Central China Securities Co., Ltd. - Capital/Financing Update 2017

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

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Central China Securities Co., Ltd. (a joint stock company incorporated in 2002 in Henan Province, the People’s Republic of China with limited liability under the Chinese corporate name “ 中原證券股份有限公司 ” and carrying on business in Hong Kong as “ 中州證券 ”) (Stock Code: 01375)

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS UNDER SPECIFIC MANDATE

The Board announces that it resolved to seek the Shareholders’ approval for obtaining the Specific Mandate to issue the A Share Convertible Corporate Bonds and for the proposed issuance of the A Share Convertible Corporate Bonds on 6 April 2017.

The Specific Mandate and the proposed issuance of the A Share Convertible Corporate Bonds are subject to the Shareholders’ approval at the AGM and Shareholders class meetings of the Company.

A circular containing, among other things, details of the Specific Mandate and the proposed issuance of the A Share Convertible Corporate Bonds, together with notices of the AGM and H Share Class Meeting, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules.

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Pursuant to the relevant requirements under the Company Law of the PRC (《中華人民共和國公司法》), the Securities Law of the PRC (《中華人民共和國證券法》), the Administrative Measures for the Issuance of Securities by Listed Companies (《上市公司證券發行管理辦法》) and other laws and regulations and normative legal documents, the Company has satisfied the requirements in relation to the issuance of the A Share Convertible Corporate Bonds. In order to further replenish the capital of the Company, enhance its comprehensive competitiveness and strengthen its sustainable development capability, the Company proposes the issuance and listing of the A Share Convertible Corporate Bonds (on the Shanghai Stock Exchange). The details of the proposed issuance of the A Share Convertible Corporate Bonds are as follows:

1. TYPE OF SECURITIES TO BE ISSUED

The type of securities to be issued by the Company are the A Share Convertible Corporate Bonds which can be converted into A Shares. The A Share Convertible Corporate Bonds and the A Shares to be converted therefrom in the future will be listed on the Shanghai Stock Exchange.

2. ISSUE SIZE

The total amount of the A Share Convertible Corporate Bonds proposed to be issued will be not more than RMB2.7 billion (inclusive). The actual size of the issuance shall be determined by the Board or other authorised persons within the above range, subject to the authorization by the Shareholders at the AGM and Shareholders class meetings.

3. PAR VALUE AND ISSUE PRICE

The A Share Convertible Corporate Bonds will be issued at par with a nominal value of RMB100 each.

4. TERM OF BOND

The term of the A Share Convertible Corporate Bonds will be six years from the date of issuance.

5. INTEREST RATE OF BOND

The manner of determining the interest rate of the A Share Convertible Corporate Bonds and the final interest rate of each interest accrual year shall be determined by the Board or other authorised persons after discussion and agreement with the sponsor institution (the lead underwriter) in accordance with the PRC policies, market conditions and the actual conditions of the Company prior to the issuance of the A Share Convertible Corporate Bonds, according to the authorization by the Shareholders at the AGM and Shareholders class meetings.

If prior to the completion of the issuance of A Share Convertible Corporate Bonds, the bank deposit interest rate is adjusted, subject to the authorisation at the AGM and Shareholders class meetings, the Board or other authorised persons shall make adjustments to the interest rate of the A Share Convertible Corporate Bonds accordingly.

6. METHOD AND TIMING OF INTEREST PAYMENT

Interest on the A Share Convertible Corporate Bonds will be paid once a year and the principal amount and the interest for last year of all outstanding A Share Convertible Corporate Bonds will be repaid at maturity.

(1) Calculation of the annual interest

The annual interest means the interest accrued to the A Share Convertible Corporate Bonds Holders in each year on each anniversary of the date of issuance of the A Share Convertible Corporate Bonds, calculated based on the aggregate nominal value of the A Share Convertible Corporate Bonds. The formula for calculating the annual interest is:

I = B x i

I: denotes the annual interest;

B: denotes the aggregate nominal value of the A Share Convertible Corporate Bonds held by a A Share Convertible Corporate Bonds Holder as at the record date for interest payment in an interest accrual year (“ that year ” or “ each year ”);

i: denotes the interest rate of the A Share Convertible Corporate Bonds of that year.

(2) Method of Interest Payment

(a) Interest of the A Share Convertible Corporate Bonds will be paid annually, accruing from the date of issuance of the A Share Convertible Corporate Bonds.
(b) Interest payment date: The interest is payable annually on each anniversary of the date of issuance of the A Share Convertible Corporate Bonds. If such day falls on a statutory holiday or rest day, the interest payment date shall be postponed to the first working day immediately thereafter, provided that no additional interest will be accrued during the period of postponement. The period between an interest payment date and the immediately following interest payment date will be an interest accrual year.
(c) Record date for interest payment rights: The record date for interest payment rights in each year will be the last trading day preceding the interest payment date. The Company will pay the interest accrued in that year within five trading days from the interest payment date. The Company will not pay any interest for that year and subsequent interest accrual years to the A Share Convertible Corporate Bonds Holders whose A Share Convertible Corporate Bonds have been applied to be converted into the A Shares on or before the record date for interest payment rights.
(d) Tax payable on the interest income of a A Share Convertible Corporate Bonds Holder shall be borne by such A Share Convertible Corporate Bonds Holder.

7. CONVERSION PERIOD

The conversion period of the A Share Convertible Corporate Bonds commences on the first trading day immediately following the expiry of the six-month period after the date of issuance of the A Share Convertible Corporate Bonds and ends on the maturity date of the A Share Convertible Corporate Bonds.

8. DETERMINATION AND ADJUSTMENT OF THE CONVERSION PRICE OF THE A SHARE CONVERTIBLE CORPORATE BONDS (1) Basis for determining the initial Conversion Price

The initial Conversion Price of the A Share Convertible Corporate Bonds shall not be lower than the highest of the average trading prices of A Shares of the Company for the 30 and 20 trading days preceding the date of publication of the Offering Document (in the event that during such 30 or 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the closing price of each of these trading days before adjustment shall be adjusted with reference to the ex-rights or ex-dividend share price) and the average trading price of A Shares of the Company on the trading day preceding the date of publication of the Offering Document of the A Share Convertible Corporate Bonds. The actual initial Conversion Price shall be determined by the Board or other authorised persons after discussion and agreement with the sponsor institution (the lead underwriter) with reference to the market conditions, according to the authorization at the AGM and Shareholders class meetings.

The average trading price of A Shares of the Company for the 30 trading days preceding the date of publication of the Offering Document means the total trading price of A Shares of the Company for the 30 trading days preceding the date of publication of the Offering Document divided by the total trading volume of A Shares of the Company for those 30 trading days; the average trading price of A Shares of the Company for the 20 trading days preceding the date of publication of the Offering Document means the total trading price of A Shares of the Company for the 20 trading days preceding the date of publication of the Offering Document divided by the total trading volume of A Shares of the Company for those 20 trading days; the average trading price of A Shares of the Company for the trading day preceding the date of publication of the Offering Document means the total trading price of A Shares of the Company for the trading day preceding the date of publication of the Offering Document divided by the total trading volume of A Shares of the Company for that day.

(2) Adjustments to the Conversion Price and calculation formula

Upon the occurrence of distribution of scrip dividend, capitalisation issue, issuance of new shares, rights issue or distribution of cash dividend (excluding any increase in the share capital as a result of conversion of the A Share Convertible Corporate Bonds) after the issuance, the Company will adjust the Conversion Price in accordance with the following formulas (the adjusted value shall be rounded off to two decimal places):

Distribution of scrip dividend or capitalisation issue: P1 = P0/(1+n);

Issuance of new shares or rights issue: P1 = (P0+A×k)/(1+k);

Two items above implemented simultaneously: P1 = (P0+A×k)/(1+n+k);

Distribution of cash dividend: P1= P0–D;

Three items above implemented simultaneously: P1 = (P0–D+A×k)/(1+n+k).

Where: P0 is the Conversion Price before adjustments; n is the ratio of the scrip dividend or capitalisation; k is the ratio of issuance of new shares or rights issue; A is the price of issuance of new shares or rights issue; D is the cash dividend per share and P1 is the adjusted Conversion Price.

Where the abovementioned changes in shareholding and/or Shareholder’s interests occur, the Conversion Price will be adjusted accordingly and an announcement will be published on the media designated by the CSRC for disclosing information of listed companies. The announcement will indicate the date of adjustment to the Conversion Price, adjustment method and suspension period of share conversion (if necessary). An announcement will also be published in the Hong Kong market in accordance with laws, rules and regulations such as the Listing Rules (if necessary). If the Conversion Price adjustment date is on or after the A Share Convertible Corporate Bonds Holder’s application for conversion, and before the share registration date, then such conversion will be based on the Conversion Price adjusted by the Company.

In the event that the rights and benefits of the A Share Convertible Corporate Bonds Holders derived from the issuance are affected by the change in the Company’s share class, quantity and/or Shareholders’ interest due to the possible share repurchase, consolidation, subdivision or any other circumstances which may occur, the Company will adjust the Conversion Price based on the actual situation and in accordance with the principles of fairness, justice, equality and full protection of the A Share Convertible Corporate Bonds Holders’ interests. The Conversion Price will be adjusted based on the relevant PRC laws and regulations and the relevant provisions of the securities regulatory authorities of that time.

9. DOWNWARD ADJUSTMENT TO THE CONVERSION PRICE

(1) Adjustment authorization and permitted adjustment magnitude

The Conversion Price may be subject to downward adjustments if, during the term of the A Share Convertible Corporate Bonds, the closing prices of the A Shares in 15 trading days out of any 30 consecutive trading days are lower than 90% of the prevailing Conversion Price. The Board may propose any such adjustments for the Shareholders to consider and seek their approval at a general meeting and Shareholders class meetings of the Company. The above-mentioned proposal is subject to approval of more than two-thirds of the participating Shareholders with voting rights present at the general meeting and Shareholders class meetings. Shareholders holding the A Share Convertible Corporate Bonds should abstain from voting at the general meeting and Shareholders class meetings. The adjusted Conversion Price shall not be lower than the highest of the average trading price of A Shares of the Company for the 30 trading days preceding the aforementioned general meeting and Shareholders class meetings, the average trading price of A Shares of the Company for the 20 trading days preceding the aforementioned general meeting and Shareholders class meetings and the average trading price of A Shares of the Company for the trading day immediately before the aforesaid general meeting and Shareholders class meetings.

In the event that another adjustment of Conversion Price has been implemented in the aforementioned 30 trading days, the Conversion Price will be calculated based on the unadjusted Conversion Price and closing price of Shares during the trading days prior to adjustment, and the adjusted Conversion Price and closing price of Shares during the trading days on which the adjustment was made or the trading day after wards.

(2) Procedure of adjustment

If the Company decides to make a downward adjustment to the Conversion Price, the Company will publish an announcement on the media designated by the CSRC for disclosing information of listed companies. The information disclosed will cover the magnitude of the adjustment, the registration date of Shares, the suspension period of share conversion, and etc (if necessary). An announcement will also be published in the Hong Kong market in accordance with laws, rules and regulations such as the Listing Rules (if necessary). Share conversion will be restored for application based on the adjusted Conversion Price on the first trading day after the registration date (i.e. the effective date of the adjustment to the Conversion Price).

If the adjustment date is on or after the share conversion application date and prior to the registration date, the share conversion application should be executed based on the price after the adjustment.

10. METHOD FOR DETERMINING THE NUMBER OF SHARES FOR CONVERSION AND METHOD ON HANDLING FRACTIONAL SHARES UPON CONVERSION

Where a A Share Convertible Corporate Bonds Holder applies to convert the A Share Convertible Corporate Bonds held by him/her/them during the conversion period, the formula for calculating number of the Shares to be issued upon conversion:

Q = V/P. Any fractional Share shall be rounded down to the nearest whole number. In the aforesaid formula:

“Q” denotes the number of convertible Shares;
“V” denotes the aggregate nominal value of the A Share Convertible Corporate Bonds in respect of which the A Share Convertible Corporate Bonds Holders apply for conversion;
“P” denotes the prevailing Conversion Price as at the date of application for conversion.

Within five trading days from the conversion of the A Share Convertible Corporate Bonds by the A Share Convertible Corporate Bonds Holders, the Company will pay the A Share Convertible Corporate Bonds Holders in cash an amount equal to the nominal value of the remaining balance of such A Share Convertible Corporate Bonds which are insufficient to be converted into one A Share and the interest accrued on such balance in accordance with the relevant requirements of the Shanghai Stock Exchange and such other authorities.

11. TERMS OF REDEMPTION

(1) Terms of redemption at maturity

Within five trading days after the maturity of the A Share Convertible Corporate Bonds, the Company will redeem all the A Share Convertible Corporate Bonds which have not been converted into Shares. The actual redemption price shall be determined by the Board or other authorised persons after discussion and agreement with the sponsor institution (the lead underwriter) according to the authorization at the AGM and Shareholders class meetings with reference to the market conditions at the time of issuance.

(2) Terms of conditional redemption

During the term of the A Share Convertible Corporate Bonds, if the closing price of the A Shares of the Company is equal to or not lower than 130% of the prevailing Conversion Price in at least 15 trading days out of any 30 consecutive trading days, or when the balance of the outstanding A Share Convertible Corporate Bonds issued hereunder is less than RMB30 million, the Company has the right to redeem all or part of the A Share Convertible Corporate Bonds which have not been converted into shares based on the par value plus the accrued interest then.

Formula for calculating the then accrued interest is:

IA=B×i×t/365

IA: Accrued interest for the current period;

B: Aggregate nominal value of the A Share Convertible Corporate Bonds issued hereunder that are held by the A Share Convertible Corporate Bonds Holders;
i: Interest rate of the A Share Convertible Corporate Bonds for current year; and
t: Number of days on which interest is accrued, meaning the actual number of calendar days from the last interest payment date to the redemption date (excluding the redemption date) of current year.

12. TERMS OF SALE BACK

If the actual usage of the proceeds from the issuance of the A Share Convertible Corporate Bonds by the Company differs from the undertaking of the use of proceeds set out by the Company in the Offering Document, and such difference is considered by the CSRC as a deviation in the use of the proceeds, the A Share Convertible Corporate Bonds Holders will have a one-off right to sell all or part of the A Share Convertible Corporate Bonds held by them back to the Company at the nominal value plus the interest accrued then. Under this scenario, the A Share Convertible Corporate Bonds Holders may sell their A Share Convertible Corporate Bonds back to the Company during the sale back declaration period. If the A Share Convertible Corporate Bonds Holders do not exercise their sale back rights during the sale back declaration period, the rights to sell back the A Share Convertible Corporate Bonds shall automatically lapse.

13. DIVIDEND RIGHTS OF THE YEAR OF CONVERSION

The new A Shares of the Company to be issued as a result of the conversion of the A Share Convertible Corporate Bonds shall rank pari passu with all the existing A Shares, and are entitled to dividend of that period for all ordinary Shareholders (including Shareholders derived from the conversion of the A Share Convertible Corporate Bonds) registered on the date of Share registration for dividend distribution.

14. METHOD OF ISSUANCE AND TARGET INVESTORS

The actual method of the issuance of the A Share Convertible Corporate Bonds will be determined by the Board or other authorised persons with the sponsor institution (the lead underwriter), according to the authorization at the AGM and Shareholders class meetings. The target investors are natural persons, legal persons, securities investment funds and other investors that meet the conditions prescribed by the laws who have maintained securities accounts with the Shanghai Branch of China Securities Depository and Clearing Corporation Limited, except those prohibited by the state laws and regulations.

15. SUBSCRIPTION ARRANGEMENT FOR THE EXISTING A SHAREHOLDERS

The existing holders of A Shares of the Company shall have pre-emptive rights to subscribe for the A Share Convertible Corporate Bonds to be issued. The actual amount to be preferentially allocated to the existing holders of A Shares shall be determined by the Board or other authorised persons with reference to the market conditions before issuance, according to the authorization at the general meeting and Shareholders class meetings, and shall be disclosed in the Offering Document of the A Share Convertible Corporate Bonds. The exercise of such preferential allocation is subject to the Securities Law of the PRC (《中華人民共和國證券法》) and the Listing Rules or all other applicable laws, rules and regulations (including but not limited to the regulations and requirements related to connected transactions) of government or regulatory bodies.

16. RELEVANT MATTERS ON MEETINGS OF A SHARE CONVERTIBLE CORPORATE BONDS HOLDERS

(1) The rights and obligations of A Share Convertible Corporate Bonds Holders
(a) Rights of A Share Convertible Corporate Bonds Holders
- (i) Entitlement to agreed interests in accordance with the number of the A Share Convertible Corporate Bonds held by the A Share Convertible Corporate Bonds Holders;
- (ii) Rights to convert the A Share Convertible Corporate Bonds held into A Shares of the Company according to the agreed conditions;
- (iii) Entitlement to exercise right of sale back on agreed conditions;
- (iv) Assignment, bestowal or pledge of the A Share Convertible Corporate Bonds held in accordance with the laws, administrative regulations and the Articles of Association;
- (v) Access to relevant information in accordance with the laws and the Articles of Association;
- (vi) Claim to the Company for principal and interests of the A Share Convertible Corporate Bonds in accordance with the agreed period and manner;
- (vii) Rights to participate in or appoint agencies to participate in the meetings with A Share Convertible Corporate Bonds Holders and exercise voting rights in accordance with the laws, administrative regulations and other relevant requirements;
- (viii) Other rights granted by the laws, administrative regulations and Articles of Association as creditors of the Company.

(b) Obligations of the A Share Convertible Corporate Bonds Holders
(i) Compliance with the relevant terms of the A Share Convertible Corporate Bonds of the Company;
(ii) Making due payment of the subscription amount;
(iii) Compliance with the valid resolutions of a A Share Convertible Corporate Bonds Holders’ meeting;
(iv) Except as specified in laws, regulations, or the agreement of the Offering Document of the A Share Convertible Corporate Bonds, the A Share Convertible Corporate Bonds Holders shall not request the Company to make prepayment of the principal and interests of the A Share Convertible Corporate Bonds;
(v) Compliance with other obligations undertaken by the A Share Convertible Corporate Bonds Holders in accordance with the laws, administrative regulations and the Articles of Association.

(2) Meetings of the A Share Convertible Corporate Bonds Holders

The Board shall convene a A Share Convertible Corporate Bonds Holders’ meeting when any of the following circumstances arises during the term of the A Share Convertible Corporate Bonds:

(i) the Company’s proposal for changes of the agreements of the Offering Document;
(ii) the Company’s default in paying principal and interests of the A Share Convertible Corporate Bonds on time;
(iii) reduction of the Company’s capital, merger, separation, dissolution or bankruptcy of the Company; and
(iv) the occurrence of other matters which may substantially affect the interests of the A Share Convertible Corporate Bonds Holders.

The Company will set out the method of protecting the interest of the A Share Convertible Corporate Bonds Holders and the rights, procedures and effective conditions of resolutions of the A Share Convertible Corporate Bonds Holders’ meeting in the Offering Document.

17. USE OF PROCEEDS

The total proceeds from the issuance of the A Share Convertible Corporate Bonds will not exceed RMB2.7 billion (inclusive), all of which will be used to replenish the working capital and develop the principal business of the Company after deducting the issue cost and the amount received after the conversion of the A Share Convertible Corporate Bonds will be used to replenish the capital of the Company.

18. GUARANTEE AND SECURITIES

There is no guarantee or security in relation to the proposed issuance of the A Share Convertible Corporate Bonds.

19. DEPOSIT OF PROCEEDS

The Company has established its Administrative System of Proceeds, according to which proceeds from the issuance of the A Share Convertible Corporate Bonds will be deposited into a special account determined by the Board, and specific matters related to the account opening will be determined by the Board before the issuance.

20. THE VALIDITY PERIOD OF THE RESOLUTION

The resolution of the issuance of the A Share Convertible Corporate Bonds will be valid for 12 months from the date of the passing of the relevant resolutions at the AGM and Shareholders class meetings of the Company.

21. MATTERS RELATING TO AUTHORIZATION

(1) Authorization in connection with the issuance

It will be proposed by the Board at AGM and Shareholders class meetings to authorize the Board, which will then delegate to the Chairman, President or Secretary to the Board (the “ Relevant Persons ”) the full power to, jointly or individually, handle matters regarding the issuance of the A Share Convertible Corporate Bonds under the framework and principles approved at the AGM and Shareholders class meetings. The period of authorization shall be 12 months commencing from the effective date of the resolutions of the general meeting and Shareholders class meetings. The Board will, according to the actual conditions of the A Share Convertible Corporate Bonds issuance, seek a new mandate from the general meeting and Shareholders general meeting before the expiry of the authorization period. The actual content and scope of the authorization shall include, among other matters, the following:

(i) in accordance with the PRC laws and regulations and the relevant requirements of securities regulatory authorities and in view of the specific conditions of the Company, to formulate and implement the specific plan of the issuance, appropriately amend, adjust and supplement the terms of the issuance of the A Share Convertible Corporate Bonds, determine the specific terms and proposal of issuance before issuance, formulate and implement the final proposal of the issuance, including but not limited to, confirming the issue size, method of issuance, target investors, proportion of preferential allotment to existing A Shareholders, the determination of the initial Conversion Price, adjustment to the Conversion Price, redemption, interest rate, the A Share Convertible Corporate Bonds Holders’ rights to meetings and procedures for convening the meetings and conditions for the resolutions to become effective, determine the timing of the issuance, open a new account for the proceeds from the issuance of the A Share Convertible Corporate Bonds, and execute three-party monitoring agreements for the account and any other matters in relation to the issuance proposal;
(ii) to approve, sign, amend, supplement, submit, present, effect all the agreements, disclosure documents and other documents regarding the issuance and to deal with all relevant procedural requirements such as applications, approvals, registrations and filings;

(iii) to engage relevant intermediaries and sign relevant agreements with them to handle the matters relating to the issuance; to prepare, amend and issue disclosure materials relevant to the issuance and listing pursuant to the requirements of the regulatory authorities and reply to the comments of the securities regulatory authorities with full discretion;
(iv) to deal with relevant matters in relation to the utilization of proceeds from the issuance and to adjust the utilization and specific arrangements of proceeds from the issuance within the scope as approved by a general meeting and Shareholders class meetings;
(v) upon the completion of the issuance, to complete the relevant registration and listing matters in relation to the issuance of A Share Convertible Corporate Bonds with the Shanghai Stock Exchange and the Shanghai Branch of China Securities Depository and Clearing Corporation Limited;
(vi) to appropriately amend the relevant provisions of the Articles of Association based on the conditions of issuance and conversion of the A Share Convertible Corporate Bonds and to deal with matters in relation to the filing with administration for industry and commerce and registration of changes in registered share capital etc.;
(vii) subject to compliance with the then applicable laws of the PRC, if new requirements were introduced by laws, regulations and other regulatory documents as well as relevant regulatory authorities to the policy of the issuance of A share convertible corporate bonds by listing companies and the market conditions changed, to adjust the issuance plan and the utilization of proceeds and continue to deal with relevant matters of the issuance in accordance with relevant provisions and requirements of the securities regulatory authorities (including reviews and feedbacks for the issuance application) as well as market conditions, save and except those matters which are required to be re-voted at a general meeting and the Shareholders class meetings and authorization of which is not permitted pursuant to requirements of relevant laws and regulations as well as the Articles of Association;
(viii) if as a result of an act of God or other matters, the issuance plan cannot be implemented or if implemented may lead to adverse consequences to the Company, or if the policy in relation to the issuance of A Share Convertible Corporate Bonds changes, to decide to postpone or terminate the issuance plan in advance at its discretion;
(ix) to conduct all other necessary, appropriate and proper matters in relation to the issuance insofar as permitted by relevant laws and regulations on behalf of the Company; and
(x) authorization and delegation in connection with the issuance by the Board.

The Company will seek the Specific Mandate from Shareholders at the AGM and the Shareholders class meetings for the issue of the A Share Convertible Corporate Bonds, which shall be valid for 12 months after the resolutions and proposal related to the issuance of A Share Convertible Corporate Bonds are considered and approved at the AGM and the Shareholders class meetings.

RECENT EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The equity fundraising activities conducted by the Company during the past twelve months preceding the date of this announcement are set out as below:

Date of	Fundraising	Net proceeds
announcement	activity	(approximate)	Intended use of net proceeds
Th e announcements dated 29	A Share Issue	RMB2.8 billion	After deducting the expenses incurred for A
September 2014, 14 November			Share Issue, being proposed to be fully used to
2014, 1 December 2014, 5			replenish the working capital of the Company
December 2014, 19 October 2015,			to support future business developments of
7 December 2015, 29 December			the Company and facilitate achievement of
2015, 2 February 2016, 23 March 2016, 22 June 2016, 29 September 2016, 14 October 2016, 4 November 2016, 9 November 2016, 18 November 2016, 25 November 2016, 8 December 2016, 15 December 2016 and 30 December 2016 and the circulars of the Company dated 29 October			strategic growth objectives of the Company. Specific purposes and arrangements of the proceeds raised include: 1) To increase the scale of fund allocation for capital-based intermediary business; 2) To actively expand the offshore business; 3) To increase and optimise network layout
2014, 20 November 2015, 8			and construction of off-site service
March 2016 and 3 November			platform to enhance the overall strength
2016			of brokerage business;

3) To increase and optimise network layout and construction of off-site service platform to enhance the overall strength of brokerage business;

Actual use of net proceeds

As at the date of this announcement, after deducting the expenses incurred for A Share Issue, actual purposes and arrangements of the proceeds raised include:

1) To increase the scale of fund allocation for capital-based intermediary business;
2) To expand the scale of our proprietary trading business moderately according to market conditions; and
3) To increase financial support for innovative business;
4) To expand the scale of our proprietary trading business moderately according to market conditions;
5) To improve the underwriting capabilities and staff capabilities of investment banking;
6) To steadily strengthen the asset management business and improve investment research and integrated marketing capabilities;
7) To conduct capital increase to ZDKY Venture Capital;
8) To conduct capital increase to Central China Futures;
9) To increase financial support for innovative business;
10) To accelerate the construction of internet finance; and
11) To strengthen the building of information system and other projects.

Save for the above, the Company did not conduct any other equity fund raising activities in the past twelve months immediately before the date of this announcement.

REASONS FOR AND BENEFITS OF THE ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

In order to expand the net capital size of the Company and meet the net capital and working capital requirements of the Company’s business development in the future, the Company proposes to raise not more than RMB2.7 billion (inclusive) through the public issuance of the A Share Convertible Corporate Bonds. All proceeds from the issuance, after deducting the issue cost, will be used to replenish the working capital of the Company, and the amount received after the conversion of the A Share Convertible Corporate Bonds by the A Share Convertible Corporate Bonds Holders will be used to replenish the capital of the Company, so as to support future development of the Company’s business, comprehensively improve the market competitiveness and risk resistance capacity of the Company, capture the opportunities arising from the development of the Central China Economic Zone (中原經濟區), explore the development potentials of the security industry in Henan province, respond to the opportunities and challenges brought by the fast development of the security industry in the PRC, and achieve the Company’s strategic development targets.

LISTING RULES IMPLICATIONS

Pursuant to Rule 19A.38 of the Listing Rules, the grant of Specific Mandate is subject to the requirements of approval at the AGM and the Shareholders class meetings.

The proposal in relation to the issuance of the A Share Convertible Corporate Bonds and the grant of the Specific Mandate were considered and approved by the Board on 6 April 2017. None of the Directors has material interest in the abovementioned matters and hence no Director abstained from voting on such Board resolution.

The Board expects that the Company will continue to maintain sufficient public float to comply with the minimum public float requirement set out in the Listing Rules.

THE AGM AND THE SHAREHOLDERS CLASS MEETING

The Company will convene and hold the AGM, a class meeting for holders of A Shares (the “ A Share Class Meeting ”) and a class meeting for holders of H Shares (the “ H Share Class Meeting ”) for the Shareholders to consider and, if thought fit, to approve, among other things, the issuance proposal related to the A Share Convertible Corporate Bonds and the grant of the Specific Mandate for the issuance of the A Share Convertible Corporate Bonds.

A circular containing, among other things, details of the Specific Mandate and the proposed issuance of the A Share Convertible Corporate Bonds, together with notice of the AGM and H Share Class Meeting, will be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the expressions below have the meanings assigned:

“A Share(s)”	domestic listed ordinary shares with a nominal value of RMB1.00
	each in the share capital of the Company, which are listed and
	traded on the Shanghai Stock Exchange
“A Share Convertible	A Share Convertible Corporate Bonds in the total amount of not
Corporate Bonds”	more than RMB2.7 billion (inclusive) which are convertible into
	new A Shares, proposed to be issued by the Company in the PRC
“A Share Convertible	holder(s) of A Share Convertible Corporate Bonds
Corporate Bonds Holder(s)”
“A Shareholder(s)”	holder(s) of A Shares
“AGM”	the annual general meeting (or any adjournment thereof) of the
	Company to be convened and held at 9:30 a.m. on 22 May 2017
	(Monday) at Conference Centre, Huanghe Yingbin Hotel, No.1
	Yingbin Road, Huiji District, Zhengzhou, Henan province, the
	PRC for the Shareholders to consider and approve, inter alia, the
	resolutions regarding the Specific Mandate to issue the A Share
	Convertible Corporate Bonds and the proposed issuance of the A
	Share Convertible Corporate Bonds
“Articles of Association”	the articles of association of the Company as amended from time
	to time
“Board”	the board of Directors
“Company”	Central China Securities Co., Ltd. (中原證券股份有限公司)
	(carrying on business in Hong Kong as “中州證券”, a joint stock
	company incorporated on 8 November 2002 in Henan Province,
	the PRC with limited liability, the H Shares and A Shares of
	which are listed on the Main Board of the Hong Kong Stock
	Exchange (stock code: 01375) and the Shanghai Stock Exchange
	(stock code: 601375), respectively)
“Conversion Price”	the price at which the new A Shares will be issued upon
	conversion of the A Share Convertible Corporate Bonds, as may
	be adjusted from time to time
“CSRC”	the China Securities Regulatory Commission
“Director(s)”	director(s) of the Company

“H Shares”	overseas listed foreign ordinary shares with a nominal value of
	RMB1.00 each in the share capital of the Company, which are
	listed and traded on the Main Board of the Hong Kong Stock
	Exchange
“Hong Kong	The Stock Exchange of Hong Kong Limited
Stock Exchange”
“Listing Rules”	the Rules Governing the Listing of Securities on the Hong Kong
	Stock Exchange
“Offering Document”	the offering memorandum in relation to the proposed issuance of
	the A Share Convertible Corporate Bonds
“PRC”	the People’s Republic of China (excluding Hong Kong Special
	Administrative Region, Macau Special Administrative Region and
	Taiwan)
“RMB”	the lawful currency of the PRC Renminbi, the basic unit of which
	is “yuan”
“Share(s)”	ordinary share(s) with a nominal value of RMB1.00 each in the
	share capital of the Company, including A Shares and H Shares
“Shareholders”	the shareholders of the Company
“Specific Mandate”	the specific mandate in relation to the issuance of the A Share
	Convertible Corporate Bonds to be considered and approved at the
	AGM class meetings

By order of the Board of Central China Securities Co., Ltd. JIAN Mingjun Chairman

Henan, the PRC, 6 April 2017

As at the date of this announcement, the Board comprises executive Directors Mr. JIAN Mingjun and Mr. ZHOU Xiaoquan, non-executive Directors Mr. LI Xingjia, Mr. WANG Lixin, Mr. ZHANG Qiang, Mr. ZHANG Xiaoqi and Mr. YU Zeyang, and independent non-executive Directors Mr. YUAN Dejun, Mr. YUEN Chi Wai, Mr. NING Jincheng and Mr. YU Xugang.