COSCO SHIPPING Development Co., Ltd. - AGM Information 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in COSCO SHIPPING Development Co., Ltd., you should at once hand this circular, the form of proxy and reply slip to the purchaser or the transferee or to licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of COSCO SHIPPING Development Co., Ltd..

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

(1) 2018 REPORT OF THE BOARD (2) 2018 REPORT OF THE SUPERVISORY COMMITTEE

(3) 2018 WORK REPORT OF INDEPENDENT DIRECTORS

(4) 2018 FINANCIAL STATEMENTS AND AUDITORS’ REPORT

(5) 2018 ANNUAL REPORT

(6) 2018 PROFIT DISTRIBUTION PLAN (7) REMUNERATION OF DIRECTORS AND SUPERVISORS FOR THE YEAR 2019 (8) RE-APPOINTMENT OF DOMESTIC AUDITOR, INTERNAL CONTROL AUDITOR AND INTERNATIONAL AUDITOR FOR THE YEAR 2019

(9) FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

(10) FURTHER EXTENSION OF VALIDITY PERIOD OF AUTHORISATION TO THE BOARD AND ANY PERSON AUTHORISED BY THE BOARD TO HANDLE ALL MATTERS IN CONNECTION WITH THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (11) PROVISIONS OF GUARANTEES (12) NOTICE OF AGM (13) SUPPLEMENTAL NOTICE OF AGM AND

(14) NOTICE OF H SHARES CLASS MEETING

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

Capitalised terms used in this cover shall have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 11 to 46 of this circular. A letter from the Independent Board Committee to the Independent Shareholders is set out on pages 47 to 48 of this circular. A letter from Messis Capital Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 49 to 58 of this circular.

The Original Notice of AGM convening the AGM to be held at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China was despatched to the Shareholders on 18 April 2019, which is reproduced on pages AGM-1 to AGM-4 of this circular. The Supplemental Notice of AGM, which contains the additional resolution to be proposed at the AGM, is set out on pages SAGM-1 to SAGM-3 of this circular.

The notice convening the class meeting of the H Shareholders to be held at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China was despatched to the Shareholders on 18 April 2019, which is reproduced on pages HCM-1 to HCM-3 of this circular.

* The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

10 May 2019

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . .	47
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . .	49
APPENDIX I – WORK REPORT OF INDEPENDENT DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2018 . . . . .	I-1
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	II-1
NOTICE OF AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .AGM-1
SUPPLEMENTAL NOTICE OF AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .SAGM-1
NOTICE OF H SHARES CLASS MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . .	HCM-1

– i –

DEFINITIONS

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

“2017 Poll Results Announcement”
the poll results announcement of the Company dated 5 June 2017
“2018 Poll Results Announcement”
the poll results announcement of the Company dated 31 May 2018
“A Share(s)”

the domestic share(s) in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange

“A Shareholder(s)”
holder(s) of A Share(s)
“A Shares Issuance Circular”

the circular of the Company dated 19 May 2017 in relation to, among other things, (i) the Revised Proposed Non-public Issuance of A Shares; (ii) the COSCO Subscription; and (iii) the Specific Mandate

“Adjustment Announcement”

the announcement of the Company dated 30 October 2017 in relation to, among other things, the COSCO SHIPPING Undertaking and the adjustment to the Revised Proposed Non-public Issuance of A Shares

“AGM”

the forthcoming annual general meeting of the Company to be convened at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China (or any adjournment thereof) to consider and, if thought fit, approve the resolutions contained in the Original Notice of AGM and the Supplemental Notice of AGM

“Articles of Association”
the articles of association of the Company, as amended and adopted from time to time
“associate”

has the meaning ascribed to it under the Hong Kong Listing Rules

– 1 –

DEFINITIONS

“Authorisation”
the authorisation granted to the Board and any person authorised by the Board to handle all matters in connection with the Revised Proposed Non-public Issuance of A Shares at the Previous EGM and the Previous Class Meetings
“Average Trading Price”
the average trading price of the A Shares during the 20 trading days immediately preceding the Price Determination Date, which is calculated by dividing the total turnover of the A Shares by the total trading volume of the A Shares during the 20 trading days immediately preceding the Price Determination Date
“Benchmark Price”
(i) 90% of the Average Trading Price or (ii) the Floor Price, whichever is higher
“Board” the board of directors of the Company
“Board Resolutions Date” 20 April 2017
“Cap” 2,336,625,000 A Shares
“China Shipping”
China Shipping Group Company Limited[#] (中國海運集團有限公司) (formerly known as China Shipping (Group) Company Limited (中國海運(集團)總公司)), a PRC stateowned enterprise, a controlling shareholder of the Company and a wholly-owned subsidiary of COSCO SHIPPING
“Company”
COSCO SHIPPING Development Co., Ltd.* (中遠海運發展股份有限公司), a joint stock limited company established in the PRC, the H shares and A shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 2866) and the Shanghai Stock Exchange (Stock Code: 601866), respectively
“Computershare”
Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar
“connected person”
has the meaning ascribed to it under the Hong Kong Listing Rules
“controlling shareholder”

has the meaning ascribed to it under the Hong Kong Listing Rules

– 2 –

DEFINITIONS

“COSCO SHIPPING”
“COSCO SHIPPING Group”
“COSCO SHIPPING HK”
“COSCO SHIPPING Leasing”
“COSCO SHIPPING Tianjin”
“COSCO SHIPPING Undertaking”
“COSCO Subscription”
“COSCO Subscription Agreement”
“CS Investment”

China COSCO Shipping Corporation Limited[#] (中國遠洋海運集團有限公司), a PRC state-owned enterprise and an indirect controlling shareholder of the Company

COSCO SHIPPING and its subsidiaries
COSCO SHIPPING Development (Hong Kong) Co., Ltd. (中遠海運發展(香港)有限公司), a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company
COSCO SHIPPING Leasing Co., Ltd.[#] (中遠海運租賃有限公司), a company established under the laws of the PRC with limited liability and a wholly-owned subsidiary of the Company
COSCO SHIPPING Development (Tianjin) Leasing Co., Ltd.[#] (中遠海發(天津)租賃有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
the undertaking provided by COSCO SHIPPING on 27 October 2017, further details of which are set out in the Adjustment Announcement
the proposed subscription of A Shares by COSCO SHIPPING pursuant to the COSCO Subscription Agreement

the subscription agreement dated 20 April 2017 entered into between the Company and COSCO SHIPPING, pursuant to which COSCO SHIPPING has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, 50% of the number of A Shares to be issued under the Revised Proposed Nonpublic Issuance of A Shares

China Shipping Investment Co., Ltd.[#] (中海集團投資有限公司), a company established under the laws of the PRC with limited liability and a wholly-owned subsidiary of the Company

– 3 –

DEFINITIONS

“CSRC”
China Securities Regulatory Commission (中國證券監督管理委員會)
“DFIC Guangzhou”
Dong Fang International Container (Guangzhou) Co., Ltd.[#] (東方國際集裝箱(廣州)有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“DFIC HK”
Dong Fang International Container (Hong Kong) Co., Ltd. (東方國際集裝箱(香港)有限公司), a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company
“DFIC Jinzhou”
Dong Fang International Container (Jinzhou) Co., Ltd.[#] (東方國際集裝箱(錦州)有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“DFIC Lianyungang”
Dong Fang International Container (Lianyungang) Co., Ltd.[#] (東方國際集裝箱(連雲港)有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“Director(s)” the director(s) of the Company
“FIL”
Florens International Limited (佛羅倫國際有限公司), a company incorporated under the laws of the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company
“Floor Price”
the latest audited net asset per Share before the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares
“Florens Maritime”
Florens Maritime Limited, a company incorporated under the laws of Bermuda with limited liability and an indirect wholly-owned subsidiary of the Company

– 4 –

DEFINITIONS

“Further Extension Resolutions”
the proposed resolutions (i) for the Independent Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2019; and (ii) for the Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Authorisation for a further period of 12 months, commencing from 5 June 2019
“Further Extension Resolutions Announcement”
the announcement of the Company dated 18 April 2019 in relation to, among other things, the Further Extension Resolutions
“Group” the Company and its subsidiaries
“Guaranteed Wholly-owned collectively, COSCO SHIPPING HK, COSCO Subsidiaries” SHIPPING Leasing, Haihui Commercial, COSCO SHIPPING Tianjin, Florens Maritime, Oriental Fleet, DFIC Jinzhou, DFIC Guangzhou, DFIC Lianyungang, Shanghai Universal, DFIC HK and Oriental Fleet LNG 01
“H Share(s)”
the overseas listed foreign shares in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed on the Main Board of the Hong Kong Stock Exchange
“H Shareholder(s)” holder(s) of H Share(s)
“Haihui Commercial”
Haihui Commercial Factoring (Tianjin) Co., Ltd.[#] (海匯商業保理(天津)有限公司), a company established under the laws of the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“Hong Kong Stock Exchange”

The Stock Exchange of Hong Kong Limited

– 5 –

DEFINITIONS

“Implementation Rules for the Non-public Issuance of Shares by Listed Companies”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholders”
“Latest Practicable Date”
“New Class Meetings”
the Implementation Rules for the Non-public Issuance of Shares by Listed Companies (《上市公司非公開發行股票實施細則》)
the independent board committee of the Company comprising Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong, Mr. Gu Xu and Ms. Zhang Weihua, being all the independent non-executive Directors, which is formed to advise the Independent Shareholders on the Shareholders’ Resolutions Further Extension Resolution in accordance with the Hong Kong Listing Rules
Messis Capital Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, which has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution
the Shareholders other than (i) COSCO SHIPPING and its associates and (ii) any other Shareholders who have a material interest in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and/or the Specific Mandate
6 May 2019, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

the new class meeting of the A Shareholders and the new class meeting of the H Shareholders to be convened to consider, and if thought fit, approve, among other things, the Further Extension Resolutions

– 6 –

DEFINITIONS

“New PRC Regulations”
“Notice of H Shares Class Meeting”
“Oriental Fleet”
“Oriental Fleet LNG 01”
“Original Form of Proxy”
“Original Notice of AGM”
“Overseas Regulatory Announcement”
“PRC”
“PRC Legal Advisers”

the “Decision in Amending the Implementation Rules for the Non-public Issuance of Shares by Listed Companies” (《關於修改〈上市公司非公開發行股票實施細則〉的決定》) and the “Issuance Regulation Questions and Answers – Regulatory Requirements regarding Guiding and Regulating Financing Activities of Listed Companies” (《發行監管問答 – 關於引導規範上市公司融資行為的監管要求》) issued by the CSRC on 17 February 2017

the notice of the H Shares class meeting of the Company dated 18 April 2019, which was despatched to the Shareholders on 18 April 2019
Oriental Fleet International Co., Ltd. (東方富利國際有限公司), a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company
Oriental Fleet LNG 01 Limited (東方富利LNG01有限公司), a company incorporated in the British Virgin Islands and an indirect wholly-owned subsidiary of the Company
the form of proxy of the Company in respect of the resolutions set out in the Original Notice of AGM, which was despatched to the Shareholders on 18 April 2019
the notice of the annual general meeting of the Company dated 18 April 2019, which was despatched to the Shareholders on 18 April 2019
the overseas regulatory announcement of the Company dated 6 May 2019 in relation to the Provisions of Guarantees
the People’s Republic of China which for the purposes of this circular excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
the PRC legal advisers to the Company

– 7 –

DEFINITIONS

“Previous Class Meetings”
“Previous EGM”
“Price Determination Date”
“Provisions of Guarantees”
“Register of Members”
“Revised Form of Proxy”
“Revised Proposed Non-public Issuance of A Shares”
“RMB”
“SASAC”
“SFO”

collectively, the previous class meeting of the A Shareholders and the previous class meeting of the H Shareholders held on 5 June 2017 to approve, among other things, (i) the Revised Proposed Non-public Issuance of A Shares, (ii) the COSCO Subscription and (iii) the Specific Mandate

the previous extraordinary general meeting of the Company held on 5 June 2017 to approve, among other things, (i) the Revised Proposed Non-public Issuance of A Shares, (ii) the COSCO Subscription and (iii) the Specific Mandate
the first day of the offering period of the Revised Proposed Non-public Issuance of A Shares
the proposed provisions of guarantees in the aggregate amounts of not exceeding RMB27.9 billion and US$4 billion for the Guaranteed Wholly-owned Subsidiaries and the Company and the relevant authorisation to the Board, further details of which are set out in the Overseas Regulatory Announcement
the register of H Shares members of the Company
the revised form of proxy of the Company in respect of the resolutions set out in the Original Notice of AGM and the Supplemental Notice of AGM
the proposed non-public issuance of not more than 2,336,625,000 A Shares (subject to adjustments) by the Company to not more than 10 specific target subscribers, including COSCO SHIPPING
Renminbi, the lawful currency of the PRC
State-owned Assets Supervision and Administration Commission of the State Council of the PRC (中華人民共和國國務院國有資產監督管理委員會)

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

– 8 –

DEFINITIONS

“Shanghai Listing Rules”

the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange

“Shanghai Universal”
Shanghai Universal Logistics Equipment Co., Ltd.[#] (上海寰宇物流裝備有限公司), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company
“Share(s)”

A Share(s) and H Share(s)

“Shareholder(s)”
holder(s) of the Share(s)
“Shareholders’ Resolutions”
the resolutions regarding the Revised Proposed Nonpublic Issuance of A Shares passed at the Previous EGM and the Previous Class Meetings
“Shareholders’ Resolutions Further Extension Resolution”
the special resolution to be proposed at the AGM and the New Class Meetings to extend the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2019
“Specific Mandate”
the specific mandate sought from the Independent Shareholders at the Previous EGM and the Previous Class Meetings to issue the A Shares under the Revised Proposed Non-public Issuance of A Shares
“Supervisor(s)” the supervisor(s) of the Company
“Supervisory Committee” the supervisory committee of the Company
“Supplemental Notice of AGM”
the supplemental notice of the annual general meeting of the Company dated 10 May 2019, which is set out on pages SAGM-1 to SAGM-3 of this circular
“Takeovers Code”
the Hong Kong Code on Takeovers and Mergers
“trading day(s)”
a day on which the Shanghai Stock Exchange or the Hong Kong Stock Exchange (as the case may be) is open for dealing or trading in securities
“US$” United States dollar, the lawful currency of the United States of America
“%”
per cent

– 9 –

DEFINITIONS

For the purpose of this circular, translations of RMB into HK$ or vice versa have been calculated by using an exchange rate of RMB1.00 equal to HK$1.16. Such exchange rate has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amounts were, may have been or will be exchanged at such rate or any other rates or at all.

* The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

# For identification purpose only.

– 10 –

LETTER FROM THE BOARD

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

Executive Directors : Ms. Sun Yueying Mr. Wang Daxiong Mr. Liu Chong Mr. Xu Hui

Non-executive Directors : Mr. Feng Boming Mr. Huang Jian Mr. Liang Yanfeng

Independent Non-executive Directors : Mr. Cai Hongping Ms. Hai Chi Yuet Mr. Graeme Jack Mr. Lu Jianzhong Mr. Gu Xu Ms. Zhang Weihua

Legal address in the PRC : Room A – 538 International Trade Center China (Shanghai) Pilot Free Trade Zone Shanghai The PRC Principal place of business in the PRC : 5299 Binjiang Dadao Pudong New District Shanghai The PRC Principal place of business in Hong Kong : 50/F, COSCO Tower 183 Queen’s Road Central Hong Kong

10 May 2019

To the Shareholders

Dear Sir/Madam,

(1) 2018 REPORT OF THE BOARD (2) 2018 REPORT OF THE SUPERVISORY COMMITTEE (3) 2018 WORK REPORT OF INDEPENDENT DIRECTORS (4) 2018 FINANCIAL STATEMENTS AND AUDITORS’ REPORT

(5) 2018 ANNUAL REPORT

(9) FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

– 11 –

LETTER FROM THE BOARD

I. INTRODUCTION

Reference is made to (i) the Further Extension Resolutions Announcement; (ii) the Original Notice of AGM; (iii) the Notice of H Shares Class Meeting; and (iv) the Supplemental Notice of AGM.

The purpose of this circular is to provide you with, among other things:

(i) information reasonably necessary to enable you to make an informed decision on whether to vote for or against the resolutions to be proposed at the AGM;
(ii) further details of the Further Extension Resolutions and information regarding the other resolutions to be proposed at the AGM and the New Class Meetings;
(iii) a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Shareholders’ Resolutions Further Extension Resolution; and
(iv) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Shareholders’ Resolutions Further Extension Resolution.

At the AGM, ordinary resolutions will be proposed to approve:

(i) the report of the Board for the year ended 31 December 2018;
(ii) the report of the Supervisory Committee for the year ended 31 December 2018;
(iii) the work report of the independent non-executive Directors for the year ended 31 December 2018;
(iv) the audited financial statements and the auditors’ report of the Group for the year ended 31 December 2018;
(v) the annual report of the Company for the year ended 31 December 2018;
(vi) the proposed profit distribution plan of the Company and the proposed payment of a final dividend of RMB0.033 per Share (inclusive of applicable tax) for the year ended 31 December 2018;
(vii) the remuneration of the Directors and the Supervisors for the year 2019; and
(viii) the re-appointment of the domestic auditor, the internal control auditor and the international auditor of the Company for the year 2019.

– 12 –

LETTER FROM THE BOARD

At the AGM, special resolutions will be proposed to approve:

(i) the Shareholders’ Resolutions Further Extension Resolution;
(ii) the further extension of the validity period of the Authorisation; and
(iii) the Provisions of Guarantees.

At the New Class Meetings, special resolutions will be proposed to approve (i) the Shareholders’ Resolutions Further Extension Resolution; and (ii) the further extension of the validity period of the Authorisation.

II. REPORT OF THE BOARD FOR THE YEAR ENDED 31 DECEMBER 2018

An ordinary resolution will be proposed at the AGM to approve the report of the Board for the year ended 31 December 2018. The full text of the aforesaid report of the Board is set out in the annual report of the Company which has been despatched to the Shareholders on 26 April 2019.

The report of the Board for the year ended 31 December 2018 was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

III. REPORT OF THE SUPERVISORY COMMITTEE FOR THE YEAR ENDED 31 DECEMBER 2018

An ordinary resolution will be proposed at the AGM to approve the report of the Supervisory Committee for the year ended 31 December 2018. The full text of the aforesaid report of the Supervisory Committee is set out in the annual report of the Company which has been despatched to the Shareholders on 26 April 2019.

The report of the Supervisory Committee for the year ended 31 December 2018 was considered and approved by the Supervisory Committee on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

IV. WORK REPORT OF THE INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

An ordinary resolution will be proposed at the AGM to approve the work report of the independent Directors for the year ended 31 December 2018. The full text of the English translation of the aforesaid report of the independent non-executive Directors is set out in Appendix I to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

– 13 –

LETTER FROM THE BOARD

The work report of the independent non-executive Directors for the year ended 31 December 2018 was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

V. AUDITED FINANCIAL STATEMENTS AND AUDITORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

An ordinary resolution will be proposed at the AGM to approve the audited financial statements and the auditors’ report of the Group for the year ended 31 December 2018. The full text of the aforesaid financial statements and auditors’ report is set out in the annual report of the Company which has been despatched to the Shareholders on 26 April 2019.

The audited financial statements and the auditors’ report of the Group for the year ended 31 December 2018 was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

VI. 2018 ANNUAL REPORT

An ordinary resolution will be proposed at the AGM to approve the annual report of the Company for the year ended 31 December 2018. The aforesaid annual report has been despatched to the Shareholders and also published on the website of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the website of the Company (http://development.coscoshipping.com) on 26 April 2019.

The 2018 annual report was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

VII. 2018 PROFIT DISTRIBUTION PLAN

1. Proposed payment of a final dividend

An ordinary resolution will be proposed at the AGM to approve the proposed profit distribution plan of the Company for the year ended 31 December 2018 in accordance with the Articles of Association.

As at 31 December 2018, the retained earnings of the Company calculated under the PRC accounting standards was approximately RMB444 million. The Board proposed the payment of a final dividend of RMB0.033 per share (inclusive of applicable tax) for the year ended 31 December 2018.

– 14 –

LETTER FROM THE BOARD

The final dividend will be paid to A Shareholders and domestic investors investing in H Shares through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect in RMB and to H Shareholders in HK$. The actual amount of final dividend to be distributed and paid to H Shareholders in HK$ will be calculated in accordance with the average middle exchange rate for RMB to HK$ as quoted by the People’s Bank of China for the period of one week before the announcement of the final dividend, being the date of the AGM (subject to the approval by the Shareholders). It is expected that the final dividend in respect of the H Shares will be distributed and paid on or before 2 August 2019.

The 2018 profit distribution plan was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

2. Enterprise income tax

According to the Law on Corporate Income Tax of the People’s Republic of China and the relevant implementation rules which came into effect on 1 January 2008, the Company is required to withhold corporate income tax at the rate of 10% before distributing the final dividends for the year ended 31 December 2018 to non-resident enterprise shareholders as appearing on the Register of Members. Any Shares not registered in the name of an individual person, including HKSCC Nominees Limited, other nominees, trustees or other groups and organizations will be treated as being held by non-resident enterprise shareholders and will therefore be subject to the withholding of the corporate income tax. After receiving the final dividends, non-resident enterprise shareholders may apply, personally or by proxy, to provide materials to the competent taxation authorities proving their eligibility to be the actual beneficiaries under the taxation agreements (arrangement) to enjoy tax refund.

3. Individual income tax

Pursuant to the requirements of Notice of the Ministry of Finance and the State Administration of Taxation on Certain Policies Regarding Individual Income Tax (Cai Shui Zi [1994] No. 020) (《財政部、國家稅務總局關於個人所得稅若干政策問題的通知》(財稅字 [1994]020號)), individual foreigners are exempted from individual income tax on dividends and bonus received from foreign-invested enterprises in the PRC. As the Company is a foreign-invested joint stock limited company, individual H Shareholders whose names appeared on the Register of Members are not required to pay the individual income tax of the PRC.

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LETTER FROM THE BOARD

4. Profit distribution for domestic investors investing in H Shares through ShanghaiHong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect

Shanghai-Hong Kong Stock Connect

For domestic investors (including enterprises and individuals) investing in the H Shares through the Shanghai Stock Exchange, the Shanghai Branch of China Securities Depository and Clearing Corporation Limited, as the nominee of the H Shareholders through Shanghai-Hong Kong Stock Connect, will receive the final dividends paid by the Company and further distribute the final dividends to the relevant investors of H Shares through Shanghai-Hong Kong Stock Connect through its depositary and clearing system.

The final dividends will be paid to investors investing in H Shares through Shanghai-Hong Kong Stock Connect in RMB. Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the Shanghai-Hong Kong Stock Connect (《關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知》) (Caishui [2014] No. 81) issued by the Ministry of Finance of the PRC, the State Administration of Taxation and the CSRC:

(i) for dividends received by mainland individual investors from investing in H shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, the relevant H share listed company shall withhold and pay individual income tax payable by such mainland individual investors at the rate of 20% on their behalf;
(ii) for dividends received by mainland securities investment funds from investing in H shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, individual income tax payable by such mainland securities investment funds shall be withheld and paid by the relevant H share listed company in the same manner as stated in paragraph (i) above; and
(iii) for dividends received by mainland enterprise investors from investing in H shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, the relevant H share listed company shall not withhold or pay the income tax of dividends for mainland enterprise investors and those enterprise investors shall report and pay the income tax themselves.

Shenzhen-Hong Kong Stock Connect

For domestic investors (including enterprises and individuals) investing in the H Shares through the Shenzhen Stock Exchange, the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited, as the nominee of the H Shareholders through Shenzhen-Hong Kong Stock Connect, will receive the final dividends paid by the Company and further distribute the final dividends to the relevant investors of H Shares through Shenzhen-Hong Kong Stock Connect through its depositary and clearing system.

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LETTER FROM THE BOARD

The final dividends will be paid to investors investing in H Shares through Shenzhen-Hong Kong Stock Connect in RMB. Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the Shenzhen-Hong Kong Stock Connect (Cai Shui [2016] No.127) (《關於深港股票市場交易互聯互通機制試點有關稅收政策的通知》(財稅[2016]127 號)):

(i) for dividends received by mainland individual investors from investing in H shares listed on the Hong Kong Stock Exchange through Shenzhen-Hong Kong Stock Connect, the relevant H share listed company shall withhold and pay individual income tax payable by such mainland individual investors at the rate of 20% on their behalf;
(ii) for dividends received by mainland securities investment funds from investing in H shares listed on the Hong Kong Stock Exchange through Shenzhen-Hong Kong Stock Connect, individual income tax payable by such mainland securities investment funds shall be withheld and paid by the relevant H share listed company in the same manner as stated in paragraph (i) above; and
(iii) for dividends received by mainland enterprise investors from investing in H shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, the relevant H share listed company shall not withhold or pay the income tax of dividends for mainland enterprise investors and those enterprise investors shall report and pay the income tax themselves.

The record date, the date of distribution and other arrangements in relation to the payment of the final dividends to domestic investors investing in the H Shares through Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect will be the same as those for the H Shareholders.

5. To qualify for the proposed final dividend for the year ended 31 December 2018

For the purpose of determining the H Shareholders’ entitlement to the proposed final dividend for the year ended 31 December 2018, the Register of Members will be closed from 20 July 2019 to 25 July 2019 (both days inclusive), during which period no transfer of H Shares of the Company will be registered. The H Shareholders whose names appear on the Register of Members at the close of business on 25 July 2019 are entitled to receive the proposed final dividend. In order to qualify for the proposed final dividend, the H Shareholders shall lodge all transfer documents together with the relevant share certificates to Computershare, the Company’s H Share registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 19 July 2019.

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LETTER FROM THE BOARD

VIII. REMUNERATION OF DIRECTORS AND SUPERVISORS FOR THE YEAR 2019

An ordinary resolution will be proposed at the AGM to approve the remuneration of the Directors and the Supervisors for the year 2019, details of which are as follows:

(i) the Directors and the Supervisors nominated by the controlling shareholders shall receive no remuneration from the Company;
(ii) the Directors and the employee Supervisors who are employed as management or non-management personnel of the Company shall receive remuneration after the remuneration proposal of their position has been approved, and shall receive no additional remuneration as a Director or an employee Supervisor; and
(iii) the remuneration standard for the onshore independent Directors and Supervisors is RMB150,000 per year (before tax). The remuneration standard for the offshore independent Directors is RMB300,000 per year (before tax).

The abovementioned resolution in relation to the remuneration of the Directors and Supervisors was considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolution, for the Shareholders’ consideration and approval at the AGM.

IX. RE-APPOINTMENT OF DOMESTIC AUDITOR, INTERNAL CONTROL AUDITOR AND INTERNATIONAL AUDITOR FOR THE YEAR 2019

Each of the following ordinary resolutions will be proposed at the AGM to approve the re-appointment of the domestic auditor, the internal control auditor and the international auditor of the Company, details of which are as follows:

(i) to re-appoint ShineWing Certified Public Accountants as the Company’s domestic auditor for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration;
(ii) to re-appoint ShineWing Certified Public Accountants as the Company’s internal control auditor for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration; and
(iii) to re-appoint Ernst & Young, Hong Kong Certified Public Accountants as the international auditor of the Company for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration.

The abovementioned resolutions in relation to the re-appointment of the domestic auditor, the internal auditor and the international auditor of the Company for the year of 2019 were considered and approved by the Board on 29 March 2019 and will be submitted, by way of ordinary resolutions, for the Shareholders’ consideration and approval at the AGM.

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LETTER FROM THE BOARD

X. FURTHER EXTENSION RESOLUTIONS IN RELATION TO THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

1. Introduction

Reference is made to (1) the announcement of the Company dated 20 April 2017; (2) the A Shares Issuance Circular; (3) the 2017 Poll Results Announcement; (4) the announcements of the Company dated 2 June 2017, 19 July 2017, 30 October 2017 and 16 April 2018; (5) the Adjustment Announcement; (6) the circular of the Company dated 10 May 2018; (7) the 2018 Poll Results Announcement; (8) the overseas regulatory announcements of the Company dated 13 September 2017, 30 October 2017, 16 April 2018 and 13 November 2018; and (9) the Further Extension Resolutions Announcement, in relation to, among other things, (i) the Revised Proposed Non-public Issuance of A Shares; (ii) the COSCO Subscription; and (iii) the Specific Mandate.

As disclosed in the 2017 Poll Results Announcement, resolutions were passed at the Previous EGM and the Previous Class Meetings to approve, among other things, the (i) Revised Proposed Non-public Issuance of A Shares; (ii) the COSCO Subscription; and (iii) the Specific Mandate. As disclosed in the A Shares Issuance Circular:

(a) the resolutions regarding the Revised Proposed Non-public Issuance of A Shares shall be valid for 12 months from the date of the passing of the resolutions at the Previous EGM and the Previous Class Meetings; and
(b) the authorisation to the Board and any person authorised by the Board to handle all matters in connection with the Revised Proposed Non-public Issuance of A Shares shall be valid for 12 months from the date of approval by the Shareholders.

As disclosed in the 2018 Poll Results Announcement, resolutions were passed at the annual general meeting of the Company, the class meeting of the A Shareholders and the class meeting of the H Shareholders held on 31 May 2018 to approve, among other things, the extension of the validity periods of (i) the Shareholders’ Resolutions and (ii) the Authorisation for a period of 12 months, commencing from 5 June 2018.

2. Further Extension Resolutions

(a) for the Independent Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2019; and

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LETTER FROM THE BOARD

(b) for the Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Authorisation for a further period of 12 months, commencing from 5 June 2019.

3. Reasons for the Further Extension Resolutions

Despite the acceptance of the application for the Revised Proposed Non-public Issuance of A Shares by the CSRC on 19 July 2017, as at the Latest Practicable Date, the Company has not yet received the written approval from the CSRC, which is the only outstanding condition precedent of the Revised Proposed Non-public Issuance of A Shares, and it is uncertain whether the written approval from the CSRC will be obtained before the expiry of the validity periods of the Shareholders’ Resolutions and the Authorisation. In addition, after the Company has obtained the written approval from the CSRC, it is expected that the Company will need certain amount of time to handle the administrative matters for the implementation of the Revised Proposed Non-public Issuance of A Shares. Based on the above, the Directors considered that it is in the best interests of the Company and the Shareholders as a whole to extend the validity periods of the Shareholders’ Resolutions and the Authorisation for a further period of 12 months, commencing from 5 June 2019.

Save as disclosed in this circular, all other terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription remain unchanged and in full force and effect.

4. Details of the Revised Proposed Non-public Issuance of A Shares

Class and par value of Shares to be issued:
A Shares with a par value of RMB1.00 each
Method and time of issuance:
The Revised Proposed Non-public Issuance of A Shares will be carried out by way of non-public issue of A Shares to not more than 10 specific target subscribers, including COSCO SHIPPING. The Company will complete the Revised Proposed Non-public Issuance of A Shares within six months after obtaining the approval from the CSRC.
Number of A Shares to A maximum of 2,336,625,000 A Shares will be issued be issued: under the Revised Proposed Non-public Issuance of A Shares, which represents:
(i) approximately 29.46% of the existing issued A Shares and 20% of the existing total issued share capital of the Company as at the Latest Practicable Date; and

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LETTER FROM THE BOARD

(ii) approximately 22.75% of the enlarged issued A Shares and approximately 16.67% of the enlarged total issued share capital of the Company upon completion of the Revised Proposed Non-public Issuance of A Shares.

The Cap will be adjusted if there occurs any ex-right event (such as bonus issue, capitalisation of capital reserves, additional issuance or placing of new Shares) between the Board Resolutions Date and the date of the issuance of A Shares under the Revised Proposed Nonpublic Issuance of A Shares. The formula for the adjustment is set out below:

Q = Q0 x (1 + N1)

where,

(i) Q is the Cap after adjustment for any ex-right event between the Board Resolutions Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares;
(ii) Q0 is the Cap; and
(iii) N1 is the number of (a) Shares being issued upon capitalisation of capital reserves for each Share, and/or (b) Shares being issued upon distribution of share dividend for each Share by the Company between the Board Resolutions Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares.

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LETTER FROM THE BOARD

On 20 April 2017, the Board approved the Revised Proposed Non-public Issuance of A Shares and passed resolutions that the gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares shall be not more than RMB8.6 billion. Notwithstanding any adjustment to the Cap and/or the Benchmark Price:

(i) the maximum gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares as approved by the Board will in any event not exceed RMB8.6 billion; and
(ii) pursuant to the New PRC Regulations, the Cap will in any event not exceed 20% of the total number of total issued share capital of the Company prior to the issuance of the A Shares under the Revised Proposed Non-public Issuance of A Shares.

As disclosed in the 2017 Poll Results Announcement, subject to the Cap, the Shareholders at the Previous EGM and the Previous Class Meetings granted to the Board and its authorised person(s) such authority as necessary for determining the final number of A Shares to be issued based on the negotiations with the sponsor (the lead underwriter) with reference to the amount of proceeds to be raised and the actual amount of subscription received. COSCO SHIPPING undertakes to subscribe for 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. China Shipping will not participate in the Revised Proposed Non-public Issuance of A Shares.

The Revised Proposed Non-public Issuance of A Shares is not underwritten.

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LETTER FROM THE BOARD

Target subscribers:

The target subscribers for the Revised Proposed Nonpublic Issuance of A Shares will be not more than 10 specific subscribers (including COSCO SHIPPING). The target subscribers other than COSCO SHIPPING include securities investment fund management companies, securities companies, trust investment companies, finance companies, insurance institutional investors, qualified foreign institutional investors and other qualified investors in compliance with applicable laws and regulations. Securities investment fund management companies, which subscribe for the A Shares with two or more of the funds managed by them, shall each be taken as one single subscriber. Trust companies may only subscribe for the A Shares with their own funds.

Pursuant to Rules 23 and 24 of the Implementation Rules for the Non-public Issuance of Shares by Listed Companies, where the board resolution of the company has not identified specific target subscribers for the non-public issuance of shares, the sponsor shall issue invitation for subscription to eligible specific target subscribers after obtaining approval documents from the CSRC. The list of eligible specific target subscribers shall include: (i) investors who have submitted a letter of intent after the announcement of the board resolution by the company; (ii) the top 20 shareholders of the company; and (iii) not less than 20 securities investment fund management companies, 10 securities companies and five insurance institutional investors, which are eligible under the “Measures for the Administration of Securities Offering and Underwriting” (《證券發行與承銷管理辦法》).

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LETTER FROM THE BOARD

According to the applicable PRC laws, regulations and regulatory requirements, foreign investors cannot subscribe in non-public issue of A shares of listed companies by way of cash unless they are approved qualified foreign institutional investors or foreign strategic investors. In order to ensure the independence of the H Shareholders, and after considering the applicable PRC laws, regulations and regulatory requirements, the scope of targeted subscribers (other than COSCO SHIPPING and its associates) under the Revised Proposed Non-public Issuance of A Shares will exclude all the H Shareholders (including approved qualified foreign institutional investors, foreign strategic investors and approved PRC investors which could invest in H Shares, including the qualified domestic institutional investors and the southbound trading investors under the Shanghai-Hong Kong Stock Connect). According to the PRC Legal Advisers, the aforementioned scope of targeted subscribers is in compliance with the applicable PRC laws, regulations and regulatory requirements.

The final list of subscribers (other than COSCO SHIPPING) will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the Previous EGM and the Previous Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, apart from the COSCO Subscription Agreement, the Company has not entered into any agreement with any potential subscribers in respect of the Revised Proposed Non-public Issuance of A Shares and will not enter into any such agreement with any potential subscribers prior to the AGM and the Class Meetings. The Company currently expects that, with the exception of COSCO SHIPPING: (i) the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares will only be issued to subscribers who and whose ultimate beneficial owners are third parties independent of the Company and its connected persons, and none of them will become substantial shareholders of the Company nor, together with parties acting in concert with it, would trigger mandatory general offer obligation under the Takeovers Code, upon completion of their respective subscriptions of the A Shares under the Revised Proposed Non-public Issuance of A Shares; and (ii) the subscribers will not be parties acting in concert with COSCO SHIPPING. The Company will comply with all the relevant requirements of the Hong Kong Listing Rules and the Takeovers Code should there be any changes or if otherwise necessary.

Price Determination Date, issue price and pricing principles:

The Price Determination Date of the Revised Proposed Non-public Issuance of A Shares is the first day of the offering period of the Revised Proposed Non-public Issuance of A Shares.

The issue price shall not be lower than the Benchmark Price, being (i) 90% of the Average Trading Price, or (ii) the Floor Price, whichever is higher. The final issue price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the Previous EGM and the Previous Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

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LETTER FROM THE BOARD

Based on the annual report of the Company for the year ended 31 December 2018, the audited net asset value per Share of the Company as at 31 December 2018 was approximately RMB1.54, which represents:

(i) a discount of approximately 45.77% to the closing price of RMB2.84 per A Share as quoted on the Shanghai Stock Exchange as at the Latest Practicable Date;
(ii) a premium of approximately 83.33% to the closing price of HK$0.98 per H Share (equivalent to approximately RMB0.84) as quoted on the Hong Kong Stock Exchange as at the Latest Practicable Date;
(iii) a discount of approximately 50.80% to the average closing price of approximately RMB3.13 per A Share as quoted on the Shanghai Stock Exchange for the last five trading days up to and including the Latest Practicable Date;
(iv) a premium of approximately 71.11% to the average closing price of approximately HK$1.04 per H Share (equivalent to approximately RMB0.90) as quoted on the Hong Kong Stock Exchange for the last five trading days up to and including the Latest Practicable Date;
(v) a discount of approximately 52.17% to the average closing price of approximately RMB3.22 per A Share as quoted on the Shanghai Stock Exchange for the last 10 trading days up to and including the Latest Practicable Date; and
(vi) a premium of approximately 67.39% to the average closing price of approximately HK$1.07 per H Share (equivalent to approximately RMB0.92) as quoted on the Hong Kong Stock Exchange for the last 10 trading days up to and including the Latest Practicable Date.

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LETTER FROM THE BOARD

In the event that the issue price is expected to fall below the audited net asset value per Share of the Company as at 31 December 2018, being approximately RMB1.54, the Company will re-comply with the necessary approval requirements, including, among other things, the Independent Shareholders’ approval under the Hong Kong Listing Rules.

The Benchmark Price will be adjusted if there occurs any ex-right or ex-dividend event (such as distribution of dividend, bonus issue, capitalisation of capital reserves, additional issuance or placing of new Shares) between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of the A Shares. The formula for the adjustment is set out below:

P = (P0 – Div)/(1 + N2)

where,

(i) P is the Benchmark Price after adjustment for any ex-right or ex-dividend event between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares;
(ii) P0 is the Benchmark Price before adjustment;
(iii) Div is the amount of cash dividend per Share in RMB distributed by the Company between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of the A Shares; and
(iv) N2 is the number of (a) Shares being issued upon capitalisation of capital reserves for each Share, and/or (b) Shares being issued upon distribution of share dividend for each Share by the Company between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of the A Shares.

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LETTER FROM THE BOARD

All the target subscribers will subscribe for the A Shares under the Revised Proposed Non-public Issuance of A Shares at the same issue price in cash. COSCO SHIPPING will not participate in the price inquiry exercise for the Revised Proposed Non-public Issuance of A Shares, and will accept the price inquiry results and subscribe for the A Shares at the same issue price as other target subscribers.

As disclosed in the Adjustment Announcement, on 27 October 2017, COSCO SHIPPING has provided an undertaking that in the event that the issue price of the A Shares to be issued under the Revised Proposed Nonpublic Issuance of A Shares cannot be determined through the price inquiry exercise, COSCO SHIPPING will subscribe for the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares at the Benchmark Price and will complete the relevant internal and external approval procedures in compliance with the relevant onshore and offshore regulatory requirements. Please refer to the section headed “X. Further Extension Resolutions in relation to the Revised Proposed Nonpublic Issuance of A Shares – 6. The COSCO SHIPPING Undertaking” for further details of the COSCO SHIPPING Undertaking.

Conditions precedent of the Revised Proposed Non-public Issuance of A Shares:

The Revised Proposed Non-public Issuance of A Shares is conditional upon:

(i) the obtaining of the approval from the Board and the Shareholders at the general meeting and the class meeting of the A Shareholders and the class meeting of the H Shareholders;
(ii) the obtaining of the approval from the SASAC; and
(iii) the obtaining of the approval from the CSRC.

According to the PRC Legal Advisers, none of the conditions above may be waived by any party to the Revised Proposed Non-public Issuance of A Shares and therefore, if any of the conditions above is not satisfied, the Company will not proceed with the Revised Proposed Non-public Issuance of A Shares.

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LETTER FROM THE BOARD

The Revised Proposed Non-public Issuance of A Shares has been approved by the Board on 20 April 2017 and by the Shareholders at the Previous EGM and the Previous Class Meetings on 5 June 2017.

An application for the approval of the Revised Proposed Non-public Issuance of A Shares has been submitted to the SASAC on 5 May 2017 by COSCO SHIPPING. On 2 June 2017, the Company was notified by COSCO SHIPPING that it has received the approval from the SASAC dated 1 June 2017 for the Revised Proposed Non-public Issuance of A Shares.

An application for the approval of the Revised Proposed Non-public Issuance of A Shares has been submitted to the CSRC by the Company on 12 July 2017. On 19 July 2017, the Company received the “Acceptance Notice of the Application for Administrative Permission from the CSRC (No. 171433) (《中國證監會行政許可申請受理書》 (171433號))” issued by the CSRC. As at the Latest Practicable Date, the approval from the CSRC has not been obtained.

Lock-up period:

COSCO SHIPPING shall not transfer the A Shares subscribed under the Revised Proposed Non-public Issuance of A Shares within 36 months from the date of completion of the Revised Proposed Non-public Issuance of A Shares. All other target subscribers shall not transfer the A Shares subscribed under the Revised Proposed Non-public Issuance of A Shares within 12 months from the date of completion of the Revised Proposed Nonpublic Issuance of A Shares.

Place of listing of the A Shares to be issued:

The Company will apply to the Shanghai Stock Exchange for the listing of, and permission to deal in, the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. The A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares can be traded on the Shanghai Stock Exchange upon the expiration of the lock-up period.

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LETTER FROM THE BOARD

Use of proceeds:

The gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares will be not more than RMB8.6 billion (inclusive of the subscription by COSCO SHIPPING pursuant to the COSCO Subscription Agreement). The net proceeds from the Revised Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Revised Proposed Non-public Issuance of A Shares) are intended to be used in the following manner:

(i) as to approximately RMB6.8 billion to be used for the capital injection in FIL, which in turn will be used by FIL to purchase containers during the period of 2017 to 2019 for the purpose of maintaining and expanding container scale and securing competitive position in the market; and
(ii) as to approximately RMB1.8 billion to be used for repayment of corporate bonds (which are held by persons other than the existing Shareholders), the principal terms of which are as follows:

Issuer: The Company Date of first issuance: 12 June 2007 Maturity date: On the date falling upon the expiry of 10 years after the date of first issuance (i.e. 12 June 2017) Principal amount: RMB1.8 billion Interest: 4.51% per annum

As at the Latest Practicable Date, the Company has injected approximately RMB1.9 billion into the capital of FIL with its internal resources for the purpose of procurement of containers by FIL in accordance with its expansion plan and operational needs. The Board considers that the delay in the completion of the Revised Proposed Non-public Issuance of A shares will not have any material impact on the operation and expansion of FIL. In addition, the Company repaid the aforementioned corporate bonds upon maturity by its internal resources. The amount used for the aforementioned capital injection into FIL and repayment of the corporate bonds prior to completion of the Revised Proposed Non-public Issuance of A Shares will be substituted and replenished by the proceeds to be raised from the Revised Proposed Nonpublic Issuance of A Shares in accordance with relevant procedures as required by applicable laws and regulations.

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LETTER FROM THE BOARD

If the actual proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares are less than the aggregate amount of the proceeds as per the above allocation, the Company will make up for the shortfall by utilising its internal resources or other means of financing. The Board may make adjustments as to the specific projects, the order of priority and the specific amount allocated for each project based on the net proceeds actually raised. Before the receipt of the proceeds to be raised from the Revised Proposed Nonpublic Issuance of A Shares, the Company will, depending on the status of the projects, finance these projects by funds raised through other means of financing, which will be substituted by the proceeds raised from the Revised Proposed Non-public Issuance of A Shares in accordance with relevant procedures as required by applicable laws and regulations once the same becomes available.

Specific Mandate to issue The Company will issue the A Shares under the Specific A Shares: Mandate sought from the Independent Shareholders at the Previous EGM and the Previous Class Meetings.
Distribution of profit:
Upon completion of the Revised Proposed Non-public Issuance of A Shares, the existing and new Shareholders will be entitled to share the Company’s cumulative undistributed profits at the time of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares.
Rights of the A Shares to be issued:
The A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares, when fully paid and issued, will rank pari passu in all respects amongst themselves and with the A Shares in issue at the time of the issuance of such A Shares.

For further details of the Revised Proposed Non-public Issuance of A Shares, please refer to the A Shares Issuance Circular.

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LETTER FROM THE BOARD

5. Principal terms of the COSCO Subscription Agreement

Date:

20 April 2017

Parties:

(1) The Company, as the issuer; and
(2) COSCO SHIPPING, as the subscriber.

Number of A Shares to be issued:

The number of A Shares to be issued to COSCO SHIPPING under the COSCO Subscription Agreement shall be 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares.

Subscription price and pricing principles:

The subscription price shall not be lower than the Benchmark Price (subject to adjustments).

The final subscription price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the Previous EGM and the Previous Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

COSCO SHIPPING (including the senior management who are also Directors) will not participate in the pricing exercise for the Revised Proposed Non-public Issuance of A Shares, but will accept results of market inquiry and subscribe for the A Shares at the same subscription price as other target subscribers.

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LETTER FROM THE BOARD

The Benchmark Price will be adjusted if there occurs any ex-right or ex-dividend event (such as distribution of dividend, bonus issue, capitalization of capital reserves, additional issuance or placing of new Shares) between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares. Please refer to the section headed “X. Further Extension Resolutions in relation to the Revised Proposed Non-public Issuance of A Shares – 4. Details of the Revised Proposed Non-public Issuance of A Shares – Price Determination Date, issue price and pricing principles” for further details of the adjustment.

The aggregate subscription price under the COSCO Subscription Agreement will be paid by COSCO SHIPPING to the Company in cash by bank transfer on the specific payment date as confirmed by the sponsor (the lead underwriter) in the notice of payment.

Conditions precedent of the COSCO Subscription:

The COSCO SHIPPING Subscription is conditional upon:

(i) the obtaining of the approval from the Board and the Shareholders at the general meeting and the class meeting of the A Shareholders and the class meeting of the H Shareholders;
(ii) the obtaining of the approval from the SASAC; and
(iii) the obtaining of the approval from the CSRC.

According to the PRC Legal Advisers, none of the conditions above may be waived by either party to the COSCO Subscription Agreement and therefore, if any of the conditions above is not satisfied, the Company will not proceed with the COSCO Subscription.

The COSCO Subscription has been approved by the Board on 20 April 2017 and by the Shareholders at the Previous EGM and the Previous Class Meetings on 5 June 2017.

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LETTER FROM THE BOARD

An application for the approval of the COSCO Subscription has been submitted to the SASAC on 5 May 2017 by COSCO SHIPPING. On 2 June 2017, the Company was notified by COSCO SHIPPING that it has received the approval from the SASAC dated 1 June 2017 for the COSCO Subscription.

An application for the approval of the COSCO Subscription has been submitted to the CSRC by the Company on 12 July 2017. On 19 July 2017, the Company received the “Acceptance Notice of the Application for Administrative Permission from the CSRC (No. 171433) (《中國證監會行政許可申請受理書》 (171433號))” issued by the CSRC. As at the Latest Practicable Date, the approval from the CSRC has not been obtained.

Lock-up period:

Pursuant to the COSCO Subscription Agreement, COSCO SHIPPING shall not transfer the A Shares subscribed by it under the Revised Proposed Nonpublic Issuance of A Shares within 36 months from the date of completion of the Revised Proposed Nonpublic Issuance of A Shares.

Distribution of profit:

Upon the completion of the COSCO Subscription, the existing Shareholders and COSCO SHIPPING will be entitled to share the Company’s cumulative undistributed profits at the time of the issuance of the A Shares under the COSCO Subscription Agreement.

For further details of the COSCO Subscription, please refer to the A Shares Issuance Circular.

6. The COSCO SHIPPING Undertaking

As disclosed in the Adjustment Announcement, on 27 October 2017, COSCO SHIPPING has provided an undertaking that in the event that the issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares cannot be determined through the price inquiry exercise, COSCO SHIPPING will subscribe for the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares at the Benchmark Price and will complete the relevant internal and external approval procedures in compliance with the relevant onshore and offshore regulatory requirements.

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LETTER FROM THE BOARD

On 30 October 2017, in accordance with the authority granted to the Board by the Shareholders at the Previous EGM and the Previous Class Meetings, the Board has approved the following adjustment to the Revised Proposed Non-public Issuance of A Shares in light of the aforementioned COSCO SHIPPING Undertaking:

In the event that the issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares cannot be determined through the price inquiry exercise, COSCO SHIPPING will subscribe for the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares at the Benchmark Price and will complete the relevant internal and external approval procedures in compliance with the relevant onshore and offshore regulatory requirements.

The abovementioned adjustment to the Revised Proposed Non-public Issuance of A Shares is reflected in the “Proposal in respect of the Non-public Issuance of A Shares (Second Revision)”, the full text of which is set out in the overseas regulatory announcement of the Company dated 30 October 2017.

In the event that the issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares cannot be determined through the price inquiry exercise and the Company proceeds with the Revised Proposed Non-public Issuance of A Shares, the Company will determine the number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares and will comply with all the relevant requirements of all applicable laws and regulations, including the Hong Kong Listing Rules and the Takeovers Code.

7. Effects on the shareholding structure of the Company

As at the Latest Practicable Date, the total issued share capital of the Company is 11,683,125,000 Shares, which comprises 7,932,125,000 A Shares and 3,751,000,000 H Shares.

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LETTER FROM THE BOARD

The shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Revised Proposed Non-public Issuance of A Shares (assuming that (a) the maximum number of A Shares up to the Cap is being issued under the Revised Proposed Non-public Issuance of A Shares; (b) COSCO SHIPPING subscribes for 50% of the maximum number of A Shares being issued; and (c) there is no change in the total issued share capital of the Company since the Latest Practicable Date save for the issue of the A Shares pursuant to the Revised Proposed Non-public Issuance of A Shares) is as set out below:

Name of Shareholder Class of Shares COSCO SHIPPING and its associates (Note 1) A H Sub-total Public A Shareholders A Treasury shares (Note 2) A Public H Shareholders H Total	Shareholding as at the Latest Practicable Date Number of Shares Approximate percentage of the issued A Share capital Approximate percentage of the total issued share capital (%) (%) 4,458,195,175 56.20 38.16 100,944,000 – 0.86 4,559,139,175 – 39.02 3,428,229,888 43.22 29.34 45,699,937 0.58 0.39 3,650,056,000 – 31.24 11,683,125,000 100.00 100.00	Shareholding immediately after completion of the Revised Proposed Non-public Issuance of A Shares Number of Shares Approximate percentage of the issued A Share capital Approximate percentage of the total issued share capital (%) (%) 5,626,507,675 54.79 40.13 100,944,000 – 0.72 5,727,451,675 – 40.85 4,596,542,388 44.96 32.79 45,699,937 0.45 0.33 3,650,056,000 – 26.04 14,019,750,000 100.00 100.00	Shareholding immediately after completion of the Revised Proposed Non-public Issuance of A Shares Number of Shares Approximate percentage of the issued A Share capital Approximate percentage of the total issued share capital (%) (%) 5,626,507,675 54.79 40.13 100,944,000 – 0.72 5,727,451,675 – 40.85 4,596,542,388 44.96 32.79 45,699,937 0.45 0.33 3,650,056,000 – 26.04 14,019,750,000 100.00 100.00
			40.85 32.79 0.33 26.04
			100.00

Notes:

As at the Latest Practicable Date, COSCO SHIPPING does not directly hold any Shares. An aggregate of 4,458,195,175 A Shares is held by China Shipping, a wholly-owned subsidiary of COSCO SHIPPING, and an aggregate of 100,944,000 H Shares is held by Ocean Fortune Investment Limited, an indirectly wholly-owned subsidiary of COSCO SHIPPING.
The Company repurchased 30,007,437 A Shares and 15,692,500 A Shares on 27 February 2019 and 28 February 2019, respectively, and all of such repurchased A Shares were held as treasury shares for the purpose of future implementation of an A Share equity incentive scheme of the Company as at the Latest Practicable Date.

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LETTER FROM THE BOARD

8. Equity fund raising activities in the past twelve months

The Company has not conducted any equity fund raising exercises during the 12 months immediately preceding the Latest Practicable Date.

9. Reasons for and benefits of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription

(a) The Revised Proposed Non-public Issuance of A Shares

The Board considers that the Revised Proposed Non-public Issuance of A Shares is conducive to the comprehensive and sustainable development of the Company’s business and would lay a strong foundation for the Company’s transformation from a container liner operator into an integrated financial services platform with leasing businesses such as vessel leasing, container leasing and non-shipping leasing as core and shipping financing as feature.

Pursuant to the Implementation Rules for the Non-public Issuance of Shares by Listed Companies, where the board of a listed company resolves to issue shares by way of non-public issuance, the board resolution shall specify, among other things, the maximum proceeds to be raised from the non-public issuance and the specific use of the proceeds. Accordingly, on 20 April 2017, the Board has approved the Revised Proposed Non-public Issuance of A Shares and passed resolutions that the gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares shall be not more than RMB8.6 billion and that the net proceeds from the Revised Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Revised Proposed Non-public Issuance of A Shares) are intended to be used (i) as to approximately RMB6.8 billion for the capital injection in FIL; and (ii) as to approximately RMB1.8 billion for the repayment of the Company’s corporate bonds (which were held by persons other than the existing Shareholders). Please refer to the section headed “X. Further Extension Resolutions in relation to the Revised Proposed Non-public Issuance of A Shares – 4. Details of the Revised Proposed Non-public Issuance of A Shares – Use of Proceeds” for further details of the use of proceeds.

The capital injection of approximately RMB6.8 billion in FIL will be used by FIL to purchase containers during the period of 2017 to 2019 for the purpose of maintaining and expanding container scale and securing competitive position in the market. The aforementioned capital injection in FIL is in line with the business strategy of the Company and would facilitate the transformation of the business and future development of the Company as an integrated financial services platform with diversified leasing businesses.

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LETTER FROM THE BOARD

The long term capital raised from the Revised Proposed Non-public Issuance of A Shares would also optimize the Company’s capital structure and reduce the Company’s debt-to-asset ratio, which enables the Company to obtain further debt financing and lower the costs of its debt financing.

Based on the audited consolidated financial statements of the Group for the year ended 31 December 2018 as set out in the annual results announcement of the Group for the year ended 31 December 2018, the debt-to-asset ratio and the liquid ratio of the Company as at 31 December 2018 was 86.91% and 0.55, respectively. Upon completion of the Revised Proposed Non-public Issuance of A Shares, the debt-to-asset ratio of the Company will be decreased from 86.91% to 81.81% and the liquid ratio will be increased from 0.55 to 0.71 (without taking into account the costs of Revised Proposed Non-public Issuance of A Shares).

Apart from the Revised Proposed Non-public Issuance of A Shares, as disclosed in the circular of the Company dated 10 June 2016 and as approved by the Shareholders at the annual general meeting of the Company held on 30 June 2016, the Company proposed to apply to the National Association of Financial Market Institutional Investors for registration and issuance of mid-term notes of not exceeding RMB5 billion and super short-term financing bills of not exceeding RMB10 billion and on 28 September 2018, the National Association of Financial Market Institutional Investors approved the registration and issuance by the Company of mid-term notes of not exceeding RMB5 billion and super short-term financing bills of not exceeding RMB8 billion. The mid-term notes and the super short-term financing bills are intended to be used for repayment of bank loans, optimizing debt financing structure and/or replenish the liquidity for the needs of daily production and operation of the Company. As at the Latest Practicable Date, mid-term notes and super short-term financing bills of RMB3.5 billion and RMB2.5 billion, respectively, have been issued by the Company. In addition, as disclosed in the announcements of the Company dated 28 September 2017, 12 February 2018, 25 July 2018 and 7 December 2018, COSCO SHIPPING Leasing proposed to issue asset-backed notes and securities in the aggregate principal amount of not more than RMB2,985.34 million, RMB2,022 million, RMB2,331.8 million and RMB2,455 million, respectively, the proceeds of which will be used for the business development, the repayment of loans of COSCO SHIPPING Leasing and project investments. As at the Latest Practicable Date, the aforementioned issuance of the asset-backed notes and securities by COSCO SHIPPING Leasing have been completed. Further, as disclosed in the announcement of the Company dated 3 August 2018 and the circular of the Company dated 4 September 2018 and as approved by the Shareholders at the extraordinary general meeting of the Company held on 19 September 2018, the Company proposed to issue renewable corporate bonds in the aggregate principal amount of not more than RMB6 billion in one or multiple tranches to qualified investors. As at the Latest Practicable Date, renewable corporate bonds in the principal amount of RMB3.5 billion have been issued by the Company.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, save for (i) the Revised Proposed Non-public Issuance of A Shares, the proceeds of which will be used for the specific purposes of the capital injection in FIL and the repayment of the corporate bonds; (ii) the remaining portion of the mid-term notes and the super short-term financing bills to be issued by the Company; and (iii) the remaining portion of the renewable corporate bonds to be issued by the Company, the Company does not have any other specific fund raising plans for the next 12 months from the Latest Practicable Date.

(b) The COSCO Subscription

As disclosed in the section headed “X. Further Extension Resolutions in relation to the Revised Proposed Non-public Issuance of A Shares – 5. Principal terms of the COSCO Subscription Agreement”, COSCO SHIPPING has undertaken to subscribe for 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance. The COSCO Subscription demonstrates the confidence COSCO SHIPPING places in the Company and COSCO SHIPPING’s support to the development and transformation of the business of the Company.

(c) Alternative financing

The Company has considered other fund raising methods such as obtaining debt financing and conducting rights issue or public offering to satisfy the funding needs of the Group.

As disclosed in the annual report of the Group for the year ended 31 December 2018, the Group’s gearing ratio, being the ratio of net debts over Shareholders’ equity, was 533% as at 31 December 2018. The Directors considered that taking into account the current gearing level of the Group, raising funds by equity financing with interest-free nature could reduce the gearing ratio of the Group. The Directors therefore concluded that equity financing can improve the leverage position of the Group as compared to debt financing.

Given that the issued H Share capital of the Company is significantly lower than the issued A Share capital of the Company, the expected size of the funds to be raised by rights issue, open offer or placement of H Shares will be less than approximately RMB8.6 billion. Based on the closing prices of the H Shares and the A Shares on the Latest Practicable Date, the market capitalisation of H Shares and A Shares was approximately HK$3.68 billion (equivalent to approximately RMB3.17 billion) and RMB22.53 billion, representing approximately 12.33% and 87.67% of the total market capitalisation of the Company of approximately RMB25.70 billion, respectively.

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LETTER FROM THE BOARD

In addition, as there is a significant premium of the price of A Shares trading on the Shanghai Stock Exchange over the price of H Shares trading on the Hong Kong Stock Exchange, if the Company were to conduct a fund raising exercise by issuance of new H Shares with a proceed of RMB8.6 billion, assuming that an equivalent pricing basis is adopted to determine the benchmark price for the H Share issuance (that is, being (i) not lower than 90% of the average trading price of the H Shares during the 20 trading days immediately preceding the Price Determination Date or (ii) the Floor Price, whichever is higher), the number of H Shares to be issued will be substantially more than that required for the Revised Proposed Non-public Issuance of A Shares. This would lead to a greater dilution effect on the shareholding of the existing Shareholders and would not be in the interests of the Independent Shareholders.

Having considered that (i) equity financing can improve the leverage position of the Group as compared to debt financing; (ii) the issued H Share capital of the Company is significantly lower than the issued A Share capital of the Company; and (iii) the greater dilution effect on the shareholding of the existing Shareholders if the Company were to conduct a fund raising exercise by issuance of new H Shares with a proceed of RMB8.6 billion with the same pricing basis as the Revised Proposed Non-public Issuance of A Shares, the Directors considered that it is in the interests of the Company and the Shareholders as a whole to raise funds by the Revised Proposed Non-public Issuance of A Shares (including the subscription of A Shares by COSCO SHIPPING).

10. Authorisation granted to the Board to handle all matters in connections with the Revised Proposed Non-public Issuance of A Shares

The validity period of the Authorisation will expire on 4 June 2019. In order to ensure effective and efficient implementation of the Revised Proposed Non-public Issuance of A Shares, the Board proposes to extend the validity period of the authorisation to the Board and any person authorised by the Board to handle all matters in connection with the Revised Proposed Non-public Issuance of A Shares set out below for a further period of 12 months, commencing from 5 June 2019:

(i) authorise the Board to formulate and implement specific proposals for the Revised Proposed Non-public Issuance of A Shares in accordance with the proposals as approved by the Shareholders and specific circumstances at the time of issuance, including but not limited to, determining the target subscribers, timing of the issuance, the commencement date and end date of the issuance, the subscription price, method of subscription, adjusting the Cap as a result of ex-right events (including bonus issue, capitalisation of capital reserves, additional issuance or placing of new Shares) between Board Resolutions Date and the date of the issuance of the A Shares and cancellation of repurchased Shares and determining other matters relating to determination of the subscription price;

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LETTER FROM THE BOARD

(ii) authorise the Board to supplement, review and adjust the specific proposals for the Revised Proposed Non-public Issuance of A Shares in accordance with the requirements of relevant laws and regulations, changes in polices, changes in market conditions and requirements of relevant authorities;
(iii) authorise the Board to handle the filing and registration matters relating to the Revised Proposed Non-public Issuance of A Shares, prepare, revise and submit the application materials for to the Revised Proposed Non-public Issuance of A Shares in accordance with the requirements of the relevant securities regulatory authorities;
(iv) authorise the Board to determine and engage intermediaries such as the sponsor (lead underwriter), revise, supplement, sign, submit, report and execute all agreements and documents relating to the Revised Proposed Non-public Issuance of A Shares, including without limited to, underwriting and sponsoring agreement, subscription agreement, material contracts involved in implementing the investment projects with the proceeds raised;
(v) authorise the Board to set up a designated account for the Revised Proposed Non-public Issuance of A Shares which shall be used solely for depositing, management and use of the proceeds raised (and for no other purposes), and execute tripartite custodian agreement with the sponsor and the relevant commercial bank within one month after the proceeds become available;
(vi) authorise the Board to increase the registered capital of the Company, amend the Articles of Association and handle relevant registration and filing procedures in accordance with the results of the Revised Proposed Non-public Issuance of A Shares;
(vii) authorise the Board to handle registration, lock-up and listing of the A Shares with the Shanghai Stock Exchange and the Shanghai branch of China Securities Depository and Clearing Co., Ltd. upon completion of the Revised Proposed Non-public Issuance of A Shares;
(viii) authorise the Board to make adjustments to the specific arrangement on the use of the proceeds raised within the scope permitted in the Shareholders’ resolutions;
(ix) if there is any new requirement under the law or by the securities regulatory authorities or if there is any change to the market condition, authorize the Board to adjust the Revised Proposed Non-public Issuance of A Shares and the use of proceeds raised and continue to handle matters relating to the Revised Proposed Non-public Issuance of A Shares (other than those matters requiring Shareholders’ approval in accordance with the relevant laws, regulations or Articles of Association or as requested by the regulatory authorities) in accordance with the requirements of relevant laws and regulations, and by relevant governmental authorities and securities regulatory authorities;

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LETTER FROM THE BOARD

(x) authorise the Board to handle the filing, listing and other relevant matters relating to the Revised Proposed Non-public Issuance of A Shares within the scope permitted under the laws, regulations, normative documents and the Articles of Association;
(xi) authorise the Board to determine whether to continue with the Revised Proposed Non-public Issuance of A Shares in the event of material change in market condition, polices or laws;
(xii) authorise the Board to handle all other matters in connection with the Revised Proposed Non-public Issuance of A Shares not listed in (i) to (xi) above; and
(xiii) authorise the Board to authorise the chairman of the Company or any person authorised by him/her to exercise the authority granted to the Board herein (provided that the Board is duly authorised for the above matters), unless otherwise provided under the laws, regulations, normative documents and the Articles of Association.

11. Implications under the Hong Kong Listing Rules

As at the Latest Practicable Date, COSCO SHIPPING and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, COSCO SHIPPING is a controlling shareholder of the Company and therefore a connected person of the Company.

Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, and Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng, all being non-executive Directors, hold directorship(s) or act as senior management in COSCO SHIPPING and/or its associates, and were nominated by COSCO SHIPPING to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng have therefore abstained from voting on the relevant Board resolutions approving the Shareholders’ Resolutions Further Extension Resolution. Save as aforementioned, none of the other Directors has a material interest in any of the Shareholders’ Resolutions Further Extension Resolution and hence no other Director has abstained from voting on such Board resolution.

12. Independent Board Committee and Independent Financial Adviser

The Independent Board Committee has been formed in accordance with Chapter 14A of the Hong Kong Listing Rules to advise the Independent Shareholders on the Shareholders’ Resolutions Further Extension Resolution. In this connection, the Independent Financial Adviser has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution.

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LETTER FROM THE BOARD

13. Proposal in relation to the Further Extension Resolutions

The Further Extension Resolutions will be submitted, by way of special resolutions, for the Independent Shareholders’ or the Shareholders’ (as the case may be) consideration and approval at the AGM and the New Class Meetings.

XI. PROVISIONS OF GUARANTEES

As disclosed in the Overseas Regulatory Announcement, on 6 May 2019, the Board resolved that the Company, CS Investment and Oriental Fleet shall provide the following guarantees for the Guaranteed Wholly-owned Subsidiaries and the Company in the aggregate amounts of not exceeding RMB27.9 billion and US$4 billion during the period from 1 July 2019 to 30 June 2020 and the relevant authorisation shall be given to the Board to consider and approve each guarantee within the approved cap, including but not limited to the manner, type, term and amount of the guarantees:

(i) the provision of guarantee for COSCO SHIPPING HK by the Company in the amount of not exceeding US$2.8 billion;
(ii) the provision of guarantee for the Company by CS Investment in the amount of not exceeding RMB5 billion;
(iii) the provision of guarantee for COSCO SHIPPING Leasing by the Company in the amount of not exceeding RMB11 billion;
(iv) the provision of guarantee for COSCO SHIPPING Leasing by CS Investment in the amount of not exceeding RMB3.5 billion
(v) the provision of guarantee for Haihui Commercial by the Company in the amount of not exceeding RMB1 billion;
(vi) the provision of guarantee for COSCO SHIPPING Tianjin by the Company in the amount of not exceeding RMB2.5 billion;
(vii) the provision of guarantee for Florens Maritime by the Company in the amount of not exceeding US$500 million;
(viii) the provision of guarantee for Oriental Fleet by the Company in the amount of not exceeding US$400 million;
(ix) the provision of guarantee for DFIC Jinzhou by the Company in the amount of not exceeding RMB600 million;
(x) the provision of guarantee for DFIC Guangzhou by the Company in the amount of not exceeding RMB1 billion;

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LETTER FROM THE BOARD

(xi) the provision of guarantee for DFIC Lianyungang by the Company in the amount of not exceeding RMB800 million;
(xii) the provision of guarantee for DFIC HK by CS Investment in the amount of not exceeding US$200 million;
(xiii) the provision of guarantee for Oriental Fleet LNG 01 by Oriental Fleet in the amount of not exceeding US$100 million; and
(xiv) the provision of guarantee for Shanghai Universal by the Company in the amount of not exceeding RMB2.5 billion.

Pursuant to the relevant requirements under relevant PRC laws and regulations and the Articles of Association, the Provisions of Guarantees shall be subject to the approval of the Shareholders.

The resolution in relation to the Provisions of Guarantees will be submitted, by way of special resolution, for the Shareholders’ consideration and approval at the AGM.

XII. THE AGM AND NEW CLASS MEETINGS

The AGM will be held at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the PRC, for the Shareholders to consider and, if thought fit, approve the aforesaid resolutions. The abovementioned resolutions will be proposed by way of ordinary and special resolutions at the AGM to be approved by the Shareholders. The voting in relation to such resolutions will be conducted by way of poll.

The New Class Meetings will be held at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the PRC, for the Shareholders to consider and, if thought fit, approve the Further Extension Resolutions. The Further Extension Resolutions will be proposed by way of special resolutions at the New Class Meetings to be approved by the Shareholders. The voting in relation to such resolutions will be conducted by way of poll.

The Original Notice of AGM and the Notice of H Shares Class Meeting were despatched to the Shareholders on 18 April 2019, which are reproduced on pages AGM-1 to AGM-4 and pages HCM-1 to HCM-3 of this circular, respectively. The Supplemental Notice of AGM, which contains the additional resolution to be proposed at the AGM, is set out on pages SAGM-1 to SAGM-3 of this circular.

COSCO SHIPPING and its associates and those who are involved or interested in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate will be required to abstain from voting on the Shareholders’ Resolutions Further Extension Resolution to be proposed at the AGM and the New Class Meetings. Save as

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LETTER FROM THE BOARD

aforementioned, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate and therefore no other Shareholder is required to abstain from voting on the relevant resolutions to be proposed at the AGM and the New Class Meetings.

A Shareholder who has not yet lodged the Original Form of Proxy in accordance with the instructions printed thereon with Computershare, is requested to complete and return the Revised Form of Proxy in accordance with the instructions printed thereon to Computershare not less than 24 hours before the time for holding the AGM or any adjournment thereof, if he or she wishes to appoint proxies to attend the AGM on his or her behalf. In this case, the Original Form of Proxy should not be lodged to Computershare.

A Shareholder who has already lodged the Original Form of Proxy in accordance with the instructions printed thereon with Computershare should note the following:

(i) If no Revised Form of Proxy is lodged with Computershare, the Original Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder if correctly completed. The proxy appointed under the Original Form of Proxy will be entitled to vote in his or her discretion or abstain from voting on any resolutions properly put to the AGM, other than those referred to in the Original Notice of AGM and the Original Form of Proxy, including the additional resolutions set out in the Supplemental Notice of AGM.
(ii) If the Revised Form of Proxy is lodged with Computershare in accordance with the instructions printed thereon not less than 24 hours before the time for holding the AGM or any adjournment thereof, 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 correctly completed.
(iii) If the Revised Form of Proxy is lodged after 24 hours before the time for holding the AGM or any adjournment thereof, the Revised Form of Proxy will be deemed invalid. It will not revoke the Original Form of Proxy previously lodged by the Shareholder. The Original Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder if correctly completed. The proxy appointed under the Original Form of Proxy will be entitled to vote in his or her discretion or abstain from voting on any resolutions properly put to the AGM, other than those referred to in the Original Notice of AGM and the Original Form of Proxy, including the additional resolutions set out in the Supplemental Notice of AGM.

Completion and return of the Original Form of Proxy and/or Revised Form of Proxy will not preclude a Shareholder from attending and voting in person at the AGM or at any adjourned meeting should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

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LETTER FROM THE BOARD

If you intend to attend the AGM in person or by proxy, you are required to complete and return the reply slip to Directorate Secretary Office of the Company not later 14 May 2019.

XIII. RECOMMENDATION

Messis Capital Limited has been appointed by the Company as the Independent Financial Adviser with the approval of the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution.

The Independent Board Committee, after considering the advice from the Independent Financial Adviser, is of the view that while the Shareholders’ Resolutions Further Extension Resolution is not conducted in the ordinary and usual course of business of the Group, the terms of the Shareholders’ Resolutions Further Extension Resolution are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the Shareholders’ Resolutions Further Extension Resolution to be proposed at the AGM.

The Board considers that the other resolutions mentioned above are in the best interest of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of these resolutions to be proposed at the AGM.

XIV. FURTHER INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 47 to 48 of this circular, containing its recommendation in respect of the Shareholders’ Resolutions Further Extension Resolution and (ii) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on pages 49 to 58 of this circular, containing its recommendation in respect of the Shareholders’ Resolutions Further Extension Resolution.

The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote on the resolutions approving the Shareholders’ Resolutions Further Extension Resolution.

By order of the Board of COSCO SHIPPING Development Co., Ltd. Yu Zhen

Company Secretary

* The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

For identification purpose only.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

10 May 2019

To the Independent Shareholders

Dear Sir or Madam,

FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

We refer to the circular of the Company dated 10 May 2019 (the “ Circular ”), of which this letter forms part. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution, details of which are set out in the “Letter from the Board” in the Circular. Messis Capital Limited has been appointed as the Independent Financial Adviser with our approval to advise the Independent Board Committee and the Independent Shareholders in this regards.

We wish to draw your attention to the “Letter from the Board” set out on pages 11 to 46 of the Circular and the “Letter from the Independent Financial Adviser” set out on pages 49 to 58 of the Circular and the additional information set out in the appendices of this Circular.

Having taken into account, among other things, the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in the “Letter from the Independent Financial Adviser” in the Circular, we concur with the view of the Independent Financial Adviser and consider that while the Shareholders’ Resolutions Further Extension Resolution is not conducted in the ordinary and usual course of business of the Group, the terms of the Shareholders’ Resolutions Further Extension Resolution are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend you to vote in favour of the Shareholders’ Resolutions Further Extension Resolution to be proposed at the AGM.

Yours faithfully, Independent Board Committee Mr. Cai Hongping Ms. Hai Chi Yuet Mr. Graeme Jack Mr. Lu Jianzhong Mr. Gu Xu Ms. Zhang Weihua Independent Non-executive Directors

The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution.

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10 May 2019

To: The Independent Board Committee and the Independent Shareholders of COSCO SHIPPING Development Co., Ltd.*

Dear Sir or Madam,

(1) FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND

(2) FURTHER EXTENSION OF VALIDITY PERIOD OF AUTHORISATION TO THE BOARD AND ANY PERSON AUTHORISED BY THE BOARD TO HANDLE ALL MATTERS IN CONNECTION WITH THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Shareholders’ Resolutions Further Extension Resolution, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company to the Shareholders dated 10 May 2019 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

References are made to (i) the announcement of the Company dated 20 April 2017; (ii) the A Shares Issuance Circular; (iii) the 2017 Poll Results Announcement; (iv) the announcements of the Company dated 2 June 2017, 19 July 2017, 30 October 2017 and 16 April 2018; (v) the Adjustment Announcement; (vi) the circular of the Company dated 10 May 2018; (vii) the 2018 Poll Results Announcement; (viii) the overseas regulatory announcements of the Company dated 13 September 2017, 30 October 2017, 16 April 2018 and 13 November 2018 and (ix) the Further Extension Resolutions Announcement, in relation to, among other things, (a) the Revised Proposed Non-public Issuance of A Shares; (b) the COSCO Subscription; and (c) the Specific Mandate.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As disclosed in the 2018 Poll Results Announcement, resolutions were passed at the annual general meeting of the Company, the class meeting of the A Shareholders and the class meeting of the H Shareholders held on 31 May 2018 to approve, among other things, the extension of the validity period of (i) the Shareholders’ Resolutions and (ii) the Authorisation for a period of 12 months, commencing from 5 June 2018.

As at the Latest Practicable Date, the CSRC was still in the process of reviewing the application of the Company for the Revised Proposed Non-public Issuance of A Shares. As the validity periods of (i) the Shareholders’ Resolutions and (ii) the Authorisation will expire on 4 June 2019, the Board proposes to convene the New Class Meetings and seek the approval of the Independent Shareholders or the Shareholders (as the case maybe) at the AGM: (i) for the Independent Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2019; and (ii) for the Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Authorisation for a further period of 12 months, commencing from 5 June 2019. Save as disclosed above, all other terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription remain unchanged and in full force and effect.

As disclosed in the A Shares Issuance Circular, the entering into the COSCO Subscription Agreement by the Company and COSCO SHIPPING (being a connected person as at the date of the COSCO Subscription Agreement) constituted a connected transaction under Chapter 14A of Listing Rules. As at the Latest Practicable Date, COSCO SHIPPING and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company, and therefore, a connected person of the Company. Accordingly, the Further Extension Resolutions is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.

Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, and Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng, all being non-executive Directors, hold directorship(s) or act as senior management in COSCO SHIPPING and/or its associates, were nominated by COSCO SHIPPING to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng have therefore abstained from voting on the relevant Board resolution approving the Shareholders’ Resolutions Further Extension Resolution. Save as aforementioned, none of the other Directors has a material interest in any of the Shareholders’ Resolutions Further Extension Resolution and hence no other Director has abstained from voting on such Board resolution.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee (comprising all independent non-executive Directors namely Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong, Mr. Gu Xu and Ms. Zhang Weihua) has been formed in accordance with Chapter 14A of the Hong Kong Listing Rules to advise the Independent Shareholders on the Shareholders’ Resolutions Further Extension Resolution. We, Messis Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these regards and to give our opinion for the Independent Board Committee’s consideration when making their recommendations to the Independent Shareholders.

As at the Latest Practicable Date, we did not have any relationship with or interest in the Company and any other parties that could reasonably be regarded as relevant to our independence. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser, no arrangement exists whereby we will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. During the past two years, we were appointed as an independent financial adviser for the Company on four occasions, details of which are set out in the Company’s circulars dated (i) 19 May 2017 in relation to the Revised Proposed Non-Public Issuance of A Shares and COSCO Subscription; (ii) 31 May 2017 in relation to the discloseable and connected transaction for the assignment and novation of shipbuilding contracts; (iii) 10 May 2018 in relation to the extension of validity period of resolutions regarding Revised Proposed Non-public Issuance of A Shares; and (iv) 4 September 2018 in relation to the continuing connected transactions for the revision of annual caps for master containers services agreement. During the past two years, we were also appointed as an independent financial adviser for COSCO SHIPPING Energy Transportation Co., Ltd (stock code:1138), a connected person of the Company, on three occasions, details of which are set out in its circulars dated (i) 4 December 2017 in relation to the proposed non-public issuance of A shares and proposed subscription of A shares by COSCO SHIPPING; (ii) 30 November 2018 in relation to the extension of validity period of shareholders’ resolutions relating to the proposed non-public issuance of A shares and; (iii) 30 November 2018 in relation to major and continuing connected transactions. Notwithstanding the above, the previous engagements with the Company and its connected person would not affect our independence from the Company and we are independent from the Company pursuant to Rule 13.84 of the Hong Kong Listing Rules, in particular that we did not serve as a financial adviser to (i) the Company, (ii) COSCO SHIPPING or its subsidiaries, and (ii) any core connected person of the Company within 2 years prior to 29 April 2019, being date of making our independence declaration to the Hong Kong Stock Exchange pursuant to Rule 13.85(1) of the Hong Kong Listing Rules.

BASIS OF OUR OPINION

In arriving at our recommendations, we have relied on the statements, information and representations contained in the Circular and the information and representations provided to us by the Company, the Directors and the management of the Company. We have assumed that all information, representations and opinions contained or referred to in the Circular and all information and representations which have been provided by the Company, the Directors and the management of the Company for which they are solely and wholly responsible, are true and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

accurate at the time they were made and will continue to be accurate as at the Latest Practicable Date. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the management of the Company.

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

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any material facts or circumstances which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Company, the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group and any parties in relation to the Shareholders’ Resolutions Further Extension Resolution.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Shareholders’ Resolutions Further Extension Resolution. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinions and recommendations, we have taken into consideration the following principal factors and reasons:

1. Background and Reasons for Further Extension Resolutions

The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Hong Kong Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange. The Group is principally engaged in providing integrated financial services with diversified leasing businesses such as vessel leasing, container leasing and non-shipping finance leasing, supply chain finance, shipping insurance, logistic infrastructure investment and other financial assets investment services.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

COSCO SHIPPING is a company incorporated under the laws of the PRC, and is a state-owned enterprise wholly-owned and controlled by SASAC. The scope of business of COSCO SHIPPING includes international shipping, ancillary business in international maritime transportation, import and export of goods and technologies, international freight agency business, leasing of self-owned vessels, sales of vessels, containers and steel and maritime engineering.

We refer to the A Shares Issuance Circular and noted that the conditions precedent to the Revised Proposed Non-public Issuance of A Shares and COSCO Subscription are obtaining the approval from (i) the Board and the Shareholders at the Previous EGM and the Previous Class Meetings; (ii) the SASAC and (iii) the CSRC. We have (a) enquired the management of the Company and (b) reviewed the announcements made by the Company regarding the progress of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription. We note from the announcement of the Company dated 2 June 2017 that SASAC had approved the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription. Further, according to the 2017 Poll Results Announcement, the Revised Proposed Non-public Issuance of A Shares had been approved by the Board on 20 April 2017 and has been approved by the Shareholders at the Previous EGM and the Previous Classing Meetings on 5 June 2017.

On 19 July 2017, the Company announced that the Company received the “Acceptance Notice of the Application for Administrative Permission from the CSRC (No. 171433) (《中國證監會行政許可申請受理書》(171433號))” issued by the CSRC and pursuant to which, the CSRC considered that the application materials were complete and in compliance with the statutory form and therefore decided to accept the application for further processing. The Company made another two announcements on 13 September 2017 and 30 October 2017 that the Company received the “Notice Regarding CSRC’s First Feedback on the Review of Administrative Permission Items” (No.171433) (《中國證監會行政許可項目審查一次反饋意見通知書》(171433號)) from the CSRC on 13 September 2017, and in response to the comments raised therein, on 27 October 2017, COSCO SHIPPING had provided an undertaking that in the event that the issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares could not be determined through the price inquiry exercise, COSCO SHIPPING would subscribe for the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares at the Benchmark Price and would complete the relevant internal and external approval procedures in compliance with the relevant onshore and offshore regulatory requirements. As such, on 30 October 2017, the Company in accordance with the authority granted to the Board by the Shareholders at the Previous EGM and the Previous Class Meetings, had approved the above adjustment to the Revised Proposed Non-public Issuance of A Shares in light of the COSCO SHIPPING Undertaking.

As disclosed in the circular of the Company dated 10 May 2018, as the approval from the CSRC was the only outstanding condition precedent to the Revised Proposed Non-public Issuance of A Shares at the material time, it was proposed that, for the Independent Shareholders to consider and, if thought fit, approve the special resolution to extend the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2018; and for the Shareholders to consider and, if thought fit, approve the special

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

resolution to extend the validity period of the Authorisation for a further period of 12 months, commencing from 5 June 2018. According to the 2018 Poll Results Announcement, the aforesaid special resolutions were duly passed and approved at the annual general meeting of the Company, the class meeting of the A Shareholders and the class meeting of the H Shareholders held on 31 May 2018.

On 8 October 2018, the Company announced that the Company received the “Notice Regarding CSRC’s Second Feedback on the Review of Administrative Permission Items” (No.171433) (《中國證監會行政許可項目審查二次反饋意見通知書》(171433號)) from the CSRC. The Company and the relevant intermediaries had studied and replied on 13 November 2018 to the questions raised in the notice from the CSRC. As advised by the management of the Company, after the replies were submitted, CSRC had not issued further written enquires to the Company in relation to the Revised Proposed Non-public Issuance of A Shares at the Latest Practicable Date.

As at the Latest Practicable Date, the approval from the CSRC is the only outstanding condition precedent to the Revised Proposed Non-public Issuance of A Shares. Based on our discussion with the management of the Company, it is uncertain whether the written approval from the CSRC will be obtained before the expiry of the validity periods of the Shareholders’ Resolutions and the Authorisation. In addition, after the Company has obtained the written approval from the CSRC, it is expected that the Company will need certain amount of time to handle the administrative matters for the implementation of the Revised Proposed Non-public Issuance of A Shares. The Directors therefore consider that the Shareholders’ Resolutions Further Extension Resolution is in the interest of the Company and the Shareholders as a whole.

Based on the aforementioned independent work done and our discussions with the management of the Company, we concur with the view of the Directors that it is fair and reasonable and in the interest of the Company and the Shareholders as a whole to propose the Shareholders’ Resolutions Further Extension Resolution.

2. Reasons for and Benefits of the Revised Proposed Non-Public Issuance of A Shares and the COSCO Subscription

As disclosed in the A Shares Issuance Circular and the Letter from the Board, COSCO SHIPPING had conditionally agreed to subscribe for, and the Company had conditionally agreed to issue, 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. The Board considered that the Revised Proposed Non-public Issuance of A Shares is conducive to the comprehensive and sustainable development of the Company’s business and would lay a strong foundation for the Company’s transformation from a container liner operator into an integrated financial services platform with leasing businesses such as vessel leasing, container leasing and non-shipping leasing as core and shipping financing as feature.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 20 April 2017, the Board approved that the gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares shall be not more than RMB8.6 billion and the net proceeds from the Revised Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Revised Proposed Non-public Issuance of A Shares) are intended to be used (i) as to approximately RMB6.8 billion for the capital injection in FIL, which in turn will be used by FIL to purchase containers during the period of 2017 to 2019; and (ii) as to approximately RMB1.8 billion for the repayment of the Company’s corporate bonds (which were held by persons other than the existing Shareholders). As at the Latest Practicable Date, the Company has injected approximately RMB1.9 billion into the capital of FIL with its internal resources for the purpose of procurement of containers by FIL in accordance with its expansion plan and operational needs. As discussed in the Letter from the Board, the Board considers that the delay in the completion of the Revised Proposed Non-public Issuance of A shares will not have any material impact on the operation and expansion of FIL. In addition, the Company repaid the aforementioned corporate bonds upon maturity by its internal resources. The amount used for the aforementioned capital injection into FIL and repayment of the corporate bonds prior to completion of the Revised Proposed Non-public Issuance of A Shares will be substituted and replenished by the proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares in accordance with relevant procedures as required by applicable laws and regulations.

As set out in the Letter from the Board, the long term capital raised from the Revised Proposed Non-public Issuance of A Shares can allow the Company to implement its business strategy and would facilitate the transformation of the business and future development of the Company as an integrated financial services platform with diversified leasing businesses. It would also optimise the Company’s capital structure and reduce the Company’s debt-asset ratio, which enables the Company to lower the costs of its debt financing. Based on the audited consolidated financial statements of the Group as set out in the annual results announcement of the Group for the year ended 31 December 2018, the debt-to-asset ratio and the liquid ratio of the Company as at 31 December 2018 was 86.91% and 0.55, respectively. Upon completion of the Revised Proposed Non-public Issuance of A Shares, the debt-to-asset ratio of the Company will be decreased from 86.91% to 81.81% and the liquid ratio will be increased from 0.55 to 0.71 (without taking into account the costs of Revised Proposed Non-public Issuance of A Shares). The Directors consider that raising funds by equity financing with interest-free nature could reduce the gearing ratio of the Group and equity financing could improve the leverage position of the Group as compared to debt financing.

Alternative financing

As advised by the Directors, the Company has also considered other means of equity financing such as private placement of H Shares, rights issue or open offer. However, given that the issued H Share capital of the Company is significantly lower than the issued A Share capital of the Company, the expected size of fund to be raised will be less than approximately RMB8.6 billion. In addition, there is a significant premium of the price of A Shares trading on the Shanghai Stock Exchange over the price of H Shares trading on the Hong Kong Stock Exchange. If the Company conducts a fund raising exercise by issuing both new A Shares and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

new H Shares, assuming a pricing basis of not less than the average trading price of the A Share in the 20 trading days preceding the base day, the issue price will represent a premium over the historical trading prices of H Shares which the H Shareholders are not likely to subscribe the new H Shares.

The chart below illustrates a comparison between the daily closing prices of the A Share and the daily closing price of the H Share (presented in RMB equivalent based on an exchange rate of RMB1 to HK1.169) from 18 January 2019 up to the last trading day before the Further Extension Resolutions Announcement (the “ Review Period ”):

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Share Share
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Sources: Website of Hong Kong Stock Exchange and Cninfo* (www.cninfo.com.cn, being a website designated by the CSRC for the purpose of information disclosure)

During the Review Period, the closing prices of the H Share were in the range of HK$0.87 (or approximately RMB0.74) to HK$1.16 (or approximately RMB0.99) as per H Share and the closing prices of the A Share were in the range of RMB2.32 to RMB3.61 as per A Share.

In other words, the closing prices of H shares were lower than those of A Shares during the Review Period. If the Company were to conduct a fund raising exercise by issuance of new H Shares with a proceed of approximately RMB8.6 billion, assuming that an equivalent pricing basis is adopted to determine the benchmark price for the H Shares issuance (that is, being not lower than 90% of the average trading price of the H Shares during the 20 trading days immediately preceding the Price Determination Date), the number of H Shares to be issued will be substantially more than that required for the Revised Proposed Non-public Issuance of A Shares. This would lead to a greater dilution effect on the shareholding of the existing Shareholders and would not be in the interests of the Independent Shareholders.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we concur the views from the Directors that the Revised Proposed Non-public Issuance of A Shares is in the interests of the Company and the Shareholders as a whole.

3. Key Terms of the Revised Proposed Non-Public Issuance of A Shares

Save for the (i) the extension of the validity period of the Shareholders’ Resolutions for a further period of 12 months, commencing from 5 June 2019; and (ii) the extension of the validity period of the Authorisation for a further period of 12 months, commencing from 5 June 2019, all other terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription remain unchanged and in full force and effect.

In particular, as disclosed in the A Shares Issuance Circular, the issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares shall not be lower than the Benchmark Price, being (i) 90% of the Average Trading Price (being the average trading price of the A Shares during the 20 trading days immediately preceding the Price Determination Date, which is calculated by dividing the total turnover of the A Shares by the total trading volume of the A Shares during the 20 trading days immediately preceding the Price Determination Date) or (ii) the Floor Price (being the latest audited net asset per Share of the Company before the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares), whichever is higher. In the event that the issue price is expected to fall below the audited net asset value per Share of the Company as at 31 December 2018, being approximately RMB1.54, the Company will re-comply with the necessary approval requirements, including, among other things, the Independent Shareholders’ approval under the Hong Kong Listing Rules. We noted that the basis of determining subscription price remain unchanged. We obtained and reviewed the aforesaid regulations (including《關於修改＜上市公司非公開發行股票實施細則＞的決定》(Decision on Amending Implementing Rules on Non-Public Issuance of Shares by Listed Companies) published by CSRC on 15 February 2017 and 《發行監管問答 – 關於引導規範上市公司融資行為的監管要求》(the Issuance Regulatory Questions and Answers – Regulatory Requirements regarding Guiding and Regulating Listed Companies’ Financing Activities) published by the CSRC on 17 February 2017 and revised on 9 November 2018 (collectively, the “ New PRC Regulations ”) and the “Measure for Administration of the Issuance of Securities by Listed Companies” (《上市公司證券發行管理辦法》) (the “ Measures ”)) and acknowledged that the basis of determining the issue price is in compliance with the relevant regulations of the PRC.

Subject to the abovementioned Benchmark Price, the final issue price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholder at the EGM and the Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulation, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares. All the target subscribers will subscribe for the A Shares under the Revised Proposed Non-public Issuance of A Shares at the same issue price in cash.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given that (i) the subscription price will reflect the then latest market prices of the A Shares and in any event not lower than the Floor Price; (ii) the basis of the subscription price is in compliance with the New PRC Regulations and the Measures; (iii) all subscribers will subscribe the A Shares at the same subscription price and (iv) save for the Shareholders’ Resolutions Further Extension Resolution, all other terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription remain unchanged and in full force and effect, we concur with the Directors that the terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription (together with the Shareholders’ Resolutions Further Extension Resolution) are fair and reasonable so far as the Independent Shareholders are concerned.

RECOMMENDATION

Having taken into account the above-mentioned principal factors and reasons, we are of the opinion that while the Shareholders Resolutions Further Extension Resolution is not conducted in the ordinary and usual course of business of the Group, (i) the Shareholders’ Resolutions Further Extension Resolution is in the interests of the Company and the Shareholders as a whole and (ii) the terms of the Shareholders Resolutions Further Extension Resolution are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the Shareholders’ Resolutions Further Extension Resolution to be proposed at the AGM and the New Class Meetings.

For identification purpose only

Yours faithfully, For and on behalf of Messis Capital Limited Vincent Cheung Managing Director

Mr. Vincent Cheung is a licensed person registered with the Securities and Futures Commission and regarded as a responsible officer of Messis Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 10 years of experience in corporate finance industry.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

The English translation is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

COSCO SHIPPING Development Co., Ltd. 2018 Work Report of the Independent Directors

According to the laws and regulations including the Company Law of the PRC (“ Company Law ”), the Securities Law of the PRC (“ Securities Law ”), Guiding Opinions on the Establishment of Independent Directors System in Listed Companies and the relevant provisions of the Articles of Association and the Work System for Independent Directors, and under the Guidelines on the Format of Work Report of Independent Directors issued by the Shanghai Stock Exchange, we, as the independent Directors of COSCO SHIPPING Development Co., Ltd. (the “ Company ”), have prepared the 2018 Work Report of Independent Directors as follows.

I. BASIC INFORMATION ABOUT INDEPENDENT DIRECTORS

(1) Personal working experience, professional background and part-time engagement

The personal working experience, professional background and part-time engagement of Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Allan Jack, Mr. Lu Jianzhong, Mr. Gu Xu and Ms. Zhang Weihua are as follows:

Mr. Cai Hongping ( 蔡洪平 )

Born in 1954, Mr. Cai is a Hong Kong citizen and graduated from Fudan University in Shanghai with a bachelor’s degree in journalism. He is now chairman of AGIC Capital. He served in the Industrial and Transport Management Committee of Shanghai Municipal Government and Sinopec Shanghai (Sinopec Shanghai Petrochemical Company Limited, a company listed on the Hong Kong Stock Exchange with the stock code 338, and listed on Shanghai Stock Exchange with the stock code 600688 and on New York Stock Exchange with the stock code SHI) from 1987 to 1991, during when he participated in the whole process of the listing of the first batch of H shares of Sinopec Shanghai in Hong Kong and the United States. From 1992 to 1996, he was a member of the Steering Group for Overseas Listing of Chinese Enterprises under the State Commission for Restructuring the Economic System under the State Council and chairman of the Joint Conference of Secretaries to the Board of a H shares Company. He served as the general manager of the Investment Banking Asia Division of Peregrine Investments from 1996 to 1997 and the joint director of the Investment Banking Asia Division of BNP Paribas Peregrine from 1997 to 2006. He was the chairman of the Investment Banking Asia Division of UBS AG from 2006 to 2010 and the executive chairman of Investment Banking Asia Pacific at Deutsche Bank from 2010 to 2015. Mr. Cai served as the independent director of Minmetals Development Co., Ltd. from April 2015 to December 2015 (a company listed on the Shanghai Stock Exchange with the stock code 600058).

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

Ms. Hai Chi Yuet ( 奚治月 )

Born in 1954, Ms. Hai is an independent non-executive director of the Company. She has over 30 years of working experience in the shipping logistics industry. Since 2016, she has served as the advisor to Hutchison Port Holdings Limited. Ms. Hai served as the managing director of COSCO-HIT Terminals (Hong Kong) Limited, the managing director of Yantian International Container Terminals Limited, the chief executive officer of Hutchison Port Holdings Trust (“HPH Trust”) and the advisor to HPH Trust. Ms. Hai also participates in public service organizations, including being the member of the Election Committee for the Chief Executive of Hong Kong Special Administrative Region (Transport Subsector). She also served as the member of Hong Kong Port Development Advisory Group and the president of Shenzhen Ports Association. In 2011, Ms. Hai was awarded as Shenzhen Honorable Citizen. Ms. Hai graduated from York University, Toronto, Canada and the University of Hong Kong, obtaining a bachelor’s degree in business administration and a master’s degree in Buddhist studies respectively. Ms. Hai was appointed as an independent non-executive director of the Company in May 2015.

Mr. Graeme Jack

Born in 1950, Mr. Jack has served as an independent non-executive director of the Company since July 2015 and a member of the remuneration committee of the Company. He has more than 40 years of experience in finance and auditing. He retired from PricewaterhouseCoopers as a partner in 2006 after working for 33 years in the accounting firm. He is currently an independent non-executive director of The Greenbrier Companies Inc. and an independent trustee of HPH Trust and Hutchison China MediTech Limited. Mr. Graeme Jack holds a Bachelor of Science in Business and is a senior fellow of The Hong Kong Institute of Certified Public Accountants and a member of the Chartered Accountants Australia and New Zealand.

Mr. Lu Jianzhong ( 陸建忠 )

Born in 1954, Mr. Lu is currently an independent non-executive director of the Company. He graduated from the Department of Accounting of Shanghai University of Finance and Economics with the Bachelor Degree of Economics in January 1983 and started to engage in financial works in the same year. From September 1986 to August 1997, he was a lecturer and associate professor of the Department of Accounting and Finance of Shanghai Maritime University. From September 1997 to June 2012, he was a certified public accountant and Auditing Partner of PricewaterhouseCoopers. From July 2012 to September 2016, he served as the partner of Shanghai De’an Certified Public Accountants, marketing director of WUYIGE Certified Public Accountants LLP and partner of Zhongxinghua Certified Public Accountants LLP. From October 2016 to the present, he is a certified public accountant of Da Hua Certified Public Accountants. He also serves as an independent director of HIK Vision, an independent director of Changshu Fengfan Power Equipment Co., Ltd, an independent director of Shanghai

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

Moons Electric Co., Ltd. and an independent director of Ningbo Lehui International Engineering Equipment Co., Ltd. Mr. Lu is also an MPACC/Maud enterprise mentor in Antai College of Economics and Management, Shanghai Jiaotong University, an external expert of the asset securitization research group of Development Research Center of the State Council, and a member of Jiusan Society.

Mr. Gu Xu ( 顧旭 )

Born in 1964, Mr. Gu has over 20 years of experience in the financial and securities industry as well as extensive experience in corporate financial management. He led and participated in the restructuring, issue and listing of Shanghai Phoenix Bicycle Co., Ltd., Hero (Gold Pen) Co. Ltd. and Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. (A shares and B shares) and succeeded in leading several corporate mergers and acquisitions and reorganizations. He has accumulated theoretical and practical experience in respect of corporate financial and accounting management, capital management, investment management, disposal of distressed assets and management of financial information systems. He is currently the chairman of Shanghai Dongsheng Investment Management Co., Ltd., an independent director of Suzhou Financial Leasing Co., Ltd., the general manager of Henan Zhongyuan Lianchuang Investment Funds Management Company and an executive director and the chairman of China New Economy Fund Limited (00080.HK).

Ms. Zhang Weihua ( 張衛華 )

Born in 1961, Ms. Zhang graduated from the Faculty of Business of University of Southern Queensland with a master’s degree in business administration. Ms. Zhang once served as the compliance director of China Merchants Securities Co., Ltd. (listed on the Shanghai Stock Exchange under the stock code of 600999) and the chairman of the supervisory committee of China Merchants Fund Management Co., Ltd. Ms. Zhang also served as the chief auditor, assistant to the president, general manager of the audit department of China Merchants Securities Co., Ltd. and the assistant to the general manager of the securities business department of the head office of China Merchants Bank successively.

(2) Explanation on circumstances that may affect independence

We, as independent directors of the Company, do not have any of the following situations that may affect our independence:

(1) holding any position in the Company or its subsidiaries other than independent Directors;

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APPENDIX I

(2) having immediate family relationship or key social relationship with the personnel in the Company or its subsidiaries (immediate family relationship means spouse, parents, children and other family relationship; key social relationship means brothers/sisters, parents-in-law, son/daughter in-law, spouses of brothers/sisters or brothers/sisters of spouses);
(3) holding, directly or indirectly, 1% or more of the interests in the issued shares of a listed company or ranking among the top ten shareholders of the Company who are natural persons in terms of shareholdings or having immediate family relationships with them;
(4) working in a corporate shareholder that directly holds 5% or more of the issued shares of a listed company or ranks among top five corporate shareholders of the listed company or having immediate family relationship with them;
(5) having the circumstances as mentioned in the preceding four paragraphs during the last year;
(6) providing financial, legal or consulting services to the Company or its subsidiaries;
(7) having any other relationship with the Company or the substantial shareholders of the Company that could materially interfere with the exercise of our independent and objective judgment;
(8) breaching the Articles of Association in relation to our appointment as independent Directors;
(9) breaching other laws and regulations in relation to our appointment as independent Directors.
II. PERFORMANCE OF DUTIES OF INDEPENDENT DIRECTORS DURING THE YEAR

(1) Attendance of meetings

1. Audit Committee of the Board

	Number of
	attendance	Number of	Number of	Number of
	required	meetings	meeting(s)	meetings	Number of
Name of	for the	attended	attended by	attended	meeting(s)
Director	year	in person	telecommunication	by proxy	absent
Lu Jianzhong	11	11	9	0	0
Cai Hongping	11	11	9	0	0

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APPENDIX I

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

2. Nomination Committee of the Board

	Number of
	attendance	Number of	Number of	Number of
	required	meetings	meeting(s)	meetings	Number of
Name of	for the	attended	attended by	attended	meeting(s)
Director	year	in person	telecommunication	by proxy	absent
Hai Chi Yuet	2	2	2	0	0
Cai Hongping	2	2	2	0	0
Gu Xu	1	1	1	0	0
Lu Jianzhong	1	1	1	0	0

3. Investment Strategy Committee of the Board

	Number of
	attendance	Number of	Number of	Number of
	required	meetings	meeting(s)	meetings	Number of
Name of	for the	attended	attended by	attended	meeting(s)
Director	year	in person	telecommunication	by proxy	absent
Cai Hongping	1	1	1	0	0
Hai Chi Yuet	1	1	1	0	0

4. Remuneration Committee of the Board

	Number of
	attendance	Number of	Number of	Number of
	required	meetings	meeting(s)	meetings	Number of
Name of	for the	attended	attended by	attended	meeting(s)
Director	year	in person	telecommunication	by proxy	absent
Cai Hongping	1	1	1	0	0
Hai Chi Yuet	1	1	1	0	0
Graeme Jack	1	1	1	0	0

5. Risk Control Committee of the Board

	Number of
	attendance	Number of	Number of	Number of
	required	meetings	meeting(s)	meetings	Number of
Name of	for the	attended	attended by	attended	meeting(s)
Director	year	in person	telecommunication	by proxy	absent
Cai Hongping	2	2	0	0	0
Lu Jianzhong	2	2	0	0	0
Zhang Weihua	2	2	0	0	0

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

6. The Board of Directors

	Number of
	meetings					Not attend
	of the					the
	Board that	Number of	Number of	Number of		meetings in
	should be	meetings	meetings	meetings	Number of	person for
Name of	attended in	attended	attended by	attended	meeting(s)	consecutive
Director	the year	in person	telecommunication	by proxy	absent	twice or not
Cai Hongping	20	19	18	1	0	No
Hai Chi Yuet	20	20	18	0	0	No
Graeme Jack	20	20	18	0	0	No
Lu Jianzhong	20	20	18	0	0	No
Gu Xu	16	16	14	0	0	No
Zhang Weihua	16	16	14	0	0	No

Note: Mr. Gu Xu and Ms. Zhang Weihua, independent non-executive directors of the Company, started to perform their duties on 15 March 2018.

In addition to the aforementioned Board meetings and special committee meetings of the Board, the independent Directors had attended the 2017 annual general meeting and other general meetings, during which independent Directors considered the resolutions proposed at those meetings with all shareholders (including minority shareholders) of the Company, engaged in interactive communications, and responded to relevant issues of the shareholders’ concern.

(2) Voting on proposals at the Board meetings and special committee meetings of the Board

The Company reports the daily operation and production to us on a regular basis. Before the Board meetings and special committee meetings of the Board were held, we reviewed all materials and actively studied the situations for decision-making and communicated with other relevant staff. We considered every proposal conscientiously, making independent judgments and giving reasonable advices in meetings held by ways of telecommunication and on-site meetings. We give independent opinions relating to the proposals in accordance with the relevant requirements under the listing rules of Hong Kong Stock Exchange and Shanghai Stock Exchange. Based on sufficient communication with the Company, we voted for all resolutions proposed at the Board meetings and the special committee meetings of the Board.

(3) Support given by the Company to the Independent Directors

The Company has provided full support and all convenience as possible for our work as well as the investigations and surveys conducted by us as the independent Directors.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

(4) On-site investigations and surveys

Within the reporting period, the independent Directors conducted discussion and communication with the management during the general meetings and Board meetings as to the issue of targets and budget for the year, operation of the business segments, plans and capability of financing for the year, plans of long-term and short-term financing of the Company for long-term investments, criteria for selecting investment projects, assessment and incentive mechanism for the management and attracting professionals to the financial platform, in order to obtain a comprehensive understanding of the operation and management of the subsidiaries, the internal control and the relevant regional markets.

III. IMPORTANT CONCERNS OF INDEPENDENT DIRECTORS FOR THE YEAR

(1) Related Transactions

The independent Directors performed their duties strictly in accordance with all rules relating to the control and daily management of the related transactions during the reporting period. All independent Directors expressed the recognitions and independent opinions on all material related transactions in advance. The independent Directors are of the opinion that these related transactions were in the interests of the Company and the shareholders as a whole as the related transactions of the Company were on normal commercial terms, the pricing for these transactions were fair and reasonable and these transactions were in compliance with the principles of fairness, impartiality and openness. The independent Directors are also of the opinion that these transactions were in the interests of the Company and the shareholders as a whole as these transactions were considered to be in accordance with laws and regulations and not prejudicial to the interest of minority shareholders.

(2) External guarantees and appropriation of funds

We believe the Company was able to strictly adhere to the requirements of relevant laws and regulations, and external guarantees have satisfied the procedural requirement for matters such as consideration and approval and information disclosure, and there were no instances where it was discovered that the Company provided illegal guarantees to controlling shareholders and other associates. The flow of funds between the Company and the actual controller was based on normal operation, and there was no instance where it was discovered that the controlling shareholder and other associates had appropriated the funds of the Company.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

(3) Use of proceeds

All proceeds from fund raising had been used up before 2013.

(4) Nomination of senior management

Within the reporting period, Mr. Lin Feng was appointed as the new chief accountant of the Company. According to the relevant requirements of the Company Law of the People’s Republic of China, the Guidelines for Introducing Independent Directors to the Board of Directors of Listed Companies, the Rules Governing the Listing of Stocks on Shanghai Stock Exchange and the Articles of Association, we believe that the procedures for this appointment of senior management are in line with the relevant requirements of the Company Law of the People’s Republic of China and the Articles of Association, and are legal and valid.

(5) Profit Distribution

In accordance with the productional and operational needs of the Company and other actual situations as well as the Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies (Zheng Jian Fa (2012) No. 37), Listed Companies Regulation Guideline No. 3 – Cash Dividend of Listed Companies (CSRC Announcement (2013) No. 43) promulgated by the CSRC, Guidelines of Shanghai Stock Exchange on Cash Dividend of Listed Companies and the Articles of Association, it was proposed that no profit distribution would be made and no capitalization of capital common reserve fund would be made for the year of 2017. We agree with the annual profit distribution plan for 2017, and we believe the plan complies with the relevant regulations of the Company Law and the Articles of Association.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

(6) Performance of undertakings by the Company and Shareholders

		The		Date and
Background of	Types of	Undertaking		Deadline of		Executed
Undertaking	Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
Undertakings	Other	COSCO	Upon completion of the	The	No	Yes
made in the		SHIPPING	gratuitous transfer, and for the	undertaking
Acquisition		Group	period in which the COSCO	was made on
Report and			SHIPPING Group holds,	May 5, 2016
Report on			directly or indirectly, the
Changes in			controlling interests of the
Equity			Company, the COSCO
			SHIPPING Group itself, and
			also through COSCO Group and
			China Shipping, will remain
			relatively independent of the
			Company in terms of personnel,
			finance, organization, assets
			and business and strictly
			comply with the relevant
			regulations of the China
			Securities Regulatory
			Commission (“CSRC”) on the
			independence of the listed
			companies, and will not take
			advantage of its position as a
			controlling shareholder to
			violate the regular operating
			procedures for the listed
			company or intervene in the
			operating decisions of the listed
			company and impair the legal
			interests of the listed company
			and its shareholders. The
			COSCO SHIPPING Group and
			other companies under its
			control promise that they will
			not appropriate the funds of the
			listed company and its
			subsidiaries by any means.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
		Addressing	COSCO	1. For the period in which the	The	No	Yes
		horizontal	SHIPPING	COSCO SHIPPING Group	undertaking
		competition	Group	holds, directly or indirectly,	was made on
				the controlling shareholding	May 5, 2016
				of the Company, the COSCO
				SHIPPING Group and its
				subsidiaries will not take any
				actions or measures to be
				engaged or involved in the
				activities that constitute or
				may constitute substantive
				competition with the
				principal activities of the
				Company and its
				subsidiaries, and will not
				impair the legal interests of
				the Company and its
				subsidiaries, including but
				not limited to the future
				establishment of other
				subsidiaries or joint ventures
				or associates to be engaged
				in the businesses that
				constitute substantive
				competition with the
				existing principal activities
				of the Company and its
				subsidiaries, or be involved,
				directly or indirectly, in the
				existing principal activities
				of the Company and its
				subsidiaries by any other
				means.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				2. If there may be substantive
				competition in principal
				business or substantive
				conflicts in the interests
				between the COSCO
				SHIPPING Group and the
				Company and companies
				under its control, the
				COSCO SHIPPING Group
				will give up or procure that
				the companies under its
				control will give up such
				business opportunities that
				may cause such competition,
				or transfer the business that
				may cause such competition
				in its entirety from the
				COSCO SHIPPING Group
				and the companies under its
				control to the Company at a
				fair market price at an
				appropriate time.
				3. The COSCO SHIPPING
				Group will not take
				advantage of the information
				obtained from the Company
				to assist the third parties to
				be engaged or involved in
				any business activities that
				may result in substantive or
				potential competition with
				the existing business of the
				Company.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

		The		Date and
Background of	Types of	Undertaking		Deadline of		Executed
Undertaking	Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
			4. For any breach of the said
			undertakings on the part of
			the COSCO SHIPPING
			Group or companies
			controlled by it that results
			in reduced interests of
			shareholders of the
			Company and other
			shareholders, the COSCO
			SHIPPING Group shall
			indemnify the loss in
			accordance with the laws.
Undertaking	Addressing	COSCO	1. The COSCO SHIPPING	The	No	Yes
regarding the	related	SHIPPING	Group and other companies	undertaking
major asset	transactions	Group	under its control will do	was made on
restructuring			everything they could to	May 5, 2016
			avoid unnecessary related
			transactions with the listed
			company; for those related
			transactions necessary for its
			on-going operations, they
			should be handled in a
			mutually-agreed manner,
			and in compliance with the
			market-oriented pricing
			principles, the requirements
			of the relevant laws,
			regulations and regulatory
			documents as well as the
			articles of association of the
			Company and the rules
			regarding related
			transactions.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				2. The COSCO SHIPPING
				Group and other companies
				under its control will do
				everything they could to
				avoid and reduce potential
				related transactions with the
				listed company; for the
				unavoidable related
				transactions or those
				occurring with a valid
				reason, the COSCO
				SHIPPING Group will enter
				into related transaction
				agreements with the
				Company in compliance
				with the relevant laws,
				regulations and regulatory
				documents as well as the
				articles of association of the
				Company and the rules
				regarding related
				transactions and following
				the general commercial
				principle of openness,
				fairness and equitability,
				ensure the fairness and rule-
				compliance of the related
				transactions, and carry out
				the transaction procedures
				and perform their
				information-disclosure
				obligations in accordance
				with the requirements of the
				relevant laws, regulations
				and regulatory documents.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				3. The COSCO SHIPPING
				Group’s undertakings
				regarding the related
				transactions will apply to the
				other companies under its
				control with equal effect; the
				COSCO SHIPPING Group
				will procure, within the
				range of its legal authority,
				that the other companies
				under its control will
				perform the obligations
				under the existing or
				potential related transactions
				between them and the listed
				company.
		Addressing	China	The assets, staff, finance,	December 11,	No	Yes
		horizontal	Shipping	entities and business of each of	2015
		competition		China Shipping and the
				Company shall be independent
				from each other:
				1. Independence of assets:
				China Shipping Group has
				undertaken that the
				Company shall have
				complete and sole ownership
				of all of its assets, the assets
				of each of China Shipping
				Group and the Company
				shall be totally separated and
				managed by each of China
				Shipping Group and the
				Company. China Shipping
				Group has undertaken that
				China Shipping Group and
				companies under its control
				shall not appropriate the
				funds and assets of the
				Company.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				2. Independence of staff: China
				Shipping Group has
				undertaken that the
				Company shall have
				independent and complete
				management systems of
				labor, human resources and
				wages, and that these
				systems shall be absolutely
				independent from those of
				China Shipping Group.
				China Shipping Group shall
				propose candidates for
				senior management
				personnel such as directors,
				supervisors and managers in
				accordance with statutory
				procedures, without
				interfering decisions
				regarding exercise of powers
				by the board and general
				meeting of the Company in
				relation to appointment and
				removal of staff. General
				managers, deputy general
				managers, financial
				controllers, secretary to the
				board and other senior
				management personnel of
				the Company shall solely
				work for the Company and
				be entitled to remunerations
				paid by the Company. They
				shall not work at China
				Shipping Group or
				companies under its control
				and/or be entitled to any
				remuneration paid by these
				companies.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				3. Financial independence:
				China Shipping Group has
				undertaken that the
				Company shall have
				independent finance
				department and independent
				finance auditing systems; the
				Company shall have
				standardized and
				independent financial
				accounting systems; the
				Company shall maintain its
				independent bank account
				and shall not share any
				account with China Shipping
				Group and companies under
				its control; the finance staff
				of the Company shall not
				work at China Shipping
				Group and companies under
				its control; the Company
				shall pay tax as an
				independent entity; the
				Company shall make
				independent financial
				decisions and China
				Shipping Group shall not
				interfere with usage of funds
				by the Company.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				4. Independence of entities:
				China Shipping Group has
				undertaken that the
				Company shall maintain a
				sound structure of corporate
				governance as a limited
				company and an independent
				and complete organization;
				the general meetings, board
				meetings, independent
				directors, board of
				supervisors and general
				managers of the Company
				shall exercise their powers
				independently in accordance
				with the laws, regulations
				and the articles of
				association of the Company.
				5. Independence of business:
				China Shipping Group has
				undertaken that the
				Company shall have an
				independent business
				management system, assets,
				staff, qualifications and
				capabilities required for
				independent operation of
				business, and the capability
				of independent operation in
				the market for sustainable
				operation. Other than
				exercise of rights by
				shareholders in accordance
				with the laws, China
				Shipping Group shall not
				interfere with the normal
				course of business of the
				Company. The undertaking
				shall be effective as long as
				the relationship of actual
				control between China
				Shipping Group and the
				Company exists.

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APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				Avoidance of horizontal
				competition:
				1. Upon completion of the
				major asset restructuring,
				China Shipping Group will
				not, directly or indirectly,
				(including but not limited to
				wholly-owned investment,
				joint venture, cooperation
				and association) be engaged
				in or carry out activities that
				may result in substantive
				competition with the
				business of the Company.
				2. In the event that the products
				produced or businesses
				carried out by the companies
				wholly owned, controlled by
				China Shipping Group or in
				which it is interested
				constitute or may constitute
				competition with those of the
				Company, upon request of
				the Company, China
				Shipping Group undertakes
				that it will dispose of all its
				investments or shares in the
				above-mentioned
				companies, and promise to
				offer preemptive rights to
				the Company or its wholly-
				owned subsidiaries for such
				investments or shares within
				the range of its legal
				authority, and use best
				efforts to ensure the prices
				for the relevant transactions
				are fair and reasonable and
				determined on the basis of
				normal business transactions
				with independent third
				parties.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

The Date and Background of Types of Undertaking Deadline of Executed Undertaking Undertaking Party Details of Undertaking Undertaking Deadline or Not 3. In the event of infringement of the above-mentioned undertakings by China Shipping Group or the other companies under its control that cause harm to the interests of the Company and the other shareholders, China Shipping Group will be liable for compensation.

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WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				Reduction of related
				transactions:
				1. China Shipping Group and
				the other companies under
				its control will do everything
				they could to avoid or reduce
				related transactions with the
				Company. For those
				unavoidable or necessary
				related transactions, China
				Shipping Group promises
				that it will enter into legal
				agreements following the
				general commercial
				principle of openness,
				fairness and equitability,
				carry out legal procedures in
				compliance with the relevant
				laws, regulations and
				regulatory documents as
				well as the articles of
				association of the Company
				and the rules regarding
				related transactions, so as to
				ensure the fairness and rule-
				compliance of the related
				transactions and that no
				harm is caused to the
				interests of the Company and
				the other shareholders as a
				result of the related
				transactions, while
				performing their
				information-disclosure
				obligations in accordance
				with the requirements of the
				relevant laws, regulations
				and regulatory documents.

– I-20 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

		The		Date and
Background of	Types of	Undertaking		Deadline of		Executed
Undertaking	Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
			2. China Shipping Group will
			exercise its rights as a
			shareholder in strict
			compliance with the
			Company Law and articles
			of association of the
			Company, and abstain from
			voting at the general meeting
			of the Company on the
			related transactions in
			relation to China Shipping
			Group and the other
			companies under its control.
Undertaking	Addressing	The	1. China Shipping shall adopt	August 29,	No	Yes
regarding IPO	horizontal	Company or	effective steps to ensure that	2007
	competition	shareholders	it will not and procure its
		holding more	subsidiaries to adopt
		than 5% of	effective steps to ensure that
		equity	they will not engage in any
		interests	business that may compete
			with the container
			transportation business and
			the related business which
			the Company and/or its
			subsidiaries engage in, or
			have rights or interests in
			such business; where China
			Shipping or its subsidiaries
			are offered any business
			opportunity related to
			container transportation
			business and the related
			business that the Company
			engages or will engage in the
			future, China Shipping shall
			and shall procure its
			subsidiaries to offer the first
			rights of refusals to such
			business opportunities to the
			Company or its subsidiaries
			with no charge.

– I-21 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				2. China Shipping (Group)
				Company Limited agreed to
				indemnify the Company
				and/or its subsidiaries all
				losses, damages and
				expenses incurred as a result
				of any breach of this
				undertaking by China
				Shipping and/or its
				subsidiaries.
		Other	Undertaking	1. I hereby undertake that I	October 11,	No	Yes
			by Directors	shall not provide benefits to	2016
			and senior	other entities or individuals
			management	without consideration or on
			of the	unfair terms nor conduct in
			Company	any other way that may
				impair the interest of the
				Company.
				2. I hereby undertake that I
				shall incur expenses in
				performing my duties
				subject to restrictions.
				3. I hereby undertake that I
				shall not apply the assets of
				the Company for any
				investment or expenditure
				which is unrelated to the
				performance of my duties.
				4. I hereby undertake that the
				remuneration package
				formulated by the Board or
				the Remuneration
				Committee shall be
				implemented in accordance
				with the reimbursement
				measures of the Company.

– I-22 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				5. For any subsequent share
				incentive plan of the
				Company, I hereby
				undertake that the vesting
				terms to be announced shall
				be operated in line with the
				reimbursement system of the
				Company.
				6. For any new regulatory
				measures issued by CSRC in
				relation to the
				reimbursement system and
				such undertaking during the
				period from the date of this
				undertaking to the
				completion of the non-public
				issuance of A Shares of the
				Company that makes the said
				undertaking fails to meet
				such requirements by CSRC,
				I hereby undertake that I
				shall make further
				undertaking(s) in accordance
				with those new requirements
				issued by CSRC.
				7. I hereby undertake that I
				shall strictly adhere to the
				undertaking and shall
				indemnify the loss suffered
				by the Company or the
				investors in accordance with
				the laws for any loss caused
				to the Company or the
				investors as a result of any
				breach of these
				undertakings.

– I-23 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
Undertaking		Other	China	The Company hereby	October 11,	No	Yes
regarding			Shipping	undertakes that the listed	2016
refinancing				company shall have
				independence and that it shall
				not interfere with the normal
				course of business and
				management of the listed
				company and its profits. The
				Company hereby undertakes
				that it shall strictly adhere to
				the undertaking and shall
				indemnify the loss suffered by
				the listed company or the
				investors in accordance with
				the laws for any loss caused to
				the listed company or the
				investors as a result of any
				breach of these undertakings.
		Other	COSCO	The Company hereby	October 11,	No	Yes
			SHIPPING	undertakes that the listed	2016
			Group	company shall have
				independence and that it shall
				not interfere with the normal
				course of business and
				management of the listed
				company and its profits. The
				Company hereby undertakes
				that it shall strictly adhere to
				the undertaking and shall
				indemnify the loss suffered by
				the listed company or the
				investors in accordance with
				the laws for any loss caused to
				the listed company or the
				investors as a result of any
				breach of these undertakings.

– I-24 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
		Other	COSCO	1. COSCO SHIPPING Group	October 30,	No	Yes
			SHIPPING	and its persons acting in	2017
			Group	concert did not reduce their
				holdings of the shares of the
				issuer from 6 months prior to
				the pricing ex-date of the
				non-public offering of the
				issuer (October 12, 2016) to
				the issue date of this Letter
				of Undertaking.
				2. COSCO SHIPPING Group
				and its persons acting in
				concert did not have any
				plan to reduce their holdings
				of the shares of the issuer
				(including the shares arising
				from allotment,
				capitalization of capital
				common reserve fund and
				other distribution in the
				undertaking period) from the
				issue date of this Letter of
				Undertaking to the date 6
				months after the completion
				of the non-public offering of
				the issuer.
				3. COSCO SHIPPING Group
				and its persons acting in
				concert did not violate
				Article 47 of the Securities
				Law of the PRC or item (vii)
				of Article 39 of Management
				Measures on Securities
				Issuance by Listed
				Companies.

– I-25 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				4. In the event of any violation
				of the aforementioned
				undertakings, all the
				proceeds of COSCO
				SHIPPING Group and its
				persons acting in concert
				from the reduction will be
				attributed to the issuer, and
				they shall assume all the
				legal liabilities thus
				incurred.
		Other	Company	1. The funding plan for the	October 30,	No	Yes
				coming 36 months, such as	2017
				making additional
				investment or providing
				loans for pseudo-banking
				businesses: As of the issue
				date of this Letter of
				Undertaking, according to
				the current development plan
				of the Company for pseudo-
				banking businesses, the
				parent company of the
				Company does not have such
				funding plans making
				additional investment or
				providing loans for pseudo-
				banking businesses in the
				coming 36 months.

– I-26 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

			The		Date and
Background	of	Types of	Undertaking		Deadline of		Executed
Undertaking		Undertaking	Party	Details of Undertaking	Undertaking	Deadline	or Not
				2. Undertaking concerning the
				funding plan for the coming
				36 months, such as making
				additional investment or
				providing loans for pseudo-
				banking businesses: As of
				the issue date of this Letter
				of Undertaking, the parent
				company of the Company
				does not have such funding
				plans making additional
				investment or providing
				loans for pseudo-banking
				businesses in the coming 36
				months.
				3. Undertaking that no
				investment to pseudo-
				banking businesses is made
				directly or indirectly with
				the proceeds from this non-
				public offering: When the
				proceeds from this non-
				public offering are received,
				the Company will use and
				manage the proceeds strictly
				according to the relevant
				laws, regulations and
				proceeds management
				measures, and it will review
				the use of the proceeds
				regularly to ensure the legal
				and reasonable use of the
				proceeds. The Company
				undertakes that it will not
				make any investment to
				pseudo-banking businesses
				directly or indirectly with
				the proceeds from this non-
				public offering.

In our opinion, the undertakings above have been strictly executed.

– I-27 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

(7) Implementation of information disclosure

During the reporting period, the Company was able to disclose information in an “open, fair and just” manner according to the requirements of relevant laws and regulations, and was not criticized or penalized by regulatory authorities.

(8) Implementation of internal control

For the implementation of internal control, please refer to the “Internal Control Evaluation Report for 2018” considered and passed by the Board and the “Internal Control Audit Report for 2018” of the Company issued by ShineWing Certified Public Accountants.

(9) Operations of the Board and its special committees

The Board has set up six special committees, namely the investment strategy committee, nomination committee, remuneration committee, audit committee, risk control committee and execution committee. All special committees considered issues according to their respective specialized fields. The operations of the Board and its special committees were regulated and they carried out their duties according to law. For operating details, please refer to the annual report of the Company for 2018.

(10) Other issues which the Independent Directors think the Company should improve

The Company operated according to relevant laws and regulations as well as regulatory requirements for listed companies, and there is currently no issue which needs improvement.

IV. OVERALL ASSESSMENT

As the independent directors of the Company, we strictly adhered to the requirements of laws and regulations, including the Company Law, Securities Law, Guiding Opinions on the Establishment of Independent Directors System in Listed Companies, the Articles of Association and Working System of Independent Directors, and carried out our duties according to the principles of objectiveness, fairness and independence. We also participated in the decision making of material events of the Company, and remained diligent, fully realizing the purpose of independent Directors, safeguarding the interests of the Company and shareholders (especially minority shareholders) as a whole.

– I-28 –

WORK REPORT OF INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

APPENDIX I

In 2019, we will continue to be prudent, diligent and faithful and be responsible to the Company and all shareholders. We will constantly study and enhance our professional skills and decision making capabilities, and carry out our duties and obligations as independent Directors in a faithful and effective manner so as to better protect the statutory interests of the Company and minority shareholders.

Independent Directors of COSCO SHIPPING Development Co., Ltd. Cai Hongping, Hai Chi Yuet, Graeme Jack, Lu Jianzhong, Gu Xu, Zhang Weihua

29 March 2019

– I-29 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

Interests and short positions of Directors, Supervisors and chief executives

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, Supervisors or chief executive(s) of the Company had any interests or short positions in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Directors, Supervisors or chief executive(s) is taken or deemed to have under such provisions of the SFO) or which was required to be entered in the register required to be kept by the Company pursuant to Section 352 of the SFO or which was otherwise required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers adopted by the Company.

					Approximate	Approximate
					percentage of	percentage of
					the relevant	the total
				Number of	class of	issued share
		Class of		Shares	Shares of the	capital of the
Name	Position	Shares	Capacity	interested	Company	Company
				(Note 1)	(%)	(%)
Wang Daxiong	Director	H Shares	Other	834,677 (L)	0.02	0.01
				(Notes 2 and 3)
Liu Chong	Director	H Shares	Other	1,112,903 (L)	0.03	0.01
				(Notes 2 and 4)
Xu Hui	Director	H Shares	Other	945,968 (L)	0.03	0.01
				(Notes 2 and 5)

– II-1 –

GENERAL INFORMATION

APPENDIX II

Notes:

“L” means long position in the shares.
As disclosed in the announcement of the Company dated 24 November 2016, certain executive Directors, Supervisor, senior management and employees of the Company have voluntarily invested, with their own fund, in an asset management plan (the “ Asset Management Plan ”), pursuant to which the executive Directors, Supervisor, senior management and employees of the Company had subscribed to the units of the Asset Management Plan and entrusted the manager of the Asset Management Plan to manage the Asset Management Plan, which would invest in the H Shares. The manager of the Asset Management Plan shall be responsible for, among other things, the investment and re-investment of the assets under the Asset Management Plan and shall be entitled to exercise the voting rights and other relevant rights in respect of the H Shares held under the Asset Management Plan. The Company did not participate in the Asset Management Plan, and the Asset Management Plan does not constitute a share option scheme or any type of employee benefit scheme of the Company. As at 31 December 2017, the Asset Management Plan has been fully funded and has acquired 6,900,000 H Shares on the market at an average price of HK$1.749 per H Share.
Mr. Wang Daxiong was one of the participants of the Asset Management Plan through which he held approximately 12.10% of the total number of units of the Asset Management Plan as at the Latest Practicable Date. Accordingly, the 834,677 H Shares represent the interests derived from the units subscribed by Mr. Wang Daxiong in the Asset Management Plan as at the Latest Practicable Date. As at the Latest Practicable Date, Mr. Wang Daxiong did not hold any Shares.
Mr. Liu Chong was one of the participants of the Asset Management Plan through which he held approximately 16.13% of the total number of units of the Asset Management Plan as at the Latest Practicable Date. Accordingly, the 1,112,903 H Shares represent the interests derived from the units subscribed by Mr. Liu Chong in the Asset Management Plan as at the Latest Practicable Date. As at the Latest Practicable Date, Mr. Liu Chong did not hold any Shares.
Mr. Xu Hui was one of the participants of the Asset Management Plan through which he held approximately 13.71% of the total number of units of the Asset Management Plan as at the Latest Practicable Date. Accordingly, the 945,968 H Shares represent the interests derived from the units subscribed by Mr. Xu Hui in the Asset Management Plan as at the Latest Practicable Date. As at the Latest Practicable Date, Mr. Xu Hui did not hold any Shares.

Positions held by Directors and Supervisors in substantial Shareholder(s)

As at the Latest Practicable Date:

(a) Ms. Sun Yueying, an executive Director, was also the chief accountant and member of the party leadership group of COSCO SHIPPING;
(b) Mr. Huang Jian, a non-executive Director, was also a department general manager of COSCO SHIPPING;
(c) Mr. Feng Boming, a non-executive Director, was also a department general manager of COSCO SHIPPING;
(d) Mr. Hao Wenyi, a Supervisor, was also a department general manager of COSCO SHIPPING; and
(e) Mr. Ye Hongjun, a Supervisor, was also the chief legal adviser of COSCO SHIPPING.

– II-2 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, none of the Directors or Supervisors was, as at the Latest Practicable Date, a director or employee of a company which had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Interests of substantial Shareholders

As at the Latest Practicable Date, so far as was known to the Directors, Supervisors or chief executive(s) of the Company, the interests or short positions of the Shareholders who are entitled to exercise or control 5% or more of the voting power at any general meeting or other persons (other than a Director, Supervisor or chief executive(s) of the Company) in the Shares or underlying shares of the Company which were required to be notified to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO, or which were required to be recorded in the register kept by the Company pursuant to Section 336 of the SFO or which have been notified to the Company and the Hong Kong Stock Exchange were as follow:

				Approximate
				percentage of
				the total	Approximate
				number of	percentage of
				the relevant		the issued
				class of	share capital
Name of	Class of		Number of	Shares of the		of the
Shareholder	Shares	Capacity	Shares interested	Company		Company
			(Note 1)	(%)		(%)
China Shipping	A Shares	Beneficial owner	4,458,195,175 (L)	56.20		38.16
			(Note 2)
	H Shares	Interest of controlled	100,944,000 (L)	2.69		0.86
		corporation	(Note 3)
COSCO	A Shares	Interest of controlled	4,458,195,175 (L)	56.20		38.16
SHIPPING		corporation	(Note 2)
	H Shares	Interest of controlled	100,944,000 (L)	2.69		0.86
		corporation	(Note 3)
The Northern	H Shares	Approved lending	249,945,900 (P)	6.66		2.14
Trust		agent
Company
(ALA)

Notes:

“L” means long position in the shares and “P” means shares in the lending pool.
Such 4,458,195,175 A Shares represent the same block of Shares.
Such 100,944,000 H Shares represent the same block of Shares and is held by Ocean Fortune Investment Limited, an indirectly wholly-owned subsidiary of China Shipping.

– II-3 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, no other person (other than Directors, Supervisors or chief executive(s) of the Company) had any interests or short positions in any Shares or underlying shares of the Company which would fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or any interests or short positions recorded in the register kept by the Company pursuant to Section 336 of the SFO or any interests or short positions which have been notified to the Company and the Hong Kong Stock Exchange.

3. NO MATERIAL ADVERSE CHANGE

The Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2018, being the date to which the latest audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or the Supervisors had entered into or proposed to enter into any service contract with any member of the Group which does not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. LITIGATION

As at the Latest Practicable Date, no litigation or claims of material importance was known to the Directors to be pending or threatened against any member of the Group.

6. MATERIAL INTERESTS

As at the Latest Practicable Date:

(a) none of the Directors or the Supervisors had any direct or indirect interest in any assets which had been, since 31 December 2018 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group; and
(b) none of the Directors or the Supervisors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

– II-4 –

GENERAL INFORMATION

APPENDIX II

7. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors nor any of their respective close associates had any interest in other business which competes or may compete, either directly or indirectly, with the business of the Group as if each of them were treated as a controlling shareholder under Rule 8.10 of the Hong Kong Listing Rules.

8. EXPERTS’ QUALIFICATIONS AND CONSENT

The following are the qualifications of the experts who have given their opinions or advice which are contained in this circular:

Name Qualification Messis Capital Limited A licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO Grandall Law Firm (Shanghai) PRC legal advisers to the Company

As at the Latest Practicable Date, each of the above experts had given and had not withdrawn its written consent to the issue of this circular with the inclusion of its letter or opinion and/or the reference to its name and opinions in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the above experts did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, each of the above experts did not have any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group, or was proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2018 (being the date to which the latest published audited statements of the Group were made up).

– II-5 –

GENERAL INFORMATION

APPENDIX II

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at 50/F, COSCO Tower, 183 Queen’s Road Central, Hong Kong from the date of this circular up to and including the date of the AGM:

(a) the COSCO Subscription Agreement;
(b) the letter from the Board, the text of which is set out in the section headed “Letter from the Board” in this circular;
(c) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out in the section headed “Letter from the Independent Board Committee” in this circular;
(d) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, the text of which is set out in the section headed “Letter from the Independent Financial Adviser” in this circular;
(e) the written consents referred to in the paragraph headed “Experts’ Qualifications and Consent” in this Appendix; and
(f) this circular.

– II-6 –

NOTICE OF AGM

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, 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 notice.

This notice is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of COSCO SHIPPING Development Co., Ltd.

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

NOTICE OF 2018 ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting for the year of 2018 (the “ AGM ”) of COSCO SHIPPING Development Co., Ltd. (the “ Company ”) will be held at 1:30 p.m. on Monday, 3 June 2019 (or at any adjournment thereof) at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China to consider and, if thought fit, pass the following resolutions. Unless otherwise stated, capitalised terms used in this notice shall have the same meanings as those defined in the announcement of the Company dated 18 April 2019 (the “ Announcement ”).

ORDINARY RESOLUTIONS

To consider and approve the report of the Board for the year ended 31 December 2018.
To consider and approve the report of the supervisory committee of the Company for the year ended 31 December 2018.
To consider and approve the work report of the independent non-executive Directors for the year ended 31 December 2018.
To consider and approve the audited financial statements and the auditors’ report of the Group for the year ended 31 December 2018.
To consider and approve the annual report of the Company for the year ended 31 December 2018.

– AGM-1 –

NOTICE OF AGM

To consider and approve the proposed profit distribution plan of the Company and the proposed payment of a final dividend of RMB0.033 per share of the Company (inclusive of applicable tax) for the year ended 31 December 2018.
To consider and determine the remuneration of the Directors and the supervisors of the Company for the year 2019.
8(a). To re-appoint ShineWing Certified Public Accountants as the Company’s domestic auditor for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration.
8(b). To re-appoint ShineWing Certified Public Accountants as the Company’s internal control auditor for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration.
8(c). To re-appoint Ernst & Young, Hong Kong Certified Public Accountants as the international auditor of the Company for the year of 2019, and to authorise the audit committee of the Board to determine its remuneration.

SPECIAL RESOLUTIONS

To consider and approve the further extension of the validity period of the Shareholders’ Resolutions for a period of 12 months, commencing from 5 June 2019, details of which are set out in the Announcement.
To consider and approve the further extension of the validity period of the Authorisation for a period of 12 months, commencing from 5 June 2019, details of which are set out in the Announcement.

By order of the Board of COSCO SHIPPING Development Co., Ltd.

Yu Zhen

Company Secretary

Shanghai, the People’s Republic of China

18 April 2019

– AGM-2 –

NOTICE OF AGM

Notes:

The register of H Shares members of the Company (the “ Register of Members ”) will be closed during the following periods and during these periods, no transfer of H Shares of the Company will be registered.
(a) To attend and vote at the AGM

For the purpose of holding the AGM, the Register of Members will be closed from 4 May 2019 to 3 June 2019 (both days inclusive), during which period no transfer of H Shares of the Company will be registered. Holders of the Company’s H Shares (the “ H Shareholders ”) whose names appear on the Register of Members at the close of business on 3 May 2019 are entitled to attend and vote at the AGM.

In order to attend and vote at the AGM, the H Shareholders shall lodge all transfer documents together with the relevant share certificates to Computershare Hong Kong Investor Services Limited (“ Computershare ”), the Company’s H Share registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 3 May 2019.

(b) To qualify for the proposed final dividend for the year ended 31 December 2018

In order to qualify for the proposed final dividend, the H Shareholders shall lodge all transfer documents together with the relevant share certificates to Computershare, the Company’s H Share registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 19 July 2019.

H Shareholders who intend to attend the AGM must complete the reply slips and return them to the Directorate Secretary Office of the Company not later than 20 days before the date of the AGM (i.e. not later than 14 May 2019).

The address of the Directorate Secretary Office of the Company is as follows: 5th Floor, COSCO SHIPPING Plaza 5299 Binjiang Dadao Pudong New District Shanghai The People’s Republic of China Tel: (8621) 6596 7333 Fax: (8621) 6596 6498

Each H Shareholder who has the right to attend and vote at the AGM is entitled to appoint in writing one or more proxies, whether a Shareholder or not, to attend and vote on his/her behalf at the AGM.
The form of proxy must be signed by the Shareholder or his/her attorney duly authorised in writing or, in the case of a legal person, must either be executed under its common seal or under the hand of a legal representative or other attorney duly authorised to sign the same. If the form of proxy is signed by an attorney of the appointer, the power of attorney authorising that attorney to sign, or other document of authorisation, must be notarially certified.
To be valid, for H Shareholders, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointer, a notarially certified copy of that power of attorney or other authority, must be delivered to Computershare at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time for holding the AGM or any adjournment thereof in order for such documents to be valid.
If a proxy attends the AGM on behalf of a Shareholder, he/she should produce his/her identity card and the form of proxy signed by the Shareholder or his/her legal representative or his/her duly authorised attorney, and specify the date of its issuance. If a legal person Shareholder appoints its corporate representative to attend

– AGM-3 –

NOTICE OF AGM

the AGM, such representative should produce his/her identity card and the notarised copy of the resolution passed by the board of directors or other authorities, or other notarised copy of the licence issued by such legal person Shareholder. Completion and return of the form of proxy will not preclude a Shareholder from attending in person and voting at the AGM or any adjournment thereof should he/she so wish.

Pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, any vote of Shareholders at a general meeting must be taken by way of poll except where the chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. As such, the resolutions set out in the notice of the AGM will be voted on by poll. Results of the poll voting will be published on the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk after the AGM.
Where there are joint registered holders of any share of the Company, only the person whose name stands first on the Register of Members in respect of such share may vote at the AGM, either personally or by proxy, in respect of such share as if he/she were solely entitled thereto.
The AGM is estimated to last for half a day. Shareholders who attend the AGM in person or by proxy shall bear their own transportation and accommodation expenses.

The Board as at the date of this notice comprises Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong, Mr. Gu Xu and Ms. Zhang Weihua, being independent non-executive Directors.

The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

– AGM-4 –

SUPPLEMENTAL NOTICE OF AGM

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

SUPPLEMENTAL NOTICE OF 2018 ANNUAL GENERAL MEETING

Reference is made to the notice of the annual general meeting (the “ Original Notice of AGM ”) dated 18 April 2019 which sets out the details of the annual general meeting (the “ AGM ”) of COSCO SHIPPING Development Co., Ltd. (the “ Company ”) to be held at 1:30 p.m. on Monday, 3 June 2019 (or at any adjournment thereof) at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China, and the resolutions to be proposed at the AGM for the Shareholders’ approval. Unless otherwise defined, capitalised terms used in this supplemental notice shall have the same meanings as those defined in the circular of the Company dated 10 May 2019 (the “ Circular ”).

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the AGM will be held, as originally scheduled, to consider and, if thought fit, pass the following resolution as a special resolution of the Company, in addition to the resolutions set out in the Original Notice of AGM:

SPECIAL RESOLUTION

To consider and approve the resolution in relation to the Provisions of Guarantees, details of which are set out in the Circular.

By order of the Board of COSCO SHIPPING Development Co., Ltd. Yu Zhen

Company Secretary

Shanghai, the People’s Republic of China

10 May 2019

– SAGM-1 –

SUPPLEMENTAL NOTICE OF AGM

Notes:

Save for the inclusion of the additional proposed resolution as set out in this supplemental notice of AGM, there are no other changes to the resolutions set out in the Original Notice of AGM. For details of the other resolutions to be considered at the AGM, closure of the register of H Shares members of the Company (the “ Register of Members ”), eligibility for attending the AGM, registration procedures for attending the AGM, appointment of proxy, method of voting and other relevant matters, please refer to the Original Notice of AGM.
Since the form of proxy dated 18 April 2019 (the “ Original Form of Proxy ”) sent together with the Original Notice of AGM does not contain the additional proposed resolution as set out in this supplemental notice of AGM, a revised form of proxy (the “ Revised Form of Proxy ”) has been prepared and is enclosed with this supplemental notice of AGM.
A Shareholder who has not yet lodged the Original Form of Proxy in accordance with the instructions printed thereon with Computershare, the Company’s H Share registrar, is requested to complete and return the enclosed Revised Form of Proxy in accordance with the instructions printed thereon to Computershare not less than 24 hours before the time for holding the AGM or any adjournment thereof, if he or she wishes to appoint proxies to attend the AGM on his or her behalf. In this case, the Original Form of Proxy should not be lodged to Computershare.

The address of Computershare is as follows: Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong

A Shareholder who has already lodged the Original Form of Proxy in accordance with the instructions printed thereon with Computershare should note the following:
(i) If no Revised Form of Proxy is lodged with Computershare, the Original Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder if correctly completed. The proxy appointed under the Original Form of Proxy will be entitled to vote in his or her discretion or abstain from voting on any resolutions properly put to the AGM, other than those referred to in the Original Notice of AGM and the Original Form of Proxy, including the additional resolution set out in this supplemental notice of AGM.
(ii) If the Revised Form of Proxy is lodged with Computershare in accordance with the instructions printed thereon not less than 24 hours before the time for holding the AGM or any adjournment thereof, 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 correctly completed.
(iii) If the Revised Form of Proxy is lodged after 24 hours before the time for holding the AGM or any adjournment thereof, the Revised Form of Proxy will be deemed invalid. It will not revoke the Original Form of Proxy previously lodged by the Shareholder. The Original Form of Proxy will be treated as a valid form of proxy lodged by the Shareholder if correctly completed. The proxy appointed under the Original Form of Proxy will be entitled to vote in his or her discretion or abstain from voting on any resolutions properly put to the AGM, other than those referred to in the Original Notice of AGM and the Original Form of Proxy, including the additional resolution set out in this supplemental notice of AGM.
Completion and return of the Original Form of Proxy and/or Revised Form of Proxy will not preclude a Shareholder from attending in person and voting at the AGM or any adjournment thereof should he/she so wish.
The reply slip despatched to the Shareholders on 18 April 2019 will be treated as a valid reply slip for the AGM.

– SAGM-2 –

SUPPLEMENTAL NOTICE OF AGM

The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

– SAGM-3 –

NOTICE OF H SHARES CLASS MEETING

This notice is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of COSCO SHIPPING Development Co., Ltd.

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

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

(Stock Code: 02866)

NOTICE OF H SHARES CLASS MEETING

NOTICE IS HEREBY GIVEN that a class meeting of H Shareholders (the “ H Shares Class Meeting ”) of COSCO SHIPPING Development Co., Ltd. (the “ Company ”) will be held at 1:30 p.m. on Monday, 3 June 2019 at Level 3, Ocean Hotel Shanghai, 1171 Dong Da Ming Road, Hong Kou District, Shanghai, the People’s Republic of China to consider and, if thought fit, pass the following resolutions. Unless otherwise defined, capitalised terms used in this notice shall have the same meanings as those defined in the announcement of the Company dated 18 April 2019 in relation to, among other things, the Revised Proposed Non-public Issuance of A Shares (the “ Announcement ”).

SPECIAL RESOLUTIONS

To consider and approve the further extension of the validity period of the Shareholders’ Resolutions for a period of 12 months, commencing from 5 June 2019, details of which are set out in the Announcement.
To consider and approve the further extension of the validity period of the Authorisation for a period of 12 months, commencing from 5 June 2019, details of which are set out in the Announcement.

By order of the Board of COSCO SHIPPING Development Co., Ltd, Yu Zhen

Company Secretary

Shanghai, the People’s Republic of China

18 April 2019

– HCM-1 –

NOTICE OF H SHARES CLASS MEETING

Notes:

For the purpose of holding the H Shares Class Meeting, the register of H Shares members of the Company (the “ Register of Members ”) will be closed from 4 May 2019 to 3 June 2019 (both days inclusive), during which period no transfer of H Shares of the Company will be registered. H Shareholders whose names appear on the Register of Members at the close of business on 3 May 2019 are entitled to attend and vote at the H Shares Class Meeting.
In order to attend and vote at the H Shares Class Meeting, H Shareholders shall lodge all transfer documents together with the relevant share certificates to Computershare Hong Kong Investor Services Limited (“ Computershare ”), the Company’s H Share registrar, not later than 4:30 p.m. on 3 May 2019.

The address of Computershare is as follows: Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong

H Shareholders, who intend to attend the H Shares Class Meeting, must complete the reply slips and return them to the Directorate Secretary Office of the Company not later than 20 days before the date of the H Shares Class Meeting (i.e. not later than 14 May 2019).

Each H Shareholder who has the right to attend and vote at the H Shares Class Meeting is entitled to appoint in writing one or more proxies, whether a Shareholder or not, to attend and vote on his/her behalf at the H Shares Class Meeting.
The form of proxy must be signed by the Shareholder or his/her attorney duly authorised in writing or, in the case of a legal person, must either be executed under its common seal or under the hand of a legal representative or other attorney duly authorised to sign the same. If the form of proxy is signed by an attorney of the appointer, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified.
To be valid, for H Shareholders, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointer, a notarially certified copy of that power of attorney or other authority, must be delivered to Computershare at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time for holding the H Shares Class Meeting or any adjournment thereof in order for such documents to be valid.
If a proxy attends the H Shares Class Meeting on behalf of a Shareholder, he/she should produce his/her identity card and the form of proxy signed by the Shareholder or his/her legal representative or his/her duly authorised attorney, and specify the date of its issuance. If a legal person Shareholder appoints its corporate representative to attend the H Shares Class Meeting, such representative should produce his/her identity card and the notarised copy of the resolution passed by the Board or other authorities or other notarised copy of the licence issued by such legal person Shareholder. Completion and return of the form of proxy will not preclude a Shareholder from attending in person and voting at the H Shares Class Meeting or any adjournment thereof should he/she so wish.

– HCM-2 –

NOTICE OF H SHARES CLASS MEETING

Pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, any vote of Shareholders at a general meeting must be taken by way of poll except where the chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. As such, the resolutions set out in the notice of the H Shares Class Meeting will be voted on by poll. Results of the poll voting will be published on the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk after the H Shares Class Meeting.
Where there are joint registered holders of any share of the Company, only the person whose name stands first on the Register of Members in respect of such share may vote at the H Shares Class Meeting, either personally or by proxy, in respect of such share as if he/she were solely entitled thereto.
The H Shares Class Meeting is estimated to last for half a day. Shareholders who attend the H Shares Class Meeting in person or by proxy shall bear their own transportation and accommodation expenses.

The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

– HCM-3 –

AI assistant

COSCO SHIPPING Development Co., Ltd. — AGM Information 2019

50782_rns_2019-05-10_90226441-491d-4a6c-a684-c75522b1c7ed.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]

(Stock Code: 02866)

I. INTRODUCTION

II. REPORT OF THE BOARD FOR THE YEAR ENDED 31 DECEMBER 2018

III. REPORT OF THE SUPERVISORY COMMITTEE FOR THE YEAR ENDED 31 DECEMBER 2018

IV. WORK REPORT OF THE INDEPENDENT DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2018

V. AUDITED FINANCIAL STATEMENTS AND AUDITORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2018

VI. 2018 ANNUAL REPORT

VII. 2018 PROFIT DISTRIBUTION PLAN

1. Proposed payment of a final dividend

LETTER FROM THE BOARD

2. Enterprise income tax

3. Individual income tax

Shanghai-Hong Kong Stock Connect

Shenzhen-Hong Kong Stock Connect

5. To qualify for the proposed final dividend for the year ended 31 December 2018

VIII. REMUNERATION OF DIRECTORS AND SUPERVISORS FOR THE YEAR 2019

IX. RE-APPOINTMENT OF DOMESTIC AUDITOR, INTERNAL CONTROL AUDITOR AND INTERNATIONAL AUDITOR FOR THE YEAR 2019

1. Introduction

2. Further Extension Resolutions

3. Reasons for the Further Extension Resolutions

4. Details of the Revised Proposed Non-public Issuance of A Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Price Determination Date, issue price and pricing principles:

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Lock-up period:

LETTER FROM THE BOARD

5. Principal terms of the COSCO Subscription Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Lock-up period:

6. The COSCO SHIPPING Undertaking

7. Effects on the shareholding structure of the Company

LETTER FROM THE BOARD

8. Equity fund raising activities in the past twelve months

(a) The Revised Proposed Non-public Issuance of A Shares

(b) The COSCO Subscription

(c) Alternative financing

LETTER FROM THE BOARD

10. Authorisation granted to the Board to handle all matters in connections with the Revised Proposed Non-public Issuance of A Shares

11. Implications under the Hong Kong Listing Rules

12. Independent Board Committee and Independent Financial Adviser

13. Proposal in relation to the Further Extension Resolutions

XI. PROVISIONS OF GUARANTEES

XII. THE AGM AND NEW CLASS MEETINGS

XIII. RECOMMENDATION

XIV. FURTHER INFORMATION

By order of the Board of COSCO SHIPPING Development Co., Ltd. Yu Zhen

For identification purpose only.

中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]

FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

(1) FURTHER EXTENSION OF VALIDITY PERIOD OF RESOLUTIONS REGARDING REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND

(2) FURTHER EXTENSION OF VALIDITY PERIOD OF AUTHORISATION TO THE BOARD AND ANY PERSON AUTHORISED BY THE BOARD TO HANDLE ALL MATTERS IN CONNECTION WITH THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and Reasons for Further Extension Resolutions

2. Reasons for and Benefits of the Revised Proposed Non-Public Issuance of A Shares and the COSCO Subscription

Alternative financing

3. Key Terms of the Revised Proposed Non-Public Issuance of A Shares

COSCO SHIPPING Development Co., Ltd. AGM Information 2019

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**

**中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.[*]**