DFZQ — Governance Information 2017

Aug 7, 2017

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

(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)

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The board of directors (the “ Board ”) of 東方證券股份有限公司 (the “ Company ”) hereby announces that in order to further improve the articles of association (the “ Articles of Association ”) and corporate governance documents of the Company, pursuant to the PRC policy regarding “including the overall requirements for party building work in the articles of association of state-owned enterprises” and the latest requirements of the regulatory authorities on comprehensive risk management of securities companies and on private investment fund subsidiaries and alternative investment subsidiaries of securities companies, and considering the actual conditions of the Company’s operations and management, the Board has resolved to amend certain articles in the Articles of Association, details of which are set out as below:

Original article	To be amended as	Basis
Articles of Association:
	Adding: Article 10 The Company shall, in accordance with the provisions of the Constitution of the Chinese Communist Party, establish the organizations of the Chinese Communist Party and carry out party activities. The Company shall provide necessary conditions for the activities of the Party organizations. Party organizations shall act as a political core in the Company, and the Board of Directors shall consult the Party organizations before deciding on the Company’s significant issues. For major management issues involving national macro-control, national development strategy and national security, the Board of Directors shall make their decisions based on the opinions of the Party organisations. The following articles shall be reordered.	Article 19 of the Company Law of the People’s Republic of China and the relevant requirements for work

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	Original article		To be amended as	Basis
	Article 14Within the scope permitted by laws and regulations, the Company may invest in other limited liability companies or joint-stock limited companies, and is accountable to such investees subject to the capital commitment of the Company. The Company can establish wholly-owned subsidiaries or set up subsidiaries with other investors through joint contributions. The Company may establish a subsidiary engaging in direct investment business or a subsidiary engaging in other businesses as permitted by the securities regulatory authority. In accordance with the Articles of Association, the Company may set up a subsidiary engaging in investment businesses of financial products and others upon consideration by the shareholders’ general meeting or the Board of Directors.		Article 15Within the scope permitted by laws and regulations, the Company may invest in other limited liability companies or joint-stock limited companies, and is accountable to such investees subject to the capital commitment of the Company. The Company can establish wholly-owned subsidiaries or set up subsidiaries with other investors through joint contributions;the Company may establish wholly-owned private investment funds subsidiaries and alternative investment subsidiaries with its own funds, to be engaged in private investment fund business and alternative investment business such as financial products and equity respectively, it may also establish a subsidiary engaging in direct investment business or a subsidiary engaging in other businesses as permitted by the securities regulatory authority.	Rule 2 & 11 of the Management Rules for the Alternative Investment Subsidiaries under Securities Companies and Rule 2 & 10 of the Management Rules for the Private Investment Funds Subsidiaries under Securities Companies
	Article 19 See Note 1.1		Article 20 See Note 1.1	Updating the names of the promoters according to the requirements of Shanghai Bureau of Industry and Commerce Administration

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Original article		To be amended as	Basis
Article 151The Board of Directors shall perform the following duties: (1)......(9) (10) to appoint or dismiss the Company’s President; appoint or dismiss Chief Risk Officer, Chief Compliance Officer and Secretary to the Board based on the nominations of Chairman of the Board; to appoint or dismiss other senior management including Vice President, Chief Finance Officer, Chief Operating Officer, Chief Investment Officer and Investment Banking Director based on the nominations of President and to determine their remuneration and penalties; (11)......(16) (17) other duties and powers granted by the laws, regulations and the Articles of Association. ......		Article 152The Board of Directors shall perform the following duties: (1)......(9) (10) to appoint or dismiss the Company’s President; appoint or dismiss Chief Risk Officer, Chief Compliance Officer and Secretary to the Board based on the nominations of Chairman of the Board; to appoint or dismiss other senior management including the Company’s Vice President, Chief Finance Officer, Chief Operating Officer, Chief Investment Officer and Investment Banking Director based on the nominations of President,and conduct appraisals of the above personnel to determine their remuneration and penalties; (11)......(16) (17) to promote the Company’s risk culture development, consider and approve the Company’s basic regulatory system for overall risk management, risk preferences, risk tolerance and major risk limits, consider the Company’s regular risk assessment reports, establish direct communication with the Chief Risk Officer and undertake the ultimate responsibilities for the Company’s overall risk management; (18) other duties and powers granted by the laws, regulations and the Articles of Association. ......	Rule 7 of the Norms for Overall Risk Management of Securities Companies

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Original article		To be amended as	Basis
Article 186President is accountable to the Board of Directors, and shall perform the following duties: (1)......(6) (7)......(12) The senior management, such as vice president, the Chief Financial Officer, Chief Operation Officer, Chief investment Officer and Investment Banking Director shall be in charge of relevant work respectively under the leadership of the President. The Chief Risk Officer shall be responsible for the implementation of the risk management strategies and policies of the Company.		Article 187President is accountable to the Board of Directors, and shall perform the following duties: (1)......(6) (7) to be responsible for implementing the Company’s overall risk management initiatives, developing the risk management system, establishing and improving the Company’s risk management structure, developing the specific risk management plans and overseeing their implementation, regularly assessing the Company’s management of overall risks and significant risks and solving the existing problems, establishing an overall performance appraisal system that covers the effectiveness of risk management, establishing the information technology system and data quality control mechanism and undertaking the primary responsibility for overall risk management; (8)......(13) The senior management, such as Vice President, the Chief Finance Officer, Chief Operation Officer, Chief Investment Officer and Investment Banking Director shall be in charge of relevant work respectively under the leadership of the President. The Chief Risk Officer shall be responsiblefor the overall risk management, such as implementation of the risk management strategies and policies of the Company.	Rule 9 & 10 of the Norms for Overall Risk Management of Securities Companies
Article 188The president shall report to the Board or Supervisory Committee on the signing and execution of material contracts, application of funds as well as profit and loss of the Company as requested by the Board or Supervisory Committee. The President shall ensure the trueness of the report.		Article 189The President shall report to the Board or Supervisory Committee on the signing and execution of material contracts, application of funds, profit and loss as well as risk management of the Company as requested by the Board or Supervisory Committee. The President shall ensure the trueness of the report.	Rule 9 of the Norms for Overall Risk Management of Securities Companies

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Original article		To be amended as	Basis
Article 206The Supervisory Committee shall perform the following duties: (1) to review the periodical reports of the Company prepared by the Board of Directors and to provide written comments thereon; (2) to inspect the financial and compliance management of the Company; (3)......(10)		Article 207The Supervisory Committee shall perform the following duties:： (1) to review the periodical reports of the Company prepared by the Board of Directors and to provide written comments thereon; 2) to inspect the financial and compliance management of the Company; 3) to supervise and inspect the duty performance of the Board of Directors and senior management in respect of risk management and rectification, and to undertake the responsibility for supervising the Company’s overall risk management; (4)......(11)	Rule 8 of the Norms for Overall Risk Management of Securities Companies

NOTE 1.1

Before Amendments ：

Article 19 The Company was approved to issue a total of 2,139,791,800 ordinary shares upon its establishment and all the promoters contributed their capital in 2003. The number of shares initially subscribed for and the methods of capital contribution are as follows:

	Name of shareholders	Number of shares subscribed for (share)	Percentage	Methods of capital contribution
1	Shenergy (Group)CompanyLimited	603,335,458	28.20%	Assets and cash
2	Shanghai Tobacco GroupCo.,Ltd.	213,979,180	10.00%	Assets and cash
3	Wenhui Xinmin United Press Group	200,000,000	9.35%	cash
4	Shanghai Maosheng Enterprise Development (Group)Co.,Ltd.	170,000,000	7.94%	cash
5	Shanghai Jiushi Corporation	163,979,180	7.66%	Assets and cash
6	Shanghai Post Bureau	113,979,180	5.33%	Assets
7	Shanghai Electric(Group)CompanyLimited	113,979,180	5.33%	Assets
8	Hunan Computer Co.,Ltd.	100,000,000	4.67%	cash

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	Name of shareholders	Number of shares subscribed for (share)	Percentage	Methods of capital contribution
9	Shanghai Jinqiao Export Processing Zone Development Co.,Ltd.	79,785,426	3.73%	Assets
10	Shanghai Construction Co.,Ltd.	64,193,754	3.00%	Assets and cash
11	Shanghai Educational Development Co.,Ltd.	56,989,590	2.66%	Assets
12	Shanghai Greenland(Group)Co.,Ltd.	56,989,590	2.66%	Assets
13	Shanghai Gaoyuan Property (Group)Co.,Ltd.	50,000,000	2.34%	cash
14	Shanghai Minhang and Hongqiao Development Corp.	34,193,754	1.60%	Assets
15	Shanghai Taiyu GroupCo.,Ltd.	30,000,000	1.40%	cash
16	Shanghai Transportation Investment (Group) Co.,Ltd.	22,795,836	1.07%	Assets
17	Weida Hi-Tech HoldingCo.,Ltd.	20,000,000	0.93%	cash
18	Shanghai Join BuyCo.,Ltd.	17,096,877	0.80%	Assets
19	Shanghai International Trade & Investment DevelopingCo.,Ltd.	17,096,877	0.80%	Assets
20	Shanghai No. 1 Department Store Co.,Ltd.	11,397,918	0.53%	Assets
	Total	2,139,791,800	100.00%

After Amendments :

Article 20 The Company was approved to issue a total of 2,139,791,800 ordinary shares upon its establishment and all the promoters contributed their capital in 2003. The existing name of each promoter, the number of shares initially subscribed for, the methods of capital contribution and the shareholding percentage are as follows:

	Name of Promoters	Number of shares subscribed (share)	Percentage	Method of capital contribution
1	Shenergy (Group)CompanyLimited	603,335,458	28.20%	Assets and cash
2	Shanghai Tobacco GroupCo,Ltd.	213,979,180	10.00%	Assets and cash
3	Wenhui Xinmin United Press Group	200,000,000	9.35%	Cash
4	Shanghai Mexan Enterprise Development (Group)Limited	170,000,000	7.94%	Cash
5	Shanghai Jiushi(Group)Co.,Ltd.	163,979,180	7.66%	Assets and cash
6	Shanghai Post Company (上海市郵政公司)	113,979,180	5.33%	Assets
7	Shanghai Electric(Group)CompanyLimited	113,979,180	5.33%	Assets
8	Greatwall Information IndustryCo.,Ltd.	100,000,000	4.67%	Cash

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	Name of Promoters	Number of shares subscribed (share)	Percentage	Method of capital contribution
9	Shanghai Jinqiao Export Processing Zone Development Co.,Ltd.	79,785,426	3.73%	Assets
10	Shanghai Construction GroupCo.,Ltd.	64,193,754	3.00%	Assets and cash
11	Shanghai Educational Development Co.,Ltd.	56,989,590	2.66%	Assets
12	Greenland Holding Group Company Limited ( 綠地控股集團有限公司)	56,989,590	2.66%	Assets
13	Shanghai Gaoyuan Property (Group) Co., Ltd. (上海高遠置業(集團)有限公司)	50,000,000	2.34%	Cash
14	Shanghai Housing and Land (Group) Corporation(上海房地(集團)公司)	34,193,754	1.60%	Assets
15	Shanghai Taiyu GroupCo.,Ltd.	30,000,000	1.40%	Cash
16	Shanghai Transportation Investment (Group) Co.,Ltd.	22,795,836	1.07%	Assets
17	Weida Hi-Tech HoldingCo.,Ltd.	20,000,000	0.93%	Cash
18	Shanghai Join BuyCo.,Ltd.	17,096,877	0.80%	Assets
19	Shanghai International Trade &Investment Developing Co., Ltd. (上海市外經貿投資 開發有限公司)	17,096,877	0.80%	Assets
20	Shanghai Bailian Group Co., Ltd. (上海百聯集 團股份有限公司)	11,397,918	0.53%	Assets
	Total	2,139,791,800	100.00%

Such amendments to the Articles of Association shall be proposed at the shareholders’ general meeting of the Company for consideration and approval, and material articles therein will come into effect after being approved by China Securities Regulatory Commission.

A circular containing, among other things, details of the above resolutions, together with the notice of the shareholders’ general meeting, will be despatched to the shareholders of the Company in due course.

By order of the Board of Directors PAN Xinjun Chairman

Shanghai, PRC August 7, 2017

As at the date of this announcement, the Board of Directors comprises Mr. PAN Xinjun and Mr. JIN Wenzhong as executive Directors; Mr. WU Jianxiong, Mr. ZHANG Qian, Mr. WU Junhao, Mr. CHEN Bin, Mr. LI Xiang, Mr. XU Jianguo, Ms. HUANG Laifang and Mr. ZHOU Yao as non-executive Directors; and Mr. LI Zhiqiang, Mr. XU Guoxiang, Mr. TAO Xiuming, Mr. WEI Anning and Mr. XU Zhiming as independent nonexecutive Directors.

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