duties of the manager and internal audit and certain other related matters. The Articles of Association will also be amended to reflect the change of name of the Company as well as to reflect the recent amendments to the Listing Rules. Such proposed amendments to be made to the Articles of Association are subject to be approved by the shareholders of the Company at the EGM, and are conditional upon obtaining any approval, or registration as may be necessary from the relevant PRC authorities. Details regarding such proposed amendments are set out in Appendix I. The Directors believe that such proposed amendments are a practical opportunity to update the Articles of Association, and will ensure that mechanisms will be in place for the Company, as a company listed on the Hong Kong Stock Exchange and, upon completion of the A Share Issue, expected to be listed on the Shanghai Stock Exchange, to continue to adhere to the standards of corporate governance required by the Hong Kong Stock Exchange and the Shanghai Stock Exchange. 4. GENERAL INFORMATION 4.1 The A Share Issue and connected transactions The A Share Issue shall be conducted in accordance with the requirements of the CSRC. It should also be noted that the A Share Issue, upon being approved by the shareholders of the Company and the Independent Shareholders, is subject to the approval of the CSRC, and that of the Shanghai Stock Exchange in respect of the listing and trading on the Shanghai Stock Exchange of such A Shares to be issued under the Public Subscription Tranche. As each of CDGC and TJIC is a substantial shareholder of the Company holding approximately 35.43% and 10.84% respectively of its entire issued share capital as at the Latest Practicable Date, the proposed issue of any of the A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) under the Private Placement Arrangements to each of CDGC and TJIC, if materialised, will constitute a connected transaction for the Company under the Listing Rules, and is subject to be approved by the Independent Shareholders at the EGM with CDGC and TJIC abstaining from voting in the resolution regarding the Private Placement Arrangements. The Board has appointed the Independent Board Committee to consider and advise the Independent Shareholders on, among other things, the Private Placement Arrangements, and has appointed DBS Asia as the independent financial adviser to advise the Independent Board Committee. There is no assurance that the A Share Issue will materialise or will proceed in such manner and in such terms as are set out herein. Investors are therefore advised to exercise caution when dealing in the H Shares. Further details regarding the A Share Issue will, when the A Share Issue materialises, be disclosed in newspapers in the PRC, and the Company will then publish an announcement in newspapers in Hong Kong simultaneously in accordance with the Listing Rules. 4.2 EGM The EGM will be held on Tuesday, 22 June 2004 to consider, and if thought fit, approve, inter alia, the resolution authorising the Board to issue A Shares not exceeding 1,000,000,000 A Shares and to determine the implementation details of the A Shares Issue, the Private Placement Arrangements and the amendments proposed to be made to the Articles of Association. A notice dated 6 May 2004 convening the EGM (a copy of which is set out on pages 75 to 78 of this circular), together with the reply slip for attendance and proxy form has been despatched to the shareholders of the Company. 4.3 CSMs In accordance with Rule 19A.38 of the Listing Rules and the Articles of Association, for the purpose of approving the A Share Issue, CSM will be held for each of the holders of H Shares and holders of domestic shares of the Company on 22 June 2004, at which certain resolutions will be proposed to consider and, if thought fit, approve, inter alia, the resolution authorising the Board to issue A Share not exceeding 1,000,000,000 A Shares and to determine the implementation details of the A Share Issue. Shareholders of the Company whose names appeared on the register of members of the Company at the close of business on Friday, 21 May 2004 are entitled to attend the EGM and the CSMs. The H Share register of members of the Company will be closed on Saturday, 22 May 2004 until Tuesday, 22 June 2004, both days inclusive, during which period no transfer of H Shares will be effected. If you are eligible, and intend, to attend the EGM and/or the CGM, please complete and return the relevant reply slip for attendance enclosed with the Company's notice of the EGM and/or the CGM in accordance with the instructions printed thereon as soon as possible and in any event by Tuesday, 1 June 2004. Whether or not you will attend the EGM and/or the CGM, you are requested to complete and return the relevant proxy form enclosed with the Company's notice of the EGM and /or the CGM in accordance with the instructions printed thereon. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM and/or the CGM or any adjournment thereof should you so wish. 5. RECOMMENDATION Your attention is drawn to the letter from the Independent Board Committee which is set out on page 16 of this circular. The text of a letter from DBS Asia, the independent financial adviser to the Independent Board Committee, containing its advice in respect of the Private Placement Arrangements, is set out on pages 17 to 20 of this circular. The Independent Board Committee, having taken into account the advice of DBS Asia, consider that the terms of each of the Private Placement Arrangements are all fair and reasonable so far as the Company and its shareholders are concerned. Accordingly, the Independent Board Committee recommends that the Independent Shareholders to vote at the EGM in favour of the resolution regarding the issue of a maximum of 301,704,761 A Shares to CDGC and a maximum of 92,358,600 A Shares to TJIC by the Company. 6. ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the appendices to this circular. Yours faithfully, For and on behalf of the board of Directors of Datang International Power Generation Company Limited Zhai Ruoyu Chairman LETTER FROM THE INDEPENDENT BOARD COMMITTEE Datang International Power Generation Co., Ltd. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) Legal address and head office: No. 482 Guanganmennei Avenue Xuanwu District Beijing, 100053 People's Republic of China 27 May 2004 To the Independent Shareholders Dear Sir or Madam, We refer to the circular (the 'Circular') dated 27 May 2004 to the shareholders of the Company of which this letter forms part. Unless the context requires otherwise, terms and expressions defined in the Circular shall have the same meanings in this letter. We have been appointed to advise the Independent Shareholders in connection with terms regarding the proposed issue of A Shares by the Company to each of CDGC and TJIC under the Private Placement Arrangements, details of all of which are set out in the letter from the Board contained in the Circular. As each of CDGC and TJIC is a substantial shareholder of the Company holding approximately 35.43% and 10.84% respectively of its entire issued share capital, the proposed issue of any of the A Shares (in the form of State-owned legal person shares which are provisionally prohibited from listing) under the Private Placement Arrangements to each of CDGC and TJIC, if materialised, will constitute a connected transaction of the Company under the Listing Rules, and is subject to be approved by the Independent Shareholders at the EGM with CDGC and TJIC abstaining from voting in the resolution regarding the Private Placement Arrangements. We wish to draw your attention to the letter of advice issued by DBS Asia which is set out on pages 17 to 20 of the Circular. We have discussed that letter and the advice contained therein with DBS Asia. Having considered, among other things, the factors and reasons considered by, and the advice of, DBS Asia, as stated in the aforementioned letter, we are of the opinion that the terms regarding the proposed issue of A Shares by the Company to each of CDGC and TJIC under the Private Placement Arrangements are fair and reasonable so far as the Company and its shareholders are concerned. Accordingly, we recommend that the Independent Shareholders vote at the EGM in favour of the resolution regarding the issue of a maximum of 301,704,761 A Shares to CDGC and a maximum of 92,358,600 A Shares to TJIC by the Company. Yours faithfully, Xu Daping Wu Zhentao Independent Board Committee LETTER FROM DBS ASIA The following is the text of the letter of advice dated 27 May 2004 from DBS Asia to the Independent Board Committee in respect of the terms regarding the proposed issue of A Shares by the Company to each of CDGC and TJIC under the Private Placement Arrangements prepared for the purpose of incorporation into this circular: DBS Asia Capital 27 May 2004 To the Independent Board Committee of Datang International Power Generation Company Limited Dear Sirs, CONNECTED TRANSACTIONs Proposed issue of A Shares under the Private Placement Arrangements We refer to our engagement as the independent financial adviser to the Independent Board Committee in relation to the Private Placement Arrangements, details of which are contained in a circular (the 'Circular') to the shareholders of the Company dated 27 May 2004, of which this letter forms part. Expressions used in this letter shall have the same meanings as defined in the Circular. As each of CDGC and TJIC is a substantial shareholder of the Company as at the Latest Practicable Date, the proposed issue and allotment of A Shares to CDGC and TJIC under the Private Placement Arrangements, if materialised, constitute connected transactions of the Company under the Listing Rules. Our scope of work under this engagement is to assess the fairness and reasonableness of the terms of such connected transactions insofar as the Independent Shareholders are concerned. It is not within our scope of work to opine on any other aspects of the A Share Issue or the A Share Issue as a whole. In arriving at our opinion, we have relied on the information, opinions and facts supplied, and representations made to us, by the Directors, and advisers and representatives of the Company (including those contained or referred to in the Circular). We have also assumed that the information and representations contained or referred to in the Circular were true and accurate in all respects at the time they were made and continue to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have relied on certain information available to the public and have assumed such information to be accurate and reliable, and we have not independently verified the accuracy of such information. We have also been advised by the Directors and believe that no material facts have been omitted from the Circular. We consider that we have reviewed sufficient information to reach an informed view, to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion. We have not, however, conducted an independent verification of the information nor have we conducted any form of in-depth investigation into the businesses and affairs or the prospects of the Company or any of its respective subsidiaries or Associates. Principal factors and reasons considered: In arriving at our opinion with regard to the terms of the proposed issue of A Shares to each of CDGC and TJIC under the Private Placement Arrangements, we have considered the principal factors and reasons set out below. Background and principal terms As stated in the announcement of the Company dated 6 May 2004, the Board resolved that the Company shall apply to the CSRC for the issue of a maximum of 1,000,000,000 A Shares. The A Share Issue will involve (i) the issue of a maximum of 301,704,761 A Shares and 92,358,600 A Shares (in the form of unlisted State-owned legal person shares) to CDGC and TJIC, respectively at the same issue price as the A Shares to be issued under the Public Subscription Tranche; and (ii) the issue of a maximum of 605,936,639 A Shares to natural persons and institutional investors in the PRC. The A Shares to be issued under the Public Subscription Tranche are proposed to be listed on the Shanghai Stock Exchange. Further details regarding the structure and other aspects of the A Share Issue are contained in the letter from the Board contained in the Circular. In connection with the Private Placement Arrangements, each of CDGC and TJIC issued a written commitment in favour of the Company that CDGC and TJIC respectively will fully subscribe in cash in full, at the same issue price as the A Shares to be issued under the Public Subscription Tranche, for a maximum of 301,704,761 A Shares and 92,358,600 A Shares respectively (in the form of State-owned legal person shares which are provisionally prohibited from listing and trading) to be allocated to it under the Private Placement Arrangements. Such A Shares to be subscribed by CDGC and TJIC respectively pursuant to the Private Placement Arrangements cannot be listed on the Shanghai Stock Exchange until such time when the PRC government releases any new policy regulating the exchange trading of State-owned shares and legal person shares. To the best knowledge of the Directors, they are not aware as to whether and, if so, when any such new policy may be released. The numbers of A Shares to be placed to CDGC and TJIC will be adjusted accordingly with reference to the actual total number of A Shares to be issued. We note that as the proposed issue and allotment of A Shares to each of CDGC and TJIC are component transactions of the A Share Issue, they are effectively subject to the approval to be granted by the shareholders of the Company at the EGM in respect of the A Share Issue. Reasons for the A Share Issue As stated in the letter from the Board, the Directors believe that with the proceeds raised from the A Share issue, the Company could further develop its business in the development, construction and operation of power plants in the PRC. The Directors have set out 10 power generation projects for which the net proceeds from the A Share Issue are intended to be used. The Directors have also stated that to the extent the proceeds of the A Share Issue are not sufficient to fund the above projects, the Company will use its internal resources, if necessary. The Company advised us that demand for electricity in the PRC will continue to be strong in the forthcoming years and it has undertaken detailed feasibility and return studies for each of the projects. We note that the Company intends to utilise the net proceeds from the A Share Issue towards its core business of power generation. The A Share Issue will provide the Company with an alternative channel to raise further capital and will enhance the shareholder base and enlarge the capital base of the Company. It will also enhance the profile of the Company in the PRC since the A Shares will be sold exclusively to natural persons and institutional investors in the PRC. The Directors indicated that they have considered various fund raising alternatives and have concluded that the A Share Issue is appropriate for the Company at this stage having considered the fact that the A Share Issue could raise the profile of the Company in the PRC. Taking into consideration factors including the overall valuation of the A Share market relative to the current valuation of the Company's H Shares being traded on the Hong Kong Stock Exchange, the expected positive demand on the Company's new A Shares and the size of the proposed fund raising for the A Share Issue, we concur with Directors' view that the A Share Issue is appropriate for the Company. Regulatory requirements for holding of A Shares According to the current PRC laws and regulations, unless specifically approved, A Shares can only be subscribed by natural persons and institutional investors in the PRC. Accordingly, while the proposed issue of A Shares to CDGC and TJIC under the Private Placement Arrangements constitute connected transactions of the Company under the Listing Rules, the Company is effectively not allowed to extend similar private placement arrangements to the holders of H Shares due to the restrictions of the relevant PRC laws and regulations for A Shares. Shareholding Assuming that a total of 1,000,000,000 A Shares are issued under the A Share Issue and assuming that the Convertible Bond issued by the Company will be fully converted into 215,812,558 H Shares (based on the conversion price of HK$5.558 per H Shares), of which a total of 301,704,761 A Shares and 92,358,600 A Shares (in the form of unlisted State-owned legal person shares) are allocated and issued to CDGC and TJIC respectively, the approximate shareholding percentage of CDGC and TJIC in the Company will be diluted from 35.43% and 10.84% respectively immediately before completion of the A Share Issue to 33.40% and 10.22% respectively immediately upon completion of the A Share Issue. The aggregate shareholding of the shareholders of the Company (excluding CDGC and TJIC) will increase from approximately 53.73% immediately before completion of the A Share Issue to approximately 56.38% immediately upon completion of the A Share Issue. The aggregate shareholding of the original holders of H Shares will be diluted from approximately 27.71% immediately before completion of the A Share Issue to approximately 25.81% immediately upon completion of the A Share Issue. The aggregate amount of H Shares and such A Shares to be issued and held by the public following completion of the A Share Issue will represent approximately 35.31% of the then total enlarged issued share capital of the Company. We note that following completion of the A Share Issue, CDGC will continue to be the controlling shareholder of the Company and that each of BIPDIC, HCIC and TJIC will continue to be a substantial shareholder of the Company. The Directors consider that such arrangement is conducive to the maintenance of a close relationship between the Company and each of CDGC, BIPDIC, HCIC and TJIC which is instrumental to the future continuing success of the Company. We also note, given the fact that the Independent Shareholders (except for BIPDIC and HCIC) are effectively not legally allowed to subscribe or hold any A Shares to be issued under the A Share Issue, the individual shareholding levels of the shareholders of the Company (excluding CDGC and TJIC) shall be diluted due to the issue of A Shares under the A Share Issue as a whole rather than as a result of the proposed issue of A Shares to each of CDGC and TJIC under the Private Placement Arrangements. Pricing of the A Share Issue under the Private Placement Arrangements The A Share Issue (including the proposed issue of A Shares to each of CDGC and TJIC), as stated in the letter from the Board contained in the Circular, shall be conducted in accordance with the requirements of the CSRC and is subject to, among other things, the approval and/or endorsement of the CSRC. The issue price as well as the pricing mechanism for the A Share Issue will, as may be required under relevant PRC laws and regulations, be subject to be approved by all relevant PRC regulatory authorities including the CSRC, and be determined in accordance with strict market principles based on the PRC securities market conditions at the time when the A Share Issue takes place. As the issue of A Shares to each of CDGC and TJIC will be at the same issue price as the issue price for the A Shares to be issued under the Public Subscription Tranche, we consider the aforesaid pricing mechanism for determining the issue price for the A Shares to be issued to each of CDGC and TJIC to be in line with market practice. We also note that there were precedents whereby new A shares were proposed to be issued to the existing State-owned shareholders of a H Share listed company on the Hong Kong Stock Exchange. Opinion Having considered the principal factors and reasons discussed above, we are of the opinion that the terms of the proposed issue of A Shares by the Company to each of CDGC and TJIC under the A Share Issue are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company as a whole. Accordingly, we would recommend the Independent Shareholders to vote in favour of the resolution regarding the issue of a maximum of 301,704,761 A Shares and 92,358,600 A Shares to CDGC and TJIC respectively at the EGM. Yours faithfully, For and on behalf of DBS ASIA CAPITAL LIMITED Kelvin S.K. Lau Managing Director APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION ARTICLES OF ASSOCIATION (Explanations to the Proposed Amendments) Amended in accordance with the relevant provisions of the Company Law, the Special Provisions Regarding Overseas Offering and Listing of Shares by Joint Stock Limited Companies, the Further Standardizing Operations and Intensifying Reform of Companies Listed Outside China Opinion, the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (the 'Mandatory Provisions'), the Guide for Articles of Association of Listed Companies (the 'Guide for Articles of Association'), the Standards for Governance of Listed Companies (the 'Standards'), the Regulatory Opinions on Standardising Shareholders' General Meetings of Listed Companies (the 'Regulatory Opinions'), the Guiding Opinions Concerning the Establishment of the System of Independent Directors for Listed Companies (the 'Guiding Opinions') and other relevant provisions of China Securities Regulatory Commission and the Rules Governing the Listing on Securities of The Stock Exchange of Hong Kong Limited (the 'Listing Rules'). Table of Contents Chapter 6 The heading is changed from 'Shares Certificates and Register of Members' to 'Share Certificates and Register of Members'. A new chapter 23 headed 'Supplementary Provisions' is added. Chapter 1: General Provisions Article 2 The registered name of the Company in Chinese is changed to '(Chinese Characters)'. The registered name of the Company in English is changed to 'Datang International Power Generation Company Limited'. Article 6 The first paragraph of Article 6 is amended as follows: The Articles of Association of the Company ('Articles') are formulated in accordance with the Company Law, the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (the 'Mandatory Provisions'), the Guide for Articles of Association of Listed Companies (the 'Guide for Articles of Association'), the Rules Governing the Listing of Securities or The Stock Exchange of Hong Kong Limited (the 'Listing Rules') and other relevant provisions, and will come into effect on the day when they are approved by the department responsible for the examination and approval of companies. Bases and explanation: Based on Rule 13.01 of the Listing Rules, additional regulations are added as bases for the formulation of the Articles of Association of the Company to meet the requirements of A share issue. Article 7 The second paragraph of Article 7 is amended as follows: Without breaching the relevant provisions of Chapter 20 of these Articles, under these Articles, the Company's shareholders may bring action(s) against the Company; the Company may bring action(s) against the Company's shareholders, Directors, supervisors, managers and other officers; the Company's shareholders may bring action(s) against each other; and the Company's shareholders may bring action(s) against the Directors, supervisors, managers and other officers of the Company. Bases and explanation: Based on Article 10 of the Guide for Articles of Association, additional provision is added under these Articles, the Company may bring action(s) against the Directors, supervisors, managers and other officers of the Company. Article 8 The specific article number of the Company Law referred to in the second paragraph of this article is deleted. Explanation: The deletion is made to avoid changes in the serial number of the article of the Company Law in case of any amendments thereto. Chapter 2: Objectives and Scope of business Article 10 The second paragraph of Article 10 is amended as follows: The scope of business of the Company includes: construction and operation of power plants; sales of electricity and thermal power; inspection and commissioning of power equipment; the provision of technological services in relation to power industry; and other business activities permitted by laws and administrative regulations. Chapter 3: Shares and Registered Capital Article 11 In Article 11, 'the department authorized by the State Council for the examination and approval of companies' is changed to 'the examination and approval department authorized by the State Council'. Bases and explanation: The amendment is made in accordance with the actual government establishment for the time being. Article 15 Article 15 is amended as follows: Upon establishment after obtaining the approval of the department authorized by the State Council for examination and approval of companies, the Company issued a total of 3,732,180,000 ordinary shares, all of which were subscribed by the three promoters. After its establishment, the Company, under the approval of the department authorized by the State Council for examination and approval of companies and the State Council securities regulatory authority, issued overseas-listed foreign-invested shares of 1,430,669,000 shares, which were listed on The Stock Exchange of Hong Kong Limited and London Stock Exchange. After completion of the issue, the total issued ordinary shares of the Company amounted to 5,162,849,000 shares, of which 72.29 percent was domestic shares held by the promoters and 27.71 percent was overseas-listed foreign-invested shares. The Group Company, one of the promoters, has transferred the 1,775,331,800 shares held by it to BIC, HCI and Tianjin Municipality Jinneng Investment Company respectively in the amount of 575,732,400 shares, 639,772,400 shares and 559,827,000 shares. After completion of the share transfer, the Group Company held 1,828,768,200 shares, amounting to 35.43 percent of the total issued ordinary shares of the Company, BIC held 671,792,400 shares, amounting to 13.01 percent of the total issued ordinary shares of the Company, HCI held 671,792,400 shares, amounting to 13.01 percent of the total issued ordinary shares of the Company and Tianjin Municipality Jinneng Investment Company held 559,827,000 shares, amounting to 10.84 percent of the total issued ordinary shares of the Company. Holders of overseas-listed foreign-investment shares held 1,430,669,000 shares, amounting to 27.71 percent of the total issued ordinary shares of the Company. In accordance with the Guo Han (2003) No. 16 'Approval of the State Council regarding the establishment of CDGC' issued by the State Council, all the shares of the Company held by the Group Company have been transferred to CDGC, which replaces the Group Company to hold 1,828,768,200 shares, amounting to 35.43 percent of the total issued ordinary shares of the Company. Upon approval by special resolution of the Company's extraordinary shareholders' meeting and resolution of the Company's class shareholders' meeting, and the approval of the regulatory authority of the PRC government, the Company, in September 2003, issued outside the PRC convertible bonds (the 'Convertible Bonds') with a total principal of USD153.8 million which were convertible into overseas-listed foreign-invested shares of the Company. The total share capital and share structure of the Company will be modified in accordance with the actual amount of Convertible Bonds finally converted into overseas-listed foreign-invested shares of the Company. On 22 June 2004, upon approval by special resolution of the Company's extraordinary shareholders' meeting and resolution of the Company's class shareholders' meeting, and approval of the examination and approval department authorized by the State Council, the Company issued * Renminbi-denominated ordinary shares, of which * shares and * shares were placed with CDGC and Tianjin Municipality Jinneng Investment Company respectively. After completion of the additional issue of domestic shares and the placing, the amount of shares held by the shareholders and their respective shareholding proportion are as follows: CDGC * shares * percent BIC * shares * percent HCI * shares * percent Tianjin Municipality Jinneng Investment Company * shares * percent Other holders of domestic shares * shares * percent Holders of overseas-listed foreign-invested shares * shares * percent Bases and explanation: The amendments are made to reflect in these Articles the various issues made by the Company and changes in its share capital. Article 16 In the second paragraph of Article 16, 'the State Council Securities Commission' is changed to 'the State Council securities regulatory authority' and 'approval' is changed to 'verification'. Article 17 In Article 17, 'the State Council Securities Commission' is changed to 'the State Council securities regulatory authority' Article 18 The specific amount of registered capital of the Company referred to in Article 18 will be determined after completion of this issue. Article 19 Two additional items are added to the second paragraph of Article 19 as item 4 and item 5. The article is amended as follows: The Company may, depending on the needs of its operation and development, approve increase in capital according to the relevant provisions of these Articles, and implement the same according to the procedures stipulated in the relevant laws and administrative regulations of the State. The Company may increase non-specified capital in any of the following manners: 1. issue new shares to non-specific investors; 2. issue rights to existing shareholders to subscribe new shares; 3. issue bonus shares to existing shareholders; 4. unrest reserve fund into capital; 5. conversion of convertible bonds into capital of the Company pursuant to the approval of the State Council securities regulatory authority and other relevant provisions; 6. other manners permitted under PRC laws and administrative regulations. Bases and explanation: Article 22 of the Guide for Articles and Association. Article 20 Three additional paragraphs are added to Article 20 as the second, third and fourth paragraphs thereof. The article is amended as follows: Unless otherwise provided in laws and administrative regulations, shares in the Company may be freely transferred without any lien. The Company shall not accept its own shares as the subject matter of any pledge. The Directors, supervisors, managers and other officers of the Company shall disclose to the Company on a regular basis during their term of office the amount of shares held by them. They shall not transfer the shares held by them during their term of office and within 6 months after they vacate office. If the Directors, supervisors, managers and other officers of a legal person shareholder which holds 5 percent or more of voting shares in the Company sell the shares held by them within 6 months after purchasing or purchase shares within 6 months after selling, any profits received therefrom shall be vested in the Company. Bases and explanation: Articles 28, 29 and 30 of the Guide for Articles of Association Chapter 4: Reduction of Capital and Share Repurchase Article 23 Article 23 is amended as follows: The Company may under the following circumstances purchase its issued shares by means of the passing of a resolution in accordance with these Articles and submitting the same for approval by the relevant authority-in-charge of the State: 1. when shares are cancelled for the purpose of reducing the Company's capital; 2. when the Company merges with another company or companies which hold(s) shares in the Company; 3. other circumstances permitted by law and administrative regulation. Bases and explanation: Amendment of serial number of the article. Article 24 An additional item is added to Article 24 as item 4 thereof. The article is amended as follows: The Company may, after obtaining approval from the relevant authority-in-charge of the State, repurchase its own shares through any of the following methods: 1. a general offer to all shareholders to repurchase on a pro rata basis; 2. share repurchase through open trading on a stock exchange; 3. an off-market contract outside of a stock exchange; 4. any other methods approved by laws, administrative regulations and the State Council securities regulatory authority. Bases and explanation: Article 25 of the Guide for Articles of Association. Chapter 5: Financial Assistance to Purchase Shares in the Company Article 29 Article 29 is amended as follows: In this Chapter, 'financial assistance' includes (but is not limited to) assistance by way of: 1. gift; 2. guarantee (including the provision of any undertaking or property to secure the performance of obligations by the obligor), indemnity (other than an indemnity in respect of the Company's default), release or waiver; 3. provision of loans, or any other agreement under which the obligations of the Company are to be fulfilled before the obligations of another party to the agreement, or the novation of, or the assignment of rights under, such loan(s) or agreement; 4. advance; 5. financial assistance given in any other manner where the Company is unable to pay its debts, has no net assets or in situations where its net assets would be reduced by a material extent. In this Chapter, 'incurring a liability' includes liabilities incurred by changing one's financial position by making an agreement or joint arrangement (whether enforceable or otherwise and whether made on one's own account or with any other person) or by any other means. Bases and explanation: Article 21 of the Guide for Articles of Association, add serial number to the items. Chapter 6: Share Certificates and Register of Members Article 33 Article 33 is amended as follows: The Company shall maintain a register of its shareholders containing the following information: 1. Name of each shareholder, address (residence), occupation or nature of occupation; 2. Class and number of shares held by each shareholder; 3. Amount paid or payable by each shareholder for the shares; 4. Serial number of the share certificate held; 5. Date on which each shareholder is registered; and 6. Date on which each shareholder ceases to be a shareholder. Unless there is evidence to the contrary, the register of shareholders is sufficient evidence as proof of ownership by a shareholder of the Company's shares. Explanation: Add serial number to the items. Article 35 In item 1 of paragraph 1 of Article 35, 'paragraphs (2) and (3) of this Article' is changed to 'paragraph 2 and paragraph 3 of this Article'. Article 40 The specific article number of the Company Law referred to in paragraph 2 of this Article is deleted, and 'paragraphs (3) and (4) of this Article' in item 5 of paragraph 4 is changed to 'paragraph 3 and paragraph 4 of this Article'. Chapter 7: Rights and Obligations of Shareholders Article 44 In item 2 of Article 44, 'and to vote thereat' is changed to: 'and to vote thereat in proportion to the number of shares held'. Item 4 of the Article is changed to: the right to transfer, give and pledge shares held in accordance with relevant laws, administrative regulations and these Articles; An additional item is added as item 7 of the Article: The right to institute a legal action in the people's court for stopping illegal acts and infringing acts if a resolution of a shareholders' general meeting or board meeting violates laws and administrative regulations or infringes the lawful rights and interests of the shareholders, and the right to request the Company to institute a legal action for claiming compensation in accordance with laws if a Director, supervisor, manager or other officer of the Company violates laws, administrative regulations or these Articles in execution of his/her duties, causing damages to the Company. The original item 7 becomes item 8. Article 44 is amended as follows: Each holder of ordinary shares of the Company shall enjoy the following rights: 1. the right to receive dividends and other distributions in proportion to the number of shares held; 2. the right to attend or to appoint a proxy to attend on his/her behalf shareholders' general meetings and to vote thereat in proportion to the number of shares held; 3. the right to supervise the operation of the Company and to make suggestions or inquiries; 4. the right to transfer, give and pledge shares held in accordance with relevant laws, administrative regulations and these Articles; 5. the right to receive any relevant information in accordance with the Articles of the Company, including: (1) the right to a copy of the Articles after payment of costs; (2) the right to inspect and copy at reasonable charges any part of the register of shareholders; the personal particulars of each of the Directors, supervisors, managers and other officers including his/her present and former name(s) and alias(es); his/her principal address (residence); his/her nationality; his/her primary and all other occupations and duties; and his/her identification document and number. (3) state of the Company's share capital; (4) reports showing the number and par value of shares repurchased by the Company since the end of the previous financial year, the aggregate amount paid by the Company for the shares repurchased and the maximum and minimum price paid, in respect of each class of shares repurchased; and (5) minutes of shareholders' meetings. 6. the right to participate in the distribution of the residual assets of the Company according to the number of share held upon the termination or liquidation of the Company; 7. the right to institute a legal action in the people's court for stopping illegal acts and infringing acts if a resolution of a shareholders' general meeting or board meeting violates laws and administrative regulations or infringes the lawful rights and interests of the shareholders, and the right to request the Company to institute a legal action for claiming compensation in accordance with laws if a Director, supervisor, manager or other officer of the Company violates laws, administrative regulations or these Articles in execution of his/her duties, causing damages to the Company. 8. other rights conferred by relevant laws, administrative regulations and these Articles. Bases and explanation: Articles 35 and 37 of the Guide for Articles of Association; Article 4 of the Standards; adjust the format of the Article. Article 45 An additional item is added to Article 45 as item 3 thereof: '3. Except under the circumstances provided in laws and administrative regulations, the shareholders shall not withdraw their contributions to share capital;' The original item 3 becomes item 4. Bases and explanation: Article 38 of the Guide for Articles of Association. Article 47 In item 2 and item 3 of paragraph 1 of this Article, 'with 30 percent' is deleted. An additional paragraph is added as paragraph 2 of this Article: The expression 'acting in concert' in this Article refers to two or more persons (including natural persons, legal persons or other organizations, institutions) acting under agreement (oral or written) to obtain or strengthen the control of a company through acquiring voting rights in the company by either of them. Bases and explanation: Article 41 of the Guide for Articles of Association; the meaning of 'more than' is added to the supplementary provisions of these Articles. Chapter 8: Shareholders' General Meetings Article 49 Item 13 of Article 49 is amended as follows: 'to consider interim proposals made by the shareholders representing more than 5 percent of the total amount of voting shares in the Company or by the supervisory committee at annual general meetings'. Bases and explanation: Article 12 of the Regulatory Opinions Article 51 Item 3 of paragraph 2 of Article 51 is amended as follows: 'the shareholder(s), alone or together, holding more than 10 percent of the total amount of voting shares in the Company request(s) in writing;' Bases and explanation: Article 44 of the Guide for Articles of Association Two additional items are added to paragraph 2 of this Article as item 5 and item 6: 5. the required number of independent Director(s) propose(s); 6. any other circumstances provided in these Articles.' Bases and explanation: Article 5 of the Guiding Opinions. Article 51 is amended as follows: A shareholders' general meeting shall either be an annual general meeting or an extraordinary general meeting shall be convened by the Board, annual general meetings are held once every year within six months after the end of a financial year. The Board shall convene an extraordinary general meeting within two months of the occurrence of any one of the following events: 1. the number of Directors is less than the number provided for in the Company Law or less than two-thirds of the number prescribed in the Articles; 2. the Company's unaccounted losses amount to one-third of its share capital; 3. the shareholder(s), alone or together, holding more than 10 percent of the total amount of voting shares in the Company request(s) in writing; 4. when the Board considers necessary or upon the request of the supervisory committee. 5. the required number of independent Director(s) propose(s); 6. any other circumstances provided in these Articles. Article 53 Article 53 is amended as follows: Proposals of shareholders' general meeting shall mean specific proposals relating to matters which shall be discussed at shareholders' general meeting and such specific proposals shall be resolved thereat. The contents of the proposals of shareholders' general meeting shall not be in conflict with the provisions of laws, administrative regulations and these Articles, and shall be within the business scope of the Company and the scope of duties of shareholders' general meeting. The proposals shall have a clear subject for discussion and contain specific resolution matters, and shall be submitted or sent to the Board of the Company in writing. If the proposal is to modify any matters relating to a resolution of a last shareholders' general meeting, the content of the proposal shall be complete and shall not contain only modifications. Matters listed as 'other matters' without specific contents shall not be deemed as proposals and shall not be voted at shareholders' general meeting. The Board shall list the matters to be discussed at the forthcoming shareholders' general meeting in the notice of the meeting, and make sufficient disclosure of the contents of all the proposals put forward by the Board. No new proposal shall be put forward by the Board after dispatch of the notice of meeting. Any amendments to the original proposals shall be announced 15 days preceding the date of the shareholders' general meeting, failing which the date of the shareholders' meeting shall be postponed accordingly in order to ensure an interval of at least 15 days is available. Bases and explanation: Articles 9, 10 and 11 of the Regulatory Opinions. Article 54 The following article is added as Article 54: The shareholder(s), alone or together, holding more than 5 percent of the total amount of voting shares in the Company, or the supervisory committee may put forward interim proposals at annual general meeting and the Company shall include in the agenda of the meeting any of the matters contained in the proposals which are within the scope of responsibilities of the general meeting. If an interim proposals involve new matters which have not been listed in the notice of the annual general meeting issued by the Board, the proposer shall submit the interim proposal to the Board 10 days prior to the date of the annual general meeting for consideration by the Board in accordance with the provisions of laws, regulations, rules, standard documents and the Listing Rules of the stock exchange on which the shares of the Company are listed with respect to issues such as whether the proposal is directly related to the Company, whether the proposal is within the scope of responsibilities of the shareholders' general meeting, and the procedures involved. If the Board decides to include the proposal in the agenda of the meeting, an announcement shall be made in accordance with the relevant provisions. Bases and explanation: Articles 12 and 13 of the Regulatory Opinions. Article 55 The original Article 54 becomes Article 55. Article 56 Two additional items are added to the original Article 55 as item 9 and item 10 thereof: '9. the date of recording the shareholding of shareholders entitled to attend the shareholders' general meeting;' '10. the name and telephone number of the permanent contact person(s) for the general meetings.' Bases and explanation: Article 48 of the Guide for Articles of Association. Article 57, Article 58 The original Article 56 and Article 57 become Article 57 and Article 58 respectively. Article 59 The original Article 58 is amended as follows: Any shareholder entitled to attend and vote at a meeting of the Company shall be entitled to appoint one or more other persons (whether a shareholder or not) as his/her proxy to attend and vote on behalf of him/her, and a proxy so appointed shall: 1. have the same rights as the shareholder to speak at the meeting; 2. have the authority to demand or join in demanding a poll; and 3. have the right to vote by a show of hands or on a poll provided that where a shareholder has appointed more than one proxy, such proxies may only vote on a poll. Bases and explanation: Add serial number to the items. Article 60 The serial numbers at the beginning of paragraph 1 and paragraph 2 of the original Article 59 are deleted. Articles 61, 62, 63, 64 The original Articles 60, 61, 62, 63 become Articles 61, 62, 63, 64 respectively. Article 65 The original Article 64 is amended as follows: On a poll, a shareholder (including proxies) shall exercise the voting rights in accordance with the voting rights represented by the total number of shares he/she holds. Except the relevant PRC laws, regulations, rules or regulatory documents provide otherwise, each share shall carry one vote. Bases and explanation: The shareholder voting system shall be improved. Article 66 The first paragraph of the original Article 65 is amended as follows: At any meeting of the shareholders a resolution put to the vote of the meeting shall be decided on the show of hands unless a poll is demanded (before or after any vote by the show of hands) the following persons: 1. the chairman of the meeting; 2. at least two shareholders or proxies having the right to vote; 3. one or more shareholders or proxies having more than 10 percent of all shares carrying the right to vote at the meeting. Bases and explanation: Add serial number to the items. Article 67, Article 68 The original Articles 66 and 67 become Articles 67 and 68 respectively. Article 69 In the original Article 68, 'votes for for' is changed to 'votes for'. Article 70 Two additional items are added to the original Article 69 as items 1 and 6 thereof and the serial numbers of the original items are changed accordingly. This Article is amended as follows: The following matters shall be resolved by ordinary resolutions at shareholders' general meetings: 1. deciding on the business objectives of the Company; 2. work reports of the Board and supervisory committee; 3. plans for profit distribution and plans for making up losses drafted by the Board; 4. appointment and removal of members of the Board and supervisory committee, and the amount of their remuneration and method of payment; 5. the Company's budget and final accounts, balance sheet, profit statement and other financial reports; 6. appointment and termination of appointment of and non-renewal of appointment an accounting firm; 7. matters other than those required by relevant laws, administrative regulations or the Articles to be resolved by special resolutions. Bases and explanation: The amendments are made based on the responsibilities of shareholders' general meeting. Article 71 The original Article 70 becomes Article 71, and an additional item is added as item 1 thereof: 1. deciding on the investment proposals of the Company; The original item 1 becomes item 2 and the words of 'or repurchase of shares' is added. The serial numbers of the following items are changed accordingly. Article 72 The original Article 71 is amended as follows: The following procedures should be followed when the shareholders request the convening of extraordinary general meeting or class shareholders' meetings: 1. The shareholder(s), alone or together, holding an aggregate of more than 10 percent of the voting shares may make a request in writing by signing on one or more copies of a document in the same form and contents to the Board to convene an extraordinary general meeting or a class shareholders' meeting, stating the matters to be considered at the meeting. Upon receipt of the above-mentioned written request from the shareholder(s), the Board shall make a decision within 15 days in accordance with laws, administrative regulations, these Articles and other relevant provisions, notify the proposing shareholder(s) of the decision, and report it to the branch of China Securities Regulatory Commission and the stock exchange in the place where the Company is situated. 2. Where the Board decides to convene an extraordinary general meeting or class shareholders' meeting, it shall give the notice of the extraordinary general meeting or class shareholders' meeting and any changes to the original proposals in the notice shall be made with the consent of the proposing shareholder(s). No new proposals shall be put forward by the Board after the notice is issued. The time of convening the shareholders' meeting shall not be changed or postponed without the consent of the proposing shareholder(s). 3. Where the Board considers that the above-mentioned request is in violation of laws, administrative regulations, these Articles and other relevant provisions, it shall decide not to convene the extraordinary general meeting or class shareholders' meeting and notify the proposing shareholder(s) of its decision. The proposing shareholder(s) may, within 15 days of receipt of the notice, decide not to convene the meeting or give notice of the meeting by himself/ themselves. 4. Where the Board neither gives notice of the extraordinary general meeting or class shareholders' meeting nor notifies the proposing shareholder(s) of its decision not to convene the meeting within 30 days upon receipt of the above-mentioned request, the proposing shareholder(s) may convene the meeting by himself/themselves within 4 months of the date of receipt of the request by the Board. 5. Where the proposing shareholder(s) decide(s) not to convene the extraordinary general meeting or the class shareholders' meeting, the shareholder(s) shall report to the branch of China Securities Regulatory Commission and the stock exchange in the place where the Company is situated. 6. Where the proposing shareholder(s) decide(s) to convene the extraordinary general meeting or class shareholders' meeting by himself/themselves, the shareholder(s) shall notify the Board in writing, and give a notice of the meeting in writing after reporting to the branch of China Securities Regulatory Commission and the stock exchange in the place where the Company is situated. The procedures for the extraordinary general meeting or class shareholders' meeting convened by the proposing shareholder(s) shall be, as far as possible, the same as those for the meeting convened by the Board. The notice of the meeting shall comply with the following provisions: (1) No new contents shall be added to the proposals. Otherwise, the proposing shareholders shall, in accordance with the above-mentioned procedures, make another request to the Board with respect to convening a shareholders' meeting. (2) The place for holding the meeting shall be the place where the Company is situated. 7. Where the proposing shareholder(s) decide(s) to convene the extraordinary general meeting or class shareholders' meeting, the Board or the secretary of the board shall perform their duties effectively to ensure that the meeting is convened in normal order. The meeting shall be presided over by the chairman of the board. If the chairman is not able to perform its duties for special reasons, the meeting shall be presided over by the deputy chairman or other Directors designated by the chairman. The meeting must be attended by the secretary to the Board. The Board shall engage a lawyer qualified to practise in the PRC to give a legal opinion in accordance with laws. The reasonable expenses for the meeting shall be borne by the Company. Where the chairman is not able to preside over the meeting and has not designated a Director to preside over the meeting, such meeting may be presided over by the proposing shareholder(s) after reporting for record to the branch of China Securities Regulatory Commission in the place where the Company is situated. Bases and explanation: Articles 21, 22, 23, 24, 25 and 26 of the Regulatory Opinion-s. Article 73 The following article is added as Article 73: The supervisory committee may propose to the Board to convene an extraordinary general meeting. The Board shall, within 15 days of receipt of the supervisory committee's written proposal for convening an extraordinary general meeting, give a notice of extraordinary general meeting and the procedures for convening such meeting shall comply with the provisions of these Articles. Bases and explanation: Article 19 and Article 20 of the Regulatory Opinions. Article 74 The following article is added as Article 74: When the shareholder(s), alone or together, holding more than 10 percent of the total amount of voting shares in the Company propose(s) to the Board to convene an extraordinary general meeting or class shareholders' meeting and when the supervisory committee proposes to the Board to convene an extraordinary general meeting, the subject to be considered at the meeting and the proposals with complete content shall be submitted to the Board in writing. The written proposals shall be reported to the branch of China Securities Regulatory Commission and the stock exchange in the place where the Company is situated for record. The proposing shareholder(s) or the supervisory committee shall ensure that the contents of the proposals are in compliance with laws, administrative regulations and these Articles. Bases and explanation: Article 19 of the Regulatory Opinions. Article 75 The following article is added as Article 75: The shareholder(s) involved in a connected transaction shall not vote on the connected transaction at a shareholders' meeting and the voting rights held by such shareholder(s) shall not be counted into the total amount of voting shares at the shareholders' meeting. Bases and explanation: Article 34 of the Regulatory Opinions. Article 76 The following article is added as Article 76: Pursuant to the provisions of the Listing Rules, if a shareholder is required to waive his/her voting rights or is restricted to vote for or against a resolution, any vote cast by such shareholder (including its proxy) in breach of such requirement or restriction shall not be counted into the total amount of voting shares at the shareholders' meeting. Bases and explanation: Section 14 of Appendix 3 of the Listing Rules. Article 77 The original Article 72 is amended as follows: Shareholders' general meetings shall be convened by the Board in accordance with laws and presided over by the Chairman of the board who shall act as a chairman at such meeting. If the Chairman of the board is unable to attend for whatever reasons, the Vice-Chairman of the board or other Directors designated by the Chairman of the board shall preside over and act as chairman at the meeting. Where both the Chairman and the Vice-Chairman of the board are unable to attend and no one has been designated by the Chairman of the board, the Board may specify a Director to preside over and act as chairman at the meeting. If no chairman is appointed for a meeting by the Board, shareholders present at the meeting may elect one shareholder to preside over the meeting and act as chairman. If, for any reason, such shareholder is not able to preside over the meeting, the shareholder, whether attending in person or by proxy, with the largest number of shares with voting rights should preside over and act as chairman of the meeting. Bases and explanation: Article 46 of the Guide for Articles of Association. Article 78 The original Article 73 is amended as follows: At a shareholders' general meeting, the chairman shall decide whether a resolution is adopted based on the result of voting. His/her decision shall be announced to the meeting, recorded in the minutes of meeting and shall be final. The Company shall make information disclosure of the relevant matters relating to the resolutions of shareholders' general meeting pursuant to applicable laws and the relevant provisions of the stock exchange on which the Company's shares are listed. Bases and explanation: Contents about announcement of matters relating to resolutions of shareholders' general meeting are added based on Article 87 of the Standards. Article 79, Article 80, Article 81 The original Articles 74, 75 and 76 become Articles 79, 80 and 81 respectively. Chapter 9: Special Procedures for Voting by Holders of Different Classes of Shares Article 82 The original Article 77 becomes Article 82. Article 83 The original Article 78 is amended as follows: If the Company intends to vary or abrogate rights attached to any class of shares it must obtain the approval of shareholders in a general meeting by way of a special resolution and by a resolution of the Shareholders of the affected class passed at a separate meeting conducted in accordance with the provisions of Articles 85 to 89. Article 84 The original Article 79 becomes Article 84. Article 85 The original Article 80 is amended as follows: Shareholders of the affected class, whether or not having the right to vote at general meetings, shall nevertheless have the rights to vote at class meetings in respect of matters concerning paragraphs 2 to 8, 11 and 12 in Article 84 above, but interested shareholder(s) shall not be entitled to vote at class meetings. An 'interested shareholder' mentioned in the preceding paragraph is: 1. in the case of a repurchase of shares made under Article 24 by a general offer to all shareholders to repurchase in the same ratio or by open trading on a stock exchange, an interested shareholder, as defined in Article 47; 2. in the case of a repurchase of shares by an off-market contract under Article 24, a holder of the relevant shares relating to the contract; 3. in the case of a restructuring of the Company, a shareholder of a class who bears a less than proportionate burden imposed on other shareholders of that class under the proposed restructuring or who has an interest in the proposed restructuring different from that of other shareholders of that class. Bases and explanation: Amend the serial number of the articles referred to in this Article according to the revised order of the articles. Article 86 In the original Article 81, 'Article 80' is changed to 'Article 85'. Article 87, Article 88 The original Articles 82 and 83 become Articles 87 and 88 respectively. Article 89 In the original Article 84, 'the State Council Securities Commission' in item 2 of paragraph 2 is changed to 'the State Council securities regulatory authority'. Chapter 10: the Board Article 90 The original Article 85 is amended as follows: The Company shall establish a Board, which shall report to the shareholders' general meeting. Directors shall be natural persons. The Board shall consist of 15 members, of which one shall be the Chairman and one shall be Vice-Chairmen. The composition, the number of independent Directors and the formation of the Board shall comply with the requirements of laws, administrative regulations, rules and regulatory documents. Bases and explanation: Article 77 of the Guide for Articles of Association and Article 1 of the Guiding Opinions. Article 91 The original Article 86 is amended as follows: The Directors shall be elected by shareholders at general meetings. The term of office of a Director is 3 years. Upon expiry, the term of office of a Director is renewable upon re-appointment or re-election. The term of re-appointment of an independent Director shall not exceed 6 years. Bases and explanation: Article 4 of the Guiding Opinions. Article 92 The following article is added as Article 92: The list of candidates for Director shall be submitted to a shareholders' meeting for consideration in the form of proposal. Candidates for non-independent Director shall be nominated by shareholder(s), alone or together, holding more than 5 percent of the total amount of voting shares in the Company or by the Board and elected at shareholders' meeting. Candidates for independent Director shall be nominated by shareholder(s), alone or together, holding more than 1 percent of the total amount of voting shares in the Company or by the Board, supervisory committee and elected at shareholders' meeting. When the shareholder(s), alone or together, holding more than 5 percent of the total amount of voting shares in the Company put(s) forward interim proposal at an annual general meeting for election of non-independent Directors, the proposal relating to the nomination of candidates and the written notice from the candidates stating their acceptance of the nomination shall be submitted to the Company one day after issue of the notice of annual general meeting but no later than 10 days before the annual general meeting is convened. Bases and explanation: Article 67 of the Guide for Articles of Association, Article 28 of the Standards, Article 4 of the Guiding Opinions, sections 4.(4) and 4(5) of Appendix 3 of the Listing Rules. Article 93 The following article is added as Article 93: Investigations on the qualifications of the candidates for non-independent Director and independent Director, solicitation for the opinions of the candidates, nomination procedures and information disclosure shall be conducted in compliance with the requirements of laws, administrative regulations, rules, regulatory documents and the Listing Rules of the stock exchange on which the Company's shares are listed. Bases and explanation: Articles 29 and 30 of the Standards and Article 4 of the Guiding Opinions Article 94 The following article is added as Article 94: Subject to compliance with the relevant laws and administrative regulations, the shareholders' general meeting may by way of a special resolution remove a Director whose term of office has not expired (however, any claim which may arise in accordance with any contract shall not be affected). A non-independent Director shall be deemed to be failed to perform his/her duties if he/she does not attend in person or authorize another Director to attend two consecutive board meetings, and the Board shall propose at the shareholders' general meeting for dismissal of such Director. If an independent Director fails to attend in person three consecutive board meetings, the Board shall propose at shareholders' general meeting for dismissal of such Director. Unless upon the occurrence of the above circumstances and the circumstances provided in the Company Law under which a person shall not act as Director, an independent Director shall not be dismissed without reason before expiry of his/her term of office. If an independent Director is dismissed before expiry of his/her term of office, the dismissal shall be disclosed by the Company as a special disclosed matter. If such Director considers his/her dismissal by the Company is without proper reasons, he/she may make public announcements. Bases and explanation: Article 85 of the Guide for Articles of Association, Article 4 of the Guiding Opinion, Section 4.(3) of Appendix 3 of the Listing Rules. Article 95 The following article is added as Article 95: A Director may resign before expiry of his/her term of office. The resigning Director shall submit his/her resignation to the Board in writing. Independent Directors shall also give an explanation of matters relating to his/her resignation or matters as he/she thinks necessary for- the shareholders and creditors of the Company to pay attention. Where the number of Directors becomes less than the statutory minimum number of Directors by reason of resignation of a Director, or the number of independent Directors becomes less than the number required by laws, administrative regulations, rules or regulatory documents by reason of resignation of an independent Director, the resignation of such Director shall take effect after the vacancy is filled up. The Board shall convene an extraordinary general meeting as soon as possible during its remaining term to elect a Director to fill up the vacancy arising from the resignation of Director. Before a decision is made by the shareholders' general meeting regarding the election of Director, the power of the resigning Director and the Board shall be restricted to a reasonable extent during the remaining term. Bases and explanation: Articles 86 and 87 of the Guide for Articles of Association, Article 4 of the Guiding Opinions. Article 96 The original Article 87 is amended as follows: The Board shall be accountable to the general meetings of the shareholders, and shall exercise the following functions and powers: 1. to convene general meetings and report on its work to the shareholders; 2. to implement resolutions of general meetings; 3. to decide on the Company's business plans; 4. to decide on the Company's investment proposals; 5. to formulate the Company's proposed annual financial budgets and final accounts; 6. to formulate the Company's profit distribution plans and plans for making up for losses; 7. to formulate proposals for the increase or reduction of the Company's registered capital, the issue of corporate bonds or other securities and the listing plan; 8. to prepare substantial acquisition by the Company; 9. to prepare plans for the repurchase of shares or merger, division or dissolution of the Company; 10. subject to Article 97 of these Articles, and within the scope of authorization by the shareholders' meeting, to decide on the disposal of the Company's fixed assets and exercise of the Company's financing and lending rights; 11. to decide any security provided by the Company to external parties; 12. to decide on the establishment of the Company's internal management structure; 13. to appoint or dismiss the Company's managers and secretary to the Board, and pursuant to the managers' nominations to appoint or dismiss the deputy general managers and financial officers of the Company and to decide on their remuneration and rewards; 14. to formulate the Company's basic management system; 15. to formulate plans for the amendment to the Company's Articles of Association; 16. to be responsible for information disclosure of the Company; 17. to propose to the shareholders' general meeting to appoint or replace the accounting firm acting as the Company's auditor; 18. to hear working reports of managers and examine their work; 19. to decide on the wage level and the welfare and bonus plan of the Company; 20. to establish special committees, appoint and remove the relevant members in accordance with the resolutions of shareholders' general meeting; 21. to decide on other important affairs and administrative matters which are not required in these Articles to be decided at the shareholders' general meetings. 22. to exercise other functions and powers specified by laws, administrative regulations and these Articles and conferred at the shareholders' general meetings. The special committees mentioned in paragraph 20 above shall comprise one or more Director(s) and their composition shall comply with the relevant provisions. Members of the special committees shall assist the Board in the exercise of its functions and powers under the authority of the Board. Resolutions relating to the above, with the exception to items 4, 7, 8, 9, 11 and 15 above which require the consent of two-thirds or more of the Directors through voting, shall require the consent of more than half of the Directors. Bases and explanation: Article 94 of the Guide for Articles of Association and Article 2 of the Notice on Several Issues Concerning the Regulation of Transaction of Funds Between Listed Companies and their Affiliates and the Provision of Security to External Parties by Listed Companies. Article 97 The original Article 88 becomes Article 97. Article 98 The following article is added as Article 98: The Chairman and Vice Chairman of the Board shall be Directors of the Company and shall be elected and removed by a majority of the Board. Bases and explanation: Article 98 of the Guide for Articles of Association. Article 99 The original Article 89 is amended as follows: The Chairman of the Board shall exercise the following functions and powers: 1. to preside over shareholders' general meetings, and to convene and preside over meetings of the Board; 2. to enforce and inspect the implementation of resolutions of the Board; 3. to sign share certificates, bonds and other marketable securities of the Company; 4. to sign material documents of the Board and other documents which shall be signed by the legal representative of the Company 5. to exercise the functions and powers of the legal representative; 6. to exercise special powers which are in compliance with laws and for the benefits of the Company, to handle affairs of the Company on the occurrence of force majeure events such as serious natural disasters, and report the same to the Company's Board and shareholders' general meeting subsequently; 7. other functions and powers defined and conferred by the Board. With the authorization of the Board, the Chairman of the board may exercise part of the functions and powers of the Board when the board is not in session, provided that the authorization shall be clear and specific. Matters involving substantial interest of the Company shall be decided by the Board. Where the Chairman of the board is unable to exercise his/her functions and powers, he/she may designate the Vice-Chairman or other Directors to act on his/her behalf. Bases and explanation: Article 99 of the Guide for Articles of Association and Article 48 of the Standards. This information is provided by RNS The company news service from the London Stock Exchange

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Datang International Power Generation Co Ltd. (DAT)

Tuesday, 3rd December 2024

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