China Railway Group Limited — Proxy Solicitation & Information Statement 2008

Sep 4, 2008

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in China Railway Group Limited, you should at once hand this circular and the accompanying form of proxy and the reply slip to the purchaser or the transferee or to the Company, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims 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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中國中鐵股份有限公司

CHINA RAILWAY GROUP LIMITED

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

(Stock Code: 390)

(1) AMENDMENTS TO THE ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS

(2) PROVISION OF GUARANTEE AND

(3) ISSUE OF CORPORATE BONDS

A notice convening the EGM to be held at 9:00 a.m. on Monday, 20 October 2008 at the Multi-functional Hall on the Fourth Floor of Tower A of China Railway Building, No. 26 Lianhuachi Nanli, Fengtai District, Beijing, PRC, is set out on pages 18 to 20 of this circular.

If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying proxy form in accordance with the instructions printed thereon. For holder of H Shares, the proxy form should be returned to Computershare Hong Kong Investor Services Limited in person or by post not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to Computershare Hong Kong Investor Services Limited or to the Company’s Board of Directors’ Office on or before 30 September 2008.

5 September 2008

TABLE OF CONTENTS

		Page
DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER	FROM THE BOARD
1.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
2.	AMENDMENTS TO THE ADMINISTRATIVE RULES GOVERNING
	RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
3.	PROVISION OF GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
4.	ISSUE OF CORPORATE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5.	THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
6.	PROCEDURES FOR DEMANDING POLL BY SHAREHOLDERS . . . . . . . . . . . . . . . . .	6
7.	RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
APPENDIX I — ADMINISTRATIVE RULES GOVERNING RELATED
	PARTY TRANSACTIONS (AMENDED DRAFT) . . . . . . . . . . . . . . . . . . . .	8
NOTICE	OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

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DEFINITION

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

‘‘A Shares’’	ordinary shares of RMB1.00 each in the share capital of the
	Company which are listed on the Shanghai Stock Exchange and
	traded in RMB
‘‘Articles’’	the articles of association of the Company from time to time
‘‘Board’’	the board of Directors
‘‘the Company’’	China Railway Group Limited (中國中鐵股份有限公司), a joint
	stock limited company incorporated in the PRC and the H Shares
	and A Shares of which are listed on the Hong Kong Stock
	Exchange and the Shanghai Stock Exchange, respectively
‘‘Directors’’	the directors of the Company
‘‘EGM’’	the extraordinary general meeting of the Company to be held on
	20 October 2008
‘‘H Shares’’	overseas listed foreign shares of RMB1.00 each in the share
	capital of the Company which are listed on the Hong Kong Stock
	Exchange and traded in Hong Kong dollars
‘‘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
‘‘PRC’’	the People’s Republic of China, excluding, for the purpose of this
	circular only, Hong Kong Special Administrative Region, Macau
	Special Administrative Region, and Taiwan
‘‘Related Party Transaction Rules’’	the Administrative Rules Governing Related Party Transactions
	adopted by the Company (as amended from time to time)
‘‘RMB’’	Renminbi, the lawful currency of the PRC
‘‘Shareholders’’	holders of Shares
‘‘Shares’’	A Shares and/or H Shares

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LETTER FROM THE BOARD

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中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

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

(Stock Code: 390)

Executive Directors: Registered Office: Mr. Shi Dahua (Chairman) 1 Xing Huo Road, Fengtai District, Mr. Li Changjin (President) Beijing 100070, Mr. Bai Zhongren (Vice President) PRC Non-executive Director: Principal Place of Business in Hong Kong: Mr. Wang Qiuming Unit 1201–1203, 12th Floor, APEC Plaza, Independent non-executive Directors: 49 Hoi Yuen Road, Mr. He Gong Kwun Tong, Mr. Zhang Qinglin Hong Kong Mr. Gong Huazhang Mr. Wang Taiwen Mr. Sun Patrick 5 September 2008

To the Shareholders

Dear Sir or Madam,

(1) AMENDMENTS TO THE ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS

(2) PROVISION OF GUARANTEE AND

(3) ISSUE OF CORPORATE BONDS

1. INTRODUCTION

At the EGM, ordinary resolutions will be proposed to approve (i) the proposed amendments to the Related Party Transaction Rules and (ii) the provision of guarantee, and a special resolution will be proposed to approve the issue of corporate bonds. The purpose of this circular is to give you notice of the EGM and to provide you with information regarding the proposed amendments to the Related Party Transaction Rules, the provision of guarantee and the issue of corporate bonds.

The Notice of EGM is set out in pages 18 to 20 of this circular.

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LETTER FROM THE BOARD

2. AMENDMENTS TO THE ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS

It was resolved at the Thirteenth Meeting of the First Session of the Board held on 29 August 2008 that the proposal on the amendments to the Related Party Transaction Rules be put forward to the Shareholders’ general meeting for consideration and approval. Accordingly, an ordinary resolution will be proposed at the EGM to approve the amendments to the Related Party Transaction Rules. The Related Party Transaction Rules are primarily applicable to related party transactions conducted by the Company and its group of companies under the framework regulating the Company as an A-share listed company. Connected transactions (as defined in the Hong Kong Listing Rules) conducted by the Company as an H-share listed company shall be subject to the applicable provisions of the Hong Kong Listing Rules.

Details of the amendments to the Related Party Transaction Rules are as follows:

• (a) Two chapters headed ‘‘Flow of Funds between the Company and Its Controlling Shareholder and Other Related Parties’’ and ‘‘Investigation of Liabilities’’ be incorporated in the Related Party Transaction Rules.

• (b) The following wordings be incorporated in the original article 2: ‘‘The capital operations department of the Company shall be responsible for the management of the list of related persons arising from equity interests and the establishment of management records in that regard. At the same time, the department shall, on a timely basis, file with the office of the board of directors an updated list of the Company’s related persons upon any change due to equity interests together with a description of the related party relationship arising in that regard.’’

The full version of the amended draft of the Related Party Transaction Rules is set out in Appendix I to this circular.

3. PROVISION OF GUARANTEE

The proposal on provision of guarantee by certain subsidiaries of the Company has been approved at the Tenth Meeting of the First Session of the Board held on 18 June 2008. Pursuant to the relevant provisions of the Articles, proposed guarantee provided to enterprises with assets-to-liabilities ratio exceeding 70 per cent. shall be put forward to the Shareholders’ general meeting for consideration and approval. Accordingly, an ordinary resolution will be proposed at the EGM to approve (i) the provision of guarantee amounting to RMB600,000,000 to China Henan International Cooperation Group Co., Ltd., an independent third party (with an assets-to-liabilities ratio of 78.97% as at 31 March 2008) by China Railway NO. 7 Engineering Group Co., Ltd. (a wholly-owned subsidiary of the Company), and (ii) the provision of guarantee amounting to RMB160,000,000 to China Railway NO. 10 Engineering Group NO. 3 Construction Co., Ltd., a subsidiary of the Company (with an assets-to-liabilities ratio of 96.22% as at 31 March 2008) by China Railway NO. 10 Engineering Group Co., Ltd. (a wholly-owned subsidiary of the Company). To the best knowledge and belief of the Company, China Railway NO. 10 Engineering Group NO. 3 Construction Co., Ltd. is not a connected person (as defined in the Hong Kong Listing Rules) of the Company.

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LETTER FROM THE BOARD

4. ISSUE OF CORPORATE BONDS

It was resolved at the Thirteenth Meeting of the First Session of the Board held on 29 August 2008 that corporate bonds be issued by the Company, subject to approval of the Shareholders by passing a special resolution at the EGM and approval of relevant regulatory authorities. Particulars of the issue of the corporate bonds are as follows:

(a) Size of the Issue

The Company proposes a public offering of corporate bonds of principal amount not exceeding RMB15 billion (the ‘‘Corporate Bonds’’) in single or multiple tranches in mainland China.

(b) Maturity

The Corporate Bonds will have a term of maturity not exceeding 15 years and can be either single-term or multiple-terms, and the size and maturity of the Corporate Bonds are subject to final determination according to market conditions prevailing at the time of issue.

(c) Use of Proceeds

The issue of the Corporate Bonds will provide the Company with a source of medium and long-term funding, to adjust the Company’s debt structure, and to repay loans and supplement the Company’s working capital.

(d) Arrangement as to Whether or Not to Place Bonds to Shareholders

There will not be any preferential placement of the Corporate Bonds to Shareholders.

(e) Underwriting

An underwriting syndicate organised by the lead underwriter will underwrite the Corporate Bonds.

(f) Listing

Application for listing and trading of the Corporate Bonds shall be filed to the Shanghai Stock Exchange as soon as possible following the completion of the issue of the Corporate Bonds. Subject to approval of regulatory authorities, the Corporate Bonds may also be listed and traded on such other stock exchanges as permissible by applicable laws.

(g) Measures for Guaranteeing the Repayment of the Corporate Bonds

The Company undertakes that in circumstances where any failure to pay any amounts of principal or interest of the Corporate Bonds as scheduled or when any of such amounts fall due is expected to take place, it will take measures accordingly to guarantee the repayment as required by relevant laws and regulations, including but not limited to: (i) not to declare any profit distribution to Shareholders; (ii) to postpone the implementation of capital expenditure projects such as

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LETTER FROM THE BOARD

material investment, merger or acquisition; (iii) to reduce or discontinue the payment of salaries and bonuses of Directors and members of senior management; and (iv) not to approve any transfer or secondment of the staff primarily responsible for the issue.

(h) Term of Validity of the Resolution

The resolution passed at the EGM in respect of the issue of the Corporate Bonds will expire 36 months after the date of passing of such resolution.

In addition, it is also proposed by the Board that the general meeting will, subject to its approval of the issue of the corporate bonds, authorise Mr. Shi Dahua (Chairman of the Company) and Mr. Li Changjin (President of the Company) to jointly exercise all powers to handle all matters relating to the issue and listing of the Corporate Bonds in the best interests of the Company, including but not limited to:

• (a) to decide on specific matters relating to the issue and listing of the Corporate Bonds, including but not limited to the arrangements as to whether or not to issue in tranches and whether or not to issue multiple types of bonds and their terms, the arrangements in relation to the issue size and maturity of each tranche and each type, the duration and method of repayment of the principal and the interests, the matters as to whether any terms for repurchase and redemption will be in place, the pricing approach, the coupon interest rate, the details of use of proceeds, the measures for guaranteeing the repayment, the guarantee, the listing of bonds, the stock exchanges on which the bonds will be listed and the selection of qualified professional advisers of the issue of the Corporate Bonds;

• (b) to negotiate on behalf of the Company in relation to all matters regarding the issue and listing of the Corporate Bonds, to execute all relevant agreements and other necessary documents, and to make proper disclosure of all relevant information;

• (c) to carry out all necessary relevant procedures with respect to the approval of the issue and listing of the Corporate Bonds by the relevant regulatory authorities, and to make suitable adjustments to the specific issue of the Corporate Bonds in accordance with the directions from the regulatory authorities (if any); and

• (d) to take all necessary actions and deal with or make decisions on other matters relating to the issue and listing of the Corporate Bonds.

After comparing various means of financing and taking into account the current interest rate environment, the Board considers the issue of the Corporate Bonds to be the most suitable means to effectively lower the overall capital costs and raise the repayment capability of the Company.

The proposed issue of the Corporate Bonds may or may not occur and will not be placed to the Shareholders. The Shareholders and investors should therefore exercise caution in dealing in the Company’s Shares.

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LETTER FROM THE BOARD

5. THE EGM

A notice convening the EGM to be held at 9:00 a.m. on Monday, 20 October 2008 at the Multifunctional Hall on the Fourth Floor of Tower A of China Railway Building, No. 26 Lianhuachi Nanli, Fengtai District, Beijing, PRC, is set out on pages 18 to 20 of this circular.

If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying form of proxy in accordance with the instructions printed thereon. For holders of H Shares, the proxy form should be returned to Computershare Hong Kong Investor Services Limited in person or by post not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to the Computershare Hong Kong Investor Services Limited or to the Company’s Board of Directors’ Office on or before 30 September 2008.

6. PROCEDURES FOR DEMANDING POLL BY SHAREHOLDERS

Pursuant to relevant provisions of the Articles, a resolution at a Shareholder’s general meeting shall be decided on a show of hands unless otherwise required under the listing rules of the location(s) where the Company’s shares are listed or a poll is (before or after the show of hands) demanded:

• (i) by the chairman of the meeting;

• (ii) by at least two Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (iii) by any Shareholder or Shareholders (including proxy) holding individually or holding in aggregate of 10% or more of the Shares carrying the right to vote at the meeting.

Unless otherwise required under the listing rules of the location(s) where the Company’s shares are listed or a poll is demanded by the persons mentioned above, the chairman of the meeting will announce the results of the passing of a resolution according to a show of hands, which will be recorded in the minutes of the meeting and treated as conclusive evidence without the need to prove the number or the proportion of votes for or against the resolution passed.

A request to vote by poll may be withdrawn by the person who made such request.

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LETTER FROM THE BOARD

7. RECOMMENDATION

The Directors consider that the proposed (i) amendments to the Related Party Transaction Rules, (ii) provision of guarantee and (iii) issue of corporate bonds are in the best interests of the Company and its Shareholders. Accordingly, the Directors recommend the Shareholders to vote in favour of these resolutions which will be proposed at the EGM.

Yours faithfully, By Order of the Board China Railway Group Limited Shi Dahua Chairman

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APPENDIX I ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

The Administrative Rules Governing Related Party Transactions are written in Chinese. The English version of the Appendix I is an unofficial translation and is for reference only. In case of any inconsistency between the English and Chinese versions, the Chinese version shall prevail.

China Railway Group Limited Administrative Rules Governing Related Party Transactions (Amended Draft)

The rules are formulated in accordance with laws, regulations and other governing documents, such as the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China and the Rules Governing the Listing of Securities on the Shanghai Stock Exchange (hereinafter, the ‘‘Listing Rules’’), and the relevant provisions of the Articles of Association of China Railway Group Limited (hereinafter, the ‘‘Articles of Association’’), with a view to governing related party transactions conducted by China Railway Group Limited (hereinafter, the ‘‘Company’’) and safeguarding the lawful interests of investors, in particular, the individual investors.

The rules are primarily applicable to related party transactions conducted by the Company under the framework governing the Company as an A-share listed company. Connected transactions conducted by the Company under the framework governing the Company as an H-share listed company shall be conducted with reference to these rules but always subject to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Chapter 1 Organisation and Structure of Management of Related Party Transactions

Article 1 As the authority for the management of related party transactions, the office of the board of directors of the Company manages related party transactions under the leadership of the secretary to the board of directors. The office of the board of directors is primarily responsible for analysing and identifying related persons, reviewing compliance in relation to related party transactions and organising decision-making processes as well as information disclosure in relation to significant related party transactions.

Article 2 The finance department of the Company shall be responsible for the accounting records, audit, reporting and statistical analysis in relation to related party transactions, and shall report the same to the office of the board of directors on a quarterly basis.

The capital operations department of the Company shall be responsible for the management of the list of related persons arising from equity interests and the establishment of management records in that regard. At the same time, the department shall, on a timely basis, file with the office of the board of directors an updated list of the Company’s related persons upon any change due to equity interests together with a description of the related party relationship arising in that regard.

The legal department of the Company shall provide opinions on judgments in relation to related party transactions.

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• Article 3 The office of the board of directors of the Company shall consolidate and analyse such combined reports on related party transactions as it shall receive and shall, under the provisions of these rules, ensure that decisions relating to related party transactions are in compliance with laws and regulations as well as provisions of the Articles of Association, and make disclosures according to the provisions of these rules.

• Chapter 2 Related Persons and Related Party Transactions

• Article 4 Related persons of the Company consist of related legal persons and related natural persons.

• Article 5 A legal person shall be regarded as a related legal person if it falls within any one of the following categories:

• (1) a legal person which directly or indirectly controls the Company;

• (2) a legal person (other than the Company and its subsidiaries) directly or indirectly controlled by the legal person as mentioned in subsection (1) above;

• (3) a legal person (other than the Company and its subsidiaries) directly or indirectly controlled by a related natural person of the Company as set out in Article 6, or whose directors or chief executives are related natural persons;

• (4) a legal person holding more than 5% of the shares in the Company;

• (5) a joint venture or an associate of the Company;

• (6) other legal persons who may be in such more favorable position in respect of the Company’s interests due to their special relations with the Company, as identified by the China Securities Regulatory Commission, the Shanghai Stock Exchange or the Company, the determination of which shall be based on substance rather than form.

Article 6 A natural person shall be regarded as a related natural person if he or she falls within any one of the following categories:

• (1) a natural person directly or indirectly holding more than 5% of the shares in the Company;

• (2) a director, supervisor or chief executive of the Company;

• (3) a director, supervisor or chief executive of a legal person as set out in subsection (1) of Article 5;

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• (4) a close family member of a person as set out in subsections (1) and (2) of this Article, including his or her spouse, children aged over 18 and their spouses, his or her parents and the parents of his or her spouse, his or her siblings and their spouses, the siblings of his or her spouse and parents of their childrens’ spouses;

• (5) other legal persons who may be in such more favorable position in respect of the Company’s interests due to their special relations with the Company, as identified by the China Securities Regulatory Commission, the Shanghai Stock Exchange or the Company, the determination of which shall be based on substance rather than form.

Article 7 A legal person or natural person falling within any one of the following categories shall be deemed to be a related person of the Company:

• (1) a party who or which will fall within one of the categories specified under Article 5 or Article 6 pursuant to an agreement or arrangement entered into with a related person of the Company upon the agreement or the arrangement becoming effective or within the next twelve months;

• (2) a party who or which fell within one of the categories specified under Article 5 or Article 6 at any time during the preceding 12-month period.

• Article 8 Directors, supervisors, chief executives, shareholders with more than 5% shareholding of the Company and parties acting in concert with them, and the ultimate controller shall on a timely basis file with the board of directors of the Company a list of related persons of the Company and a statement of their related relations.

• Article 9 Related party transactions mentioned herein refer to the transfer of resources or obligations entered into between the Company, its subsidiaries and the related persons as set out above and primarily include the following:

• (1) the acquisition or disposal of assets;

• (2) external investments, including entrusted financing, entrusted loans etc.;

• (3) the provision of financial assistance;

• (4) the provision of guarantee;

• (5) the lease of assets as lessor or lessee;

• (6) entrusting or being entrusted with asset and business management;

• (7) giving or receiving assets as a gift;

• (8) restructuring of creditor’s rights or debts;

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• (9) entering into licensing agreements;

• (10) transferring or being transferred research and development projects;

• (11) the purchase of raw materials, fuel and energy;

• (12) the sale of products and merchandise;

• (13) the provision or receipt of labour services;

• (14) entrusting or being entrusted sales;

• (15) joint investments with related persons;

• (16) settlement of debts by or on behalf of the corporation;

• (17) payment of remuneration of key management personnel;

• (18) such other matters as may lead to the transfer of resources or obligations through agreement.

• Article 10 The related party transactions of the Company shall be conducted in accordance with the principles of openness, fairness, impartiality and honesty and credibility.

Chapter 3 Decision-Making Processes for Related Party Transactions

• Article 11 In respect of a related party transaction proposed to be conducted by the Company, resolutions shall be proposed by a function department of the Company and shall include detailed description of the subject matters of the related party transaction, its basis of pricing, and the degree of influence on the interests of the Company and its shareholders.

Article 12 Powers and authorities of decision-making in relation to related party transactions:

• In the event that the transaction proposed to be entered into between the Company and the related person (excluding the provision of guarantee or the receipt of cash assets as a gift by the Company) is of a transaction amount of RMB30,000,000 or more and represents 5% or more of the absolute value of the latest audited net assets of the Company, the Company shall not only disclose the transaction on a timely basis, but shall also engage intermediate agencies with relevant qualifications to conduct securities and futures business to audit or appraise the subject matter of the transaction, and shall put forward the transaction for review by the shareholders in general meeting;

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

In the event that the related party transaction proposed to be entered into between the Company and the related persons is of a transaction amount of RMB3,000,000 or more and represents 0.5% or more of the absolute value of the latest audited net assets of the Company, the transaction shall be put forward for consideration by the board of directors upon consent given by the independent director(s). Independent directors, prior to making judgments, may engage intermediate agencies to issue an independent financial advisor report as the basis of their judgments.

In the event that a guarantee is provided by the Company for related persons (irrespective of amount), such provision shall be disclosed on a timely basis upon review and approval by the board of directors and shall be put forward for review by the shareholders in general meeting. In case of provision of a guarantee by the Company for shareholders holding less than 5% shareholding (excluding 5%), the aforesaid requirements shall be followed;

The Company shall not provide any guarantee for its controlling shareholder or other related parties in which the Company holds interests of less than 50% (excluding 50%), or any non-legal-person entity or individual.

Related party transactions arising from the provision or receipt of labour services or the purchase or sale of products between related parties and the Company shall be based on fair market prices.

• Article 13 Transactions between the Company and related persons shall be entered into in a written agreement. The contents of the agreement shall be clear and specific. The Company shall make disclosure on such matters as the execution, alteration, termination and performance of the agreement in accordance with the relevant requirements of the Listing Rules.

• Article 14 Related directors shall abstain from voting and shall not exercise the voting rights on behalf of other directors in any meeting of the board of directors of the Company to review any related party transaction. Such a meeting may be held with the attendance of more than half of the non-related directors and any resolution of such a meeting shall be subject to approval by more than half of the non-related directors. Where fewer than three non-related directors attend such a meeting, the transaction shall be submitted to the shareholders in general meeting for their review.

Related directors referred to in the preceding paragraph include directors who fall within any one of the following categories:

• (1) being the other party to the transaction;

• (2) being a direct or indirect controller of the other party to the transaction;

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• (3) holding office in the other party to the transaction, or holding office in a legal entity which is in a position to directly or indirectly control the other party to the transaction or which is under the direct or indirect control of the other party to the transaction;

• (4) being a close family member of the other party to the transaction or a direct or indirect controller of the other party to the transaction;

• (5) being a close family member of a director, supervisor or chief executive of the other party to the transaction or a direct or indirect controller of the other party to the transaction;

• (6) being a director whose independent commercial judgment may be influenced as determined by the China Securities Regulatory Commission, Shanghai Stock Exchange or the Company.

• Article 15 Related shareholders shall abstain from voting in any general meeting of the shareholders of the Company to review any related party transaction.

Related shareholders referred to in the preceding paragraph include shareholders who fall within any one of the following categories:

• (1) being the other party to the transaction;

• (2) being a direct or indirect controller of the other party to the transaction;

• (3) under the direct or indirect control of the other party to the transaction;

• (4) under the same common control, directly or indirectly, of the same legal person or natural person as the other party to the transaction;

• (5) being a shareholder whose voting rights are subject to limitation or influence as a result of any outstanding equity transfer agreement or other agreement entered into with the other party to the transaction or its related person(s);

• (6) being a shareholder who is in such more favorable position in respect of Company’s interests as identified by the China Securities Regulatory Commission or the Shanghai Stock Exchange.

Chapter 4 Disclosure of Related party transactions

• Article 16 Disclosure of information about any related party transactions shall be in compliance with the respective rules stipulated by the China Securities Regulatory Commission and the Shanghai Stock Exchange and the Management System on A-Share Information Disclosure of China Railway Group Limited.

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• Article 17 Any related party transaction of an amount of RMB300,000 or more with a related natural person shall be disclosed on a timely basis. Any related party transaction of an amount of RMB3,000,000 or more with a related legal person and which amount represents 0.5% or more of the absolute value of the latest audited net assets of the Company shall be disclosed on a timely basis.

• Article 18 In disclosing a related party transaction, the following documents shall be submitted to the Stock Exchange:

• (1) a copy of the announcement;

• (2) any agreements or letters of intent related to the transaction;

• (3) a copy of the resolution and the announcement of the resolution of the board of directors, as well as opinion of independent director(s), if applicable;

• (4) government approvals involved in the transaction, if applicable;

• (5) professional report issued by intermediate agencies, if applicable;

• (6) written consent given by the independent director(s) prior to the transaction;

• (7) opinion of the independent director(s);

• (8) any other documents as required by the stock exchange.

• Article 19 Announcements disclosing related party transactions by the Company shall contain the following:

• (1) an overview of the transaction and background information about the subject of the transaction;

• (2) prior consent of the independent director(s) and his/her/their independent opinions;

• (3) voting conducted by the board of directors, if applicable;

• (4) related relations between parties to the transaction and background information about the related persons;

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• (5) policy and basis of the pricing of the transaction, how the transaction price(s) relate(s) to the book value or appraised value of the subject of the transaction and clear and fair market price(s), and such other matter(s) relating to pricing as required to be explained depending on the specific circumstances of the transaction. Where the transaction price(s) differ(s) significantly from the book value, appraised value or market price(s), reasons shall be given in that regard. Where the transaction is not considered fair, disclosure shall be made as to how interests would be transferred as a result of the related party transaction so contemplated;

• (6) other major details of the agreement of the transaction including, among others, the amount and method of settlement of the transaction price(s), nature of and percentage in interests in the transaction attributable to the related person, condition(s) precedent to and time and period of validity of the agreement. For continuing or recurring related party transactions in the ordinary business of the Company, the expected total annual amount of the related party transaction shall also be stated;

• (7) purpose of the transaction and its effect on the Company, including, among others, the true intention and necessity for the related party transaction, and effect on the Company’s current and future financial position and results of operations;

• (8) accumulated total transaction amount in related party transactions with the same related person incurred during the period from the beginning of the same year to the date of disclosure;

• (9) such other information as would help describe the truth of the transaction and be required by the China Securities Regulatory Commission and the Shanghai Stock Exchange.

• Article 20 During the period when the related party transaction is under negotiation, the Company shall on a timely basis report to the stock exchange and China Securities Regulatory Commission and make an announcement in that regard in case of significant fluctuation of the share price of the Company due to any hearsay or reporting on the related party transaction in the market.

Chapter 5 Flow of Funds between the Company and Its Controlling Shareholder and Other Related Parties

• Article 21 The controlling shareholder and other related parties shall not, directly or indirectly and by any means, appropriate the funds or assets of the Company, nor shall they request the Company to advance, among others, any wage, benefits, insurance premium or advertising expenses, nor shall they bear any costs or other expenses incurred for each other.

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• Article 22 Funds, assets or other resources of the Company shall not, directly or indirectly, be provided for use by the controlling shareholder and other related parties by the following means:

• (1) lending any fund of the Company, whether with or without consideration, for use by the controlling shareholder and other related parties;

• (2) providing entrusted loans to the related parties through a bank or a non-bank financial institution;

• (3) engaging the controlling shareholder or other related parties to invest on the Company’s behalf;

• (4) issuing any trade acceptance without actual underlying transaction for the controlling shareholder and other related parties;

• (5) repaying any debt for the controlling shareholder and other related parties;

• (6) such other means as shall be determined by the China Securities Regulatory Commission.

• Article 23 The Company shall, after the end of each financial year, engage the accounting firm responsible for the annual audit of the Company to conduct a specific inspection on any appropriation of the Company’s funds by the controlling shareholder and other related parties and to issue a specific statement in that regard. Independent director(s) shall, in case of disagreement to the result of such inspection process, be entitled to propose to the board of directors of the Company the engagement of another accounting firm for re-inspection at the costs of the Company.

Chapter 6 Investigation of liabilities

• Article 24 The controlling shareholder, ultimate controller(s) and other related parties shall not act upon its related relation in detriment to the interests of the Company. Any loss to the Company in violation of this rule shall be compensated by the respective violating parties.

In case of any appropriation of the Company’s assets and any detriment to the interests of the Company and its shareholders carried out by the controlling shareholder or other related parties, the Company shall be entitled to take effective measures to require the controlling shareholder and other related parties to cease those detrimental acts, and shall be entitled to apply to the People’s Court for a judicial order to freeze such assets of the Company so appropriated by the controlling shareholder and other related parties and those shares of the Company held by them.

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ADMINISTRATIVE RULES GOVERNING RELATED PARTY TRANSACTIONS (AMENDED DRAFT)

APPENDIX I

• Article 25 Where a director, supervisor or senior management of the Company violates the laws and regulations and these rules to assist or connive at the appropriation of the Company’s assets and the detriment to the Company’s interests by the controlling shareholder and other related parties, the board of directors of the Company shall, depending on the severity of the circumstance, penalise the directly-liable person and remove the director(s) who is/are gravely liable for the same, and shall be entitled to request such proper compensation depending on the degree of loss suffered by the Company. Where it constitutes a criminal offence, it shall be subject to judicial procedures.

• In case of negligence or misconduct by the related party transaction management department of the Company affecting or causing loss to the Company, the Company shall be entitled, depending on the severity of the circumstance, to criticise or warn the directly-liable person, or remove the directly-liable person from office.

• Article 26 In case of initiation by any shareholder of the Company of a litigation for civil compensation in accordance with the law for economic loss caused by the detrimental acts against the interests of the Company and other shareholders by the controlling shareholder and other related parties, the Company shall be obliged to give support including the provision of relevant information, subject to compliance with the laws, regulations and the Articles of Association.

• Chapter 7 Miscellaneous

• Article 27 Unless otherwise specified, the terms used in the rules shall have the same meanings as the corresponding terms under the Articles of Association.

• Article 28 Matters on which these rules are silent or which conflict with the laws and regulations, Listing Rules or Articles of Association issued or amended subsequent to the effective date of these rules shall be dealt with in compliance with the laws, regulations, Listing Rules and the Articles of Association.

• Article 29 These rules together with its amendments are drafted by the board of directors and shall become effective on the date of approval by resolution of the shareholders in general meeting.

• Article 30 The rules shall be subject to interpretation by the board of directors.

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NOTICE OF EGM

==> picture [50 x 51] intentionally omitted <==

中國中鐵股份有限公司

CHINA RAILWAY GROUP LIMITED

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

(Stock Code: 390)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the EGM of China Railway Group Limited (the ‘‘Company’’) will be held at the Multi-functional Hall on the Fourth Floor of Tower A of China Railway Building, No. 26 Lianhuachi Nanli, Fengtai District, Beijing, PRC, on 20 October 2008 at 9:00 a.m. to consider and approve the following as appropriate:

By way of ordinary resolutions:

1. To consider and approve the amendments to the Administrative Rules Governing Related Party Transactions.

2. To consider and approve:

3. (i) the provision of guarantee amounting to RMB600,000,000 to China Henan International Cooperation Group Co., Ltd. by China Railway NO. 7 Engineering Group Co., Ltd. (a wholly-owned subsidiary of the Company); and

4. (ii) the provision of guarantee amounting to RMB160,000,000 to China Railway NO. 10 Engineering Group NO. 3 Construction Co., Ltd. by China Railway NO. 10 Engineering Group Co., Ltd. (a wholly-owned subsidiary of the Company).

By way of special resolution:

1. To consider and approve the following as a special resolution:

‘‘THAT

• (a) the Company be and is hereby authorised, within 36 months from the date of passing of this resolution, to publicly issue and offer corporate bonds (the ‘‘Corporate Bonds’’) of principal amount not exceeding RMB15 billion in mainland China with a term of maturity not exceeding 15 years, in single tranche or multiple tranches.

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NOTICE OF EGM

• (b) Mr. Shi Dahua (Chairman of the Company) and Mr. Li Changjin (President of the Company) is hereby authorised to jointly exercise all powers to handle all matters relating to the issue and listing of the Corporate Bonds, including but not limited to:

• (i) to decide on specific matters relating to the issue and listing of the Corporate Bonds, including but not limited to the arrangements as to whether or not to issue in tranches and whether or not to issue multiple types of bonds and their terms, the arrangements in relation to the issue size and maturity of each tranche and each type, the duration and method of repayment of the principal and the interests, the matters as to whether any terms for repurchase and redemption will be in place, the pricing approach, the coupon interest rate, the details of use of proceeds, the measures for guaranteeing the repayment, the guarantee, the listing of bonds, the stock exchanges on which the bonds will be listed and the selection of qualified professional advisers in the issue of the Corporate Bonds;

• (ii) to negotiate on behalf of the Company in relation to all matters regarding the issue and listing of the Corporate Bonds, to execute all relevant agreements and other necessary documents, and to make proper disclosure of all relevant information;

• (iii) to carry out all necessary relevant procedures with respect to the approval of the issue and listing of the Corporate Bonds by the relevant regulatory authorities, and to make suitable adjustments to the specific issue of the Corporate Bonds in accordance with the directions from the regulatory authorities (if any); and

• (iv) to take all necessary actions and deal with or make decisions on other matters relating to the issue and listing of the Corporate Bonds.’’

By order of the Board Yu Tengqun Tam Chun Chung Joint Company Secretaries

Beijing, the PRC 5 September 2008

Notes:

1. Closure of register of members and eligibility for attending the EGM

Shareholders who submit their share transfer application forms to the Company’s share registrar before close of business on Friday, 19 September 2008 and then register as shareholders on the register of members of the Company are entitled to attend the EGM.

Holders of the Company’s H Shares are advised that the register of members will be closed from Sunday, 21 September 2008 to Monday, 20 October 2008 (both days inclusive). Holders of H shares whose names appear on the register of members of the Company maintained in Hong Kong at the close of business on Friday, 19 September 2008 are entitled to attend the EGM.

Holders of H shares who wish to attend the EGM but have not registered the transfer documents are required to deposit the transfer document together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Rooms 1806–1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong at or before 4:30 p.m., Friday, 19 September 2008.

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NOTICE OF EGM

2. Registration procedures for attending the EGM

Shareholders attending the EGM in person or by proxy shall present their identity certification. If the attending shareholder is the authorised legal representative of the Company’s shareholders, the Board or other decision making authority, then such attending shareholder shall present a copy of the relevant resolution of the Board or other decision making authority appointing it as its authorised legal or official representative in order to attend the EGM on behalf of such company.

3. Notice of attendance

Shareholders who intend to attend the EGM in person or by proxy should return the reply slip in person, by post or by facsimile to the Company’s Board of Directors’ Office or Computershare Hong Kong Investor Services Limited on or before Tuesday, 30 September 2008.

The Company’s Board of Directors’ Office is located at Room A609, China Railway Building, No. 26, Lianhuachi Nanli, Fengtai District, Beijing 100055, PRC (Person to contact: Mr. Wan Ming/Ms. Duan Yinhua, Tel: (86 10) 5189 1497 / 5184 5147, Fax: (86 10) 5184 3559).

The address of Computershare Hong Kong Investor Services Limited is Rooms 1806–07, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (Tel: (852) 2862 8555, Fax: (852) 2865 0990).

4. Proxy

Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote in their stead. A proxy need not be a shareholder of the Company.

The instrument appointing a proxy must be in writing under the hand of a shareholder or his attorney duly authorised in writing. If the shareholder is a corporate body, the proxy form must be either executed under its common seal or under the hand of its director(s) or duly authorised attorney(s). If the proxy form is signed by an attorney of the shareholder, the power of attorney authorising that attorney to sign or other authorisations document must be notarised.

To be valid, the form of proxy together with the power of attorney or other authorisation document (if any) signed by the authorised person or notarially certified power of attorney must be delivered to Computershare Hong Kong Investor Services Limited for holders of H Shares not less than 24 hours before the designated time for the holding of the EGM.

Completion and return of a form of proxy will not preclude a shareholder from attending in person and voting at the EGM if he so wishes, but in such event the instrument appointing a proxy shall be deemed to be revoked.

5. Other business

Shareholders and their proxies attending the EGM shall be responsible for their own travelling and accommodation expenses.

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