Professional Documents
Culture Documents
ARTICLES OF ASSOCIATION
(DRAFT: MAY 10, 2000)
STANDARDIZED COMPANY ARTICLES OF ASSOCIATION
TABLE OF CONTENTS
Chapter 3. Shares
Article 1
Article 2
Article 3
The Company initially issued _____ million RMB common shares to the public on
__________, 2000 by the approval of the China Securities Regulatory Commission. Those
shares included _____ million domestic shares subscribed in RMB form issued to domestic
investors. The Company was listed on the _________ Stock Exchange on
_____________, 2000.
(OPTIONAL (IF RELEVANT)- Those shares also included ____ million foreign
capital shares subscribed in foreign currency form issued to foreign investors and listed on
the domestic stock exchange.)
Article 4
________________________________________ (Chinese)
________________________________________ (English)
Article 5
Article 6
Article 7
Article 8
The Chairman of the Board of Directors is the legal representative of the Company.
Article 9
The entire assets of the Company is divided into an equal number of shares. Each
shareholder shall assume liability to the extent of his shareholding in the Company. The
Company shall assume liability for its debt to the extent of its entire assets.
Article 10
From the date that it takes effect, these Articles of Association shall become a
binding legal document to standardize the organization and behavior of the Company, and
to set the rights and obligations between the Company and its shareholders and for the
shareholders with each other.
Article 11
Article 12
The Company has the right to raise funds through various legal sources, including,
but not limited to, loans and the issuance of bonds. However, such funds may be raised
only after preconditions are met which are set by relevant laws, administrative rules and
regulations, and by the provisions of these Articles of Association. The Company also has
the right to provide a guarantee to any third party.
Article 13
The Company is an independent legal person, all of whose behavior shall abide by
China laws and regulations and shall protect the legitimate interests and rights of
shareholders. The Company shall be governed and protected by China laws,
administrative rules and other regulations issued by the Government.
Article 14
The Company may invest in other limited liability companies and joint stock
limited liability companies. It shall assume liability in such cases to the extent of its
investment in such companies.
The aggregate amount of such investments shall not exceed the limits set by Article
12 of the Company Law, that is 50% of net assets, and be related to the requirements for
operation and management of the Company.
Article 15
The Company shall not be an unlimited liability shareholder of any other economic
organization.
The purpose of the Company is to construct, develop and operate a high class road
in a positive manner which has a large potential traffic volume and a stable revenue. The
road shall improve the road network in its area of operation and for adjacent areas, and
promote regional economic development. It shall satisfy its shareholders with a reasonable
rate of return on their investment.
Article 17
CHAPTER 3. SHARES
Section 1. Issuance of Shares
Article 18
Article 19
The shares of the Company shall be issued based upon the principle of openness,
fairness and impartiality. Thus each share shall have the same rights and each share shall
receive the same profit.
Article 21
The nominal price of the stock issued by the Company shall be indicated in RMB.
Article 22
The domestic shares issued by the Company shall be in the centralized trusteeship
of the __________ Stock (Exchange) Registration Limited Company.
(OPTIONAL (IF RELEVANT)- The foreign capital shares listed in the domestic
stock exchange shall also be in the centralized trusteeship of the ____________ Stock
(Exchange) Registration Limited Company.)
Article 23
The total number of common shares issued by the Company after approval are
______ billion shares. Upon its establishment, the Company issued common shares to the
following sponsors, which account to _____% of the total amount of common shares:
_____________________________________(____%)
_____________________________________ (___%)
_____________________________________ (___%)
Article 24
The equity structure of the Company is _____ billion common shares, among
which ____ million shares are held by the sponsors. The other ____ million shares are held
____ million by domestic shareholders and ____ million by foreign shareholders, all listed
on the _______ domestic Stock Exchange.
Article 25
Article 26
For the purpose of operation and development, and according to laws and
regulations and to resolutions made by the Board of Directors, the Company shall adopt the
following methods for increasing its capital:
Article 27
The Company may reduce its registered capital according to the regulations set in
these Articles of Association. It shall also follow the procedures set in the Company Law
and in other regulations.
Where such reduction of capital occurs, the Company shall prepare a balance sheet
and inventory of assets.
The Company shall inform its creditors of the reduction of registered capital within
ten (10) days following the date on which the reduction resolution is adopted, and make at
least three announcements regarding the reduction in a newspaper within thirty (30) days.
The creditors shall have the right to claim full repayment of their debts or have the
provision of a corresponding guarantee from the Company within thirty (30) days from the
date of receipt of such notice, or within ninety (90) days from the date of the first public
announcement for those creditors who did not receive a notice directly.
After the reduction, the registered capital of the Company shall not be less than the
statutory minimum limit.
Article 28
The Company shall repurchase its shares in the following cases, after the approval
of the relevant Government administrative departments:
The Company shall not buy or sell its shares except in the above cases.
Article 29
Where the Company repurchases its shares, such repurchase shall be conducted in
one of the following methods:
Article 30
The Company shall canceled the repurchased shares within ten (10) days of their
repurchase. It shall apply to the Industrial and Commercial Administration Bureau for a
change in its registered capital.
Article 31
Article 32
The Company shall not accept its own shares as a form of hypothecation.
Article 33
Shares held by sponsors shall not be transferred within three (3) years of the
establishment of the Company.
Directors, the general manager and other superior managers of the Company shall
each declare the number of shares he (or she) possesses during the period of his
employment. He (or she) shall not transfer his shares during that period and within six (6)
months after leaving that position.
Article 34
Where shareholders who possess at least 5% of voting rights shares sell their shares
within six (6) months after they are purchased, or buy such shares again within six (6)
months after selling them, then the profits received shall be owned/taken by the Company.
Section 1. Shareholders
Article 35
Shareholders are the persons who hold shares of the Company legitimately, and
whose names are registered in the shareholders' register.
Shareholders shall enjoy rights and assume obligations according to the different
types of shares held. Shareholders who have the same type of shares shall enjoy the same
rights and assume the same obligations.
Article 36
The shareholders' register is sufficient evidence to prove that shareholders hold the
Company's shares,. except where there is evidence to the contrary.
Article 37
The Company shall establish the shareholders' register based upon evidence
provided by the Securities Registration Authority. The register shall list the following
information:
3. whether the shares held by each shareholder have been paid for or are still
payable;
The Company shall sign a centralized trustee agreement with the Securities
Registration Authority to check the information regarding major shareholders and to keep
track of the change (including pledging of shares) of the holdings of major shareholders
periodically so that its share structure is kept up-to-date.
Article 38
Each part of the shareholders' register shall not overlap with another. The transfer
of shares registered in a certain part of that register shall not also be registered in other parts
of the shareholders' register during the registration period.
Article 39
Article 40
Article 41
Where any shareholder requires the registration of his name (or title) on the
shareholders' register or the cancellation of his name (or title) from the shareholders'
register due to an objection to what is contained in the shareholders' register, then he may
apply to the court which has jurisdiction for a change in the shareholders' register.
Article 42
After the reissuance of new shares by the Company according to these Articles of
Association, the name (or title) of bona fide purchasers who hold the above-mentioned new
shares or of shareholders who are registered as the owners of such shares (as a bona fide
purchaser) shall not be canceled from the shareholders' register.
Article 43
Article 44
1. to obtain share dividends and other types of benefit allocation to the extent
of their number of shares;
2. the right to request and receive a copy after paying a reasonable fee
of:
Article 45
Article 46
Where a resolution is passed by the shareholders' general meeting and the board of
directors violates laws and regulations and infringes on legitimate benefits of shareholders,
then the shareholders have the right to file suit to stop such illegal actions and prejudicial
acts in the People's Court concerned.
Article 47
2. render equity according to the shares they subscribed and the type of
admission; (??????)
3. not retire shares, except in the cases regulated by laws and regulations;
Article 48
Where shareholders who possess 5% or more of the shares of the Company pledge
their shares, then they shall report to the Company in writing within three (3) working days
from the date that such pledge occurred.
Article 49
Where the holding/dominant shareholder exercises his voting rights, he shall not
make decisions which impair the legitimate benefit of the Company and of other
shareholders.
Article 50
The "concerted action" referred to above relates to the agreement of two or more
persons (whether oral or written) that one of those persons has the voting rights to control
or stabilize the control of the Company.
Article 51
The shareholders' general meeting decides the important issues regarding the
Company. It shall exercise the following functions and powers according to law:
1. to decide the business operation and investment plans for the Company;
2. to elect and replace members of the board of directors, and to decide upon
matters related to the remuneration of the directors;
6. to examine and approve the Company's fiscal budget and its final accounts;
7. to examine and approve plans for the Company's profit distribution and for
the making up of its losses;
14. to examine and approve other matters which shall be determined by the
shareholders' general meeting, based upon laws, regulations and these
Articles of Association.
Article 52
There are two types of shareholders' general meeting, namely the annual meeting
and the special/periodic meeting. The annual meeting shall be convened once a year within
six (6) months after the end of the preceding fiscal year.
Article 53
A special shareholders' general meeting shall be convened within two (2) months if
one of the following situations occurs:
1. if the number of directors is less than the minimum number set by the
Company Law, or less than two-thirds of the number required by these Articles of
Association;
2. if the amount of the Company's losses that have not been made up reach
one-third of its total share capital;
The holding of shares by shareholders for item 3 shall be calculated as of the date of
the written request.
Article 54
A special shareholders' general meeting may adopt resolutions only upon the
matters listed in the notice of meeting.
Article 55
Article 56
When the Company plans to convene a shareholders' general meeting, then the
Board of Directors shall notify all shareholders forty-five (45) days prior to the meeting.
The shareholders who are going to attend the meeting shall give a written reply that they
will attend to the Company twenty (20) days prior to the meeting.
In calculating the forty-five (45) days' notice, the date of the issuance of
notification shall not be included.
Article 57
The Company shall calculate the number of shares with voting rights based upon
the written reply received twenty (20) days prior to the shareholders' general meeting.
Where the number of voting rights shares held by shareholders who are going to attend the
meeting reaches one-half (1/2) of the total of shares with voting rights of the Company,
then the general meeting can be held. Otherwise, the Company shall inform the
shareholders again, using the form of an announcement about the matters to be discussed in
the meeting, of the date and location of a meeting to be held within five (5) days. The
Company may convene such a shareholders' general meeting after such announcement has
been made.
Article 58
The notice for a shareholders' general meeting shall meet the following
requirements:
1. be in written form;
5. where any directors, supervisory personnel, the general manager and other
superior managers have an important interest with regard to matters to be discussed, then
the nature and extent of that interest shall be disclosed. Further, where the impact of the
matters to be discussed by such directors, supervisory personnel, general manager and
other superior managers who are shareholders is different from the impact on other
shareholders of the same type, then that difference shall be illustrated;
6. contain the full text of any special resolution proposed to be passed at the
meeting;
7. provide a clear description stating that all shareholders have the right to
attend the shareholders' general meeting and to entrust a proxy, as necessary, who does not
need to be a shareholder of the Company, to attend the meeting and also to put forward a
resolution;
8. the time set for delivery of the name and address of any proxies for voting;
9. the date set for final registration of shareholders who are eligible to attend
the shareholders' general meeting; and
10. the name and phone number of the contact person regarding the meeting.
Article 59
Article 60
Where the meeting notice is not delivered to, or received by, a person who has the
right to get a meeting notice because of an accidental mistake, the meeting and any
resolution adopted at that meeting shall not be invalid due to that cause.
Article 61
Shareholders shall entrust a proxy in a written form which shall be signed by the
consigning party and by the party receiving the proxy. Where the party giving the proxy is
a legal person, the proxy/power of attorney shall be affixed with its seal and signed by the
person receiving the proxy.
Article 62
Shareholders who attend the general meeting in person shall show their
identification cards and evidence of their shareholding. Where they entrust another person
to be their proxy and attend the meeting, then the proxy shall provide his identification
card, the power of attorney for the proxy, and evidence of the shareholding.
6. the signature of the party giving the proxy (or his seal). Where that party is
a legal person shareholder, then that unit's seal shall be affixed to the proxy.
The power of attorney/proxy shall note that if there is no specific indication from
the shareholder, the proxy holder has the right to vote according to his will.
Article 64
Where the person granting the proxy is a legal person, then its legal representative
or the person entrusted by the board of directors and other decision-making authority shall
attend the shareholders' general meeting.
Article 65
A signature book of attendees (of the meeting) shall be prepared by the Company.
It shall contain such information as the name (or title) of the attendee, the number of his
identification card, his address, the number of his shares, the name of the proxy (or title of
unit), etc.
Article 66
Where the supervisory board or shareholders of the Company require the
convening of a special shareholders' general meeting, it shall be done in accordance with
the following procedures:
1. the signing of one or several written requests in the same form and with the
same content which propose that the board of directors convene a special shareholders'
general meeting and stating the proposed purpose of that meeting. After receiving the
above-mentioned written requests, the board of directors shall issue the notice to convene
such special shareholders' general meeting.
2. where the board of directors does not issue such a notice convening the
special shareholders' general meeting with thirty (30) days after receiving such written
requests, then the supervisory board or shareholders who request the convening of such
meeting shall, after the consent of the local Securities Administration Department, convene
such a meeting voluntarily within three (3) months.
Where the supervisory board or shareholders convene such meeting voluntarily, the
Company shall provide necessary assistance to such supervisory board or shareholder, and
shall bear the meeting expense.
Article 67
After the issuance of the notice for convening the general meeting, then the board
of directors shall not change the time of that general meeting (except based on other laws,
regulations and requirements of government administration departments), except due to
force majeure or other accidents.
Article 68
Where the number of directors of the Company is less than the number set by the
Company Law, or is less than two-thirds of the number required by these Articles of
Association, or the amount of the losses of the Company that have not been made up
reaches one-third of its total share capital, then the supervisory board or shareholders may
convene the special general meeting in accordance with the procedures set in Article 66 if
the board of directors does not convene the special meeting within the time period set.
Article 69
The agenda for a shareholders' general meeting shall meet the following criteria:
1. the content of the agenda shall not violate laws, regulations and these
Articles of Association, and shall be within the scope of business and the limit of rights for
what may be considered at a general meeting;
Article 71
In examining the proposed agenda for the general meeting according to Article 70,
the board of directors shall take the maximum benefit of the Company and of the
shareholders as its action principle.
Article 72
Where the board of directors decides not to list the proposed items into an agenda,
then it shall explain and illustrate its reasons in a meeting. After that meeting, there shall
be published the content of the proposals and the explanation of the board of directors,
together with the shareholders' general meeting resolution.
Article 73
Where the shareholders who made proposals do not agree with the decision of not
listing their proposals/items in the agenda, then they can request the convening of a special
shareholders' general meeting according to the procedures set forth in Article 66.
Article 74
Article 75
General resolutions made at the general meeting must be adopted by one-half of the
shareholders (including agents) who attend the meeting.
Special resolutions made at the general meeting must be adopted by two-thirds of
the shareholders (including agents) who attend the meeting.
Article 76
1. the working reports of the board of directors and of the supervisory board;
2. the program for profit allocation and the program to make up losses that
are proposed by the board of directors.
Article 77
Article 78
The Company shall not sign a contract with a person other than the directors,
general manager and other top managers to be responsible for all or part of the important
business of the Company without the approval through a special resolution of the
shareholders' general meeting.
Article 79
The list of candidates for directors and supervisors shall be discussed based upon a
proposal/motion at the shareholders' general meeting.
The resume and basic information regarding candidate directors and supervisors
shall be provided to the shareholders by the board of directors.
Article 80
The method of type of ballot to be used for such selection, whether open or secret,
shall be adopted in the shareholders' general meeting.
When voting, there is no need for a shareholder (including proxies) with two or
more votes to vote both affirmative and negative at the same time.
Where the number of yeas and nays is the same on a proposal, then the chairman of
the meeting has the right to cast the deciding vote.
Article 81
At the discussion of the vote of every item that is proposed, at least two
representatives of the shareholders and one supervisor shall check the voting and declare
the result of the voting on the resolution on the spot.
Article 82
The chairman of the meeting shall determine whether a resolution has passed or
not, and shall announce the result of the voting at the meeting. The results regarding that
resolution shall be written down in the minutes of the meeting.
Article 83
Where the chairman of the meeting suspends the meeting while a resolution is
being discussed, then he may check the votes for that resolution. Where the chairman does
not so check the votes, and the shareholders or their agents agree to suspend the meeting
after determining the results of the voting on that resolution, then they have the right to
check the voting results immediately after the announcement of suspension.
Article 84
The shareholders at a shareholders' general meeting may adopt additional rules that
cover special conflict of interest situations faced by specific shareholders.
Article 85
The board of directors or supervisory board shall explain and reply regarding such
matters at the request and suggestion of the shareholders, except with regard to business
secrets which would not be open to discussion at the shareholders' general meeting.
Article 86
The shareholders' general meeting shall have meeting minutes which shall contain
the following:
1. the number of voting shares of those attending the general meeting, and
their percentage of total voting shares;
(OPTIONAL (IF RELEVANT)-If the Company has both domestic capital shares
and foreign capital shares in a domestic stock market, then the proportion of each attending
the meeting shall also be noted in the minutes);
Article 87
The minutes of the meeting shall be signed by the directors and the recording
secretary who attended the meeting. They shall be kept by the secretary of the board of
directors for five (5) years.
Article 88
Matters regarding the meeting, such as the number of attendees, the number of
shares attending, the powers of attorney/proxies, the results of each resolution, the minutes
of the meeting and the legitimacy of meeting procedures may be notarized.
Article 89
Directors of the Company shall be natural persons. They need not be shareholders
of the Company.
Article 90
Article 91
Directors shall be elected by the shareholders and serve a term of three (3) years. A
director may be re-elected to serve for consecutive terms. The shareholders' general
meeting shall not dismiss a director without sufficient reason prior to the end of his term of
office.
The term of office of a director shall be calculated from the date of the resolution of
his election at the shareholders' general meeting until the expiration of his term of office.
Article 92
The validity of the behavior of a director of the Company with regard to a bona fide
third person shall not be affected by any irregular behavior with regard to his employment,
election or qualification.
Article 93
Directors shall comply with the laws and Articles of Association of the Company,
shall faithfully perform their duties and maintain the interests of the Company. Where
their own interests are in contradiction with the interests of the shareholders, then their
action principle shall be the maximum benefit of the Company and the shareholders.
Directors shall:
2. not enter into contracts or conduct transactions with the Company, except
as provided for in these Articles of Association or as approved by the shareholders' general
meeting;
4. not operate on their own, or operate for others, the same category of
business as the Company they are serving, or engage in activities which damage the
interests of the Company;
5. not take advantage of their functions and powers to accept bribes or other
unlawful income, no misappropriate the property of the Company;
10. not use Company assets as security for the personal debts of shareholders of
the Company or of other individuals;
11. not disclose any Company secrets, except as provided for by law or
approved by the shareholders' general meeting. However, a director may disclose such
information to a court or other government department in the following cases:
1. regulation of laws;
2. as required for the common benefit;
3. as required for the legitimate benefit of that director.
Article 94
3. that they read the various commercial and financial reports of listed
companies carefully so as to find out the business and operations of the Company in a
timely manner;
4. that they exercise the management and decision rights entrusted by the
Company to him and not let them be handled by others; that they do not transfer the
disposition of these rights to others without the permission of laws and administrative rules
or as resolved at the shareholders' general meeting; and
Article 95
A director of the company, based upon the requirement of faithfulness to his duties,
shall not instigate any of the following persons or agencies (who shall be considered as
related persons) to do any of the things above that a director is not permitted to do:
3. the director of a company or partner of any of the persons listed in (1) and
(2);
5. the directors, supervisors, General Manager and other top managers of the
company referred to in (4) above.
Article 96
Any director shall not take action on behalf of the Company or of the board of
directors in his personal name without being legitimately entitled to do so by these Articles
of Association or by a resolution of the board of directors.
Article 97
Article 98
Where a director informs the board of directors in writing to announce the interest
stated in Article 97, and the contract, transaction or arrangement concerned was entered
into by the company in which he has an interest prior to the initial consideration by the
Company of the signing of such contract, transaction or arrangement, then the action of the
director shall be taken as the disclosure stipulated in Article 97.
Article 99
Where a director does not attend a board meeting twice in succession, and does not
give a proxy to other directors to attend that meeting, then the board of directors shall
suggest that the shareholders' general meeting dismiss that director.
Article 100
A director may resign prior to the expiration of his term of office. The director
shall submit a written resignation to the board of directors.
Article 101
Where the resignation of a director leads to the number of members of the board of
directors being less than the statutory minimum number required, then the resignation shall
take effect only after a new director has been appointed to make up for the vacancy.
Article 102
Where a director submits his resignation or his term of office expires, then his
obligations to the Company and the shareholders shall, prior to the date of effectiveness of
his written resignation or within a reasonable period after the expiration of his term of
office, not naturally expire. His obligation for keeping commercial secrets of the Company
shall stay in effect as long as the secret is not open information to the public.
Article 103
A director whose term of office has not expired shall be responsible for the
payment of compensation for liabilities due to damages resulting from his unauthorized
leaving of his position.
Article 104
The Company shall not pay taxes in any form for directors.
Article 105
Article 106
The Company shall have a board of directors which shall be responsible to the
shareholders' general meeting.
Article 107
The Board of Directors of the Company shall consist of nine (9) directors,
including a Chairman and one or two Vice Chairmen.
Article 108
The Board of Directors of the Company shall exercise the following functions and
powers:
5. to formulate plans for the distribution of profits and the making up of the
losses of the Company;
10. to engage or dismiss the general manager and secretary of the board of
directors, and, upon the recommendation of the general manager, to
engage or dismiss the deputy general manager and responsible persons in
charge of the financial affairs of the Company, and to decide upon matters
concerning their remuneration;
15. to debrief and consider the working reports prepared by the general
manager and to examine the work of the general manager; and
Where the Board of Directors makes a resolution regarding the above matters, that
resolution shall be voted on and passed by at least fifty percent (50%) of the directors. As
an exception, items (6), (7) and (12) shall be voted on and passed by at least two-thirds of
the directors.
The Board of Directors shall exercise any power not regulated by these Articles of
Association which may be exercised by the shareholders' general meeting. The Board of
Directors shall abide by the regulations in these Articles of Association and by the
regulations developed on occasion by the shareholders' general meeting. However,
regulations developed by the shareholders' general meeting shall not make behavior by the
Board of Directors invalid which was proper before the passage of that regulation.
Article 109
The Board of Directors shall explain the auditing report, which makes comments
on the financial report of the Company, to the shareholders' general meeting.
Article 110
The Board of Directors shall formulate the discussion of regulations for itself so as
to ensure efficiency and scientific decision-making for the Board.
Article 111
The Board of Directors shall determine the limits of the scope of risk investment
using the Company's assets, and shall establish strict examination and decision-making
procedures for such matters. A large investment program shall be evaluated and examined
by relevant experts and professional staff and be approved by the shareholders' general
meeting.
The validity of transactions using the assets of the Company as set by the Board of
Directors shall not be invalid due the violation of the preceding paragraph (with regard to
innocent third parties.)
Article 112
The Chairman and Vice Chairman positions shall be held by directors of the
Company. They shall be elected and dismissed by the affirmative votes of at least one-half
of all directors.
Article 113
The Chairman of the Board of Directors shall exercise the following functions and
powers:
3. to sign the Company's stock, its bonds and other valuable securities;
Article 114
The Vice Chairman of the Company shall, upon designation by the Chairman,
exercise the Chairman's powers and functions on behalf of the Chairman of the Board in
cases where the Chairman is unable to perform his powers and functions.
Article 115
Meetings of the Board of Directors shall be held at least twice a year. All of the
members of the Board shall be notified of the meeting at least ten (10) days prior to the
holding of the meeting.
Article 116
The Chairman of the Board shall convene a special/interim board meeting within
ten (10) working days in the following cases:
Article 117
The notice for convening a special board meeting shall be in writing and shall be
made at least ten (10) days prior to the meeting.
In cases (2), (3) and (4) mentioned in Article 116, a Vice Chairman or director may
be appointed by the Chairman to convene the special board meeting on his behalf if the
Chairman is unable to perform his duties. Where the Chairman neither performs his duties
or appoints a specific person to exercise his duties on his behalf, then a director selected by
the Vice Chairman or by one-half of the Board of Directors shall be responsible for
convening the meeting.
Article 118
The notice for convening a board meeting shall contain the following:
Article 119
A meeting of the Board of Directors shall be convened only when more than
one-half of all directors are present. Each director shall have one vote. Any resolution of
the Board of Directors must be adopted by the affirmative votes of more than one-half of
the directors.
Where there is a tie vote, the vote of the Chairman shall be determining.
Article 120
With the purpose of ensuring the full participation of directors, a special board
meeting may be carried out by conference telephone call, by fax or by e-mail or other
similar method. The resolutions adopted shall be signed by all directors present.
Article 121
That power of attorney/proxy shall give the name of the agent/proxy, the matters on
which he is authorized to vote, the limit of his rights and validation, and shall be signed or
sealed by the person granting the proxy.
Article 122
The method of voting in a board meeting shall be by open ballot, voice vote or by a
show of hands. Each director shall have one vote.
Article 123
1. the date, location and name of the person who convenes the meeting;
2. the names of the directors, and the names of other agents/proxies who are
appointed by directors who attended;
5. the method of voting and the results of each resolution (the result of each
resolution shall list the affirmative and negative votes and the abstentions).
Article 125
Directors shall sign resolutions passed by board meetings and shall assume
responsibility/liability for such resolutions. If a board resolution violates law,
administrative rules and regulations or these Articles of Association of the Company, and
thus causes serious losses to the Company, then the directors who participated in the
adoption of such a resolution shall be liable for compensation to the Company. However,
if a director is proved to have expressed his objection to such a resolution when it was put
to a vote, and his objection was recorded in the minutes of that meeting, then he shall be
exempted from such liability.
(DIRECTOR LIABILITY INSURANCE???)
Article 126
Article 127
The Board of Directors shall have one secretary of the Board of Directors. He shall
be a superior manager and responsible to the Board of Directors.
Article 128
The Secretary of the Board of Directors shall have the necessary professional
knowledge and experience, and shall be appointed by the board of directors.
Article 129
4. to ensure that persons who have the right to obtain records and documents
of the Company can obtain those materials in a timely manner; and
Article 130
Directors and other superior/top managers of the Company may concurrently hold
the position of Secretary of the Board of Directors. Certified public accounts and lawyers
hired by the Company shall not hold the position of Secretary of the Board of Directors
concurrently.
Article 131
The Company shall have one General Manager, who is hired and dismissed by the
Board of Directors. Directors of the Company may hold the position of General Manager,
Deputy General Manager or other superior/top manager concurrently. However, the
number of directors who hold the positions of General Manager, Deputy General Manager
and other superior manager concurrently shall not exceed one-third of all directors of the
Company.
Article 133
Article 134
The General Manager shall have a term of office of three (3) years. He may serve
consecutive terms, if re-elected at the end of his term of office.
Article 135
The General Manager shall be responsible to the Board of Directors and shall
exercise the following functions and powers:
Article 136
Article 137
The General Manager shall report to the Board of Directors or Supervisory Board
regarding the implementation of contracts and uses of funds and the situation regarding
benefits/profits and losses, based on the requirements set by the Board of Directors or
Supervisory Board. The General Manage shall ensure the truth of his reports.
Article 138
Where the General Manager drafts proposals regarding issues related to the
interests and rights of the staff, such as salaries, benefits, safety standards, labor protection,
labor insurance and unemployment (or dismissal), etc., then he shall first ask for the
comments of the labor unions and staff representatives at a general meeting.
Article 139
The detailed working procedures for the General Manager shall be prepared by the
General Manager and shall be implemented after their approval by the Board of Directors.
Article 140
The detailed working procedures for the General Manager shall contain the
following:
2. the specific duties and allocation of duties among the General Manager,
Deputy General Manager and other major/important managers;
3. the limits of the right to use Company funds and assets, and for the signing
of major contracts, and the system of reporting to the Board of Directors and the
Supervisory Board; and
Article 141
The General Manager shall abide by laws, administrative regulations and these
Articles of Association, and shall faithfully perform his duties.
Article 142
The General Manager may submit his resignation prior to the end of his term of
office. The detailed procedure and method for doing so shall be stipulated in the contract
signed between the General Manager and the Company.
Article 143
Article 144
Persons stipulated in Articles 57 and 58 of the Company Law and identified by the
China Securities Regulatory Commission who are forbidden to engage in the stock market,
shall not be supervisors of the company.
Directors, the General Manager and other top managers may not serve concurrently
as supervisors.
Article 145
The term of office of the supervisors shall be three years. A supervisor who is
representing the shareholders shall be elected or replaced by the shareholders' general
meeting. A supervisory who is a staff member of the company shall be elected or replaced
by the company's staff and workers. A supervisor may serve consecutive terms if
re-elected upon the expiration of his term of office.
Article 146
Where a supervisor does not attend the board of directors' meeting twice in
succession, then he can be dismissed by the shareholders' general meeting or staff
representatives' general meeting which elected him.
Article 147
A supervisor can submit his resignation prior to the expiration of his term of office.
The rules regarding such resignations by directors and all other matters regarding directors,
as set in Chapter 5 of these Articles of Association, shall also apply to supervisors.
Article 148
Supervisors shall abide by laws, administrative rules and regulations and by the
provisions of these Articles of Association. They shall faithfully perform their obligations.
Article 149
The Company shall have a supervisory board composed of five members. The
supervisory board shall elect a convener. Where the convener is unable to perform his
functions, then he shall appoint another supervisor to perform those functions on his
behalf.
Article 150
The supervisory board shall exercise the following functions and powers:
2. to supervise the acts of the directors and of the General Manager and other
top managers with regard to violations of laws, of administrative rules and regulations or of
these Company Articles of Association during the performance of their functions;
In performing its functions, the supervisory board may employ such professional
agencies as law offices and accounting firms for assistance, if necessary. The reasonable
expenses thus incurred shall be borne by the Company.
Article 152
The supervisory board shall convene meetings not less than twice annually. All
supervisors shall be notified in writing of such meetings at least ten days prior to the
meeting.
Article 153
2. the reason for the meeting and the proposals that will be considered at it;
Article 154
Article 155
Unless a secret ballot is demanded by one or more of the supervisors, the vote at
supervisory board meetings shall be a show of hands. Each supervisor shall have one vote.
Article 156
Article 157
The Company shall establish a financial and accounting system in accordance with
the law, administrative rules and regulations, and the stipulations of the department in
charge of financial affairs under the State Council.
Article 158
The Company shall prepare an interim financial report within sixty (60) days after
the completion of the first six months of each fiscal year, and prepare an annual financial
report within 120 days after the end of each fiscal year.
Article 159
The annual financial report and the interim financial report for interim profit
distribution shall contain the following:
1. a balance sheet;
Article 160
The interim financial report and the annual financial support shall be prepared in
accordance with relevant laws and regulations.
Article 161
The Company shall not have any other account books in addition to its statutory
account books. No account may be opened in the name of any individual for deposit of the
Company's assets.
Article 162
The after-tax profits of the Company shall be distributed in the following sequence:
1. make up losses of preceding years;
3. allocate five percent (5%) to ten percent (10%) to the statutory common
welfare fund;
Where the accumulated amount of the statutory common reserve fund has exceeded
fifty percent (50%) of the registered capital of the Company, then no further allocation may
be made. After allocating to the statutory common reserve fund and to the statutory
common welfare fund, the shareholders' general meeting shall decide whether to allocate to
the discretionary common reserve fund. The Company shall not allocate profit to
shareholders before making up losses and making allocations to the statutory common
reserve fund and to the statutory common welfare fund.
Article 163
If the Company converts its statutory common reserve fund into capital upon a
resolution made by the shareholders' general meeting, then its shall issue new shares in
proportion to the original shares held by the shareholders. However, when the statutory
common reserve fund is converted into its capital, the remaining amount of that fund shall
not be less than twenty five percent (25%) of the registered capital.
Article 164
Article 165
The Company may distribute a share bonus in the form of cash or of shares.
Article 166
The Company shall implement an internal auditing system. It shall equip a special
auditor to carry out such internal auditing and supervision over the Company's financial
income and expenditures and other economic activities.
Article 167
The functions and powers of the Company's internal auditing system and of the
auditor shall be approved for implementation by the Board of Directors. The person in
charge of auditing shall be responsible to and report to the Board of Directors.
Article 168
The Company shall employ an accounting firm which is qualified with regard to
securities business to carry out the audit of its financial statements, the verification of its
net assets and other relevant consulting services for a one year period.
Article 169
The shareholders' general meeting shall decide upon the employment of a specific
accounting firm.
Article 170
The accounting firm employed by the Company shall enjoy the following rights:
1. to review the Company's financial statements, records and books, and has
the right to ask directors, the General Manager and other top/superior
managers to provide relevant information and descriptions;
Article 171
Where the position of accounting firm is vacant, the Board of Directors shall
authorize an accounting firm to take over the vacancy until the shareholders' general
meeting.
Article 172
The shareholders' general meeting shall decide upon the remuneration to be paid to
the accounting firm. The remuneration paid to an accounting firm taking over a vacancy
on a temporary basis shall be decided by the Board of Directors and be approved by the
shareholders' general meeting.
Article 173
Article 174
When the Company decides to dismiss or re-employ its accounting firm, then it
shall notify the accounting firm at least thirty (30) days prior to that dismissal. The
accounting firm shall then have the right to address its comments on the matter at the
shareholders' general meeting.
Article 176
A hiring system shall be adopted by the Company for staff at each management
level and a contract system for other staff. The Company shall decide upon the distribution
of staff and the procedures for the hiring and firing of staff, paying attention to relevant
laws and administrative rules and regulations.
Article 177
The Company, according to its benefit and within the scope regulated by relevant
laws and regulations, shall decide upon salary and benefit levels for staff at various
management levels.
Article 178
The Company shall, according to laws and regulations issued by central and local
provincial governments, arrange the health insurance, retirement insurance and
unemployment insurance for its staff, and shall carry out laws, regulations and relevant
rules regarding labor insurance and labor protection for retired and unemployed staff
members.
Article 179
The Company's staff and workers shall, in accordance with law, organize a labor
union to carry out labor union activities and protect the lawful rights and interests of its
staff and workers. The Company shall provide its labor union with the conditions
necessary for carrying out its activities. The labor union fund shall be allocated by the
Company according to relevant laws for the carrying out of labor union activities.
Article 180
Any dispute arising between the Company and any outside party based upon a
contract or other matter shall first be settled by both Parties through consultation in a spirit
of mutual trust. Should such consultation fail to settle the dispute within thirty (30) days of
notification, then mediation may be conducted by a third party selected by the Parties.
In the event that such mediation fails to resolve the dispute within thirty (30) days,
the dispute shall be finally settled by arbitration. If the other Party agrees, it shall be
submitted to the China International Economic and Trade Arbitration Commission
(CIETAC), and the arbitration shall be conducted in accordance with the provisional rules
of procedure of that Commission.
Article 181
The arbitration award shall be considered final and binding on both Parties. The
cost of the arbitration shall be borne by the losing Party or in accordance with the ruling of
the arbitrators.
Section 1. Notification
Article 182
Article 183
Article 184
Article 185
A meeting notice for the convening of a meeting of the Board of Directors shall be
in the form of a written notice.
Article 186
A meeting notice for the convening of a meeting of the Supervisory Board shall be
in the form of a written notice.
Article 187
For a meeting notice delivered by a special messenger, the person receiving it shall
sign or affix his seal upon receipt of service and the date of his signature shall be the date of
service. For a meeting notice delivered by mail, the date of the service shall be the seventh
day from delivery to the post office. For a meeting notice delivered by announcement, the
date of service shall be the first day of the publishing of the announcement.
Article 188
Where the meeting notice is not delivered to, or received by, a person who has a
right to get such a notice due to an accident, then the meeting and resolutions adopted at
such a meeting shall not be considered invalid because of that cause.
Section 2. Announcement
Article 189
Article 190
The Company may carry out a merger or division based upon law. The merger of
the Company may take the form of either a merger by absorption or a merger by new
establishment.
Article 191
Article 192
Where a merger or division has occurred, then each party to the merger or division
shall prepare a balance sheet and asset inventory. The Company shall notify creditors
within ten (10) days after the adoption of the resolution of merger or division by the
shareholders' general meeting. It shall publish an announcement regarding it in the China
Securities Paper three times within thirty (30) days.
Article 193
The creditors shall have the right to claim full repayment of their debts or receive
provision of a corresponding guarantee from the Company within thirty (30) days from the
date of receipt of the notice of merger or division. The merger or division shall only be
valid upon such payment of debts or provision of corresponding guarantee.
Article 194
Where a merger or division has occurred, the board of directors shall carry out the
necessary measures to protect the legitimate interests and rights of shareholders who
disagree with the merger or division of the Company.
Article 195
Debts prior to the division of the Company shall be assumed by the companies
resulting from the division, in accordance with the agreement reached between them.
The claims and debts of a party to a merger shall be succeeded to by the absorbing
company or the newly established company when companies are merged.
Article 196
Where the merger or division of the Company involves changes in registered items,
such changes shall be registered according to law with the Company Registration
Authority. Where the Company is dissolved, it shall apply for cancellation of its
registration in accordance with law. Where a new company is incorporated, the
registration of the incorporation of the company shall be carried out according to law.
Article 197
The Company shall be dissolved and liquidated according to law in each of the
following cases:
4. bankruptcy; and
Article 198
Where the Company is dissolved in accordance with the provisions of items (1) or
(2) of preceding Article 195, then a liquidation committee shall be formed within fifteen
(15) days thereafter. The members of the liquidation committee shall be elected by a
common resolution at the shareholders' general meeting.
Where the Company is dissolved in accordance with the provisions of item (3) of
preceding Article 195, ;then a liquidation committee shall be formed according to the
contract entered into by each party to the merger or division.
Where the Company is dissolved in accordance with the provisions of item (4) of
preceding Article 195, then a liquidation committee shall be formed by the shareholders,
relevant departments and professional staff organized by the People's Court concerned,
according to law.
Where the Company is dissolved in accordance with the provisions of item (5) of
preceding Article 195, then a liquidation committee shall be formed by shareholders,
relevant departments and professional staff organized by the relevant administrative
departments.
Article 199
The functions and powers of the Board of Directors and the General Manager shall
be terminated after the establishment of a liquidation committee. During the liquidation,
the Company shall not engage in any new operations.
Article 200
The liquidation committee shall inform the creditors of the Company of its
establishment within ten (10) days following the date of its establishment. It shall make at
least three announcements in a newspaper appointed by the China Securities Regulatory
Commission within sixty (60) days following that date.
Article 202
A creditor shall declare his claims to the liquidation committee within thirty (30)
days from the date of receipt of the notice or within ninety (90) days from the date of the
first public announcement if such notice was not received. Where declaring his claims, a
creditor shall specify the relevant items of the claim and provide supporting material. The
liquidation committee shall register the claims.
Article 203
After the liquidation committee has checked up on the Company's assets, and
formulated the balance sheet and a detailed inventory of assets, it shall formulate a
liquidation plan and submit such plan to the shareholders' meeting for confirmation.
Article 204
The Company's assets shall be paid off according to the following sequence:
Article 205
If the Company is liquidated due to its dissolution, and the liquidation committee,
having checked up on the Company's assets and formulated the balance sheet and a
detailed inventory of assets, discovers that there are insufficient assets in the Company to
pay off its debts, then the committee shall apply to the People's Court concerned for a
declaration that the Company is bankrupt. Following that declaration, the liquidation
committee shall turn the liquidation matters over to that court.
Article 206
After the completion of the liquidation, the liquidation committee shall formulate a
liquidation report and submit that report to the shareholders' general meeting for
confirmation and submit it to the Company Registration Authority in order to cancel the
registration of the Company. It shall then publicly announce the termination of the
Company.
Article 207
Members of the liquidation committee shall be devoted to their duties and perform
their liquidation obligations in accordance with the law. Also, they shall not accept bribes
or other illegal income, or misappropriate the property of the Company by taking
advantage of their position and power.
Article 208
1. the Articles of Association violate the Company Law or relevant laws and
administrative regulations;
Article 209
Article 210
Article 211
Where the matters which are subject to change are information that needs to be
disclosed to the public according to laws and regulations, then they shall be announced
according to relevant regulations.
Article 212
Article 213
These Articles of Association are written in Chinese. The latest Chinese version of
these Articles of Association as registered at the State Administration for Industry and
Commerce shall be prevailing.
Article 214