COSCO SHIPPING Development Co., Ltd. - Capital/Financing Update 2016

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

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of China Shipping Container Lines Company Limited.

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

(Stock Code: 02866)

(1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (2) CONNECTED TRANSACTION - PROPOSED SUBSCRIPTION OF A SHARES BY THE CONTROLLING SHAREHOLDER

(3) APPLICATION FOR WHITEWASH WAIVER

(4) SPECIAL DEAL

(5) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION (6) PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN AND

(7) RESUMPTION OF TRADING IN A SHARES

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

The Board is pleased to announce that, on 11 October 2016, the Board has approved the Proposed Non-public Issuance of A Shares, pursuant to which the Company will issue a maximum of 3,278,688,524 A Shares (subject to adjustment) to not more than 10 specific target subscribers, including China Shipping, which would raise a gross proceeds of up to RMB12 billion.

The issue price of the A Shares to be issued under the Proposed Non-public Issuance of A Shares shall not be lower than the Benchmark Price, being 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), which is RMB3.66 per A Share.

The A Shares to be issued under the Proposed Non-public Issuance of A Shares represents (i) approximately 41.33% of the existing issued A Shares and approximately 28.06% of the existing total issued share capital of the Company as at the date of this announcement; and (ii) approximately 29.25% of the enlarged issued A Shares and approximately 21.91% of the enlarged total issued share capital of the Company upon completion of the Proposed Non-public Issuance of A Shares.

The Company will issue the A Shares under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings. 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 Proposed Non-public Issuance of A Shares. The A Shares to be issued under the Proposed Non-public Issuance of A Shares can be traded on the Shanghai Stock Exchange upon the expiration of the lock-up period.

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY CHINA SHIPPING

As part of the Proposed Non-public Issuance of A Shares, on 11 October 2016, the Company and China Shipping entered into the CS Subscription Agreement pursuant to which China Shipping has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, such number of A Shares for an amount of not less than RMB5 billion and not more than RMB7 billion under the Proposed Non-public Issuance of A Shares. China Shipping will not participate in the pricing exercise for the 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.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, China 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, China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company. The CS Subscription constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is therefore subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

IMPLICATIONS UNDER THE TAKEOVERS CODE AND APPLICATION FOR WHITEWASH WAIVER

As at the date of this announcement, China Shipping and parties acting in concert with it 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 entire issued share capital of the Company. Immediately following completion of the CS Subscription, assuming that (i) China Shipping subscribes for such number of A Shares for an amount of up to RMB7 billion at the Benchmark Price, (ii) the other target subscribers subscribe for such number of A Shares for an aggregate amount of up to RMB5 billion at the Benchmark Price and (iii) there is no change in the total issued share capital of the Company since the date of this announcement save for the issue of the A Shares pursuant to the Proposed Non-public Issuance of A Shares, the aggregate shareholding of China Shipping and parties acting in concert with it in the Company will increase to approximately 43.25% of the then enlarged total issued share capital of the Company.

Accordingly, upon completion of the CS Subscription, pursuant to Rule 26.1 of the Takeovers Code, China Shipping and parties acting in concert with it will be required to make a mandatory general offer for all the issued shares in the Company not already owned or agreed to be acquired by China Shipping and parties acting in concert with it, unless the Whitewash Waiver from strict compliance with Rule 26.1 of the Takeovers Code is obtained from the Executive. The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders taken by way of a poll at the EGM.

As at the date of this announcement, the Company does not believe that the Proposed Non-public Issuance of A Shares and the CS Subscription give rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). If a concern should arise after the release of this announcement, the Company will endeavour to resolve the matter to the satisfaction of the relevant authority as soon as possible but in any event before the despatch of the circular. The Company notes that the Executive may not grant the Whitewash Waiver if the Proposed Non-public Issuance of A Shares and the CS Subscription do not comply with other applicable rules and regulations.

SPECIAL DEAL IN RELATION TO THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

Pursuant to Rules 23 and 24 of the Rules for the Implementation of Non-public Issuance of Shares by Listed Companies (《上市公司非公開發行股票實施細則》), 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》).

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 China Shipping) under the 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 does not contravene the applicable PRC laws, regulations and regulatory requirements.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

The Independent Board Committee (comprising all the independent non-executive Directors) has been formed in accordance with Chapter 14A of the Listing Rules and Rule 2.8 of the Takeovers Code to advise the Independent Shareholders on the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal. As all the three non-executive Directors, namely, Mr. Feng Boming, Mr. Huang Jian and Mr. Chen Dong, were nominated by China Shipping to the Board, they are not included as members of the Independent Board Committee.

In this connection, an independent financial adviser will be appointed with the approval of the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal. Further announcement will be made by the Company upon the appointment of the independent financial adviser.

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Board proposes to make certain amendments to the Articles of Association, to take effect subject to and upon the completion of the Proposed Non-public Issuance of A Shares, in order to reflect the latest registered capital and shareholding structure of the Company as a result of the issue of A Shares pursuant to the Proposed Non-public Issuance of A Shares.

In addition, the Board also proposes to make certain other amendments to the Articles of Association in relation to, among other things, (i) proxy at general meetings and (ii) the profit distribution plan of the Company, in accordance with relevant laws and regulations in the PRC, including the Guidance on the Articles of Association of Listed Companies (revised in 2016) (《上市公司章程指引》（2016修訂）) and the Listed Companies Regulatory Guidance No. 3 – Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號－上市公司現金分紅》) issued by the CSRC and the Guideline on the Distribution of Cash Dividends by Listed Companies of the Shanghai Stock Exchange (《上海證券交易所上市公司現金分紅指引》) issued by the Shanghai Stock Exchange.

The Proposed Amendments to the Articles of Association are subject to approval by the Shareholders by way of special resolution at the EGM and the approval of, and registration or filing with, the relevant PRC governmental authorities.

PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN

Pursuant to the Notice Regarding Further Implementation of Cash Dividend Distribution of Listed Companies (《關於進一步落實上市公司現金分紅有關事項的通知》) and Listed Companies Regulatory Guidance No. 3 – Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號－上市公司現金分紅》) both issued by the CSRC, the Guideline on the Distribution of Cash Dividends by Listed Companies of the Shanghai Stock Exchange (《上海證券交易所上市公司現金分紅指引》) issued by the Shanghai Stock Exchange and the Articles of Association, the Board has formulated and proposes to adopt the Shareholders’ Return Plan. The proposed adoption of the Shareholders’ Return Plan will be subject to the approval by the Shareholders at the EGM.

EGM AND CLASS MEETINGS

The EGM will be convened to consider and, if thought fit, approve (i) the Proposed Non-public Issuance of A Shares, (ii) the CS Subscription, (iii) the Specific Mandate, (iv) the Whitewash Waiver, (v) the Special Deal, (vi) the Proposed Amendments to the Articles of Association and (vii) the Shareholders’ Return Plan.

The Class Meetings will be convened to consider and, if thought fit, approve (i) the Proposed Non-public Issuance of A Shares, (ii) the CS Subscription, (iii) the Specific Mandate and (iv) the Special Deal.

China Shipping and parties acting in concert with it and those who are involved in or interested in the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and/or the Special Deal will be required to abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings in relation to the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal. In the event that a Shareholder becomes a subscriber under the Proposed Non-public Issuance of A Shares, such Shareholder will be required to abstain from voting at the EGM and/or the Class Meetings. Save as 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 Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal and therefore no other Shareholder is required to abstain from voting at the EGM and/or the Class Meetings.

A circular containing, among other things, (i) further details of the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver, the Special Deal, the Proposed Amendments to the Articles of Association and the Shareholders’ Return Plan; (ii) a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal; (iii) a letter from an independent financial adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal; and (iv) the notice of the EGM and the Class Meetings is expected to be despatched to the Shareholders on or before 1 November 2016 in accordance with the requirements of the Listing Rules and the Takeovers Code. In the event that additional time is required to prepare the information for inclusion in the circular, the Company will apply to the Executive for an extension of time for the despatch of the circular. Further announcement(s) will be made by the Company as and when appropriate.

RESUMPTION OF TRADING IN A SHARES

At the request of the Company, trading in the A Shares on the Shanghai Stock Exchange has been suspended from 28 September 2016 as the Company was contemplating the Proposed Non-public Issuance of A Shares. An application has been made by the Company to the Shanghai Stock Exchange for the resumption of trading in the A Shares on the Shanghai Stock Exchange from 12 October 2016.

The completion of the Proposed Non-public Issuance of A Shares and the CS Subscription are subject to the satisfaction of certain conditions. Accordingly, the Proposed Non-public Issuance of A Shares and the CS Subscription may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

INTRODUCTION

Reference is made to the announcement of the Company dated 27 September 2016 in relation to, among other things, the Proposed Non-public Issuance of A Shares.

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

The details of the Proposed Non-public Issuance of A Shares are set out below.

Details of the Proposed Non-public Issuance of A Shares

Class and par value of A Shares with a par value of RMB1.00 each. Shares to be issued:

Method and time of issuance: The 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 China Shipping. The Company will complete the Proposed Non-public Issuance of A Shares within six months after obtaining the approval from the CSRC.

Number of A Shares A maximum of 3,278,688,524 A Shares will be issued under the to be issued: Proposed Non-public Issuance of A Shares, which represents:

(i) approximately 41.33% of the existing issued A Shares and approximately 28.06% of the existing total issued share capital of the Company as at the date of this announcement; and
(ii) approximately 29.25% of the enlarged issued A Shares and approximately 21.91% of the enlarged total issued share capital of the Company upon completion of the Proposed Non-public Issuance of A Shares.

The Cap 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 Proposed Non-public Issuance of A Shares.

Subject to the Cap, the Board proposes that the Shareholders at the EGM and the Class Meetings grant 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 market conditions and negotiations with the sponsor (the lead underwriter) with reference to the amount of proceeds to be raised and the actual amount of subscription received.

China Shipping undertakes to subscribe for such number of A Shares for an amount of not less than RMB5 billion and not more than RMB7 billion under the Proposed Non-public Issuance of A Shares.

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

Target subscribers:

The target subscribers for the Proposed Non-public Issuance of A Shares will be not more than 10 specific subscribers (including China Shipping). The target subscribers other than China 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.

The H Shareholders (other than China Shipping) are not entitled to subscribe for A Shares under the Proposed Non-public Issuance of A Shares. Please refer to the section headed “Special Deal in relation to the Proposed Non-public Issuance of A Shares” below for further details.

The final list of subscribers (other than China Shipping) will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders 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 regulations, after obtaining the approval documents issued by the CSRC in respect of the Proposed Nonpublic Issuance of A Shares.

As at the date of this announcement, apart from the CS Subscription Agreement, the Company has not entered into any agreement with any potential subscribers in respect of the Proposed Non-public Issuance of A Shares. The Company currently expects that, with the exception of China Shipping: (i) the A Shares to be issued under the 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 Proposed Non-public Issuance of A Shares; and (ii) the subscribers will not be parties acting in concert with China Shipping. The Company will comply with all the relevant requirements of the 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 Proposed Non-public Issuance of A Shares is the date of the announcement of the Board resolutions passed at the ninth meeting of the fifth session of the Board, being 11 October 2016.

The issue price shall not be lower than the Benchmark Price, being 90% of the Average Trading Price, which is RMB3.66 per A Share. The final issue price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders 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 regulations, after obtaining the approval documents issued by the CSRC in respect of the Proposed Non-public Issuance of A Shares.

All the target subscribers will subscribe for the A Shares under the Proposed Non-public Issuance of A Shares at the same issue price in cash. China Shipping will not participate in the price inquiry exercise for the 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.

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 Proposed Non-public Issuance of the A Shares.

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

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

(i) the obtaining of the approval from the Shareholders at the EGM and the Class Meetings;
(ii) the obtaining of the approval from the SASAC;
(iii) the obtaining of the approval from the CSRC; and
(iv) the obtaining of the Whitewash Waiver and the consent to the Special Deal from the Executive.

According to the PRC Legal Advisers, none of the conditions above may be waived by any party to the 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 Proposed Non-public Issuance of A Shares.

As at the date of this announcement, no application for the approval of the Proposed Non-public Issuance of A Shares has been submitted to the SASAC or the CSRC by the Company. The Company will submit the application for approval to (i) the SASAC following the approval by the Board of the Proposed Non-public Issuance of A Shares, and (ii) the CSRC following the approval by the Independent Shareholders of the Proposed Nonpublic Issuance of A Shares at the EGM and the Class Meetings, in accordance with applicable laws and regulations in the PRC.

Lock-up period:

Place of listing of the A Shares to be issued:

Use of proceeds:

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

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 Proposed Non-public Issuance of A Shares. The A Shares to be issued under the Proposed Non-public Issuance of A Shares can be traded on the Shanghai Stock Exchange upon the expiration of the lock-up period.

The gross proceeds to be raised from the Proposed Non-public Issuance of A Shares will be not more than RMB12 billion (inclusive of the subscription for an amount of not less than RMB5 billion by China Shipping pursuant to the CS Subscription Agreement). The net proceeds from the Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Proposed Non-public Issuance of A Shares) are intended to be used in the following manner:

(i) as to approximately RMB6 billion to be used for the capital injection in COSCO Shipping Leasing;
(ii) as to approximately RMB2.4 billion to be used for the capital injection in FIL;
(iii) as to approximately RMB1.8 billion to be used for redemption of maturing corporate bonds (which are held by persons other than the existing Shareholders); and
(iv) as to the remaining proceeds of approximately RMB1.8 billion to be used to replenish working capital of the Company.

If the actual proceeds to be raised from the 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 Proposed Non-public 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 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 A Shares:

Distribution of profit:

Rights of the A Shares to be issued:

Validity period of the resolution:

The Company will issue the A Shares under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings.

Upon completion of the 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 Proposed Non-public Issuance of A Shares.

The A Shares to be issued under the 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.

The resolution regarding the Proposed Non-public Issuance of A Shares shall be valid for 12 months from the date of the passing of the resolution at the EGM and the Class Meetings.

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY CHINA SHIPPING

Major terms of the CS Subscription Agreement

Date: 11 October 2016 Parties: (1) The Company, as the issuer; and (2) China Shipping, as the subscriber.

Number of A Shares Subject to the Cap, the number of the A Shares to be issued to to be issued: China Shipping under the CS Subscription Agreement will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the EGM and the Class Meetings, based on the market conditions and negotiations with the sponsor (the lead underwriter) with reference to the amount of proceeds to be raised and the actual amount of subscription received.

Pursuant to the CS Subscription Agreement, China Shipping undertakes to subscribe for such number of A Shares for an amount of not less than RMB5 billion and not more than RMB7 billion under the Proposed Non-public Issuance of A Shares.

Subscription price and pricing principles:

The subscription price shall not be lower than the Benchmark Price, being 90% of the Average Trading Price, which is RMB3.66 per A Share.

The final subscription price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders 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 regulations, after obtaining the approval documents issued by the CSRC in respect of the Proposed Non-public Issuance of A Shares.

China Shipping (including the senior management who are also Directors) will not participate in the pricing exercise for the 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.

The Benchmark Price will be adjusted if there occurs any exright 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 Proposed Non-public Issuance of A Shares.

The aggregate subscription price under the CS Subscription Agreement will be paid by China 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 CS Subscription:

The CS Subscription is conditional upon:

(i) the obtaining of the approval from the Board and the Shareholders at the EGM and the Class Meetings;
(ii) the obtaining of the approval from the SASAC;
(iii) the obtaining of the approval from the CSRC; and
(iv) the obtaining of the Whitewash Waiver and the consent to the Special Deal from the Executive.

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

As at the date of this announcement, no application for the approval of the CS Subscription has been submitted to the SASAC or the CSRC by the Company. The Company will submit the application for approval to (i) the SASAC following the approval by the Board of the CS Subscription, and (ii) the CSRC following the approval by the Independent Shareholders of the CS Subscription at the EGM and the Class Meetings, in accordance with applicable laws and regulations in the PRC.

Lock-up period:

Distribution of profit:

Pursuant to the CS Subscription Agreement, China Shipping shall not transfer the A Shares subscribed by it under the Proposed Non-public Issuance of A Shares within 36 months from the date of completion of the Proposed Non-public Issuance of A Shares.

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

Information on the parties to the CS Subscription Agreement

The Company

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.

China Shipping

China Shipping is a large shipping conglomerate involved in import and export business, trading, coastal and ocean cargo transportation, dry bulk cargo transportation, supply of food for vessels, management of docks and other services in relation to the above, and operates in different regions of the PRC and across the world.

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the date of this announcement, 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.

The shareholding structure of the Company (i) as at the date of this announcement and (ii) immediately after completion of the Proposed Non-public Issuance of A Shares (assuming that (i) China Shipping subscribes for such number of A Shares for an amount of up to RMB7 billion at the Benchmark Price, (ii) the other target subscribers subscribe for such number of A Shares for an aggregate amount of up to RMB5 billion at the Benchmark Price and (iii) there is no change in the total issued share capital of the Company since the date of this announcement save for the issue of the A Shares pursuant to the Proposed Non-public Issuance of A Shares) is as set out below:

Name of Shareholder Class of Shares China Shipping its associates and parties acting in concert with it_(Note 1)_ A H Sub-total Public A Shareholders A Public H Shareholders H Total	Shareholding as the date of this announcement 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 3,473,929,825 43.80 29.73 3,650,056,000 – 31.24 11,683,125,000 100.00 100.00	Shareholding immediately after completion of the 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 (%) 6,370,763,481 56.83 42.58 100,944,000 – 0.67 6,471,707,481 – 43.25 4,840,050,043 43.17 32.35 3,650,056,000 – 24.40 14,961,813,524 100.00 100.00	Shareholding immediately after completion of the 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 (%) 6,370,763,481 56.83 42.58 100,944,000 – 0.67 6,471,707,481 – 43.25 4,840,050,043 43.17 32.35 3,650,056,000 – 24.40 14,961,813,524 100.00 100.00
			100.00

Note:

1. An aggregate of 4,458,195,175 A Shares is held by China Shipping and an aggregate of 100,944,000 H Shares is held by Ocean Fortune Investment Limited, an indirectly wholly-owned subsidiary of China Shipping.

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 date of this announcement.

REASONS FOR AND BENEFITS OF THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

The Board considers that the 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.

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

The gross proceeds to be raised from the Proposed Non-public Issuance of A Shares will be not more than RMB12 billion. The net proceeds from the Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Proposed Non-public Issuance of A Shares) are intended to be used for, among others, the capital injections in COSCO Shipping Leasing and FIL and the redemption of the Company’s maturing corporate bonds (which are held by persons other than the existing Shareholders). These align with the transformation of business of the Company.

In addition, the CS Subscription also demonstrates the confidence China Shipping places in the Company and China Shipping’s support to the development and transformation of the business of the Company.

The terms and conditions of the CS Subscription Agreement are agreed after arm’s length negotiations between the Company and China Shipping. As stated in the section headed “Implications under the Listing Rules”, all the executive Directors and non-executive Directors have abstained from voting on the relevant Board resolutions approving the Proposed Non-public Issuance of A Shares and the CS Subscription. The independent non-executive Directors will, after considering the advice from the independent financial adviser, express their view on whether the terms of the Proposed Non-public Issuance of A Shares and the CS Subscription are on normal commercial terms that are fair and reasonable and whether the Proposed Non-public Issuance of A Shares and the CS Subscription are in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, hold directorship(s) or act as senior management in China Shipping and its associates, and Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian, all being non-executive Directors were nominated by China Shipping to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian have therefore abstained from voting on the relevant Board resolutions approving the Proposed Non-public Issuance of A Shares and the CS Subscription. As at the date of this announcement, none of the aforementioned Directors hold any Shares. Save as aforementioned, none of the other Directors has a material interest in the Proposed Non-public Issuance of A Shares and the CS Subscription and hence no other Director has abstained from voting on such Board resolutions.

IMPLICATIONS UNDER THE TAKEOVERS CODE AND APPLICATION FOR WHITEWASH WAIVER

As disclosed in the announcements of the Company dated 11, 14, 15 and 29 December 2015, China Shipping and its associates have during the period from 9 July 2015 to 29 December 2015, cumulatively acquired 47,570,789 A Shares and 100,944,000 H Shares through the trading systems of Shanghai Stock Exchange and Hong Kong Stock Exchange, respectively, representing approximately 1.27% of the total issued share capital of the Company, resulting in an increase of the shareholding of China Shipping and its associates in the Company from approximately 45.08% to approximately 46.35%.

As disclosed in the announcement of the Company dated 12 January 2016, China Shipping has on 12 January 2016 transferred 388,674,125 A Shares, representing 3.33% of the total issued share capital of the Company, and 467,325,000 A Shares, representing 4.00% of the total issued share capital of the Company, held by it to State Development & Investment Corporation and Guoxin Investment Co., Ltd. (國新投資有限公司), respectively, resulting in a decrease of the shareholding of China Shipping and its associates in the Company from approximately 46.35% to approximately 39.02%. Accordingly, the lowest percentage holding of China Shipping and parties acting in concert with it in the Company in the 12-month period ending on and inclusive of the date of this announcement is 39.02%.

As at the date of this announcement, China Shipping and parties acting in concert with it 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 entire issued share capital of the Company. Immediately following completion of the CS Subscription, assuming that (i) China Shipping subscribes for such number of A Shares for an amount of up to RMB7 billion at the Benchmark Price, (ii) the other target subscribers subscribe for such number of A Shares at an aggregate amount of up to RMB5 billion at the Benchmark Price and (iii) there is no change in the total issued share capital of the Company since the date of this announcement save for the issue of the A Shares pursuant to the Proposed Non-public Issuance of A Shares, the aggregate shareholding of China Shipping and parties acting in concert with it in the Company will increase to approximately 43.25% of the then enlarged total issued share capital of the Company.

Accordingly, upon completion of the CS Subscription, pursuant to Rule 26.1 of the Takeovers Code, China Shipping will be required to make a mandatory general offer for all the issued shares in the Company not already owned or agreed to be acquired by China Shipping and parties acting in concert with it, unless the Whitewash Waiver from strict compliance with Rule 26.1 of the Takeovers Code is obtained from the Executive.

Completion of the Proposed Non-public Issuance of A Shares and the CS Subscription is conditional upon, among other things, the Whitewash Waiver being granted by the Executive and approved by the Independent Shareholders. An application will be made by China Shipping to the Executive for the granting of the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to the approval of the Independent Shareholders taken by way of a poll at the EGM. The Executive may or may not grant the Whitewash Waiver. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the Proposed Non-public Issuance of A Shares and the CS Subscription will not proceed.

As at the date of this announcement, other than the 39.02% interest in the total issued share capital of the Company controlled by China Shipping and parties acting in concert with it and the transactions contemplated under the CS Subscription Agreement and as disclosed in this announcement, neither China Shipping nor parties acting in concert with it:

(i) holds, owns, controls or directs any shares, convertible securities, warrants, options or derivatives in respect of the securities in the Company;
(ii) has secured an irrevocable commitment to vote in favour of or against the Proposed Nonpublic Issuance of A Shares, the CS Subscription and/or the Whitewash Waiver;

(iii) has any arrangement (whether by way of option, indemnity or otherwise) or contracts in relation to the shares of the Company or China Shipping which might be material to the Proposed Non-public Issuance of A Shares, the CS Subscription and/or the Whitewash Waiver;
(iv) has any agreement or arrangement to which China Shipping or parties acting in concert with it is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Proposed Non-public Issuance of A Shares, the CS Subscription and/or the Whitewash Waiver; or
(v) has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company.

Save for the entering into of the CS Subscription Agreement and as disclosed in this announcement, neither China Shipping nor any parties acting in concert with it has acquired or disposed of any voting rights of the Company or has dealt for value in any shares, convertible securities, warrants, options or derivatives in respect of the securities in the Company in the six-month period prior to and including 11 October 2016, being the date on which the Company first made an announcement in respect of the CS Subscription. China Shipping and parties acting in concert with it will not acquire or dispose of any voting rights of the Company after the date of this announcement until the completion of the CS Subscription and for six months after the date of the EGM and the Class Meetings.

The Company has no outstanding warrants, options or securities convertible into shares of the Company as at the date of this announcement.

SPECIAL DEAL IN RELATION TO THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

The Proposed Non-public Issuance of A Shares, therefore, constitutes a Special Deal under Rule 25 of the Takeovers Code which is not capable of being extended to all Shareholders and requires the consent of the Executive. An application will be made by the Company to the Executive for its consent to the Special Deal pursuant to Rule 25 of the Takeovers Code. Such consent, if granted, will be subject to (i) the independent financial adviser publicly states that in its opinion the terms of the Special Deal are fair and reasonable and (ii) the approval of the Special Deal by the Independent Shareholders by way of poll at the H Shares Class Meeting. Accordingly, the resolution in respect of the Special Deal will be submitted, by way of special resolution, for H Shareholders’ consideration and approval at the H Shares Class Meeting. China Shipping and parties acting in concert with it and those who are involved in or interested in the Proposed Nonpublic Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and/or the Special Deal will abstain from voting on the resolution to be proposed at the H Shares Class Meeting to approve the Special Deal.

Pursuant to the Articles of Association and the applicable PRC laws and regulations, if the rights attached to any class of shares are varied, a special resolution shall be passed at the Shareholders’ general meeting and by holders of Shares of the affected class passed at a separate general meeting of the holders of Shares of the class. Accordingly, the resolution in respect of the Special Deal will also be submitted, by way of special resolution, for the Independent Shareholders’ consideration and approval at the EGM and the A Shares Class Meeting. China Shipping and parties acting in concert with it and those who are involved in or interested in the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and/or the Special Deal will abstain from voting on the resolution to be proposed at the EGM and A Shares Class Meeting to approve the Special Deal.

If the consent to the Special Deal is not obtained from the Executive or if the Special Deal is not approved by the Independent Shareholders, the Proposed Non-public Issuance of A Shares and the CS Subscription will not proceed.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The full text of the English translation of the Proposed Amendments to the Articles of Association, which were prepared in the Chinese language, is set out in the appendix to this announcement. In the event of any discrepancy between the English translation and the Chinese version of the Articles of Association, the Chinese version shall prevail.

The Proposed Amendments to the Articles of Association are subject to the approval by the Shareholders by way of special resolution at the EGM and the approval of, and registration or filing with, the relevant PRC governmental authorities.

PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN

EGM AND CLASS MEETINGS

The Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Special Deal and the Proposed Amendments to the Articles of Association will be proposed by way of special resolutions and the Whitewash Waiver and the Shareholders’ Return Plan will be proposed by way of an ordinary resolution at the EGM and/or the Class Meetings to be approved by the Independent Shareholders.

The voting in relation to the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver, the Special Deal, the Proposed Amendments to the Articles of Association and the Shareholders’ Return Plan at the EGM and/or the Class Meetings will be conducted by way of poll.

China Shipping and parties acting in concert with it and those who are involved in or interested in the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and/or the Special Deal will be required to abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings in relation to the Proposed Nonpublic Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal. In the event that a Shareholder becomes a subscriber under the Proposed Non-public Issuance of A Shares, such Shareholder will be required to abstain from voting at the EGM and/or the Class Meetings. Save as 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 Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal and therefore no other Shareholder is required to abstain from voting at the EGM and/or the Class Meetings.

RESUMPTION OF TRADING IN A SHARES

DEFINITIONS

Unless the context requires otherwise, capitalized terms used in this announcement shall have the meanings as follow:

“A Shareholder(s)” holder(s) of A Share(s) “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 Share Class Meeting” the class meeting of the A Shareholders “Articles of Association” the articles of association of the Company “associate(s)” has the meaning ascribed to it under the Listing Rules “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” RMB3.66 per A Share “Board” the board of directors of the Company “Cap” 3,278,688,524 A Shares “China Shipping” China Shipping (Group) Company[#] (中國海運（集團）總公司), a PRC state-owned enterprise and the controlling shareholder of the Company
“Class Meetings” the A Shares Class Meeting and the H Shares Class Meeting

“Company”	China Shipping Container Lines Company Limited* (中海集裝箱運
	輸股份有限公司), a joint stock limited company established in the
	PRC, whose H shares and A shares are listed on Main Board of the
	Hong Kong Stock Exchange (Stock Code: 2866) and the Shanghai
	Stock Exchange (Stock Code: 601866), respectively
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules
“COSCO Shipping	COSCO Shipping Leasing Co., Ltd.#(中遠海運租賃有限公
Leasing”	司), a limited liability company incorporated in the PRC and a
	wholly-owned subsidiary of the Company
“CS Subscription”	the proposed subscription of A Shares by China Shipping pursuant to
	the CS Subscription Agreement
“CS Subscription	the subscription agreement dated 11 October 2016 entered into
Agreement”	between the Company and China Shipping, pursuant to which China
	Shipping has conditionally agreed to subscribe for, and the Company
	has conditionally agreed to issue, such number of A Shares for an
	amount of not less than RMB5 billion and not more than RMB7
	billion under the Proposed Non-public Issuance of A Shares
“CSRC”	China Securities Regulatory Commission (中國證券監督管理委員
	會)
“Director(s)”	director(s) of the Company
“EGM”	the extraordinary general meeting of the Company to be convened
	to consider and, if thought fit, approve, among other things, (i) the
	Proposed Non-public Issuance of A Shares, (ii) the CS Subscription,
	(iii) the Specific Mandate, (iv) the Whitewash Waiver, (v) the Special
	Deal, (vi) the Proposed Amendments to the Articles of Association
	and (vii) the Shareholders’ Return Plan
“Executive”	the Executive Director of the Corporate Finance Division of the SFC
	or any delegates of the Executive Director
“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
“Group”	the Company and its subsidiaries as at the date of this announcement
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong	The Stock Exchange of Hong Kong Limited
Stock Exchange”
“H Shareholder(s)”	holder(s) of H Share(s)

“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 Main Board of the Hong Kong Stock Exchange
“H Shares Class Meeting” the class meeting of the H Shareholders “Independent Board the independent board committee of the Company comprising Mr. Committee” Cai Hongping, Mr. Tsang Hing Lun, Ms. Hai Chi Yuet and Mr. Graeme Jack, being all the independent non-executive Directors, which is formed to advise the Independent Shareholders on the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and the Special Deal in accordance with the Listing Rules and the Takeovers Code
“Independent Shareholders other than (i) China Shipping and parties acting in Shareholders” concert with it and (ii) all other parties (if any) who are interested or involved in the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandate, the Whitewash Waiver and/or the Special Deal.
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“PRC” the People’s Republic of China excluding, for the purpose of this announcement, Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“PRC Legal Advisers” the PRC legal advisers to the Company “Price Determination Date” 11 October 2016, being the date of the announcement of the Board’s resolutions in respect of the Proposed Non-public Issuance of A Shares
“Proposed Amendments the proposed amendments to the Articles of Association, the full text to the Articles of the English translation of the proposed amendments to the Articles of Association” of Association, which were prepared in the Chinese language, is set out in the appendix to this announcement
“Proposed Non-public the proposed non-public issuance of not more than 3,278,688,524 Issuance of A Shares” A Shares by the Company to not more than 10 specific target subscribers, including China Shipping
“RMB” Renminbi, the lawful currency of the PRC “SASAC” State-owned Assets Supervision and Administration Commission of the State Council of the PRC (中國國務院國有資產監督管理委員會)
“SFC” the Securities and Futures Commission of Hong Kong “Share(s)” A Share(s) and H Share(s)

“Shareholder(s)” holder(s) of Share(s)

“Shareholders’ Return Plan” the shareholders’ return plan for the coming three years (2016-2018) of the Company

“Special Deal” the Proposed Non-public Issuance of A Shares which constitutes a special deal under Rule 25 of the Takeovers Code

“Specific Mandate” the specific mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings to issue the A Shares under the Proposed Non-public Issuance of A Shares
“Takeovers Code” the Hong Kong Code on Takeovers and Mergers
“trading day(s)” a day on which the Shanghai Stock Exchange is open for dealing or trading in securities
“Whitewash Waiver” a waiver from the Executive pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code in respect of the obligations of China Shipping to make a mandatory general offer for all the securities of the Company not already owned or agreed to be acquired by China Shipping and parties acting in concert with it which would otherwise arise as a result of the issue of the A Shares under the Proposed Non-Public Issuance of A Shares and the CS Subscription Agreement

“%”

per cent

By order of the Board China Shipping Container Lines Company Limited Yu Zhen Joint Company Secretary

Shanghai, the People’s Republic of China

11 October 2016

As at the date of this announcement, the Board comprises of Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Feng Boming, Mr. Huang Jian and Mr. Chen Dong, being non-executive Directors, and Mr. Cai Hongping, Mr. Tsang Hing Lun, Ms. Hai Chi Yuet and Mr. Graeme Jack, being independent non-executive Directors.

All the Directors jointly and severally accept full responsibility for the accuracy of the information in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any of the statements in this announcement misleading.

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 “China Shipping Container Lines Company Limited”.

For identification purpose only.

APPENDIX

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The full text of the English translation of the Proposed Amendments to the Articles of Association is set out below.

Existing articles	To be amended as
Chapter VIII General meeting	Chapter VIII General meeting
Article 8.23Resolutions made at general meetings are divided into ordinary resolutions and special resolutions. An ordinary resolution of a general meeting shall be passed by more than half of the shareholders (including proxies) with voting rights attending the general meeting. A special resolution of a general meeting shall be passed by more than two thirds of the shareholders (including proxies) with voting rights attending the general meeting. The attending shareholders (including proxies) shall vote for or against every matter to be voted on. Abstentions will not be counted when the Company calculates the poll results concerning the particular matter.	Article 8.23Resolutions made at general meetings are divided into ordinary resolutions and special resolutions. An ordinary resolution of a general meeting shall be passed by more than half of the shareholders (including proxies) with voting rights attending the general meeting. A special resolution of a general meeting shall be passed by more than two thirds of the shareholders (including proxies) with voting rights attending the general meeting. The attending shareholders (including proxies) shall vote for or against every matter to be voted on, unless securities registration and settlement institutions, as the proxies of Shares traded through Shanghai-Hong Kong Stock Connect, make declarations according to the intention of actual holders. Abstentions will not be counted when the Company calculates the poll results concerning the particular matter.

Existing articles

To be amended as

Chapter VIII General meeting

Article 8.23Resolutions made at general
meetings are divided into ordinary resolutions
and special resolutions.
An ordinary resolution of a general meeting
shall be passed by more than half of the
shareholders (including proxies) with voting
rights attending the general meeting.
A special resolution of a general meeting
shall be passed by more than two thirds of the
shareholders (including proxies) with voting
rights attending the general meeting.
The attending shareholders (including proxies)
shall vote for or against every matter to be
voted on. Abstentions will not be counted
when the Company calculates the poll results
concerning the particular matter.

Article 8.23Resolutions made at general
meetings are divided into ordinary resolutions
and special resolutions.
An ordinary resolution of a general meeting
shall be passed by more than half of the
shareholders (including proxies) with voting
rights attending the general meeting.
A special resolution of a general meeting
shall be passed by more than two thirds of the
shareholders (including proxies) with voting
rights attending the general meeting.
The attending shareholders (including proxies)
shall vote for or against every matter to be
voted on, unless securities registration and
settlement institutions, as the proxies of Shares
traded through Shanghai-Hong Kong Stock
Connect, make declarations according to the
intention of actual holders. Abstentions will not
be counted when the Company calculates the
poll results concerning the particular matter.

Chapter XVI Accounting regulation and Chapter XVI Accounting regulation and profit distribution profit distribution Article 16.15 The profit distribution policy of Article 16.15 The profit distribution policy of the Company is specified as follows: the Company is specified as follows:

(I) Profit shall be distributed in the following manner:

(I) Profit shall be distributed in the following manner:

The Company may distribute dividends in cash, in shares or in a combination of both. The Company may distribute an interim profit if practicable.

The Company may distribute dividends in cash, in shares, in a combination of both cash and shares or otherwise as permitted by laws and regulations. The Company shall give priority to dividend distribution in cash. Subject to the adherence of the profit distribution principles and conditions, the Company shall in principle distribute profit each year. The Board of the Company may propose interim profit distribution with reference to the Company’s profitability and capital requirements.

(II) Specific circumstances and proportions of cash dividend of the Company are as follows:

If the Company makes profit and its total accumulated undistributed profit are positive with adequate liquidity in the current year, the Company may distribute dividend in cash provided that it shall not undermine the subsequent ongoing operation of the Company. In addition, the profit to be distributed in cash each year shall not be less than 10% of the distributable profit realized in that year.

(III) Conditions for distributing dividends in shares by the Company are as follows:

(II) Specific circumstances and proportions of cash dividend of the Company are as follows:

The following conditions shall be met in distributing cash dividends by the Company:

If the Company makes profit and the distributable profit realized in the year concerned (i.e. after-tax profits of the Company net of loss recovery and allocation of its profits to the statutory reserve) are positive (according to the financial statements of the parent company) with adequate liquidity, the Company may distribute dividend in cash provided that it shall not undermine the subsequent ongoing operation of the Company.
External auditors had issued a standard unqualified audit report for the financial statements of the Company for that year.

The capital needs for the Company’s normal operation are satisfied and there is no such event as significant c a s h e x p e n d i t u r e , e x c l u d i n g projects funded by raised proceeds.

Such significant cash expenditure refers to the proposed external investment, asset acquisition, repayment of debts or acquisition of equipment by the Company with accumulated expenditure within the following 12 months amounting to or exceeding 30% of the latest audited net assets of the Company.

The Company shall comply with the proportions set out as follows when proceeding with distributing cash dividends:

Pursuant to the provisions of the Company Law of the People’s Republic of China and relevant laws and regulations, as well as the Articles of Association, provided that the conditions for cash dividend distribution are satisfied and are in consistent with the normal operation and sustainable development of the Company, dividends distributed in the form of cash to be made for each of the coming three years shall not be less than 10% of the distributable profit realized for that year, on condition that no imminent cash outlays are expected.

Also, the accumulated cash distribution of profit for the three years shall not be less than 30% of the average annual distributable profit of the Company for the same period. The specific distribution proportion for each year shall be determined by the Board of the Company based on the Company’s operating conditions and relevant rules of the CSRC and submitted to the general meeting for consideration and approval.

The Board of the Company shall take various
factors into consideration, including its industry
features, development stages, business model
and profitability as well as whether it has any
substantial capital expenditure arrangements, and
differentiate the following circumstances to propose
a differentiated policy for cash dividend distribution
pursuant to the procedures stipulated in the Articles
of Association:
1. Where the Company is in a developed stage
with no substantial capital expenditure
arrangements, the dividend distributed in the
form of cash shall not be less than 80% of the
total profit distribution;
2. Where the Company is in a developed
stage with substantial capital expenditure
arrangements, the dividend distributed in the
form of cash shall not be less than 40% of the
total profit distribution;
3. Where the Company is in a developing
stage with substantial capital expenditure
arrangements, the dividend distributed in the
form of cash shall not be less than 20% of the
total profit distribution.

In the case that it is difficult to distinguish the Company’s stage of development but the Company has significant capital expenditure arrangements, the profit distribution may be dealt with pursuant to the preceding provisions.

(III) Conditions for distributing dividends in shares by the Company are as follows

Where the Company’s business is in a sound condition, and the Board considers that the share price of the Company does not reflect its share capital size and distributing dividend in the form of shares is in the entire interest of all the shareholders of the Company, the Company may adopt dividend distribution in the form of shares provided that the above conditions for cash dividend are fully satisfied. Should the Company distribute dividends in shares, it should be made on the premise of maintaining reasonable cash dividend returns and appropriate capital size and take into account the growth of the Company and dilution in net assets per share.

Article 16.16 Procedures for reviewing the profit distribution plan of the Company are as follows:

(I) The Company shall have various channels to consult its minority shareholders and independent directors for their expectation of distribution. The Company’s profit distribution plan shall be drafted by the management of the Company with reference to investors’ opinions, and shall then be submitted to the Board and the supervisory committee of the Company for consideration. The Board shall thoroughly discuss the profit distribution plan, record in detail the contents of the recommendations of the management, key points of the speeches of the Directors present at the meeting, opinions of independent directors, voting results of the Board, etc. and form written minutes to be properly kept as the Company’s records. The Board shall thoroughly discuss the rationality of the profit distribution plan and form a specific resolution and submit it to the general meeting for consideration.

Article 16.16 Procedures for reviewing the profit distribution plan of the Company and related information disclosure are as follows:

(I) Procedures for consideration of the profit distribution plan of the Company:

The Company’s profit distribution plan shall be drafted by the management of the Company with reference to investors’ opinions, and shall then be submitted to the Board and the supervisory committee of the Company for consideration and independent directors shall express their opinions. The Board shall thoroughly discuss the profit distribution plan, keep detailed records of the contents of the recommendations of the management, key points of the speeches of the Directors present at the meeting, voting results of the Board, etc. and prepare written minutes to be properly kept as the Company’s records. The Board shall thoroughly discuss the rationality of the profit distribution plan and prepare a specific resolution and submit it to the general meeting for consideration.

(II) If the Board receives a distribution plan from other shareholders that satisfies relevant conditions, the Board shall ask the relevant shareholders for the specific reasons and background of such plan, and publish an announcement setting out the contents and reasons of the plan in accordance with the “Rules of Procedures for General Meeting” of the Company and submit it to the general meeting for consideration.

(III) After the end of an accounting year, when the Board meeting does not propose any plan for profit distribution in cash in spite of making profit in that accounting year, it shall explain matters such as the specific reasons for not proposing any profit distribution in cash and the actual usage of the profit retained by it for the independent directors to issue their opinions on such issues, and then submit the same at the general meeting for approval in accordance with the relevant laws, regulations and regulatory policies.

If the Board receives a distribution plan from other shareholders that satisfies relevant conditions, the Board shall ask the relevant shareholders for the specific reasons and background of such plan, and publish an announcement setting out the contents and reasons of the plan in accordance with the “Rules of Procedures for General Meeting” of the Company and submit it to the general meeting for consideration.
Independent directors may solicit opinions from minority shareholders, put forth profit distribution plan and submit it directly to the Board for consideration and approval.
Before the cash dividend distribution plan is considered at the shareholders’ general meeting, different channels should be used to proactively communicate and interact with shareholders, in particular, the minority shareholders, and the Company shall fully listen to the opinions and demands of minority shareholders and timely answer the questions raised by minority shareholders.
After the end of an accounting year, when the Board meeting does not propose any plan for profit distribution in cash in spite of making profit in that accounting year, it shall explain matters such as the specific reasons for not proposing any profit distribution in cash and the actual usage of the profit retained by it for the independent directors to issue their opinions on such issues, and then submit the same at the general meeting for approval in accordance with the relevant laws, regulations and regulatory policies.

(II) Information disclosures regarding profit distribution plan of the Company:

The Company shall disclose in details in its periodic report the formulation and implementation of the profit distribution policy, especially cash dividend policy, and state whether the policy is in compliance with the requirements of the Articles of Association or the resolutions passed at the general meeting; whether the basis and ratio of the distribution of dividends are clear; whether the relevant decision-making procedures and systems are sound; whether the independent directors have duly performed their duties; whether there are enough channels for minority shareholders to express their views and concerns, and whether their legal interests are sufficiently protected, etc.
In the event of any adjustment or alteration to the cash dividend policy, the Company shall fully describe whether the conditions and procedures for such adjustment or alteration are compliant and transparent.
Where no cash dividends distribution plan are proposed by the Board of the Company for the year when profits are recorded, the Board shall explain in details the reasons for not distributing cash dividends, the exact usage of and application plan for the retained profits in the periodic report, and the independent directors shall express their opinions thereon.
Where there is a change in the control of the Company resulting from securities issuance, material asset restructuring, merger and division or acquisition, the Company shall disclose in details the cash dividend policy and relevant arrangements a f t e r t h e o f f e r i n g o r i s s u a n c e , restructuring or change in control, as well as the Board’s explanation of the aforesaid in the prospectus, offering proposal, report of material asset restructuring, report of changes in equity or report of acquisition.

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COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2016

50782_rns_2016-10-11_1513ea4e-2b0e-45e8-a413-d46a8e0a23a8.pdf

(1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (2) CONNECTED TRANSACTION - PROPOSED SUBSCRIPTION OF A SHARES BY THE CONTROLLING SHAREHOLDER

(3) APPLICATION FOR WHITEWASH WAIVER

(4) SPECIAL DEAL

(5) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION (6) PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN AND

(7) RESUMPTION OF TRADING IN A SHARES

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY CHINA SHIPPING

IMPLICATIONS UNDER THE LISTING RULES

IMPLICATIONS UNDER THE TAKEOVERS CODE AND APPLICATION FOR WHITEWASH WAIVER

SPECIAL DEAL IN RELATION TO THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN

EGM AND CLASS MEETINGS

RESUMPTION OF TRADING IN A SHARES

INTRODUCTION

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

Details of the Proposed Non-public Issuance of A Shares

Target subscribers:

Price Determination Date, issue price and pricing principles:

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

Lock-up period:

Use of proceeds:

Distribution of profit:

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY CHINA SHIPPING

Major terms of the CS Subscription Agreement

Conditions precedent of the CS Subscription:

Lock-up period:

Distribution of profit:

Information on the parties to the CS Subscription Agreement

The Company

China Shipping

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

REASONS FOR AND BENEFITS OF THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

IMPLICATIONS UNDER THE LISTING RULES

IMPLICATIONS UNDER THE TAKEOVERS CODE AND APPLICATION FOR WHITEWASH WAIVER

SPECIAL DEAL IN RELATION TO THE PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN

EGM AND CLASS MEETINGS

RESUMPTION OF TRADING IN A SHARES

DEFINITIONS

By order of the Board China Shipping Container Lines Company Limited Yu Zhen Joint Company Secretary

11 October 2016

For identification purpose only.

APPENDIX

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

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COSCO SHIPPING Development Co., Ltd. Capital/Financing Update 2016