Central China Securities Co., Ltd. — Proxy Solicitation & Information Statement 2019

Sep 18, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your securities broker or other registered securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Central China Securities Co., Ltd. (the “ Company ”), you should at once hand this circular to the purchaser or transferee or to the bank, securities broker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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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 “中原証券股份有限公司” and carrying on business in Hong Kong as “中州証券”) (Stock Code: 01375)

PROFIT DISTRIBUTION PLAN FOR THE FIRST HALF OF THE YEAR OF 2019 PROVISION FOR CREDIT IMPAIRMENT PROPOSED GENERAL MANDATE TO ISSUE ONSHORE AND OFFSHORE DEBT FINANCING INSTRUMENTS PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

Letter from the Board is set out on pages 3 to 15 of this circular.

The notice convening an extraordinary general meeting (“ EGM ”) to be held at 9:30 a.m. on Thursday, 7 November 2019 at Conference Room, 17th Floor, Zhongyuan Guangfa Finance Building, No. 10 Shangwu Waihuan Road, Zhengzhou, Henan Province, the PRC, is set out on pages 23 to 30 of this circular.

The proxy form for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying proxy form in accordance with the instructions printed thereon as soon as possible. In case of holders of H Shares, the proxy forms shall be lodged with the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any event, not less than 24 hours before the time scheduled for holding the EGM or any adjournment thereof (as the case may be) or the time appointed for the taking of the poll. Completion and delivery of the proxy forms will not preclude you from attending and voting in person at the relevant meetings or any adjournment if you so desire.

19 September 2019

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
APPENDIX	— PROPOSED AMENDMENTS TO
	THE ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . .	16
**NOTICE OF **	THE 2019 FIRST EXTRAORDINARY GENERAL MEETING. . . . . . . .	23

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DEFINITIONS

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

• “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 Main Board of Shanghai Stock Exchange

• “A Shareholder(s)” the holder(s) of A Shares

• “Articles of Association” the articles of association of the Company as amended made from time to time

• “Board” the board of Directors of the Company

• “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)

• “Company Law” the Company Law of the People’s Republic of China

• “CSRC”

• the China Securities Regulatory Commission

• “Director(s)”

• the director(s) of the Company

• “EGM”

the 2019 first extraordinary general meeting (or any adjournment thereof) of the Company to be held at 9:30 a.m. on Thursday, 7 November 2019 at Conference Room, 17th Floor, Zhongyuan Guangfa Finance Building, No. 10 Shangwu Waihuan Road, Zhengzhou, Henan Province, the PRC

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DEFINITIONS

“H Share(s)” 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 “H Shareholder(s)” the holder(s) of H Shares

• “HKD” Hong Kong Dollars, the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Onshore and Offshore Debt the proposed issuance of onshore and offshore debt Financing Instrument(s)” financing instrument(s) by the Company for Shareholders’ consider and approval at the EGM, details of which are set out under the section “Letter from the Board — IV. Proposed General Mandate to Issue Onshore and Offshore Debt Financing Instruments” of this circular

• “PRC” or “China” the People’s Republic of China

• “RMB” the lawful currency of the PRC, Renminbi, the basic unit of which is “yuan”

• “Securities Law” the Securities Law of the People’s Republic of China

• “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

• “Shareholder(s)” the shareholder(s) of the Company

• “%” per cent

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LETTER FROM THE BOARD

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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 “中原証券股份有限公司” and carrying on business in Hong Kong as “中州証券”) (Stock Code: 01375)

Executive Directors:

Mr. JIAN Mingjun (Chairman) Mr. CHANG Junsheng

Non-executive Directors:

Mr. LI Xingjia Mr. WANG Lixin Mr. TIAN Shengchun Mr. ZHANG Xiaoqi Mr. LU Benson Cheng

Independent Non-executive Directors:

Mr. YUEN Chi Wai Mr. NING Jincheng Mr. YU Xugang Ms. ZHANG Dongming

Registered Office in the PRC:

No. 10 Shangwu Waihuan Road Zhengdong New District Zhengzhou, Henan Province China

Headquarters/Principal Place of Business in the PRC:

No. 10 Shangwu Waihuan Road Zhengdong New District Zhengzhou, Henan Province China

Principal Place of Business in Hong Kong: Suite 3108, Two Exchange Square 8 Connaught Place Central, Hong Kong

19 September 2019

To the Shareholders

Dear Sir and Madam,

PROFIT DISTRIBUTION PLAN FOR THE FIRST HALF OF THE YEAR OF 2019 PROVISION FOR CREDIT IMPAIRMENT PROPOSED GENERAL MANDATE TO ISSUE ONSHORE AND OFFSHORE DEBT FINANCING INSTRUMENTS PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

At the EGM, ordinary resolutions will be proposed to approve (1) the profit distribution plan for the first half of the year of 2019; and (2) the resolution on the provision for credit impairment, and special resolutions will be proposed to approve (3) proposed general mandate to issue onshore and offshore debt financing instruments; and (4) proposed amendments to the Articles of Association.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with details of the aforementioned matters and to set out the notice of the EGM.

II. PROFIT DISTRIBUTION PLAN FOR THE FIRST HALF OF THE YEAR OF 2019

The audited net profit attributable to owners of the parent in the consolidated financial statements of the Company for the first half of the year of 2019 is RMB239,926,940.64, and the audited net profit of the parent is RMB145,425,178.56.

According to the relevant requirements of the Company Law, Securities Law, Financial Rules for Financial Enterprises and the Articles of Association, the Company may distribute profit to investors after withdrawing the provident fund and reserves. After 10%, 5%, 11% and 10% of the net profit of the parent in the first half of the year of 2019 to each of the statutory surplus reserve fund, discretionary surplus reserve fund, general risk reserve and transaction risk reserve was appropriated respectively, totaling RMB52,353,064.29, the profit available for distribution of Company in the first half of the year of 2019 was RMB93,072,114.27. In addition, the undistributed profit of the parent at the beginning of the year was RMB42,727,658.94, and the accumulated profit of the parent distributable to Shareholders in the interim of 2019 was RMB135,799,773.21.

According to the requirements of the CSRC, the gains from changes in fair value of the available-for-distribution profits shall not be used for cash distribution to Shareholders. As of 30 June 2019, the Company recorded negative in gains from changes in fair value of the available-for-distribution profits and did not deduct the impact of the gains from changes in fair value changes. The cash distribution of the accumulated profit of the parent distributable to Shareholders in the interim of 2019 was RMB135,799,773.21.

Taking into account comprehensive factors such as the future development of the Company and the interests of the Shareholders, the profit distribution plan is proposed as follows:

The Company will adopt cash dividend payment method to distribute a cash dividend to the A Shareholders and H Shareholders whose names appear on the register of members of the Company on the record date. Based on the number of total issued Shares of the Company as of 30 June 2019, a cash dividend of RMB0.20 (tax inclusive) for every ten Shares with a total cash dividend of RMB77,381,414.00 (tax inclusive) is proposed to be distributed. The outstanding balance of the retained profits distributable amounted to RMB58,418,359.21 and will be carried forward to the next period.

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LETTER FROM THE BOARD

Cash dividend is denominated and declared in RMB and payable in RMB to the A Shareholders and in HKD to the H Shareholders. The actual distribution amounts to be paid in HKD will be calculated based on the average benchmark exchange rate of RMB against HKD as published by the People’s Bank of China five business days before the date of the EGM.

After the profit distribution plan of the Company for the first half of 2019 is considered and approved at the EGM, the Company will distribute the cash dividend within two months from the date of convening the EGM.

On 27 August 2019, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the profit distribution plan of the Company for the first half of the year of 2019 at the EGM by way of ordinary resolution.

III. PROVISION FOR CREDIT IMPAIRMENT

(I) Summary of provision for credit impairment

Based on the Accounting Standards for Business Enterprises and relevant requirements of the accounting policies of the Company, in order to reflect the financial position as of 30 June 2019 and the operating results for the first half of 2019 of the Company accurately and objectively, the Company and its subsidiaries conducted comprehensive check and impairment testing of assets such as financial assets held under resale agreements, debt financing, advance to customers, and loans and entrusted loans, and made provision for credit impairment with an aggregate amount of RMB80.3662 million for the first half of 2019, accounting for more than 10% of the net profit attributable to the owner of the parent in the Company’s audited consolidated financial statements for the most recent financial year. The details are set out as follows:

Asset Financial assets held under resale agreements Others Total	The provision for credit impairment for the first half of 2019 (Unit: RMB’0,000) 7,784.02 252.60
	8,036.62

The above figures are based on a preliminary review by the Company, which are unaudited.

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LETTER FROM THE BOARD

(II) The impact of provision for credit impairment on the Company

The Company’s provision for credit impairment in the consolidated financial statements for the first half of 2019 amounted to RMB80.3662 million in total, as a result of which, the total profit for the first half of 2019 will decrease by RMB80.3662 million.

(III) Details of provision for credit impairment

1. Financial assets held under resale agreements

Based on the Accounting Standards for Business Enterprises and relevant accounting policies of the Company, the expected credit loss method was adopted to make provision for impairment of RMB77.8402 million for the Company’s financial assets held under resale agreements for the first half of 2019, mainly due to the Company’s provision for impairment of RMB78.5730 million for the stock pledge business involving Shenwu Energy Saving (Stock Code: 000820.SZ), and the reverse of provision for impairment of RMB0.7328 million due to such reasons as decrease of the scale of financial assets held under resale agreements.

The receiver, Shenwu Technology Group Corporation Limited* (神霧科技集團股份有限公 司), pledged the stocks of Shenwu Energy Saving (Stock Code: 000820.SZ) and financed RMB200.0000 million from the Company. In the first half of 2019, the share price of Shenwu Energy Saving continued to drop. After estimating the recoverable amount of pledged equities and other judicially frozen assets, the Company expected that there was a difference between the cash flows receivable from the contract and the cash flows expected to be received. It is estimated that the provision for credit impairment for the period from January to June 2019 amounted to RMB78.5730 million and the accumulated provision for credit impairment amounted to RMB160.3463 million.

2. Others

Based on the Accounting Standards for Business Enterprises and relevant accounting policies of the Company, the expected credit loss method was adopted to make provision for impairment totalling RMB2.5260 million for financial assets such as the Company’s debt investments, advance to customers and loans and entrusted loans for the first half of 2019.

On 27 August 2019, the Board approved and resolved to propose to the Shareholders to consider, and, if thought fit, approve the proposal for the provision for credit impairment at the EGM by way of ordinary resolution.

• For identification purpose only

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LETTER FROM THE BOARD

IV. PROPOSED GENERAL MANDATE TO ISSUE ONSHORE AND OFFSHORE DEBT FINANCING INSTRUMENTS

The use of various debt financing instruments for debt financing is one of the important channels for securities companies to continue to replenish funds and ensure that the Company’s capital and financial strength match its industry position and business development. Coupled with the current liability, leveraging and future actual operation needs of the Company, the Company proposed to implement a stable debt finance strategy by drawing on debt financing methods commonly used in the industry in accordance with various laws and regulations such as the Securities Law, the Company Law, the Regulations on Supervision and Management of Securities Companies, the Administrative Measures for the Issuance and Trading of Corporate Bonds, thereby optimizing its capital structure and maximizing the interest of the Shareholders.

Based on the above reasons, the Company proposed the resolution in relation to the issuance of Onshore and Offshore Debt Financing Instruments at the EGM for approval. Provided that the Company complied with the Administrative Measures for the Risk Control Indicators of Securities Companies 《證券公司風險控制指標管理辦法》( ) in the PRC and the internal prudential risk control indicators of the Company, the Company may issue on an one-off or multiple issuances or multi-tranche issuances bases, either openly or privately, domestic corporate bonds, short-term corporate bonds, short-term financing bonds, subordinated bonds (including perpetual subordinated bonds), subordinated debt, asset-backed securities (notes), income receipts and other domestic debt financing instruments to be issued by the Company as approved or filed with the CSRC, Securities Association of China, stock exchanges and other relevant authorities in accordance with relevant regulations; and offshore debt financing instruments, on an one-off or multiple issuances or multi-tranche issuances bases, such as US dollar, Euro and other foreign currency denominated corporate bonds and offshore RMB denominated corporate bonds, medium term note programme, foreign currency notes and commercial papers (the above-mentioned Onshore and Offshore Debt Financing Instruments shall not contain any provision for conversion into Shares).

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LETTER FROM THE BOARD

Proposal for the Proposed Issuance of Onshore and Offshore Debt Financing Instruments

The specific details on the proposal for the issuance of Onshore and Offshore Debt Financing Instruments are as follows:

(i) Size:

• The total size of the aforesaid Onshore and Offshore Debt Financing Instruments shall not exceed 300% of the net asset value in the latest financial statements (inclusive of 300%, the size of issuance is calculated based on the outstanding amount denominated in RMB upon issuance; in the case of an instrument denominated in a foreign currency, based on the central parity rate published by the People’s Bank of China on the date of each issuance or each tranche issuance), subject to relevant laws and regulations in respect of issuance limit, can be issued on an one-off or multiple issuances or multi-tranche issuances bases.

• (ii) Types: The specific types and priorities for repayment of the Onshore and Offshore Debt Financing Instruments shall be determined according to relevant regulations and the market condition at the time of issuance.

• (iii) Terms: The term of Onshore and Offshore Debt Financing Instruments shall not exceed 10 years (inclusive) either for a type with a single term or for a hybrid type with multiple terms.

• (iv) Interest rate: The interest rate of the issuance and its calculation and payment method thereof shall be determined according to the market condition at the time of issuance and relevant regulations.

• (v) Issue price:

• The issue price shall be determined according to the market condition at each issuance and relevant laws and regulations.

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LETTER FROM THE BOARD

• (vi) Security and other credit enhancement arrangements:

• Security and other credit enhancement arrangements shall be determined according to relevant laws and regulations.

• (vii) Use of proceeds:

After deducting relevant expenses for the issuance, all of the proceeds will be used to supplement the working capital of the Company, fulfill the operation needs and support the business expansion, or used for the adjustment on liability structure of the Company, the supplement of the liquidity of the Company and project investment and/or construction of fixed assets according to laws.

• (viii) Issuer(s): The Company or the domestic and overseas wholly-owned subsidiary(ies) of the Company will serve as the issuer(s).

• (ix) Method of issuance:

• Shall be under custody and issue in accordance with the approval or filing of relevant authorities.

• (x) Targets of issuance and The targets of issuance shall be investors who meet the the placement conditions for subscription in accordance with relevant arrangements to the laws and regulations. Placement to the Shareholders of Shareholders of the the Company can be conducted in accordance with laws. Company:

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LETTER FROM THE BOARD

• (xi) Safeguard measures for During the term of Onshore and Offshore Debt Financing debt repayment: Instruments, the Company can increase the proportion of allocations of discretionary surplus reserve and general risk reserve. When there is an anticipated or actual failure to repay the principal and interests of the Onshore and Offshore Debt Financing Instruments when they become due, at least the following measures shall be taken:

• (1) not to distribute profit to the Shareholders;

• (2) to suspend implementation of capital expenditure projects such as material external investments, acquisitions and mergers, etc.;

• (3) to reduce or cease the payment of salary and bonus of the Directors and senior management of the Company;

• (4) to forbid the job transfers of principal persons in charge.

• (xii) Listing of debt Matters in respect of listing application shall be financing instruments: determined in accordance with the actual situation of the Company, market condition and relevant laws and regulations.

• (xiii) Validity period of the The validity period of the resolution shall be 36 months resolution: from the date on which the resolution being approved at the EGM.

Shareholders’ Authorization

In order to expedite the issuance of the Onshore and Offshore Debt Financing Instruments, it is proposed at the EGM to authorize the Board in relation to the issuance of Onshore and Offshore Debt Financing Instruments by the Company and agree the Board in turn to authorize the chairman and the president of the Company to jointly determine, on the principle to maximize the benefits of the Company, the specific size, proposal, time, method and other matters with respect to such issuance in accordance with related laws and regulations, opinions and suggestions of regulatory

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LETTER FROM THE BOARD

authorities, capital requirement of the Company and the then prevailing market condition, and oversee the issuance and repayment status of the Onshore and Offshore Debt Financing Instruments. Such authorization includes but not limited to the following:

• i. According to applicable laws, regulations and related requirements of regulatory authorities and resolutions of the EGM, to formulate and adjust specific proposals for the issuance of other Onshore and Offshore Debt Financing Instruments (including but not limited to the determination of the appropriate issuer; types, size, term, method to determine interest rate of the issuance; provisions, targets and time of the issuance (such as one-off issue, issue in multiple occasions or issue in tranches and in multiple types, and the size and term of each issue, tranche and type) thereof); security arrangements, credit enhancement arrangements such as letters of guarantee and letters of support and credit rating arrangements; determination of specific financing accounts; specific use of proceeds; whether and how to set up terms of re-sale and redemption, option to raise the interest rate, put option by investors; registration, listing and place of listing; repayment and interest payment, measures to lower repayment risks, measures to safeguard repayment and all other matters in relation to such issuance of the Onshore and Offshore Debt Financing Instruments in accordance with condition of the Company and related debt markets;

• ii. To determine on the engagement of intermediaries, to execute, exercise, revise and conclude all agreements and documents in relation to the Onshore and Offshore Debt Financing Instruments issuance (including but not limited to credit enhancement agreements such as sponsorship agreements, underwriting agreements, guarantee agreements and letters of support, bond indentures, engagement agreements of intermediaries, entrusted management agreements, settlement management agreements, registration and custody agreements, listing agreements and other legal documents) and to make relevant disclosure in accordance with relevant laws and regulations and listing rules of stock exchanges on which securities of the Company are listed (including but not limited to preliminary and final memorandum of the issuance of the debt financing instruments, announcements and circulars in relation to the issuance of Onshore and Offshore Debt Financing Instruments of the Company);

• iii. To select and appoint the entrusted manager and settlement manager for the Onshore and Offshore Debt Financing Instruments issuance, to execute any entrusted management agreements and settlement management agreements in relation thereto and to formulate procedures for meeting of such instruments, if applicable;

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LETTER FROM THE BOARD

• iv. To conduct all reporting and listing matters in relation to such issuance of the Onshore and Offshore Debt Financing Instruments of the Company, if applicable, including but not limited to preparation, modification and delivery of reporting materials of the Onshore and Offshore Debt Financing Instruments issuance, listing, credit enhancement agreements such as guarantees and letters of support provided by the Company, the issuer and/or any third parties, and to execute related reporting documents and other legal documents in accordance with requirements of relevant regulatory authorities or industry self-discipline organizations;

• v. To make corresponding adjustment to the Onshore and Offshore Debt Financing Instruments issuance according to opinions of regulatory authorities, changes of policy and changes in market condition or to determine whether proceed with all or part of other work in relation to Onshore and Offshore Debt Financing Instruments of the Company, save for matters subject to the reapproval of the general meeting required under related laws and regulations and the Articles of Association; and

• vi. To carry out or determine other matters related to the issuance, listing and other matters of the Onshore and Offshore Debt Financing Instruments of the Company.

The above authorization shall be valid within 36 months from the date of passing of such resolution at the EGM. However, if the Board and/or its delegations have determined the issuance or part of the issuance of the Onshore and Offshore Debt Financing Instruments of the Company during the validity period of such authorization and the Company has also obtained approval, permit, filing or registration (if applicable) thereof from regulatory authorities during the validity period of such authorization, the Company may complete such issuance or part of the issuance during the validity period confirmed by such approval, permit, filing or registration, and, for the purposes of such issuance or part of the issuance related, the validity period of such authorization shall be extended to the date on which the issuance or part of the issuance completes.

On 27 August 2019, the Board approved and resolved to propose to the Shareholders to consider, and, if thought fit, approve the proposal for the general mandate of the Company to issue Onshore and Offshore Debt Financing Instruments at the EGM by way of ordinary resolution.

V. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Reference is made to the announcement of the Company dated 27 August 2019, regarding the proposed amendments to the Articles of Association.

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LETTER FROM THE BOARD

The CSRC issued the “Decision on Amending the Guidelines for the Articles of Association of Listed Companies” 《關於修改〈上市公司章程指引〉的決定》( ) on 17 April 2019, and issued the “the Administrative Provisions for the Equity of Securities Companies” 《證券公司股權管理( 規定》) 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 resolved to propose amendments to some clauses of the Articles of Association at the meeting held on 27 August 2019.

Details of the proposed amendments to the Articles of Association are set out in the appendix to this circular. 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 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 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 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.

The proposed amendments to the Articles of Association are subject to the approval by the Shareholders at the EGM by way of special resolution and the approval by Henan Regulatory Bureau of the CSRC.

VI. EXTRAORDINARY GENERAL MEETING

The EGM will be held at 9:30 a.m. on Thursday, 7 November 2019 at Conference Room, 17th Floor, Zhongyuan Guangfa Finance Building, No. 10 Shangwu Waihuan Road, Zhengzhou, Henan Province, the PRC.

No Shareholder is required to abstain from voting in connection with the matters to be resolved at the EGM.

The proxy form for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying applicable form of proxy in accordance with the instructions printed thereon as soon as possible. In case of holders of H Shares, the proxy forms shall be lodged with the Company’s H Share

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LETTER FROM THE BOARD

registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any event, no later than 24 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be) or the time appointed for the taking of the poll. Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment if you so wish.

VII. VOTING

According to Rule 13.39(4) of the Hong Kong Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. Therefore, the resolutions as set out in the notice of the EGM will be taken by way of a poll under the Article 125 of the Articles of Association.

During the poll, every Shareholder present in person or by proxy (or in case of corporation, its duly authorized representative) at the EGM shall have one vote for each Share registered in his/her name in the register of members. A Shareholder entitled to more than one vote needs not use all his/her votes or cast all the votes he/she uses in the same manner.

VIII. RECOMMENDATION

The Board considered that all resolutions to be proposed at the EGM are in the interests of the Company and the Shareholders as a whole, and therefore recommends you to vote in favour of all the resolutions to be proposed at the meeting.

IX. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

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LETTER FROM THE BOARD

X. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

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

Chairman

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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The following sets out the details of proposed amendments to the Articles of Association:

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:

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 (I) to reduce the registered capital of the Company; Company;

• (II) to merge with other companies holding (II) to merge with other companies holding shares of the Company; shares of the Company;

• (III) to award shares to employees of the (III) to use shares for employee stock Company; ownership plans or equity incentives;

• (IV) as required by shareholders objecting to (IV) as required by shareholders objecting to resolutions of the general meeting resolutions of the general meeting concerning merger or division of the concerning merger or division of the Company to buy their shares; Company to buy their shares;

• (V) other circumstances specified by laws and regulations and approved by relevant regulatory authorities.

• (V) to use shares for conversion of convertible corporate bonds issued by the Company;

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

• (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.

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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Existing Articles

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

Amended Articles

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.

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).

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.

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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Existing Articles

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

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.

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;

......

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;

......

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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Existing Articles

• (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

• (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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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

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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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Existing Articles

Amended Articles

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

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 lock-up 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.

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APPENDIX PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Existing Articles

Amended Articles

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.

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......

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

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.

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

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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 “中原証券股份有限公司” and carrying on business in Hong Kong as “中州証券”) (Stock Code: 01375)

NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ EGM ”) of Central China Securities Co., Ltd. (the “ Company ”) will be held at 9:30 a.m. on Thursday, 7 November 2019 at Conference Room, 17th Floor, Zhongyuan Guangfa Finance Building, No. 10 Shangwu Waihuan Road, Zhengzhou, Henan Province, the PRC, for the purpose of considering and, if thought fit, passing the following resolutions:

Unless otherwise indicated, capitalised terms used herein shall have the same meaning as those defined in the circurlar of the Company dated 19 September 2019.

AS ORDINARY RESOLUTIONS

1. To consider and approve the profit distribution plan of the Company for the first half of 2019;

2. To consider and approve the resolution regarding the provision for credit impairment;

AS SPECIAL RESOLUTIONS

1. Subject to approval from related governmental departments or regulatory authorities of the PRC, to consider and approve the resolutions of the general mandate for the issuance of Onshore and Offshore Debt Financing Instruments of the Company as follows:

2. (1) Subject to approval from relevant governmental departments or regulatory authorities of the PRC and compliance of the Administrative Measures for the Risk Control Indicators of Securities Companies 《證券公司風險控制指標管理辦法》( ) in the PRC and the internal prudential risk control indicators of the Company, to approve the issuance on an one-off or multiple issuances or multi-tranche issuances bases, either openly or privately, of domestic corporate bonds, short-term corporate bonds, short-term financing bonds, subordinated bonds (including perpetual

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

subordinated bonds), subordinated debt, asset-backed securities (notes), income receipts, and other domestic debt financing instruments to be issued by the Company as approved or filed with the CSRC, Securities Association of China, stock exchanges and other relevant authorities in accordance with relevant regulations; and offshore debt financing instruments, on an one-off or multiple issuances or multi-tranche issuances bases, such as US dollar, Euro and other foreign currency denominated corporate bonds and offshore RMB-denominated corporate bonds, medium term note programme, foreign currency notes and commercial papers. The above-mentioned Onshore and Offshore Debt Financing Instruments shall not contain any provision for conversion into shares.

• (2) Subject to approval from relevant governmental departments or regulatory authorities of the PRC, to approve the proposal for the issuance of Onshore and Offshore Debt Financing Instruments as follows:

• (i) Size

• The total size of the aforesaid Onshore and Offshore Debt Financing Instruments shall not exceed 300% of the net asset value in the latest financial statements (inclusive of 300%, the size of issuance is calculated based on the outstanding amount denominated in RMB upon issuance; in the case of an instrument denominated in a foreign currency, based on the central parity rate published by the People’s Bank of China on the date of each issuance or each tranche issuance), subject to relevant laws and regulations in respect of issuance limit, can be issued on an one-off or multiple issuances or multi-tranches issuances bases.

• (ii) Types

The specific types and priorities for repayment of the Company’s Onshore and Offshore Debt Financing Instruments shall be determined according to relevant regulations and the market condition at the time of issuance.

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

• (iii) Terms The term of the Onshore and Offshore Debt Financing Instruments shall not exceed 10 years (inclusive) either for a type with a single term or for a hybrid type with multiple terms.

• (iv) Interest rate

• The interest rate of the issuance and its calculation and payment method thereof shall be determined according to the market condition at the time of issuance and relevant regulations.

• (v) Issue price

• The issue price shall be determined according to the market condition at each issuance and relevant laws and regulations.

• (vi) Security and other Security and other credit enhancement credit enhancement arrangements shall be determined according to arrangements relevant laws and regulations.

• (vii) Use of proceeds

• After deducting relevant expenses for the issuance, all of the proceeds will be used to supplement the working capital of the Company, fulfill the operation needs and support the business expansion, or used for the adjustment on liability structure of the Company, the supplement of the liquidity of the Company and project investment and/or construction of fixed assets according to laws.

• (viii) Issuer(s)

• The Company or the domestic and overseas wholly-owned subsidiary(ies) of the Company will serve as the issuer(s).

• (ix) Method of issuance Shall be under custody and issue in accordance with the approval or filing of relevant authorities.

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

• (x) Targets of issuance and The targets of issuance shall be investors who the placement meet the conditions for subscription in arrangements to the accordance with relevant laws and regulations. Shareholders of the Placement to the Shareholders of the Company Company can be conducted in accordance with laws.

• (xi) Safeguard measures for debt repayment

During the term of Onshore and Offshore Debt Financing Instruments, the Company can increase the proportion of allocations of discretionary surplus reserve and general risk reserve. When there is an anticipated or actual failure to repay the principal and interests of the Onshore and Offshore Debt Financing Instruments when they become due, at least the following measures shall be taken:

• (1) not to distribute profit to the Shareholders;

• (2) to suspend implementation of capital expenditure projects such as material external investments, acquisitions and mergers, etc.;

• (3) to reduce or cease the payment of salary and bonus of the Directors and senior management of the Company;

• (4) to forbid the job transfers of principal persons in charge.

• (xii) Listing of debt fnancing Matters in respect of listing application shall instruments be determined in accordance with the actual situation of the Company, market condition and relevant laws and regulations.

• (xiii) Validity period of the The validity period of the resolution shall be resolution 36 months from the date on which the resolution being approved at the EGM.

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

• (3) To authorize the Board and agree the Board in turn to authorize the chairman and the president of the Company, to jointly determine, on the principle to maximize the benefits of the Company, the specific size, proposal, time, method and other matters with respect to such issuance in accordance with related laws and regulations, opinions and suggestions of regulatory authorities, capital requirement of the Company and the then prevailing market condition, and oversee the issuance and repayment status of the Onshore and Offshore Debt Financing Instruments. Such authorization includes but not limited to the following:

• i. According to applicable laws, regulations and related requirements of regulatory authorities and resolutions of the EGM, to formulate and adjust specific proposals for the issuance of other Onshore and Offshore Debt Financing Instruments (including but not limited to the determination of the appropriate issuer; types, size, term, method to determine interest rate of the issuance; provisions, targets and time of the issuance (such as one-off issue, issue in multiple occasions or issue in tranches and in multiple types, and the size and term of each issue, tranche and type) thereof); security arrangements, credit enhancement arrangements such as letters of guarantee and letters of support and credit rating arrangements; determination of specific financing accounts; specific use of proceeds; whether and how to set up terms of re-sale and redemption, option to raise the interest rate, put option by investors; registration, listing and place of listing; repayment and interest payment, measures to lower repayment risks, measures to safeguard repayment and all other matters in relation to such issuance of the Onshore and Offshore Debt Financing Instruments in accordance with condition of the Company and related debt markets;

• ii. To determine on the engagement of intermediaries, to execute, exercise, revise and conclude all agreements and documents in relation to the Company’s Onshore and Offshore Debt Financing Instruments issuance (including but not limited to credit enhancement agreements such as sponsorship agreements, underwriting agreements, guarantee agreements and letters of support, bond indentures, engagement agreements of intermediaries, entrusted management agreements, settlement management agreements, registration and custody agreements, listing agreements and other legal documents) and to make relevant disclosure in accordance with relevant laws and regulations and listing rules of stock exchanges on which securities of the Company are listed (including but not limited to preliminary and final

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

memorandum of the issuance of the debt financing instruments, announcements and circulars in relation to the issuance of Onshore and Offshore Debt Financing Instruments of the Company);

• iii. To select and appoint the entrusted manager and settlement manager for the Company’s Onshore and Offshore Debt Financing Instruments issuance, to execute any entrusted management agreements and settlement management agreements in relation thereto and to formulate procedures for meeting of such instruments, if applicable;

• iv. To conduct all reporting and listing matters in relation to such issuance of the Company’s Onshore and Offshore Debt Financing Instruments, if applicable, including but not limited to preparation, modification and delivery of reporting materials of the Company’s Onshore and Offshore Debt Financing Instruments issuance, listing, credit enhancement agreements such as guarantees and letters of support provided by the Company, the issuer and/or any third parties, and to execute related reporting documents and other legal documents in accordance with requirements of relevant regulatory authorities or industry self-discipline organizations;

• v. To make corresponding adjustment to the Company’s Onshore and Offshore Debt Financing Instruments issuance according to opinions of regulatory authorities, changes of policy and changes in market condition or to determine whether proceed with all or part of other work in relation to Onshore and Offshore Debt Financing Instruments of the Company, save for matters subject to the reapproval of the general meeting required under related laws and regulations and the Articles of Association; and

• vi. To carry out or determine other matters related to the issuance, listing and other matters of the Onshore and Offshore Debt Financing Instruments of the Company.

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

The above authorization shall be valid within 36 months from the date of passing of such resolution at the EGM. However, if the Board and/or its delegations have determined the issuance or part of the issuance of the Company’s Onshore and Offshore Debt Financing Instruments during the validity period of such authorization and the Company has also obtained approval, permit, filing or registration (if applicable) thereof from regulatory authorities during the validity period of such authorization, the Company may complete such issuance or part of the issuance during the validity period of confirming such approval, permit, filing or registration, and, for the purposes of such issuance or part of the issuance related, the validity period of such authorization shall be extended to the date on which the issuance or part of the issuance completes.

1. To consider and approve the proposed amendments to the Articles of Association set out in the appendix of the circular of the Company dated 19 September 2019, and to authorize the Board to revise the wordings of such amendments as appropriate (no approval from the Shareholders is required for such amendments), and execute relevant documents and/or take all relevant actions as it considers necessary or appropriate and in the interest of the Company to effect the proposed amendments, comply with the PRC laws and regulations and meet the requirements of the relevant regulatory authorities of the PRC (if any), and deal with other relevant matters arising from the amendments to the Articles of Association.

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

Henan, the PRC 19 September 2019

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NOTICE OF THE 2019 FIRST EXTRAORDINARY GENERAL MEETING

Notes:

1. The register of members of the Company will be closed from 8 October 2019 to 7 November 2019 (both days inclusive), during which period no transfer of H Shares of the Company can be registered. For holders of H Shares, in order to qualify to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged with the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on 4 October 2019.

2. Shareholders who are entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on their behalves. A proxy need not be a Shareholder of the Company.

3. In order to be valid, the proxy form for the EGM of the H Shareholders must be deposited by hand or post, for holders of H shares of the Company, to the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the scheduled time for holding the EGM (or any adjournment thereof) for taking the poll. If the proxy form is signed by a person under a power of attorney or other authority, a notarial copy of that power of attorney or authority shall be deposited at the same time as mentioned in the proxy form. Completion and return of the proxy form will not preclude shareholders from attending and voting in person at the EGM or any adjourned meetings should they so wish.

4. Shareholders or their proxies shall provide their identity documents when attending the EGM.

5. Shareholders who intend to attend the EGM should complete the reply slip and return it by hand or by post to the H Share registrar of the Company (for holders of H Shares of the Company) on or before 18 October 2019.

6. The EGM is expected to take half a day approximately. Shareholders attending the EGM shall be responsible for their own travel and accommodation expenses.

7. The address of the head office in the PRC of the Company is No. 10 Shangwu Waihuan Road, Zhengdong New District, Zhengzhou, Henan Province, the PRC.

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