CMON Limited — Share Issue/Capital Change 2001

Jul 3, 2001

瀋陽公用發展股份有限公司

Shenyang Public Utility Holdings Company Limited

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

Resolutions passed at the 13th MEETING of the 1st Board of Directors

The 13th meeting of the first board of directors ("Board") of Shenyang Public Utility Holdings Company Limited (the "Company") was held at the conference room located at the office of the Company at Level 9, Shenyang Golden International Tower, 355 Zhong Shan Road, Shenhe District, Shenyang, the People's Republic of China (the "PRC") on 29th June, 2001. 13 directors of the Company ("Directors") were present at the Board meeting. The Board meeting was convened in accordance with the requirements of the PRC Company Law and the articles of association of the Company. The resolutions considered and duly passed at the Board meeting were as follows:

1. With regard to the resolution on the compliance of the relevant rules and regulations stipulated under, inter alia, "The Management Methods for New Issue of Shares by Listed Companies", regarding the public issue of A Shares of the Company.

The Board has carefully reviewed and examined the Company's status with "The Management Methods for New Issue of Shares by Listed Companies" 《上市公司新股發行管理辦法》and "The Notice of Satisfactory Fullfilment of New Issue of Shares by Listed Companies" 《關於做好上市公司新股發行工作的通知》announced by the China Securities Regulatory Commission ("CSRC") and unanimously noted that the Company has satisfied the requirements thereof and resolved to apply for and implement the A Share Issue in 2001 (the "A Share Issue").

1. With regard to the resolution on the proposed A Share Issue of the Company in 2001.

In order to diversify the principal business of the Company, strengthen the key competitiveness of the Company, and adopt a "great public utilities" strategy, the Board considered and approved the proposed A Share Issue of the Company in 2001. Details of the A Share Issue are as follows:

(1) Type of securities: Ordinary shares (A Shares) denominated in Renminbi ("RMB") for the public listing in the PRC.

(2) Nominal value per share: RMB1.00.

(3) Number of shares to be issued: Not more than 100,000,000 new A Shares. The Board will propose a resolution at the first Extraordinary General Meeting in 2001 (the "EGM"), pursuant to which the Board will be authorised to discuss with the lead underwriter regarding the A Share Issue and to determine the final number of A Shares to be issued, taking into account the actual circumstances in relation thereto.

(4) Target subscribers: All natural persons and institutional investors (except those restricted by the PRC laws and regulations) who have A shares stock trading accounts with the Shanghai Stock Exchange in the PRC.

(5) Structure of the A Share Issue: The A Share Issue will be structured on the basis of an on-line "book-building" process for public investors and on the basis of an off-line "book-building" process for institutional investors. Depending on the subscription result, the Company and the lead underwriter can make an appropriate re-allocation between the off-line placing amount for institutional investors and the on-line offering amount for public investors.

(6) Determining the issue price:    The final issue price of A Shares will be determined by agreement between the lead underwriter of the A Share Issue and the Company with reference to the result of a simultaneous on-line and off-line "book building" process in respect thereof.

(7) Use of proceeds: The proceeds of the proposed A Share Issue will be used to invest in a 2 x 200 megahertz watt low temperature nuclear heat project in Shenyang, the PRC. The total investment of this project is estimated to be approximately RMB1,327 million and the Company intends to invest approximately RMB842 million in such project. The Company plans to apply the proceeds received from the A Share Issue to such project and the remaining proceeds, if any, will be used as working capital of the Company. In the event that the proceeds received from the A Share Issue cannot satisfy the funding requirements of the project, the differences will be satisfied by internal resources and other means of financing of the Company.

(8) Reduction of State-owned shares: With regard to reduction of State-owned shares, the Board will comply with the requirements of the reduction of State-owned shares and make adjustment to the A Share Issue in accordance with the "Provisional Regulations on Raising Social Security Funds from the Reduction of State-owned Shares" announced by the State Council of the PRC and other relevant regulations.

(9) Listing place: Shanghai Stock Exchange

The Board considered that the proposed A Share Issue is in compliance with the relevant requirements of the "The Management Methods for New Issue of Shares by Listed Companies" issued by the CSRC. This resolution is still subject to approval of the CSRC after its being passed at the EGM.

1. With regard to the feasibility of the proposed investment project which is to be financed by the net proceeds received from the A Share Issue of the Company.

The Board, upon evaluation of the investment project and careful consideration of its feasibility and implementation, has resolved that the investment project is in accordance the State's industry policy and the Company's development strategy. The investment project will improve the Company's economic returns and prospect for development in utility industry, enhance the Company's competitiveness and risk resistance ability and drive the Company, while continuing its utility business, into prospective development in the high technology field. It was agreed that the Company will proceed to invest in a low temperature nuclear heat project in Shenyang.

1. THAT "The Explanatory Notes Regarding the Status of the Use of Proceeds Previously Received by the Company" be considered and was approved.

The Board considered that the explanatory notes regarding the status of the use of proceeds previously received from the H share offer in December, 1999 and "the report on the use of proceeds previously received", compiled by the Hualun Certified Public Accountants, were in line with the current status of the use of proceeds previously received and the disclosure made in the 2000 interim report and the 2000 annual report.

As at 31st December, 2000, approximately RMB493,297,000 of the net proceeds received from the H share offer has been applied to the following purposes:

(1) approximately RMB231,951,000 had been applied to invest in the acquisition of No. 8 Water Plant;

(2) approximately RMB46,787,000 had been applied for the acquisition and construction of the Shifosi Water Source expansion project;

(3) approximately RMB19,041,000 had been applied to renovate the system of production facilities of Shenyang Water;

(4) approximately RMB1,000,000 had been applied to purchase new vehicles for Jingwei Transportation; and

(5) the balance of approximately RMB194,517,000 was used as working capital of the Company.

1. With regard to the resolution on the proposal for the one year validity period for the A Share Issue commencing from the date of passing such resolution at the EGM of the Company.

2. With regard to the resolution to be proposed at the EGM authorizing the Board to do for and on behalf of the Company all relevant matters which are in connection with the proposed A Share Issue, including:

(1) upon    the A Share Issue being considered and approved at the EGM of the Company and based on the market situation of the A Share Issue, to determine the number of A Shares to be issued, the structure of the A Share Issue, the issue price, target subscribers, percentage allocation of the A Shares between on-line and off-line and all matters in relation thereto;

(2) to execute all relevant contracts in relation to the project which is intended to be funded by the net proceeds of the A Share Issue and other legal documents and material contracts in respect of the A Share Issue;

(3) to make appropriate adjustments of a non-material nature in respect of the use and the amount of the net proceeds of the A Share Issue;

(4) to make amendments to the relevant provisions of the Articles of Association of the Company subsequent to the completion of the A Share Issue and the registration of the change in the registered capital of the Company upon the completion of the A Share Issue;

(5) to make corresponding adjustment of the A Share Issue in relation to the reduction of State-owned shares in accordance with the "Provisional Regulations on Raising Social Security Funds from the Reduction of State-owned shares" 《減持國有股募集社會保障資金管理暫行辦法》 announced by the State Council and any other relevant guidelines.

(6) to deal with any other matters in connection with the A Share Issue.

The effective period of the above mandate is the same as the validity period of the A Share Issue.

1. With regard to the resolution of the proposal that upon successful completion of the A Share Issue, the existing and new shareholders of the Company will be entitled to the undistributed profits of the Company after the A Share Issue.

The above resolutions will be proposed at the EGM of the Company for consideration and approval by way of special resolution and will be reported to the CSRC for approval before implementation.

1. With regard to the resolution to elect an independent non-executive Director.

In view of the resignation of Mr. Chen Jia Sheng as an independent non-executive Director of the Company due to personal reasons, Shenyang Public Utility Group Company Limited, the controlling shareholder of the Company, proposes to appoint Dr. Cheng Wei as a candidate for an independent non-executive Director and such appointment is subject to the consideration and approval by the shareholders of the Company at the EGM.

This resolution will be proposed at the EGM for consideration and approval by way of ordinary resolution.

1. The resolution that the EGM of the Company for 2001 be convened was approved.

By order of the Board

Wang Se

Company Secretary

Shenyang, the PRC, 29th June, 2001