Central China Securities Co., Ltd.

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

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The China Securities Regulatory Commission (the “ CSRC ”) issued the Decision on Amending the Guidelines for the Articles of Association of Listed Companies on 17 April 2019, and issued the Administrative Provisions for the Equity of Securities Companies on 5 July 2019, which made new provisions on the buyback of shares by the listed company, the rights and obligations of shareholders, the lock-up period of equity, and the administration of equity. In order to effectively implement the above provisions of the CSRC and further standardize corporate governance, the board of directors (the “ Board ”) of Central China Securities Co., Ltd. (the “ Company ”) resolved to propose amendments to some clauses of the articles of association of the Company (the “ Articles of Association ”) at the meeting held on 27 August 2019.

The Board proposes to amend the Articles of Association as follows:

Existing Articles

Amended Articles

Article 38 The Company may, in the following circumstances, buy back its shares pursuant to laws, administrative regulations, department rules and Articles of Association:

(I) to reduce the registered capital of the Company;
(I) to reduce the registered capital of the Company;
(II) to merge with other companies holding shares of the Company;
(II) to merge with other companies holding shares of the Company;

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Existing Articles

(III) to award shares to employees of the Company;
(IV) as required by shareholders objecting to resolutions of the general meeting concerning merger or division of the Company to buy their shares;
(V) other circumstances specified by laws and regulations and approved by relevant regulatory authorities.

The Company shall not trade its shares unless in the aforesaid circumstances.

Amended Articles

(III) to use shares for employee stock ownership plans or equity incentives;
(IV) as required by shareholders objecting to resolutions of the general meeting concerning merger or division of the Company to buy their shares;
(V) to use shares for conversion of convertible corporate bonds issued by the Company;
(VI) to maintain corporate value and shareholders’ interests as the Company deems necessary;
(VII) other circumstances specified by laws and regulations and approved by relevant regulatory authorities.

The Company shall not buy back its shares unless in the aforesaid circumstances.

Newly added (the subsequent articles are to be renumbered accordingly)

Article 39 The Company may buy back its shares through public centralized trading or other methods as recognized by laws and regulations and the CSRC.

Where the buyback of shares by the Company falls under any of the circumstances stipulated in subparagraphs (III), (V) and (VI) of the first paragraph of Article 38 of the Articles of Association, such buyback shall be conducted through public centralized trading method.

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Existing Articles

Article 42 Where the Company should buy back the shares due to subparagraph (I) to (III) of Article 38 of the Articles of Association, the general meeting shall pass the resolution. After the Company buys back the shares pursuant to Article 38, such shares shall be cancelled within 10 days from the date of buyback if it is under the situation of subparagraph (I); such shares shall be transferred or cancelled within 6 months if it is under the situations of subparagraph (II) and/or (IV).

The shares bought back by the Company in accordance with subparagraph (III) of Article 38 shall not exceed 5% of the total shares issued; the payment for buyback shall be made out of the Company’s after-tax profits; the shares bought back shall be transferred to the employees within 1 year.

Amended Articles

Article 43 Where the buyback of shares by the Company falls under any of the circumstances stipulated in subparagraphs (I) and (II) of the first paragraph of Article 38 of the Articles of Association, it shall be subject to approval at the general meeting. Where the buyback of shares by the Company falls under any of the circumstances stipulated in subparagraph (III), (V) and (VI) of the first paragraph of Article 38 of the Articles of Association, it may be resolved by more than two-thirds of directors present at a meeting of the Board in accordance with the provisions of the Articles of Association or the authorization of the general meeting.

In the event that the Company has bought back its shares in accordance with the first paragraph of Article 38 of the Articles of Association, such shares shall be cancelled within 10 days from the date of buyback under the circumstance stipulated in subparagraph (I); such shares shall be transferred or cancelled within 6 months under any of the circumstances stipulated in subparagraphs (II) and (IV); the aggregate number of shares held by the Company shall not exceed 10% of the total issued shares of the Company, and such shares shall be transferred or cancelled within 3 years under any of the circumstances stipulated in subparagraphs (III), (V) and (VI).

Where the laws and regulations of the places where the shares of the Company are listed and the listing rules of the stock exchanges provide otherwise in relation to the aforementioned share buyback and cancellation, such provisions shall prevail.

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Existing Articles

Article 64 The Company’s ordinary shareholders shall have the following obligations:

(I) to abide by the laws, administrative regulations and the Articles of Association;

......

(VI) to fulfill other obligations as stipulated by laws, administrative regulations and Articles of Association.

Shareholders shall not be liable for further contribution to share capital other than the conditions agreed to by the subscriber of the relevant shares on subscription.

Amended Articles

Article 65 The Company’s ordinary shareholders shall have the following obligations:

(I) to abide by the laws, administrative regulations and the Articles of Association;

......

(VI) shareholders who should be approved but have not been approved by the regulatory authorities or have not filed with the regulatory authorities, or those who have not completed the rectification, shall not exercise the rights of, amongst others, proposing to convene a general meeting, voting, nomination, making proposals and disposition;
(VII) shareholders who make false statements, abuse shareholders’ rights or commit other behavior that harms the Company’s interests, shall not exercise the rights of, amongst others, proposing to convene a general meeting, voting, nomination, making proposals and disposition;
(VIII) to fulfill other obligations as stipulated by laws, administrative regulations and Articles of Association.

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Existing Articles

Newly added (the subsequent articles are to be renumbered accordingly)

Amended Articles

Article 66 The office of the Board of the Company is the department responsible for the Company’s equity administration affairs, and organizing the implementation of equity administration affairs. The Chairman of the Company is the first responsible person for the Company’s equity administration affairs. The secretary to the Board of the Company assists the Chairman and is the direct responsible person for the Company’s equity administration affairs.

In the event of illegal or improper conduct related to equity administration affairs in violation of laws, administrative regulations and regulatory requirements, shareholders, the Company, responsible persons for the equity administration affairs and related personnel shall bear corresponding responsibilities in accordance with the requirements of the Securities Law, the Supervision and Administration Regulations for Securities Companies and other relevant laws and regulations and regulatory documents.

Article 66 If any shareholder who holds 5% or more shares with voting right in the Company pledges his or her shares, he or she shall report it to the Company in writing as at the date of such pledge.

Article 68 The Company’s substantial shareholders and controlling shareholders shall replenish capital to the Company when necessary. If any shareholder who holds 5% or more shares with voting right in the Company pledges his or her shares, he or she shall report it to the Company in writing as at the date of such pledge.

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Existing Articles

Newly added (the subsequent articles are to be renumbered accordingly)

Amended Articles

Article 69 The Company shall maintain a stable shareholding structure. The shareholding period of the Company’s shareholders shall comply with the laws, administrative regulations and the relevant provisions of the CSRC. For the Company’s equity controlled by actual controllers of the Company’s shareholders, such actual controllers shall abide by the same lockup period for the Company’s shareholders controlled by them, except for the cases approved by the CSRC according to law.

The Company’s shareholders shall not pledge the equities held by them in the Company during the equity lock-up period. After the expiration of the equity lock-up period, the percentage of equities pledged by a Company’s shareholders shall not exceed 50% of the equities held by the shareholder in the Company. The shareholders’ pledge of their equities in the Company shall not harm the interests of other shareholders and the Company, and shall not maliciously evade the requirements for the equity lock-up period. Such shareholders shall not agree to the exercise of shareholders’ rights such as voting rights by the pledgee or other third parties, and shall not transfer the control over the Company’s equity in disguise.

Article 157 Directors of the Company shall be elected or replaced at general meetings. A Director shall serve a term of three years, and may seek reelection upon expiry of the said term. Prior to the expiry of a Director’s term the general meeting shall not remove him without cause.

Directors of the Company shall before assuming office have their post-holding qualifications approved by securities regulatory authority......

Article 160 Directors of the Company shall be elected or replaced at general meetings, and can be removed by the general meeting prior to the expiry of their terms. A Director shall serve a term of three years, and may seek reelection upon expiry of the said term.

Directors of the Company shall before assuming office have their post-holding qualifications approved by securities regulatory authority......

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Existing Articles

Amended Articles

Article 215 Staff of the controlling shareholder and its beneficial owner of the Company who serve positions other than Directors of the controlling shareholder and its beneficial owner shall not serve as senior management of the Company.

Article 218 Staff of the controlling shareholder of the Company who serve administrative positions other than Directors and supervisors of the controlling shareholder shall not serve as senior management of the Company.

Except for the above articles, the contents of other articles in the Articles of Association remain unchanged.

The English version of the Articles of Association is an unofficial translation of the Chinese version. In the event of any inconsistency between the Chinese and English versions, the Chinese version shall prevail.

In respect of the articles in relation to “buyback of shares by the Company” (i.e. Article 38, Article 39 and Article 43 of the amended Articles of Association) in the aforesaid proposed amendments to the Articles of Association, the Company hereby states that even if the amendments become effective, the Company shall comply with the relevant provisions in relation to the repurchase of shares by a company in Chapter 10 and Chapter 19A under the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “ Hong Kong Listing Rules ”) (as applicable) if the Company repurchases any of its A shares or H shares. The Company will also ensure that any share repurchase is in compliance with the provisions in relation to public float under the Hong Kong Listing Rules.

The proposed amendments to the Articles of Association are subject to the approval by the shareholders of the Company at the 2019 first extraordinary general meeting of the Company by way of special resolution and the approval by Henan Regulatory Bureau of the CSRC.

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

Henan, the PRC 27 August 2019

As at the date of this announcement, the Board comprises executive directors Mr. JIAN Mingjun and Mr. CHANG Junsheng, non-executive directors Mr. LI Xingjia, Mr. WANG Lixin, Mr. TIAN Shengchun, Mr. ZHANG Xiaoqi and Mr. LU Benson Cheng, and independent non-executive directors Mr. YUEN Chi Wai, Mr. NING Jincheng, Mr. YU Xugang and Ms. ZHANG Dongming.

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AI assistant

Central China Securities Co., Ltd. Governance Information 2019

49885_rns_2019-08-27_5b98e5e4-8e09-4bcb-b9de-963d3f49e13c.pdf