China Galaxy Securities Co., Ltd. — Proxy Solicitation & Information Statement 2016

Sep 14, 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in China Galaxy Securities Co., Ltd., you should at once hand this supplemental circular and the accompanying Revised Form of Proxy to the purchaser or transferee or to the bank, stockbroker 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 supplemental 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 supplemental circular.

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(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 06881)

ELECTION OF MR. TAO LIBIN AS A SUPERVISOR OF THE THIRD SESSION OF THE SUPERVISORY COMMITTEE OF THE COMPANY SPECIAL REPORTS ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS AND SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2016

This supplemental circular should be read in conjunction with the EGM Circular of the Company dated 2 September 2016.

The EGM of the Company will be held as originally scheduled at Donghua Hall, 11th Floor, Beijing Minzu Hotel, No. 51 Fuxingmen Inner Street, Xicheng District, Beijing, the PRC, on Tuesday, 18 October 2016 at 9:30 a.m. The supplemental notice of the EGM is set out on pages 7 to 8 of this supplemental circular.

The Revised Form of Proxy of the EGM is enclosed to this supplemental circular. If you intend to appoint a proxy to attend the EGM, please complete the enclosed Revised Form of Proxy in accordance with the instructions printed thereon and return the same to Computershare Hong Kong Investor Services Limited (for holders of H Shares) or the Office of the Board of Directors of the Company (for holders of Domestic Shares) not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof in person or by post. Completion and return of the Revised Form of Proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

15 September 2016

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**LETTER FROM **	THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY
GENERAL MEETING OF 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7
APPENDIX I	−SPECIAL REPORT ON THE UTILIZATION OF
	THE PREVIOUSLY RAISED PROCEEDS –
	INITIAL PUBLIC OFFERING OF H SHARES . . . . . . . . . .	9
APPENDIX II	−SPECIAL REPORT ON THE UTILIZATION OF
	THE PREVIOUSLY RAISED PROCEEDS –
	PLACING OF H SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .	15

– i –

DEFINITIONS

In this supplemental circular, unless the context otherwise requires, the following expressions have the following meanings:

• “Board” or “Board of Directors” the board of Directors of the Company

• “Company” China Galaxy Securities Co., Ltd., a joint stock company with limited liability incorporated in the PRC on 26 January 2007, whose H Shares are listed on the Stock Exchange

• “controlling shareholder” has the meaning ascribed to it under the Listing Rules

• “CSRC” China Securities Regulatory Commission

• “Director(s)” the director(s) of the Company

• “Domestic Share(s)” issued ordinary share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which is(are) subscribed for or credited as fully paid in RMB

• “EGM” or “Extraordinary General the second extraordinary general meeting of 2016 to be Meeting” held by the Company at Donghua Hall, 11th Floor, Beijing Minzu Hotel, No. 51 Fuxingmen Inner Street, Xicheng District, Beijing, the PRC on Tuesday, 18 October 2016 at 9:30 a.m.

• “EGM Circular” the circular of the Company dated 2 September 2016 in relation to the matters to be considered and approved at the EGM

• “EGM Notice” the notice of the EGM dated 2 September 2016

• “H Share(s)”

• overseas listed foreign share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which is(are) listed on the Stock Exchange and traded in Hong Kong dollars

• “HK$” or “HK dollars” Hong Kong dollars, the lawful currency of Hong Kong

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

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time

– 1 –

DEFINITIONS

“Original Form of Proxy”	the form of proxy issued by the Company	the form of proxy issued by the Company	on	2
	September 2016 along with the EGM Circular and			the
	EGM Notice
“PRC” or “China”	the People’s Republic of China, but for the purposes of
	this supplemental circular, excluding Hong		Kong,
	Macau Special Administrative Region and		Taiwan
	region
“Revised Form of Proxy”	the revised form of proxy issued by the Company
	together with this supplemental circular	and		the
	supplemental notice as set out on pages 7 to	8	of this
	supplemental circular
“RMB” or “Renminbi”	Renminbi, the lawful currency of the PRC
“Shareholder(s)”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary(ies)”	has the meaning ascribed to it under the Listing		Rules
“Supervisor(s)”	the supervisor(s) of the Company
“Supervisory Committee”	the supervisory committee of the Company

In case of any discrepancy between the Chinese version and the English version of this supplemental circular, the Chinese version shall prevail.

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LETTER FROM THE BOARD

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(A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 06881)

The Board of Directors:

Executive Directors: Mr. GU Weiguo (Vice Chairman and President) Mr. WU Chengming

Registered Office and Head Office in the PRC: 2-6/F, Tower C, Corporate Square 35 Finance Street Xicheng District, Beijing, the PRC

Non-executive Directors:

Mr. DU Ping Mr. SHI Xun Mr. ZHANG Jinghua Mr. LI Chaoyang

Independent Non-executive Directors:

Mr. LIU Feng Mr. LUO Lin Mr. WU Yuwu Mr. CHI Fulin

Principal Place of Business in Hong Kong: Unit 3501-07, 3513-14 35/F, Cosco Tower 183 Queen’s Road Central Sheung Wan Hong Kong

15 September 2016

To the Shareholders

Dear Sir or Madam,

ELECTION OF MR. TAO LIBIN AS A SUPERVISOR OF THE THIRD SESSION OF THE SUPERVISORY COMMITTEE OF THE COMPANY SPECIAL REPORTS ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS AND

SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2016

INTRODUCTION

Reference is made to the EGM Circular and the EGM Notice of the Company dated 2 September 2016, which set out the time and venue of the EGM and contain the resolutions to be considered and approved at the EGM.

The EGM will be held as originally scheduled at Donghua Hall, 11th Floor, Beijing Minzu Hotel, No. 51 Fuxingmen Inner Street, Xicheng District, Beijing, the PRC, on Tuesday, 18 October 2016 at 9:30 a.m., and in addition to the resolutions contained in the EGM Notice, the supplemental resolutions contained in the supplemental notice as set out on

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LETTER FROM THE BOARD

pages 7 to 8 of this supplemental circular will also be submitted to be considered and approved by the Shareholders at the same meeting, which include the resolution in relation to the election of Mr. Tao Libin as a Supervisor of the third session of the Supervisory Committee, and the resolution in relation to the special reports on the utilization of the previously raised proceeds.

The Revised Form of Proxy of the EGM is enclosed to this supplemental circular, which sets out the supplemental resolutions contained in the supplemental notice.

The purpose of this supplemental circular is to provide you with the supplemental notice of the EGM and the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed supplemental resolutions at the EGM.

SUPPLEMENTAL ORDINARY RESOLUTIONS

Election of Mr. Tao Libin as a Supervisor of the Third Session of the Supervisory Committee

The Supervisor Committee approved the proposal in relation to the nomination of Mr. Tao Libin as a candidate for Supervisor of the Company. The proposal is hereby submitted to the EGM for consideration and approval. The biographical details of Mr. Tao Libin are set out below:

Tao Libin, male, born in November 1977, was a lecturer of the Statistics and Finance Department of the University of Science and Technology of China from June 2003 to April 2005, and has been an associate dean and associate professor of the Investment Department of the School of Banking and Finance of the University of International Business and Economics since January 2009. Mr. Tao Libin graduated from the Statistics and Finance Department of the University of Science and Technology of China with a bachelor’s degree in finance in July 2000 and a master’s degree in finance in June 2003, and graduated from the Faculty of Business and Economics of the University of Hong Kong with a doctoral degree in finance in September 2008. Mr. Tao Libin was entitled as an associate professor in December 2012.

Mr. Tao Libin will enter into a letter of appointment with the Company. The term of office of Mr. Tao Libin will commence from the date of approval by the Shareholders at the EGM, and end on the expiry of the term of the third session of the Supervisory Committee. Mr. Tao Libin is eligible for re-election upon expiry of his term.

As an external Supervisor of the Company, Mr. Tao Libin will receive a supervisor’s fee of RMB120,000 per annum from the Company. The supervisor’s fee is determined pursuant to the relevant remuneration administrative measures of the Company with reference to the external Supervisor’s duties and responsibilities. If there is any provision on the remuneration of external supervisors under the relevant national policies, the actual amount of remuneration payable by the Company to the external Supervisor will be adjusted in accordance with such policies.

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LETTER FROM THE BOARD

Save as disclosed above, Mr. Tao Libin has not held any directorships in other listed public companies in the last three years, does not hold any other position with the Company or any of its subsidiaries, and is not connected with any Directors, senior management or substantial or controlling Shareholders of the Company. Mr. Tao Libin does not have any interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Further, there is nothing in respect of the election of Mr. Tao Libin that needs to be disclosed pursuant to Rule 13.51(2) of the Listing Rules nor is there anything that needs to be brought to the attention of the Shareholders.

Special Reports on the Utilization of the Previously Raised Proceeds

The “Special Report on the Utilization of the Previously Raised Proceeds −Initial Public Offering of H Shares” and the “Special Report on the Utilization of the Previously Raised Proceeds – Placing of H Shares” have been audited by Deloitte Touche Tohmatsu CPA Limited (Special General Partnership), and have been considered and approved by the Board. Such reports are hereby submitted to the EGM for consideration and approval, details of which are set out in Appendix I and Appendix II to this supplemental circular.

THE EGM

The Revised Form of Proxy of the EGM is enclosed to this supplemental circular, which sets out the supplemental resolutions contained in the supplemental notice. The Revised Form of Proxy will supersede the Original Form of Proxy.

If you intend to appoint a proxy to attend the EGM, please complete the enclosed Revised Form of Proxy in accordance with the instructions printed thereon and return the same to Computershare Hong Kong Investor Services Limited (for holders of H Shares) or the office of the Board of Directors of the Company (for holders of Domestic Shares) not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof (the “ Closing Time ”) in person or by post. Completion and return of the Revised Form of Proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

Any Shareholder who has not yet lodged the Original Form of Proxy is requested to lodge the Revised Form of Proxy if he or she intends to appoint a proxy to attend the EGM on his or her behalf. In this case, the Original Form of Proxy should not be lodged. Any Shareholder who has already lodged the Original Form of Proxy should note that:

• (i) if the Revised Form of Proxy is lodged before the Closing Time, the Revised Form of Proxy will revoke and supersede the Original Form of Proxy previously lodged by the Shareholder. The Revised Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder, if duly completed;

• (ii) if no Revised Form of Proxy is lodged before the Closing Time, the Original Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder, if duly completed. The proxy so appointed pursuant to the Original Form of Proxy

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LETTER FROM THE BOARD

will be entitled to vote in accordance with the instructions previously given by the Shareholder or at his/her discretion (if no such instructions are given) on any resolution properly put to the EGM, including the proposed supplemental resolutions as set out in the supplemental notice.

Apart from the proposed supplemental resolutions set out in the supplemental notice of the EGM, all other matters of the EGM remain unchanged. For details of other resolutions to be considered and approved at the EGM, eligibility for attending the EGM, registration procedures, closure of register of members and other relevant matters, please refer to the EGM Circular and the EGM Notice of the Company dated 2 September 2016.

RECOMMENDATION

The Board considers that all resolutions proposed at the EGM are in the interests of the Company and its Shareholders as a whole. As such, the Board recommends you to vote in favour of all resolutions proposed at the EGM.

Yours faithfully, By Order of the Board China Galaxy Securities Co., Ltd. Gu Weiguo

Vice Chairman and Executive Director

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SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2016

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(A joint stock company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 06881)

SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2016

Reference is made to the circular (the “ EGM Circular ”) and notice (the “ EGM Notice ”) of China Galaxy Securities Co., Ltd. (the “ Company ”) dated 2 September 2016, which set out the time and venue of the second extraordinary general meeting of 2016 of the Company (the “ EGM ”) and contain the resolutions to be submitted to be considered and approved by the shareholders of the Company at the EGM.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the EGM will be held as originally scheduled at Donghua Hall, 11th Floor, Beijing Minzu Hotel, No. 51 Fuxingmen Inner Street, Xicheng District, Beijing, the PRC on Tuesday, 18 October 2016 at 9:30 a.m., and in addition to the resolutions contained in the EGM Notice, the following supplemental resolutions will also be proposed to be considered and approved at the same meeting:

SUPPLEMENTAL ORDINARY RESOLUTIONS

1. To consider and approve the election of Mr. Tao Libin as a Supervisor of the third session of the Supervisory Committee of the Company

2. To consider and approve the special reports on the utilization of the previously raised proceeds

By order of the Board China Galaxy Securities Co., Ltd. Gu Weiguo Vice Chairman and Executive Director

Beijing, the PRC, 15 September 2016

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SUPPLEMENTAL NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2016

Notes:

1. A revised form of proxy of the EGM (the “ Revised Form of Proxy ”) is enclosed to this supplemental notice. For holders of H Shares, the Revised Form of Proxy should be returned to Computershare Hong Kong Investor Services Limited (17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong), and for holders of Domestic Shares, the Revised Form of Proxy should be returned to the Office of the Board of Directors of the Company (Tower C, Corporate Square, 35 Finance Street, Xicheng District, Beijing, the PRC), not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof (the “ Closing Time ”) in person or by post. Completion and return of the Revised Form of Proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

2. Any shareholder who has not yet lodged the form of proxy issued by the Company on 2 September 2016 (the “ Original Form of Proxy ”) is requested to lodge the Revised Form of Proxy if he or she intends to appoint a proxy to attend the EGM on his or her behalf. In this case, the Original Form of Proxy should not be lodged. Any shareholder who has already lodged the Original Form of Proxy should note that:

3. (i) if the Revised Form of Proxy is lodged before the Closing Time, the Revised Form of Proxy will revoke and supersede the Original Form of Proxy previously lodged by the shareholder. The Revised Form of Proxy will be treated as a valid form of proxy lodged by the shareholder, if duly completed;

4. (ii) if no Revised Form of Proxy is lodged before the Closing Time, the Original Form of Proxy will be treated as a valid form of proxy lodged by the shareholder, if duly completed. The proxy so appointed pursuant to the Original Form of Proxy will be entitled to vote in accordance with the instructions previously given by the shareholder or at his/her discretion (if no such instructions are given) on any resolution properly put to the EGM, including the proposed supplemental resolutions set out above.

5. Apart from the proposed supplemental resolutions set out above, all other matters of the EGM remain unchanged. For details of other resolutions to be considered and approved at the EGM, eligibility for attending the EGM, registration procedures, closure of register of members and other relevant matters, please refer to the EGM Circular and the EGM Notice of the Company dated 2 September 2016.

As at the date of this supplemental notice, the executive Directors of the Company are Mr. GU Weiguo and Mr. WU Chengming; the non-executive Directors are Mr. DU Ping, Mr. SHI Xun, Mr. ZHANG Jinghua and Mr. LI Chaoyang; and the independent non-executive Directors are Mr. LIU Feng, Mr. LUO Lin, Mr. WU Yuwu and Mr. CHI Fulin.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

I. BASIS OF PREPARATION

This Special Report on the Utilization of the Previously Raised Proceeds from the Initial Public Offering of H Shares and the annex thereto are prepared in accordance with the “Regulations of the CSRC on the Report on the Utilization of the Previously Raised Proceeds”（《關於前次募集資金使用情況報告的規定》）(Zheng Jian Fa Xing Zi [2007] No. 500).

II. AMOUNT, COLLECTION TIME AND DEPOSIT OF THE PREVIOUSLY RAISED PROCEEDS

As approved by the CSRC under the “Reply of the CSRC on the Approval of the Issue of Overseas Listed Foreign Shares by China Galaxy Securities Co., Ltd.”（《關於核准中國銀河 證券股份有限公司發行境外上市外資股的批覆》） (Zheng Jian Xu Ke [2013] No. 325), the Company was listed on the Main Board of the Stock Exchange on 22 May 2013. According to the “Prospectus of China Galaxy Securities Co., Ltd.”（《中國銀河證券股份有限公司招股書》） , the “Announcement of the Allotment Results of China Galaxy Securities Co., Ltd.”（《中國 銀河證券股份有限公司配發結果公告》）, the “Announcement of the Exercise of Part of the Over-allotment Option, Stabilization of Prices and Expiration of the Stabilization Period of China Galaxy Securities Co., Ltd.”（《中國銀河證券股份有限公司行使部分超額配股權、穩定價格 行動及穩定價格期結束》）and other announcements, the size of the initial public offering of H Shares of the Company was 1,500,000,000 Shares and the number of Shares from exercise of the Over-allotment Option amounted to 37,258,757 Shares with a par value of RMB1.00 per share and the offer price of HK$5.30 per share. As at 20 June 2013, the Company completed the issue of 1,537,258,757 H Shares, received the proceeds raised and interest income of HK$8,147,533,679.63, equivalent to RMB6,498,257,233.72. After deducting issuance expenses equivalent to RMB214,098,999.21, the actual net proceeds raised by the Company was a sum equivalent to RMB6,284,158,234.51.

The collection time for the proceeds raised was 20 June 2013. The availability of the proceeds raised was verified by Deloitte Touche Tohmatsu CPA Limited (Special General Partnership), who issued the capital verification report (De Shi Bao (Yan) Zi (13) No. 0130) on 28 June 2013.

Details of the initial deposit of the proceeds raised are set out in Annex I “Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds −Initial Public Offering of H Shares” in this report.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

III. ACTUAL UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS

• (1) Explanation on the reconciliation of the utilization of the previously raised proceeds

According to the commitments made in the prospectus, the Company undertook to utilize the net proceeds raised for the following purposes: (1) about 60% was used to develop the margin financing and securities lending business; (2) about 25% was used to develop the capital-based intermediary securities trading business, mainly including dealer-quoted bond repurchase transactions; and (3) about 15% was used to expand the capital investment business. The actual utilization of the raised proceeds as at 30 June 2016 was consistent with the commitments made in the prospectus.

As at 30 June 2016, the Company utilized the proceeds raised on a cumulative basis for investments amounting to HK$7,909,593,010.04 (inclusive of deposit interest), equivalent to RMB6,235,590,449.10. The exchange losses arising from the differences between HK dollars actual exchange rate for settlement of foreign exchange and the translation exchange rate at the time when proceeds were raised and verified were RMB72,387,100.94, the actual amount in RMB available for use by the Company decreased correspondingly, the actual invested funds and exchange losses from the settlement of foreign exchange totalled RMB6,307,977,550.04. Details are set out in Annex II “Reconciliation Table of the Utilization of the Previously Raised Proceeds − Initial Public Offering of H Shares” in this report.

The Company exchanged the remaining proceeds of HK$52,817,215.31 from the initial public offering of H Shares as deposited at its Hong Kong account with its domestic funds of RMB43,569,449.08 on a dollar-to-dollar basis on 18 August 2015, and utilised such RMB funds for the relevant businesses as expressly described in the prospectus on that day: (1) about 60% was be used to develop the margin financing and securities lending business; (2) about 25% was used to develop the capital-based intermediary securities trading business; and (3) about 15% was used to expand the capital investment business. The converted HK dollars were regarded as the Company’s own funds and used for the distribution of dividends for H Shares.

(2) Change in the projects actually invested with the previously raised proceeds

There was no change in the projects actually invested with the previously raised proceeds.

• (3) External transfer or replacement of the projects invested with the previously raised proceeds

There was no external transfer or replacement of the projects invested with the previously raised proceeds.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

(4) Previously raised proceeds that were not utilized

As at 30 June 2016, the balance of the previously raised proceeds in bank account was RMB100,990,989.68, inclusive of outstanding issuance expenses in respect of fund raising from the initial public offering, outstanding issuance expenses carried forward in the bank account for fund raising from the placing of H Shares and the interest income accrued thereon. Details of the balance of proceeds raised are set out in Annex I “Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds −Initial Public Offering of H Shares” in this report.

• (5) Benefits realized from the projects invested with the previously raised proceeds

As at 30 June 2016, the Company realized benefits of RMB346,828,743.79 for the current period from January to June 2016 and accumulated benefits of RMB2,120,861,022.05 from the previously raised proceeds. Details are set out in Annex III “Reconciliation Table of the Benefits from the Projects Invested with the Previously Raised Proceeds −Initial Public Offering of H Shares” in this report.

IV. COMPARISON OF THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS AND THE INFORMATION DISCLOSED IN THE 2016 INTERIM REPORT OF THE COMPANY

The Company compared the actual utilization of the previously raised proceeds with the relevant contents disclosed in the Company’s 2016 interim report and other information disclosure documents item by item, and the disclosure information is consistent with the relevant contents.

V. CONCLUSION

The Board of Directors considered that the Company utilized the previously raised proceeds according to the plan for use of proceeds as disclosed in the prospectus in relation to the initial public offering of H Shares. The Company fulfilled its disclosure obligation with respect to the utilization and progress of the previously raised proceeds.

All Directors undertake that there are no misrepresentations, misleading statements or material omissions in this report and they are jointly and severally liable for the authenticity, accuracy and completeness of the information contained in this report.

China Galaxy Securities Co., Ltd.

In case of any discrepancy between the Chinese version and the English version of this Appendix, the Chinese version shall prevail.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

Annex I:

Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds – Initial Public Offering of H Shares

Deposit Bank A/C No. Date of opening Date of cancellation Bank of China (Hong Kong) Limited 012-875-1-236673-6 30/04/2013 Not cancelled Wing Lung Bank Limited 020-601-120-8280-5 26/04/2013 12/12/2014 China Construction Bank Corporation, Hong Kong Branch 671056233050 26/04/2013 12/12/2014 China Construction Bank, Beijing Fuxing Sub-branch 11013040300220000318 09/07/2013 01/12/2014 Bank of China, Beijing Fengtai East Avenue Sub-branch 340261011941 09/07/2013 Not cancelled Bank of China, Beijing Fengtai East Avenue Sub-branch 325961012411 09/07/2013 Not cancelled China Merchants Bank, Beijing Branch 110902516821801 09/07/2013 01/12/2014 Total	As at 30 June 2016 Unit: RMB Initial deposit of proceeds raised Balances of proceeds raised 2,038,371,284.76 100,990,989.68 (Note) 2,037,008,610.80 – 2,422,877,338.16 – – – – – – – – – 6,498,257,233.72 100,990,989.68	As at 30 June 2016 Unit: RMB Initial deposit of proceeds raised Balances of proceeds raised 2,038,371,284.76 100,990,989.68 (Note) 2,037,008,610.80 – 2,422,877,338.16 – – – – – – – – – 6,498,257,233.72 100,990,989.68
		100,990,989.68

Note: The balance of the Company’s account at Bank of China (Hong Kong) Limited included: outstanding issuance expenses in respect of fund raising from the initial public offering; outstanding issuance expenses carried forward in the bank account for fund raising from the placing of H Shares and the interest income accrued thereon.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

Annex II:

Reconciliation Table of the Utilization of the Previously Raised Proceeds – Initial Public Offering of H Shares

As at 30 June 2016 Unit: RMB

			Total amount of proceeds raised	Total amount of proceeds raised	Total amount of proceeds raised	Total amount of proceeds raised				6,498,257,233.72	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)	Total amount of proceeds utilized accumulatively (Note 1)				6,235,590,449.10	6,235,590,449.10
			Net amount of proceeds raised							6,284,158,234.51						Utilization in 2013					6,113,371,133.14
			Total amount of proceeds raised with changes of use Proportion of amount of proceeds raised with changes of use							– 0.00%	Utilization of proceeds raised in each period/year (Note 1)					Utilization in 2014 Utilization in 2015						76,276,432.65 45,942,883.31
																Utilization	from					–
																January to	June
																	2016
																						Date for
											Total amount of investment from proceeds raised						as at					projects to
				Investmentproject				Total amount of investment fromproceeds raised					30 June 2016(Note 1)									reach
								Committed			Committed											intended
								amount of		Committed	amount of			Committed								use (or the
				Committed	Actual			investment		amount of Actual	investment			amount of		Actual						extent of
				investment	investment			before raising	investment after investment		before raising			investment	after	investment		Exchange losses			Total (Note 3)	completion
			No.	project	project			proceeds	raising proceeds amount		proceeds			raising proceeds		amount(1)			(Note 2) (2)		(1)+(2)	ofprojects)
			1	Margin financing	Margin financing			3,770,494,940.70	3,770,494,940.70 3,715,415,261.31		3,770,494,940.70			3,770,494,940.70		3,715,415,261.31			43,432,260.56		3,758,847,521.87	Not
				and securities	and	securities																applicable
				lendingbusiness	lendingbusiness
			2	Capital-based	Capital-based			1,571,039,558.63	1,571,039,558.63 1,580,977,326.11		1,571,039,558.63			1,571,039,558.63		1,580,977,326.11			18,096,775.24		1,599,074,101.35	Not
				intermediary	intermediary																	applicable
				transaction	transaction
				business	business
			3	Capital	Capital			942,623,735.18	942,623,735.18 939,197,861.68		942,623,735.18			942,623,735.18		939,197,861.68			10,858,065.14		950,055,926.82	Not
				investment	investment																	applicable
				business	business
			Total					6,284,158,234.51	6,284,158,234.51 6,235,590,449.10		6,284,158,234.51			6,284,158,234.51		6,235,590,449.10			72,387,100.94		6,307,977,550.04

Note 1: Utilization of proceeds raised in each period/year and total amount of proceeds utilized accumulatively are listed in the amounts of RMB after the actual foreign exchange settlement (inclusive of bank interest income).

• Note 2: As a result of differences between HK dollars actual settlement exchange rate and the exchange rate at time when the proceeds were raised and verified, there was exchange losses of RMB72,387,100.94, and the actual funds in RMB available for use by the Company were reduced correspondingly.

• Note 3: The aggregated data were arrived at after taking into account the factors of the actual funds in RMB used for investments and exchange losses.

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APPENDIX I SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – INITIAL PUBLIC OFFERING OF H SHARES

Annex III:

Reconciliation Table of the Benefits from the Projects Invested with the Previously Raised Proceeds – Initial Public Offering of H Shares

As at 30 June 2016 Unit: RMB

Name of project actually invested Accumulative production utilization rate of investment projects as at 30 June 2016 Promised benefits No. Name of project 1 Margin financing and securities lending business Not applicable Not applicable 2 Capital-based intermediary transaction business Not applicable Not applicable 3 Capital investment business Not applicable Not applicable Total	Actual benefits from January to June 2016 155,118,587.16 167,171,242.65 24,538,913.98 346,828,743.79	Accumulative benefits realized as at 30 June 2016 Estimated benefits achieved 884,359,562.83 Not applicable 592,960,101.48 Not applicable 643,541,357.74 Not applicable 2,120,861,022.05

Calculation of the benefits realized from the projects invested with the raised proceeds for the current period:

• (1) For all three projects invested with the proceeds raised by the Company, the capital invested included self-owned capital and proceeds raised by the Company. The self-owned capital and proceeds raised for the same project were not independently audited, and the benefits could not be separately determined. The benefits realized from the projects listed above were calculated based on the proportion of the benefits realized from the three projects in the self-owned capital and proceeds raised.

• (2) The income from the margin financing and securities lending business represented interest income calculated at an estimated rate of return of funds raised and the capital-based intermediary transaction business included net investment income from dealer-quoted bond repurchase transactions, interest income from securities-based lending transactions and interest income from dealer-quoted securities repurchase transactions while the income from the capital investment business was investment income.

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS −PLACING OF H SHARES

I. BASIS OF PREPARATION

This Special Report on the Utilization of Proceeds Raised from the Placing of H Shares and the annex thereto are prepared in accordance with the “Regulations of the CSRC on the Report on the Utilization of Previously Raised Proceeds”（《關於前次募集資金使用情況報告的規 定》）(Zheng Jian Fa Xing Zi [2007] No. 500).

II. AMOUNT, COLLECTION TIME AND DEPOSIT OF THE PREVIOUSLY RAISED PROCEEDS

On 24 April 2015, the Company received the “Approval for the Issuance of Additional Overseas Listed Foreign Shares by China Galaxy Securities Co., Ltd.”（《關於核准中國銀河證 券股份有限公司發行境外上市外資股的批覆》）issued by the CSRC (Zheng Jian Xu Ke [2015] No. 749) for placing of H Shares. According to the “Placing of H Shares by China Galaxy Securities Co., Ltd.”（《中國銀河證券股份有限公司配售H股股份》）, the “Announcement made by China Galaxy Securities Co., Ltd. in Relation to the Completion of Placing of H Shares” （《中國銀河證券股份有限公司公告配售H股完成》）and other announcements, the Company placed 2,000,000,000 H Shares at a placing price of HK$11.99 each. As at 5 May 2015, the Company completed the placing of 2,000,000,000 H Shares, with total proceeds raised of HK$23,980,000,000.00 (equivalent to RMB18,923,097,600.00). After deducting the direct payments of transaction fee and transaction levy, the actual proceeds amounted to HK$23,978,153,540.00 (equivalent to RMB18,921,640,521.48). After deducting the issuance expenses, the net proceeds actually raised by the Company was a sum equivalent to RMB18,864,276,965.40. The availability of the proceeds raised was verified by Deloitte Touche Tohmatsu CPA Limited (Special General Partnership), who issued the capital verification report (De Shi Bao (Yan) Zi (15) No. 0543) on 6 May 2015.

As at 30 June 2016, the Company accumulatively utilized HK$23,910,376,434.18 (equivalent to RMB19,122,144,915.38 at the actual settlement exchange rate) of the proceeds raised, and the remaining outstanding issuance expenses and interest income were transferred to the bank account of Bank of China (Hong Kong) Limited (with account number 012-875-1-236673-6) (See Annex I). Details of the initial deposit of the proceeds raised are set out in Annex I “Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds −Placing of H Shares” in this report.

III. ACTUAL UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS

(1) Explanation on the reconciliation of the utilization of the previously raised proceeds

According to the commitments made in its announcement in relation to the placing of H Shares, the Company undertook to utilize the net proceeds raised for the following purposes: (1) about 60% was used for the margin financing and securities

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

lending business and dealer-quoted securities repurchase business; (2) about 15% was used for other capital-based intermediary business; (3) about 15% was used for investment and innovative business; and (4) about 10% was used to replenish the working capital of the Company. The actual utilization of proceeds as at 30 June 2016 was consistent with the commitments made in the Company’s announcement in relation to the placing of H Shares. As at 30 June 2016, the investment amount of the raised proceeds committed by the Company was RMB18,864,276,965.40 and the actual investment amount was RMB19,122,144,915.38 (including the exchange gains of RMB253,749,452.77 arising from the differences between actual exchange rate for settlement of foreign exchange and the translation exchange rate at the time when proceeds were examined and verified and the interest income of RMB4,118,497.21 arising from the process of carrying forward and utilization of the proceeds raised). Details are set out in Annex II “Reconciliation Table of the Utilization of the Previously Raised Proceeds −Placing of H Shares” in this report.

In 2015, the remaining balance of the bank account for the proceeds raised from the placing of H Shares of the Company, was fully transferred to the bank account at Bank of China (Hong Kong) Limited (with account number: 012-875-1-236673-6), and there was no balance left in the bank account for the proceeds raised from the placing of H Shares. Details of the balance of the proceeds raised are set out in Annex I “Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds −Placing of H Shares” in this report.

(2) Change in the projects actually invested with the previously raised proceeds

There was no change in the projects actually invested with the previously raised proceeds.

(3) External transfer or replacement of the projects invested with the previously raised proceeds

There was no external transfer or replacement of the projects invested with the previously raised proceeds.

(4) Previously raised proceeds that were not utilized

As at 30 June 2016, the Company committed to make an investment amount of RMB18,864,276,965.40 out of the proceeds raised, and the actual investment amount was RMB19,122,144,915.38, inclusive of the exchange gains of RMB253,749,452.77 arising from the differences between actual exchange rate for settlement of foreign exchange and the translation exchange rate when proceeds were examined and verified; interest incomes accrued on the raised proceeds actually received by the bank account totalling RMB4,118,497.21).

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

• (5) Benefits realized from the projects invested with the previously raised proceeds

As at 30 June 2016, the Company realized total benefits of RMB690,389,455.72 for the current period from January to June 2016 and accumulated benefits of RMB1,824,364,406.08 from the previously raised proceeds. Details are set out in Annex III “Reconciliation Table of the Benefits from the Projects Invested with the Previously Raised Proceeds −Placing of H Shares” in this report.

IV. COMPARISON OF THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS AND THE INFORMATION DISCLOSED IN THE 2016 INTERIM REPORT OF THE COMPANY

The Company compared the actual utilization of the previously raised proceeds with the relevant contents disclosed in the Company’s 2016 interim reports and other information disclosure documents item by item, and the disclosure information is consistent with the relevant contents.

V. CONCLUSION

The Board of Directors considered that the Company utilized the previously raised proceeds according to the plan for use of proceeds as disclosed in the announcement of “Placing of H Shares by China Galaxy Securities Co., Ltd.”（《中國銀河證券股份有限公司配售 H股股份》）. The Company fulfilled its disclosure obligation with respect to the utilization and progress of the previously raised proceeds.

All Directors undertake that there are no misrepresentations, misleading statements or material omissions in this report and they are jointly and severally liable for the authenticity, accuracy and completeness of the information contained in this report.

China Galaxy Securities Co., Ltd.

In case of any discrepancy between the Chinese version and the English version of this Appendix, the Chinese version shall prevail.

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

Annex I:

Statistical Table of the Initial Deposits and the Balances of the Previously Raised Proceeds – Placing of H Shares

Deposit Bank A/C No. Date of opening Date of cancellation Agricultural Bank of China, Hong Kong Branch 0574191311 28/04/2015 26/11/2015 China Construction Bank (Asia) Corporation Limited 84694094-3050 24/04/2015 26/11/2015 China Bohai Bank, Beijing Weigongcun Sub-branch 3001042993000427 16/05/2015 30/10/2015 China Bohai Bank, Beijing Weigongcun Sub-branch 3001042993000308 16/05/2015 30/10/2015 Agricultural Bank of China, Beijing Fuxingmen Sub-branch 11021501040010912 14/05/2015 18/12/2015 Agricultural Bank of China, Beijing Fuxingmen Sub-branch 11021513040000090 14/05/2015 11/12/2015 China Construction Bank Corporation, Beijing Fuxing Sub-branch 11001046500053055069 15/05/2015 11/12/2015 China Construction Bank Corporation, Beijing Fuxing Sub-branch 11013040300220000510 15/05/2015 11/12/2015 Total	As at 30 June 2016 Unit: RMB Initial deposit of proceeds raised Balances of proceeds raised 9,460,820,260.74 – 9,460,820,260.74 – – – – – – – – – – – – – 18,921,640,521.48 –	As at 30 June 2016 Unit: RMB Initial deposit of proceeds raised Balances of proceeds raised 9,460,820,260.74 – 9,460,820,260.74 – – – – – – – – – – – – – 18,921,640,521.48 –
		–

Note: The remaining balance of the bank account for the proceeds raised from the placing of H Shares of the Company, amounting to RMB47,413,719.06, were fully transferred to the bank account at Bank of China (Hong Kong) Limited (with account number: 012-875-1-236673-6).

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

Annex II:

Reconciliation Table of the Utilization of the Previously Raised Proceeds – Placing of H Shares

As at 30 June 2016 Unit: RMB

		Totalproceeds raised Netproceeds raised	Totalproceeds raised Netproceeds raised	Totalproceeds raised Netproceeds raised							18,923,097,600.00 18,864,276,965.40	18,923,097,600.00 18,864,276,965.40	Total amount of proceeds utilized accumulatively	Total amount of proceeds utilized accumulatively	Total amount of proceeds utilized accumulatively	Total amount of proceeds utilized accumulatively	Total amount of proceeds utilized accumulatively	19,122,144,915.38	19,122,144,915.38
		Total	amount of proceeds raised with changes of use									–	Utilization of			Utilized for the period from			−
												proceeds raised				January to June 2016
		Proportion of amount of proceeds raised				with changes of use:						0.00%	in each year (Note) Utilized for the period from May to December 2015					19,122,144,915.38
												Accumulated amount of investment from proceeds
					Investmentproject					Total amount of investment fromproceeds raised					raised	as at 30 June 2016		Date for project
										Committed			Committed					to reach
										amount of	Committed		amount of			Committed		intended use	(or
										investment	amount of	Actual	investment			amount of Actual		the extent of
									before raising		investment after	investment before raising investment after investment						completion of
		No.	Committed investmentproject			Actual investmentproject				proceeds	raising proceeds amount(Note)		proceeds raising proceeds amount(Note)					projects)
		1	Margin financing and securities lending Margin financing and securities						18,864,276,965.40		18,864,276,965.40 11,470,815,850.90 18,864,276,965.40 18,864,276,965.40 11,474,934,348.11							Not applicable
			business			lendingbusiness										(Note)
		2	Other capital-based		intermediary	Other capital-based intermediary					2,867,703,962.73					2,867,703,962.73		Not applicable
			business			business
		3	Investment and innovative business Investment and innovative								2,867,703,962.73					2,867,703,962.73		Not applicable
						business
		4	Replenishment of working capital of Replenishing the working								1,911,802,641.81					1,911,802,641.81		Not applicable
			the Company			capital of the Company
		Total							**18,864,276,965.40 **		18,864,276,965.40 19,118,026,418.17 18,864,276,965.40 18,864,276,965.40 19,122,144,915.38

Note: The Company realized an exchange gain of RMB253,749,452.77 arising from the difference between actual exchange rate for settlement of foreign exchange and the translation exchange rate when proceeds were examined and verified. The Company utilized such exchange gain and the interest income of RMB4,118,497.21 for the margin financing and securities lending business.

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APPENDIX II SPECIAL REPORT ON THE UTILIZATION OF THE PREVIOUSLY RAISED PROCEEDS – PLACING OF H SHARES

Annex III:

Reconciliation Table of the Benefits from the Projects Invested with the Previously Raised Proceeds – Placing of H Shares

Actual investment project Accumulative production utilization rate as at 30 June 2016 Promised benefits No. Name of project 1 Margin financing and securities lending business Not applicable Not applicable 2 Other capital-based intermediary business Not applicable Not applicable 3 Investment business Not applicable Not applicable 4 Replenishment of working capital Not applicable Not applicable Total	Actual benefits for the period from January to June 2016 479,078,509.03 142,516,227.36 45,617,676.58 23,177,042.75 690,389,455.72	As at 30 June 2016 Unit: RMB Accumulative benefits realized as at 30 June 2016 Estimated benefits achieved 1,128,679,801.35 Not applicable 407,955,083.07 Not applicable 111,030,934.97 Not applicable 176,698,586.69 Not applicable 1,824,364,406.08

Calculation of the benefits realized from the projects invested with raised proceeds:

• (1) For each project invested with the proceeds raised by the Company, the capital invested included self-owned capital and proceeds raised by the Company. The self-owned capital and proceeds raised for the same project were not independently audited, and the benefits could not be separately determined. The benefits realized from the projects listed above were calculated based on the proportion of the benefits realized from all the projects in the self-owned capital and proceeds raised.

• (2) The income from the margin financing and securities lending business was based on the actual rate of return of the funds raised. The income from other capital-based intermediary transaction business included net investment income from dealer-quoted bond repurchase transactions and net income from structured fund A dealer-quoted repurchase transactions. The income from investment business represented investment income, and the income from funds replenishing working capital represented income from self-owned capital based on the weighted return on assets of the percentage of proceeds raised (including investment income, gain on change in fair value and interest income from self-owned capital).

• (3) The proceeds raised were converted into RMB and transferred to China on 20 May 2015 and were subsequently utilized in various businesses.

– 20 –