Dida Inc. — Proxy Solicitation & Information Statement 2009

Nov 4, 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt about this circular, you should consult appropriate independent advisers.

If you have sold all your shares in China Shipping Development Company Limited, you should at once hand this circular and the enclosed proxy form and reply slip to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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.

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

CONTINUING CONNECTED TRANSACTIONS

Independent Financial Advisor to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 5 to 13 of this circular.

A letter from the Independent Board Committee is set out on page 14 of this circular.

A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set out on pages 15 to 23 of this circular.

A notice convening the EGM of the Company to be held at 2:00 p.m. on Tuesday, 22 December 2009 at 687 Dong Da Ming Road Shanghai, The People’s Republic of China, is set out on pages N-1 to N-3 of this circular.

A reply slip and form of proxy used at the EGM are enclosed. If you are eligible and intend to attend the EGM, please complete and return the enclosed reply slip in accordance with the instructions printed thereon on or before Wednesday, 2 December 2009. Whether or not you are able to attend the above meeting, please complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as practicable and in any event by not less than 24 hours before the time appointed for the holding of the meeting. Completion and return on the proxy form will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

5 November 2009

CONTENTS

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	N1

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DEFINITIONS

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

• “A Shares”

PRC-listed Domestic Shares in the share capital of the Company, with a par value of RMB1.00 each, which are subscribed for and traded in RMB and listed on the Shanghai Stock Exchange

• “Agreed Supplies”

the necessary supporting shipping materials and services to be provided to the Company pursuant to the New Services Agreement

• “associate”

has the meaning ascribed thereto under the Listing Rules

• “Board” the board of Directors

• “CBRC”

China Banking Regulatory Commission

• “China Shipping”

中國海運(集團)總公司 (China Shipping (Group) Company), a PRC state-owned enterprise and the controlling shareholder of the Company, currently holding 46.36% of the registered capital of the Company

• “China Shipping Group” China Shipping and its subsidiaries (excluding the Group)

• “Company”

China Shipping Development Company Limited (中海發展股 份有限公司) a joint stock limited company incorporated in the PRC with limited liability, whose H Shares have been listed on the Main Board since 1994 and whose A Shares have been listed on the Shanghai Stock Exchange since 2002

“CSCL”

China Shipping Container Lines Company Limited (中海集裝 箱運輸股份有限公司), a joint stock limited company established in the PRC whose H shares and A shares are listed on the Stock Exchange and the Shanghai Stock Exchange respectively, and in which China Shipping has approximately 49.03% shareholding interest

• “CS Finance Company”

China Shipping Finance Company Limited (中國海運財務有 限責任公司), a limited liability company to be established by the JV Partners in the PRC pursuant to the Investment Agreement

• “CS Haisheng”

China Shipping (Hainan) Haisheng Shipping and Enterprise Co., Ltd (中海（海南）海盛船務股份有限公司), a joint stock limited company established in the PRC whose A shares are listed on the Shanghai Stock Exchange, and in which China Shipping has approximately 27.49% shareholding interest

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DEFINITIONS

“Directors” the directors of the Company “Domestic Shares” domestic shares of RMB1.00 each in the registered capital of the Company “dwt” dead weight tons, the unit of measurement of weight capacity of vessels, which is the total weight a ship can carry, including cargo, bunkers, water, stores, spare and crew at a specified draft “EGM” extraordinary general meeting of the Shareholders to be convened by the Company on Tuesday, 22 December 2009 to consider and, if thought fit, to approve, among other things, the New Services Agreement and the Financial Services Framework Agreement “Financial Services Framework the financial services framework agreement dated 22 October Agreement” 2009 between the Company and China Shipping, pursuant to which China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC “Group” the Company and its existing subsidiaries “Guangzhou Maritime Transport” Guangzhou Maritime Transport (Group) Co. Ltd. (廣州海運 (集團)有限公司), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of China Shipping “H Shares” H shares of par value RMB1.00 each in the share capital of the Company, being overseas listed foreign invested shares “HK$” the lawful currency of Hong Kong dollars “Hong Kong” Hong Kong Special Administrative Region of the PRC. “Independent Board Committee” Messrs. Zhu Yongguang, Gu Gongyun, Zhang Jun and Lu Wenbin “Independent Financial Adviser” Evolution Watterson Securities Limited, the independent financial adviser appointed to make the relevant recommendation to the Independent Board Committee and the Independent Shareholders in relation to the New Services Agreement and the Financial Services Framework Agreement, being a registered investment adviser and dealer under the Securities and Futures Ordinance “Independent Shareholder(s)” the Shareholders other than China Shipping and its associates

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DEFINITIONS

“Investment Agreement”	an agreement entered into between the JV Partners	on 13
	February 2009 regarding the establishment of CS Finance
	Company
“JV Partners”	the Company, China Shipping, Guangzhou Maritime
	Transport, CSCL and CS Haisheng
“Latest Practicable Date”	3 November 2009, being the latest practicable date prior to
	the printing of this circular for ascertaining	certain
	information contained herein
“Listing Rules”	Rules Governing the Listing of Securities on the	Stock
	Exchange
“New Services Agreement”	the agreement to supply shipping materials and services dated
	22 October 2009 between the Company and China Shipping
“PBC”	People’s Bank of China (中國人民銀行)
“PRC”	the People’s Republic of China
“RMB”	Renminbi Yuan, the lawful currency of the PRC
“Services Agreement”	the agreement to supply shipping materials and services dated
	31 October 2006 between the Company and China Shipping
“Shareholder(s)”	shareholder(s) of the Company
“State Price”	the price stipulated from time to time by the relevant	pricing
	authorities of the PRC national government or municipal
	government of Shanghai Municipality or any	PRC
	governmental body
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

Note:

Unless otherwise specified and for illustration purpose only, the conversion of RMB into HK$ is based on the exchange rate HK$1.00=RMB0.88.

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EXPECTED TIMETABLE

Date of despatch of this circular . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday, 5 November 2009 Last date for returning the reply slips for the EGM . . . . . . . . . . . . . .Wednesday, 2 December 2009 Latest time for lodging proxy forms for the EGM . . . . . .2:00 p.m. on Monday, 21 December 2009 Time and date of EGM . . . . . . . . . . . . . . . . . . . . . . . . . .2:00 p.m. on Tuesday, 22 December 2009

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LETTER FROM THE BOARD

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

Executive Directors: Li Shaode (Chairman) Ma Zehua Lin Jianqing Wang Daxiong Zhang Guofa Mao Shijia Qiu Guoxuan

Independent Non-Executive Directors: Zhu Yongguang Gu Gongyun Zhang Jun Lu Wenbin

Registered Office: 168 Yuanshen Road Shanghai The PRC

Principal place of business in Hong Kong: 20/F., Alexandra House 16-20 Chater Road Central, Hong Kong

5 November 2009

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

Reference is made to the announcement of the Company dated 22 October 2009 in respect of the Company entering into the New Services Agreement and the Financial Services Framework Agreement.

The purpose of this circular is to provide the Shareholders with further information on the terms of the New Services Agreement and the Financial Services Framework Agreement and to convene the EGM to seek the approval of the Shareholders with respect to these agreements.

2. THE NEW SERVICES AGREEMENT

Background Information

Pursuant to the Services Agreement, China Shipping (or other members of the China Shipping Group) had agreed to provide the necessary supporting shipping materials and services for the

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LETTER FROM THE BOARD

on-going operations of the oil transportation business and dry bulk cargo transportation business including dry-docking and repairs services, suppliers of lubricating oil, fresh water, raw materials, bunker oil as well as other services for a term of three years which commenced on 1 January 2007 and ending on 31 December 2009.

Subject to the conditions of the New Services Agreement having been fulfilled (or waived, as the case may be), the New Services Agreement will be effective from 1 January 2010. The New Services Agreement ensures the continuity of the established and long-term business relationship between China Shipping Group and the Group.

Major terms of the New Services Agreement

Date: 22 October 2009 Parties: China Shipping (as provider of services) The Company (as recipient of services)

Shipping materials and services provided

The Company has entered into the New Services Agreement with China Shipping pursuant to which China Shipping Group agreed to provide to the Group certain Agreed Supplies for the ongoing operations for all vessels owned or bareboat chartered by the Group.

The Agreed Supplies, to be provided for the vessels owned or bareboat chartered by the Group, include:

1. supply of lubricating oil, fresh water, raw materials, bunker oil, mechanical and electrical engineering, ship stores and repairs and maintenance services for life boats;

2. oil removal treatment, maintenance, telecommunication and navigational services;

3. dry docking, repairs, special coating, technical improvements of vessels;

4. management services of sea crew;

5. accommodation, lodging, medical services and transportation for employees;

6. agency commissions;

7. service fees on sale and purchase of vessels, accessories and other equipment; and

8. miscellaneous management services.

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LETTER FROM THE BOARD

Fees for the supply of shipping materials and services

The fee for the Agreed Supplies will be determined by reference to the State Price. If a State Price is not available for any of the Agreed Supplies referred to above, reference will be made to its market price. Such market price shall be determined by reference to the price chargeable by independent third parties for identical or similar type of shipping material or service at the time. Where there is no market price, a price based on the actual book cost incurred by the China Shipping Group for providing the Agreed Supplies will be referred to.

Annual Caps

The aggregate fee in any financial year for the Agreed Supplies will depend on the types or quantity of the Agreed Supplies provided to the Group. Pursuant to the New Services Agreement, the annual cap for the Agreed Supplies will be as follows:

Year ending 31 December Annual Cap 2010 RMB4,001,000,000 (approximately HK$4,546,590,909.09) 2011 RMB4,901,000,000 (approximately HK$5,569,318,181.81) 2012 RMB5,535,000,000 (approximately HK$6,289,772,727.27)

These annual caps have been determined based on the actual amounts paid by the Group to the China Shipping Group in the last three financial years ended 31 December 2008, actual payments for the six months ended 30 June 2009, management’s estimates of fleet operational costs over the next three years ending 31 December 2012 and management’s estimates of State Prices and other relevant market developments. The increment of the annual caps for the three years have been determined based on the estimated increase in shipping capacity (as a result of the delivery of vessels already commissioned for construction as well as historical expansion trends of the Company) and the estimated increase in revenue as a result of the increase in shipping capacity. The shipping capacities for the three years ending 31 December 2012 is estimated to be approximately 11,710,000 dwt, 14,220,000 dwt and 16,250,000 dwt respectively.

For the three years ended 31 December 2008 and the six months ended 30 June 2009, the amount of Agreed Supplies purchased from China Shipping Group were approximately RMB2,211,045,000 (approximately HK$2,512,551,136.36), approximately RMB2,933,544,000 (approximately HK$3,333,572,727.27), approximately RMB3,267,957,000 (approximately HK$3,713,587,500) and approximately RMB1,101,910,000 (approximately HK$1,252,170,454.54) respectively.

Payment terms

Other than fees which cannot be ascertained at the time or such fees which are being disputed, all fees and charges for a particular calendar month where the Agreed Supplies have been provided by China Shipping Group to the Group shall be determined by the last business day of such calendar month and shall be paid by the Group no later than the 15th day on the following calendar month.

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LETTER FROM THE BOARD

Term

The New Services Agreement is for a term of 3 years, starting from 1 January 2010 and ending on 31 December 2012.

The New Services Agreement is conditional upon approval of the Independent Shareholders at the EGM.

Effective date

The New Services Agreement will, subject to Independent Shareholders’ approval, take effect from 1 January 2010. The term of the Services Agreement between the Company and China Shipping will end on 31 December 2009.

3. THE FINANCIAL SERVICES FRAMEWORK AGREEMENT

Background Information

As disclosed in the announcement dated 13 February 2009, on 13 February 2009, the Company entered into the Investment Agreement with China Shipping and its subsidiaries, that is, CSCL, CS Haisheng and Guangzhou Maritime Transport, for the establishment of CS Finance Company in Shanghai, the PRC. CS Finance Company is expected to be established by the end of 2009, subject to the approval from relevant PRC authorities.

The Company entered into the Financial Services Framework Agreement on 22 October 2009 with China Shipping and subject to obtaining Independent Shareholders’ approval, China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC.

Major terms of the Financial Services Framework Agreement

Date: 22 October 2009 Parties: China Shipping (as procurer of services to be provided) The Company (as recipient of services)

Pricing

Under the Financial Services Framework Agreement:

• (i) CS Finance Company shall accept deposits from the Group at interest rates not lower, and thus no less favourable, than (a) the lower limit of the relevant rates stipulated by PBC for the same type of deposits; (b) the interest rates offered by any independent third party for the same type of deposits; or (c) the interest rates at which CS Finance Company accepts from any independent third party for the same type of deposits;

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LETTER FROM THE BOARD

• (ii) CS Finance Company shall provide loans to the Group at interest rates not higher, and thus no less favourable, than (a) the upper limit of the relevant rates stipulated by PBC for the same type of loan; (b) the interest rates offered by any independent third party for the same type of loan; or (c) the interest rates at which CS Finance Company charges any independent third party with the same credit rating for the same type of loan;

• (iii) The fees charged by CS Finance Company for the provision of settlement services to the Group shall not be higher, and thus no less favourable, than the fees charged by an independent third party for the same type of services at the time; and

• (iv) The fees charged by CS Finance Company for the provision of other financial services to the Group shall not be higher, and thus no less favourable, than (a) the upper limit (if applicable) of the fees stipulated by PBC to be charged for the same type of services; (b) the fees charged by any independent third party for the same type of services; or (c) the fees charged by CS Finance Company for the same type of services on any independent third party with the same credit rating.

Annual Caps

Based on an internal estimate, the Directors propose to set the annual caps for the remaining period of 2009 up to 31 December 2009, and the three years ending 31 December 2012 for the continuing connected transactions under the Financial Services Framework Agreement as follows:

			(RMB’000)	(RMB’000)
			Proposed annual caps for
		the period
		ending	**the **	three years ending
		31 December		31 December
		2009	2010	2011	2012
(1)	Maximum daily outstanding balance of
	deposits (including accrued interest and
	handling fee) to be placed by the Group
	with CS Finance Company	1,000,000	2,500,000	3,000,000	3,500,000
(2)	Maximum daily outstanding balance of
	loans (including accrued interest and
	handling fee) to be granted CS Finance
	Company to the Group	500,000	1,500,000	1,700,000	1,900,000

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LETTER FROM THE BOARD

In arriving at such annual caps, the Directors have considered the following factors:

• (i) The historical figures of the maximum daily outstanding balance of deposits (including accrued interest and handling fee) placed by the Group with commercial banks from January 2009 to August 2009 and during the preceding three years, being approximately RMB1,300,000,000 (approximately HK$1,477,272,727.27) for the 8 month period from 1 January 2009 to 31 August 2009, and approximately RMB700,000,000 (approximately HK$795,454,545.45), approximately RMB800,000,000 (approximately HK$909,090,909.09) and approximately RMB2,000,000,000 (approximately HK$2,272,727,272.72) respectively for the 3 years ending 31 December 2008; and

• (ii) The historical figures of the maximum daily outstanding balance of loans (including accrued interest and handling fee) granted by commercial banks to the Group from January 2009 to August 2009 and during the preceding three years, being approximately RMB6,800,000,000 (approximately HK$7,727,272,727.27) for the 8 month period from 1 January 2009 to 31 August 2009, and approximately RMB3,500,000,000 (approximately HK$3,977,272,727.27), approximately RMB4,300,000,000 (approximately HK$4,886,363,636.36) and approximately RMB6,500,000,000 (approximately HK$7,386,363,636.36) respectively for the 3 years ending 31 December 2008.

The annual caps above have been determined based on the above historical figures and the Group’s expectation of capital needs for the next three years.

Furthermore, due to the current downturn of the shipping market, the Group is expected to face financial pressure. Therefore, the proposed annual caps were determined according to the Group’s capital needs and CS Finance Company’s financial ability.

Payment Terms

The payment terms are dependent on the type of financial services to be provided and are determined at the time when such financials services are entered into. The Group expect such terms of payment to be consistent with market terms for the relevant type of financial services.

Term

Subject to the approval being obtained from the Independent Shareholders, and CS Finance Company obtaining its business license and license for operation of financial business, the Financial Services Framework Agreement will be effective for a term of 3 years commencing from the date when all conditions precedent under the Financial Services Framework Agreement are satisfied to the day immediately before the third anniversary of the commencement date.

4. REASONS FOR, AND BENEFITS OF, ENTERING INTO THE NEW SERVICES AGREEMENT AND THE FINANCIAL SERVICES FRAMEWORK AGREEMENT

The New Services Agreement is essential to the operation of the shipping businesses of the Group as it will provide the necessary supporting services and shipping supplies to all the vessels owned or bareboat chartered by the Group. In general, material terms and conditions for the provision of the Agreed Supplies under the New Services Agreement, including the pricing structure, items of services and services standards, are consistent with those under the Services Agreement.

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LETTER FROM THE BOARD

The terms of and consideration payable under the New Services Agreement have been arrived at after arm’s length negotiation and are based on normal commercial terms.

The terms and conditions provided by CS Finance Company under the Financial Services Framework Agreement are generally more favourable to the Group than those provided by independent third parties.

Furthermore, the Group is not restricted under the Financial Services Framework Agreement to approach, and in fact may choose, any bank or financial institution to satisfy its financial service needs. Its criteria in making the choice could be made on costs and quality of services. Therefore, the Group may, but is not obliged to, continue to use CS Finance Company’s services if the service quality provided is competitive. Having such flexibility afforded under the Financial Services Framework Agreement, the Group is able to better manage its current capital and cashflow position. In addition, it is also expected that CS Finance Company will provide more efficient settlement service to the Group, as compared to independent third-party banks.

5. LISTING RULE IMPLICATIONS

As at the Latest Practicable Date, China Shipping is beneficially interested in 1,578,500,000 Domestic shares, representing approximately 46.36 per cent. of the existing issued share capital of the Company and is therefore its controlling shareholder. As such, China Shipping is a connected person of the Company within the meaning of the Listing Rules and in light of the applicable ratios under Chapter 14 of the Listing Rules exceeding 2.5% on an annual basis, the transactions under the New Services Agreement constitute continuing connected transactions for the Company that are subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

In respect of the provision of deposit services and loan services under the Financial Services Framework Agreement, the applicable percentage ratios are expected to be more than 2.5% but less than 25% on an annual basis. Therefore, such transactions constitute continuing connected transactions of the Company that are subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

In respect of the provision of settlement services and other financial services under the Financial Services Framework Agreement, any future transaction that may take place between the Group and CS Finance Company in respect of such services is expected to be less than 0.1% based on the applicable percentage ratios under Chapter 14 of the Listing Rules. Accordingly, pursuant to Rule 14A.31 of the Listing Rules, such transactions are exempt from all reporting, announcement and Independent Shareholders approval requirements. Should such transactions exceed the exemption threshold in future, the Group will be required to re-comply with the applicable connected transaction regulatory requirements under Chapter 14A of the Listing Rules.

In light of China Shipping’s involvement in the transactions contemplated under both the New Services Agreement and the Financial Services Framework Agreement, China Shipping (being the controlling shareholder of the Company) and its associates will abstain from voting at the EGM in relation to both agreements.

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LETTER FROM THE BOARD

Pursuant to rule 13.39(4) of the Listing Rules, votes in relation to the resolutions to be proposed at the EGM shall be taken by poll.

6. EGM

It is proposed that the EGM be convened and held at 2:00 p.m. on Tuesday, 22 December 2009 at 687 Dong Da Ming Road, Shanghai, The People’s Republic of China to consider and, if thought fit, approve the New Services Agreement, the Financial Services Framework Agreement and their respective annual caps. A notice of the EGM is set out on pages N-1 to N-3 of this circular.

A reply slip and form of proxy used at the EGM are enclosed. If you are eligible and intend to attend the EGM, please complete and return the enclosed reply slip in accordance with the instructions printed thereon on or before Wednesday, 2 December 2009. Whether or not you are able to attend the above meeting, please complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as practicable and in any event by not less than 24 hours before the time appointed for the holding of the meeting. Completion and return on the proxy form will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

7. CLOSURE OF H SHARE REGISTER OF MEMBERS OF THE COMPANY

The H share register of members of the Company will be closed from Saturday, 21 November 2009 to Tuesday, 22 December 2009 (both days inclusive), during which period no transfer of H Shares will be effected. Any holders of H Shares, whose names appear on the Company’s register of members at the close of business on Friday, 20 November 2009, are entitled to attend and vote at the EGM after completing the registration procedures for attending the EGM. For holders of H Shares, in order to be entitled to attend and vote at the EGM, their share transfer documents must be lodged with the Company’s branch share registrar in Hong Kong, Hong Kong Registrars Limited at Room 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:30 p.m. on Friday, 20 November 2009.

8. INDEPENDENT BOARD COMMITTEE

An Independent Board Committee comprising Messrs. Zhu Yongguang, Gu Gongyun, Zhang Jun and Lu Wenbin has been formed to advise the Independent Shareholders in respect of the transactions and annual caps pursuant to the New Services Agreement and the Financial Services Framework Agreement. The Independent Financial Adviser has also been appointed as the independent financial adviser for the purpose of advising the Independent Board Committee and the Independent Shareholders in respect of the above transactions and annual caps.

9. INFORMATION ABOUT THE COMPANY AND CHINA SHIPPING

The business scope of the Company mainly involves coastal, ocean and Yangtze River cargo transportation, oil transportation, chartering, cargo agency and cargo transportation agency. The business scope of China Shipping includes import and export business, trading, coastal and ocean cargo transportation, dry bulk cargo transportation, supply of food for vessels, management of docks and other services in relation to the above.

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LETTER FROM THE BOARD

10. RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the transactions pursuant to the New Services Agreement and the Financial Services Framework Agreement and their respective annual caps to be fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and its shareholders as a whole. Accordingly, the Directors recommend that all Independent Shareholders to vote in favour of the ordinary resolutions set out in the notice of the EGM.

Yours faithfully, China Shipping Development Company Limited Li Shaode Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

5 November 2009

To the Independent Shareholders

Dear Sir / Madam,

CONTINUING CONNECTED TRANSACTIONS

We have been appointed as the Independent Board Committee to advise you in connection with the transactions pursuant to the New Services Agreement and the Financial Services Framework Agreement, details of which are set out in the Letter from the Board contained in the circular to the shareholders of the Company dated 5 November 2009 (the “Circular”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Having considered the transactions pursuant to the New Services Agreement and the Financial Services Framework Agreement, and the opinion of the Independent Financial Adviser in relation thereto as set out on pages 15 to 23 of the Circular, we are of the opinion that the terms of the transactions pursuant to the New Services Agreement and the Financial Services Framework Agreement and their respective annual caps are fair and reasonable and such transactions are in the interests of the Company and the Shareholders as a whole. We therefore recommend that you vote in favour of the ordinary resolutions to be proposed at the EGM to approve such transactions and the respective annual caps.

Yours faithfully,

Zhu Yongguang Gu Gongyun Zhang Jun Lu Wenbin Independent Independent Independent Independent non-executive non-executive non-executive non-executive Director Director Director Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from Evolution Watterson Securities Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the New Services Agreement and Financial Services Framework Agreement.

5 November 2009

The Independent Board Committee and the Independent Shareholders

China Shipping Development Company Limited

168 Yuanshen Road Shanghai The PRC

Dear Sir / Madam,

CONTINUING CONNECTED TRANSACTION RELATING TO THE NEW SERVICES AGREEMENT AND FINANCIAL SERVICES FRAMEWORK AGREEMENT

We refer to our appointment as Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders relating to the New Services Agreement and Financial Services Framework Agreement as described in the letter from the Board in the circular to Shareholders dated 5 November 2009 (the “Circular”). Our letter is made for incorporation into the Circular. Capitalized terms used in this letter have the same meanings as those defined in the Circular unless the context otherwise requires.

Background and terms of the New Services Agreement and Financial Services Framework Agreement are set out in the letter from the Board in the Circular. Our role as Independent Financial Adviser is to give our opinion as to whether the New Services Agreement and Financial Services Framework Agreement contained therein and the annual cap amount for each of the three years ending 31 December 2012 are in the interest of the Company and are on normal commercial terms, in the ordinary and usual course of business, are fair and reasonable insofar as the Independent Shareholders are concerned.

In putting forth our recommendation, we have relied on all relevant information, opinions and facts supplied and representation made to us by the Directors and representatives of the Company. We have assumed that all such information, opinions, facts and representations, which have been provided by the Directors or representatives of the Company, for which they are fully responsible, are true,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

accurate and complete in all respects. The Directors have also confirmed to us that no material facts have been omitted from the information supplied and we have no reason to suspect that any material information has been withheld by the Company or is misleading. We consider that we have sufficient information to reach an informed view and to provide a reasonable basis for our recommendation.

We have not, however, for the purpose of this exercise, conducted any form of detailed investigation or audit into the businesses or affairs of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED IN RELATION TO THE CONTINUING CONNECTED TRANSACTIONS

1. New Services Agreement

In arriving at our opinion on the terms of the New Services Agreement, we have taken into consideration the following factors and reasons:

Background of the Group

The Group is mainly involved in coastal, ocean and Yangtze River cargo transportation, oil transportation, chartering, cargo agency and cargo transportation agency.

Background of China Shipping

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

Principal terms of the New Services Agreement:

Date of the Agreement : 22 October 2009

• Subject matter : China Shipping Group will provide the Group with certain Agreed Supplies for the ongoing operations for all vessels owned or bareboat chartered by the Group. The list of Agreed Supplies includes:

• supply of lubricating oil, fresh water, raw materials, bunker oil, mechanical and electrical engineering, ship stores and repairs and maintenance services for life boats;

• oil removal treatment, maintenance, telecommunication and navigational services;

• dry docking, repairs, special coating, technical improvements of vessels;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1. management services of sea crew;

2. accommodation, lodging, medical services and transportation for employees;

3. agency commissions;

4. service fees on sale and purchase of vessels, accessories and other equipment; and

5. miscellaneous management services.

Provider of services : China Shipping

• Recipient of services : The Company

• Terms : 3 years, starting from 1 January 2010 and ending on 31 December 2012.

• Payment of Fee : The fees for the Agreed Supplies will be paid no later than the 15th day of the following calendar month.

Pricing policy

As disclosed in the “Letter from the Board” in the Circular, the fee of the Agreed Supplies will be determined by reference to:

• (i) the State Price;

• (ii) if a State Price is not available, reference will be made to the relevant market price, which is the price chargeable by independent third parties for identical or similar type of shipping material or service; and

• (iii) where there is no comparable market price, a price based on the actual book cost incurred by China Shipping Group for providing the Agreed Supplies will be referred to.

We are of the view that the above pricing principle is fair and reasonable so far as the Independent Shareholders are concerned as (i) fees of the Agreed Supplies will be set at either State Prices, market prices or on cost basis, with the former always prevail unless deemed not applicable; and (ii) the above pricing policies will be the same as those stipulated under the existing Service Agreement which was approved by the Independent Shareholders in December 2006.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Annual caps and basis of determination

A summary of the continuing connected transaction under the existing Service Agreement and the historical annual amount for the three financial years ended 31 December 2008, the six months ended 30 June 2009 and the proposed annual caps for each of the three years ending 31 December 2012 are set out in the table below:

(RMB million)	**Historical **	**Historical **	annual amount	annual amount	**Proposed annual **	**Proposed annual **	caps
	2006	2007	2008	1H2009	2010	2011	2012
Fees for the Agreed
Supplies	2,211	2,934	3,268	1,102	4,001	4,901	5,535

As briefly described in the table above, the provision of the Agreed Supplies mainly include the provision of fuel, shipping equipments, repair and maintenances, communications and navigation services, and shipping agency service provided by China Shipping Group to the Group. In our view, the annual caps of these ship transportation related materials and services are closely related to the shipping capacity and the shipping volume of the Group over the next three years. Therefore, to arrive at our view on the Group’s future demand for Agreed Supplies for the three years ahead to 2012, we have considered the following factors:

(a) Delivery of pre-ordered vessels

As disclosed in various announcement of the Company, the Company has commissioned the construction of a large number of vessels over the past few years that include bulk carriers, tankers, very large ore carriers and etc. The construction of these vessels will be completed over the next few years and the Company will begin taking delivery of them. As at 30 June 2009, the total shipping capacity of the Group is 8.0 million dwt. However, the total shipping capacity of the Group is estimated to grow to approximately 11.7 million dwt, 14.2 million dwt and 16.2 million dwt for the three years ended 31 December 2012 respectively. Consequently, this growth in total tonnage would result in the increase consumption of certain Agreed Supplies.

(b) Growing demand for shipping transportation of raw materials

According to a report published by the Australian Bureau of Agricultural and Resource Economics, China is expected to continue to underpin the demand for iron ore with imports estimated to be 568 and 635 million tonnes in 2009 and 2010 respectively, compared to just 444 million tonnes in 2008. Similarly, import of crude oil by China has grown about 5.8% in the first 7 months of 2009 compared to the same period last year as reported by China Petroleum and Chemical Industry Association. While Business Monitor International estimates oil consumption by China is expected to increase by about 24.1% from 2008 to 2013, implying an import of 5.97 million barrels per day by 2013. Therefore, we are of the view that the growth in raw material imports by China is expected to continue and the cumulative effect of the increase in importation of various raw materials will contribute significantly to shipping volume of the Group over the next few years.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) General growth in China’s economy

Although the financial crisis in September 2008 led to the collapse of global economy, however we have begun seeing signs of recovery by middle of 2009. Although Business Monitor International have revised their 2009 forecast of China’s gross domestic product (“GDP”) growth from 9.0% to 6.8%, they expect the Chinese GDP to grow at 7.6%, 8.4% and 7.7% for the next three years ending 2010, 2011 and 2012 respectively.

In addition to the abovementioned general factors, we have also considered the compound annual growth rate (“CAGR”) of the Group’s historical Agreed Supplies growth which amounts to 21.6% annually from 2006 to 2008. Based on the proposed annual caps, the CAGR of Agreed Supplies are estimated to grow at a lowered annual rate of 14.1% from 2008 to 2012.

Based on the above, we are of the view that the proposed annual caps for the Agreed Supplies for the next three years ending 2012 are fair and reasonable.

Reasons for the New Services Agreement

The Group has been purchasing the Agreed Supplies from China Shipping Group for many years. As a result of the Group’s long term business relationship with the China Shipping Group, China Shipping Group is familiar with the Group’s business operations and has been able to provide prompt services to meet the Group’s requirements. The New Services Agreement is essential to the operation of the shipping businesses of the Group as it will provide the necessary supporting services and shipping supplies to all the vessels owned or bareboat chartered by the Group.

2. Financial Services Framework Agreement

In arriving at our opinion on the terms of the Financial Services Framework Agreement, we have taken into consideration the following factors and reasons:

Background of CS Finance Company

CS Finance Company is expected to be established in Shanghai, the PRC by the end of 2009, pursuant to the Investment Agreement that the Company entered into with China Shipping and its subsidiaries. According to the Investment Agreement, CS Finance Company will provide the Group with a range of financial services including (i) deposit services;(ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC.

Principal terms of the Financial Services Framework Agreement:

Date of the Agreement : 22 October 2009 Subject matter : China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including:

1. deposit services;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1. loan services;

2. settlement services; and

3. other financial services as approved by CBRC.

Procurer of financial : China Shipping services Recipient of financial : The Company services Terms : Subject to the approval being obtained from the Independent Shareholders, and CS Finance Company obtaining its business license and license for operation of financial business, the Financial Services Framework Agreement will be effective for a term of 3 years commencing from the date when all conditions precedent under the Financial Services Framework Agreement are satisfied to the day immediately before the third anniversary of the commencement date.

Payment of Fee : The payment terms are dependent on the type of financial services to be provided and are determined at the time when such financials services are entered into. The Group expect such terms of payment to be consistent with market terms for the relevant type of financial services.

Pricing policy

As disclosed in the “Letter from the Board” in the Circular, the fee and charges of various financial services of the Financial Services Framework Agreement will be determined in the following manner:

• (a) CS Finance Company shall accept deposits from the Group at interest rates not lower, and thus no less favourable, than (a) the lower limit of the relevant rates stipulated by PBC for the same type of deposits; (b) the interest rates offered by any independent third party for the same type of deposits; or (c) the interest rates at which CS Finance Company accepts from any independent third party for the same type of deposits;

• (b) CS Finance Company shall provide loan to the Group at interest rates not higher, and thus no less favourable, than (a) the upper limit of the relevant rates stipulated by PBC for the same type of loan; (b) the interest rates offered by any independent third party for the same type of loan; or (c) the interest rates at which CS Finance Company charges any independent third party with the same credit rating for the same type of loan;

We are of the view that the above pricing principle is fair and reasonable so far as the Independent Shareholders are concerned as the fees and charges of the financial services provided will be set at rate better than either upper or lower limit of such limits set by PBC, independent third party providers or CS Finance Company provides to independent third party, thus the more favourable rate will always prevail unless deemed not applicable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Annual caps and basis of determination

A summary of the approximate maximum daily outstanding balance of deposits and loans placed by the Group under various commercial banks for the three financial years ended 31 December 2008, the eight months ended 31 August 2009, the proposed annual caps for the remaining period of 2009 up to 31 December 2009 and the proposed annual caps for each of the three years ending 31 December 2012 are set out in the table below:

(RMB million)	**Historical **	**Historical **	**annual **	amount	Proposed annual caps	Proposed annual caps	Proposed annual caps	Proposed annual caps
	2006	2007	2008	2009	2009	2010	2011	2012
				Jan-Aug	Nov-Dec
Maximum daily outstanding
balance of deposits
(including accrued interest
and handling fee) to be
placed by the Group with
CS Finance Company	700	800	2,000	1,300	1,000	2,500	3,000	3,500
Maximum daily outstanding
balance of loans
(including accrued interest
and handling fee) to be
granted by CS Finance
Company to the Group	3,500	4,300	6,500	6,800	500	1,500	1,700	1,900

As briefly described in the table above, CS Finance Company will provide deposits and loan services to the Group. In our view, the annual caps of the deposit and loan services are closely related to the size of the operations of the Group over the next three years. Therefore, to arrive at our view on the Group’s future demand for deposits and loan services for the financial period ending 2009 and the three years ahead to 2012, we have considered the following factors:

(a) General size of Operation of the Group

As disclosed above, the Group is expecting to expand its total shipping capacity by a significant amount over the next 3 years. Hence, cash receipts from operating a larger fleet of vessels is expected to increase as well. As the Group’s vessel capacity for 2008, 2010, 2011 and 2012 is 7.6 million, 11.7 million, 14.2 million and 16.2 million dwt respectively, it represents a growth rate of 54.0%, 21.4% and 14.3% respectively. Comparatively, the corresponding growth of annual caps for maximum daily outstanding balance of deposits for the same period grew at a rate of 25.0%, 20.0% and 16.7% respectively. Although the growth of annual caps for maximum daily outstanding balance of deposits from 2011 to 2012 is slightly higher than the vessel capacity growth of the same period, 2012 annual caps for maximum daily outstanding balance of deposits when compared to 2008 is only 75%, while the Group’s vessel capacity is expected to grow by more than 113.7% from 2008 to 2012. As for the annual cap for the remaining period of 2009, the proposed annual cap of RMB1.0 billion is below the maximum daily outstanding balance of deposit for the first 8 months of 2009.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Amount of loans the Group is expected to assume

As disclosed above, the Group is expecting to accept delivery of a large numbers of vessels over the next few years. As a result, cash outlay due to both stage payments and completion of the vessels will increase for the Group over the next few years. As such, the Company does not expect to pay down a significant amount of the total outstanding loan amount, which as of 31 August 2009 balance of maximum daily outstanding loan is approximately RMB6,800 million. The annual caps for maximum daily outstanding balance of loans for 2010, 2011 and 2012 when compared to the maximum daily outstanding balance of loans of 31 August 2009, is only 22.1%, 25.0% and 27.9% respectively. As for the annual cap for the remaining period of 2009, the proposed annual cap of RMB500 million is a mere 7.35% of the maximum daily outstanding balance of loan for the first 8 months of 2009.

Furthermore, as disclosed above, due to the growing demand for shipping transportation of raw materials and general growth of China’s economy, the increasing annual caps for both maximum daily outstanding balance of deposits and loans will be required to accommodate the growth in the Group’s business. Based on the above, we are of the view that the proposed annual caps for the Financial Services Framework Agreement for the period ending 31 December 2009 and the next three years ending 31 December 2012 are fair and reasonable.

Reasons for the Financial Services Framework Agreement

Historically, the Group has been depositing and borrowing funds with/from commercial banks to operate its business. The Financial Services Framework Agreement allows the Group to capitalize on this aspect of the business by benefiting from potentially higher deposit rates or lower loan rates, when compare to services provided by commercial banks. As CS Finance Company is familiar with the Group’s operation, it will be able to accommodate and coordinate with the Company better on various financial services that CS Finance Company will provide, and as a result, providing more efficient and timely usage of funds of the Group.

Conclusion

Having taken into account the principal factors and reasons set out above, we are of the opinion that (i) it is in the Company’s ordinary and usual course of business to enter into the New Services Agreement and the Financial Services Framework Agreement; (ii) the New Services Agreement and the Financial Services Framework Agreement would provide the Company with better business support services as China Shipping Group is familiar with the industry and operations of the Group; (iii) major terms of the New Services Agreement and the Financial Services Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole; and (iv) the annual cap amount for the New Services Agreement and the Financial Services Framework Agreement for each of the three years ending 31 December 2012, and in respect of the Financial Services Framework Agreement, the period ending 31 December 2009, are fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Accordingly, we would recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the upcoming EGM to approve the New Services Agreement and the Financial Services Framework Agreement.

Yours faithfully, For and on behalf of Evolution Watterson Securities Limited Edward Wu Executive Director

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GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

Directors’ Interests and Short Positions

As at the Latest Practicable Date, none of the Directors and chief executives, nor their associates, had any interest and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 and the Stock Exchange under the provisions of Divisions 7 and 8 of Part XV of the SFO or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in appendix 10 of the Listing Rules to be notified to the Company and the Stock Exchange or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein.

Directors’ Interest in Any Asset Acquired, Disposed or Leased

None of the Directors has had any material interest, direct or indirect, in any asset which, since 31 December 2008, being the date to which the latest audited consolidated financial statements of the Group have been made up, had been acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group.

Directors’ Service Contracts

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, any service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

Directors’ Interest in Contracts

No contracts of significance to which the Company, any of its holding companies, fellow subsidiaries or subsidiaries was a party and in which a Director had a material interest and which is significant to the Group’s business, whether directly or indirectly, subsisted at the date of this circular. None of the Directors or their respective associates has any competing interest (as would be required to be disclosed to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controller shareholder of the Company for the purpose of the Listing Rules).

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GENERAL INFORMATION

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial position or trading prospects of the Group since 31 December 2008, the date to which the latest audited financial statements of the Group were made up.

4. CONSENT AND EXPERT

The following is the qualification of the professional adviser who has given opinion or advice, which is contained in this circular:

Name	Qualification
Evolution Watterson	Independent financial adviser and a licensed corporation to
Securities Limited	carry out Type 1 (dealing in securities), Type 4 (advising on
	securities) and Type 6 (advising on corporate finance) of the
	regulated activities under the SFO

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or opinions and/or the references to its name in the form and context in which it respectively appears.

As at the Latest Practicable Date, (i) the Independent Financial Adviser did not have any interest, either direct or indirect, in any assets which had been, since the date to which the latest published audited financial statements of the Company were made up acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group; and (ii) the Independent Financial Adviser did not have any shareholding interests in any member of the Group and it did not have any right, whether legally enforceable or not, to subscribe for or nominate persons to subscribe for securities of any members of the Group.

5. MISCELLANEOUS

• (i) The legal address of the Company is at 168 Yuanshen Road, Shanghai, The People’s Republic of China.

• (ii) The registered office of the Company in Hong Kong is 20/F., Alexandra House, 16-20 Chater Road, Central, Hong Kong.

• (iii) The Company’s branch share registrar and transfer office in Hong Kong is at Hong Kong Registrars Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (iv) The secretary of the Company is Ms. Yao Qiaohong.

• (v) In the event of inconsistency, the English version of this circular shall prevail over the Chinese version.

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GENERAL INFORMATION

6. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Richards Butler in association with Reed Smith LLP at 20/F., Alexandra House, 16-20 Chater Road, Central, Hong Kong during normal business hours on any weekday (except public holidays) from the date of this circular up to and including Tuesday, 22 December 2009:

• (a) Services Agreement;

• (b) Investment Agreement;

• (c) the New Services Agreement; and

• (d) the Financial Services Framework Agreement.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [65 x 48] intentionally omitted <==

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

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

(Stock Code: 1138)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Notice is hereby given that the extraordinary general meeting (the “ EGM ”) of China Shipping Development Company Limited (the “ Company ”) will be held at 2:00 p.m. on Tuesday, 22 December 2009 at 687 Dong Da Ming Road, Shanghai, The People’s Republic of China to consider and, if thought fit, pass the following ordinary resolutions:

1. “ THAT the new services agreement dated 22 October 2009 (“ New Services Agreement ”) entered into between the Company and 中國海運(集團)總公司 (China Shipping (Group) Company) for the supply of shipping materials and services to the Company for a term of three years commencing from 1 January 2010 and ending on 31 December 2012, the continuing connected transactions contemplated thereunder and the proposed annual caps for such continuing connected transactions contemplated thereunder, be and are hereby approved, confirmed and ratified; and the directors of the Company be and are hereby authorised to do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the New Services Agreement;

2. “ THAT the financial services framework agreement dated 22 October 2009 (“ Financial Services Framework Agreement ”) entered into between the Company and 中國海運(集團)總公司 (China Shipping (Group) Company) (“ China Shipping ”) whereby China Shipping shall procure China Shipping Finance Company Limited (中國海運財務有限責任公司) to provide the Company and its subsidiaries with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC for a term of three years commencing from the date when all conditions precedent under the Financial Services Framework Agreement are satisfied and ending on the day immediately before the third anniversary of the commencement date, the continuing connected transactions contemplated thereunder and the proposed annual caps for the deposits and loans transactions contemplated thereunder, be and are hereby approved, confirmed and ratified; and the directors of the Company be and are hereby authorised to do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the Financial Services Framework Agreement;

By Order of the Board China Shipping Development Company Limited Yao Qiaohong Company Secretary

5 November 2009 Shanghai The People’s Republic of China

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

• (A) The H Share register of the Company will be closed from Saturday, 21 November 2009 to Tuesday, 22 December 2009 (both days inclusive), during which no transfer of H Shares will be effected. Any holders of H Shares of the Company, whose names appear on the Company’s register of members at the close of business on Friday, 20 November 2009 are entitled to attend and vote at the EGM after completing the registration procedures for attending the meeting. For the holders of H Shares, in order to be entitled to attend and vote at the EGM, their share transfer documents must be lodged with the Company’s H share registrar not later than 4:30 p.m. on Friday, 20 November 2009.

The address of the share registrar (for share transfer) for the Company’s H Shares is as follows:

Hong Kong Registrars Limited Rooms 1712-1716 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

• (B) Holders of H Shares, who intend to attend the EGM, must complete the reply slips for attending the EGM and return them to the Office of the Secretary to the Board of Directors of the Company not later than 20 days before the date of the EGM, i.e. no later than Wednesday, 2 December 2009.

Details of the Office of the Secretary to the Board of Directors of the Company are as follows:

Room 1601, 700 Dong Da Ming Road, Shanghai, The People’s Republic of China Postal Code: 200080 Tel: 86(21) 6596 6666 Fax: 86(21) 6596 6160

• (C) Each holder of H Shares who has the right to attend and vote at the EGM is entitled to appoint in writing one or more proxies, whether that proxy is a shareholder or not, to attend and vote on his behalf at the EGM.

• (D) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified.

• (E) For holders of H Shares, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarially certified copy of that power of attorney or other authority, must be delivered to the Company’s H share registrar, Hong Kong Registrars Limited, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time appointed for holding the EGM (or any adjournment thereof) in order for such documents to be valid.

• (F) Each holder of A Shares is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on its behalf at the EGM. Notes (C) to (D) also apply to holders of A Shares, except that the proxy form or other documents of authority must be delivered to the Office of the Secretary to the Board of Directors, the address of which is set out in Note (B) above, not less than 24 hours before the time appointed for holding the EGM (or any adjournment thereof) in order for such documents to be valid.

• (G) If a proxy attends the EGM on behalf of a shareholder, he should produce his identity card and the instrument signed by the proxy or his legal representative, which specifies the date of its issuance. If the legal representative of a

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NOTICE OF EXTRAORDINARY GENERAL MEETING

shareholder which shareholder is a legal person attends the EGM, such legal representative should produce his identity card and valid documents evidencing his capacity as such legal representative. If a shareholder which is a legal person appoints a company representative other than its legal representative to attend the EGM, such representative should produce his identity card and an authorization instrument affixed with the seal of that shareholder (which is a legal person) and duly signed by its legal representative.

• (H) The EGM is expected to last for an hour. Shareholders attending the EGM are responsible for their own transportation and accommodation expenses.

• (I) As at the date of this notice, the board of directors of the Company is comprised of Mr. Li Shaode, Mr. Ma Zehua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Guofa, Mr. Mao Shijia and Mr. Qiu Guoxuan as executive Directors, and Mr. Zhu Yongguang, Mr.Gu Gongyun, Mr. Zhang Jun and Mr. Lu Wenbin as independent non-executive Directors.

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