DFZQ - AGM Information 2018 | FinancialReports.eu

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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

If you have sold or transferred all your shares in 東方證券股份有限公司 , you should at once hand this circular together with the accompanying form of proxy and reply slip to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

(A joint stock company incorporated in the People’s Republic of China with limited liability under the Chinese corporate name “ 東方證券股份有限公司 ” and carrying on business in Hong Kong as “ 東方證券 ” (in Chinese) and “DFZQ” (in English))

(Stock Code: 03958)

2017 REPORT OF THE BOARD 2017 REPORT OF THE SUPERVISORY COMMITTEE 2017 FINAL ACCOUNTS REPORT 2017 PROFIT DISTRIBUTION PROPOSAL 2017 ANNUAL REPORT PROPRIETARY BUSINESS SCALE OF THE COMPANY IN 2018 ENGAGEMENT OF AUDITING FIRMS FOR THE YEAR 2018 CONDUCTION OF ASSET-BACKED SECURITIZATION BUSINESS WITH THE COMPANY’S CREDIT ASSETS FROM ITS FINANCING BUSINESSES PROJECTED ROUTINE RELATED PARTY TRANSACTIONS OF THE COMPANY IN 2018

EXPECTED PROVISION OF GUARANTEES BY THE COMPANY IN 2018 AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the AGM of the Company to be held at Meeting Room, 4/F, Building 2, No. 318 South Zhongshau Road, Shanghai, the PRC on Friday, May 25, 2018 at 2:00 p.m. is set out on pages 12 to 14 of this circular.

The reply slip and the form of proxy for the AGM have been distributed on Tuesday, April 10, 2018 and have also been published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company’s website (www.dfzq.com.cn). If you are not able to attend the AGM, please complete and return the form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 24 hours before the time appointed for the holding of the AGM (i.e. 2:00 p.m. on Thursday, May 24, 2018), and deposit it together with the notarized power of attorney or other document of authorization with the H Share Registrar, Computershare Hong Kong Investor Services Limited (for holders of H Shares). Completion and return of the form of proxy will not preclude you from attending and voting at the AGM should you so desire.

Shareholders intending to attend the AGM in person or by their proxies should complete and return the reply slip for attending the AGM to the H Share Registrar, Computershare Hong Kong Investor Services Limited (for holders of H Shares) on or before Saturday, May 5, 2018.

April 30, 2018

TABLE OF CONTENTS

			Page
DEFINITIONS.		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM		THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
NOTICE OF	ANNUAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
ANNEX I	–	2017 REPORT OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
ANNEX II	–	2017 REPORT OF THE SUPERVISORY COMMITTEE. . . . . . . . . . .	II-1
ANNEX III	–	2017 DUTY PERFORMANCE REPORT OF
		INDEPENDENT DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
ANNEX IV	–	2017 FINAL ACCOUNTS REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
ANNEX V	–	PROPOSAL REGARDING THE PROJECTED
		ROUTINE RELATED PARTY TRANSACTIONS
		OF THE COMPANY IN 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1

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DEFINITIONS

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

“A Share(s)”	the domestic share(s) of the Company with a nominal value of
	RMB1 each, which are listed for trading on the SSE
“AGM” or “Annual General Meeting”	the 2017 annual general meeting of the Company to be held at
	Meeting Room, 4/F, Building 2, No. 318 South Zhongshan Road,
	Shanghai, the PRC on Friday, May 25, 2018 at 2:00 p.m.
“Articles of Association”	the articles of association of東方證券股份有限公司, as amended
	from time to time
“Board” or “Board of Directors”	the board of directors of the Company
“Company”	東方證券股份有限公司, a joint stock company incorporated in
	the PRC with limited liability, the H Shares of which are listed
	on the Hong Kong Stock Exchange under the stock code of 03958
	and the A Shares of which are listed on the SSE under the stock
	code of 600958
“CSRC”	the China Securities Regulatory Commission
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“H Share(s)”	the ordinary share(s) of the Company with a nominal value of
	RMB1 each, which are listed on the Hong Kong Stock Exchange
	and traded in Hong Kong dollars
“H Share Registrar”	Computershare Hong Kong Investor Services Limited
“HK$” or “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
“Latest Practicable Date”	April 23, 2018, being the latest practicable date for the purpose of
	ascertaining certain information contained in this circular prior to
	its publication

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DEFINITIONS

“PRC” or “China” the People’s Republic of China, but for the purposes of this circular only, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “RMB” or “Renminbi” Renminbi, the lawful currency of the PRC “Rules of Procedure for the Rules of Procedure for Shareholders’ General Meetings of the Shareholders’ General Meetings” Company, as amended from time to time “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholder(s)” the shareholder(s) of the Company, including holder(s) of H Shares and holder(s) of A Shares “SSE” Shanghai Stock Exchange “Supervisor(s)” the supervisor(s) of the Company “Supervisory Committee” the supervisory committee of the Company

Unless otherwise indicated, all the financial data in this circular were presented in Renminbi.

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LETTER FROM THE BOARD

(Stock Code: 03958)

Executive Directors: Mr. PAN Xinjun (Chairman) Mr. JIN Wenzhong (President)

Non-executive Directors:

Mr. LIU Wei Mr. WU Junhao Mr. CHEN Bin Mr. LI Xiang Ms. XIA Jinghan Mr. XU Jianguo Mr. DU Weihua

Registered office: 22/F, 23/F and 25-29/F Building 2, No. 318 South Zhongshan Road Shanghai PRC Principal place of business in Hong Kong: 28-29/F No. 100 Queen’s Road Central Central Hong Kong

Independent Non-executive Directors:

Mr. XU Guoxiang Mr. TAO Xiuming Mr. WEI Anning Mr. XU Zhiming Mr. JIN Qinglu

April 30, 2018

To the Shareholders

Dear Sir or Madam,

INTRODUCTION

The purpose of this circular is to provide you, as holders of H Shares, with the notice of the AGM (set out on pages 12 to 14 of this circular) and information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions or abstain from voting at the AGM.

At the AGM, ordinary resolutions will be proposed to approve, among others, (i) the report of the Board of Directors of the Company for the year 2017 (the “ 2017 Report of the Board ”); (ii) the report of the Supervisory Committee of the Company for the year 2017 (the “ 2017 Report of the Supervisory Committee ”); (iii) the final accounts report of the Company for the year 2017 (the “ 2017 Final Accounts Report ”); (iv) the profit distribution proposal of the Company for the year 2017 (the “ 2017 Profit Distribution

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LETTER FROM THE BOARD

Proposal ”); (v) the annual report of the Company for the year 2017 (the “ 2017 Annual Report ”); (vi) the proposal regarding the proprietary business scale of the Company in 2018; (vii) the proposal regarding the engagement of auditing firms for the year 2018; (viii) the proposal regarding the conduction of asset-backed securitization business with the Company’s credit assets from its financing business; (ix) the proposal regarding the projected routine related party transactions of the Company in 2018; and (x) the proposal regarding the expected provision of guarantees by the Company in 2018.

ORDINARY RESOLUTIONS

1. 2017 Report of the Board

An ordinary resolution will be proposed at the AGM to approve the 2017 Report of the Board. Details of the aforesaid report of the Board are set out in Annex I of this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

The 2017 Report of the Board was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

2. 2017 Report of the Supervisory Committee

An ordinary resolution will be proposed at the AGM to approve the 2017 Report of the Supervisory Committee. Details of the aforesaid report of the Supervisory Committee are set out in Annex II of this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

The 2017 Report of the Supervisory Committee was considered and approved by the Supervisory Committee on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

3. 2017 Final Accounts Report

An ordinary resolution will be proposed at the AGM to approve the 2017 Final Accounts Report. Details of the aforesaid final accounts report are set out in Annex IV of this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

The 2017 Final Accounts Report was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

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LETTER FROM THE BOARD

4. 2017 Profit Distribution Proposal

An ordinary resolution will be proposed at the AGM to approve the 2017 Profit Distribution Proposal in accordance with the Articles of Association.

In accordance with the Company Law, the Securities Law, the Financial Rules for Financial Enterprises, 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, the Guidelines of Cash Dividends Distribution of SSE (《上海證券交易所上市公司現金分紅指引》) and the Articles of Association and other relevant rules, and based on the actual needs of business development of the Company, the proposed profit distribution plan for 2017 of the Company is as follows:

As at the beginning of 2017, the undistributed profit of the Company was RMB5,871,486,147.80. Together with the net profit of the Company realized in 2017 of RMB2,442,708,717.76 and deducting the cash dividends of 2016 distributed of RMB932,317,801.65, the distributable profit of the Company in 2017 was amounted to RMB7,381,877,063.91.

In accordance with the relevant requirements of the aforesaid laws and regulations, the net profits of the Company for 2017 shall be distributed according to the following priority:

The Company appropriates RMB244,270,871.77 to the statutory surplus reserve calculated on the basis of 10% of the net profit of the parent company realized in 2017;
The Company appropriates RMB122,135,435.89 to the discretionary surplus reserve calculated on the basis of 5% of the net profit of the parent company realized in 2017;
The Company appropriates RMB366,406,307.66 to the transaction risk reserve calculated on the basis of 15% of the net profit of the parent company realized in 2017;
The Company appropriates RMB268,697,958.96 to the general risk reserve calculated on the basis of 11% of the net profit of the parent company realized in 2017;

The aggregate of the above amounted to RMB1,001,510,574.28.

Net of the above items, the Company’s distributable profits attributable to the investors in 2017 was RMB6,380,366,489.63.

The Company has considered factors such as long-term development and the interest of investors comprehensively, and proposed the profit distribution scheme for 2017 as follows:

Ways of cash dividend distribution for 2017 profit of the Company: based on the total share capital of 6,993,655,803.00 Shares as at 31 December 2017, a cash dividend of RMB2.00 (inclusive of tax) for every 10 Shares will be distributed to A Shareholders and H Shareholders who are registered on the date of cash distribution in 2017, with a total cash dividend of RMB1,398,731,160.60, accounting for 39.36% of the net profit attributable to the owners of the parent company in 2017 consolidated statements.

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LETTER FROM THE BOARD

Cash dividend will be denominated and distributed in RMB and paid in RMB to A Shareholders but paid in HK dollar to H Shareholders. The actual amount of distribution in HK dollar will be converted into HK dollar based on the average benchmark exchange rate published by the People’s Bank of China five working days prior to the date of AGM.

The 2017 Profit Distribution Proposal was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval. The Company will conduct the cash dividend distribution within two months from the date of convening the AGM, subject to the approval of the aforesaid profit distribution proposal at the AGM. The Company will give further announcement regarding the record date and the book closure period for the dividend of H Shares.

5. 2017 Annual Report

An ordinary resolution will be proposed at the AGM to approve the 2017 Annual Report. The 2017 Annual Report of the Company has been despatched and also published on the website of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the website of the Company (www.dfzq.com.cn).

The 2017 Annual Report was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

6. The proposal regarding the proprietary business scale of the Company in 2018

An ordinary resolution will be proposed at the AGM to consider and approve the proposal regarding the proprietary business scale of the Company in 2018. Details are as follows:

The proprietary securities business is the principle business of the Company. In order to keep in line with regulatory requirements and further strengthen risk management, the proprietary business scale of the Company in 2018 is set out as follows in accordance with the Administrative Measures for Risk Control Indicators of Securities Companies and relevant laws and regulations and company rules:

In accordance with various regulatory requirements of the CSRC, the maximum amount of investment in proprietary equity securities and securities derivatives shall not exceed 100% of net capital of the Company, and the maximum amount of investment in proprietary non-equity securities and securities derivatives shall not exceed 500% of net capital of the Company. The Board will be authorized to determine the detailed investment scale within the aforesaid limit based on the market changes and business development and keep in line with various regulatory requirements in relation to proprietary management and risk monitoring.

The aforesaid resolution was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

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LETTER FROM THE BOARD

7. The proposal regarding the engagement of auditing firms for the year 2018

An ordinary resolution will be proposed at the AGM to consider and approve the proposal regarding the engagement of accounting firms for the year 2018. Details are as follows:

According to the domestic and international supervisory regulations, the Company appointed accounting firms as the domestic and overseas auditors of the Company which were responsible for provision of relevant audit services in accordance with the PRC Accounting Standards for Business Enterprises and the International Financial Reporting Standards. Pursuant to the resolution approved on the 2016 AGM of the Company, the Company appointed Deloitte Touche Tohmatsu Certified Public Accountants LLP as the domestic auditor in 2017 and Deloitte Touche Tohmatsu as the overseas auditor in 2017. During serving for the Company as auditors in 2017, Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu followed auditing standards and other laws and regulations, adhered to professional ethics, showed strong professional competences and good abilities to perform their duties diligently, fulfilled effectively the responsibilities that the auditors should perform, and completed their audits independently, objectively and impartially.

The Board proposes that Deloitte Touche Tohmatsu Certified Public Accountants LLP be reappointed as the domestic auditor of the Company in 2018 and as the internal control auditor of the Company in 2018, and will be responsible for provision of relevant audit services in accordance with the PRC Accounting Standards for Business Enterprises for a period of one year. In 2018, the financial and special regulatory reporting auditing fees amounted to RMB1.19 million, and the internal control auditing fees were RMB370,000.
The Board proposes that Deloitte Touche Tohmatsu be reappointed as the overseas auditor of the Company in 2018, and will be responsible for provision of relevant audit and review services in accordance with the International Financial Reporting Standards for a period of one year. In 2018, the financial reporting auditing fees amounted to RMB1.19 million, and the semi-annual auditing fees were RMB450,000.
If there is any increase to the auditing fees due to the change in auditing content, the Board proposed that the general meeting of shareholders authorizes the Company’s management to determine the auditing fees in accordance with market principles and sign relevant contracts.

The aforesaid resolution was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

8. The proposal regarding the conduction of asset-backed securitization business with the Company’s credit assets from its financing businesses

An ordinary resolution will be proposed at the AGM to consider and approve the proposal regarding the conduction of asset-backed securitization business with the Company’s credit assets from its financing businesses of the Company. Details are as follows:

In recent years, the securities financing business of securities companies has been growing rapidly and has become an important source of income for securities companies. As a capital intermediary business and loan business, the securities financing business also effectively improved the profitability model of securities companies. In order to further promote the development of its securities financing business, the

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LETTER FROM THE BOARD

Company has to steadily expand the scale of business while controlling risks. In this regard, in addition to the Company’s own capital investment, another major financing method is to revitalize stock assets to improve the efficiency of asset utilization. The conduction of asset-backed securitization business with the credit assets from financing business is also a major financing method.

The asset securitization financing method has the following advantages: First, as compared with the banking revenue right financing model, the method of asset securitization of credit assets of financing business has clear legal norms, and thus there will be no policy and compliance risks. Second, along with more stringent supervision over the non-standard banking business, the demand for bank funds to invest in asset-backed securities standard products has increased significantly, and the pricing of asset-backed securities has become more market-oriented.

Therefore, the Company proposes at the AGM to authorize the Board within the scope allowed by laws and regulations and the Articles of Association and the Board to delegate the Company’s operating management to carry out asset securitization businesses including margin financing and securities lending business involving margin accounts receivables, stock pledged repurchase business and stock repurchase trading business. The principal scale of asset securitization business shall not exceed RMB10 billion in total and the business can be carried out in one or more phases within two years from the date of consideration and approval at the AGM. The specific authorizations include but are not limited to:

(1) determine the assets disposal size of asset securitization business, the product plan, issuance period, issuance size, issuance interest rate, way of issuance and other matters related to asset securitization business according to the specific conditions of the Company and the market;
(2) decide and engage intermediaries (including but not limited to managers, custodians, regulatory banks, accountants, rating agencies, assessment agencies, law firms, etc.);
(3) handle issues such as reporting, issuance, establishment, filing and listing transactions of asset securitization business;
(4) sign, execute, modify, and complete all agreements and documents related to asset securitization business;
(5) if the relevant policies or the market conditions change, authorize the Company’s operating management to make corresponding adjustments to the specific plans of asset securitization and other related matters according to the opinions of the regulatory authorities, except for matters that shall be re-voted by the Board or the general meetings as required by relevant laws and regulations and the Articles of Association; and
(6) handle and carry out other matters related to the asset securitization business.

The aforesaid resolution was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

9. The proposal regarding the projected routine related party transactions in 2018

An ordinary resolution will be proposed at the AGM to consider and approve the proposal regarding the projected routine related party transactions of the Company for the year 2018, details of which are set out in Annex V of this circular.

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LETTER FROM THE BOARD

The aforesaid resolution was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

10. The proposal regarding the expected provision of guarantees by the Company in 2018

Reference is made to the announcement of the Company dated 29 March 2018 in relation to the projected intragroup guarantees for the year 2018. An ordinary resolution will be proposed at the AGM to consider and approve the guarantees provided by the Company for its subsidiaries or among its subsidiaries for the year 2018, details are as follows:

In accordance with the operation plan of the Company and in order to minimize the financing costs, the Company and its subsidiaries propose to adopt various fundraising methods, including bond issuance and banking loans, which may involve guarantees provided by the Company for its subsidiaries or among its subsidiaries. To minimize the financing time cost and prepare internal approval in advance, the Company projects the guarantees during the period from the date of consideration and approval by the AGM to the date of the 2018 annual general meeting, and proposes to the AGM for consideration and approval in accordance with the relevant requirements of the laws and regulations, the Articles of Association, and the Measures to Manage External Guarantees of the Company:

Limitation of the guarantees: the total amount of additional external guarantees provided by the Company and its subsidiaries within the validity period of authorization shall not exceed 20% of the latest audited net assets of the Company, and the amount of each separate guarantee shall not exceed 10% of the latest audited net assets of the Company.
Types of the guarantees: any one-time, multiple-time, or multiple-tranche onshore or offshore debt financing instrument(s) is/are issued through public or non-public issuances (including but not limited to ordinary bonds, subordinated bonds, ultra short-term financing bills, short-term financing bills, medium-term notes), or loans are granted from onshore or offshore financial institutions (including but not limited to bank credit, bank loans and syndicated loans).
Models of the guarantees: collateralization include guarantees, security, pledges, and other models as required under the provisions of the relevant laws and regulations.
Targets of the guarantees: guarantees will be provided by the Company for its directly and indirectly holding wholly-owned subsidiaries (including those with the gearing ratio over 70%), or provided among its wholly-owned subsidiaries (including those with the gearing ratio over 70%).
Validity period of authorization: the aforementioned guarantees shall be valid from the date of consideration and approval of the guarantees by the 2017 annual general meeting to the date of the 2018 annual general meeting.
Authorization: it is proposed to the AGM for the shareholders to authorize the Board and agree the Board in turn to further authorize the management to, at its/their sole discretion, execute all documents in connection with the aforementioned guarantees, obtain approvals from and handle filing formalities with the relevant regulatory authorities and all other relevant matters, and to fulfill the obligation of information disclosure in a timely manner in accordance with the relevant laws and regulations upon the provision of letters of guarantees or issuance of guarantee documents for the Company’s wholly-owned subsidiaries.

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LETTER FROM THE BOARD

The aforesaid resolution was considered and approved by the Board on 29 March 2018 and is hereby proposed at the AGM for consideration and approval.

READING MATERIALS – 2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

Pursuant to the requirements of the Rules of General Meeting of Listed Companies (《上市公司股東大會規則》) issued by the CSRC, independent Directors shall present a duty performance report at the AGM. Such report will be presented at the AGM, but no Shareholder’s resolution is required. The duty performance report of the independent Directors of the Company is made available to the Shareholders in Annex III of this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

ANNUAL GENERAL MEETING

The AGM of the Company will be held at Meeting Room, 4/F, Building 2, No. 318 South Zhongshan Road, Shanghai, the PRC on Friday, May 25, 2018 at 2:00 p.m. The notice of the AGM is set out on pages 12 to 14 of this circular.

The register of members of H Shares of the Company will be closed from Wednesday, April 25, 2018 to Friday, May 25, 2018 (both days inclusive), during which time no share transfers of H Shares will be effected. Purchasers of H Shares who have submitted their instruments of share transfer to the H Share Registrar of the Company and registered as Shareholders on the register of members of H Shares of the Company before 4:30 p.m. on Tuesday, April 24, 2018 are entitled to attend and vote in respect of all resolutions to be proposed at the AGM. In order to attend the AGM, holders of H Shares should ensure that all transfer documents, accompanied by the relevant H Share certificates, are lodged with the H Share Registrar at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, before 4:30 p.m. on Tuesday, April 24, 2018.

Reply slip and the form of proxy for the AGM have been distributed on Tuesday, April 10, 2018 and have also been published on the website of Hong Kong Stock Exchange (www.hkexnews.hk) and the Company’s website (www.dfzq.com.cn). Shareholders intending to attend the AGM in person or by their proxies should complete and return the reply slip for attending the AGM to the H Share Registrar (for holders of H Shares) on or before Saturday, May 5, 2018.

To be valid, for holders of H Shares, the form of proxy and notarized power of attorney or other document of authorization must be delivered to the H Share Registrar not less than 24 hours before the time appointed for the AGM (i.e. 2:00 p.m. on Thursday, May 24, 2018). Completion and return of the form of proxy will not preclude you from attending and voting at the AGM in person if you so wish.

In accordance with the provisions of the relevant PRC laws and regulations, in relation to resolution No.9 at the AGM, the relevant related Shareholders shall abstain from voting on the related proposals, respectively.

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LETTER FROM THE BOARD

HONG KONG LISTING RULES REQUIREMENT

According to Rule 13.39(4) of the Hong Kong Listing Rules, any vote of shareholders at a general meeting must be taken by poll except where the chairman, 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. Therefore, all resolutions at the AGM will be taken by way of a poll.

Save as mentioned above, to the best knowledge of the Directors, as at the Latest Practicable Date, no Shareholder has a material interest in any of the above resolutions and therefore no Shareholder is required to abstain from voting in respect of the above resolutions at the AGM.

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 circular misleading.

RECOMMENDATION

The Board believes that all the resolutions mentioned above are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends that all Shareholders to vote in favor of the relevant resolutions to be proposed at the AGM as set out in the notice of the AGM set out in this circular.

Yours faithfully, By order of the Board PAN Xinjun Chairman

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NOTICE OF ANNUAL GENERAL MEETING

(Stock Code: 03958)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting (the “ Annual General Meeting ”) of 東方證券股份有限公司 (the “ Company ”) will be held at Meeting Room, 4/F, Building 2, No. 318 South Zhongshan Road, Shanghai, the People’s Republic of China (the “ PRC ”) on Friday, May 25, 2018 at 2:00 p.m., for the following purposes:

ORDINARY RESOLUTIONS

To consider and approve the report of the Board of Directors of the Company for the year 2017.
To consider and approve the report of the Supervisory Committee of the Company for the year 2017.
To consider and approve the final accounts report of the Company for the year 2017.
To consider and approve the profit distribution proposal of the Company for the year 2017.
To consider and approve the annual report of the Company for the year 2017.
To consider and approve the proposal regarding the proprietary business scale of the Company in 2018.
To consider and approve the proposal regarding the engagement of auditing firms for the year 2018.
To consider and approve the proposal regarding the conduction of asset-backed securitization business with the Company’s credit assets from its financing businesses.

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NOTICE OF ANNUAL GENERAL MEETING

To consider and approve the proposal regarding the projected routine related party transactions of the Company in 2018:
9.01 Routine related party transactions with Shenergy (Group) Company Limited and its related companies;
9.02 Routine related party transactions with other related parties.
To consider and approve the proposal regarding the expected provision of guarantees by the Company in 2018.

By order of the Board of Directors PAN Xinjun Chairman

Shanghai, the PRC April 10, 2018

Notes:

1. Eligibility for attending the Annual General Meeting and date of registration of holders for H Shares

In order to attend this Annual General Meeting, holders of H Shares should ensure that all transfer documents, accompanied by the relevant share certificates, are lodged with the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, before 4:30 p.m. on Tuesday, April 24, 2018.

2. Proxy

(1) Each shareholder entitled to attend and vote at the Annual General Meeting may appoint one or more proxies in writing to attend and vote on his behalf. A proxy need not be a shareholder of the Company.
(2) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorized in writing, or if the appointor is a legal entity, either under seal or signed by a director or a duly authorized attorney. If that instrument is signed by an attorney of the appointor, the power of attorney authorizing that attorney to sign or other document of authorization must be notarized.

To be valid, for holders of H Shares, the form of proxy and notarized power of attorney or other document of authorization must be delivered to the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time appointed for the Annual General Meeting (i.e. before 2:00 p.m. on Thursday, May 24, 2018).

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NOTICE OF ANNUAL GENERAL MEETING

3. Registration procedures for attending the Annual General Meeting

(1) A shareholder or his proxy should present proof of identity when attending the Annual General Meeting. If a shareholder is a legal person, its legal representative or other person authorized by the board of directors or other governing body of such shareholder may attend the Annual General Meeting by providing a copy of the resolution of the board of directors or other governing body of such shareholder appointing such person to attend the meeting.
(2) Shareholders intending to attend the Annual General Meeting in person or by their proxies should complete and return the reply slip for attending the Annual General Meeting to the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited (for holders of H Shares), at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong on or before Saturday, May 5, 2018.

4. Voting by poll

According to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, any vote of shareholders at a shareholders’ general meeting must be taken by poll.

5. Miscellaneous

(1) The Annual General Meeting is expected to be held for no more than half a day. Shareholders who attend the meeting in person or by proxy shall bear their own travelling and accommodation expenses.
(2) The address of Computershare Hong Kong Investor Services Limited is:

17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(3) The registered office of the Company:

22/F, 23/F and 25-29/F Building 2, No. 318 South Zhongshan Road Shanghai The People’s Republic of China

Contact office: Office of the Board Telephone No.: 86 (21) 63325888 Facsimile No.: 86 (21) 63326010 Contact Person: Mr. DENG Haipeng

As at the date of this notice, the Board of Directors comprises Mr. PAN Xinjun and Mr. JIN Wenzhong as executive Directors; Mr. LIU Wei, Mr. WU Junhao, Mr. CHEN Bin, Mr. LI Xiang, Ms. XIA Jinghan, Mr. XU Jianguo and Mr. DU Weihua as non-executive Directors; and Mr. XU Guoxiang, Mr. TAO Xiuming, Mr. WEI Anning, Mr. XU Zhiming and Mr. JIN Qinglu as independent non-executive Directors.

– 14 –

2017 REPORT OF THE BOARD

ANNEX I

Dear Shareholders,

The 2017 annual work report and 2018 annual work plan of the Board is set out below according to relevant requirements of laws and regulations and the Articles of Association:

In 2017, China’s capital market has always been under strict and comprehensive supervision in accordance with the law, focusing on improving the capabilities to serve the real economy and social development. The A-share market showed a feature of varied performance throughout the year. The SSE Composite Index rose by 6.56%, the Shenzhen Composite Index and the GEM Index fell by 3.54% and 10.67%, respectively, and the ChinaBond Total Net Price (Total Value) Index decreased by 4.84%; the trading volume of stocks and funds transactions in Shanghai Stock Exchange and Shenzhen Stock Exchanges amounted to RMB122.61 trillion, representing a year-on-year decrease of 11.73%; the balances of margin financing and securities lending business as of the end of 2017 was RMB1,026.264 billion, representing an increase of 9.26% as compared to the end of previous year; and the total financing amount of the whole market was RMB5,443.915 billion, representing a year-on-year decrease of 18.23%.

By accurately judging the situation and making scientific and effective decisions, the Board of the Company successfully accomplished the private placement of A Shares of the Company in accordance with the requirements for the last year of the three-year strategic plan. Through further reinforcement of innovative transformation and stringent management on various risks, the Company was enabled to achieve optimization and improvement in business structure and profit-making model, and thus steadily enhanced its overall strength and effectively improved its operating results with several key indicators achieving new high.

I. PRINCIPAL OPERATION OF THE COMPANY IN 2017

(I) Key Financial Indicators

In 2017, the Company realized an operating income (on a consolidated basis) of RMB10.532 billion, representing a year-on-year increase of 53.16%, and a net profit attributable to the parent company of RMB3.554 billion, representing a year-on-year increase of 53.57%. As of the end of the year, the total assets of the Company amounted to RMB231.860 billion, representing a year-on-year increase of 9.16%, the net assets attributable to the parent company amounted to RMB52.986 billion, representing a year-on-year increase of 30.88%, and the earnings per share amounted to RMB0.57 with net assets per share of RMB7.58.

(II) Principal Operation

1. Outstanding performance of securities investment business

In 2017, through keenly grasping the market trend and structural opportunities, and developing the securities investment business in the A-share and H-share markets, the Company achieved revenue of RMB2.961 billion from this business, which made an important contribution to the accomplishment of the annual performance targets of the Company. The Company promoted the transformation from the fixed income business to FICC business, which realized a revenue of RMB1.251 billion. The trading volume of spot bond on interbank market, the total amount of settlement via China Central Depository & Clearing Co., Ltd, and the cumulative volume in the first three quarters of the market-making business all ranked second among securities companies, and the Company was selected as one of the four quotation agencies for the first batch of “Bond Connect”. The transformation of financial derivatives business to sales trading business has achieved remarkable results, with both the on-exchange and OTC transactions businesses flourishing.

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2017 REPORT OF THE BOARD

ANNEX I

As a result, the income model has become more diversified with revenue of RMB300 million realized, representing a year-on-year increase of 150%. For equity investment and trading business, the Company, while adhering to the strategy of pursuing quality products, strives to cut inventory, adjust structures and select products to increase.

2. The yielding results of the transformation of wealth management

As the transformation of the wealth management business began to yield results, the Company realized annual revenue of RMB2.102 billion. The total number of outlets increased from 122 at the beginning of the year to 153. And the market share of stocks and funds trading reached 1.55%, representing a year-onyear increase of 24%, and rising to the 18th in the industry. The securities branches have become integrated marketing and service platforms for the Company’s various businesses, with the proportion of non-channel business revenue rising to over 30%. The securities financing business realized revenue of RMB2.304 billion, representing a year-on-year increase of 16.4%, and the total scale of business at the end of the year was RMB46.02 billion.

3. The stable growth of research business

The research business achieved revenue of RMB178 million through consolidating the commission income and promoting resource sharing. It continued to develop the core publicly offered funds clients, maintaining a stable ranking in the internal research and evaluation of the core customers, and was honored the second runner-up of “Most Potential Research Institutions (最具潛力研究機構)” by the New Fortune (新財富).

4. The stable development of OTC custody business

The products of OTC business have become increasingly rich, its transactions have become increasingly active, and its functions have been further improved. In 2017, the total scale of the OTC business exceeded RMB30 billion, representing a year-on-year increase of 37.4%. The scale, revenue, and number of customers of the custody business grew rapidly. As of the end of the year, the scale of online products exceeded RMB70 billion, representing an increase of nearly 2 times from the beginning of the year.

5. The strengths of subsidiaries kept growing, deepening corporatization and internationalization

Orient Securities Asset Management achieved a record high of its annual results and realized a revenue of RMB2.1 billion, representing a year-on-year increase of 104%, and at the end of the year, the assets under management (the “ AUM ”) of discretionary management assets reached RMB200 billion with the products’ absolute return leading the industry; Orient Securities Futures kept a sound development trend and realized a revenue of RMB912 million, representing a year-on-year increase over 100%; Orient Securities Capital Investment further strengthen its status at the equity investment market and realized a revenue of RMB291 million, representing a year-on-year increase of 16.9%, awarded “2017 Top 10 Direct-Invested Institution of Securities Firm in China(2017中國券商直投10強)”; Orient Securities Innovation Investment continued to expand special business and realized a revenue of RMB290 million, representing a year-on-year increase of 42.3%; Orient Finance Hong Kong realized a revenue of HK$297 million, excluding the profit or loss of the parent company; Citi Orient experienced the historical best period with its industry ranking as well as brand reputation, and realized a revenue of RMB1,039 million; China Universal gained a steady growth with the stable ranking of the NO.1 in Shanghai, and as of the end of the year, the AUM reached to RMB550 billion, representing an increase of 15% as compared with that at the beginning of the year.

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2017 REPORT OF THE BOARD

ANNEX I

II. MAJOR WORK OF THE BOARD IN 2017

(I) Due diligence, scientific decision-making

In 2017, the Board focused on the consideration and decision on the Company’s major issues. Throughout the year, the Company held a total of 12 Board meetings, in which, 3 meetings were held on site and 9 meetings were via teleconference. The first was considering and passing important strategic matters including proposals relating to the private placement of A Shares of the Company; the second was the decision and tracking of the matters relating to daily operation including the Company’s annual business plan, allocation of assets and liabilities and related transactions; the third was considering and passing major decisions on personnel, organization and systems. The Board passed the matter including the by-election of the independent directors and appointment of representatives on the Company’ securities issues in a timely manner according to its actual need.

In strict compliance with relevant requirements of laws and regulations and the Articles of Association, the Board of the Company performed its duty as a convener of the shareholders’ general meeting diligently. In 2017, a total of one annual general meeting and two extraordinary general meetings were convened, on which the Board considered or listened to a total of 25 proposals or reports, which practically protected the rights of shareholders.

(II) Successfully accomplished the private placement of A Shares of the Company

After the completion of the offering and listing of A and H shares of the Company, the Board made timely decisions to plan a new round of equity financing for the Company according to the Company’s strategic planning needs. Although the private placement of A Shares of the Company faced various challenges brought about by adverse factors such as the new regulations on private placement, reducing holding-shares and asset management in 2017, the Company, under the active efforts of the Board, actively coordinated the strength of all parties, made scientific decisions under pressure, adjusted the placement plan in a timely manner, advanced all works efficiently, and successfully completed the placement during the year. The final price of the private placement with reference to market rate was determined at RMB14.21 per share, raising a total of RMB11.058 billion of funds, which effectively expanded the Company’s capital strength by increasing the Company’s net assets from RMB41.5 billion to about RMB53.0 billion, ranking among the top ten in the securities industry in this regard.

(III) Continuously improved corporate governance

In order to continuously meet the requirements of a listed company of both A Shares and H Shares, the Board actively improved the corporate governance. The first was to strengthen the establishment of relevant systems. It made amendment and improvement to its Articles of Association and other systems according to the requirements of domestic and foreign laws and regulations and the actual situation of the Company’s operation and management. The second was to steadily promote the general election of the Board. In accordance with relevant laws and regulations and the Articles of Association, the Board timely researched and developed proposals for its general election, and strictly complied with the relevant legal decision-making procedures. The third was to attach great importance to self-building including trainings

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ANNEX I

2017 REPORT OF THE BOARD

for Directors and the Board, to actively participate in regular trainings organized by regulatory authorities and special trainings on information disclosure and standard operation for listed companies to Directors according to the needs of work and to improve their ability to perform their duties. The fourth was to establish good relations with stakeholders, to maintain the interests of both shareholders and creditors; to maintain the interests of customers through efficient and professional services; to maintain the lawful interests of employees through well-established labor system and corporate culture system; to continuously carry out various types of public welfare undertakings to perform the corporate social responsibility.

(IV) Strengthened strategic management and Group management

Under the guidance of the Board, the Company promptly started the preparation of the strategic plan for the years 2018-2020. It took more than four months to carry out this round of strategic planning research on nearly 30 headquarters and subsidiaries, comprehensively analyze the internal and external environment faced by the Company in its development, and clarify the main goals of development, implementation principles, development paths and initiatives of the Company for the next three years, which will be submitted to the Board for consideration and approval before being implemented.

The Board valued the effective linkage between the implementation of strategies and the management of the Group. It adjusted the structure of Orient Securities Capital Investment, a wholly-owned subsidiary of the Company, according to the requirements of new regulations such as Management Rules for the Private Investment Funds Subsidiaries under Securities Companies. In order to expand the scope of underwriting of government bonds such as local government bonds and the financing products governed by the National Association of Financial Markets Institutional Investors, the Board further adjusted the division of “securities underwriting and sponsorship” business according to the actually operating conditions of the Company and its controlling subsidiary Citi Orient. It also effectively promoted the linkage between group collaboration and business development and successfully acquired the first international rating granted by Moody’s to the Company, overseas bond issuance and other projects, which gradually increased the overall advantages and strengthened the synergies of the Group.

(V) Strictly performed information disclosure responsibility

As a listed company of both A Shares and H Shares, the requirements for the authenticity, accuracy, completeness, timeliness and fairness of information disclosure have been further enhanced, so the Company has shouldered more responsibilities. The compliance and effectiveness of information disclosure will have an important impact on the Company’s sustainable development, refinancing and brand building. In strict accordance with the requirements of the listing rules of shares on the SSE and the HKEX, the Board continuously updated and improved the effectively functioning information disclosure operating system, and strictly regulated review processes and procedures to ensure that the Company performed its information disclosure obligations more accurately, completely and efficiently. In 2017, the Company prepared and disclosed in aggregate 4 regular reports, issued 96 temporary announcements, 12 monthly financial data briefings and 5 insider information announcements. The effectiveness of information disclosure of the Company has been recognized by regulatory authorities, where the appraisal rating for the information disclosure of the Company for two consecutive years after the listing of A Shares by Shanghai Stock Exchange was A (excellent).

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2017 REPORT OF THE BOARD

ANNEX I

(VI) Carried out sound management on investor relations

The Company attached great importance to management on investor relations. A standardized and professional management on investor relations is not only a listed company’s obligation, but also an effective means to build a brand image and reflect corporate values. During the reporting period, the Company continuously optimized the long-term management mechanism for investor relationship by establishing IR system, work systems and workflows. In addition, the Company strengthened its communication with investors through various means, including hotlines for investors, e-mails, company website, WeChat official account, teleconferences, on-site reception, online interaction, investors meetings, performance press conferences and performance road shows. In 2017, the Company received nine on-site researches and investigations from domestic and foreign institutions and analysts, attended seven investor activities including exchange meetings of the China Association for Public Companies (CAPCO) or securities firms, held two on-site performance press conferences and received around 400 investors, through which the Company interacted and communicated with investors in a timely manner, thereby increasing the recognition of investors to the Company and facilitating synergies between investors and the Company.

(VII) Effectively carried out comprehensive risk management and compliance management

In 2017, with the implementation of the requirements of new regulations such as the Norm for the Comprehensive Risk Management of Securities Firms (Zhong Zheng Xie Fa [2016] No. 251) (《證券公司全面風險管理規範》) (中證協發[2016]251號, the Guideline on Liquidity Risk Management of Securities Firms (Zhong Zheng Xie Fa [2016] No. 251) (《證券公司流動性風險管理指引》(中證協發[2016]251 號)), the Administrative Measures on Compliance of Securities Companies and Securities Investment Fund Management Companies (Zheng Jian Hui Ling [No. 133]) (《證券公司和證券投資基金管理公司合規管理辦法》(證監會令[第133號])) and the Guideline for the Implementation of the Compliance Management of Securities Companies (Zhong Zheng Xie Fa [2017] No. 208) (《證券公司合規管理實施指引》(中證協發[2017]208號)), the Board revised the Company’s Basic System for Comprehensive Risk Management (《全面風險管理基本制度》), Administrative Measures of Liquidity Risk Management (《流動性風險管理辦法》), Basic System for Compliance Management (《合規管理基本制度》), Work Rules for the Chief Risk Officer (《首席風險官工作細則》) and Work Rules for the Compliance Officer (《合規總監工作細則》) in a timely manner and formulated the Administrative Measures for Internal Control (Trial) (《內部控制管理辦法(試行)》) of the Company, which effectively promoted the establishment of the comprehensive risk management system, further enhanced the professionalism and effectiveness of risk management and control and fully met the new requirements for the listing of A Shares and H Shares, business innovation and group-oriented development of the Company.

III. SPECIFIC EXPLANATION ON DUTY PERFORMANCE, APPRAISAL AND REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT IN 2017

(I) Duty performance, appraisal and remuneration of Directors

In 2017, all Directors of the Company lawfully, honestly and diligently fulfilled their statutory duties in compliance with relevant requirements of laws and regulations, the Listing Rules and the Articles of Association. The Directors actively attended the meetings of special committees and the Board meetings, carefully considered various issues, made recommendations and suggestions and provided professional expertise on important aspects including improvement on corporate governance, promotion of private

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2017 REPORT OF THE BOARD

ANNEX I

placement of A shares, formulation of strategic planning and major decision-making, expansion on investment and financing channels, and implementation of new requirements for compliance and risk management, which ensured scientific and standardized decision-making of the Board, pointed out an exact direction and laid a solid foundation for seizing the opportunity of in-depth reform of industry, innovation and development in a timely and effectively manner to achieve a leaping development.

The Board of the Company held in aggregate 12 meetings during the year, each Director has attended in the meetings in person or by entrusting other Directors, particulars of attendance of meetings are as follows:

	Required
	attendance
Directors of	during the	Attendance
the third session	reporting period	in person	Attendance	Absence
of the Board	(times)	(times)	by proxy (times)	(times)	Voting result
Pan Xinjun	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Wu Jianxiong	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Jin Wenzhong	12	11	1	0	Voted in favour of all proposals
			(Entrusted Pan Xinjun,		submitted for voting
			the chairman, to vote
			on his behalf on the
			33rd meeting of the
			third session of the Board)
Zhang Qian	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Wu Junhao	12	11	1	0	Voted in favour of all proposals
			(Entrusted Zhang Qian,		submitted for voting
			a director, to vote on his
			behalf on the 28th
			meeting of the third
			session of the Board)
Chen Bin	12	11	1	0	Voted in favour of all proposals
			(Entrusted Pan Xinjun,		submitted for voting
			the chairman, to vote on
			his behalf on the 33rd
			meeting of the third
			session of the Board)
Li Xiang	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Xu Jianguo	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Huang Laifang	12	10	2	0	Voted in favour of all proposals
			(Entrusted Pan Xinjun,		submitted for voting
			the chairman, to vote on
			his behalf on the 25th
			meeting of the third
			session of the Board and
			the 28th meeting of the
			third session of the Board)
Xu Guoxiang	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Tao Xiuming	12	12	0	0	Voted in favour of all proposals
					submitted for voting

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2017 REPORT OF THE BOARD

ANNEX I

	Required
	attendance
Directors of	during the	Attendance
the third session	reporting period	in person	Attendance	Absence
of the Board	(times)	(times)	by proxy (times)	(times)	Voting result
Wei Anning	12	11	1	0	Voted in favour of all proposals
			(Entrusted Xu Guoxiang,		submitted for voting
			an independent director,
			to vote on his behalf on
			the 33rd meeting of the
			third session of the Board)
Xu Zhiming	12	12	0	0	Voted in favour of all proposals
					submitted for voting
Jin Qinglu *	2	2	0	0	Voted in favour of all proposals
					submitted for voting
Zhou Yao *	11	9	2	0	Voted in favour of all proposals
			(Respectively entrusted		submitted for voting
			Pan Xinjun, the chairman,
			Wu Junhao, a director,
			to vote on his behalf on
			the 25th meeting of the
			third session of the
			Board and the 33rd
			meeting of the third
			session of the Board)
Li Zhiqiang *	10	10	0	0	Voted in favour of all proposals
					submitted for voting
Pan Fei *	7	7	0	0	Voted in favour of all proposals
					submitted for voting

*Notes:

On July 6, 2017, the Company received the resignation tendered by Mr. Pan Fei, an independent non-executive Director of the Company. Due to personal affairs (career arrangement), Mr. Pan Fei resigned from the positions of an independent non-executive Director of the third session of the Board and the chairman of the Audit Committee.
On August 29, 2017, the Company received the resignation tendered by Mr. Li Zhiqiang, an independent non-executive Director of the Company. Due to expiration of his tenure as an independent non-executive director of the Company, Mr. Li Zhiqiang resigned from the positions of an independent non-executive Director of the third session of the Board, the chairman of the Remuneration and Nomination Committee and a member of the Compliance and Risk Management Committee. As the resignation of Mr. Li Zhiqiang would cause the number of independent non-executive Directors of the Company to be less than one-third in number of members of the Board, according to relevant laws and regulations, the resignation shall take effect upon the appointment of a new independent non-executive Director to fill the vacancy, and to satisfy the requirement that the independent non-executive Directors should be not less than one-third in number of members of the Board. On October 16, 2017, the resignation of Mr. Li Zhiqiang took effect after Mr. Jin Qinglu duly performed his duties as an independent non-executive Director.
On September 27, 2017, Mr. Jin Qinglu was elected as an independent non-executive Director of the third session of the Board of the Company at the 2017 second extraordinary general meeting of the Company. At the 32nd meeting of the third session of the Board, Mr. Jin Qinglu was elected as the chairman of the Audit Committee of the third session of the Board. On October 16, 2017, the Company received the Reply on Approving Qualification of Jin Qinglu as an Independent Director of Securities Company (Hu Zheng Jian Xu Ke [2017] No. 80) issued by the Shanghai Bureau of the CSRC, pursuant to which, Mr. Jin Qinglu duly performed his duties as an independent non-executive Director and the chairman of the Audit Committee of the Company.
On December 5, 2017, the Company received the resignation report tendered by Mr. Zhou Yao, a non-executive Director of the Company. Due to work reallocation, Mr. Zhou Yao resigned from the positions of the non-executive Director of the third session of the Board and the member of the Compliance and Risk Management Committee of the Company.

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ANNEX I

2017 REPORT OF THE BOARD

In 2017, the Compliance and Risk Management Committee convened seven meetings, the Remuneration and Nomination Committee convened four meetings and the Audit Committee convened seven meetings. Each special committee, with well-defined terms of reference, conducted prior consideration on the proposals respectively, put forward professional review opinions as reference for consideration of proposals to the Board, which provided strong support to improve the scientific and forward-looking decision-making of the Board. Independent Directors were capable of diligently performing their duties, expressing their independent opinions and recommendations on the proposals, which practically maintained the interests of shareholders, especially minority shareholders, and promoted the standardized operation of the Company.

In 2017, except that the independent Directors received the allowance for independent Directors in accordance with the resolution of the shareholders’ general meeting each year, and the chairman and president received the remuneration which was included into the personnel appraisal in accordance with the relevant provisions, the remaining Directors did not receive any remuneration from the Company.

(II) Duty performance, appraisal and remuneration of senior management

In 2017, all senior management of the Company lawfully, honestly, diligently and effectively fulfilled their duties of operation and management in compliance with relevant requirements of laws and regulations, relevant systems of the Company including the Articles of Association and resolutions of the Board and president’s office meeting. Under the guidance and support of the Board, the senior management completed the goal of private placement of A shares, achieved breakthroughs in innovation-driven transformation, ensured that the Company maintained its leading position in compliance and risk control across the industry and obtained A-rating for consecutive years. As a result, the assets of the Company recorded rapid expansion and the operation result recorded rapid growth, which laid a good foundation for the strategic plan in next three years and new round of leapfrog development of the Company.

According to requirements of relevant systems of the Company, the remuneration and nomination committee of the Board are responsible for annual performance evaluation of operational management team after the end of each year.

In 2017, the senior management (including chairman) of the Company received basic salary, performance related bonus and term incentive according to requirements of relevant systems, where the basic salary was determined according to remuneration coefficient, while performance related bonus was determined according to annual assessment results and annual assessment coefficient. For term incentive, it subject to the cap of 40% of total remuneration during the tenure and was determined according to the assessment for the terms.

For the remuneration of senior management of the Company, please refer to Section VIII “III. Remunerations of Directors, Supervisors and Senior Management” in 2017 annual report of the Company.

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2017 REPORT OF THE BOARD

ANNEX I

IV. WORK PLAN FOR THE BOARD IN 2018

The year 2018 is the first year for implementation of the spirit of the 19th CPC National Congress as well as the 40th anniversary of reform and opening up of our country. It is a crucial year for securing a decisive victory in building a moderately prosperous society in all respects and for continuing to implement the 13th Five-Year Plan. It is also the first year for the Company to implement its new three-year strategic planning. As an important intermediary institution in the capital market, the Company must study and implement the spirit of the 19th CPC National Congress, fulfill the responsibility of serving real economy development and social wealth management. As a listed company of both A Shares and H Shares, the Company must build a high-quality listed securities company, fully implement the requirements of corporate governance and responsibility of information disclosure, and return investors with excellent performance. Facing the lawful, strict, comprehensive regulatory policy environment and increasingly intense competition in the industry, the Company will firmly grasp the keynote of seeking progress in stability, and will undergo innovation and transformation by centering on the strategic objective of “building up a modern investment bank which has the domestic first-class core competitiveness and provides comprehensive financial services for clients” to further initiate new stage of development.

The Board of the Company will give a full play to its leading and decision-making role, diligently perform their duties, collectively make progress, oversee the overall situation, promote innovation, strictly control the risk and lead the development. Specifically speaking, the Board will focus on the following work:

(I) Further improve corporate governance and effectively perform the responsibility of information disclosure

Since the listing of A Shares and H Shares, the Company has initially established standardized operation and information disclosure system as a listed company adapt to the regulatory rules of both PRC and Hong Kong. In 2018, the Board of the Company will further improve the corporate governance system and the corporate governance level in accordance with the requirements of regulatory rules of both PRC and Hong Kong; the Company shall further adapt to the new situation and new requirements and deepen the combination between industry and finance with Shenergy Group and other shareholders to realize a synergy development. The Company shall strictly fulfill the information disclosure obligations, ensure the authenticity, accuracy, completeness, timeliness and fairness of information disclosure, and practically improve the effectiveness of domestic and foreign information disclosure, strengthen the management of investor relations, further establish and maintain a smooth channel for communication between domestic and foreign investors, and establish a good market image of the Company.

(II) Strengthen strategic planning and enhance the level of strategic management

The new three-year strategic planning of the Company for the years 2018-2020 requires that we shall adhere to the main theme of making progress while maintaining stability, improve the quality and effectiveness of business management, promote a sense of cohesion in the corporate culture and ensure the compliance and risk control. We shall strive to enable major operating indicators fully ranking the top ten in the industry, with some of the preponderant businesses and innovative businesses maintaining the top five in the industry. The Board will closely focus on the new three-year strategic planning, seize the opportunities, meet the challenges and promote implementation. At the same time, the Board will strengthen the monitoring and evaluation of strategic planning, constantly carry out strategic analysis and special research taking into consideration of both domestic and foreign market environment changes, and utilize continuously the guidance and direction of strategic planning. In addition, the Board will further strengthen the management on subsidiaries, improve equity management system and promote group synergy and resource integration.

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2017 REPORT OF THE BOARD

ANNEX I

(III) Adhere to the bottom line of compliance and strengthen the overall risk management

In 2018, the industry regulation continues to stress that the risk prevention shall be placed in a more prominent position, and the bottom line of non-occurring of major systemic risk shall be firmly held; the strict overall supervision shall be further deepened to maintain the capital market order. The Board will continuously urge the Company to carry out strict compliance and the risk control management to ensure non-occurring of risk of material violations of regulations. The first is to strictly implement various regulatory requirements to ensure that every business of the Company is in line with regulatory indicators, and further enhance the quality and efficiency of work. The second is to further rationalize and improve the compliance management system of the Group to achieve full coverage of compliance management, and focus on key fields. The third is to further rationalize and improve the comprehensive risk management system of the Group, strengthen the control on various risks including market risk, credit risk, liquidity risk and employees’ occupational ethics, and vigorously promote the construction of risk management information system. The fourth is to adhere to carry out risk-oriented audit, and strictly control the quality of audit.

(IV) Strengthen the construction of talent team and promote the reform of system and mechanism

The enhancement of comprehensive capabilities of the Company requires support and safeguard of cadre team and professional talents. In 2018, the Board will follow the new three-year strategic planning of the Company, guide the Company in construction of talent echelon and training of key talents, and take the training of talents as a key task. The Company shall strengthen the introduction and training of talents, promote the professionalization, younger generation and internationalization of cadre team, and further improve the internal incentive and restraint mechanisms to fully mobilize and stimulate the vitality and enthusiasm of the talent team.

(V) Improve self-construction and the Directors’ capability to perform duties

With increasingly stricter regulatory requirements imposed by both the PRC and Hong Kong following the listing of A Shares and H Shares, the Company shall bring the functions of the special committees of the Board and the independent Directors into full play and improve self-construction to ensure that major decisions will be made scientifically and in compliance with laws and regulations. The Company shall also arrange for the Directors to participate in regular and occasional trainings held by relevant regulatory authorities or stock exchanges with specific purposes, assisting the Directors to keep abreast of the latest policies and regulations of both the PRC and Hong Kong and be familiar with the requirements of standardized operation and information disclosure by listed securities companies, hence further improve their capability to perform duties.

In the past year, under the strictly regulated market environment, the Company withstood the severe test and achieved outstanding operating results. The private placement of A Shares was completed, marking a successful conclusion of the three-year strategic planning. All these achievements cannot be achieved without the vigorous support from all shareholders and Directors. At present, the Company has come to a new starting point. With the strong support from all relevant parties and persons and adhering to the strategic objective of “building up a modern investment bank which has the first-class core competitiveness and provides comprehensive financial services for clients”, the Board will continue to unite all cadres and staff of the Company to seek progress in stability and perform duties diligently with new attitude and action that is in line with the new era, in a bid to promote the development of the Company to a new stage and return investors and society with excellent performance.

The above proposal is hereby put forth to Shareholders for consideration.

– I-10 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

Dear Shareholders,

The Report of the Supervisory Committee of the Company for the Year 2017 is submitted to the shareholders’ general meeting for consideration as follows.

I. REVIEW OF THE WORK IN 2017

In 2017, the Supervisory Committee put in place the guiding ideology to “make exploratory evaluation of compliance risk control, pay close attention to the group management and control, standardize and optimize supervisory functions, so as to promote the steady and sound development of the Company through effective supervision” in observance of the Company Law, the Securities Law and other relevant laws and regulations of the PRC. To this end, it pushed on the improvement of compliance and risk management of the Company by focusing on the progress of the Company’s transformation, enhanced guidance to and supervision on the work of supervisors (Supervisory Committees) at the subsidiaries and optimized the supervision process norm, and thus contributed to the achievement of a new-round development objective of the Company.

(I) Clarified duties and performed in accordance with relevant laws to regulate the operation of the Supervisory Committee

1. Convened meetings of the Supervisory Committee and attended the shareholders’ general meetings of the Company in accordance with relevant laws

In 2017, the Supervisory Committee held six meetings in total, at which the proposals such as the regular reports of the Company were duly discussed and considered. In addition, the Supervisors of the Company attended three shareholders’ general meeting in total, at which the chairman of the Supervisory Committee reported to shareholders the work and plans of the Supervisory Committee, thus fulfilled the duties as Supervisors in accordance with relevant laws. (For details, please refer to the Annex I titled “the Meetings and Survey of the Supervisory Committee in 2017”《2017年度監事會會議及調研情況》).

2. Continued with the assessment on performance of duties by Directors, Supervisors and senior management

The Supervisory Committee continued to conduct the assessment on performance of duties in 2017 in accordance with the “Rules of the Supervisory Committee of the Company on Assessment of the Performance of Duties by Directors, Supervisors and Senior Management (《公司監事會對董事、監事、高管人員履職評價辦法》). With regard to the performance of duties by Directors, Supervisors and Senior Management in 2016, the Supervisory Committee prepared the respective reports on performance of duties by Directors, Supervisors and Senior Management and submitted the same to the eleventh meeting of the third session of the Supervisory Committee. In 2017, the Supervisory Committee delegated its members to attend a total of three on-site meetings of the Board of Directors and a total of four on-site meetings of the special committees of the Board of Directors. Supervisors attending the meetings performed due supervision over the decision-making procedures and performance of duties by Directors at the meetings in accordance with relevant laws through studying the proposals to be put forth to relevant meetings in advance and recording the attendance and opinions of Directors and the voting at the meetings. In addition, the Supervisory Committee appointed its members to opine at the meetings of the Board of Directors, which effectively strengthened the exchange and communication with shareholders, Directors and managers of the Company.

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ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

3. Made targeted supervision proposals to key departments

In accordance with the requirements made at the eleventh meeting of the third session of the Supervisory Committee on finance, compliance and risk management, the Supervisory Committee gave “Supervision Proposals” in written (《監督建議書》) to the Finance Planning Management Department, the Treasury Management Department, the Compliance and Legal Management Department and the Risk Management Department, respectively, in which it made the suggestions such as “to continuously optimize the allocation of assets and liabilities and comprehensively coordinate the deployment of capital of the Group”, “to broaden financing channels and increase the capital of the Company”, “to follow new regulatory requirements by reviewing and adjusting the Group’s compliance systems” and “to strengthen the risk assessment by improving indicators management”. The relevant departments have submitted their work plans and improvement measures to the Supervisory Committee.

(II) Found the key aspects while focusing on the center issues and effectively deepen the supervision function

1. Made full cooperation for the completion of the non-public issuance

In 2017, in connection with the non-public issuance of the Company, the Supervisory Committee actively cooperated with the Company in submission of materials in relation to the Supervisory Committee and Supervisors during the non-public issuance, convened the tenth meeting of the third session of the Supervisory Committee, at which the Resolution on the Report on the Use of Fund Raised from the Previous Offering was considered and passed. The announcement of the Resolution was issued in a timely manner after the meeting to enable the non-public offering to go smoothly.

2. Convened survey symposium on finance and compliance

In order to deepen the understanding of the Company’s key management departments, and listen to the opinions and suggestions on the Supervisory Committee, and further improve the supervisory function, the Supervisory Committee convened a survey symposium on compliance and risk control, and a survey symposium on capital and finance successively, to listen to the information about the structure and operation of the compliance and risk control system of the Company and the establishment of risk management information system, as well as the focuses of financial management of the Company. The Supervisors present at the symposiums put forward some supervision suggestions such as “continuously optimizing the allocation of assets and liabilities”, “strengthening overall management and control, and unifying the risk control platform”, which propelled the Company to further improve the effectiveness of capital, finance and compliance and risk control work.

3. Made in-depth investigation and survey on the key operations of the Company

In order to continuously strengthen the supervision and inspection on the innovative development of key operations and risk management and control, the Supervisory Committee conducted on-site inspection on the Company’s Wealth Management Business Headquarters in 2017 to learn about its works in the Department reforms, financial management, compliance and risk control management, put forward supervision suggestions such as “further integrating internal resources”, “adhering to the market-oriented development” and “conducting researches on regional operation plan” so as to deepen the Department reforms.

– II-2 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

4. Completed the post-evaluation on overseas investment projects

In 2017, the Supervisory Committee further proceeded with and completed the post-evaluation on overseas investment projects. It engaged an accounting firm to assist the Compliance and Legal Administration Department in evaluating the governance, compliance and risk control, control procedures of parent company and the preservation and appreciation of state-owned assets of the subsidiaries related to overseas investment, analyzing the investment management of overseas investment projects and the factors affecting returns, and putting forward suggestions such as “strengthening feasibility analysis and due diligence before making overseas investment”, “sparing more efforts to establish an overall risk management system”, and “proactively and regularly evaluating the impairment risk of related assets or business”. Besides, the Supervisory Committee formed the Special Report on the Post-evaluation on Overseas Investment Projects of the Company which was submitted to the managements of the parent company and the subsidiaries, and encouraged relevant departments to further improve the management systems to facilitate the standardized development of overseas businesses, and provide references and recommendations for the Company to assess investment results and optimize investment decisions.

(III) Complied with regulatory requirements and promoted the improvement of corporate governance

1. Fully complied with the A+H dual listing requirements and improved the governance to keep pace with the times

According to the requirements of the Special Committee of the Board of Supervisors of the CAPCO and based on the internal needs for the Company’s strategic development, the Supervisory Committee advanced the research on the supervision over A+H listed companies. Through studying the domestic and foreign legal supervision systems, visiting A+H listed companies in the industry and other means, the Supervisory Committee clarified the key aspects and difficulties in conducting supervision in the A+H dual listings, completed the project report on the “Research on the Supervision Issues of A+H Listed Companies”, proposed “optimizing and improving the organizational structure to ensure professional and prudent supervision”, “supervising the implementation of information disclosure, emphasizing on related party transactions”, “studying the accounting policies of the mainland China and Hong Kong and strengthening supervision over financial activities” and other suggestions, explored effective working model to further exert the supervisory functions of the Supervisory Committees of A+H listed securities companies and driven the Company to continuously improve its corporate governance.

2. Increased communications with peer companies and continuously optimized the supervision mode

In order to further explore effective means of supervision, in 2017, the Supervisory Committee communicated with a number of securities firms in the industry, visited Haitong Securities and GF Securities successively, and received visits from the SASAC of Ningbo Municipal Government, the supervisory committees of Central China Securities, Guotai Fund, Shenwan Hongyuan Securities and Caitong Securities to discuss the topics such as the establishment of supervisory committees’ system, the assessment on performance of duties, A+H governance, and parent company supervision system establishment. By taking the Company’s actual situations into consideration and summarizing the useful experience from peer companies in areas like innovating supervision methods and integrating supervision powers, the Supervisory Committee prepared the Report on the Communication with Peer Companies (《同業交流工作報告》), bringing about more ideas for further improving supervision.

– II-3 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

3. Joined in the professional committee of the CAPCO and increased communications with the supervision authority

The Chairman of the Supervisory Committee of the Company was invited to serve as a member of the professional committee of the second session of the supervisory committee of the CAPCO. He also conducted in-depth studies together with the chairmen of the supervisory committees of other companies on changes in regulatory policies, discussed and exchanged experience of supervisory work, and held discussions as an expert judge on the topics of theses of supervisory committees. By summing up experience of the industry, the Supervisory Committee continued to expand its working ideas, innovate its working methods and provide advice and suggestions for optimizing corporate governance.

(IV) Continuously strengthened team construction to ensure continuous professional development

1. Actively participated in various types of trainings

The Supervisory Committee actively organized the Company’s Supervisors and the staff of the Supervisory Committee Office to participate in the trainings on duty performance and other professional training courses held by the CSRC, the SSE, the CAPCO, and the Company itself to strengthen the study on the country’s macroeconomic situation, industry innovation and development, business risk management and control and other aspects, laying the foundation for continuous and effective supervision and performance of duties.

2. Strengthened the construction of a talent team of office

In order to further enhance the professional level of its daily office, the Supervisory Committee Office committed to strengthening the construction of a talented team by recruiting talents through multiple channels to fill the posts of financial supervision and performance of duties assessment, and continuing to tighten the study and trainings of more staff, in order to have a more professional and efficient work team to assist the Supervisory Committee in conducting effective supervision.

(V) Specific explanation on the performance of duties and remuneration of Supervisors in 2017

In 2017, all the Supervisors of the Company discharged their duties lawfully, honestly and diligently in accordance with laws and regulations and the requirements of the Articles of Association. The Supervisors actively attended the meetings and activities of the Supervisory Committee, conducted effective supervision over the finance, compliance and risk management and key operations of the Company and gave prompt opinions and suggestions thereon, which promoted the sustainable and healthy development of the Company.

– II-4 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

During the year, the Supervisory Committee held a total of six meetings and all Supervisors attended such meetings either in person or by way of proxy. Set out below are the details of their attendances:

	Required	Attendance	Attendance
Name of	attendances	in person	by proxy
Supervisor	(Times)	(Times)	(Times)	Absence Voting
SONG Xuefeng	6	6	0	0 Voted in favour of
				all proposals
LI Bin	6	6	0	0 Voted in favour of
				all proposals
LIU Wenbin	6	5	1	0 Voted in favour of
				all proposals
YIN Keding	6	6	0	0 Voted in favour of
				all proposals
WU Zhengkui	6	5	1	0 Voted in favour of
				all proposals
ZHOU Wenwu	6	6	0	0 Voted in favour of
				all proposals
YAO Yuan	6	6	0	0 Voted in favour of
				all proposals

In 2017, Apart from LI Bin, the vice chairman of the Supervisory Committee, who received his remuneration based on assessment of performances for the management team in accordance with relevant requirements, and ZHOU Wenwu and YAO Yuan, both being employee representative Supervisors, who received their remunerations based on the assessment of performances for their specific posts, other Supervisors did not receive remunerations from the Company.

II. SUPERVISORY OPINIONS AND SUGGESTIONS

(I) Supervisory opinions

1 . Opinions on the duty performance of the Directors and senior management

In 2017, the Directors and senior management of the Company followed the guiding ideology for the work of 2017 as established by the Shareholders’ general meeting and the Board of Directors at the beginning of 2017, led the Company to proactively grasp the development opportunity, successfully completed the additional placement of A Shares, rationally conducted asset allocation, continuously improved innovation business, strictly controlled risks, and stuck to the bottom line of compliance, by which the Company recorded satisfactory operation result with the increase rates of revenue and profit being significantly higher than the average level of the industry.

In 2017, the Company was able to operate in accordance with the Company Law, the Securities Law, the Articles of Association and relevant requirements of the state, and the decision-making procedures of the Company were in compliance with relevant laws. We are not aware of any breach of laws, regulations or the Articles of Association in the discharge of their duties of Directors and senior management of the Company, nor are we aware of any behavior detrimental to the interests of Shareholders, the Company or the employees.

– II-5 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

2. Opinions on the financial activities of the Company in 2017

The Supervisory Committee is of the opinion that, in 2017, the Company was able to conduct its financial activities in earnest observance of the national financial and tax laws and regulations and the financial rules of the Company and in strict accordance with the disclosure requirements on financial information of listed securities firms in Shanghai and Hong Kong. The Company strived to dive into the impacts of and responses to new accounting standards for financial instrument and continually improved resources allocation, made efforts to strengthen collaboration among groups, expanded funding channels in a rewarding direction and enhanced fund operation; the Company also fully implemented new regulatory rules, improved indicator management system and reinforced overall control on liquidity risk so as to effectively support business development and comprehensively serve the implementation of collectivization strategy.

3. Opinion on the compliance and risk management of the Company

The Supervisory Committee is of the opinion that, in 2017, the Company was able to conduct its compliance work in a way that met regulatory requirements, improve the Company’s compliance management system, facilitate collectivization compliance management and intensify publicity and guidance on compliance so as to advance the development of compliance system; the Company also conducted risk management with strictly compliance with regulatory requirements and drafted and pushed to implement the overall risk management initiatives. By enhancing abilities to identify, assess, monitor and handle risks, the Company strived to achieve the objects that the overall risks were measurable, controllable and acceptable, which well supported and boosted the stable and sound development of the Company.

(II) Supervision suggestions

In 2018, in order to get off to a flying start in implementing the three-year strategic plan for the year 2018-2020, the Company will seize the opportunities occurring in China’s economy and capital market, strengthen the research and pre-judgment of the development trend of the industry and the Company, balance risk control and business development, intensify resource integration and business collaboration, and continue to improve the quality and level of comprehensive financial services so as to accumulate strength for achieving new development goals.

1. Implement the strategic plan, and pursue high-quality development and progress in stability

(1) Effectively implement the Company’s new three-year strategic plan, promote the performance of six strategic tasks, strengthen the research and pre-judgment of the country’s macroeconomic trends and industry development trends, maintain a strategic vision of farsightedness, and dynamically adjust strategic implementation plans. (2) Balance business development and risk control, effectively integrate resources, increase business collaborations, provide customers with more comprehensive financial services, and create higher value for shareholders. (3) Adhere to the market-oriented development, improve personnel training, assessment, and incentive mechanisms to stimulate innovation and provide continuous driving force for the Company’s development.

– II-6 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

2. Improve liquidity management and optimize the allocation of assets and liabilities

(1) Conduct a smooth implementation and transition of the new accounting standards, pay attention to the possible impacts of the new standards on the Company and prepare corresponding solutions. (2) Strengthen the research and pre-judgment of the development trend of the industry and the Company, rationally plan the use of the funds from the private placement, and optimize the allocation of assets and liabilities. (3) Pay constant attention to liquidity risk management, strengthen the monitoring and research on the scale of the debts and leverage level of the Company and the industry to ensure that they meet the regulatory requirements and the Company’s development needs. (4) Further broaden the financing channels, optimize financing arrangements, and strengthen the Company’s financing capacity.

3. Effectively implement regulatory requirements and continuously strengthen risk management and control

(1) Effectively implement various new regulatory regulations, optimize the Company’s compliance and risk control system, improve system regulations and the construction of talent teams and systems, and promote various countermeasures. (2) Continuously promote the compliance and risk management construction of subsidiaries, clarify the vertical management model of the parent company over the compliance and risk control of subsidiaries, and incorporate subsidiaries into the Company’s unified compliance and risk management system. (3) Fully predict industrial risks, pay close attention to credit risks, and take active measures to ensure that the Company always meets the requirements of the risk control indicator system.

III. WORK PLAN FOR 2018

Looking into 2018, the Supervisory Committee will put in place the guiding ideology to “promote supervision to change with the times, effectively integrate supervision resources, strengthen the Company’s risk control and drive the Company to develop steadily” in accordance with the Company Law, the Securities Law and other relevant laws and regulations of the PRC, with focus on the progress of the Company’s transformation, standardize the work processes of supervision, integrate internal and external supervisory forces to drive the improvement of the compliance and risk management system of the Company and contribute to achieve the goals of pursuing progress in stability and high-quality development of the Company.

(I) Constantly uplift the norm for supervision on the basis of system construction

1. Further standardize the system construction of the Supervisory Committee

According to the “Guidance to the Work of Supervisory Committee of Listed Companies” (《上市公司監事會工作指引》) and regulatory requirements, the Supervisory Committee of the Company formulates its framework system, namely the “Work Regulations for the Supervisory Committee” (《監事會工作條例》). Based on this, the Supervisory Committee will also research and develop the working rules for its tour inspection and survey and other works, to define duties and powers of the Supervisory Committee as well as specific measures and work flow for discharge of its duties, so as to provide a reference basis and standard for the effective practice of the Supervisory Committee.

– II-7 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

2. Continuously optimize assessment on performance of duties system

The Supervisory Committee will comprehensively rationalize and improve the assessment system of the Supervisory Committee on the performance of duties by Directors, Supervisors and senior management, and on the basis of the summary of the assessments on performance of duties over the years, will further study effective models for quantitative evaluation on senior management and explore effective applications of the results of the assessment on performance of duties. At the same time, the Supervisory Committee will timely send guidance to the work of the assessment on performance of duties to the new Directors, Supervisors and senior management to ensure the continuous and effective implementation of the assessment on performance of duties.

(II) Fully expand the depth and breadth of supervision through multi-cooperation

1. Promote the communication mechanism of the Supervisory Committee

The Supervisory Committee will promote its communication and exchange mechanism. Specifically, it will communicate with the Company’s senior management and financial, compliance and risk control, auditing and other functional departments to research and discuss relevant regulations and policies, communicate the problems found and their rectification situations, listen to opinions and suggestions on the work of the Supervisory Committee, and find out effective points to conduct supervision in key areas, thereby to promote the coordination and integration of the Company’s internal supervision resources.

2. Explore to establish the work guidance mechanism for the Supervisory Committee

The Supervisory Committee will research and promote the construction of the systems of the supervisory committees of the Company and its subsidiaries, try to establish a guidance and exchange mechanism for the supervisory committees (supervisors) of the Company and its subsidiaries to discuss the latest regulatory requirements and the difficulties in supervision, and strengthen its guidance and supervision over the work of the supervisory committees (supervisors) of subsidiaries to improve the performance of duties by the supervisors of subsidiaries. The Supervisory Committee will pay close attention to the decision-making and management of major events of subsidiaries, and its management of capital and finance and compliance and risk control. At the same time, it will supervise and urge the Company to promptly promote the assessment on the performance of duties by Directors, Supervisors and senior management dispatched to subsidiaries and comprehensively improves the Group’s overall corporate governance practices.

3. Continuously deepen the tour inspection and survey mechanism of the Supervisory Committee

The Supervisory Committee will further deepen the tour inspection and survey mechanism and send its Supervisors to visit key business departments, branches or subsidiaries of the Company for survey for the purpose to conduct supervision and inspection on matters such as the risk management of innovative businesses, the improvement of internal control defects, the coverage of compliance management measures, and the management of employees’ practices. In addition, the Supervisory Committee will further extend the chain of its supervision, so that more efforts will be made in the research to strengthen and follow up with the implementation of supervision suggestions put forth after its supervision inspection, to form a supervision close-loop to improve effectiveness and thus provide support for the Company’s sustainable and healthy operation by identifying and addressing problems in a timely manner.

– II-8 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

(III) Effectively supervise and promote steady and healthy development with focus on compliance and risk control management

1. Supervise the compliance with new regulatory requirements

The Supervisory Committee will keep close eyes on the changes in regulatory requirements of the securities industry, timely study and analyze the regulatory requirements governing the Company in respect of corporate governance, finance, and compliance and risk control. Besides, it will monitor the implementation of new regulatory requirements regarding compliance and risk management by the Company, and pay close attention to the measures and plans adopted by the Company responding to the promulgation of new accounting standards to ensure that the Company will meet regulatory requirements.

2. Pay on-going attention to the Group’s financial soundness

The Supervisory Committee will communicate with the accounting firms and the Company’s Auditing Department to get full knowledge of the Company’s regular financial report preparation, decision-making on major financial matters, and the compliance with the financial accounting system. The Supervisory Committee will also carry out special inspections or assessments on important branches, departments or overseas investments, pay close attention to the Company’s leverage level and liquidity risk, and timely report to the Company’s management on the problem found, so as to ensure the Group’s financial soundness.

3. Promote and improve the establishment of the compliance and risk control system

To further monitor the compliance management of the Company and the development of the comprehensive risk management system, the Supervisory Committee will study feasible methods for systematic evaluation of the comprehensiveness, effectiveness and operational efficiency of the system, and make suggestions for improvement based on the evaluation on the effectiveness of the Company’s compliance management and the Supervisory Committee’s daily supervision, thus continuously meeting external regulatory requirements and business development needs through urging the Group to further enhance its compliance risk management and control capabilities.

(IV) Continuously improve the efficiency of supervision by taking professionalism and prudence as standards

1. Continuously improve the requirements for performance of duties by supervisors

The Supervisory Committee will perform the guidance and induction for new Supervisors to fulfill their duties, further clarify the requirements on Supervisors in respect of attending meetings, expressing supervision opinions and making information disclosure, and optimize the method in assessing duties performance, so as to promote a more prudential and proper performance of duties by Supervisors. On the other hand, it will explore effective ways to promote the performance of duties by employee Supervisors, propel the improvement of duty performance report by employee Supervisors, study and explore a democratic appraisal mechanism, aiming to comprehensively enhance the responsibility and representativeness of employee Supervisors in performing their duties.

– II-9 –

ANNEX II 2017 REPORT OF THE SUPERVISORY COMMITTEE

2. Effectively expand internal and external communications

The Supervisory Committee will continue to maintain and deepen communications with regulators, shareholders, Directors, and peer supervisory committees, keep abreast of the regulatory requirements, share and acquire advanced supervision and management experience in the industry, seek effective measures to achieve the integration of industry and finance, and promote the coordinated and mutual development of the Company and its corporate Shareholder.

3. Explore and promote research on supervision

The Supervisory Committee will organize learning sessions for its Supervisors to get knowledge of relevant legal and regulatory requirements, keep abreast of hot issues in the securities industry and the Company’s operation status. In addition, it will conduct special research on supervision in light of the Company’s actual conditions of development and the difficult and main aspects in the work of the Supervisory Committee, to continue to enhance the professional level of supervision.

The above proposal is hereby put forth to Shareholders for consideration.

– II-10 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

Dear Shareholders,

We, as the independent directors of Orient Securities Company Limited, hereby report our work for 2017 below pursuant to the Guidance on the Establishment of Independent Director System in Listed Companies, the Code of Corporate Governance for Listed Companies, the Rules for Governance of Securities Companies, the Listing Rules of Shanghai Stock Exchange as well as the relevant rules under the Guidelines for the Format of the Annual Work Report of Independent Directors promulgated by the Shanghai Stock Exchange:

I. BASIC INFORMATION OF INDEPENDENT DIRECTORS

At the beginning of the reporting period, there were 16 directors at the third session of the Board of Directors, including 6 independent directors; at the end of the reporting period, there are 14 directors at the third session of the Board of Directors, including 5 independent directors.

At the beginning of the reporting period, the independent directors of the Company were Mr. Li Zhiqiang, Mr. Xu Guoxiang, Mr. Tao Xiuming, Mr. Wei Anning, Mr. Pan Fei and Mr. Xu Zhiming. At the end of the reporting period, the independent directors of the Company were Mr. Xu Guoxiang, Mr. Tao Xiuming, Mr. Wei Anning, Mr. Xu Zhiming and Mr. Jin Qinglu.

On July 6, 2017, the Company received the resignation tendered by Mr. Pan Fei, an independent non-executive Director of the Company. Due to personal affairs (career arrangement), Mr. Pan Fei resigned from the positions of an independent Director of the third session of the Board and the chairman of the Audit Committee.

On August 29, 2017, the Company received the resignation tendered by Mr. Li Zhiqiang, an independent non-executive Director of the Company. Due to expiration of his tenure as an independent non-executive director of the Company, Mr. Li Zhiqiang resigned from the positions of an independent Director of the third session of the Board, the chairman of the Remuneration and Nomination Committee and a member of the Compliance and Risk Management Committee. As the resignation of Mr. Li Zhiqiang would cause the number of independent Directors of the Company to be less than one-third in number of members of the Board, according to relevant laws and regulations, the resignation shall take effect upon the appointment of a new independent Director to fill the vacancy, and to satisfy the requirement that the independent Directors should be not less than one-third in number of members of the Board. On October 16, 2017, the resignation of Mr. Li Zhiqiang took effect after Mr. Jin Qinglu duly performed his duties as an independent non-executive Director.

On September 27, 2017, Mr. Jin Qinglu was elected as an independent non-executive Director of the third session of the Board of the Company at the 2017 second extraordinary general meeting of the Company. At the 32nd meeting of the third session of the Board, Mr. Jin Qinglu was elected as the chairman of the Audit Committee of the third session of the Board. On October 16, 2017, the Company received the Reply on Approving Qualification of Jin Qinglu as an Independent Director of Securities Company (Hu Zheng Jian Xu Ke [2017] No. 80) issued by the Shanghai Bureau of the CSRC, pursuant to which, Mr. Jin Qinglu duly performed his duties as an independent non-executive Director and the chairman of the Audit Committee of the Company.

– III-1 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

The basic information of each of the independent directors is as follows:

(I) Current Independent Directors

Mr. Xu Guoxiang , born in 1960, is a member of CPC, a doctor and a professor. Currently, he is an independent non-executive Director of the Company, a director of the Research Center for Applied Statistics of Shanghai University of Finance and Economics, a chair professor of the School of Statistics and Management of Shanghai University of Finance and Economics, an independent director of China Enterprise Company Limited, an independent director of Luzhou Laojiao Co., Ltd., a supervisor of Dazhong Transportation (Group) Co., Ltd., and a supervisor of Shanghai Xintonglian Packaging Co., Ltd. Mr. Xu served as a lecturer of the Department of Management of Shanghai Maritime University, and a lecturer, associate professor, professor and the department head of the Department of Statistics of Shanghai University of Finance and Economics from January 1986 to May 2003. Mr. Xu has been the director of the Research Center for Applied Statistics of Shanghai University of Finance and Economics since June 2003.

Mr. Tao Xiuming , born in 1964, is a member of CPC, holds a doctorate in law and is a CPC party member. Currently, he is an independent non-executive Director of the Company, a founding partner and the management committee director of Beijing JunZeJun Law Offices, an executive director of Beijing Houjian Investment Co., Ltd., and an independent director of Taikang Asset Management Co., Ltd. Mr. Tao served in the China Law Counsel Center from July 1989 to April 1992, and in the Institute of International Law of Chinese Academy of Social Sciences from April 1992 to December 1994. Mr. Tao has been a founding partner and the management committee director of Beijing JunZeJun Law Offices since July 1995.

Mr. Wei Anning , born in 1963, holds a doctorate. Currently, he is an independent non-executive Director of the Company, the executive director and the general manager of Shanghai Guwang Investment Management Limited, an independent director of Hwabao WP Fund Management Co., Ltd., a director of Hangzhou United Rural Commercial Bank Co. Ltd., an independent director of DaChan Food (Asia) Limited, the executive director of Ningxia Guwang Investment Management Limited, an executive director of Ningbo Guwang Investment Management Limited, and a director of Xinjiang Tycoon Group Co., Ltd., a director of Yantai Changyu Pioneer Wine Company Limited and a director of Jiangsu Financial Leasing Co., Ltd. Mr. Wei served as a lecturer of the Department of Economics and Statistics of Ningxia Broadcasting and Television University (Yinchuan) (寧夏廣播電視大學(銀川)), a director and assistant researcher of the Economic Development Office of the Economic Research Institute of Chinese Academy of Social Science, an agricultural economist of Agriculture and Natural Resources Bureau of World Bank. Mr. Wei served as a director and a director of agriculture, food, industry and commerce of Rabo bank in Northeastern Asia from February 1998 to January 2003, the executive vice president of New Hope Group from February 2003 to June 2006, the director of Chinese Business Development, CEO in China and president of Shanghai Branch of Fortis Bank Belgium from January 2007 to July 2010, and the chairman of Shandong Pacific Zhonghui Group from August 2010 to August 2012. Mr. Wei has been the executive director and the general manager of Shanghai Guwang Investment Management Limited since September 2010, and a director of Jiangsu Financial Leasing Co., Ltd since November 2017.

– III-2 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

Mr. Xu Zhiming , born in 1961, holds a doctorate in economics. Currently, he is an independent non-executive Director of the Company, a founding partner of China Broadband Capital. Mr. Xu served as a research analyst of Institute for International Studies in China International Trust and Investment Corporation, and the co-director of corporate finance department and co-director of capital market department of Nomura International (Hong Kong) Limited, a director and the director of investment banking division in the Great China Region of National Westminster Bank of Britain, a director and the director of corporate financing division in the Great China Region of Bank of Boston of the US from December 1986 to August 1999, an executive director of China Resources Enterprise, Limited, an executive director of China Resources (Beijing) Land Limited, the managing director and chief operating officer of China Resources Logic Limited from August 1999 to December 2001, as well as a senior consultant of TOM Group Limited, and an executive director and chief operating officer of TOM Online Inc from January 2002 to May 2005. Mr. Xu has been a founding partner of China Broadband Capital since March 2006.

Mr. Jin Qinglu , born in 1972, a member of CPC, holds a doctorate and is a professor. Currently, he is an independent non-executive Director of the Company, the vice dean of the School of Accountancy, a vice dean of the Institute of Accounting and Finance, a doctoral supervisor and the director of the Collaborative Innovation Center for Accounting Reform and Development of Shanghai University of Finance and Economics, and an independent director of Shanghai Emperor Of Cleaning Hi-tech Co., Ltd. Mr. Jin served as an assistant professor in the School of Accountancy of Shanghai University of Finance and Economics from June 2005 to June 2011, then a vice professor in the School of Accountancy of Shanghai University of Finance and Economics from July 2011 to June 2012. Mr. Jin has been a professor in the School of Accountancy of Shanghai University of Finance and Economics since July 2012, the vice dean of the School of Accountancy and the Institute of Accounting and Finance of Shanghai University of Finance and Economics since February 2014, the vice dean of the School of Accountancy of Shanghai University of Finance and Economics since April 2015, and the director of the Collaborative Innovation Center for Accounting Reform and Development of Shanghai University of Finance and Economics since January 2016.

(II) Resigned Independent Director

Mr. Li Zhiqiang , born in 1967, a member of CPC, is a holder of a master’s degree in law and a lawyer. He has been serving as an independent non-executive Director of the Company from October 2014 to October 2017. Currently, he is the founding partner of Jin Mao Kai De Partners, and an independent director of Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd. and an independent director of 上海新世界股份有限公司. Mr. Li served as a head and senior partner of Jin Mao Partners, a Chinese legal counsel of Graham & James LLP, as well as the vice chairman of the legal practice committee of Inter-Pacific Bar Association from July 1990 to July 2008. Mr. Li has been a founding partner of Jin Mao Kai De Partners since June 2008.

Mr. Pan Fei , born in 1956, a member of CPC, is a holder of a doctorate in management. He has been serving as an independent non-executive Director of the Company from June 2015 to July 2017. Currently, he is a professor and a doctoral supervisor of the School of Accountancy of Shanghai University of Finance and Economics. Mr. Pan served as a teaching assistant, lecturer, associate professor, and assistant dean of the School of Accountancy of Shanghai University of Finance and Economics. Mr. Pan has been serving as a professor and a doctoral supervisor of the school of accountancy of Shanghai University of Finance and Economics since July 2000.

– III-3 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

There is no impact on the current independent directors to serve as the independent directors of the Company during their term of office.

(III) Employment of the Special Committees to the Board of Directors

In accordance with the Rules for Governance of Securities Companies and other laws and regulations as well as the Articles of Association, the Board of Directors has established four special committees, namely the Strategy Development Committee, the Compliance and Risk Management Committee, the Auditing Committee and the Remuneration and Nomination Committee. The specific positions of the independent directors are as follows:

Current Independent

Directors of the Third Session of the Board of Directors Employment Xu Guoxiang A member of the Auditing Committee and a member of the Remuneration and Nomination Committee Tao Xiuming A member of the Strategy Development Committee Wei Anning A member of the Auditing Committee and a member of the Remuneration and Nomination Committee Jin Qinglu The chairman of the Auditing Committee

Retired Independent Directors of the Third Session of the Board of Directors Previous Employment

Li Zhiqiang The chairman of the Remuneration and Nomination Committee and a member of the Compliance and Risk Management Committee Pan Fei The chairman of the Auditing Committee

II. ANNUAL WORK PERFORMANCE OF INDEPENDENT DIRECTORS

(I) Attendance of the General Meetings

There were 3 general meetings convened by the Company this year. The first extraordinary general meeting for 2017 was convened on April 14 , 2017. This meeting was attended by two independent directors, including Mr. Li Zhiqiang and Mr. Pan Fei. The annual general meeting for 2016 was convened on June 5, 2017. This meeting was attended by five independent directors, including Mr. Li Zhiqiang, Mr. Xu Guoxiang, Mr. Wei Anning, Mr. Pan Fei and Mr. Xu Zhiming. Mr. Li Zhiqiang addressed the work report on behalf of the independent directors at the meeting. The second extraordinary general meeting for 2017 was convened on September 27, 2017. This meeting was attended by three independent directors, including Mr. Li Zhiqiang, Mr. Xu Guoxiang and Mr. Wei Anning.

– III-4 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

(II) Attendance of the Board Meetings

There were 12 meetings convened by the third session of the Board of Directors this year, 3 of which were on-site meetings and 9 of which were held by way of correspondence. All the directors attended the meetings in person or appointed other directors as their proxies to attend the meetings. The attendance of such meetings is detailed below:

Current

Current
Independent
Directors of the	Required	Attendance
Third Session of the	Attendance	in Person	Attendance by Proxy		Absence
Board of Directors	(times)	(times)		(times)	(times)	Voting
Xu Guoxiang	12	12		0	0	In favour of all the issues to
						be voted by him
Tao Xiuming	12	12		0	0	In favour of all the issues to
						be voted by him
Wei Anning	12	11		1	0	In favour of all the issues to
			(He appointed the			be voted by him
			independent director
			Xu	Guoxiang as his
			proxy to vote at the
			33rd meeting of the
			third session of the
			Board of Directors)
Xu Zhiming	12	12		0	0	In favour of all the issues to
						be voted by him
Jin Qinglu	2	2		0	0	In favour of all the issues to
						be voted by him
Retired Independent
Directors of the	Required	Attendance
Third Session of the	Attendance	in Person	Attendance by Proxy		Absence
Board of Directors	(times)	(times)		(times)	(times)	Voting
Li Zhiqiang	10	10		0	0	In favour of all the issues
						to be voted by him
Pan Fei	7	7		0	0	In favour of all the issues

0 In favour of all the issues to be voted by him

– III-5 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

(III) Attendance of the Meetings of the Special Committees of the Board of Directors

There were 18 meetings of the special committees convened by the Board of Directors this year, of which 7 were of the Auditing Committee, 7 were of the Compliance and Risk Management Committee, and 4 were of the Remuneration and Nomination Committee. The attendance of such meetings is detailed below (actual number of attendance/required number of attendance):

		Compliance		Remuneration
Current Independent	Strategy	and Risk		and
Directors of the Third Session	Development	Management	Auditing	Nomination
of the Board of Directors	Committee	Committee	Committee	Committee
Xu Guoxiang			7/7	4/4
Tao Xiuming
Wei Anning			6/7	4/4
Xu Zhiming
Jin Qinglu			2/2
		Compliance		Remuneration
Retired Independent	Strategy	and Risk		and
Directors of the Third Session	Development	Management	Auditing	Nomination
of the Board of Directors	Committee	Committee	Committee	Committee
Li Zhiqiang		6/6		3/3
Pan Fei			4/4

The proposals considered by the special committees the respective independent directors served for were fully reviewed and discussed, and relevant recommendations were put forward therefor. At the end the independent directors voted in favour of the related proposals and there was no against or abstain from voting. In addition, the Auditing Committee communicated with Deloitte & Touche LLP (Deloitte Touche Tohmatsu and Deloitte Touche Tohmatsu Certified Public Accountants LLP) in respect of reviewing the semi-annual report for 2017 and auditing the financial statement for 2017, respectively, so that the audit process was reasonably arranged, the audit strategy and key issues were defined and the Company’s auditing was ensured to be completed in a timely and effective manner.

(IV) Other Duty Performance

In 2017, the Board of Directors, in due diligence and by scientific decision-making, further promoted the innovation and transformation, strictly controlled various risks, and successfully completed the private placement of A shares in accordance with the final year of the three-year strategic plan. In those efforts, the independent directors of the Company actively attended the general meetings as well as the meetings of the Board of Directors and its special committees to actively understand, among others, the Company’s strategic development, innovation and transformation, compliance and risk management and the progress of private placement of A shares; in addition, the independent directors provided professional opinions and suggestions with regards to the relevant decision-making and corporate governance, effectively promoting the Board of Directors to make decisions in a scientific and forward-looking manner and enhancing the effectiveness of corporate governance.

– III-6 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

The independent directors kept abreast of the details of the operation and management as well as the operating progress of the Company in a timely manner through the Company Newspaper, Consolidated Report for Compliance and Risk Management, Compliance Delivery and other materials regularly prepared by the Company. Meanwhile, the independent directors maintained daily contact with the Company in a timely manner through e-mail, phone and other means, forming an effective communication mechanism and ensuring the right to know.

III. KEY ISSUES ON THE ANNUAL WORK PERFORMANCE OF INDEPENDENT DIRECTORS

(I) Related Party Transactions

The independent directors of the Company made judgments on the necessity and objectivity of the related party transactions of the Company and determined whether the pricing was fair and reasonable or whether it damaged the interests of the Company and shareholders in accordance with the Listing Rules of Shanghai Stock Exchange, the Guidelines on Related Party Transactions of Listed Companies and other laws and regulations as well as the requirements of the Administrative Measures for Related Party Transactions formulated by the Company. The independent directors of the Company also reviewed the foregoing based on relevant processes. The independent directors of the Company expressed independent opinions on the related party transactions, and were of the opinion that the relevant transactions were in line with the principle of equality, voluntariness, equivalence and payment, and that the price of the transaction did not deviate from the price of the independent third parties in the market, and that there was no damage to the interests of the shareholders of non-related party and the Company and was beneficial to the normal operation of the Company’s business.

(II) External Guarantee and Capital Occupation

In accordance with the Notification on Standardizing the Capital Transfer between Listed Companies and Related Parties and on Certain Issues of External Guarantee of Listed Companies and the Notification on Standardizing External Guarantee Behavior of Listed Companies promulgated by the CSRC, the Administrative Measures for External Guarantee formulated by the Company and other rules and requirements, the independent directors of the Company carefully and meticulously verified, among others, the external guarantee and capital occupation, and were of the opinion that there was no damage to the legitimate rights and interests of the Company and other shareholders.

(III) The Use of Proceeds Raised

The independent directors of the Company expressed their independent opinions on the deposit and actual use of the proceeds raised by the Company. Upon verification, the deposit, use and management of the proceeds raised by the Company were in line with the relevant provisions of the CSRC and the Shanghai Stock Exchange for the deposit and use of the proceeds raised by listed companies, the relevant rules under the Administrative Measures for Funds Raised formulated by the Company as well as the interests of all shareholders of the Company; and there is no change in the investment projects of raised proceeds. During the period, the Company has fulfilled relevant obligations and there was no violation of laws and regulations, and the information on the funds raised was disclosed in a timely, true, accurate and complete manner.

– III-7 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

(IV) Nomination, Appointment and Remuneration of Directors and Senior Management

The independent directors of the Company expressed independent opinion in respect of the issue for accruing the performance bonus of management team members for 2016 as considered at the 28th meeting of the third session of the Board of Directors, and were of the opinion that the total performance bonus, determined by the Company in accordance with the Administrative Measures for the Remuneration and Performance of Management Team Members and based on the annual performance evaluation by the Remuneration and Nomination Committee, was in line with the actual circumstances and system of the Company, which reflected that the responsibility, right and interest were consistent and was beneficial to the sustainable development of the Company.
The independent directors of the Company, after reviewed the personnel work history of relevant personnel and other relevant materials which helps judgment, expressed independent opinions in respect of the issue for electing the non-executive director as considered at the 32nd meeting of the third session of the Board of Directors. The independent directors were of the opinion that Mr. JIN Qinglu were equipped with relevant professional knowledge and capable of decision-making, supervision and coordination, that they were qualified to perform related duties and that their job qualification was in line with the Company Law, the Securities Law, the Measures for Regulating the Qualification of Directors, Supervisors and Senior Management of Securities Companies and other laws and regulations as well as the relevant rules of the Articles of Association. Mr. JIN Qinglu was nominated by the Board and considered by the general meeting. The procedure is legal and effective and in line with the Articles of Association.
The independent directors of the Company, after reviewed the personnel work history of relevant personnel and other relevant materials which helps judgment, expressed independent opinions in respect of the issue for electing the non-executive director as considered at the 36th meeting of the third session of the Board of Directors. The independent directors were of the opinion that candidates for the fourth session of the Board of Directors were equipped with relevant professional knowledge and capable of decision-making, supervision and coordination, that they were qualified to perform related duties and that their job qualification was in line with the Company Law, the Securities Law, the Measures for Regulating the Qualification of Directors, Supervisors and Senior Management of Securities Companies and other laws and regulations as well as the relevant rules of the Articles of Association. The candidates were nominated by the Board and considered by the general meeting. The procedure is legal and effective and in line with the Articles of Association.

(V) Results Forecast and Results Express

The Company published the announcement on the expected decrease of its 2016 annual results, the results express for interim results 2017 and the results express for the third quarterly results 2017, respectively. The independent directors of the Company were of the opinion that the company discloses information in a timely manner in accordance with the Listing Rules of Shanghai Stock Exchange, the Memorandum of Understanding on the Daily Information Disclosure of Listed Companies and the Company’s Administrative Measures for Information Disclosure, and that the financial data and indicators contained in the results express and results forecast are not significantly different from the actual data and indicators disclosed in related regular reports.

– III-8 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

(VI) Appointment of Accounting Firm

Given that DTT (Deloitte Touche Tohmatsu (德勤 • 關黃陳方會計師行) and Deloitte Touche Tohmatsu Certified Public Accountants LLP (德勤華永會計師事務所) (“ DTT ”) was in compliance with the auditing standards and other laws and regulations as well as professional ethics to serve as the reporting auditor for the H-share listing of the Company and domestic external auditor for 2016 of the Company, diligently performed its audit duties, and completed the audit work in an independent, objective and fair manner. The independent directors expressed independent opinion in respect of the issue for appointing the accounting firm for 2017 as considered at the 28th meeting of the Board of Directors. Pursuant to the opinion, it was agreed to appoint DTT as the Company’s domestic and overseas auditor for 2017, appoint Deloitte Touche Tohmatsu Certified Public Accountants LLP as the Company’s internal control auditor, and submit the same to the shareholders’ general meeting. It was agreed to authorize the management of the Company to determine the annual audit fees in 2017 within the scope of RMB3.08 million, and authorize the Board of Directors to determine the changes in scope and content of the auditing that would result in any increase to the auditing fees.

(VII) Cash Dividends

The independent directors expressed independent opinion in respect of the issue of the profit distribution plan of the Company for 2016 as considered at the 28th meeting of the third session of the Board of Directors. The independent directors were of the opinion that the profit distribution plan, proposed by the Company upon comprehensive consideration of the interests of shareholders, the Company’s development and other factors, was in line with relevant laws, regulations and normative documents as well as the ongoing, stable profit distribution policy determined in accordance with the Articles of Association and the Shareholders’ Returns in the Next Three Years upon Listing, which was conducive to the Company’s long-term development and in line with the interests of shareholders. The independent directors agreed to submit the plan to the shareholders’ general meeting.

(VIII) Performance of the Undertakings of the Company and Shareholders

The independent directors diligently performed their duties and safeguarded the overall interests of the Company. In particular, the independent directors attached great importance to protect the legitimate rights and interests of the minority shareholders from being damaged and actively concerned about the performance of the undertakings of the Company and shareholders. The undertakings that had not yet been fulfilled by the shareholders and the Company were fully disclosed in the Company’s announcements. During the reporting period, the Company and its shareholders had fulfilled related undertakings in good faith, and there was no breach thereof.

(IX) Implementation of Information Disclosure

The Company disclosed the information in accordance with the Company Law, Securities Law, the Listing Rules of Shanghai Stock Exchange and other laws, regulations, normative documents as well as the Articles of Association. The independent directors were of the opinion that the Company’s information was disclosed in a true, accurate, complete, timely and fair manner, and there was no false representation, misleading statement or material omission.

– III-9 –

2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNEX III

(X) Implementation of Internal Control

The independent directors were of the opinion that the Company had established and continuously improve the internal control system in accordance with the Company Law, the Securities Law, the Basic Norms of Corporate Internal Control and its supporting guidelines as well as the requirements of CSRC on regulating internal control, which was in line with the principles of comprehensiveness, prudence, effectiveness and timeliness. There was no material flaw existing. The internal control system was operated well during the implementation, which effectively guaranteed the healthy development of the Company.

(XI) The Operation of the Board of Directors and its Special Committees

The independent directors were of the opinion that the meetings for the Board of Directors and its special committees were convened and held in accordance with the Articles of Association, the Rules of Procedures of the Board of Directors and the working rules of the committees; and that their duties were performed under laws and rules, the decision-making process was scientific and efficient, the voting results were effectively implemented, and the information was disclosed in a true, accurate, complete and timely manner.

(XII) Other Issues that Independent Directors Consider Necessary to be Improved by the Listed Company

The independent directors were of the opinion that, in the volatile market, the Company’s business should maintain steady, taking the road of sustainable development; the Company should strengthen strategic thinking, so as to bring the synergic collectivization development and application of financial and other technologies to a strategic height; establish talents strategy, further proceed with the construction of motivation mechanism, and fully mobilize the enthusiasm of talents.

IV. OVERALL EVALUATION AND RECOMMENDATIONS

In 2017, all the independent directors were faithful in performing their duties. Through diligent and dedicated engagement in the decision-making for significant matters of the Company under the principle of objectivity, fairness and independence, the independent directors made positive contribution for improving the corporate governance structure, promoting the capital operation of the Company and safeguarding the interests of the Company as a whole as well as the legitimate rights and interests of the public shareholders.

In 2018, all the independent directors will continuously abide by the regulatory requirements for listed securities companies; diligently and faithfully perform their duties in strict compliance with the requirements under the laws, regulations and the Articles of Association; actively engage in the decisionmaking for significant matters of the Company; and safeguard the legitimate rights and interests of all the shareholders and in particular of the minority shareholders, with a view to promote the Company to develop in a sustainable, health and stable way.

– III-10 –

2017 FINAL ACCOUNTS REPORT

ANNEX IV

Dear Shareholders,

The preparation of 2017 final accounts report of the Company has finished. Both Deloitte Touche Tohmatsu Certified Public Accountants LLP (Special General Partnership) and Deloitte Touche Tohmatsu have audited the Company’s 2017 financial statements and issued standard unqualified opinions on the financial statements.

Unless otherwise stated, the financial data in this report are based on its A Shares audited consolidated financial statements. Among which, net asset, net profit, and consolidated total income are all based on those attributable to the parent company.

2017 KEY ACCOUNTING DATA AND FINANCIAL INDICATORS

Unit: 100 million (RMB)

		A Share			H Share
	As at the	As at the		As at the	As at the
	end of	beginning		end of	beginning
Items	2017	of 2017	Change	2017	of 2017	Change
Total assets	2,318.60	2,124.11	+9%	2,318.60	2,124.11	+9%
Total liabilities	1,783.59	1,714.73	+4%	1,783.59	1,714.73	+4%
Net assets	529.86	404.83	+31%	529.86	404.83	+31%
Net capital (parent	437.32	338.90	+29%	437.32	338.90	+29%
company)
Items	2017	2016	Change	2017	2016	Change
Operating income/ revenue	105.32	68.76	+53%	166.79	122.42	+36%
and other income
Operating expenses/	64.27	42.74	+50%	127.68	98.28	+30%
total expenses
Total profit	43.89	28.13	+56%	43.89	28.13	+56%
Net profit	35.54	23.14	+54%	35.54	23.14	+54%
Total consolidated income	24.31	9.80	+148%	24.31	9.80	+148%
Earnings per Share	0.57	0.41	+39%	0.57	0.41	+39%
(RMB/ Share)
Weighted average returns	8.62%	6.25%	↑2.37	8.62%	6.25%	↑2.37
on net assets			percentage			percentage
			points			points

Note: For financial report of A Share and H share, total assets, total liabilities and net assets are identical; the differences between operating income and operating expenditure was mainly in income and expenses for fees and interests, which were reflected in net amount in A Share while reflected respectively in H Share.

– IV-1 –

2017 FINAL ACCOUNTS REPORT

ANNEX IV

I. FINANCIAL POSITION IN 2017

(I) Assets

As at the end of 2017, the total assets of the Company amounted to RMB231.860 billion, representing an increase of RMB19.449 billion or 9% compared with that of the beginning of the year. Main changes: Financial assets (securities) increased RMB19.669 billion as compared with that of the beginning of the year; lending amount increased by RMB2.288 billion compared with that of the beginning of the year; as amount from securities brokerage business decreased, monetary funds, clearing settlement funds and refundable deposits decreased RMB3.053 billion compared with that of the beginning of the year.

(II) Liabilities

As at the end of 2017, total liabilities of the Company amounted to RMB178.359 billion, representing an increase of RMB6.885 billion or 4% compared with that of the beginning of the year. Main changes: Shortterm borrowings, short-term financing bills payables, amount due to banks and other financial institutions and financial assets sold under repurchase agreements increased RMB13.730 billion compared with that of the beginning of the year; amount from securities brokerage business decreased RMB7.432 billion compared with that of the beginning of the year.

After deducting amount from securities brokerage business and funds payable to securities issuers, as at the end of 2017, the gearing ratio of the Company was 73.69%, representing a drop of 3.07 ppts compared with that of the beginning of the year.

(III) Net assets and net capital

As at the end of 2017, the net assets of the Company amounted to RMB52.986 billion, representing an increase of RMB12.503 billion or 31% compared with that of the beginning of the year. Main changes: net proceeds from fund raising after the completion of private placement of A Shares amounted to RMB11.004; in 2017, the Company realized net profit and other comprehensive income of RMB3.554 billion and RMB-1.123 billion respectively; distribution of 2016 cash dividends of RMB0.932 billion.

As at the end of 2017, net asset per share attributable to owners of parent company was RMB7.58 per share, representing an increase of RMB1.06 per share or 16% compared with that of the beginning of the year.

As at the end of 2017, net capital of the parent company amounted to RMB43.732 billion, representing an increase of RMB9.842 billion or 29%, compared with that of the beginning of the year. Main changes: net proceeds from fund raising after the completion of additional placing of A Shares amounted to RMB10.957 billion, fully charged in core net capital. During the year, net capital of the parent company and other major risk control indicators all have complied with the regulatory standards with overall safety margin of various indicators on a rising trend.

– IV-2 –

2017 FINAL ACCOUNTS REPORT

ANNEX IV

II. OPERATION RESULTS IN 2017

(I) Operating Income

In 2017, the Company realized operating income of RMB10.532 billion, representing an increase of RMB3.655 billion or 53% year on year. Among which:

Net fee and commission income amounted to RMB5.006 billion, representing an increase of RMB813 million or 19% compared with the same period of last year. Main reasons: net income from asset management business increased by RMB1.091 billion compared with the same period of last year; net income from investment banking business decreased by RMB41 million compared with the same period of last year; net fee income from brokerage business decreased by RMB167 million compared with the same period of last year due to the effect of trading volume of the market.
Net interest income amounted to RMB-2,010 million, a decrease of RMB1,164 million as compared with the same period of last year. Main reasons: interest income from inter-bank deposit decreased by RMB90 million as compared with the same period of last year; interest income from securities financing business decreased by RMB156 million as compared with the same period of last year; interest expenditure of financial assets sold under repurchase agreements increased by RMB332 million as compared with the same period of last year; interest expenditure of other debt financing such as corporate bonds and subordinated bonds increased by RMB503 million as compared with the same period of last year.
Investment income and profit from change in fair value amounted to RMB7.215 billion in aggregate, representing an increase of RMB4.042 billion or 125% year on year. Main reasons: increase in profit from proprietary securities holding and disposal and increase in fair value.
Profit from exchange amounted to RMB-130 million, representing a decrease of RMB421 million or 145% year on year, mainly due to depreciation of Hong Kong Dollar.
Other business income amounted to RMB450 million, representing an increase of RMB424 million year on year, which was mainly attributable to increased sales revenue of bulk commodities of fellow subsidiaries.

(II) Operating expenditure

In 2017, the operating expenditure of the Company amounted to RMB6.427 billion, representing an increase of RMB2.153 billion or 50% year on year. Main reasons: increase in operating income led to increase in expenditure related to the business of RMB1.716 billion as compared with same period of last year; other business expenditure increased by RMB424 million as compared with the same period of last year due to the effect of bulk commodities trading of fellow subsidiaries.

– IV-3 –

2017 FINAL ACCOUNTS REPORT

ANNEX IV

(III) Profit and comprehensive income

In 2017, the Company realized a net profit of RMB3.554 billion, an increase of RMB1.240 billion or 54% compared with the same period of last year. The Company realized a total comprehensive income of RMB2.431 billion, an increase of RMB1.450 billion or 148% compared with the same period of last year.

In 2017, earnings per Share attributable to owners of parent company amounted to RMB0.57 per Share, an increase of RMB0.16 per Share or 39% compared with the same period of last year.

In conclusion, in 2017, amid a more rigorous regulatory environment and the deleveraging policy, the Company stuck to prudent operations and actively aligned itself with market trends and regulatory changes, thus some business recorded relatively substantial income growth. During the year, the Company has successfully completed its A Share placement, which further enhanced its capital strength and risk resistance ability, bringing a more reasonable structure of asset and a better quality of assets.

The above proposal is hereby put forth to the Shareholders for consideration.

– IV-4 –

PROPOSAL REGARDING THE PROJECTED ROUTINE RELATED PARTY TRANSACTIONS OF THE COMPANY IN 2018

ANNEX V

Dear Shareholders,

In accordance with the Listing Rules of Shanghai Stock Exchange, the Guidelines for the Implementation of Related Party Transactions of Listed Companies of Shanghai Stock Exchange, and the Administrative Measures for the Related Party Transactions of the Company, taking into consideration of the Company’s daily operation and business development needs, the Company has made estimation on the routine related party transactions that may occur in 2018 and during the period to 2018 AGM, details of which are as follows:

I. DESCRIPTION OF RELATED PARTIES AND RELATED RELATIONS

1. Shenergy (Group) Company Limited (“Shenergy Group”) and its related companies

Shenergy Group was established by Shanghai State-owned Assets Supervision and Administration Commission on November 18, 1996 with a registered capital of RMB10 billion. Its legal representative is HUANG Dinan. Shenergy Group holds 25.27% shares of the Company and is the largest shareholder of the Company. Shenergy Group and its related companies include legal persons or other organizations directly or indirectly controlled by Shenergy Group, 30%-controlled companies and its subsidiaries held, directly or indirectly, by Shenergy Group.

2. Other Related Parties

In addition to the aforementioned related parties, the related natural persons and other related legal persons include:

(1) Related natural persons

Related natural persons refer to natural persons who directly or indirectly hold more than 5% of the shares of the Company; directors, supervisors and senior management of the company; close family members of the aforementioned persons, including their spouse, parents and parents-in-law, siblings and their spouses, offspring of 18 years old or above and their spouses, siblings of their spouses and parents of daughters-in-law or sons-in-law; and other natural persons, recognized based on the principal of substance over form by the CSRC, the SSE, or by the Company, who have a special relationship with the Company and may cause the Company to lean against its interest, including natural persons holding 10% or more of shares of the holding subsidiaries that controlled by and have significant influence on the Company.

(2) Related legal persons

Related legal persons refer to legal persons or other organizations which hold more than 5% of the shares of the Company, other than Shenergy Group; legal persons or other organizations directly or indirectly controlled by the related natural persons of the Company, or where the related natural persons of the Company serve as directors and senior management, other than the Company and its holding subsidiaries; and legal persons or other organizations, recognized based on the principal of substance over form by the CSRC, the SSE, or by the Company, who have a special relationship with the Company and may cause the Company to lean against its interest, including legal persons or other organization holding 10% or more of shares of the holding subsidiaries that controlled by and have significant influence on the Company.

– V-1 –

PROPOSAL REGARDING THE PROJECTED ROUTINE

ANNEX V

RELATED PARTY TRANSACTIONS OF THE COMPANY IN 2018

II. DETAILS OF PROJECTED ROUTINE RELATED PARTY TRANSACTIONS

1. Related party transactions with Shenergy Group and its related companies

No. Category of Transactions Contents of Transactions

Projected Amount

1 Services for Securities and The services cover, including but Due to uncertainties Financial Products not limited to, securities and futures of the occurrence and brokerage; leasing of trading seats; volume of such sale of securities and financial business, the projected products; securities and financial cap will be calculated business; entrusted assets based on the actual management; investment and amount. consultancy; underwriting financial advisor of investment bank and asset custody services.
2 Trading in Securities and The trading covers, including but Financial Products not limited to, resale or repurchase in the interbank market; bonds proprietary trade business in the inter-bank market; usufruct transfer business; subscription for funds, wealth management or trust plans issued by related parties; related parties’ subscription for funds and wealth management products issued by the Company.
3 Purchasing goods and Including services within the business receiving labor scope of Shenergy Group and its related companies, which cover, including but not limited to, purchase gas, natural gas, gas stoves, gas equipment, gas kitchen equipment, and acceptance of supporting services such as gas transmission and distribution, gas project planning, design and construction.

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PROPOSAL REGARDING THE PROJECTED ROUTINE RELATED PARTY TRANSACTIONS OF THE COMPANY IN 2018

ANNEX V

2. Related party transactions with other related companies

No. Category of Transactions Contents of Transactions

Projected Amount

1 Services for Securities and The services cover, including but Financial Products not limited to, securities and futures brokerage; leasing of trading seats; dealing in securities and financial products; securities and financial business; entrusted assets management; investment and consultancy; underwriting financial advisor of investment banks and asset custody services.

Due to uncertainties of the occurrence and volume of such business, the projected cap will be calculated based on the actual amount.

2 Trading in Securities and The transactions with related parties Financial Products may refer to, including but not limited to, resale and repurchase in the inter-bank market; bonds proprietary trade business in the inter-bank market; usufruct transfer business; subscription for bonds, funds, wealth management or trust plans issued by related parties; related parties’ subscription for bonds, funds and wealth management products issued by the Company.

3. Related party transactions with related natural persons

Related natural persons will receive securities and futures brokerage services rendered by the Company or subscribe for wealth management products issued by the Company in accordance with laws, regulations and regulatory requirements. Due to uncertainties of the occurrence and volume of such business, the projected cap will be calculated based on the actual amount.

III. PRICING DETERMINATION POLICY AND BASIS OF RELATED PARTY TRANSACTIONS

For the aforementioned related party transactions in the ordinary course of business, the Company will determine the transaction price in strict compliance with the principle of fairness with reference to the market price level, industry practice and prices determined by any third party. The aforementioned related party transactions did not impair the interests of the Company and its shareholders, especially minority shareholders.

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PROPOSAL REGARDING THE PROJECTED ROUTINE RELATED PARTY TRANSACTIONS OF THE COMPANY IN 2018

ANNEX V

IV. IMPACT OF ROUTINE RELATED PARTY TRANSACTIONS ON THE COMPANY
The above related party transactions are those that will contribute to normal business development of the Company during the normal business of the Company;
The pricing of the aforesaid related party transactions was determined with reference to the market price, which was fair and reasonable without causing any prejudice against the interests of the Company and its non-associated shareholders; and
The above related party transactions did not affect the independence of the Company as the principal businesses of the Company did not rely on the related parties as a result of the above related party transactions.

The above proposal is hereby put forth to the Shareholders for consideration (the relevant related Shareholders shall abstain from voting on the related proposals, respectively).

– V-4 –

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DFZQ — AGM Information 2018

50931_rns_2018-04-27_fc687ded-99f3-494d-bb22-ef718d682c2e.pdf

EXPECTED PROVISION OF GUARANTEES BY THE COMPANY IN 2018 AND NOTICE OF ANNUAL GENERAL MEETING

DEFINITIONS

DEFINITIONS

(Stock Code: 03958)

INTRODUCTION

LETTER FROM THE BOARD

ORDINARY RESOLUTIONS

1. 2017 Report of the Board

2. 2017 Report of the Supervisory Committee

3. 2017 Final Accounts Report

4. 2017 Profit Distribution Proposal

LETTER FROM THE BOARD

5. 2017 Annual Report

6. The proposal regarding the proprietary business scale of the Company in 2018

7. The proposal regarding the engagement of auditing firms for the year 2018

8. The proposal regarding the conduction of asset-backed securitization business with the Company’s credit assets from its financing businesses

LETTER FROM THE BOARD

9. The proposal regarding the projected routine related party transactions in 2018

LETTER FROM THE BOARD

10. The proposal regarding the expected provision of guarantees by the Company in 2018

LETTER FROM THE BOARD

READING MATERIALS – 2017 DUTY PERFORMANCE REPORT OF INDEPENDENT DIRECTORS

ANNUAL GENERAL MEETING

HONG KONG LISTING RULES REQUIREMENT

RESPONSIBILITY STATEMENT

RECOMMENDATION

NOTICE OF ANNUAL GENERAL MEETING

ORDINARY RESOLUTIONS

1. Eligibility for attending the Annual General Meeting and date of registration of holders for H Shares

2. Proxy

3. Registration procedures for attending the Annual General Meeting

4. Voting by poll

5. Miscellaneous

Dear Shareholders,

I. PRINCIPAL OPERATION OF THE COMPANY IN 2017

(I) Key Financial Indicators

(II) Principal Operation

1. Outstanding performance of securities investment business

ANNEX I

2. The yielding results of the transformation of wealth management

3. The stable growth of research business

4. The stable development of OTC custody business

5. The strengths of subsidiaries kept growing, deepening corporatization and internationalization

II. MAJOR WORK OF THE BOARD IN 2017

(I) Due diligence, scientific decision-making

(II) Successfully accomplished the private placement of A Shares of the Company

(III) Continuously improved corporate governance

ANNEX I

2017 REPORT OF THE BOARD

(IV) Strengthened strategic management and Group management

(V) Strictly performed information disclosure responsibility

(VI) Carried out sound management on investor relations

(VII) Effectively carried out comprehensive risk management and compliance management

III. SPECIFIC EXPLANATION ON DUTY PERFORMANCE, APPRAISAL AND REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT IN 2017

(I) Duty performance, appraisal and remuneration of Directors

ANNEX I

ANNEX I

ANNEX I

2017 REPORT OF THE BOARD

(II) Duty performance, appraisal and remuneration of senior management

IV. WORK PLAN FOR THE BOARD IN 2018

(I) Further improve corporate governance and effectively perform the responsibility of information disclosure

(II) Strengthen strategic planning and enhance the level of strategic management

(III) Adhere to the bottom line of compliance and strengthen the overall risk management

(IV) Strengthen the construction of talent team and promote the reform of system and mechanism

(V) Improve self-construction and the Directors’ capability to perform duties

Dear Shareholders,

I. REVIEW OF THE WORK IN 2017

3. Made targeted supervision proposals to key departments

1. Made full cooperation for the completion of the non-public issuance

2. Convened survey symposium on finance and compliance

3. Made in-depth investigation and survey on the key operations of the Company

4. Completed the post-evaluation on overseas investment projects

3. Joined in the professional committee of the CAPCO and increased communications with the supervision authority

(IV) Continuously strengthened team construction to ensure continuous professional development

1. Actively participated in various types of trainings

2. Strengthened the construction of a talent team of office

DFZQ AGM Information 2018