THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about any of the contents of this Circular, you should obtain independent professional advice.

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

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

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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)

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND ADOPTION OF CERTAIN RULES AND PROCEDURE

A letter from the Board is set out on pages 2 to 5 of this circular.

A supplemental notice of extraordinary general meeting of the Company to be held on Wednesday, 6 April 2011 at 2:00 p.m. at 700 Dong Da Ming Road, Shanghai, the People’s Republic of China are set out on pages N-1 to N-4 of this circular. Whether or not you are able to attend the above meeting, please complete and return the enclosed revised 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 or any adjournment thereof (i) in case of holders of H Shares, to the Company’s Hong Kong branch share registrar, Hong Kong Registrars Ltd at 17 M/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, (ii) in case of holders of A shares, to the Office of the Secretary to the Board of Directors of the Company at Room 1601, 700 Dong Da Ming Road, Shanghai, the People’s Republic of China. Completion and return of the revised proxy form will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

21 March 2011

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Proposed adoption of new Articles of Association and the adoption of
certain rules and procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Information about the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I — Proposed New Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II — Proposed Rules and Procedures of Shareholders’
General Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III — Proposed Rules and Procedures of Meetings of
the Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV — Proposed Rules and Procedures of Meetings of
the Supervisory Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V — Proposed Rules of Management of Connected Transactions . . . . . . .	V-1
Appendix VI — Proposed Rules and Procedures on Independent Non-Executive
Directors’ Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
Supplemental Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .	N-1

— i —

LETTER FROM THE BOARD

In this Circular, unless the context requires otherwise, the following terms shall have the meanings set out below:

“A Shares” ordinary shares of RMB1.00 each in the share capital of the Company which are listed on the Shanghai Stock Exchange and traded in RMB; “Articles” the articles of association of the Company, as amended, modified or otherwise supplemented from time to time; “Board” the board of Directors of the Company;

“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, the H shares of which are listed on the Hong Kong Stock Exchange;
“Directors” the directors of the Company; “EGM” the extraordinary general meeting of the Company to be held on Wednesday, 6 April 2011 at 2:00 p.m. to approve, inter alia, the adoption of New Articles;
“Group” the Company and its subsidiaries; “H Shares” overseas listed shares of RMB1.00 each in the share capital of the Company, which are listed on the main board of the Hong Kong Stock Exchange and traded in Hong Kong dollars;
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited; “PRC” the People’s Republic of China, excluding, for the purpose of this circular only, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan;
“RMB” Renminbi, the lawful currency of the PRC; “Share(s)” ordinary share(s) (including H Shares and A Shares) of par value RMB1.00 each in the issued share capital of the Company;
“Shareholder(s)” holder(s) of the Shares;

— 1 —

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 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 18 Chater Road Central, Hong Kong

21 March 2011

To the Shareholders

Dear Sir/Madam,

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND ADOPTION OF CERTAIN RULES AND PROCEDURE

INTRODUCTION

By an announcement dated 11 March 2011, the Board proposed to adopt a new set of Articles and certain rules and procedures subject to Shareholders’ approval at the EGM.

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND THE ADOPTION OF CERTAIN RULES AND PROCEDURE

The existing Articles have been adopted since 1994 (and as amended from time to time thereafter). To further improve corporate governance and to update the Articles, the Board proposed to make certain amendments to the Articles, “Rules and Procedures of Meetings of the Board of Directors” (董事會議事規則), “Rules and Procedures of Meetings of the Supervisory Committee” (監事會議事規則) and to adopt “Rules and Procedures of Shareholders’ General Meetings” (股東大會議事規則), “Rules of

— 2 —

LETTER FROM THE BOARD

Management of Connected Transactions” (關聯交易管理辦法) and “Rules and Procedures on Independent Non-executive Directors’ Work” (獨立董事工作制度) pursuant to the requirements of the applicable PRC laws and regulations and the relevant rules of the Shanghai Stock Exchange on which the A Shares of the Company are listed.

As the amendments will be substantial, the Directors would like to take this opportunity to propose that a new set of Articles be adopted to replace the existing Articles instead of amending the existing set on a piecemeal basis. The new Articles will take effect after having been approved at the EGM scheduled to be held on Wednesday, 6 April 2011 at 2:00 p.m. at 700 Dong Da Ming Road, Shanghai, the PRC and obtaining relevant governmental approvals. As for the other rules and procedures set out above, they will become effective upon approval by Shareholders at the EGM.

The adoption of the new Articles as amended together with the rules and procedures take into account (but not limited to) the following PRC rules and regulations:

(1) The Company Law of the People’s Republic of China 《中華人民共和國公司法》( );
(2) The Securities Law of the People’s Republic of China 《中華人民共和國證券法》( );
(3) The Rules Governing the Listing of Securities on the Shanghai Stock Exchange (2008 Revision) 《上海證券交易所股票上市規則（( 2008年修訂）》);
(4) The Mandatory Provisions for Articles of Association of Companies to be Listed Overseas 《到( 境外上市公司章程必備條款》);
(5) The Standards for the Governance of Listed Companies 《上市公司治理準則》( );
(6) The Guide for Articles of Association of Listed Companies 《上市公司章程指引》( );
(7) The Rules Governing the General Meetings of Listed Companies 《上市公司股東大會規則》( ).

The proposed revised Articles and such proposed rules and procedures are set out in Appendices I to VI respectively to this circular.

EGM

Further to the notice of extraordinary general meeting of the Company dated 16 February 2011, an extraordinary general meeting of the Company has been scheduled to be held on Wednesday, 6 April 2011 at 2:00 p.m. at 700 Dong Da Ming Road, Shanghai, the PRC for the purpose of, amongst other things, approving matters relating to the issue of convertible bonds and the appointment of Mr. Yan Zhichong as an executive Director. It is proposed that the adoption of Articles and related rules and procedures set out above be proposed as new resolutions to be included in the same EGM. A copy of the supplemental notice of EGM is set out on pages N-1 to N-4 of this circular.

— 3 —

LETTER FROM THE BOARD

Since the old proxy form for the EGM sent together with the circular of the Company dated 16 February 2011 does not contain the newly added resolutions to be approved at the EGM, a revised proxy form for the EGM has been prepared and is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed revised proxy form (for use at the EGM) in accordance with the instructions printed thereon as soon as possible to the Company’s Hong Kong H share registrar and transfer office, Hong Kong Registrars Ltd., 17M/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Office of the Secretary to the Board of Directors of the Company at Room 1601, 700 Dong Da Ming Road, Shanghai, the PRC (in case of holders of A Shares) but in any event not less than 24 hours before the respective time appointed for the holding of the EGM. A Shareholder who has not yet lodged the old proxy form with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company is requested to lodge the revised proxy form if he or she wishes to appoint proxies to attend the EGM on his or her behalf. In this case, the old proxy form should not be lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company.

A Shareholder who has already lodged the old proxy form with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company should note that:

(1) If no revised proxy form is lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company, the old proxy form will be treated as a valid proxy form lodged by him or her if correctly completed. The proxy so appointed by the Shareholder will be entitled to vote at his or her discretion or to abstain on any resolution properly put to the EGM other than those referred to in the notice of EGM dated 16 February 2011 and the old proxy form, including the newly added resolutions as set out in this circular.
(2) If the revised proxy form is lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company before the deadline referred to above, the revised proxy form will revoke and supersede the old proxy form previously lodged by him or her. The revised proxy form will be treated as a valid proxy form lodged by the Shareholder if correctly completed.
(3) If the revised proxy form is lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company after the deadline referred to above, the revised proxy form will be invalid. However, it will revoke the old proxy form previously lodged by the Shareholder, and any vote that may be cast by the purported proxy (whether appointed under the old proxy form or the revised proxy form) will not be counted in any poll which may be taken on a proposed resolution. Accordingly, Shareholders are advised not to lodge the revised proxy form after the deadline referred to above. If such Shareholders wish to vote at the EGM, they will have to attend in person and vote at the EGM themselves.

Shareholders are reminded that completion and delivery of the old proxy form and/or the revised proxy form will not preclude shareholders from attending and voting in person at the EGM or at any adjourned meeting should they so wish.

— 4 —

LETTER FROM THE BOARD

A reply slip is also 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 Friday, 1 April 2011.

As no Shareholders have material interests in the resolutions to adopt the new Articles and related rules and procedures set out in this circular, there are no Shareholders required to abstain from voting at the EGM in respect of these resolutions.

INFORMATION ABOUT THE COMPANY

The business scope of the Group includes: coastal, ocean and Yangtze River cargo transportation, chartering, cargo agency and cargo transportation agency.

RECOMMENDATION

The Directors consider that the approval of the adoption of the new Articles and the rules and procedures referred to in this circular is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of all proposed resolutions.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this circular.

Yours faithfully,

China Shipping Development Company Limited Li Shaode Chairman

— 5 —

PROPOSED NEW ARTICLES

APPENDIX I

Please note that the following new Articles are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix I is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed New Articles

Chapter 1 General Provisions

Article 1 These Articles of Association are formulated pursuant to the Company Law of the People’s Republic of China (“ Company Law ”), Securities Law of the People’s Republic of China (“ Securities Law ”), Special Regulations on Overseas Offerings and Listing of Shares by Joint Stock Limited Companies ( “Special Regulations” ) , Mandatory Provisions for the Articles of Association of Companies to be Listed Overseas (“ Mandatory Provisions ”), Standards for the Governance of Listed Companies ( Standards for Governance), Guide to Articles of Association of Listed Companies, the Rules Governing the Listing of Securities on the SEHK and the Letter of Opinions regarding the Supplementary Amendment of the Articles of Association by Companies Seeking Listing in Hong Kong and other relevant regulations, in order to protect the legitimate rights and interests of China Shipping Development Co., Ltd. (“the Company”) and shareholders and creditors thereof and to regulate the organization and behaviour of the Company.

Article 2 The Company is a joint-stock company with limited liability incorporated under the Company Law , Securities Law , Special Regulations , and other relevant state laws and regulations.

Established by promotion upon Approval Ti Gai Sheng [1994] No. 54 of State Commission for Restructuring the Economic System, the Company was registered with the Shanghai Administration for Industry and Commerce on 3 May 1994 and obtained Business License Qi Gu Hu Zong Zi No. 022594. On 18 July 1997, China Shipping (Group) Company (“Group”) and Shanghai Shipping (Group) Company signed an agreement on the transfer of shares, specifying the transfer of RMB1.4 billion domestic shares of Shanghai Shipping (Group) Company. The aforesaid transfer agreement was approved by Doc Guo Zi Qi Fa (1997) No. 153 of the State Assets Administration on 24 July 1997.

The promoter of the Company is: Shanghai Shipping (Group) Company Article 3 Registered Name of the Company: 中海發展股份有限公司 Name of the Company in English: China Shipping Development Co., Ltd.

— I-1 —

PROPOSED NEW ARTICLES

APPENDIX I

Article 4 Address: 168 Yuanshen Road, Shanghai Postcode: 200120 Tel: 021-65966666 Fax: 021-65966160 Telex: 33103 SMTCOCN Article 5 The registered capital of the Company is RMB3,404,552,270. Article 6 The Chairman of the Board is the legal representative of the Company. Article 7 The assets of the Company are divided into equal shares. Shareholders shall bear liability for the Company to the extent of the shares that they hold, and the Company shall bear liability for the debts of the Company with all its assets. Article 8 The Company is a permanently existing joint-stock company with limited liability. Article 9 The original Articles of Association took effect after being approved by the extraordinary general meeting held on 4 May 1994 and by relevant government departments, with China’s Administration for Industry and Commerce authority approving the registration of the Company.

Pursuant to the Company Law , Special Regulations and Mandatory Provisions , the original Articles of Association were revised at the annual general meeting held on 9 June 1995.

Pursuant to the Standards for the Governance , Guiding Opinions on Establishing the Independent Director System in Listed Companies and other relevant state laws and administrative regulations, these Articles of Association were revised again at the annual general meeting 2002 held on 28 May 2003. The original Articles of Association took effect after being approved by the annual general meeting 2002, company examination and approval authority authorised by the State Council and the China Securities Regulatory Commission under the State Council.

Pursuant to the Standards for the Governance , Notice of Several Issues Concerning the Regulation of Capital Transactions between Listed Companies and Affiliates Thereof and Guarantee Provided to Outside Parties by Listed Companies and Listing Rules revised by SEHK on 31 March 2004, the Company revised the original Articles of Association and submitted them to the annual general meeting 2003 for approval. The original Articles of Association were approved by the company examination and approval authority authorized by the State Council and the Securities Commission of the State Council and registered with the State Administration for Industry and Commerce of the People’s Republic of China, and took effect thereafter.

The revised Articles of Association took effect after being approved by shareholders of the Company at the annual general meeting 2003 and filed with State Administration for Industry and Commerce of the People’s Republic of China.

— I-2 —

APPENDIX I

PROPOSED NEW ARTICLES

Pursuant to Appendix 14 of the Rules Governing the Listing of Securities on the SEHK that took effect from 1 January 2005, the Company revised these Articles of Association and submitted them to the annual general meeting 2004 held on 30 May 2005 for approval. The revised Articles of Association took effect after being approved by the annual general meeting 2004 and by the company examination and approval authority authorized by the State Council and registered with the competent administration for industry and commerce.

Article 10 The previous Articles of Association shall be abolished as from the effective date of these Articles of Association.

Commencing from the date upon which these Articles of Association take effect, these latter will become a binding legal document for regulating the organization and behaviour of the Company, as well as the rights and obligations between the Company and its shareholders and between and among the Company’s shareholders. These Articles of Association shall also be binding on the Company and its shareholders, directors, supervisors and senior executives. The aforesaid persons shall all have the right, according to these Articles of Association, to propose claims related to affairs of the Company and to assume corresponding obligations.

Pursuant to these Articles of Association, shareholders may pursue action against other shareholders, against directors, supervisors and senior executives, and against the Company, and the Company may pursue action against its shareholders, directors, supervisors and senior executives.

The aforementioned actions include the instituting of legal proceedings with a competent court or filing for arbitration with a designated arbitral institution.

Article 11 The Company may invest in other enterprises. However, save as otherwise specified in the laws, the Company shall not be an investor bearing joint liability for its invested enterprises.

Chapter 2 Objective and Scope of Business

Article 12 The Company’s objectives are: Applying advanced and scientific management methods and flexible operating policies to vigorously develop the shipping industry and improve its profitability, so as to provide satisfactory investment returns for all shareholders and develop the Company into a leading world shipping enterprise.

Article 13 The business scope of the Company shall be as approved by the company registration authorities.

The legally registered business scope of the Company is: Main businesses: transport of coastal, ocean and Yangtze River cargos, ship chartering, agency and forwarding operation of cargos; sideline businesses: ship trading, repair and manufacturing of

— I-3 —

PROPOSED NEW ARTICLES

APPENDIX I

containers, agency for purchase and sale of accessories and spare parts of ships, consulting on and transfer of ship technologies, marine and mechanical management of domestic costal bulk carriers and oil tankers, overhaul and maintenance of ships, and management of international ships (with license if required).

The Company may establish subsidiaries, branches, representative offices, etc. based on business needs.

The Company may, according to the market orientation and the Company’s business needs and abilities and upon approval of the competent authority and company registration authority, adjust the scope of business in due course and establish branches and offices in Mainland China, Hong Kong, Macao, Taiwan and foreign countries.

The Company shall have the right to raise capital, including (but not limited to) seeking loans, issuing corporate stocks or bonds, mortgaging or pledging the ownership or use right of all or part of the assets of the Company or other rights and interests allowed by Chinese laws and administrative regulations, and to provide guarantees for the debts of a third party in accordance with relevant laws and regulations and these Articles of Association.

Chapter 3 Shares, Registered Capital and Transfer of Shares

Article 14 The Company shall have common shares at any and all times; with the approval of the examination and approval authority authorized by the State Council, the Company may also have other forms of shares when needed.
Article 15 The stock of the Company shall take the form of shares. All shares issued by the Company shall have nominal values, with each share having a nominal value of RMB1 Yuan. The RMB aforementioned refers to the statutory currency of the People’s Republic of China.
Article 16 The Company shall issue shares in an open, fair and just manner, and each share of the same category shall have the same right.

All shares of the same category issued at the same time shall be issued under the same conditions and at the same price; any entity or individual shall pay the same price for each share.

Article 17 The Company may offer its shares to both domestic and foreign investors with the approval of the relevant securities regulatory authority of the State Council.

The “overseas investors” referred to above shall mean investors from a foreign country, Hong Kong, Macao or Taiwan, who wish to subscribe to the shares offered by the Company, while “domestic investors” shall mean investors in China other than in the aforementioned regions who wish to subscribe to the shares offered by the Company.

— I-4 —

PROPOSED NEW ARTICLES

APPENDIX I

Article 18 Shares issued to domestic investors and subscribed in RMB shall be called “domestic shares”. Domestic shares listed in China shall be called “A shares”. Shares issued to overseas investors and subscribed in a foreign currency shall be called “foreign shares”. Foreign shares offered and listed overseas shall be called “overseas listed foreign shares”.

The aforementioned “foreign currency” shall refer to the statutory currency, other than RMB, of another country or region, which is recognized by the foreign exchange authority of the state and can be used to pay the Company for the shares.

With approval of the securities regulatory authority under the State Council, the holders of domestic shares of the Company may transfer their shares to overseas investors and list the said shares overseas. Listing of the transferred shares on an overseas stock exchange shall also comply with the regulatory procedures, regulations and requirements of the said stock exchange, and need not be resolved by a class general meeting.

Foreign shares issued by the Company and listed in Hong Kong shall be called “H shares”, namely the shares approved by Stock Exchange of Hong Kong Limited (“SEHK”) for listing, with nominal values denominated in RMB, and subscribed and traded in HKD. Domestic shares can be converted into H shares upon the approval of the State Council, or an institution that it has authorized, and the consent of SEHK.

The total number of common shares originally issued by the Company shall be 2,480,000,000, consisting of 1,400,000,000 shares issued to the Group (accounting for 56.45% of the total number of common shares issued by the Company) and 1,080,000,000 shares (overseas listed foreign shares) (H shares) issued to the public.

Article 19 Upon the approval of company examination and approval authority authorized by the State Council, the Company increased the number of domestic shares and overseas listed foreign shares by 20% respectively in 1998. After the additional offering, the Company had a total of 2,976,000,000 shares, consisting of 1,680,000,000 domestic shares (accounting for 56.45% of the total number of common shares issued by the Company) and 1,290,000,000 overseas listed foreign shares (accounting for 43.55% of the total number of common shares issued by the Company).

Upon the approval of the securities regulatory authority under the State Council, in 2002 the Company additionally issued 350,000,000 common shares in RMB to the public, after which the Company had a total of 3,326,000,000 shares, consisting of 1,680,000,000 state-owned legal person shares (accounting for 50.51% of the total number of common shares issued by the Company), 1,296,000,000 overseas listed foreign shares (accounting for 38.97% of the total number of common shares issued by the Company), and 350,000,000 domestically listed shares targeting the public (accounting for 10.52% of the total number of common shares issued by the Company).

— I-5 —

APPENDIX I

PROPOSED NEW ARTICLES

The general meeting of the Company related to the A Shares approved the equity division reform scheme of the Company on 8 December 2005, after which the total 3,326,000,000 shares of the Company remained unchanged, consisting of 2,030,000,000 domestically listed domestic shares (accounting for 61.03% of the total number of common shares issued by the Company), and 1,296,000,000 overseas listed foreign shares (accounting for 38.97% of the total number of common shares issued by the Company).

Article 20 Upon the approval of the China Securities Regulatory Committee (“CSRC”), the Company issued RMB2 billion in convertible corporate bonds to the public in July 2007. The swap and redemption of all convertible corporate bonds ended in April 2008, leading to a change in the number of shares of the Company. Thereafter, the Company’s total number of shares increased to 3,404,552,270, consisting of 2,108,552,270 domestically listed domestic shares (accounting for 61.93% of the total number of common shares issued by the Company) and 1,296,000,000 overseas listed foreign shares (accounting for 38.07% of the total number of common shares issued by the Company). The domestic shares issued by the Company shall be kept under custody of the Shanghai Branch of China Securities Depository and Clearing Corporation Limited. H shares of the Company shall primarily be placed in the custody of the Central Depository under HKSCC Nominees Limited and may be held by shareholders in their own names.
Article 21 The Board of the Company may make arrangement for separately issuing domestic shares and overseas listed foreign shares according to the issue scheme approved by the securities regulatory authority under the State Council.
According to the aforesaid scheme for the issue of overseas listed foreign shares and domestic shares, the Company may issue the shares within 15 months after approval of the securities regulatory authority under the State Council.
Article 22 If the Company separately issues overseas listed foreign shares and domestic shares within the total number specified in the issue scheme, the said shares shall be issued at one time; if it is impossible for special reasons, the shares may be issued several times upon approval by the securities regulatory authority under the State Council.
Article 23 After the initial public offering of domestic shares and/or overseas listed foreign shares, changes in the registered capital of the Company shall be registered with State Administration for Industry and Commerce in light of the actual conditions and shall be reported to the examination and approval authority authorized by the State Council and the securities regulatory authority under the State Council for archiving.
Article 24 The Company shall not accept objects pledged with shares of the Company.
Article 25 The shares of the Company held by the promoters shall not be transferred within one year after the incorporation of the Company. Shares already issued by the Company before public offering shall not be transferred within one year after the shares of the Company are listed on the stock exchange.

— I-6 —

APPENDIX I

PROPOSED NEW ARTICLES

The directors, supervisors and senior executives shall report to the Company about their shareholdings and changes thereof and shall not transfer more than 25% of their shares per annum during their terms of office; the shares they hold in the Company shall not be transferred within one year after the shares of the Company are listed. The aforesaid persons shall not transfer their shares in the Company within a year after they terminate service with the Company. If the transfer restrictions in this paragraph involve H shares, the said transfer shall be subject to approval of SEHK.

Article 26 If the directors, supervisors, senior executives, and shareholders holding more that 5% of the total shares of the Company sell shares within 6 months after buying the same or buy shares within 6 months after selling the same, the earnings arising therefrom shall belong to the Company and the Board of the Company will take back the said earnings. If the transfer restrictions in this paragraph involve H shares, the said transfer shall be subject to the approval of SEHK. However, if a securities company comes to hold more than 5% of the shares by buying the shares remaining after an exclusive sale, the said 6-month limitation for selling said shares shall not apply.

If the Board of the Company does not observe the provision of the preceding paragraph, the shareholders shall have the right to require the Board to execute the provision within 30 days. If the Board fails to execute the provision within the aforesaid period, the shareholders shall have the right to directly institute legal proceedings in their own names for the interest of the Company.

If the Board fails to observe the provision in the first paragraph, the responsible directors shall bear joint liability according to law.

Chapter 4 Increase, Decrease and Buyback of Shares

Article 27 The Company may increase its capital by the following means in the light of its business and development needs and in accordance with laws, regulations and resolutions made at general meetings:

I. Public offering;
II. Non-public offering;
III. Issuing bonus shares to existing shareholders;
IV. Converting the common reserve fund into share capital;
V. Issuing convertible corporate bonds;
VI. Other means stipulated by laws and administrative regulations or approved by the China Securities Regulatory Commission (CSRC).

Issues of new shares by the Company shall be subject to approval as specified in these Articles of Association and shall follow the procedures specified in the relevant state laws and administrative regulations.

— I-7 —

APPENDIX I

PROPOSED NEW ARTICLES

After issuing convertible corporate bonds, the Company shall permit the holders thereof to convert them into shares in the Company shares according to the conditions and conversion procedures at the time of issue. Matters relating to changes in the Company’s equity arising from the conversion of convertible corporate bonds shall be handled in accordance with resolutions passed by the general meeting.

Article 28 Unless otherwise specified in the laws and administrative regulations, the Company’s stock can be transferred freely without any lien.
Article 29 The Company may decrease its registered capital pursuant to Company Law , other relevant laws and regulations, and these Articles of Association.
Article 30 To reduce its registered capital, the Company must prepare a balance sheet and a list of assets.

The Company shall notify creditors within 10 days after adoption of the resolution to decrease the registered capital and shall within 30 days make at least three announcements on newspapers recognized by the stock exchange on which the Company’s shares are listed. The creditors shall have the right to require the Company to repay debts or to provide corresponding guarantees for debt repayment within 30 days after receipt of the notice thereof or within 90 days after the first announcement if the creditors have not received said notice.

The Company’s registered capital after capital decrease shall not be lower than the legal minimal amount.

Article 31 The Company may, in the following circumstances, buy back its shares pursuant to laws, regulations and these Articles of Association:

I. Decreasing the registered capital of the Company;
II. Merging with another company holding shares in the Company;
III. Awarding shares to Company staff;
IV. Shareholders objecting to resolutions of the general meeting concerning the merger or division of the Company, requiring the Company to buy their shares;
V. Other circumstances stipulated by laws and regulations.

Article 32 The Company may buy back its shares in any of the following ways:

I. Through open transaction in the stock exchange;
II. Tender offer: III. Repurchase through the entering into of an OTC agreement; IV. Any other way approved by CSRC.

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Article 33 Buyback of the Company’s shares for reasons set out in Clauses (I) to (III) of Article 31 of these Articles of Association shall be subject to a resolution at a general meeting. After the Company has bought back its shares in accordance with Article 31, such shares shall be cancelled within 10 days after buyback in the circumstance set out in (I), or shall be transferred or cancelled within 6 months in the circumstances set out in (II) and (IV).

Shares bought back by the Company pursuant to Clause (III) of Article 31 shall not exceed 5% of the total shares issued by the Company; the buyback cost shall be covered by the after-tax profit of the Company; and the shares bought back shall be transferred to employees within one year.

Article 34 In buying back shares through agreement outside the stock exchange, the Company shall seek prior approval at a general meeting in accordance with these Articles of Association. With prior approval at the general meeting in the same manner, the Company may cancel or change the contract already concluded in the aforesaid manner or waive any right under the contract.

The share buyback contracts mentioned in the preceding paragraph shall include (but not be limited to) agreements for undertaking share buyback obligations and obtaining share buyback rights.

The Company shall not transfer a share buyback contract or any right thereunder.

The price of shares which the Company has the right to buy back or redeem shall not exceed a specific price limit if the said shares are not bought back by public trading or offer; to buy back the shares by offer, the Company shall issue a tender offer to all shareholders under the same conditions.

Article 35 Changes in the registered capital of the Company arising from cancellation of shares due to acquisition shall be registered with the original company registration authority.

The total par value of the cancelled shares shall be deducted from the registered capital of the Company.

Article 36 Unless the Company is under liquidation, the Company shall observe the following regulations when buying back its outstanding shares:

I. If the Company buys back shares at par value, the payment shall be deducted from the book balance of distributable profit of the Company and the proceeds from the issue of new shares for buying back old shares;

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II. If the Company buys back shares above par value, the portion equivalent to the par value shall be deducted from the book balance of distributable profit of the Company and the proceeds from issues of new shares for buying back old shares; the portion above the par value shall be processed as follows:
Deducted from the book balance of distributable profit of the Company if the shares bought back were issued at par value;
Deducted from the book balance of distributable profit of the Company and the proceeds from issue of new shares for buying back old shares if the shares bought back were issued above par value; however, the amount deducted from the proceeds from an issue of new shares shall not exceed the total premium obtained at the time of issue of the shares bought back and shall not exceed the amount (including a premium from the issue of new shares) in the premium account (or capital reserve account) of the Company at the time of buyback;
III. Sums that are paid by the Company for the following purposes should be paid out from the Company’s distributable profit:
Acquiring the right to buy back its shares;
Changing a share buyback contract;
Cancelling its obligations under the share buyback contract.
IV. After the par value of the shares deregistered is deducted from the registered capital of the Company pursuant to relevant regulations, the amount deducted from the distributable profit for paying the par value for the shares bought back shall be stated in the premium account (or capital reserve account) of the Company.

Chapter 5 Financial Assistance for Buying Company Shares

Article 37 The Company or subsidiaries thereof shall not provide any financial support to those who purchase or intend to purchase the Company’s stock. The above-mentioned purchasers of the Company’s stock shall include those who assume direct or indirect liabilities on account of their purchase of the Company’s stock.

The Company or subsidiaries thereof shall not at any time or in any form provide financial assistance to the aforesaid obligors for reducing or exempting their obligations.

The provisions herein do not apply to the circumstances set out in Article 39.

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Article 38 Financial assistance as referred to in this chapter shall include (but not be limited to):

I. Gifts;
II. Guarantees (including cases of the guarantor’s assuming liability or proving property to ensure that the obligor performs its duties), compensation (excluding such compensation as caused by the Company’s mistakes), cancellation or waiver of rights;
III. Provision of loans or conclusion of a contract whereby the Company will perform duties before the other parties, as well as change of the parties to the loan or contract and transfer of the rights in the loan or contract;
IV. Financial support provided by the Company in any way when the Company is in insolvency, has no net assets, or its net assets are set to decrease by a large margin.

The duties assumed as mentioned in this chapter shall include those assumed by the obligor on account of changes in its financial position through its conclusion of a contract or arrangement (regardless of whether the contract or the arrangement may be executed compulsorily, or whether they are assumed by the obligor individually or jointly by him and any other person(s)) or in any other manner.

Article 39 The following acts shall not be deemed as prohibited under Article 37:

I. The Company provides the relevant financial assistance for the interest of the Company and the said financial assistance is not primarily intended to buy back the Company’s shares or the said financial assistance is part of a general plan of the Company;
II. The Company distributes its assets as dividends according to the law;
III. The Company distributes shares as dividends;
IV. The Company decreases the registered capital, buys back shares and adjusts the equity structure in accordance with these Articles of Association;
V. The Company provides loans for its normal business activities within its business scope (but it should not result in a net asset decrease for the Company, or despite that, such financial support is paid out from the Company’s distributable profit);
VI. The Company provides a loan for the employee stock ownership plan (but such financial assistance shall not give rise to a decrease of the net assets of the Company, or, even if a decrease occurs, such financial assistance shall be deducted from the distributable profit of the Company).

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Chapter 6 Shares and Shareholders’ Register

Article 40 The Company’s shares shall all be registered shares.

Matters specified in the shares shall include matters required by the stock exchange on which the Company’s shares are listed, as well as those specified in Company Law .

The Company may issue their overseas listed foreign shares in the form of stock deposit receipts or in other derivate forms pursuant to the laws of the place where the Company is listed and the practices of securities registration and custody.

Article 41 Shares shall be signed by the legal representative. Relevant senior executives of the Company shall also sign the shares if required by the stock exchange on which the Company’s shares are listed. The shares shall come into effect after stamping or printing of the Company seal on the share certificates. Stamping of the Company seal on the share certificates shall be authorized by the Board. The signature of the legal representative or other relevant senior executive of the Company may also be printed on the share certificates. The issue or trading of the shares of the Company in a non-paper form shall comply with other regulations of the securities regulatory authority of the location where the Company’s shares are listed.
Article 42 The Company shall keep a shareholders’ register according to the vouchers provided by the securities registration authority, which register shall bear adequate evidence of the shareholders holding shares in the Company unless there is evidence to the contrary.

The shareholders’ register shall record the following matters:

I. Names (titles), addresses (domiciles), occupation or nature of the shareholders;
II. Type and quantity of the stock held by the shareholders;
III. Paid and payable sums for the stock held by the shareholders;
IV. Numbers of the shares held by the shareholders;
V. Dates on which the shareholders are registered as such;
VI. Dates on which shareholders are removed as such.

Article 43 The Company may keep overseas the register of holders of overseas listed foreign shares and entrust it to the care of an overseas agency in accordance with the understanding and agreement reached between the securities regulatory authority under the State Council and the overseas securities regulatory authority. The original of the H shareholders’ register shall be kept in Hong Kong.

The Company shall keep at its domicile a copy of the register of holders of overseas listed foreign shares; the entrusted overseas agency shall always ensure that the original and copies of the register of holders of overseas listed foreign shares are consistent.

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When there is a discrepancy between the original and copies of the register of holders of overseas listed foreign shares, the original shall prevail.

Article 44 The Company shall keep a complete register of shareholders.

The register of shareholders shall include the following parts:

I. The register of shareholders kept at the Company’s domicile except as specified in Items (II) and (III) of this Article;
II. The register of holders of overseas listed foreign shares kept at the overseas stock exchange
III. The registers of shareholders that the Board of Directors decides to keep at other places to meet the requirements for the Company’s stock going public.
Article 45 There shall be no overlapping between the parts of the register. Transfer of the stock recorded in one part of the register of shareholders shall not be recorded in other parts of the register of shareholders while the said record still exists.

Revision or correction of the parts of the register of shareholders shall proceed in accordance with the laws of the locations where the specific parts of the register of shareholders are kept.

Article 46 All H shares for which full payment has been made may be transferred freely (other than circumstances not allowed by the HKSE) in accordance with these Articles of Association without any lien; except under the following conditions, the Board may refuse to recognize any transfer instrument without providing any reason:

I. All the transfer documents and other relevant documents relating to or affecting ownership of any registered securities shall be registered. In the event that any fees shall be charged for the registration, the said cost shall not be higher than the maximum amount stipulated under the Rules Governing the Listing of Securities on SEHK;
II. The transfer instrument and other relevant documents only involve H shares listed in Hong Kong;
III. Stamp tax has been paid for the transfer instrument and other relevant documents;
IV. Relevant shares and evidence reasonably required by the Board to prove that the transferor has the right to transfer the shares have been provided;
V. If the shares are transferred to joint holders, the number of joint holders shall not exceed four;
VI. The relevant shares are not subject to lien by any company.
VII. No shares shall be transferred to any minors or mentally defective persons or any other legally incapacitated persons.

Any shareholder of foreign shares may transfer all or part of his shares in the Company via the common written transfer document of the place where the foreign

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shares are listed or via written transfer document in any other form acceptable to the Board. The standard transfer form specified by SEHK may be used for the transfer of H shares. The said transfer document may be signed by hand, or signed by hand or printed if the transferor or the transferee is a recognized clearing institution (“recognized clearing institution”) as defined in the Securities and Futures Ordinance , or its proxy.

Article 47 No revision of the register of shareholders shall be registered on account of a share transfer within 30 days before the shareholders’ meeting or within 5 days before the reference date for dividend distribution as decided upon by the Company.This Article shall not be applicable to the registration of changes in shareholder’ register in issuing new shares in accordance with Article 27 of these Articles of Association.
Article 48 If the Company convenes a general meeting, distributes dividends, conducts liquidation or executes any other act requiring identification of shareholders, the convener of the Board meeting or general meeting shall determine the equity registration date, at the end of which the shareholders in the register shall be the shareholders entitled to the relevant interests.
Article 49 When anybody has an objection to the register of shareholders and requests that his name (title) should be recorded in or deleted from such register, he may apply for revision of the register of shareholders with the court that has the jurisdiction over it.
Article 50 Any shareholder recorded in the register of shareholders, or anybody requesting that his name (title) should be recorded in such register, who has lost his share certificates (namely the “original share-certificates”) may apply to the Company for supplementary issue of new share-certificates in respect of the said stock (namely the “related stock”).

Applications for the reissue of shares lost by holders of domestic shares shall be processed pursuant to Company Law .

If the Company is granted a mandate to issue warrants to anonymous holders, it shall not issue any new warrants in replacement of the original warrants lost unless it is convinced beyond reasonable doubt the original warrants have been destroyed.

Applications for the reissue of shares lost by holders of overseas listed foreign shares shareholders shall be processed pursuant to the law, regulations of the stock exchange and other relevant regulations of the place where the original of the register of holders of overseas listed foreign shares is kept.

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Reissues of shares lost by H shareholders shall meet the following requirements:

I. The applicant shall file his application in the standard format designated by the Company, and attach thereto a notarial deed or legal announcement. The notarial deed or legal announcement shall contain the reasons for such application, details and evidence on the loss of the share-certificates, as well as a declaration that no other person(s) will ask to be recorded as the shareholder for the related stock.
II. Before deciding upon the supplementary issue of new share certificates, the Company has not received any request to be recorded as the shareholder for the stock from anyone other than the applicant.
III. Where the Company decides upon the supplementary issue of new share certificates to the applicant, it shall publish a declaration thereon in the newspapers and magazines designated by the Board, which shall be repeated at least once every 30 days within a period of 90 days. The newspapers and periodicals designated by the Board shall be Chinese and English newspapers and periodicals recognized by SEHK.
IV. Before publishing an announcement of the reissue of new shares, the Company shall submit a copy of the announcement to the stock exchange on which its shares are listed, and may publish the same only after receiving a reply from the said stock exchange confirming that the said announcement has been displayed in the stock exchange. The duration of the display of the said announcement in the stock exchange shall be 90 days.

If the application for the supplementary issue of share certificates has not been agreed upon by the shareholder of the related stock recorded in the register, the Company shall mail to the shareholder a photocopy of the declaration to be published.

V. If the Company has not received an objection from anybody regarding the supplementary issue of share certificates upon termination of the 90-day limit for the declaration and its demonstration as specified in Items (III) and (IV), it may carry out the supplementary issue of new share certificates for which the applicant has applied.
VI. When conducting the supplementary issue of new share certificates pursuant to this regulation, the Company shall cancel the original sharecertificates immediately, and record such cancellation and supplementary issue in the register of shareholders.
VII. All company expenses arising from the cancellation of the original share certificates and the supplementary issue of new ones shall be borne by the applicant. Until the applicant provides a reasonable guarantee, the Company shall be entitled to refuse to take any action.

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Article 51 Good faith purchasers who obtain the said new share certificates or shareholders who are thereafter recorded as owners of the stock (if they are good faith purchasers), shall not have their names (titles) deleted from the register of shareholders after the Company conducts a supplementary issue of new share certificates.
Article 52 The Company shall not assume a duty of indemnity for anyone suffering from damages on account of the cancellation of the original share certificates or the supplementary issue of new share certificates, unless the party involved is able to prove fraudulent conduct on the part of the Company.

Chapter 7 Rights and Duties of Shareholders

Article 53 Company’s shareholders are those who hold the Company’s stock and have their names (titles) recorded in the register of shareholders.

Shareholders shall enjoy their rights and assume their responsibilities according to the type and proportion of their stock. Shareholders holding the same type of stock shall enjoy equal rights and assume equal responsibilities.

All classes of shareholders of the Company shall have equal rights in any profit distribution in the form of a dividend or any other form.

Where two or more persons are registered as joint holders of any shares, they shall be deemed as the common owners of the said shares subject to the following restrictions:

I. The Company need not register more than four persons as joint holders of any shares;
II. All the joint holders of any shares shall bear joint liability for all amounts payable.

As for joint shareholders:

I. If any of the joint shareholders dies, only the surviving joint shareholders shall be deemed by the Company as owners of the relevant shares, but the Board may, for the purpose of amending the shareholders’ register, require the surviving joint shareholders to provide a death certificate as it deems appropriate.
II. Of the joint holders of any shares, only the foremost joint shareholder in the shareholders’ register shall have the right to take possession of the relevant share certificates, receive notices from the Company, and attend and exercise the voting rights for the relevant shares at general meetings, and any notice served to the said person shall be deemed as having been served to all the joint holders of the relevant shares.

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If any of the joint shareholders sends the Company a receipt for any dividend, bonus or capital return payable to the said joint shareholders, the said receipt shall be deemed as a valid receipt sent by the said joint shareholders to the Company.

Article 54 Shareholders of company’s ordinary stock shall enjoy the following rights to:

I. Receive dividends and the division of earnings in other forms depending on its stock share;
II. Require, convene, preside over or attend general meetings either in person or by proxy and exercise the corresponding voting rights in accordance with the relevant laws, regulations and the Articles of Association;
III. Supervise, present suggestions on or make inquiries about the business activities of the Company;
IV. Transfer, give or pledge their shares in accordance with laws, regulations, and these Articles of Association;
V. Obtain relevant information in line with the stipulations in these Articles of Association, including:
Obtaining these Articles of Association after paying the cost;
Consulting free of charge and having the right to consult and copy relevant information after paying reasonable expenses:
- A. All parts of the register of shareholders;
- B. Personal data of directors, supervisors and senior executives of the Company, including:
  - (1) Present and previous names and aliases;
  - (2) Main addresses (domiciles);
  - (3) Nationality;
  - (4) Full-time and all part-time occupations and positions;
  - (5) Personal status certificate and its number.
- C. Report on equity issued by the Company;
- D. The total face value, amount, ceiling price and bottom price of each category of stock repurchased by the Company since the previous financial year, as well as the report on the Company’s payment of all such expenses;
- E. Stubs of corporate bonds, minutes of general meetings, resolutions of Board meetings, resolutions of Supervisory Committee meetings, and financial reports,

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F. the latest audited financial statements of the Company, and the reports of directors, supervisors and auditors;
G. Copy of the latest annual return filed with Chinese State Administration for Industry and Commerce or other competent authorities;
H. Special resolutions of the Company; and
I. Minutes of shareholders’ meetings (only available to shareholders).
J. The Company shall place the documents referred to in Item (A), Item (C), Item (D), Item (F), Item (G), Item (H)and Item (I) in Hong Kong for the public and shareholders to consult free of charge, and for them to make copies of the above documents after charging reasonable fees.
VI. By termination or upon liquidation of the Company, participate in distribution of the Company’s remaining assets depending on its stock share;
VII. Object to resolutions of the general meeting concerning merger or division of the Company, requiring the Company to buy their shares;
VIII. Other circumstances stipulated by laws, administrative regulations, departmental rules or these Articles of Association.

The Company shall not freeze or otherwise damage the rights attached to any shares directly or indirectly held by any person on the ground that the said person has not disclosed his equity to the Company.

Article 55 If any shareholder needs to access the relevant information as set out in the preceding article, the said shareholder shall provide the Company with written documents bearing evidence of the type and number of shares held by the said shareholder, and the Company shall provide the said information as required by the said shareholder upon authentication of the said shareholder, and may charge a reasonable fee for the provision of the copies of the said documents.
Article 56 If any resolution of the general meeting or Board of the Company runs against the laws and regulations, the shareholders shall have the right to request the court to invalidate the said resolution.

If the meeting convening procedure and voting method of the general meeting or Board meeting run against the laws and administrative regulations or these Articles of Association or if the content of any resolution runs against these Articles of Association, the shareholders shall have the right to request the court to cancel the said procedure, method or resolution within 60 days after adoption of the resolution.

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Article 57 If any director or senior executive violates laws and administrative regulations or these Articles of Association in fulfilling his duties, thereby causing any loss to the Company, the shareholder(s) severally or jointly holding 1% or more shares of the Company for more than 180 days continuously shall have the right to submit a written request to the Supervisory Committee to institute legal proceedings; if the Supervisory Committee violates laws and regulations or these Articles of Association in fulfilling its duties, thereby causing any loss to the Company, the shareholders shall have the right to submit a written request to the Court for legal proceedings.

If the Supervisory Committee or Board of Directors refuses to institute legal proceedings after receipt of the aforesaid written request or does not institute legal proceedings within 30 days after receipt of the said request, or if the circumstances are urgent or if any delay of legal proceedings may cause irrecoverable damage to the interests of the Company, the shareholders specified in the preceding paragraph shall have the right to directly institute legal proceedings in their own names for the interest of the Company.

If any other person infringes upon the legitimate rights and interests of the Company, thereby causing any loss to the Company, the shareholders specified in Paragraph 1 of this Article may institute legal proceedings pursuant to the preceding two paragraphs.

Article 58 If any director or senior executive violates the laws and regulations or these Articles of Association, thereby causing any loss to the shareholders, the shareholders may institute legal proceedings.

Article 59 The Company shall include the following statements in all its listing documents and shall instruct and procure its share registrar to reject the registration of the subscription, acquisition or transfer of shares in the name of any individual holder unless and until the individual holder submit the signed form in relation to the shares to the share registrar and the form shall contain the following statements:

I. The share purchaser and the Company and each of the shareholders, and the Company and each of the shareholdlers agree to observe and comply with the requirements of the Company Law, Special Regulations and these Articles of Association.
II. The share purchaser and the Company, each of the shareholders, directors, supervisors, managers and senior management of the Company agree disputes or claims incurred as a result of rights or obligations provided by these Articles of Association or the Company Law or other relevant law or administrative regulations or in relation to the affairs of the Company shall be submitted to arbitration in accordance with these Articles of Association.
III. The share purchaser and the Company and each of the shareholders agree the shares of the Company may be freely transferred by its holder(s).

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IV. The share purchaser authorizes the Company to enter into a contract on his/her behalf with each of the directors and senior management. Pursuant to the contract, the directors and senior management undertake to observe and fulfil their responsibilities under these Articles of Association to the shareholders.

Article 60 Shareholders of the Company’s ordinary stock shall assume the following responsibilities:

I. Observing laws, regulations and these Articles of Association;
II. Paying in stock capital according to the subscribed stock and participation form;

III. Not exiting shares except in the circumstances stipulated by laws and regulations;

IV. Not abusing shareholder rights to damage the interests of the Company or other shareholders; not abusing the independent status of legal persons or shareholder limited liability to damage the interests of the Company’s creditors.

If any shareholder of the Company abuses shareholder rights, thereby causing any loss to the Company or other shareholders, the said shareholder shall be liable for compensation according to law.

If any shareholder abuses the independent status of a legal person or shareholder limited liability or evades debts, thereby damaging the interests of the creditors of the Company, the said shareholder shall bear joint liability for the Company’s debts.

V. Fulfilling other obligations stipulated by laws, regulations and these Articles of Association.

Shareholders do not have the obligation to increase any equity capital except under the conditions accepted by the subscribers at the time of subscription.

Article 61 If any shareholder holding more than 5% of the voting shares of the Company pledges the said voting shares, the said shareholder shall submit a written report to the Company on the date on which the said pledge is executed.

Article 62 The controlling shareholders and effective controllers of the Company shall not use connected relations to damage the interests of the Company; otherwise they shall make compensation for the loss incurred to the Company.

The controlling shareholders and effective controllers of the Company shall be honest to the Company and general public shareholders. The controlling shareholders shall duly exercise contributors’ rights according to law, shall not damage the legitimate

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rights and interests of the Company and general public shareholders by such means as profit distribution, asset reorganization, external investment, fund appropriations and loan guarantees and shall not abuse its controlling status to damage the interests of the Company and general public shareholders.

Except for their obligations under the relevant laws, regulations or the listing rules at the location where the Company’s shares are listed, the controlling shareholders, in exercising their rights as shareholders, shall not make any decision detrimental to all or some shareholders in connection with the following issues:

I. Relieving the directors or supervisors of their responsibility to behave honestly in the interest of the maximal benefit of the Company;
II. Approving acts by the directors or supervisors to deprive the Company of its property in any form (for their own interest or for the interest of others), including (but not limited to) any favorable opportunity of the Company;
III. Approving acts by the directors or supervisors to deprive other shareholders of their personal rights and benefits (for their own interest or the interest of others), including (but not limited to) any right to distribution and right to vote, but excluding company reorganization as submitted to the shareholders’ meeting for adoption.

A controlling shareholder referred to herein shall be a person meeting any of the following conditions:

I. One who holds more than 50% of the total shares of the Company;
II. One who holds less than 50% of the total shares but holds voting rights sufficient to have a material impact on resolutions of the Company, including but not limited to:
When acting alone or jointly with other parties, the said person can exercise 30% or more of the voting rights of the Company, or control the exercise of 30% or more of the voting rights of the Company;
When acting alone or jointly with other parties, the said person holds 30% or more of the outstanding shares of the Company; or
One who has de facto control of the Company in other ways, when acting by himself or in concert with others.

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Chapter 8 Shareholders’ Meeting

Section 1 General Provisions of Shareholders’ Meeting

Article 63 The shareholders’ meeting is the organ of power of the Company and performs its functions according to the law.

Article 64 The shareholders’ meeting performs the following functions:

I. Deciding on the business guidelines and investment plans of the Company;
II. Electing and changing directors and supervisors other than employees’ representatives, and deciding on the remuneration of directors and supervisors;
III. Considering and approving the reports of the Board of Directors and the Supervisory Committee;
IV. Examining and approving the Company’s annual financial budget scheme and final calculation scheme;
V. Examining and approving the Company’s profit distribution schemes and loss compensation schemes;
VI. Deciding on increases/decreases of the registered capital of the Company;
VII. Deciding on the merger, division, dissolution, liquidation or transformation of the Company;
VIII. Deciding on plans for issue of the Company’s bonds or other securities and listing;
IX. Deciding on the appointment or dismissal of the Company’s accounting firm;
X. Revising these Articles of Association;
XI. Considering and approving matters relating to the guarantees stipulated in Article 65 hereof;
XII. Considering and approving the Company’s purchase or disposal of major assets within one year with a transaction amount exceeding 30% of the latest audited total assets of the Company; (other than asset disposals between the Company and its controlling subsidiaries, and among the controlling subsidiaries);
XIII. Considering and approving matters related to changes in the use of proceeds from share offerings;

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XIV. Considering and approving equity incentive schemes;

XV. Considering proposals from shareholders representing 3% (inclusive) of the voting shares of the Company;
XVI. Considering other matters which, in accordance with the laws, administrative regulations, departmental rules, and listing rules at the location where the Company’s shares are listed or with the Articles of Association, must be approved by a general meeting.

Article 65 The following guarantees to be given by the Company shall be considered and approved by the shareholders’ general meeting:

I. Any external guarantee to be given by the Company and subsidiaries in which it has controlling interest, the total amount of which reaches or exceeds 50% of their latest audited net assets;
II. Any external guarantee to be given by the Company, the total amount of which reaches or exceeds 30% of its latest audited total assets;
III. Provision of a guarantee to anyone whose gearing ratio exceeds 70%;
IV. Provision of a single guarantee whose amount exceeds 10% of the latest audited net assets;
V. Provision of guarantees to shareholders, effective controllers and their connected parties;
VI. The cumulative guarantee amount for 12 consecutive months accounting for 50% of the latest audited net assets of the Company and exceeding RMB50 million;
VII. Other guarantees stipulated by the stock exchange on which the Company’s shares are listed and by these Articles of Association.

“External guarantee” as mentioned in these Articles of Association shall refer to guarantees provided by the Company for others, including those provided by the Company for its holdings subsidiaries. “Total external guarantees of the Company and its holdings subsidiaries” shall refer to the sum of the Company’s total external guarantees including the guarantees provided by the Company for its holdings subsidiaries plus the total external guarantees provided by the holdings subsidiaries of the Company.

Article 66 Unless the Company is in a crisis or subject to any special circumstance, it may not enter into any contract with anyone other than a director, supervisor or senior executive with a significant part of the Company’s business under his care, unless otherwise approved by the shareholders at a general meeting by means of special resolution.

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Article 67 General meetings shall be classified as annual general meetings and extraordinary general meetings. Annual general meetings shall be convened once a year within 6 months of the end of the previous fiscal year.
Article 68 Under any of the following circumstances, the board shall convene an extraordinary general meeting within two months from the date upon which the circumstance in question occurs:
I. The number of directors falls short of the minimum number required by the Company Law or is less than two-thirds of the number required by these Articles of Association;
II. The un-recovered losses of the Company amount to one third of the total amount of its paid-up share capital;
III. It is required in writing by shareholder(s) individually or jointly holding more than 10% equity of the Company;
IV. The Board deems to be necessary, or the Supervisory Committee proposes, the convening of an extraordinary general meeting;
V. It is proposed by the independent directors;
VI. Other circumstances stipulated by laws, regulations or these Articles of Association.

Article 69 The venue of general meeting of the Company shall be: the domicile of the Company or another place notified by the convener of the general meeting.

General meetings shall be held on site at the venue. The Company may also provide a network or any other means for its shareholders to conveniently participate in general meetings. Shareholders participating in the general meetings by any of the aforesaid means shall be deemed as having attended said meetings.

Article 70 In convening a general meeting, the Company shall engage a lawyer to provide legal opinions and publish an announcement on the following issues:

I. Whether the convening and procedures of the meeting comply with laws, regulations, the listing rules of the stock exchange(s), these Articles of Association and its annex “Rules of Procedure of Shareholders’ General Meeting;
II. Whether the attendees and convener of the meeting are eligible;
III. Whether the voting procedures and results of the meeting are valid;
IV. Legal opinions on other matters upon request by the Company.

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Section 2 Convening of General Meetings

Article 71 Independent directors may propose to the Board the convening of an extraordinary general meeting. Regarding the proposal of the independent director to convene an extraordinary general meeting, the Board shall, pursuant to relevant laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association, give a written reply on whether to convene the extraordinary general meeting within 10 days after receipt of the proposal.

If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such meeting within 5 days after the resolution has been made by the Board. If the Board does not agree to hold the extraordinary general meeting, it shall give its reasons and make an announcement in respect thereof.

Article 72 The Supervisory Committee shall have the right to propose to the Board the convening of an extraordinary general meeting, and shall put forward its proposal to the Board in writing. The Board shall, pursuant to the relevant laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association, give a written reply on whether to convene the extraordinary general meeting within 10 days after receipt of the proposal.

If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such meeting within 5 days after the resolution has been made by the Board. In the event of any change to the original proposal set forth in the notice, the consent of the Supervisory Committee shall be required.

If the Board does not agree to hold the extraordinary general meeting or fails to give a written reply within 10 days after receipt of the proposal, it shall be deemed as being unable to perform or having failed to perform the duty of convening the extraordinary general meeting, and the Supervisory Committee may convene and preside over the meeting by itself.

Article 73 If shareholders require the convening of an extraordinary general meeting or a class general meeting, the following procedures shall be followed:

I. Shareholders individually or jointly holding more than 10% of the shares with voting rights at the general meeting to be convened may sign one or more written requests with the same format and contents to propose to the Board to the convening of an extraordinary general meeting or class general meeting, and specify the topics thereof. The Board shall, pursuant to the relevant laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association, give a written reply on whether to convene the extraordinary general meeting or class general meeting within 10 days after receipt of the request. The aforesaid amount of shareholding shall be calculated as of the day on which the shareholders have made their request in writing.

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When the Board agrees to convene the extraordinary general meeting or class general meeting, it shall serve a notice of such meeting within 5 days after the resolution has been made by the Board. Any change to the original proposal set forth in the notice shall be subject to approval by the shareholder(s).

II. If the Board does not agree to convene the extraordinary general meeting or class general meeting or fails to give a written reply within 10 days after receipt of the request, the shareholders individually or jointly holding more than 10% of shares with voting rights at the general meeting to be convened shall have the right to request the Supervisory Committee to convene an extraordinary general meeting or class general meeting, and shall put forward such request to the Supervisory Committee in writing.

If the Supervisory Committee agrees to convene the extraordinary general meeting or class general meeting, it shall serve a notice of such meeting within 5 days after receipt of the said request. In the event of any change to the original proposal set forth in the notice, the consent of the shareholder(s) shall be obtained.

If the supervisory committee fails to serve the notice of such meeting within the prescribed period, it shall be deemed as having failed to convene and preside over the general meeting, and the shareholder(s) individually or jointly holding more than 10% equity of the Company for 90 consecutive days may convene and preside over the meeting by themselves.

When the shareholders convene a general meeting because the Board has failed to convene the meeting pursuant to the aforesaid provision, the reasonable expenses incurred shall be borne by the Company and shall be deducted from the monies payable by the Company to the defaulting directors.

Article 74 When the Supervisory Committee or shareholders decide to convene a general meeting by itself/themselves, it/they shall notify the Board in writing and file the decision with the authority appointed by CSRC in the location of the Company and the stock exchange.

Prior to the announcement of the resolution of the general meeting, the shareholding of shareholders who convene the meeting shall not be less than 10%.

The convening shareholders shall, upon issuing a notice of the general meeting and announcing the resolutions thereof, submit the relevant documentation to the authority appointed by CSRC in the location of the Company and the stock exchange.

Article 75 With regard to a general meeting convened by the Supervisory Committee or shareholders on its/their own initiative, the Board and its secretary shall offer cooperation. The Board shall provide a shareholders’ register as of the equity registration date. In the event that the Board fails to provide the register of members

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of the Company, the convener may apply to the securities registration and clearing institution for obtaining the register of member(s) with the relevant announcement on the convening of the general meeting. The register of the members of the Company obtained by the convener shall not be used for other purpose except the convening of the general meeting.

Article 76 The Company shall bear the expenses related to general meetings convened by the Supervisory Committee or shareholders on its/their own initiative.

Section 3 Proposals and Notice of General Meetings

Article 77 The contents of the agenda shall be determined by the general meeting, shall feature definite topics and specific issues for resolution, and shall comply with the relevant provisions of the laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association.
Article 78 When the Company convenes a general meeting, the board of directors, the supervisory committee and shareholder(s) individually or jointly holding 3% of the equity of the Company shall have the right to propose motions in writing, and the Company shall place such motions on the agenda for said annual general meeting if the said motions fall within the functions and powers of general meetings.

Shareholder(s) individually or jointly holding more than 3% of the equity of the Company may submit written provisional proposals to the convener 10 days before a general meeting is convened. The convener shall serve a supplementary notice of general meeting within 2 days after receipt of the proposal and announce the contents thereof.

Except as specified in the preceding paragraph, the convener shall not change the proposal(s) set out in the notice of the general meeting or add any new proposal after the said notice has been served.

Proposals not set out in the notice of general meeting or not complying with Article 75 of these Articles of Association shall not be voted on or resolved at the general meeting.

Article 79 When the Company convenes a general meeting, a written notice shall be given 45 days prior to the date of said meeting. Any shareholder intending to attend the meeting shall deliver to the Company a written reply showing his intention to attend at least 20 days before the meeting.

Notices of shareholders’ meetings shall be delivered to shareholders (with or without voting power at the shareholders’ meeting) in person or by mail with postage paid to the addresses as recorded in the register of shareholders. For holders of domestic shares, the meeting notice may be issued in the form of a public announcement.

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The public announcement referred to in the preceding paragraph shall be published in one or more newspaper(s) designated by the regulatory securities authority under the State Council during the period between 45 days to 50 days prior to the date of the meeting. Once the announcement has been published, all holders of domestic shares shall be deemed to have received notice of the relevant meeting.

Article 80 The Company shall, based on the written replies received from shareholders 20 days prior to the date of the general meeting, calculate the number of voting shares held by shareholders intending to attend the meeting. Where the number of voting shares represented by shareholders intending to attend the meeting amounts to more than one-half of the Company’s voting shares, the Company may convene the general meeting; if not, the Company shall, within 5 days, notify shareholders again of the issues to be considered, and of date and venue of the meeting in the form of public announcements. The Company may then convene the general meeting after such announcements. An extraordinary general meeting shall not decide to announce matters not specified.
Article 81 Notice of the general meeting shall be in writing and shall cover the following contents:
I. The time, venue and duration of the meeting;
II. Matters and proposals submitted for consideration at the meeting;
III. Providing the shareholders with such information and explanation as necessary for them to make informed decisions in connection with the matters to be discussed; this principle shall include (but not be limited to) proposals made to merge the Company, to repurchase shares of the Company, to reorganize its share capital or to effect any other reorganization of the Company, and detailed conditions of the proposed transaction shall be provided together with contracts (if any), and the causes and effects of any such proposals shall also be properly explained;
IV. In the event that advice from independent shareholders is required for the matters to be discussed, their advices and reasons shall be disclosed when the notice of the general meetings or supplementary notice are published;
V. Disclosing the nature and extent of the material interests of any director, supervisor or senior executive in the proposed transaction and the effect which the proposed transaction will have on them in their capacity as shareholders insofar as it differs from the effect on interests of shareholders of the same class;
VI. The full text of any special resolution to be proposed at the meeting;
VII. A clear statement that all shareholders are entitled to attend the general meeting and to appoint proxies in writing to attend and vote at such meeting and that such proxies need not be shareholders of the Company;
VIII. Specification of the time and venue for serving the power of attorney;
IX. Specification of the equity registration date of shareholders entitled to attend the general meeting;
X. Specification of the name and telephone number of the coordinator of the meeting;

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XI. In the event that the general meeting adopt online transmission or other ways, the time and procedures for voting via internet or by other ways will be specifically stated in the notice of the general meeting.

Article 82 If the election of directors or supervisors is proposed to be discussed at a general meeting, the notice of meeting shall adequately disclose the detailed information on the director or supervisor candidates, which information shall at least include:

I. Personal particulars, including academic qualifications, work experience, and concurrent positions;
II. Whether one has any connection with the Company, its controlling shareholders and effective controllers;
III. The amount of shares of the Company one holds;
IV. Whether one has been punished by the CSRC or any other relevant department or reprimanded by the stock exchange.

Unless a director or supervisor is elected via the cumulative voting system, each candidate for director or supervisor shall be proposed via a single proposal.

Article 83 The accidental omission to give notice of meeting to, or the non-receipt of notice of meeting by, any person entitled to receive notice shall not invalidate the meeting and the resolutions adopted at the meeting.
Article 84 After the notice of general meeting is issued, the same meeting shall not be postponed or cancelled and the proposals set out in the notice shall not be cancelled without proper reasons. In the case of any postponement or cancellation of the meeting, the convener shall make an announcement and give the reasons therefor at least 2 working days prior to the date on which the meeting was originally scheduled. Where the listing rules at the location where the Company’s shares are listed have special requirements for the aforesaid matters, such requirements shall apply.

Section 4 Convening of General Meetings

Article 85 The Board of the Company or any other convener shall take necessary measures to ensure the proper order of the general meeting. The Board or any other convener shall take measures to stop any act disturbing the general meeting, seeking trouble or infringing upon the legitimate rights and interests of shareholders, and shall report such act(s) to the relevant authority for investigation and treatment.

Article 86 All the shareholders in the shareholders’ register on the equity registration date shall have the right to attend the general meeting and exercise their voting rights according to the relevant laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association.

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Any shareholder entitled to attend and vote at a general meeting of the Company shall be entitled to appoint one or more persons (who need not be a shareholder or shareholders) as his proxies to attend and vote on his behalf. The said proxy(ies) may exercise the following rights granted by the said shareholder:

I. Shareholder’s right to speak at the general meeting;
II. To severally or jointly request to vote by ballot;
III. And to exercise voting rights pursuant to the relevant laws, regulations and these Articles of Association. Where there are more than one proxy, the said proxies shall vote by ballot.
Article 87 A personal shareholder attending a general meeting in person shall present his/her identity card or other identity certificate or share account card; a proxy attending a general meeting on behalf of a personal shareholder shall present his/her identity card and power of attorney.

For a corporate shareholder, its legal representative or a proxy appointed thereby shall attend the meeting. The legal representative attending the meeting shall present his/her identity card or valid certificate bearing evidence of his/her qualifications as legal representative; where a proxy is appointed to attend the meeting, said proxy shall present his/her identity card and the power of attorney issued by the legal representative of the corporate shareholder.

Article 88 The power of attorney shall be in writing under the hand of the principal or his proxy duly authorized in writing or, if the principal is a legal person, it shall be under seal or under the hand of the director or proxy duly authorized.

The power of attorney issued by a shareholder to appoint a proxy to attend a general meeting shall specify:

I. the name of the proxy;
II. whether or not the proxy has any voting right;
III. directives to vote for or against or abstain from voting on each and every issue included in the agenda of the general meeting;
IV. the date of issue and validity period of the power of attorney;
V. the signature (or seal) of the principal. If the principal is a corporate shareholder, the corporate seal shall be affixed;
VI. the number of shares held by the principal represented by the authorized proxy; VII. If several persons are appointed as the shareholder’s proxies, the power of attorney shall specify the number of shares to be represented by each proxy. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have other provisions on the power of attorney, such provisions shall be complied with.

Article 89 The power of attorney shall be deposited at the domicile of the Company or such other place as specified in the notice of meeting at least 24 hours prior to the meeting at

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which the proxy is authorized to vote or 24 hours before the scheduled voting time. Where such a power of attorney is signed by a person authorized by the principal, the power of attorney authorizing signature or other authorization documents shall be notarized. The notarized power of attorney and other authorization documents shall, together with the power of attorney, be deposited at the Company’s domicile or at such other place as specified in the notice of the meeting.

Where the principal is a legal person, its legal representative or a person authorized by the Board or other decision-making body shall attend the general meeting of the Company.

If the shareholder is a recognized clearing house (“recognized clearing house”) (agent thereof) as defined in the relevant ordinance enacted from time to time in Hong Kong, the said shareholder may authorize one or more persons as he deems appropriate to act on his behalf at any general meeting or class general meeting; however, where several persons are thus authorized, the power of attorney shall specify the numbers and classes of shares involved by the said persons. The persons thus authorized may exercise rights on behalf of the recognized clearing house (or agent thereof) as if the said persons were the personal shareholders of the Company.

Article 90 Any format issued to a shareholder by the Board for appointing a proxy shall provide the shareholder with the flexibility to instruct the proxy to vote for or against or abstain from voting, and give directives on each of the resolutions to be decided at the meeting. The power of attorney shall specify that, in default of directives, the proxy may vote as he thinks fit.
Article 91 A vote given in accordance with the terms of the power of attorney shall be valid notwithstanding the previous death or loss of capacity of the principal or revocation of the power of attorney or of the authority under which the proxy was executed, or the transfer of the share(s) in respect of which the proxy is given, provided that no written notice of such death, loss of capacity, revocation or transfer has been received by the Company before the commencement of the meeting at which the proxy is issued.
Article 92 An attendees register shall be prepared by the Company, which register shall state the names (or names of the corporations), identification document number and the address of the attendee, the number of voting shares held or represented, the names of the principals (or names of the corporations) and so on.
Article 93 The convener and the lawyer appointed by the Company shall jointly verify the validity of the shareholders’ qualifications based on the shareholders’ register provided by the securities registration and clearing authority, and shall register the names of the shareholders as well as the amount of their voting shares. The registration for a meeting shall be completed before the person presiding announces the number of shareholders and proxies attending the meeting and the total amount of their voting shares.

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Article 94 All directors, supervisors and the secretary of the Board shall attend general meetings of the Company, and save for justifiable reasons, the general manager and other senior executives shall be present at the meetings without voting rights.
Article 95 General meetings shall be presided over by the chairman of the Board. Where the chairman cannot or fails to fulfil the duty thereof, the vice chairman shall act as the chairman of the meetings; where even the vice chairman cannot or fails to fulfil the duty thereof, the majority of the directors shall jointly elect a director to preside.

A general meeting convened by the Supervisory Committee itself shall be presided over by the chief supervisor. If the chief supervisor cannot or does not fulfil the duty thereof, more than half of the supervisors may elect a supervisor to preside over the meeting.

Where a General Meeting is convened by shareholders themselves, the General Meeting shall be presided over by a representative elected by the conveners. If for any reason the shareholders are unable to elect a chairman, the shareholder with the greatest number of voting shares present at the meeting, whether in person or by proxy, shall act as chairman.

If the chairman of the meeting violates the rules of procedure during the general meeting so that the meeting is unable to proceed, the shareholders present at the meeting may by majority vote elect a person as chairman to proceed with the meeting. If for any reason the shareholders cannot elect a person to preside over the meeting, the shareholder (including proxy thereof) holding the most voting shares among the attending shareholders shall preside over the meeting.

Article 96 The Company shall formulate rules of procedure for general meetings defining the convening and voting procedures of general meetings, covering notification, registration, consideration of proposals, voting, counting of ballots, announcement of voting results, formation of resolutions, meeting minutes and signing thereof and announcement, and the principles and contents of the authorization of the Board on general meetings. The rules of procedure for general meetings are appended to these Articles of Association and shall be formulated by the Board and approved at the general meeting.
Article 97 The Board and the Supervisory Committee shall report on their work during the preceding year at the annual general meeting. Every independent director shall also prepare his work report.
Article 98 Directors, supervisors and senior executives shall provide explanations in relation to the inquiries and suggestions made by shareholders on general meetings.
Article 99 The person presiding shall, prior to voting, declare the number of attending shareholders and their proxies as well as the total number of their voting shares, and the number of attending shareholders and their proxies and the total number of their voting shares shall be as recorded in the meeting’s register.

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Article 100 Minutes of general meetings shall be kept

I. The date, place and agenda of the meeting, and the name of the convener; II. The names of the person presiding, and the directors, supervisors and senior executives attending or present at the meeting;
III. The number of voting shares held by the attending holders of domestic shares and overseas listed foreign shares (if any) and proxies thereof, and the percentage of the said shares in the total shares of the Company;
IV. The process of discussion in respect of each proposal, highlights of speeches and the voting results;
V. Details of the inquiries or suggestions of the shareholders, and the corresponding response or explanations;
VI. The names of the lawyer, counting officer and monitoring officer; and
VII. Other contents that shall be recorded in the minutes in accordance with these Articles of Association.
Article 101 The convener shall ensure the meeting minutes are true, accurate and complete. The attending directors, supervisors, secretary of the Board, convener or representative thereof, and the person presiding shall sign the minutes of the meeting. The minutes of the meeting and the signed attendance record of those shareholders on the scene and the powers of attorney of those attending by proxy, as well as valid information relating to the voting over the network and by other means shall be kept for at least 10 years.

Article 102 The convener shall ensure that the general meeting is held continuously until final resolutions are arrived at. If the general meeting is terminated or fails to reach any resolution owing to force majeure or for other special reasons, immediate action shall be taken to resume the general meeting as soon as possible or to directly terminate the general meeting and issue a responsive announcement. Meanwhile, the convener shall report to the authority appointed by the CSRC in the location of the Company and the stock exchange. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have special provisions on the termination and extension of the general meeting, such provisions shall be complied with.

Section 5 Voting and Resolutions of General Meetings

Article 103 Resolutions of general meetings shall be divided into ordinary resolutions and special resolutions.

Ordinary resolutions shall be passed by votes representing more than half of the voting rights represented by the attending shareholders (including proxies).

Special resolutions shall be passed by votes representing more than two-thirds of voting rights held by shareholders (including proxies thereof) attending the general meeting.

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Article 104 Shareholders (including proxies thereof) who vote at a general meeting shall exercise their voting rights in proportion to the amount of voting shares they represent. Each share shall carry the right to one vote. The Company shall have no voting rights for the shares it holds, and such portion of the shares shall be excluded from the total number of voting shares represented by the shareholders attending the general meeting. The Board, independent directors and qualified shareholders may collect voting rights from shareholders. Pursuant to governing laws, regulations and listing rules at the location where the Company’s shares are listed, if any shareholder must abstain from voting on any resolution or is restricted to declaring only an affirmative vote or only a dissenting vote on any resolution, then any vote declared by the said shareholder (or proxy thereof) against the relevant provision or restriction shall not be counted in the total number of votes.
Article 105 If the issue required to be voted by ballot relates to election of presider or termination of meeting, voting by ballot shall be conducted immediately; in respect of other issues required to be voted by ballot, the presider may decide the time of voting by ballot, and the meeting may proceed to consider other issue, and the voting results shall be deemed as resolutions passed at the said meeting.
Article 106 General meetings shall adopt voting by open ballot. In voting, shareholders (including proxies thereof) entitled to two or more votes need not cast all his votes in the same way (pro or con).
Article 107 In the event of an equality of votes, the person presiding shall be entitled to an additional vote.
Article 108 All issues under Clauses (I), (II), (III) (IV) (V) (IX) (XI) (XIII) (XVI) of Article 64 of these Articles of Association on the functions of a general meeting, or issues other than those that are to be passed by special resolutions pursuant to the relevant laws, regulations, or these Articles of Association, shall be approved by ordinary resolutions at a general meeting.
Article 109 Clauses VI, VII, VIII, X, XII and XIV listed in Article 62 above regarding the functions performed by the shareholder’s meeting, or clauses specified in applicable laws, rules or regulations or this Articles of Association, or clauses that are confirmed by a general resolution of the shareholder’s meeting to have an important influence on the Company and are to be ratified through a special resolution, shall be ratified by a special resolution on the meeting. The above stipulations regarding a general or special resolution shall apply to Article XV, depending on the particulars of the proposal.
Article 110 The moderator shall decide whether the resolution has been passed or not at the meeting based on the voting result. Such decision shall be final. The voting result shall be announced at the meeting and recorded in the minutes.
Article 111 Associated shareholders should not be involved in the voting when the meeting is reviewing the associated transactions. Their respective voting shares shall not be considered as valid shares. Voting results of non-associated shareholders shall be fully disclosed in the resolution notice.

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Article 112 The Company shall, on the premise of ensuring a valid shareholders’ meeting, facilitate shareholder participation in the general meeting using each and every means and method, including the online voting system and other means of up-to-date information technology.
Article 113 A proposal listing candidates for directors and supervisors shall be submitted to the meeting for a vote. Based on these Articles of Association or on the resolution(s) passed at the meeting, such voting can be on a cumulative basis. A cumulative voting system means that each share shall enjoy equal voting rights in the selection of directors and supervisors and that such powers can be accumulated for a one-time voting. Shareholders shall be informed by the board of directors of the curriculum vitae and basic data of candidates for directors and supervisors.
Article 114 Methods and procedures of nominating a candidate for director or supervisor:
I. Shareholders holding or jointly holding over 3% of all outstanding voting shares may submit a written proposal to the meeting, nominating non-employee representatives as candidates for directors and supervisors. The number of such nominations shall be within the limit specified in these Articles of Association, i.e., no more than the number to be selected. Such proposals are to be received at the Company at least fourteen (14) days prior to the date for which the meeting is scheduled.
II. The board of directors or board of supervisors may submit to the meeting a written proposal containing a list of suggested candidates for directors and supervisors. The number of suggested candidates shall be within the limit herein specified, taking consideration of the number to be selected.
III. The Company shall form another system for the nomination of independent directors.
IV. The written notification allowing the nomination of candidates for directors and supervisors and the notification indicating the candidates’ willingness to accept such nominations are to be received at the Company at least seven (7) days in advance.
V. The schedule mentioned in Section 4 above shall commence on the date on which the call for a shareholders’ meeting is sent at earliest, and shall end more than seven (7) days prior to the date for which such meeting is scheduled.
VI. Unless otherwise stipulated, a cumulative voting system shall be used, and the meeting shall vote on candidates for directors and supervisors on an individual basis.
VII. Any increase of directors or supervisors on a temporary basis shall be proposed by the board of directors or the board of supervisors to the meeting for election or replacement.

Article 115 Except for cumulative voting, the meeting shall vote on all proposals on an individual basis. Voting shall be on a “first in, first out” basis in the event that proposals are submitted on the same items. Unless the meeting is suspended or prevented from making a resolution owing to force majeure or other special circumstances, the meeting shall not put the voting aside or refuse to vote on a proposal.

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Article 116 No change of the proposal by the meeting shall be allowed during the reviewing process. Any amendment made during the process shall be considered as a new proposal, which shall not be eligible for a vote at the meeting.

Article 117 Each voting right shall be exercised either at the meeting, online, or by any of other available means. The first vote shall prevail in cases when a given voting right is exercised repeatedly.

Article 118 Two representatives shall be appointed for the purpose of counting and monitoring before the voting on proposals. Shareholders or their agents who have an interest in a proposal to be voted on shall not be appointed for such purpose.

Solicitors and representatives of shareholders and supervisors shall appear for a counting and monitoring when the meeting is voting on proposals. Voting results are to be announced immediately. Voting results on resolutions shall be recorded in the minutes.

When voting online or through other means, corporate shareholders or their agents shall have the right to check their respective voting results through the system.

Article 119 The on-site meeting shall not close earlier than that held online or by other means. The moderator shall announce the voting result on each proposal and decide whether a proposal has been passed or not based on its respective result.

Corporate shareholders, counting and monitoring parties, principal shareholders, the online voting system provider and others involved in on-site, online or other kinds of voting shall not disclose the voting results to any other party before such results are officially announced.

Article 120 Shareholders appearing at the meeting shall vote in one of following categories on the proposal to be voted on: for, against, and abstention.

Any unfilled, improperly filled or poorly handwritten votes or votes that are not cast shall be considered as abstentions from voting by the shareholder. Its respective shares shall be counted as “abstentions” in the voting result.

Article 121 The moderator shall have the right to count the votes if he/she challenges the voting result for any resolution. Shareholders or their agents appearing at the meeting who challenge the result of voting of for which no counting has been organized by the moderator shall have the right to require an immediate count upon the announcement of the result. A second round of counting shall be immediately organized by the moderator.

Article 122 The results of all vote counting at the meeting shall be recorded in the minutes. Such minutes, together with the signatures of the shareholders appearing at the meeting and of proxies attend the meeting on behalf of others shall be kept at the Company premises.

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Article 123 Shareholders may consult photocopies of the minutes of meetings free of charge during the business hours of the Company. In the event of any shareholder asking for photocopies of such minutes, the Company shall deliver the photocopies in 7 days after receiving a rational expenses.
Article 124 Resolutions passed at the meeting shall be immediately announced in accordance with the listing rules of the stock exchange where the Company’s shares are publicly traded. The notification should list the number of shareholders or their agents appearing at the meeting, the total number of voting shares of such shareholders or agents, the ratio of such voting shares to total voting shares at the Company, the means by which votes were cast, the voting result for each proposal, and the particulars of each resolution passed. Statistics on the attendance and the voting of domestic shareholders and foreign shareholders shall be kept on an individual basis, and announced accordingly.
Article 125 A special note should be marked in the resolution notice regarding failed proposals or previous resolutions that were amended at this meeting.
Article 126 The terms of office of newly appointed directors or supervisors shall commence upon the passing of the election proposal at the meeting.
Article 127 The Company shall implement proposals passed regarding the inclusion of cash dividends, gift shares or capital reserve into share capital within two (2) months after the close of the meeting.

Chapter 9 Special Voting Procedures for Category Shareholders

Article 128 Category shareholders are holders of category shares issued by the Company. Category shareholders shall enjoy rights and undertake obligations based on the applicable laws, regulations and these Articles of Association. Any non-voting shares included in the share capital at the Company shall bear the wording “non-voting”. Any category shares (except shares with the most privileged voting rights) included in the share capital at the Company shall bear the wording “restricted voting” or “limited voting”.
Article 129 The amendment or abolition of rights enjoyed by category shareholders shall not take effect until such amendment or abolition is passed as a special resolution at a shareholders’ meeting or at a special meeting convened by the affected category shareholders based on Article 131 to Article 135 herein, except for those resulting from any change in domestic and foreign laws and regulations and listing rules on the stock exchange where the Company is publicly traded, or those resulting from decisions made by domestic and foreign regulatory organs.

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Article 130 The following cases shall be deemed as the right to revise or cancel a category shareholder:

I. The number of the category shares in question has increased or decreased, or the number of a category shares having equal or more voting rights, distribution rights and other privileges as compared with the category shares in question has increased or decreased;
II. All or part of the category shares in question have been converted to another category, or all or part of other category shares have been converted to the category shares in question or such conversion right has been granted;
III. The right of the category shares in question to receive the dividends produced or accumulated has been cancelled or reduced;
IV. The right of the category shares in question to receive preferential dividends or to receive preferential distribution of assets in the Company’s liquidation has been reduced or cancelled;
V. Share conversion rights, option rights, voting rights, transfer rights, preferential placement rights and the right to receive Company securities from the category shares in question have been increased, cancelled or reduced;
VI. The right of the category shares in question to collect Amounts payable by the Company in a particular currency has been cancelled or reduced;
VII. A new category has been set up with equal or more voting rights, distribution rights or other privileges compared with the category shares in question;
VIII. Transfer of ownership of the category shares in question has been restrained, or such restraints have increased;
IX. Share subscription rights or share conversion rights have been issued for the category shares in question or for another category;
X. Rights and privileges of other categories of shares have been increased;
XI. The Company’s reorganization scheme will cause non-proportional assumption of responsibilities among different categories of shareholders in the reorganization; and
XII. The terms of this chapter have been revised or cancelled.

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Article 131 Affected category shareholders, regardless of whether they have voting rights at shareholder meetings, shall have voting rights at category shareholder meetings insofar as the matters in Articles 130 (II)-(VIII) and (XI)-(XII) are concerned, but shareholders with related interests shall not have voting rights at category shareholder meetings.

I. Shareholders with related interests shall refer to controlling shareholders defined herein in cases in which an offer is made by the Company to all shareholders in the same proportion based on Article 32 above or a buy-back is carried out by the Company through the exchange’s public trading system.
II. Shareholders with related interests shall refer to those entering into an OTC buy-back agreement with the Company based on Article 32 above.
III. In the Company’s reorganization scheme, shareholders with related interests shall refer to shareholders assuming a lower proportion of responsibilities than those of other shareholders within the category, or to shareholders holding different interests from those of other shareholders within the category.
Article 132 Resolutions of a category shareholder meeting can only be made after they are passed by a vote of more than 2/3 of the voting shares of the shareholders attending the category shareholder meeting pursuant to Article 131.
Article 133 In convening a category shareholder meeting, the Company shall deliver a written notice 45 days before the convening of the meeting to inform all the registered shareholders of the category shares with regard to the matters to be examined at the meeting as well as to the date and venue of the meeting. Shareholders intending to attend the meeting shall send the Company their written responses regarding their attendance at least 20 days prior to the convening of the meeting.

Where the number of voting shares at the meeting represented by shareholders intending to attend the meeting reaches more 1/2 of the total number of shares in the same category with voting rights at the meeting, the Company may convene a category shareholders’ meeting. Otherwise, the Company shall again inform the shareholders within 5 days by public announcement of the matters to be examined at the meeting as well as of he date and location of the meeting. Following such public announcement, the Company may convene a category shareholders’ meeting.

Any special listing rules of the stock exchange whereby the stocks of the Company are publicly traded shall prevail.

Article 134 Only voting shareholders shall be notified of category shareholders meetings convened by means of a meeting notice. Such meetings shall to the extent possible be based on same procedures as those for shareholder meetings. Unless otherwise specified in this chapter, the Articles herein regarding the procedures for shareholders’ meetings shall apply to category shareholder meetings.

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Article 135 Apart from other category shareholders, domestic shareholders and owners of overseas listed foreign shares shall be considered as different category shareholders.

The special procedures for voting by category shareholders shall not apply to the following cases:

I. By virtue of the approval of a special resolution at the general shareholder’s meeting, the Company shall issue domestic shares, overseas listed foreign shares, or both, at intervals of twelve (12) months. Such domestic shares or overseas listed foreign shares to be issued were not in each case to exceed 20% of the outstanding shares.
II. The plan for issuance of domestic shares or overseas listed foreign shares (or both) was completed within fifteen (15) months from the date of approval by the securities regulatory authority under the State Council.
III. With the approval by the securities regulatory authority under the State Council, domestic shareholders shall transfer their respective shares in the Company to foreign investors and such shares are to be publicly traded overseas.

Chapter 10 Board of Directors

Section 1 Directors

Article 136 Each board of directors serves the Company for three (3) years. Directors are elected or replaced by the general meeting of shareholders, with its term of office commencing on the date on which the resolution is passed at the meeting and ending on the expiration of the term of office of the Board. Directors may be reelected upon the expiration of their terms.

Where not otherwise provided by law, the issuer in general meeting shall have power by ordinary resolution to remove any director (including a managing or other executive director) before the expiration of his period of office, but such removal shall be without prejudice to any claim for damages under any contract.

A director whose term of office is to expire shall continue with his/her duties as a director before the newly elected director takes office, observing the applicable laws, administrative regulations, rules and regulations, and these Articles of Association.

Any person appointed by the directors to fill a casual vacancy on or as an addition to the board shall hold office only until the next following annual general meeting of the Company, and shall then be eligible for re-election.

The General Manager or other executives can be appointed as a Director on a concurrent basis. Directors holding a concurrent post as General Manager or other executive shall account for less than 50% of the members of the Board.

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Directors need not be shareholders of the Company.

Article 137 Any director failing to attend the directors’ meeting in person or by proxy twice in succession shall be considered as a director lacking the capacity for his duties. The board of directors shall suggest that the meeting of shareholders remove him from the post.
Article 138 A director may offer to resign before the expiration of the term of office by submitting an application for resignation to the board of directors. Particulars shall be disclosed by the Board within two (2) days.

When the Board is running below the quorum because of such resignation, the director offering to resign shall, before the newly elected director takes office, continue with the duties of a director in accordance with the applicable laws, administrative regulations, rules and regulations and these Articles of Association.

Unless otherwise specified in preceding paragraph, such resignation shall take effect upon the receipt of application by the board of directors.

Article 139 A director not duly authorized by these Articles of Association or the board of directors shall not act on behalf of the Company or the Board in its name. When there exist reasonable grounds for any third party to believe that a director is acting on behalf of the Company or the Board in its name, the director shall declare his position and identity first.
Article 140 A director shall reimburse the Company for its losses resulting from his violation of applicable laws, administrative rules and regulations or these Articles of Association during the performance of his duties at the Company.

Section 2 Independent Directors

Article 141 The Company shall have independent directors. Such directors shall pay close attention to the interests of minority shareholders during the performance of their respective duties.
Unless otherwise specified in this section, independent directors shall be subject to the Articles in Chapter 14 hereof regarding the qualifications and obligations of directors, listing rules of the exchange where shares in the Company are publicly traded and other applicable regulatory rules.

Article 142 Independent director shall refer to a director who holds no other post at the Company and lacks a relationship with the Company or with its principal shareholders (shareholders individually or jointly holding over 5% of the total voting shares at the Company) that may prevent him from an independent and objective judgment and qualifies as a director who complies with the definition of independence in the listing rules of the exchange where the stocks of the Company is publicly traded.

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Article 143 The board of directors at the Company shall consist of at least 1/3 independent directors, including at least one accounting professional. The Company shall elect new independent directors to fill a gap with the number required herein when such independent director fails to meet the requirement of independence or is found not to be fit for duties as an independent director.
Article 144 Independent directors shall serve the same period for each term of office as that of other directors at the Company. Independent directors may be reelected upon the expiration of their terms of office, however, for a period not exceeding six (6) years in succession.
Article 145 The Company shall form a working system for independent directors, with a specific definition of the qualifications, nomination, election and replacement, rights and obligations, legal responsibilities, etc. Such system shall take effect upon approval by the general meeting of shareholders.

Section 3 Board of Directors

Article 146 A board of directors shall be formed at the Company, directly responsible to the general meeting of shareholders.
Article 147 The board of directors shall consist of 10 members, including a chairman and vice chairmen. Appointment and removal of the chairman and vice chairman shall be subject to a simple majority vote of all members. The chairman and vice chairmen shall serve a term of three (3) years in office, and may be re-elected.

Article 148 The board of directors shall exercise the following powers:

I. Convening the general meeting of shareholders and reporting to the meeting;
II. Implementing the resolutions passed at the general meeting of shareholders;
III. Determining the operational plans and investment methods of the Company;
IV. Within the scope of authority of the general meeting of shareholders, deciding on such issues as foreign investment, purchase of assets on sale, mortgage of assets, financing agency, associated transactions, etc;
V. Preparing the annual financial budget and the final accounts;
VI. Formulating plans for distribution of profits and the recovery of losses; VII. Formulating a plan for the increase or decreases of the registered capital. VIII. Formulating a plan for the listing and issuance of bonds or other securities IX. Formulating plans for substantial acquisitions, buy-backs, mergers, separation, dissolution or change in corporate form;
X. Making decisions on the establishment of the Company’s internal management system;
XI. Appointing or removing the general manager;

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XII. Appointing or removing the secretary of the board of directors appointed by the chairman;
XIII. Appointing or removing the deputy general manager, the controller and other executives appointed by the general manager, and defining the compensation and bonus-penalty package for such executives;
XIV. Formulating the basic management system at the Company; XV. Defining plans for the amendment of these Articles of Association; XVI. Planning the equity incentive packages at the Company; XVII. Controlling information disclosure at the Company; XVIII. Suggesting the appointment or replacement of the accounting firm working for the Company general meeting of shareholders;
XIX. Receiving reports from the general manager and reviewing his performance;
XX. Appointing a chairman and vice chairman; XXI. Reviewing and approving the provision of security to foreign parties which, according to Article 63 above, is not subject to review by the general meeting of shareholders;
XXII. Making decisions on the establishment or abandonment of a branch; XXIII. Making decisions on the specific implementation plan for such issues as the merger, division and restructuring of branches;
XXIV. Making decisions on employees’ compensation, benefits and bonus-penalty policy and package;
XXV. Making decisions on the risk management system, including risk assessment, financial control, internal audit, legal risk control, and monitoring of implementation;
XXVI. Making decisions on the establishment of board committees and the appointment or removal of the chairmen of such committees;
XXVII. Making decisions on the establishment of securities and pledges on its assets;
XXVIII. Making decisions on the provision of loan guarantees for the head office of the Company;
XXIX. Determining the annual extra costs and expenses at the Company; XXX. Other powers or authority specified in applicable laws, administrative rules and regulations or these Articles of Association and authorized by the general meeting of shareholders.

The above powers or functions or any transactions or arrangements at the Company shall be reported to the general meeting of shareholders for its review according to the listing rules of the exchange where the stock of the Company are publicly traded.

Resolutions in the preceding Article shall win a simple majority of votes of all directors, except for Articles 7, 8, 9 and 15, which shall require a two-thirds majority or more of the votes of all the directors, and for Article 21, which shall require a two-thirds majority or more of the votes of all directors appearing at the meeting.

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Article 149 The board of directors shall be responsible for the formulation of rules of procedure to ensure that the resolutions passed at the shareholders’ meeting are put into practice, to ensure a more productive operation of the board of directors, and to ensure that a scientific decision-making procedure is in place. Such rules of procedure, as the appendix to these Articles of Association, which defines the convening and voting procedure, shall be submitted to the shareholders’ meeting for its approval.

Article 150 Board committees shall be formed to provide the board of directors with advice and suggestions on important issues. A strategy committee, audit committee, compensation and evaluation committee and nomination committee and other specialized committees shall be formed at the Company.

Such board committees shall be under the board of directors, all consisting of members of the board of directors. Independent directors shall occupy most seats and act as directors in such committees as the audit committee, compensation and evaluation committee and nomination committee. At least one of the independent directors at the audit committee shall be a professional in the accounting domain, and at least one director shall be equipped with appropriate professional qualifications in the listing rules of major exchanges or other equivalent expertise in accounting or financial management. When necessary, the board of directors may form other committees or restructure existing ones. The board of directors shall formulate specific rules of procedure for such board committees, defining their functions and procedures.

Article 151 The strategy committee under the board of directors shall be mainly responsible for

I. Studying the long-term development strategy and major investment decisions at the Company, and submitting comments accordingly;
II. Other powers or authority authorized by the board of directors.

Article 152 The audit committee under the board of directors shall be mainly responsible for

I. Defining the financial rules and regulations and major control objectives, and steering the financial management at the Company;
II. Defining the security management policy and reviewing any security transactions;
III. Reviewing the annual financial budget and final accounts, monitoring the implementation of such budgets, and performing a comparative analysis;
IV. Reviewing important investment projects from a financial perspective, exercising supervision on how the project is being implemented;
V. Submitting proposals for the appointment or replacement of external auditors; VI. Monitoring the internal audit system and its implementation;
VII. Serving as a bridge between internal auditors and external auditors;
VIII. Reviewing the financial information and its disclosure at the Company; IX. Reviewing the Company’s internal control system;
X. Other powers or authorities authorized by the board of directors.

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Article 153 The compensation and evaluation committee under the board of directors shall be mainly responsible for

I. Defining assessment criteria for directors and the general manager, performing such assessments and submitting the comments accordingly;
II. Defining and reviewing the compensation policies and packages for directors and executives;
III. Other powers or functions authorized by the board of directors.

Article 154 The nomination committee under the board of directors shall be mainly responsible for

I. Defining the standards, procedures and methods for the screening of directors, the general manager and other executives, and submitting comments accordingly to the board of directors;
II. Conducting an extensive search for qualified candidate directors, the general manager and other executives;
III. Assessing candidate directors, general manager and other executives, and submitting an evaluation report to the board of directors;
IV. Other powers or authorities authorized by the board of directors.
Article 155 Should any fixed assets whose expected value, together with its value resulting from any disposal based on such comments within four (4) months, exceed 33% of the value of the fixed assets listed in the balance sheet recently reviewed by the shareholders’ meeting, the board of directors shall not dispose of or agree to dispose of such assets without the approval of the meeting.

The disposal of fixed assets as referred to in this article, shall include actions of transferring capital benefits, but shall not include the action of providing guarantees with fixed assets.

The effectiveness of the transaction of the Company’s disposal of fixed assets will not be affected by violation of Clause 1 of this article.

Article 156 The board of directors shall submit a statement to the shareholders’ meeting regarding the non-standard audit opinion on Company’s financial statement.

Article 157 The chairman of the Board of Directors shall perform the following functions:

I. Presiding over shareholders’ meetings and convening and presiding over meetings of the Board of Directors;
II. Checking and supervising the implementation of board resolutions;
III. Nominating a candidate for the secretary of the board of directors;
IV. Defining the systems necessary for the operation of the board of directors, and coordinating its operation;

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V. Receiving regular and non-regular performance reports from executives, providing the board of directors with steering comments on the implementation of board resolutions;
VI. Other powers or authorities specified in applicable laws, administrative rules and regulations or these Articles of Association, or authorized by the board of directors.

Should the chairman be unable to perform his duties, a designated vice-chairman may perform such duties in his name.

Article 158 The vice-chairman shall assist the chairman in performing his duties. If the chairman is unable or fails to perform his duties, such duties shall be performed by the vice-chairman. (In the event that there are two or more vice-chairmen, the duties shall be performed by the vice-chairman who is elected by more than half of the directors.) If the vice-chairman is unable or fails to perform his duties, a director shall be elected jointly by more than half of the directors to perform such duties.
Article 159 The Board of Directors shall hold at least two regular meetings every year, which shall be convened by the chairman. All the directors and supervisors shall be informed in writing thereof 10 days prior to the convening of the meeting.

The Board shall convene a provisional meeting when it is deemed necessary by the chairman, proposed by shareholders representing more than 10% of the voting rights, jointly proposed by more than one-third of the directors, jointly proposed by more than half of the independent directors, proposed by the general manager, or proposed by the Supervisory Committee, requested by securities regulatory authorities or under other circumstances stipulated in the Articles of Association. The Board shall convene a provisional meeting within 10 days after the chairman receives notice of the proposal.

Article 160 If the Board convenes a provisional Board meeting, the contents of the notice of such meeting may follow the format stated in Article 238 of these Articles of Association. The Board shall notify all the directors and supervisors within 5 days prior to the convening of the meeting.

Article 161 Notices of Board meetings shall include the following:

I. time, date and venue of the meeting; II. the form of the meeting; III. duration of the meeting; IV. purpose and agenda; V. date of the notice; VI. convener and presider of the meeting, proposer of and written proposal for the provisional meeting; VII. documents needed for voting of directors; VIII. requirements for the directors to attend the meeting in person or by proxy;

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IX. coordinator and means of contact;
Article 162 Board meetings can only be held when over half of the directors can attend.

Each director shall have one vote in deciding all resolutions. In the event of equal votes in favor and against, the chairman shall have the right to cast one vote or more.

Article 163 Directors should attend Board meetings personally. In the event that a director is not able to attend for some reason, the director shall entrust another director in writing to attend on the director’s behalf. The letter of attorney shall state the name of the entrusted director, the items that are delegated to be handled, the scope of authorization, and the duration of such entrustment. Such letter shall be signed or sealed by the delegating director. A director attending a Board meeting in proxy shall exercise the right of a director within the scope of authorization. In the event that a director fails to attend a Board meeting and entrusts a delegate to attend, the absent director shall be deemed as having abandoned his/her vote at the meeting in question.
Article 164 If any director has a connection with the enterprise involved in the resolution made at a Board meeting, the said director shall not vote on the said resolution for himself/herself or on behalf of other director(s). The Board meeting may be held when more than one half of the non-connected directors attend the meeting. The resolution of the Board meeting shall be passed by more than one half of the non-connected directors. If the number of non-connected directors attending the meeting is less than 3, the issue shall be submitted to the general meeting of shareholders for examination.
Article 165 All resolutions in a Board meeting shall be voted upon by open ballots and recorded. A provisional Board meeting may vote by telecommunication only when the right of the directors to express their opinions can be protected sufficiently, and when the directors in attendance are able to sign.
Article 166 The decisions on the issues considered at Board meetings shall be recorded as minutes. All the attending directors, Secretary to the Board of Directors, and persons recording the minutes shall sign on the minutes.

The directors shall assume responsibilities for the resolutions of the Board of Directors. Where Board resolutions violate the laws, regulations or these Articles of Association, thus causing serious losses to the Company, the directors involved in such resolution shall assume the responsibility for indemnity to the Company. However, a director can be exempted from such responsibilities if it is proved that he or she has raised his or her objections during the voting and that is recorded in the minutes of the meeting. A director who has abstained from voting shall not be exempted from said responsibility of indemnification.

The meeting minutes shall be kept for at least 10 years.

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Article 167 Minutes of meetings of the Board of Directors shall include the following:

I. the time, venue and form of the meeting;
II. sending of the notice of meeting;
III. convener and presider of the meeting;
IV. Agenda of the meeting;
V. Names of the attending directors and other directors who have been entrusted to attend (proxy);
VI. The proposals considered at the meeting, chief comments and opinions of directors on relevant issues;
VII. The voting format and decisions on all resolutions (all decisions shall contain the number of votes that were for and against the resolution and those who abstained from voting and the names of the voters);
VIII. other issues that the attending directors think should be included into the minutes.

Chapter 11 Secretary to the Board of Directors

Article 168 The Company shall have a secretary to the Board of Directors, who shall be a senior officer.
Article 169 The secretary to the Board of Directors shall be a natural person who has the necessary professional knowledge and experience and shall be appointed by the Board. The principal responsibilities of the secretary to the Board shall be:
I. Ensuring that the Company has all the necessary organizational documents and records;
II. Ensuring that the Company shall prepare and submit all reports and documents requested by the relevant authorities according to the law;
III. Ensuring that the shareholder registration is accurate and ensuring that those who have the right to obtain records and documents of the Company receive those records and documents promptly.
Article 170 Aside from the general manager and the financial supervisor of the Company, a director of the Company or another senior management person may serve as the secretary to the Board of Directors of the Company concurrently. An accountant from the accounting firm appointed by the Company shall not be appointed as the secretary to the Board of Directors of the Company concurrently.

When a director also serves as the secretary to the Board of Directors of the Company, an action that should be made by a director and the secretary to the Board of Directors separately shall not be made by the concurrent director and secretary to the Board in his/her dual status.

The Company shall establish the office of securities representative to assist the secretary to the Board of Directors in fulfilling his/her duties.

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Article 171 Directors of the Company, the General Manager, and persons from other internal departments of the Company shall assist the secretary to the Board of Directors in fulfilling his/her duties pursuant to the law. They shall make necessary assurances in areas such as organizational structure, preparation of staff, and budget. All related departments of the Company shall actively coordinate with the work of the secretariat to the Board of Directors. Article 172 The Company shall establish a working system for the secretary to the Board of Directors and set out in detail the terms of reference, the requirements for the job, legal liabilities, office, evaluation, and mechanisms for awards and punishments, which shall be approved by the Board of Directors before going into effect.

Chpater 12 Managerial Team

Article 173 The Company shall establish a managerial team. Under the direction of the Board of Directors, it shall execute the decisions made by the Board and be responsible for the routine operation of the Company. The managerial team shall be under the charge of a general manager. The managerial team shall consist of one general manager who shall be appointed or dismissed by the Board, several deputy general managers, and one financial supervisor. Article 174 The general manager shall serve for a three-year term, after which he/she can be re-appointed for a new term. The general manager may resign prior to the completion of his/her term. Details regarding the procedures and schemes of such resignation shall be governed by the employment contract entered into by the general manager and the Company. In the event that the general manager cannot perform his/her duties, the Board of Directors shall appoint a deputy general manager to perform such duties on his/her behalf.

A director may serve as the general manager or a deputy general manager concurrently. Article 175 A controlling shareholder or an effective controller of the Company who serves in positions other than that of director may not serve as a senior executive of the Company. Article 176 The general manager of the Company shall be accountable to the Board of Directors and shall exercise the following powers:

I. Presiding over the management of the Company’s production and operation and submitting work reports to the Board of Directors; II. Implementing resolutions decided upon by the Board of Directors; III. Implementing the Company’s annual business plan and investment schemes;

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IV. Formulating schemes for the setup of company’s internal management organization;

V. Formulating the Company’s basic management regulations;
VI. Formulating details of the Company’s regulations and rules; VII Making proposals regarding the appointment or dismissal of deputy general managers and the financial supervisor of the Company;
VIII. Appointing or dismissing management personnel other than those who shall be appointed or dismissed by the Board of Directors;
IX. Drafting proposals regarding the merger, division, and reorganization of the subsidiary of the Company;
X. Drafting the organizational structure of branches of the Company;
XI. Drafting policies and proposals concerning the salaries, benefits, and mechanisms of award and punishment of employees;
XII. Being commissioned by the Board of Directors to handle business operations of the Company pursuant to the laws and regulations and benefits of the Company in the event of force majeure or an emergency in which it is impossible to convene a Board of Directors meeting. A report shall be given to the Board of Directors after such event occurs;
XIII. Exercising other powers as authorized by the laws, administrative regulations, department charters, or these Articles of Association and the Board of Directors.

The mandate granted by the Board to the general manager can be exercised only after discussion and demonstration by the meeting of the general manager’s office.

Article 177 The general manager of the Company shall attend meetings of the Board of Directors. In the event that the general manager is not a director, he/she shall have no voting right in the meeting.
Article 178 The Company shall establish general manager working conference system. The Company shall formulate the working details thereof for the general manager, with implementation to take place upon approval by the Board of Directors.

Article 179 Rules regarding the work of the general manager shall include the following:

I. Conditions, procedures, and attendees of meetings called by the general manager working conference;
II. Duties and division of labor among the general manager and other senior executive officers;
III. Company capital, usage of investment, power to enter into significant contracts, and systems for reporting to the Board of Directors and the Supervisory Committee;
IV. Other matters deemed necessary by the Board of Directors.

Article 180 The managerial team shall exercise its power in an honest and diligent manner according to the laws, regulations, and these Articles of Association.

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Chapter 13 Supervisory Committee

Section 1 Supervisors

Article 181 Directors and senior management persons of the Company shall not serve concurrently as a supervisor.
Article 182 Supervisors shall serve for a term of three years, after which the term may be renewed.
Article 183 If the term of a supervisor expires before re-election or if any supervisor resigns during his/her term, thus causing the membership of the Supervisory Committee to fall short of a quorum, the said supervisor shall continue to fulfill his/her duties as a supervisor pursuant to the laws, administrative regulations, and these Articles of Association until a new supervisor is elected.
Article 184 Supervisors shall ensure that the information disclosed by the Company is true, accurate, and complete.
Article 185 Supervisors may attend meetings of the Board of Directors and may make inquiries or suggestions pertaining to the resolutions of the meetings of the Board of Directors.
Article 186 Supervisors shall refrain from using their relationships and connections to harm the interests of the Company. Compensation shall be made in the event that the Company’s interest is harmed as a result of such behavior.
Article 187 Supervisors shall faithfully perform their duties pursuant to the laws, regulations, and these Articles of Association. In the event that a supervisor has violated the laws, administrative regulations, department charters, or these Articles of Association, thus harming the interests of the Company, such supervisor shall compensate for the loss by the Company.

Section 2 Supervisory Committee

Article 188 The Company shall establish a supervisory committee. The Supervisory Committee shall be composed of 3 to 9 individual supervisors . The Supervisory Committee shall have one chairman. The Chairman of the Supervisory Committee shall be appointed or dismissed by a majority of more than 2/3 of the supervisors voting.
Article 189 The Supervisory Committee shall be composed of representatives of the shareholders and the employees. The representatives of the shareholders shall be elected and dismissed at meetings of shareholders. The proportion of representatives of employees in the Supervisory Committee shall not be less than 1/3 of the number of supervisors, not shall it exceed 1/2 of their number. Representatives of the employees shall be elected and dismissed through democratic election by the employees of the Company.

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Article 190 The Supervisory Committee shall exercise the following powers:

I. Examining regular reports of the Company prepared by the Board of Directors and producing written opinions thereon;
II. Inspecting the finances of the Company;
III. Supervising the actions of directors and senior executive officers when they carry out their official capacities; proposing the dismissal of directors and senior executive officers who have violated the laws, administrative regulations, these Articles of Association, or resolutions decided upon in shareholder meetings;
IV. Requiring the Company’s directors and senior executive officers to correct their actions when such actions have harmed the interests of the Company;
V. Introducing motions at general meetings of shareholders;
VI. Proposing to convene extraordinary shareholder meetings and convene and preside over shareholder meetings in the event that the Board cannot perform the obligations of convening and presiding over shareholder meetings in accordance with the Company Law and these Articles of Association;
VII. Proposing to convene a provisional meeting of the Board of Directors;
VIII. Electing the chairman of the Supervisory Committee;
IX. Pursuing legal actions against directors and senior executive officers pursuant to the provisions of the Company Law ;
X. Carrying out an investigation in the event that the operation of the Company is out of the ordinary; if necessary, the Supervisory Committee may hire professional organizations such as a public accounting firm or a law firm to assist in its work, with the expenses involved to be borne by the Company;
XI. Other powers specified in the laws, administrative regulations, and these Articles of Association.
Article 191 The Supervisory Committee shall hold a regular meeting at least once every six months and such meeting shall be called by the chairman of the Supervisory Committee. Supervisors may propose to convene a provisional meeting.
Article 192 The Supervisory Committee shall establish rules for meetings of the Supervisory Committee to ensure that the work done by the Committee is effective and the decisions made are scientific. Rules of the Supervisory Committee regarding the convening and decision-making procedures of the Supervisory Committee shall be attached as an appendix to these Articles of Association, drafted by the Supervisory Committee, and approved at shareholder meetings.
Article 193 Meetings of the Supervisory Committee shall be held only when over 2/3 of the members are in attendance. Resolutions at the meetings of the Supervisory Committee shall be decided by an open and written ballot and each supervisor shall have one vote. A resolution of the Supervisory Committee shall be adopted when over 2/3 of the supervisors are in favor thereof.

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Article 194 The Supervisory Committee shall file resolutions as minutes, which shall be signed by the attending supervisors. Any supervisor shall have the right to have an explanatory note entered into the minutes regarding his/her opinion at the meeting. The minutes of meetings of the Supervisory Committee shall be kept for at least 10 years.

Article 195 Notices of Supervisory Committee meetings shall include the following:

I. time, date, venue and duration of the meeting; II. reasons and topics for discussion to considered; III. convener and presider of the meeting, proposer of and written proposal for the provisional meeting; IV. documents needed for voting of supervisors; V. requirements for the supervisors to attend the meeting in person; VI. coordinator and means of contact; VII. date on which the notice is sent.

A verbal notice of meeting shall at least include (I) and (II) above, and explanation for a provisional meeting of the supervisory meeting in emergency.

Chapter 14 Qualifications and Duties of the Directors, Supervisors, and Senior Management Officers of the Company

Article 196 One may not serve as a director, supervisor, general manager, or other senior management officer in any of the following cases:

I. Civil incompetence or limited civil competence;
II. Not more 5 years have passed since termination of the execution period for a penalty imposed based on committing a crime of corruption, bribery, encroachment of property, embezzlement or undermining social economic order, or not more 5 years have passed since termination of the execution period for deprivation of political rights based on the commission of a crime;
III. Not more 3 years have passed since termination of liquidation owing to the bankruptcy of a company or enterprise on account of poor management where one has served as a director or factory manager and has been held personally responsible for the bankruptcy of such company/enterprise;
IV. Not over 3 years have passed since the date of cancellation of the business license of a company or enterprise on account of violation of the law where one has served as the legal representative and has been held personally responsible;
V. A relatively large amount of personal debt is overdue;
VI. Investigation by the judiciary after a claim has been brought for breaking criminal law, pending conclusion of the case；
VII. Being suspended from enter the security market by the securities regulatory authority;
VIII. Not more 5 years have passed since one has been found guilty of violating related securities regulations and being involved in fraudulent or dishonest behavior;

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IX. One is not a natural person;
X. Other reasons specified in the laws, regulations, and rules set forth by securities authorities on publicly traded companies and stock exchanges.
Article 197 The validity of actions conducted by directors and senior management officers of the Company towards a good-faith third party shall not be affected by any irregularities with respect to their assumption of duties, election, or qualification.
Article 198 In addition to the duties required by laws, regulations, or the listing regulations of the securities exchange that lists the stock of the Company, and its directors, supervisors, and senior management officers shall assume the following duties to each shareholder when they exercise the rights conferred on them by the Company. They
I. Shall not cause the Company to act beyond the business scope specified in its business license;
II. Shall act, in good faith, according to the best interests of the Company;
III. Shall not injure the property of the Company in any manner, including but not limited to, opportunities that are favorable to the Company;
IV. Shall not injure the personal interest of shareholders, including but not limited to distribution rights and voting rights and excluding reorganization of the Company submitted to and adopted at the meeting of shareholders pursuant to these Articles of Association.
Article 199 In performing their duties, directors, supervisors, and senior management officers of the Company shall act carefully, diligently, and skillfully, in the way that a reasonable person would have done in similar circumstances, and they shall owe the following responsibilities to the Company:
I. Exercising the rights given by the Company carefully, solemnly, and diligently to ensure that the business dealings of the Company conform with the laws, regulations, and all economic policies of the State and do not go beyond the scope allowed by its business license;
II. Treating all shareholders equally;
III. Understanding and possessing the latest information about the condition of the operation and management of the Company;
IV. Within the scope of their duties, ensuring that the information released by the Company is true, accurate, and complete;
V. Reporting related information to the Supervisory Committee honestly and not intervening in the work of the Supervisory Committee and supervisors;
VI. Diligently fulfilling other duties specified in the laws, regulations, and these Articles of Association.

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Article 200 In performing their duties, directors, supervisors, and senior management officers of the Company shall follow the principle of good faith and shall not put themselves in a situation where their own interests may conflict with the duties that they have assumed. This principle shall include (but not be limited to) performance of the following duties:

I. Behaving honestly from the starting point of the maximal interests of the Company;
II. Exercising rights within the scope of one’s functions, and not going beyond one’s authority;
III. Exercising their discretionary power by themselves and not being manipulated by others; they shall not delegate their discretionary power to another party unless it is permitted by the laws, regulations, or consent of the meetings of shareholders after all the relevant facts have been made known;
IV. Treating shareholders of the same category equally and shareholders of different categories impartially;
V. Not concluding a contract or conducting transactions or arrangements with the Company, unless otherwise specified in the Articles of Association or otherwise approved by the shareholders’ meeting when the facts are known;
VI. Not using the property of the Company for their own gains without the consent of the meetings of shareholders after all the relevant facts are made known;
VII. Not using their power to accept bribes or other kinds of illegal income or infringe upon the property of the Company, including (but not limited to) opportunities that are favorable to the Company;
VIII. Not accepting commissions related to company’s transactions, without the consent of the shareholders’ meeting when the facts are known;
IX. Following the Articles of Association, performing their functions honestly and upholding the Company’s interests. They shall not seek private benefits by taking advantage of one’s position and power in the Company;
X. Not using their position to seek business opportunities that belong to the Company for themselves or for others without the consent of the meetings of shareholders after all the relevant facts are made known; companies that are owned by themselves or others and are in the same industry of the Company shall not compete with the Company;
XI. Not embezzling the funds of the Company and not depositing assets and funds of the Company into their personal account or the accounts of others;
XII. Not violating these Articles of Association, lending funds of the Company to others or using assets of the Company to act as a guarantor for shareholders of the Company or others without the consent of the meetings of shareholders after all the relevant facts have been made known;
XIII. Not using their own connections to harm the interests of the Company;
XIV. Not disclosing confidential information concerning the Company that is obtained during their tenure of office to a third party without the consent of the meetings

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of shareholders after all the relevant facts have been made known; not using such information unless it is for the interest of the Company; however, such information may be disclosed to courts or other competent government departments in the following circumstances:

When so prescribed by the law;
When so required for the public interest;
When so required for the interests of the directors, supervisors, or other senior executive officers.

Earnings obtained by the aforementioned personnel in violation of the provisions herein shall belong to the Company and any loss incurred to the Company shall be compensated.

Article 201 Directors, supervisors, and senior management officers of the Company shall not instruct the following persons or organizations (hereinafter “related persons”) to do what directors, supervisors, and senior management officers are not allowed to do:

I. Spouses and children of the directors, supervisors, and senior management officers of the Company;
II. Trustees of the directors, supervisors, senior management officers of the Company and related persons listed in subsection (1) of this Article;
III. Partners of the directors, supervisors, senior management officers of the Company and related persons listed in subsections (1) and (2) of this Article;
IV. A company under the de facto and exclusive control of the directors, supervisors, and senior executive officers of the Company or a company under de facto and common control listed in subsections (1), (2), and (3) of this Article or other directors, supervisors, or senior management officers of the Company; and
V. Directors, supervisors, and senior management officers of the controlled company as listed in subsection (4) of this Article.

Article 202 The good faith duties of the directors, supervisors, and senior management officers of the Company does not necessarily terminate upon the end of their tenure of office and their duty to keep the commercial secrets of the Company shall remain valid beyond their tenure of office. The duration of other duties shall be determined by the principle of fairness, the length of time between the occurrence of the event and the end of tenure of office, as well as the circumstances and conditions under which their relationship with the Company ended.

Article 203 Liability assumed by the directors, supervisors, and senior management officers of the Company on account of breach of a certain duty may be released by the meetings of shareholders after all relevant facts have been made known, with the exception of what is specified in Article 60 of these Articles of Association.

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Article 204 Where the directors, supervisors, and senior management officers of the Company have major interests, either directly or indirectly, in the contracts, transactions, and arrangements that the Company has concluded or planned (with the exception of appointment contracts of directors, supervisors, and senior management officers), regardless of whether the related matters require approval by the Board of Directors in normal circumstances, they shall disclose the nature and extent of such related interests to the Board of Directors as soon as possible.

Directors shall not vote on contracts, transactions, arrangements or other proposed Board meetings in which the said directors or other persons related to them have material interests in and shall not be counted in the quorum for the meeting.

Unless the directors, supervisors, and senior management officers of the Company that have a material interest that they have already disclosed to the Board of Directors as required in the preceding clause of this Article and the Board of Directors has approved the matter at a meeting without their inclusion in the quorum or without their participation in the voting, the Company shall be entitled to cancel such contract, transaction, or arrangement, except in the event that the other party is a bona fide party that does not know of the facts about the breach of duty on the part of the related directors, supervisors, and other senior management officers.

Where a person related to the directors, supervisors, and senior management officers has related interests in a certain contract, transaction, or arrangement, the related directors, supervisors, and senior management officers shall also be deemed as having related interests.

Article 205 In the event that prior to the Company’s first consideration of concluding the relevant contract, transaction, or arrangement, the directors, supervisors, and senior management officers had sent a written notice to the Board of Directors and declared that in view of the content of the notice, the contract, transaction, or arrangement to be concluded by the Company would have related interests with them, then within the scope stated in the notice, the related directors, supervisors, and senior management officers shall be deemed as having made such disclosure as specified in the preceding Article of this Chapter.

Article 206 The Company shall not pay taxes in any manner for its directors, supervisors, and senior management officers.

Article 207 The Company shall not provide loans or security for loans directly or indirectly to directors, supervisors and other senior management officers of the Company and its parent company; it shall not provide loans or security for loans to the related persons of the aforementioned personnel.

The preceding clause shall not apply to the following cases:

I. The Company is providing a loan or security for a loan to its subsidiary companies;

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II. According to the appointment contracts approved by the meetings of shareholders, the Company is providing loans, security for loans, or other sums to the directors, supervisors, and senior management officers of the Company in order for them to make payments for the purposes of the Company or for expenses incurred during performance of their company duties; and
III. If the normal business scope of the Company includes the provision of loans and security for loans, the Company may provide loans and security for loans to relevant directors, supervisors, and senior management officers as well as related personnel, provided that the conditions for such provisions shall be compatible with ordinary commercial conditions.
Article 208 Where the Company provides loans in violation of the regulation in the preceding Article, the receiver of the sum shall repay the same immediately, regardless of the conditions for such loans.
Article 209 The Company shall not be forced to implement such loan security provided by it in violation of the regulation in Clause 1 of Article 204, except in the following cases:
I. When loans are provided to persons related to the directors, supervisors, general managers, deputy general managers and other senior management personnel of the Company or its parent company, without the loan provider knowing the facts;
II. Where the hypothecated goods provided by the Company have been sold by the loan provider to a bona fide purchaser according to the law.
Article 210 The security as mentioned in the preceding Articles of this chapter shall include such acts as assumption of the duty by the guarantor of the duty or the provision of property to guarantee that the obligor performs its duties.
Article 211 When the Company’s directors, supervisors, general manager, deputy general managers and other senior management personnel breach their duties to the Company, in addition to the rights and remedies pursuant to the laws and regulations, the Company shall be entitled to adopt the following measures:
I. Requiring the related directors, supervisors, general manager, deputy general managers and other senior management personnel to compensate for the losses caused to the Company on account of their neglect of duties;
II. Canceling any contracts or transactions concluded between the Company and the related directors, supervisors, general manager, deputy general managers and other senior management personnel, and contracts or transactions concluded between the Company and a third person (when the third person knows or ought to know about breach of duties to the Company on the part of the directors, supervisors, general manager, deputy general managers and other senior management personnel who represent the Company);

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III. Requiring the related directors, supervisors, general manager, deputy general managers and other senior management personnel to hand over the benefits obtained through breach of duties;
IV. Recovering such sums as ought to have been received by the Company but have been received by the related directors, supervisors, general manager, deputy general managers and other senior management personnel, including (but not limited to) commissions;
V. Requiring the related directors, supervisors, general manager, deputy general managers and other senior management personnel to return the interest that is gained or may have been gained on sums that ought to have been handed over to the Company.
VI. Adopting rulings on legal procedures to repossess the property of the related directors, supervisors, general manager, deputy general managers, and other senior management personnel that has been obtained through the violation of duties.
Article 212 The Company shall conclude written contracts on matters involving remuneration with its directors and supervisors, being subject to prior approval by the shareholders’ meeting. The aforesaid remuneration matters shall include:
I. Remuneration of the Company’s directors, supervisors or senior management personnel;
II. Remuneration of directors, supervisors or senior management personnel of a subsidiary of the Company;
III. The sum for compensation for the lost position or retirement of the director or supervisor; and
IV. Except as specified in the aforesaid contracts, directors or supervisors shall not file lawsuits against the Company for the interests to which they are entitled on account of the aforesaid matters.

Article 213 The contracts on remuneration matters as concluded between the Company and its directors and supervisors shall specify that when the Company is to be purchased, with prior approval by the shareholder’s meeting, the Company’s directors and supervisors shall be entitled to receive compensation or other sums for their lost position or retirement.

The Company’s being purchased as mentioned in the preceding clause refers to one of the following cases:

I. Anyone makes a purchase offer to all the shareholders;
II. Anyone makes a purchase offer with a view to make the offeror the controlling shareholder, which is so defined in the Articles of Association.

If the related director or supervisor fails to follow the regulation in this article, any sum so received shall be owned by those who sell their stock by accepting the aforesaid offer, and the director or supervisor shall bear the expenses occurring from proportionate distribution of such sums, which may not be deducted from such sums.

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Article 214 The Company shall be allowed to establish necessary liability insurance systems for directors, supervisors, general manager, deputy general managers, and other senior management personnel to reduce possible risks they may encounter as they perform regular duties.

Chapter 15 Accounting regulation and profit distribution

Section 1 Accounting regulation and profits

Article 215 The Company hereby formulates its accounting regulations according to the laws and regulations of relevant national departments.

Article 216 The Company hereby adopts the calendar year as the accounting year, starting on 1 January and ending on 31 December of each calendar year.

The Company shall, upon termination of each accounting year, prepare its financial report, subject to examination according to the law.

The Company’s financial reports shall be formulated in accordance with Chinese accounting code and laws and regulations, as well as international accounting code or that of the overseas listing location if the Company issues overseas listed foreign shares. In the event of major discrepancies between the financial reports formulated according to the two accounting codes, these shall be stated in the remarks of such report.

The Company’s distribution of the after-tax profits of the relevant accounting year shall be based on the two aforementioned financial reports, whichever has the lower after-tax profit.

Article 217 The Board of Directors of the Company shall, at each annual meeting of shareholders, present to the shareholders a financial report prepared by the Company as specified by relevant laws and regulations.
Article 218 The Company shall submit an annual financial accounting report to the China Securities Regulatory Commission (CSRC) and the Stock Exchange within 4 months of the end of each accounting year; a semi-annual financial accounting report to CSRC agencies and the Stock Exchange within 2 months of the end of the first 6 months of the accounting year.

Article 219 The Company shall not establish any accounting books other than those specified by the laws. No savings accounts for assets of the Company shall be established under the name of any individual.

Article 220 The financial report of the Company shall be placed at the Company for the shareholders to consult, 20 days prior to the convening of the annual meeting of shareholders. Each shareholder of the Company shall be entitled to obtain the financial report referred to in this chapter.

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The Company shall send a copy of the aforesaid report to each holder of H Shares via mail or other means approved by the Stock Exchange where the Company’s shares have been listed at least 21 days before the annual meeting of shareholders at the address recorded in the register of shareholders.

Article 221 The Company shall issue four financial reports every fiscal year, i.e. quarterly financial reports issued within one month of the end of the first quarter and third quarter of the fiscal year, an interim financial report issued within two months of the end of the first 6 months of the fiscal year and an annual financial report issued within four months of the end of the fiscal year.

Article 222 The capital surplus shall include the following sums:

I. Premium gained from stock issued in excess of the face value;
II. Other income that should be listed in the capital surplus as specified by competent financial departments of the State Council.

Article 223 When the Company distributes after-tax profits it shall collect 10% to be used for the reserve fund. Such withdrawal may be stopped when the statutory common reserve fund of the Company amounts to more than 50% of the registered capital of the Company.

If the statutory common reserve fund is insufficient to make up for the losses of the preceding year, the profits of the current year shall first be used to make up for the said losses before any statutory common reserve fund is withdrawn as per the preceding paragraph.

After the statutory common reserve fund is withdrawn from the after-tax profits, the discretionary common reserve fund may also be withdrawn pursuant to a resolution passed at a general meeting.

The after-tax profits remaining after recovery of losses and withdrawal of common reserve funds may be distributed as dividends to the shareholders in proportion to their shareholding percentages.

If the meeting of shareholders violates the aforementioned regulations — distributes dividends to the shareholders before the Company recovers its losses and withdraws from the statutory common reserve fund — shareholders must return the unlawfully distributed dividends to the Company.

Shares held by the Company shall not participate in distribution of profits.

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Article 224 The Company may distribute the dividends in the following forms (or combination of the two forms):

I. Cash;
II. Shares.
Article 225 The common reserve funds of the Company shall be used to make up for the losses, enhance the operating scale, or increase the capital of the Company. However, the capital reserve fund may not be used to make up for losses.

When the statutory common reserve fund is converted into capital, the amount of the said fund left shall not be less than 25% of the registered capital of the Company.

Article 226 Any money paid for the shares by the shareholders before being urged is entitled to interest, but prepayment does not confer the right to access subsequently announced dividends.

Article 227 The Company’s domestic shares and overseas listed foreign shares shall carry the same rights in any distribution made in the form of dividends or in other forms.

Article 228 If the Company issues foreign capital stock, the Company shall appoint receiving agents for shareholders holding foreign capital stock. The receiving agent shall, on behalf of the related shareholders, receive dividends distributed by the Company for foreign capital stock as well as other payable sums, and keep the monies to pay the related shareholders at a later time.

The receiving agents appointed by the Company shall meet the requirements of the laws or the securities exchange of the location of the listing.

The receiving agents appointed by the Company for holders of foreign shares listed in Hong Kong shall be trust companies registered pursuant to Trustee Ordinance of Hong Kong.

Provided that the relevant PRC laws and regulations are observed, the Company may exercise the right to seize dividends not collected, but the said right shall be exercised only after the expiry of the applicable validity period of the announced shares.

The Company shall have the right to terminate delivery of dividend vouchers by mail to certain holders of foreign capital stock, but the Company may exercise such right only after two vouchers have not been cashed consecutively. However, if the first voucher failed to reach the recipient and was returned, the Company may also exercise the said right.

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The Company shall have the right to sell the shares of holders of foreign capital stock whom the Company has failed to contact by means regarded as appropriate by the Board of Directors, but the following provisions must be met:

I. That dividends on the related shares have been delivered at least 3 times within 12 years and have not been claimed; and
II. That thee Company place advertisements in one or more newspapers of the Company listing location after the 12 years have expired, stating its intention to sell the shares and informing the Stock Exchange of such intention.
Article 229 After the profit distribution plan has been adopted at the general meeting, the Board shall finish distributing dividends (or shares) within two months after conclusion of the general meeting.
Article 230 The Company’s policy on the distribution of profits holds that after the recovery of losses and withdrawal of the common reserve fund, as stated in Article 225, cash dividends shall be considered first when the Company distributes dividends. The specific proportion of the distribution of dividends shall be determined by the meeting of shareholders.

Cash dividends and other monies paid by the Company to domestic capital stockholders shall be paid in RMB. Cash dividends and other monies paid by the Company to holders of overseas listed foreign capital stock shall be stated and announced in RMB and paid in foreign currency. Foreign currency required by the Company to pay cash dividends and other monies to holders of overseas listed foreign capital stock and holders of other foreign capital stock shall be obtained pursuant to relevant state regulations on foreign exchange.

Article 231 Except as otherwise specified in relevant laws and administrative regulations, if cash dividends and other monies are paid in cash, the exchange rate shall be the average selling bid issued by People’s Bank of China one Gregorian week before the announcement of the dividends and other monies.

Article 232 The Company may distribute dividends in the form of cash or shares. The Company may declare an interim dividend in cash. The aggregate profit distributed by the Company in cash for three consecutive years shall not be less than 30% of the annual average distributable profit realized for the three years. The profit distribution policy of the Company shall maintain consistency and stability and shall comply with the requirements of the relevant laws, regulations and regulatory documents.

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Section 2 Internal Auditing

Article 233 The Company shall conduct an internal audit and assign full-time auditors to conduct internal audit and supervision on the revenues/expenditures and economic activities of the Company.
Article 234 The internal audit system and duties of the auditors shall be subject to the approval of the Board. The auditors shall be accountable to the Board and report their work to the same.

Chapter 16 Appointment of accounting firm

Article 235 The Company shall appoint an independent accounting firm in accordance with the relevant regulations of the state to carry out the audit and review of the Company’s annual and other financial reports, the audit of its accounting statements, net assets verification and other related consulting services.

The first accounting firm of the Company may be appointed by the meeting of inauguration before the first annual meeting of shareholders, and its term of office shall be terminated at the end of the first annual meeting of shareholders.

Article 236 The period for which the accounting firm is appointed by the Company shall commence at the end of the current annual meeting of shareholders and terminate at the end of the next annual meeting of shareholders.
Article 237 The accounting firm appointed by the Company shall have the following rights:
I. To consult the Company’s accounting books, records or vouchers at any time, and to request the Company’s directors, general manager, deputy general managers or other senior management personnel to provide relevant information and explanation;
II. To request the Company to adopt all rational measures to obtain from its subsidiaries such information and explanations as are needed for the accounting firm to perform its functions;
III. To attend shareholder’s meetings, obtain any meeting notice or other information about the meeting that any shareholder is entitled to, and speak at any shareholders’ meeting on matters concerning its role as the accounting firm of the Company.

Article 238 The Company’s appointment of an accounting firm must be decided upon by the shareholders’ meeting. The Board of Directors may not appoint an accounting firm prior to the decision of the shareholder’s meeting.

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Regardless of the terms and conditions in the contract concluded between the accounting firm and the Company, the shareholders’ meeting may, prior to the completion of the term of any accounting firm, dismiss it by an ordinary resolution. If the related accounting firm has the right to demand reimbursement from the Company on account of its dismissal, such right will not be affected thereby.

Article 239 Remuneration of the accounting firm appointed by the Board shall be decided upon by the Board.
Article 240 The Company’s appointment, dismissal or non-renewal of the appointment of the accounting firm shall be decided upon by the shareholders’ meeting, and shall be submitted to the securities administration in the State Council for the purpose of a record. When the shareholder’s meeting intends to adopt a resolution to appoint an accounting firm to fill a vacancy of the position of the accounting firm, or to renew the appointment of an accounting firm by the Board of Directors to fill in the vacancy, or to dismiss an accounting firm prior to completion of its term, the following regulations shall be followed:
I. Before the shareholders’ meeting notice is delivered, the proposal regarding the appointment or dismissal shall be sent to the accounting firm to be appointed or to be dismissed, or to the one that has left its post in the accounting year concerned (leaving the post to be understood to include dismissal, resignation and retirement from the post.)
II. If the accounting firm about to leave the post makes a written statement and requests the Company to inform the shareholders thereof, unless the Company receives such statement too late, it shall adopt the following measures:
1. In the notice delivered for the purpose of making a resolution, state that the accounting firm about to leave the post has made a statement; and
2. Send the duplicate of such statement as an attachment to the notice to each of the shareholders who are entitled to receive the notice of the general meeting in the methods as specified in the Articles of Association.
III. If the Company fails to send the statement of the accounting firm in question as specified in Item (2) of this Article, the said accounting firm may request such statement to be read out at the shareholders’ meeting, and may make further complaints.
IV. The accounting firm leaving the post shall be entitled to attend following meetings:
1. The shareholders’ meeting when the firm’s term is due;
2. The shareholders’ meeting held to fill in the vacancy occurring from the firm’s being dismissed;
3. The shareholders’ meeting held on account of the firm’s resignation.

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The accounting firm leaving the post shall be entitled to receive all notices of the aforesaid meetings or other information relating to such meetings, and speak at the aforesaid meetings about matters involving it as the preceding accounting firm of the Company.

Article 241 If the Company intends to dismiss or not to renew the appointment of an accounting firm, it shall inform the accounting firm in advance. The accounting firm shall be entitled to make a statement to the shareholders’ meeting. When the accounting firm resigns, it shall explain to the shareholders’ meeting whether the Company has done anything improper.

I. The accounting firm may resign by placing the written notification of resignation at the domicile or the registered office of the Company. The notification shall come into effect on the date of its being placed at the domicile of the Company or at a later date as stated in the notification. The notification shall include following statements:
A statement that its resignation does not involve anything that should be explained to the Company’s shareholders or creditors; or
Any statement about such conditions as should be explained.

Such notifications shall come into effect on the date of their being placed at the domicile of the Company or at a later date as stated in said notifications.

II. Within 14 days after receiving the written notification referred to in Clause (2), Item (1) of the Articles of Association, the Company shall send photocopies of such notification to the competent authority. If the notification carries such statements as mentioned in Clause (2), Item (1) of the Articles of Association, the Company shall place the duplicate of such statements at the domicile of the Company for shareholders to consult. In addition, the Company shall send the aforesaid duplicate via postage paid mail to each holder of H Shares who are entitled to receive the statement of financial position of the Company, at the addresses recorded in the register of shareholders.
III. If the resignation notification of the accounting firm carries such statements as mentioned in Clause (2), Item (1) of the Articles of Association, the accounting firm may request the Board of Directors to call a provisional shareholders’ meeting to listen to its explanation regarding its resignation.

Chapter 17 Notices

Article 242 The notices of the Company may be sent out in the following ways:

I. Sent out by courier;
II. Sent out by mail;
III. Sent out by fax or E-mail;

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IV. Issued on the website(s) designated by the Company and the stock exchange predicated on compliance with laws and regulations and the listing regulations at the place where the stock of the Company is listed;
V. Issued by announcement;
VI. Any other way agreed beforehand by the Company and the party notified or recognized by the party notified on the receipt of a notice; or
VII. Any other way recognized by the regulatory authority concerned at the place where the stock of the Company is listed or as provided herein.

Unless otherwise stated in the text, the “announcement” referred to herein means an announcement published in the press of China and the press organ in question shall be provided for in the laws and regulations of China or designated by the Securities Regulatory Administration of the State Council insofar as an announcement issued to the shareholders of domestic shares or an announcement to be issued within the territory of China according to relevant provisions and according hereto is concerned; or insofar as an announcement issued to the shareholders of H shares or an announcement to be issued in Hong Kong according to the relevant provisions and according hereto is concerned. All the notices or any other documents of the Company to be submitted to the Hong Kong Stock Exchange according to Chapter 13 of the listing regulations of the HKSE shall either be written in English or accompanied by signed and verified English translations.

Article 243 Unless otherwise provided for herein, such ways of sending out notices as provided for in the previous article shall apply to notices of the Company regarding the convening of general meetings of shareholders and of meetings of the board of directors and board of supervisors.
Article 244 If a notice of the Company is sent out by courier and the served party signs (or seals) on the service receipt, the date when the served party acknowledges the receipt of the notice shall be the date of service. If the notice of the Company is sent out by mail, the 48th hour after the date when the notice is delivered to the post office shall fall within the date of service. If the notice of the Company is sent out by fax or E-mail or issued by a website, the date of sending out or of issuance shall be the date of service. If a notice of the Company is sent out as an announcement, the date of the publication of the announcement for the first time shall be the date of service. The relevant announcements shall be published in the press in compliance with the relevant provisions. The Company shall give a proper notice so that H shareholders have sufficient time to exercise their rights or act in accordance with the provisions of the notice.
Article 245 The Company may only deliver the English version or the Chinese version (according to the intention expressed by the shareholder) of any relevant document of the Company within the scope permitted in any applicable law or regulation and in accordance therewith if the Company is required in the listing regulations at the place where the stock of the Company is listed to deliver, mail, distribute, issue or publish both the English and Chinese versions of any such document or provide any such

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documents in any other way, and if the Company has made appropriate arrangements to determine whether a shareholder wishes to receive only the English version or only the Chinese version of any such document.

Chapter 18 Merger, Separation, Dissolution and Liquidation

Section 1 Merger and Separation

Article 246 If the Company is to be merged or separated, the board of the Company shall propose a merger or separation plan and after it is passed in accordance with the procedures provided for herein, the relevant examination and approval formalities shall be completed according to law. A shareholder who opposes the merger or separation plan of the Company or a shareholder who agrees thereto shall be entitled to ask the Company to buy his shares at fair prices. The contents of the merger or separation resolution shall be made into a special document for the reference of the shareholders.

If the Company issues any overseas listed foreign shares, the said documents shall also be served on the shareholders of said overseas listed foreign shares by mail.

Article 247 The merger of the Company may be an absorption-type merger or consolidation.
Article 248 In the merger of the Company, the parties to the merger shall enter into a merger agreement and work out a balance sheet and a list of properties. The Company shall notify the creditors within 10 days after the date when the resolution on merger is passed and make at least 3 announcements in the newspapers approved by the stock exchange where the stock of the Company is listed within 30 days after the resolution is passed. A creditor shall be entitled to ask the Company to discharge the liabilities or provide an appropriate guarantee for the repayment of the liabilities within 30 days after the date of the receipt of the notice or, if no notice is received, within 45 days after the date when the announcement is issued for the first time.
Article 249 In the merger of the Company, the claims and liabilities of all the parties to the merger shall be inherited by the company continuing to exist or a newly established company after the merger.
Article 250 In the separation of the Company, its properties shall be separated appropriately. In its separation, a balance sheet and a list of assets shall be worked out. The Company shall notify the creditors within 10 days after the date when the resolution on separation is made and make at least 3 announcements in the newspapers approved by the stock exchange where the stock of the Company is listed within 30 days thereof.
Article 251 The liabilities before the separation of the Company shall jointly and severally be assumed by the Company after the separation except for anything otherwise agreed by the Company and the creditor in their written agreement reached prior to the separation for the discharge of the liabilities.

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Article 252 In the merger or separation of the Company, a revised registration shall be completed with the company registration authority according to law if a change occurs with any of the registered matters. If the Company is dissolved, the registration of the Company shall be cancelled according to law. If a new company is established, a company establishment registration shall be completed according to law.

Section 2 Dissolution and Liquidation

Article 253 If the Company is dissolved for any of the following causes:

I. The term of business provided for herein expires or any such other cause for dissolution as provided herein occurs;
II. The shareholders’ meeting passes a resolution on dissolution;
III. The Company has to be dissolved on account of the merger or separation thereof;
IV. Bankruptcy is declared according to law because of any failure to discharge any liabilities due;
V. The business licence has been withdrawn, the Company has been ordered to close, or it has been wound up;
VI. A shareholder who holds more than 10% of the voting rights of all the shareholders may request the people’s court to dissolve the Company if any serious difficulty occurs in the operation and management of the Company whose continuous existence will cause major losses to the shareholders’ interests and the difficulty cannot be solved by any other means.
Article 254 If the Company is dissolved as provided for in Items (1), (2), (5) and (6) of Article 253 hereof, a liquidation team shall be established within 15 days after the date of the occurrence of the cause for dissolution to start liquidation. The liquidation team shall be composed of the personnel designated by the directors or a general meeting of shareholders. If no liquidation team is established for the liquidation within the time limit, a creditor may apply to the people’s court to designate the persons concerned to form the liquidation team for the liquidation.

If the Company is dissolved as provided in Item (4) of Article 253 hereof, the people’s court may organize shareholders, the authorities concerned and the professional personnel concerned to form a liquidation team as provided for in relevant laws.

Article 255 If the board decides to liquidate the Company (except for liquidation owing to the Company’s declaration of bankruptcy), the board shall state in the notice that a general meeting of shareholders shall be convened for this purpose that the board has made an overall investigation into the situation of the Company and it considers that the Company may fully discharge the liabilities of the Company within 12 months of the beginning of the liquidation.

After the general meeting of shareholders adopts a resolution of liquidation, the functions and powers of the board of the Company shall be terminated forthwith.

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The liquidation team shall follow the instructions from the general meeting of shareholders, make at least one report every year to the general meeting of shareholders on the income and expenditure of the liquidation team as well as the Company’s business and progress in the liquidation, and make the final report to the general meeting of shareholders at the end of the liquidation.

Article 256 The liquidation team shall exercise the following functions and powers during liquidation:

I. Make an inventory of the Company’s properties and work out a balance sheet and a list of assets;

II. Send notices and declarations to the creditors; III. Dispose of and clear up any outstanding business of the Company; IV. Pay due taxes and taxes accrued during liquidation; V. Clear off claims and debts; VI. Dispose of the Company’s assets remaining after the discharge of its liabilities; VII. Attend any civil proceedings on behalf of the Company.

Article 257 The liquidation team shall notify the creditors within 10 days after the date of its establishment and within 60 days thereof make at least 3 announcements in the newspapers approved by the stock exchange where the stock of the Company is listed. The creditors shall report its claims to the liquidation team within 30 days after the date of the receipt of the notice or within 45 days after the date of the announcement if no notice is received.

In reporting claims, a creditor shall explain the relevant particulars of the claims and provide the group with supporting materials. The liquidation team shall register the claims.

In reporting claims, the liquidation team shall make no settlement with creditors.

Article 258 The liquidation team shall work out a liquidation scheme after it liquidates the assets of the Company and works out a balance sheet and a list of assets and report them to the general meeting of shareholders or the people’s court for confirmation.

Any assets remaining from the Company assets after the respective payment of liquidation expenses, staff wages, social insurance expenses and statutory compensation, the payment of taxes in arrears and the discharge of the Company’s liabilities shall be distributed according to the proportions of the shares held by the shareholders.

During liquidation, the Company shall exist but may not carry out any operation activities that are not related to the liquidation. The assets of the Company shall not be distributed to the shareholders before the discharge of liabilities is made as provided for in the previous clause.

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APPENDIX I

Article 259 The liquidation team shall apply to the people’s court for the declaration of bankruptcy according to law if they find that the assets of the Company are insufficient to discharge its liabilities after liquidation of the Company assets and works out a balance sheet and a list of assets. If the Company declares its bankruptcy pursuant to a ruling of the people’s court, the liquidation team shall transfer the liquidation affairs to the people’s court.

Article 260 After the completion of the liquidation of the Company, the liquidation team shall prepare a liquidation report and a statement of income and expenditure and financial books during liquidation and submit them to a general meeting of shareholders or the people’s court for confirmation after they have been audited by an accountant certified in China and then submit the said documents to the company registration authority within 30 days after the date of the confirmation of the general meeting of shareholders or the people’s court to apply for the cancellation of the registration of the Company and announce the termination thereof.

Article 261 The members of the liquidation team shall be devoted to their duties and perform their liquidation obligations according to law.

No member of the liquidation team shall accept any bribes or any other illegal income by making use of his functions and powers nor may he seize any assets of the Company.

A member of the liquidation team shall be responsible for compensation should he deliberately or through major negligence cause losses to the Company or to a creditor.

Chapter 19 Amendment of Articles of Association

Article 262 In case of any of the following events, the Company shall modify its articles of association:

I. Any matter provided herein conflicts with any provision in any modified law or regulation after the amendment of the Company Law or any other relevant law or regulation;
II. A change occurs in the situation of the Company that not does not correspond to the matters recorded herein;
III. A general meeting of shareholders resolves to amend the articles of association.

Article 263 An amendment hereto herein passed by a resolution of the general meeting of shareholders shall be approved by the competent authority upon the latter’s examination and approval thereof. An amended registration shall be completed according to law if it involves the registration of the Company. If the amendment to the Articles of Association does not involve registration, the Company shall submit the amended Articles of Association or the amendment to the Articles of Association to the original company registration authority for filing.

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APPENDIX I

Article 264 The general meeting may grant a mandate to the Board of the Company by passing an ordinary resolution:

I. If the Company increases the registered capital, the Board of the Company has the right to amend the content relating to the registered capital of the Company in the Articles of Association depending on the circumstances;
II. If a change in the sequence of the written words or provisions is required when the Articles of Association approved by the general meeting is submitted to the authority authorized by the State council for examination and approval, the Board of the Company has the right to make the corresponding amendment in accordance with the requirements of the securities regulatory authority under the State Council.

The board of directors shall amend these articles of association according to a resolution of amendment by the general meeting of shareholders and to the opinions and suggestions of the competent authority after its examination and approval hereof.

Article 265 Any amended item herein shall be announced as provided if it falls under the information to be disclosed as requested in any law or regulation.

Chapter 20 Settlement of Disputes

Article 266 If the Company issues any overseas listed foreign shares, it shall abide by the following dispute settlement rules:

I. The parties concerned shall refer any dispute or claim involving the Company’s affairs for settlement by arbitration if said dispute or claim occurs between shareholders of overseas listed foreign shares and the Company, between shareholders of overseas listed foreign shares and the directors, supervisors, general managers or any other senior management officers of the Company, between shareholders of the overseas listed foreign shares and the shareholders of domestic shares on the basis of such rights and obligations as provided for in the contract, these Articles of Association and in the Company Law and any other relevant laws and regulations.

Upon the reference for arbitration, the said dispute or claim shall refer to all claims or to the overall dispute. All the persons with causes of action for the same subject or anyone required to take part in the settlement of the dispute or claim shall obey the arbitration if he is operating in the capacity of the Company or a Company shareholder, director, supervisor, general manager or any other senior management officer.

Dispute concerning the definition of shareholders and the register of shareholders may be settled by ways other than arbitration.

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APPENDIX I

II. The arbitration applicant shall select the Shanghai Branch of the China International Economic and Trade Arbitration Commission for arbitration according to its arbitration rules prevailing when applying for arbitration.
III. The law of the People’s Republic of China shall apply to the settlement by arbitration of any dispute or claim stated in Item (I) except for any matter otherwise provided for in any law or regulation.
IV. The awards made by the arbitration organization shall be final, and shall be binding upon all parties.
V. The arbitration agreement shall be reached by directors or senior management and the Company which represents both itself and each of the shareholders.
VI. Any arbitration submitted shall be deemed as authorizing the arbitration tribunal to conduct a public hearing and announce its verdict.

Chapter 21 By-laws

Article 267 The term “senior management officer” referred to herein shall refer to the general manager, deputy general manager, financial controller or board secretary. The “general manager” and “deputy general manager” referred to herein shall just be the “manager” and “deputy manager” referred to in the Company Law .
Article 268 Unless specifically stated otherwise, “controlling shareholder” shall refer to the shareholder holding shares amounting to more than 50% of the total share capital of the Company; or any other shareholder enjoying resolution voting rights sufficient to exert a major impact on resolutions of the general meeting of shareholders, even if the proportion of the shares he holds is less than 50% of the total.

The “concerted action” referred to herein shall mean an action in which two or more than two persons reach an agreement (whether oral or written) whereby they obtain voting rights in the Company enabling one of them to achieve or consolidate the goal of controlling the Company.

The “actual controller” stated herein means anyone who can actually control the actions of the Company through investment relationships, agreements or any other arrangements even though he is not a shareholder of the Company.

The “association” stated herein shall refer to the relationship of the Company’s controlling shareholder, actual controller, directors, supervisors, senior management officers with any enterprise under their direct or indirect control and any other relationship liable to lead to the transfer of the Company’s interest. However, the association between enterprises with shares that are controlled by the state shall not be solely based on the fact that their shares are in each case controlled by the state.

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PROPOSED NEW ARTICLES

Article 269 Any matter nor provided for herein shall be handled in the light of the actual situation of the Company pursuant to laws and regulations and to the listing regulations at the place where the stock of the Company is listed. Law or regulation or the listing regulations at the place where the stock is listed shall prevail if any of these articles of association should conflict therewith.
Article 270 These Articles of association shall be written in Chinese and if there is any difference between these articles of association and those in any other language or in any different version, the articles of association in Chinese most recently approved and registered with the registration administration of the Company shall prevail.
Article 271 Unless otherwise provided herein, the figure itself shall be included if these articles of association refer to any such words as “above”, “within” or “before”; the figure itself shall not be included if these articles of association refer to any such words as “lower than”, “less than”, “insufficient”, “more than” or “exceed”.
Article 272 The right of the arbitration hereof shall be vested in the board of directors of the Company.

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APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Please note that the following proposed rules and procedures of shareholders’ general meeting are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix II is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed Rules and Procedures of Shareholders’ General Meetings

CHAPTER 1 GENERAL PROVISIONS

Article 1 These rules are formulated in accordance with the laws and regulations including the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China, the Mandatory Provisions in the Articles of Association of Companies Listed Overseas, Guidelines on the Articles of Association of Listed Companies (2006 Revised), Rules for the Shareholders’ General Meetings of Listed Companies, the Rules governing the Listing of Securities on The Hong Kong Stock Exchange of Hong Kong Limited as amended from time to time (the “Hong Kong Listing Rules”), the Share Listing Rules of the Shanghai Stock Exchange (2008 Revised) (the “Shanghai Listing Rules”) and with the Articles of Association of China Shipping Development Company Limited (the “Articles of Association”), in order to protect the lawful interests of China Shipping Development Company Limited (the “Company”) and its shareholders, clearly define the responsibilities and authorities of the general meeting, ensure the general meeting to operate in a standardized and efficient manner and perform its functions and powers under the laws.
Article 2 These Rules are applicable to general meeting of the Company, and shall be binding on the Company, all shareholders, proxies, directors, supervisors and managers and other senior management personnel attending general meeting as non-voting participants.
Article 3 General meetings can be classified as annual general meeting (the “AGM”) and extraordinary general meeting. The AGM shall be convened once a year and shall be held within six months after the end of the preceding accounting year. Extraordinary general meetings which are convened irregularly shall be convened within 2 months in case that the meeting shall be convened as required by the Company Law and Articles of Association. Should the Company cannot convene a general meeting within the period mentioned in the preceding paragraph, it shall report to the local office of the China Securities Regulatory Commission at the place where the Company is located and the listing stock exchange(s) where the shares of the Company are listed, explain the reason and make announcement.
Article 4 The shareholders’ general meeting is the organ of authority of the company, which exercises the following powers in accordance with the law:
(I) to decide on the Company’s operational policies and investment plans;

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(II) to elect or remove Directors and Supervisors who are not representatives of employees and decide on matters relating to the remuneration of Directors and Supervisors;
(III) to consider and approve reports of the Board of Directors and the Supervisory Committee;
(IV) to consider and approve the Company’s proposed annual financial budget and final accounts;
(V) to consider and approve the Company’s proposals for profit distribution plans and recovery of losses;
(VI) to decide on any increase or reduction of the Company’s registered capital;
(VII)to decide on issues such as merger, division, dissolution, liquidation or changing the form of the Company and other matters;
(VIII) to decide on the issue of corporate bonds or other securities and the listing plan;
(IX) to decide on the appointment or dismissal of accountants;
(X) to amend the Company’s Articles of Association;
(XI) to consider and approve guarantees pursuant to Article 5;
(XII) to consider and approve the Company’s purchase or sale of major assets within one year with the transaction amount exceeding 30% of the latest audited total assets of the Company (other than acts of disposal between the Company and its controlling subsidiaries and among controlling subsidiaries of the Company);
(XIII) to consider and approve matters relating to the changes in the use of proceeds from share offerings;
(XIV) to consider and approve the equity incentive scheme;
(XV)to consider proposals raised by the shareholders who represent more than 3% (including 3%) of the Company’s shareholders with voting rights; and
(XVI) to consider such other matters provided by the laws, administrative regulations, departmental rules and regulations, the listing rules of the stock exchange(s) on which the shares of the Company are listed or the Articles of Association which shall be decided by the shareholders’ general meeting.

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Article 5 The following external guarantee provided by the Company shall be considered and approved by the shareholders’ general meeting:

(I) when the total of guarantee provided by the company and its controlling subsidiaries for external parties has reached or exceeded by 50% the latest audited net assets of the listed company;
(II) any provision of guarantee, where the total amount of external guarantees provided by the Company reaches or exceeds 30% of the latest audited total assets of the listed company;
(III) the guarantee provided to a guaranteed party whose assets to debt ratio exceeds 70%;
(IV) when a single guaranteed amount exceeds 10% of the latest audited net assets;
(V) the guarantee provided to shareholders, beneficial controlling shareholders and their related parties.
(VI) any guarantee the total amount of which for 12 consecutive months exceeds 50% of the latest audited net assets of the Company and the absolute amount of which exceeds RMB50 million;
(VII)Other guarantees required by the stock exchange(s) on which the shares of the Company are listed and the Articles of Association.

Article 6 “External guarantee” as mentioned in the Articles of Association refers to guarantee provided by the Company for others, including guarantee provided by the Company for its holdings subsidiaries. “Total external guarantee of the Company and its holdings subsidiaries” refers to the sum of Company’s total external guarantee including the guarantee provided by the Company for its holdings subsidiaries plus the total external guarantee provided by the holdings subsidiaries of the Company. The Board Office of the Company is responsible for the preparations and organisations of general meetings.

Article 7

The Company shall engage lawyers to attend the general meeting and advise on the following issues with announcements made thereon:

(I) Whether the convening of the general meeting and its procedures are in compliance with provisions of the laws, regulations, the listing rules of the stock exchange(s) the Articles of Association and these rules;
(II) Verifying the legality and the validity of the convenor and the eligibility of attendees;
(III) Whether the voting and the voting results of the meeting is lawful and valid;
(IV) Legal opinions on other matters as requested by the Company.

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Article 8 The Board of the Company shall duly perform its duties and organise general meetings earnestly and timely in strict compliance with the Company Law, regulations, the listing rules of the stock exchange(s), Articles of Association and regulations on the convening of the general meeting. All the directors of the Company shall perform their due diligence obligations to ensure that the general meeting can be held due and its powers can be exercised in accordance with the laws.

CHAPTER 2 CONVENING OF GENERAL MEETING

Article 9 The Board shall convene the general meeting within the period as required by the Article 3 of these rules on a timely basis.
Article 10 Independent shareholders are entitled to propose to the Board to convene an extraordinary general meeting in accordance with the Articles of Association. The Board shall, in accordance with the laws, regulations, the listing rules of the stock exchange(s) and the Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of the extraordinary general meeting within ten (10) days after receiving such proposal from the independent directors. In the event that the Board agrees to convene an extraordinary general meeting, the notice of the general meeting shall be issued within five (5) days after the passing of the relevant Board resolution; In the event that the Board does not agree to convene an extraordinary general meeting, reasons for such disagreement shall be given by way of announcement.
Article 11 The Supervisory Committee shall be entitled to propose to the Board to convene an extraordinary general meeting, provided that such proposal shall be made in writing. The Board shall, in accordance with the laws, regulations, the listing rules of the stock exchange(s) and these Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of an extraordinary general meeting within ten (10) days after receiving such proposal. In the event that the Board agrees to convene an extraordinary general meeting, the notice of the general meeting shall be issued within five (5) days after the passing of the relevant resolution of the Board. Any change to the original proposal made in the notice requires prior approval of the Supervisory Committee. In the event that the Board does not agree to convene an extraordinary general meeting or does not furnish any reply within ten (10) days after receiving such proposal, the Board shall be deemed as incapable of performing or failing to perform the duty of convening a general meeting, in which case the Supervisory Committee may convene and preside over such meeting by itself.
Article 12 Shareholder(s) requesting extraordinary general meetings or class meetings shall abide by the following procedures:
(I) Shareholder(s) either individually or collectively holding over ten (10) percents of the shares of the Company carrying the voting right shall sign one or more counterpart requisitions stating the object of the meeting and requiring the Board

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

to convene an extraordinary general meeting or a class meeting. The Board shall, in accordance with the laws, regulations, the listing rules of the stock exchange(s) and the Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of the extraordinary general meeting or class meetings within ten (10) days after receiving such proposal. In the event that the Board agrees to convene an extraordinary general meeting or a class meeting, the notice of the meeting shall be issued within five days after the passing of the relevant resolution of the Board. Any changes to the original proposal made in the notice require prior approval of the shareholders concerned.

(II) In the event that the Board does not agree to convene an extraordinary general meeting or a class meeting or does not furnish any reply within 10 days after receiving such proposal, shareholders either individually or collectively over 10 percent of the shares of the Company carrying the voting right shall be entitled to propose to the Supervisory Committee to convene an extraordinary general meeting or class meeting, provided that such proposal shall be made in writing. In the event that the Supervisory Committee agrees to convene an extraordinary general meeting or class meeting, the notice of the meeting shall be issued within five days after receiving such request. Any changes to the original proposal made in the notice shall require prior approval of the shareholder(s) concerned. Failure of the Supervisory Committee to issue the notice of the meeting shall be deemed as failure of the Supervisory Committee to convene and preside over a general meeting, and shareholder(s) individually or collectively holding 10% or more of the Company’s shares for ninety (90) consecutive days or more may convene and preside over the meeting by himself or themselves.

The aforesaid shares shall be calculated based on the day when the shareholder(s) submit its (or their) written request.

Article 13 Where the Supervisory Committee or Shareholder(s) decide(s) to convene the extraordinary general meeting by itself/themselves, it/they shall send out a written notice to the Board, and shall put on the records of the dispatched office of China Securities Regulatory Commission at the locality of the Company and the stock exchange. The shareholding of the convening shareholder(s) shall not be lower than 10% prior to the announcement of the resolutions of the general meeting. The Supervisory Committee or the convening shareholder(s) shall submit relevant evidence to the local office of China Securities Regulatory Commission at the place where the Company is located and the stock exchange(s) where the Company’s shares are listed upon the issuance of the notice of general meeting and the announcement of the resolutions of the general meeting.
Article 14 The Board and the secretary to the Board shall cooperate with respect to matters relating to a general meeting convened by the Supervisory Committee or shareholder(s) at its/their own discretion. The Board shall provide the register of

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APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

shareholder(s) as of the date of record date. In the event that the Board fails to provide the register of members of the Company, the convener may apply to the securities registration and clearing institution for obtaining the register of member(s) with the relevant announcement on the convening of the general meeting. The register of the members of the Company obtained by the convener shall not be used for other purpose except the convening of the general meeting.

Article 15 Expenses arising from convening of a general meeting by the Supervisory Committee or shareholder(s) shall be borne by the Company.

CHAPTER 3 PROPOSAL AND NOTICE OF THE GENERAL MEETING

Article 16 A proposal of the shareholders’ general meeting refers to the specific documents for discussion in relation to the matters that shall be discussed and considered by the shareholders’ general meeting.
Article 17 Content of proposals shall be matters falling within the functions and powers of general meeting. It shall have definite topics to discuss and specific matters to resolve and comply with the laws, regulations, the listing rules of the stock exchange(s) and the requirements in the Articles of Association.
Article 18 When the Company convenes a general meeting, the Board, Supervisory Committee and the shareholder(s) either individually or collectively holding 3% or more of the Company’s shares may propose proposals by writing through the Board Office. Before the Board issues the notice convening the shareholders’ general meeting, the secretary to the Board may call for proposals from the shareholders, supervisors and independent directors and submit them to the Board to be considered and approved as a resolution to be submitted to the shareholders’ general meeting for consideration.
Article 19 Shareholder(s) either individually or collectively holding 3% or more of the Company’s shares may submit their provisional proposals in writing to the convener ten (10) working days before the meeting is convened. The convener shall issue a supplementary notice of the general meeting to announce the contents of the proposals. Other than the circumstances referred to in the preceding paragraph, after the convenor has issued the announcement for the general meeting, no changes shall be made to the stated proposals in the notice of the meeting or the newly added proposals. The general meeting shall not vote on or resolve proposals not stated in the notice of the general meeting or proposals which do not meet the requirements in Article 17 of these Rules.
Article 20 The written notice of convening a general meeting shall be issued to the shareholders forty-five (45) days prior to such meeting. Shareholders who intend to attend the meeting shall serve the written reply slip to the Company twenty (20) days prior to the date of the meeting. Notice of a general meeting shall be served on the shareholders (whether or not entitled to vote at the meeting), by delivery or prepaid mail to the

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

registered address of such shareholders. For the holders of domestic shares, notice of the meeting may also be made by way of announcement. The announcement referred to in the preceding paragraph shall be published in one or more newspapers designated by the securities authority of the State Council within the interval between forty-five (45) days and fifty (50) days before the date of the meeting; after the publication of notice, the holders of domestic shares shall be deemed to have received notice of the relevant general meeting.

Article 21 The Company shall, based on the written replies received twenty (20) days before the date of the general meeting, calculate the number of voting shares represented by the shareholders who intend to attend the meeting. If the number of voting shares represented by the shareholders who intend to attend the meeting reaches more than one half of the Company’s total voting shares, the Company may hold the meeting; Otherwise, the Company shall within five (5) days notify the shareholders, again by way of an announcement, of the matters to be considered at, and the place and date for, the meeting. The Company may then proceed to hold the meeting. The extraordinary general meeting shall not decide on matters not specified in the notice.

Article 22 The notice of a general meeting shall be in writing and shall contain the following:

(I) The time, venue and duration of the meeting;
(II) Matters and meeting proposals to be considered at the meeting;
(III) Provide shareholders with such information and explanation as necessary for them to make informed decisions on the matters to be considered; This principle includes (but not limited to) where a proposal is made to amalgamate the Company with another, to purchase shares, to reorganize the share capital, or to restructure the Company in any other way, the terms of the proposed transaction must be provided in detail together with copies of the proposed agreement, if any, and the cause and effect of such proposal shall be properly explained;
(IV) In the event that advice from independent shareholders is required for the matters to be discussed, their advices and reasons shall be disclosed when the notice of the general meetings or supplementary notice are published;
(V) Disclose the nature and degree of the material interest of any director, supervisor and other senior management personnel in the matters which they have material interest to be considered; in case that the impact of the matters to be considered on such director, supervisor and other senior management personnel as a shareholder is different from that of other holders of a class of shares, the difference shall be clarified;
(VI) Set out the full text of any special resolution proposed to be resolved at the meeting;

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

(VII)Contain a prominent written statement that all the shareholders are entitled to attend and appoint proxies in writing to attend and vote on their behalf and that the proxy need not be a shareholder of the Company;
(VIII) Specify the time and place for submitting proxy forms for the meeting;
(IX) Registration date for shareholders who are entitled to attend the general meeting;
(X) Name and telephone number of the contact person;
(XI) In the event that the general meeting adopt online transmission or other ways, the time and procedures for voting via internet or by other ways will be specifically stated in the notice of the general meeting.
Article 23 For the matter relating to the election of directors and supervisors is proposed to be discussed at the general meeting, the notice of the meeting shall fully disclose the detailed information of the candidates for directors and supervisors, which should at least include the following:
(I) Personal information including educational background, working experience, and any part-time job;
(II) Whether there is any connected relationship between them and the Company or its controlling shareholder(s) and actual controlling person(s);
(III) Disclosure of their shareholdings in the Company;
(IV) Whether they have been subject to any punishment by China Securities Regulatory Commission or other related authorities or stock exchange(s).

In addition to the adoption of the accumulative voting system to elect directors andsupervisors, each of the candidates for directors or supervisors shall be proposed in a separate proposal.

Article 24 The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the general meeting and the resolutions passed at the general meeting.
Article 25 After despatching the notice of general meeting, the general meeting shall not be postponed or cancelled without proper reasons. The proposals stated in the notice of general meeting shall not be cancelled. In the event that the general meeting was postponed or cancelled, the convener shall make announcement at least two (2) business days advance prior to the date of the previous general meeting and set out the reasons. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have other provisions on the matters specified hereinabove, such provisions shall be complied with.

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

CHAPTER 4 CONVENING OF GENERAL MEETING

Article 26 The Company shall convene the general meeting at the domicile of the Company or such other place as notified by the general meeting convener. General meetings will set meeting venue and be convened by ways of on-site meetings. The Company will also provide online transmission or other ways for the convenience of the shareholders to attend general meeting. Shareholders who attend the meeting in the aforesaid manners shall be deemed as present.
Article 27 In the event that the general meeting adopt online transmission or other ways, the time and procedures for voting via internet or by other ways will be specifically stated in the notice of the general meeting. The beginning time for voting via internet or other ways for the general meeting shall not be earlier than 3:00 p.m. of the day prior to the general meeting, and shall not be later than 9:30 a.m. of the day when the onsite general meeting is convened and its closing time shall not be earlier than 3:00 p.m. of the day when the onsite general meeting is closed. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have specific provisions, such provisions shall be complied with.
Article 28 The Board and other convener shall take such necessary measures to ensure the normal order of the general meeting. For any disturbance to the order of the meeting and acts infringing the lawful interests of the shareholders, measures shall be taken to prevent them, and the relevant authority will be reported to pursue the matter.
Article 29 All shareholders or their proxies whose names appeared in the Register of the Company on the date of registration are entitled to attend the general meeting, and exercise their voting rights in accordance with relevant laws, regulations, the listing rules of the stock exchanges(s) and Articles of Association of the Company. Any shareholder who is entitled to attend and vote at a general meeting shall be entitled to appoint one or more persons (whether a shareholder or not) as his proxy to attend and vote on his behalf. A proxy so appointed shall exercise the following rights pursuant to such authorization:
(I) The shareholder’s right of speech at the meeting;
(II) The right to demand or join in with the others to demand for a poll;
(III) The right to vote in accordance with laws, regulations and the Articles of Association. However, a proxy of a shareholder who has appointed more than one proxy may only vote on a poll.

Article 30 Individual shareholders attending the general meeting in person shall submit their own identity cards or valid certificates or certifications or stock account cards which can show their capacities; Proxies shall submit personal valid identity certificates and the power of attorney of the shareholder when they attend the meeting. A legal person

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APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

shareholder shall appoint its legal representative or a proxy authorised by the legal representative to attend the meeting. Legal representatives shall submit personal valid identity certificates and valid proofs of their legal representative identity when they attend the meeting; Proxies shall submit their own identity cards and the power of attorney issued by the legal representative of the legal person shareholder when they attend the meeting.

Article 31 The instrument appointing a proxy shall be in writing signed by the appointer or his attorney appointed in writing; if the appointer is a legal entity, either under seal or signed by a director or attorney duly authorized. The power of attorney appointing a proxy to attend the shareholders’ general meeting on his/her behalf as issued by the shareholder shall state the following:
(I) Name of the proxy;
(II) Whether empowered with right to vote;
(III) Instructions to vote in favour of, against or abstain from, as the case may be, each matter in the agenda of the general meeting;
(IV) The date of issuance of the power of attorney appointing the proxy and the expiration date;
(V) Signature (or seal) of the appointer. In the case that the appointer is a legal person shareholder, the power of attorney shall bear the official seal of that legal person;
(VI) The number of shares of the appointer represented by proxy shall be contained;
(VII)Such proxy form shall contain the number of shares represented by proxy in case several proxies are appointed. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have specific provisions on the power of attorney, such provisions shall be complied with.
Article 32 The proxy form shall be deposited at the address of the Company or another place specified in the notice of the meeting not less than twenty-four (24) hours prior to the time appointed for the holding of the meeting for voting or twenty-four (24) hours prior to the time appointed for voting. Where the proxy form is signed by a person authorised by the appointer, the power of attorney or other authorisation instruments shall be notarised. The notarised power of attorney and other authorisation instruments, together with the proxy form, shall be lodged at the address of the Company or such other place as specified in the notice to the meeting. In the case that the appointer is a legal person, the proxy shall be authorised by the legal representative, the Board or other authority body of that legal person to attend the Company’s general meeting.

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APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

If the shareholder is a recognized clearing house (the “recognized clearing house”) (or agent thereof) as defined in the relevant ordinance as enacted from time to time of Hong Kong, the said shareholder may authorize one or more persons as he deems appropriate to act on his behalf at any general meeting or class general meeting; however, where several persons are thus authorized, the power of attorney shall specify the numbers and classes of shares involved by the said persons. The persons thus authorized may exercise rights on behalf of the recognized clearing house (or agent thereof) as if the said persons were the personal shareholders of the Company.

Article 33 Any form issued to a shareholder by the Board of the Company for use by him for appointing a proxy to attend and vote at a meeting of the Company shall be such as to enable the shareholder, according to his intention, to instruct the proxy to vote in favour of or against or abstain from each resolution dealing with business to be resolved at the meeting. Such proxy form shall contain a statement that, in the absence of specific instructions from the shareholder, the proxy may vote at his discretion.
Article 34 A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or loss of capacity of the appointer or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given, provided that no notice in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company before the commencement of the meeting at which the proxy is used.
Article 35 The meeting attendance lists shall be prepared by the Company. The register of names is to be set out, including participants’ (individuals or entities) names, identity card numbers, addresses, shares held or represented carrying voting rights, the appointer’s (individuals or entities) names, etc.
Article 36 The convener and the legal advisers retained by the Company shall verify the legal eligibility of the shareholders based on the register of shareholders provided by the securities registration and clearing authority and shall register the name of the shareholders together with the numbers of shares with voting rights in their possession. Before the chairman of the meeting declares the number of shareholders and proxies present at the meeting as well as the total number of shares with voting rights in their possession, registration for the meeting shall be ended.
Article 37 When convening a general meeting, all directors, supervisors and the secretary to the Board shall attend the meeting in person while the general manager and senior management personnel shall attend the meeting as non-voting participants.
Article 38 General meetings shall be presided over by the chairman of the Board. Should the chairman is unable or fails to perform his duties, the vice-chairman shall preside over the meeting. If the vice-chairman cannot perform or fails to perform his duties, the meeting shall be presided over by a director elected by more than half members of the Board. The general meeting convened by the Supervisory Committee shall be presided

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over by the chairman of the Supervisory Committee. If the chairman of the Supervisory Committee cannot perform or fails to perform his duties, a supervisor shall be jointly elected by more than half of the supervisors to chair the meeting. Shareholder(s) may convene the meeting themselves and a representative nominated by the convener(s) shall preside over the meeting. If for any reason, the shareholders shall fail to elect a chairman of the meeting, then the shareholder (including proxy) present and holding the largest number of shares carrying the right to vote thereat shall be the chairman of the meeting.

When the general meeting is held and the chairman of the meeting violates these Rules which makes it difficult for the general meeting to continue, a person may be elected at the general meeting to act as the chairman of the meeting, subject to the approval of more than half of the shareholders having the voting rights who are present at the meeting. If for any reason, the shareholders shall fail to elect a chairman of the meeting, then the shareholder (including proxy) present and holding the largest number of shares carrying the right to vote thereat shall be the chairman of the meeting.

Article 39 At the annual general meeting, the Board and the Supervisory Committee shall report to the general meeting for their work over the previous year, and each of the independent directors shall also submit his/her work report.
Article 40 Directors, Supervisors and the senior management personnel should respond and explain to the questioning of shareholders at the general meeting.
Article 41 Chairman of the meeting should announce the number of shareholders and proxies present at the venue of the meeting and the total shares held by them with voting rights, and the number of shareholders and proxies present at the venue of meeting and the shares held by them with voting rights shall be the number recorded by the meeting.

CHAPTER 5 VOTING AND RESOLUTION OF GENERAL MEETING

Article 42 Resolutions of general meetings shall be divided into ordinary resolutions and special resolutions. To adopt an ordinary resolution, more than one half of the voting rights represented by the shareholders (including proxies) present at the meeting must be exercised in favour of the resolution in order for it to be passed. To adopt a special resolution, more than two-thirds of the voting rights represented by the shareholders (including proxies) present at the meeting must be exercised in favour of the resolution in order for it to be passed.
Article 43 Shareholders (including proxies) exercise their voting rights in proportion to their shareholdings with voting rights, and each share entitles the shareholder one voting right upon voting at the general meeting. The shares held by the Company have no voting rights, and that part of the shareholding is not counted as the total number of

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APPENDIX II PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

shares with voting rights held by shareholders attending the meeting. The Board, independent directors and shareholders who meet the relevant requiring conditions may gather the shareholders’ voting rights. Where any shareholder is, under the applicable laws and regulations and listing rules of the stock exchange(s) on which the shares of the Company are listed, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution at any general meeting, any votes cast by such shareholder (or their proxies) in contravention of such requirement or restriction shall not be counted.

Article 44 If the matters required to be subjected to decision by ballot is election of the chairman or suspension of the meeting, then voting by ballot shall be conducted immediately. for other matters so required, the chairman will decide when the voting should be conducted, and the meeting may continue with discussions of other matters. The voting result will be considered as a resolution adopted at the meeting all the same.
Article 45 The shareholders’ general meeting takes the votes by poll. On a poll taken at a meeting, a shareholder (including proxy) entitled to two (2) or more votes need not cast all his votes in favour of or against.
Article 46 In the case of equivalency between the negative votes and affirmative vote, the chairman of the meeting has the right to cast one more vote.
Article 47 The chairman shall, based on the voting results, determine whether a resolution is passed. His decision is final and conclusive and shall be announced at the meeting and recorded in the minutes.
Article 48 For connected transactions to be considered at a shareholders’ general meeting, connected shareholders shall abstain from voting on such connected transactions, and the number of shares they represent carrying voting rights shall not be counted into the valid quorum to vote; the announcements of resolutions passed at the general meeting shall fully disclose the voting of non-connected shareholders.
Article 49 In the course of the election of directors and supervisors, the accumulative voting mechanism may be adopted in accordance with the provisions of the Articles of Association or resolutions of the general meeting. The accumulative voting mechanism in the preceding paragraph means, each share carrying voting right is entitled to such number of votes equivalent to the number of director and supervisor candidates which may be pooled in the course of the election of directors and supervisors at the shareholders’ general meeting. The Board shall make an announcement to the shareholders concerning the biographies and general information of the candidates for directors and supervisors.
Article 50 Except the accumulative voting mechanism, all the proposals shall be voted at the general meeting item by item. In case of different proposals for the same matter, the

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APPENDIX II PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

proposals shall be voted chronologically with resolutions adopted accordingly. Unless a general meeting is suspended or no resolution can be adopted due to force majeure or other special reasons, no proposal shall be set aside or rejected for voting at the general meeting.

Article 51 When considering a proposal at the general meeting, no change shall be made thereto. Otherwise, the relevant change shall be treated as a new proposal which shall proceed for voting at the then general meeting.
Article 52 The same voting right can only be exercised by electing to vote at the scene, via internet or by other ways. In the event that the same voting right has been exercised twice, the result of the first voting shall prevail. The shareholders’ general meeting takes the votes by poll.
Article 53 Shareholders attending the general meeting shall submit their voting in the following ways: “for”, “against” or “abstain”. Ballot papers that are left in blank, unduly completed or illegible or that have not been used, are deemed as void votes to mean that the voter has waived his rights, and the voting results corresponding to the shares in their possession shall be treated as “Abstain from voting’’.
Article 54 Before a resolution is voted on at a general meeting, two (2) representatives of the shareholders shall be elected as vote counters and scrutinizers. Any shareholder who is interested in the matter under consideration and proxies of such shareholder shall not participate in vote counting or scrutinizing. When the shareholders are voting on the proposals, lawyers, shareholder representatives and supervisory representatives shall count and scrutinize the votes jointly, and the voting result will be announced forthwith. Voting on the resolutions will be recorded in the minutes of meeting. Shareholders of listed companies or their proxies that vote on line or by other ways shall have the right to check and inspect their voting results through the relevant voting system.
Article 55 The end time of on-site general meeting shall not be earlier than the general meeting via internet or by other ways. The convener shall announce the voting results of each proposal, and announce if the proposal is passed pursuant to voting results. Prior to announcement of the voting results, companies, vote counter, scrutinizer, substantial shareholder, network voting service provider and other relevant parties in relation to voting at on-site general meeting, via internet or other ways shall bear the confidentiality responsibility for the voting results.
Article 56 If the chairman of the meeting has any doubt as to the result of a resolution put to the vote at the meeting, he may have the votes counted; If the chairman of the meeting fails to have the votes counted, any shareholder who is present in person or by proxy and who objects to the result announced by the chairman of the meeting may demand that the votes be counted immediately after the declaration of the voting result, the chairman of the meeting shall have the votes counted immediately.

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APPENDIX II PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Article 57 Providing that the ballots shall be counted at the general meeting, the counting results shall be recorded into the minutes of the meeting. The meeting minutes together with the shareholders’ signing attendance book and proxy forms shall be kept at the address of the Company.
Article 58 Shareholders may consult photocopies of the minutes of meetings free of charge during the business hours of the Company. In the event of any shareholder asking for photocopies of such minutes, the Company shall deliver the photocopies in 7 days after receiving a rational expenses.
Article 59 Minutes of a general meeting shall be recorded by the secretary to Board and include the followings:
(I) Time, place, agenda of meeting and the name of the convener;
(II) Names of the chairman of the meeting, directors, supervisors and senior management personnel attend or present at the meeting;
(III) Number of shareholders (including domestic shareholders and overseas listed foreign shareholders (if any) ) and proxies present at the meeting, total number of the shares with voting rights held by them, and the percentage of shares with voting rights held by them to the total number of shares of the Company;
(IV) Process of consideration for each proposal, the gist of the speech made and voting results;
(V) Reply or explanation to shareholders’ questions or recommendations;
(VI) Names of the lawyer, vote counter and the scrutinizer;
(VII)Other matters which shall be recorded in the meeting minutes pursuant to the Articles of Association.

Directors, the secretary to the Board, the convener or his representative and the chairman of the meeting shall sign on the minutes of the meeting and ensure that the contents of minutes of the meeting are true, accurate and complete. The minutes of the meeting should be maintained with the register for signing of attending shareholders and the proxy form of their proxies and valid information on voting via internet and other manners, and the maintaining period shall not be less than ten (10) years.

Article 60 The convener should ensure that the meeting is proceeding continuously until resolutions have been resulted. When special reasons such as force majeure have led to the termination or failing to make resolution in the meeting, measures should be taken to resume the meeting, or to end the meeting directly with a timely

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announcement. The convener should also report to the local office of China Securities Regulatory Commission and the stock exchange(s). If the listing rules of the stock exchange(s) on which the Company’s shares are listed have specific provisions on termination or postponement, such provisions shall be complied with.

Article 61 In the event that a proposal in relation to election of directors or supervisors is passed at a general meeting, those newly elected shall assume office in accordance with the Articles of Association.
Article 62 Should a general meeting pass proposals regarding cash distribution, bonus issue or transfer of surplus reserve into share capital, the specific proposals shall be implemented within two (2) months after the close of the general meeting.
Article 63 The resolutions passed at the general meeting are invalid should they are in violation of any law, regulation. Should the procedures for convening a general meeting, or the way of voting, be in violation of any law, regulation or the Articles of Association of the Company, or a resolution be in violation of the Articles of Association of the Company, the shareholders may, within sixty (60) days from the day when the resolution is made, request the People’s Court to revoke it. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have specific provisions, such provisions shall be complied with.

CHAPTER 6 SPECIAL PROCEDURES FOR VOTING BY HOLDERS OF CLASS SHARES

Article 64 Shareholders holding different classes of shares are referred to as holders of class shares should different classes of shares be issued by the Company. A holder of class shares shall, in accordance with laws, regulations and the Articles of Association, enjoy rights and assume obligations.
Article 65 Rights conferred on any class of shareholders in the capacity of shareholders (“class rights”) may not be varied or abrogated unless approved by a special resolution of shareholders in general meeting and by holders of shares of that class at a separate meeting conducted in accordance with Articles 65 to 69 of these rules. Any change or abolition of any rights of holders of class shares resulted from a change of domestic or overseas laws, regulations and the listing rules of the stock exchange(s) where the shares of the Company are listed and as a result of any decisions or orders legally announced by domestic or overseas regulatory authorities shall not be subject to approvals of shareholders meeting or meeting of holders of class shares.
Article 66 The following circumstances shall be deemed to be a variation or abrogation of the rights of holders of certain class shares:
(I) The increase or decrease of the number of shares of such class, or the increase or decrease of the number of shares of a class having voting rights, distribution rights, or other privileges equal or superior to the shares of such class;

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(II) To convert all or part of a class of shares into another class, or to convert all or part of another class of shares into that class of shares, or to grant such conversion right;
(III) The removal or reduction of rights to accrued dividends or cumulative dividends attached to shares of such class;
(IV) The reduction or removal of a dividend preference or a liquidation preference attached to shares of such class;
(V) To add, remove or reduce conversion privileges, options, voting rights, transfer or preemptive rights or rights to acquire securities of the Company of such class;
(VI) To remove or reduce rights to obtain payables in specific currencies from the Company attached to shares of that class;
(VII)To create a new class of shares having voting rights, distribution rights or other privileges equal or superior to the shares of such class;
(VIII) To restrict the transfer or ownership of such class of shares or impose additional restrictions thereto;
(IX) To issue rights to subscribe for, or convert into, shares of such class or another class;
(X) To increase the rights or privileges of shares of another class;
(XI) To conduct the proposed restructuring of the Company in such a way that may result in the holders of different classes of shares to assuming liability disproportionately; and
(XII)The variation or abrogation of the provisions of this chapter.

Article 67 Shareholders of the affected class, whether or not otherwise entitled to vote at shareholders’ general meetings, shall nevertheless be entitled to vote at class meetings in respect of matters concerning sub paragraphs (2) to (8), (11) and (12) of Article 64, but interested shareholder(s) shall not be entitled to vote at class meetings. The meaning of “interested shareholder(s)” as mentioned in the preceding paragraph is:

(I) in the case of a repurchase of shares by pro rata offers to all shareholders or public dealing on a stock exchange under the Articles of Association of the Company, an “interested shareholder” refers to a controlling shareholder within the meaning of the Articles of Association of the Company;

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PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

(II) in the case of a repurchase of the company’s own share by an agreement under the Articles of Association of the Company, “an interested shareholder” refers to the shareholder who is related to the agreement;
(III) in the case of a restructuring of the Company, “an interested shareholder” refers to a shareholder within a class who bears less than a proportionate burden imposed on that class under the proposed restructuring or who has an interest in the proposed restructuring different from the interest of shareholders of that class.
Article 68 Resolutions of a class meeting shall be passed by votes representing more than two-thirds of the voting rights of shareholders of that class represented at the relevant meeting who are entitled to vote at class meetings in accordance with Article 65.
Article 69 The written notice of convening a class meeting shall be given, to notify shareholders whose names appear in the register of shareholders of such class shares of the matters proposed to be considered and the date and place of the meeting forty-five (45) days prior to such meeting. The shareholders who intend to attend the meeting shall serve the written reply to the Company twenty (20) days prior to the date of the meeting.

If the number of share carrying voting rights at the meeting represented by the shareholders intending to attend the meeting reaches more than one half of the total number of shares of such class carrying the voting right at the meeting, the Company may hold the class meeting; otherwise, the Company shall within five (5) days notify the shareholders, again by way of announcement, of the matters to be considered at, and the place and date for, the meeting. The Company may then proceed to hold the meeting. If the listing rules of the stock exchange(s) where the Company’s shares are listed have special provisions, such provisions shall be complied with.

Article 70 If service of notice for convening the class meeting is adopted, notice of class meeting only required to be served on shareholders entitled to vote thereat. Any class meeting shall be conducted as similarly as possible as any general meeting. Provisions in the Articles of Association which relate to any general meeting shall apply to any class meeting.

Article 71 Apart from holders of other classes of shares, holders of domestic shares and overseas listed overseas shares shall be regarded as holders of different classes of shares.

The special procedures for voting by holders of class shares shall not apply to the following circumstances:

(I) Where the Company issues, upon the approval by a special resolution of its shareholders in general meeting, either separately or concurrently once every twelve months, not more than twenty (20) percent of each of its existing issued domestic invested shares and overseas-listed foreign-invested shares;

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(II) Where the Company’s plan to issue domestic shares and overseas-listed shares at the time of its establishment is carried out within fifteen (15) months from the date of approval of the securities authority under the State Council.
(III) Where a domestic shareholder of the Company, upon approval by the securities authority under the State Council, transfers the shares held by him/her to an overseas investor for overseas listing and trading.

CHAPTER 7 SUBSEQUENT EVENTS AND ANNOUNCEMENT

Article 72 The Board shall execute the regulations of the securities authorities and the stock exchange(s) on which the Company’s shares are listed, and announce the discloseable proposals or resolutions of the general meeting on the designated media on a full, timely and accurate basis. The Company shall report information concerning significant events to the stock exchange(s) in accordance with the laws, regulations and the requirements of the relevant provisions of the securities regulatory authority of the place of listing and file such information with relevant regulatory authorities.
Article 73 Resolutions of a general meeting shall be announced timely in accordance with the Listing Rules of the Stock Exchange(s) where the shares of the Company are listed, and the announcement shall contain the number of shareholders and proxies present, the total number of voting rights and the percentage of their voting rights to the total of voting shares of the Company, means of voting, the voting result for each proposal and the details of each of the resolutions. The attendance and voting results of the holders of domestic shares and overseas-listed shares shall be respectively counted and published in the announcement. If a proposal of the meeting is not passed, or if a resolution of the previous general meeting is changed by the present general meeting, special notes in connection therewith should be made by the Board in the announcement of the resolutions of the general meeting. The announcement of the resolutions of the general meeting shall be published on the designated newspapers.
Article 74 The Board Office shall be responsible for keeping written information, such as the register of the attendees, power of attorneys, voting statistical sheet, minutes of meeting, and legal opinions of a lawyer as witness and announcements of resolutions. If the listing rules of the stock exchange(s) where the Company’s shares are listed have special provisions, such provisions shall be complied with.
Article 75 The Board is a permanent operational decision-making body of the Company and performs its duties in accordance with the Company Law, the Articles of Association and other relevant laws and regulations and is responsible and report to the general meeting. The Board exercises its powers in accordance with the authorization of the general meeting:
(I) To exercise the powers of the Board in accordance with the Articles of Association;

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(II) To consider other matters other than matters such as major transactions requiring consideration by the shareholders’ general meeting in accordance with the listing rules of the stock exchange(s) where the Company is listed and the relevant laws and regulations.
Article 76 When the Board makes decision on the matters authorised by the general meeting as mentioned in the previous article, it shall discuss and verify the matters thoroughly and may appoint intermediaries to provide advices if necessary, to ensue scientific and correct decision-making on the matters. The Company shall perform its information disclosure obligation in respect of the Board’s decision on the matters authorised as mentioned in the previous article under the supervision of shareholders, Supervisory Committee of the Company and relevant securities regulatory authorities in accordance with the laws, regulations and the relevant provisions of the securities regulatory authority of the place of listing.

CHAPTER 8 SUPPLEMENTARY PROVISIONS

Article 77 In the event matters are not dealt with by these Rules or these Rules are in contradiction to the laws and regulations, the listing rules of the Stock Exchange(s) where the shares of the Company are listed or the Articles of Association, the applicable laws and regulations, the listing rules of the Stock Exchange(s) where the shares of the Company are listed and the Articles of Association shall prevail.
Article 78 The announcements or circulars referred to herein refer to the relevant information disclosures published on the newspapers designated by the securities regulatory authorities. The length of an announcement or a circular is relatively long and listed companies may choose to publish a summary of the relevant content on the newspaper(s) designated by the securities regulatory authorities but the full text shall be published simultaneously on the web site designated by the securities regulatory authorities. The supplementary notice of the general meeting referred to herein shall be published on the same designated newspaper(s) on which the meeting notice is published. If the listing rules of the stock exchange(s) on which the Company’s shares are listed have specific provisions on these Rules, such provisions shall be complied with.
Article 79 Unless otherwise stated, terms used in these rules shall have the same meanings as those defined in the Articles of Association of the Company.
Article 80 These rules and its amendments are the appendix to the Articles of Association and shall come into effect after the approval of the general meeting.

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APPENDIX II PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Article 81 These Rules shall be amended by way of an amendment proposed by the Board to the shareholders’ general meeting for consideration and approval.
Article 82 These rules shall be interpreted by the Board.

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APPENDIX III PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS

Please note that the following proposed rules and procedures of meetings of the Board of Directors are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix III is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed Rules and Procedures of Meetings of the Board of Directors

Chapter 1 General Provisions

Article 1 In order to regulate the rules of procedure and decision-making of the Board of Directors of China Shipping Development Co., Ltd. (“the Company”), to make the directors and the Board effectively perform their duties, and to ensure the standard operation and scientific decision-making of the Board, these Rules are formulated in accordance with the Company Law of the People’s Republic of China (“Company Law”) , Securities Law of the People’s Republic of China , Mandatory Provisions for the Articles of Association of Companies Listed Overseas, Standards for the Governance of Listed Companies , Stock Listing Rules of Shanghai Stock Exchange , Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited, the Listing Rules of the Shanghai Stock Exchange (amended in 2008) , and Articles of Association of China Shipping Development Co., Ltd. (“ Articles of Association ”).
Article 2 These Rules shall apply to the Board, the special committees under the Board, directors, Board secretary and relevant departments and staff of the Company involved in these Rules.

Chapter 2 Functions and Powers of the Board

Article 3 The Board is the standing decision making body of the Company and shall be accountable to the general meeting. The Board shall fulfill its duties in accordance with Company Law and other relevant laws and regulations and the Articles of Association , and shall be accountable and report work to the general meeting.
Article 4 Pursuant to Articles of Association , the Board shall exercise the following functions and powers:

(I) to convene general meetings and report to general meetings; (II) to execute resolutions of general meetings; (III) to resolve on the business plans and investment plans of the Company; (IV) to decide on the investment, purchase and disposal of assets, asset mortgage, consigned financial management, connected transactions, etc. within the authority granted by the general meeting;

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APPENDIX III PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS

(V) to prepare the annual financial budgets and final accounting plans of the Company;
(VI) to prepare the profit distribution plan and loss makeup plan of the Company;
(VII) to formulate plans for the increase or decrease of the registered capital of the Company;
(VIII) to formulate plans for issuing bonds or other securities and listing of the Company;
(IX) to formulate plans for material acquisitions, repurchase of shares of the Company, merger, division, dissolution or transformation of the Company;
(X) to resolve on the internal management setup of the Company;
(XI) to appoint or dismiss general manager of the Company;
(XII) to appoint or dismiss Board secretary as nominated by the chairman of the Board;
(XIII) to appoint or dismiss senior executives including deputy general manager and chief financial officer of the Company as nominated by the general manager, and to determine their remunerations, awards and punishments;
(XIV) to set up the basic management system of the Company;
(XV) to formulate the plan for any amendment to the Articles of Association;
(XVI) to formulate the equity incentive plan of the Company;
(XVII) to manage the disclosure of the Company;
(XVIII) to propose the appointment or replacement of the accountant conducting audit for the Company to the general meeting;
(XIX) to listen to the work report by the general manager of the Company and examine the work of the general manager;
(XX) to elect the chairman and the vice-chairman of the Company; (XXI) to consider and approve external guarantees given by the Company pursuant to the Articles of Association not subject to consideration by the general meeting;
(XXII) to decide on the establishment or cancellation of any branches of the Company;
(XXIII) to decide on such matters as the merger, division and reorganization of the subsidiaries of the Company;
(XXIV) to decide on the salary, benefits, award and punishment policy and plan; (XXV) to decide on the risk management system of the Company, including risk appraisal, financial control, internal audit, legal risk control and to monitor its implementation;
(XXVI) to appoint or replace the directors and supervisors who are not representatives of employees of the wholly-owned subsidiaries of the Company, to recommend candidates for directors and supervisors who are not representatives of employees of the controlling and shareholding subsidiaries of the Company and to recommend candidates for senior management personnel of the wholly-owned and controlling subsidiaries;

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APPENDIX III PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS

(XXVII) to decide on the establishment of specialized committees under the Board, to appoint or dismiss the directors of specialized committees under the Board;
(XXVIII) to decide on the asset pledge or charge created by the Company for its own debts;
(XXIX) to manage the records of the responsible persons of the functional departments of the headquarters of the Company;
(XXX) to decide on the provision of guarantees for loans granted to the headquarters of the Company;
(XXXI) to decide on expenses other than the annual budget of the Company;
(XXXII) to exercise other functions and powers specified in relevant laws, administrative regulations, departmental rules and the Articles of Association or granted by the general meetings.

In exercising the aforesaid powers and functions, the Board shall also observe laws and regulations and the listing rules of the stock exchange(s) applicable to domestic and overseas listed comapnies.

Article 5 In addition to the powers and functions specified in Article 4, the Board shall also consider matters other than material transactions etc to be considered at general meetings as stipulated in relevant laws and regulations, the listing rules of the stock exchange with which the Company is listed, and Articles of Association .

Article 6 Pursuant to Articles of Association , the chairman of the Board shall exercise the following functions and powers:

(I) to preside over general meetings and to convene and preside over Board meetings;
(II) to examine and supervise the implementation of the resolutions of the Board; (III) to nominate Board secretary;
(IV) to organize formulation of regulations on the operation of the Board, and to coordinate the operation of the Board;
(V) to hear the regular or irregular work reports of the senior executives of the Company, and give opinions guiding execution of the resolutions of the Board;
(VI) to exercise other functions and powers specified in relevant laws, administrative rules, regulations of relevant authorities or Articles of Association or granted by the general meetings.

Article 7 The vice chairman shall assist the chairman in performing his duties. If the chairman is unable or fails to perform his duties, such duties shall be performed by the vice chairman (if there are two or more than two vice chairmen, such duties shall be performed by the vice chairman jointly elected by the majority of the directors). If the vice chairman is unable or fails to perform his duties, a director shall be elected jointly by more than half of the directors to perform such duties.

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APPENDIX III PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS

Article 8 The Board may within its terms of reference authorize the general manager (as set out in the appendix) and may from time to time check the scope of authorization for the general manager to meet the actual needs of the Company. The authority granted by the Board to the general manager shall not be exercised unless discussed and certified at the general manager’s work meeting.
Article 9 The chairman of the Board and the general manager shall responsively file the exercise of the authority with the Board. The Board may if necessary adjust the authorization in accordance with Article 7. Where the laws and regulations have other provisions on matters to be considered and adjusted at general meetings, such provisions shall apply.

Chapter 3 Composition and Committees of the Board

Article 10 The Board shall comprise nine to fifteen directors, including one chairman and vice-chairman.
Article 11 Directors shall be elected and replaced at general meetings. A director shall serve a term of three years, and may seek reelection upon expiry of the said term. The chairman and vice chairmen of the Board shall be directors of the Company and shall be elected and removed by more than half of all the directors.
Article 12 The board shall have a board office for handling the daily affairs of the board. The secretary of the Board or securities affair representative shall serve concurrently as the officer in charge of the Board office and keep the seals of the Board and the Board office.
Article 13 The Board shall establish strategy committee, audit committee, nomination committee, and remuneration and evaluation committee. These special committees are ad hoc committees under the Board which provide consulting and advice for the Board on important decisions. The special committees do not have decision-making power and shall not make any decision in the name of the Board. Where necessary, the Board may set other committees and adjust the existing committees. The Board shall specify the duties and rules of procedure of the special committees, which duties and rules shall take effect upon approval by the Board.
Article 14 Members of the special committees shall be directors as nominated by the chairman and approved by the Board, and shall be accountable to the Board. Conveners of the special committees shall be nominated by the chairman and approved by the Board.
Article 15 The Board shall have one secretary, who is a senior executive of the Company and shall be nominated by the chairman and appointed or dismissed by the Board. The Board secretary shall chiefly be responsible for the preparations for general meetings and Board meetings, keeping of documentation and shareholders’ data, handling of matters relating to information disclosure, management of investor relations, equity management of the Company, etc.

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PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE BOARD OF DIRECTORS

APPENDIX III

Article 16 The Company shall formulate separate rules on the work of the Board secretary, which rules shall specify the qualifications, work methods, work procedure, evaluation, awards and punishments of the Board secretary and shall take effect upon approval by the Board.

Chapter 4 Proceedings of Board Meetings

Article 17 Board meetings include regular meetings and provisional meetings. The Board shall hold at least four regular meetings every year, usually once every quarter. Before serving the notice of regular meeting of the Board, the office of the Board shall adequately consult with the directors, and shall accordingly formulate a preliminary proposal for meeting and submit the same to the chairman of the Board for consideration. Before deciding a proposal, the chairman may, where necessary, seek opinions of the general manager and other senior executives. Article 18 In any of the following circumstances, the Board shall hold a provisional meeting: (I) deemed necessary by the chairman of the Board; (II) proposed by shareholders representing more than 10% of the voting rights; (III) jointly proposed by more than one-third of the directors; (IV) jointly proposed by half of the independent directors; (V) proposed by the general manager; (VI) proposed by the Supervisory Committee; (VII)required by the securities regulating authority; and (VIII) in any other circumstance so specified in the Articles of Association . Article 19 A proposal for convening a provisional Board meeting as specified in the preceding article shall be in written form and affixed with the signature (seal) of the proposer and submitted through the office of the Board or directly to the chairman. A written proposal shall specify:

(I) name of the proposer; (II) reason or objective circumstance for the proposal; (III) time or duration, venue or form of the meeting proposed; (IV) well-defined and specific motions; and (V) means to contact the proposer, date of proposal, etc.

The contents of the written proposal shall be within the terms of reference of the Board specified in the Articles of Association , and the documents relating to the proposal shall be submitted together with the proposal itself.

The Board office shall transfer to the chairman the aforesaid proposal and related documents promptly after receipt of the same. The chairman shall convene and preside over a Board meeting within 10 days after receipt of the proposal or requirement of

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the securities regulatory authority. Where the chairman deems the contents of the proposal as not well-defined, specific or complete, the chairman may require the proposer to modify or supplement the proposal and shall convene and preside over a meeting within 10 days after receipt of the modified or supplemented proposal.

Article 20 Board meetings shall be convened and presided over by the chairman; where the chairman cannot or does not fulfill the duty thereof, the vice chairman shall convene and preside; where even the vice chairman cannot or does not fulfill the duty thereof, more than half of the directors may elect a director to convene and preside.
Article 21 The Board office shall send the written notice of meeting bearing the seal of the Board office to all the directors, supervisors and other non-voting representatives by email, fax, express, registered mail or personal delivery 14 days and 5 days before a regular Board meeting and a provisional Board meeting respectively. Where the notice is not served by direct delivery, telephone acknowledgement and relevant records shall be made.
Article 22 Where a provisional Board meeting needs to be convened in emergency, the notice of meeting may be sent by telephone or by other verbal means, but the convener shall make explanations at the meeting.
Article 23 A written notice of Board meeting shall at least include:
(I) time, date and venue of the meeting;
(II) the form of the meeting;
(III) duration of the meeting;
(IV) reasons and topics for discussion;
(V) date on which the notice is sent;
(VI) convener and presider of the meeting, proposer of and written proposal for the provisional meeting;
(VII) documents needed for voting of directors;
(VIII) requirements for the directors to attend the meeting in person or by proxy; and (IX) contact person and means of contact.

A verbal notice of meeting shall at least include (I) and (II) above, and explanation for a provisional meeting of the Board in emergency.

Article 24 If, after the notice of a regular Board meeting is sent, it is necessary to change the time, venue, etc. of the meeting or add, change or cancel proposals to the meeting, a written notice of change shall be sent 3 days before the original designated date for convening the meeting, to explain why and provide contents and documents relating to the new proposals. Where the notice of change is sent in less than 3 days in advance, the date of meeting shall be postponed accordingly or approved by all the

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attending directors. If, after the notice of a provisional Board meeting is sent, it is necessary to change the time, venue, etc. of the meeting or add, change or cancel proposal for the meeting, then it shall be necessary to seek the prior consent of all the attending directors and make relevant records.

Article 25 A Board meeting shall be attended by more than half of the directors. Supervisors may attend Board meetings without voting rights; the general manager and Board secretary shall attend Board meetings without voting rights. The presider may, where he deems necessary, notify other relevant non-director persons to attend Board meetings without voting rights.
Article 26 In principle, the directors shall attend Board meetings in person. Where a director is unable to attend a meeting for any reason, he shall peruse the meeting documents in advance, form definite opinions, and appoint another director in writing to attend the meeting on his behalf. The power of attorney shall specify:
(I) the names of the principal and proxy;
(II) outline opinions of the principal on respective proposals;
(III) the principal’s scope of authorization and instructions about voting intent in relation to respective proposals; and
(IV) signature of the principal and proxy, date, etc.

Where any director signs the regular reports by proxy, the said director shall specify such authorization in the power of attorney. The proxy director shall present the written power of attorney to the presider, and explain proxy attendance in the attendance book.

Article 27 The director attending the meeting by proxy shall exercise rights as granted by the principal. If a director fails to attend a Board meeting either in person or by proxy, the said director shall be deemed as having waived his right to vote at the meeting.

Article 28 Proxy attendance at Board meetings shall follow the principles below:

(I) Where connected transactions are considered, a non-connected director shall not appoint a connected director to attend the meeting on his behalf, and a connected director shall also not accept the appointment of a non-connected director;
(II) An independent director shall not appoint a non-independent director to attend the meeting on his behalf, and a non-independent director shall also not accept the appointment of an independent director;
(III) A director shall not give any other director carte blanche to attend the meeting and vote on his behalf without providing his own opinions and voting intent on the proposals, and the relevant director shall also not accept the carte blanche or any appointment not well defined.

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(IV) One director shall not accept appointment by more than two directors, and a director shall also not appoint any other director who has been appointed by two other directors to attend the meeting and vote on his behalf.
Article 29 Board meetings shall generally be held onsite, or where necessary, via videoconference, conference call, fax or email voting provided that the directors can adequately express their views and the convener (presider) and proposer grant approval. Board meetings may also be held onsite and off-site simultaneously. Where a Board meeting is held offsite, the number of attending directors shall be counted according to the directors shown at the videoconference, the directors expressing their views at the conference call, valid votes such as faxes or emails received within the prescribed period, or written acknowledgements submitted after the meeting by the directors for attending the meeting.
Article 30 Provisional Board meetings may be held in emergency, on condition that the attending directors fully express their opinions and subject to approval by the chairman, and may pass resolutions in an offsite way, with the resolutions signed by the directors.

Chapter 5 Procedure and Resolutions of Board Meetings

Article 31 The presider of the meeting shall ask the attending directors to provide definite opinions on respective proposals. For any proposal requiring prior acknowledgements of independent directors, the presider shall, before discussing the relevant proposal, appoint one independent director to read out the written acknowledgements of independent directors.

For any director who disturbed the normal order of the meeting or interfered with any other directors to present their opinions, the presider shall take measures to prevent the director to conduct such actions in a timely manner.

The Board meeting shall not vote on any proposal not included in the notice of the meeting unless with the unanimous consent of the attending directors. A proxy director shall not vote on any proposal not included in the notice of the meeting.

Article 32 The directors shall carefully read documents relating to the meeting and shall express well-informed, independent and discreet opinions. The directors may, before the meeting, learn and inquire about information needed for decision making from relevant persons or institutions such as the Board office, the convener of the meeting, senior executives, special committees, the accounting firm and the law firm, or may, while the meeting is underway, suggest to the presider that the aforesaid persons or institutions appear at the meeting to make relevant explanations. Where any director needs to obtain opinions from an independent agency institution in order to correctly fulfil the said director’s obligations to the Company, the said director may submit the relevant reasonable request to the Board, and the Board may through a resolution provide the said director the opinions of the agency institution and the Company shall bear the relevant agency fees.

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Article 33 After adequate discussion of each proposal, the presider shall submit it to voting by the attending directors. Each attendant shall cast one vote by open ballot.
Article 34 The voting intent of a director may be pro, con or abstention. Every attending director shall choose one out of the aforesaid intents. Where any director does not make any option or makes two or more options, the presider shall require the said director to make an option again, otherwise the said director shall be deemed as having abstained from voting; any director who has left the meeting midway without coming back and has not made any option shall be deemed as having abstained from voting.
Article 35 Where more than half of the attending directors or more than two independent directors think they cannot make judgments on relevant issues because the relevant proposal is not clear or specific or the meeting documents are inadequate, the presider shall require the meeting to suspend voting on the said proposal. The director proposing suspension of voting shall provide definite requirements for the conditions to be met for resubmitting the said proposal for deliberation.
Article 36 After voting of the attending directors, the Board office staff shall responsively collect ballots cast by the directors, which ballots shall be counted by the Board secretary under supervision of a supervisor or independent director.
Article 37 Where the meeting is held onsite, the presider shall announce the statistics onsite; in other circumstances, the presider shall require the Board secretary to announce the voting result within a workday after the prescribed voting deadline.
Article 38 The ballots cast by directors after the presider announces the voting result or after the prescribed voting deadline shall not be counted.
Article 39 Saved as specified in Article 41 of these Rules, adoption of or resolution on any proposal shall be subject to approval of more than half of all the directors of the Company. Where the relevant laws, administrative regulations and Articles of Association have any provisions on approval of more directors, such provisions shall apply. Any resolution made by the Board on any guarantee within its scope of authority in accordance with Articles of Association shall be subject to the approval of more than half of all the directors of the Company and more than two thirds of the attending directors. Where the listing rules at the location where the shares of the Company are listed have special requirements for disclosure of guarantee related matters, such requirements shall apply. If different resolutions conflict with each other in contents and meanings, the resolutions formed later in time shall prevail. If the pros and cons are the same, the chairman of the Board shall be entitled to an additional vote.
Article 40 Where a Board meeting is held onsite, the Board secretary shall arrange Board office staff to form draft resolutions onsite based on the voting results. Save in special circumstances, draft resolutions of the meeting shall be examined by the attending

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directors and signed onsite before conclusion of the meeting. The meeting minutes shall record failures of directors to sign the resolutions of the meeting. Where the listing rules at the location where the shares of the Company are listed have special requirements for disclosure of Board meetings, such requirements shall apply.

Article 41 In any of the following circumstances, the directors shall abstain from voting on the relevant proposals:

(I) The listing rules of the stock exchange with which the company is listed provide for abstention of the directors from voting;
(II) The directors themselves think they should abstain from voting;
(III) The directors are connected with the enterprises involved by the proposals and shall therefore abstain from voting pursuant to Articles of Association.

Where any director is required to abstain from voting, the director shall not vote on the related resolution or vote on behalf of other director and shall not be included into the quorum attending the related meeting. The relevant Board meeting may be held when more than half of the non-connected directors attend the meeting, and the resolutions made shall be passed by more than half of the non-connected directors. If the number of non-connected attending directors is less than 3, the relevant proposal shall not be voted on but shall be submitted to the general meeting for deliberation.

Article 42 The directors shall act as authorized by the general meetings and Articles of Association , and shall not make any resolution beyond authority.
Article 43 Where the issues relating to profit distribution need to be resolved at the Board meeting, the profit distribution proposal to be submitted to the Board may first be submitted to the certified public accountants, who shall be required to produce a draft audit report (all financial data except those involving profit distribution have been determined). After resolving on profit distribution, the Board shall require the certified public accountants to produce a formal audit report, according to which the Board shall resolve on other relevant issues in the regular report. Where the listing rules at the location where the shares of the Company are listed have special requirements for Board meetings needing to resolve on profit distribution of the Company or other Board meetings, such requirements shall apply.
Article 44 Where any proposal is not passed, any Board meeting shall not deliberate any proposal with the same contents within one month if the relevant conditions and factors have not changed significantly.

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Chapter 6 Administration of Minutes, Summaries and Documents of Board Meetings

Article 45 The Board secretary shall arrange Board office staff to record the minutes of the Board meeting. Minutes shall be signed by all attending directors, Board secretary and the person taking the minutes. The minutes shall include the following information:

(I) the serial number, time, venue and form of the meeting;
(II) sending of the notice of meeting;
(III) convener and presider of the meeting;
(IV) the agenda of the meeting;
(V) the names of the attending directors and the directors (proxies) attending the meeting on behalf of others;
(VI) the proposals considered at the meeting, chief comments and opinions of directors on relevant issues;
(VII) the voting method and result for each resolution (the voting result shall set out the numbers of pros, cons and abstentions and names of voters);
(VIII) other issues that the attending directors think should be recorded.
Article 46 Where a Board meeting is held onsite, the Board secretary shall organize Board office staff to serve the meeting minutes to the attending directors within three days after conclusion of the meeting. Where a Board meeting is held offsite, the Board secretary shall organize Board office staff to finish sorting out the meeting minutes and forming resolutions within three days after conclusion of the meeting and send the minutes and resolutions to the attending directors. The directors shall sign the minutes and resolutions after receipt of the same and shall within three days send the same to the Board secretary.
Article 47 The attending directors shall sign the minutes, resolutions and summary of the meeting in person or on behalf of the directors appointing them to attend the meeting. Where the directors disagree over the minutes, resolutions and summary of the meeting, they may attach written remarks when signing the same.
Article 48 Where any director neither signs as per the preceding paragraph nor provides his different opinions in writing, reports to the regulatory authority or announces public statement, the said director shall be deemed as agreeing with the minutes, resolutions and summary of the meeting.
Article 49 The directors shall be responsible for the resolutions passed at Board meetings. Any director who votes for a resolution which runs counter to the relevant laws, regulations or Articles of Association , thereby causing serious losses to the Company, shall be liable for compensation. A director who has been proved as having expressed dissenting opinions on the resolution and such opinions are recorded in the minutes of the meeting may be exempt from liability. Abstention from voting does not exempt the relevant director from his responsibility to the resolution of the Board. If any

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director does not attend a Board meeting either in person or by proxy or lodge a written objection to the matters to be discussed on or before the day on which the meeting is held, the said director shall be deemed as having abstained from voting and shall not be exempt from liability.

Article 50 Archives of Board meetings including notices of meeting, meeting documents, attendance book, powers of attorney for proxy directors, votes, meeting minutes signed by the attending directors, meeting summaries, resolutions, announcements of the resolutions, etc. shall be kept by the Board secretary. Archives of Board meetings shall be kept for at least 10 years. Where any director needs to refer to the said archives, the Board secretary shall provide the relevant archives for reference by the said director within a reasonable time after receipt of the reasonable notice of the said director.

Chapter 7 Implementation of and Feedback on Resolutions of Board Meetings

Article 51 The chairman shall urge the relevant personnel to execute the resolutions of the Board, supervise such execution, and report at Board meetings how the resolutions are executed. After resolutions are passed at Board of meetings, the general manager shall implement the resolutions which fall within the scope of the authority of the general manager or which the Board authorizes the general manager to handle, and shall make regular written report to the Board on the implementation of the resolutions. The chairman may appoint other director to examine and supervise implementation of the resolutions.

Chapter 8 Information Disclosure of Board Meetings

Article 52 Resolutions made by the Board shall be announced by the Board secretary pursuant to the listing rules of the stock exchange with which the Company is listed. Before announcement of the resolutions, the attending directors, other attendants, and the recording and service staff shall fulfill the confidentiality obligation.
Article 53 The specific matters relating to information disclosure of Board meetings shall be governed by information disclosure regulations formulated by the Company.

Chapter 9 Supplementary Provisions

Article 54 Matters not covered herein or conflicts between these Rules and laws and regulations, listing rules of the stock exchange with which the Company is listed or Articles of Association shall be governed by the applicable laws and regulations, listing rules and Articles of Association .

Article 55 Save otherwise specified, the terms used in these Rules shall have the same meanings as identical terms in the Articles of Association .

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Article 56 These Rules and amendments thereto shall take effect upon adoption through a resolution at the general meeting, and shall be an appendix to the Articles of Association .

Article 57 The Rules shall be subject to the interpretation of the Board.

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APPENDIX IV PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

Please note that the following proposed rules and procedures of meetings of the Supervisory Committee are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix IV is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed Rules and Procedures of Meetings of the Supervisory Committee

Chapter 1 General Provisions

Article 1 To further regulate the rules of procedure and decision-making of the Supervisory Committee of China Shipping Development Co., Ltd. (“the Company”), make the supervisors and the Supervisory Committee effectively perform their supervisory duties, and improve the governance structure of the Company, these Rules are formulated pursuant to Company Law of the People’s Republic of China ( Company Law ), Securities Law of the People’s Republic of China , Standards for the Governance of Listed Companies, Articles of Association of China Shipping Development Co., Ltd. (“Articles of Association”) and relevant listing rules of the place where the shares of the Company are listed.
Article 2 The Supervisory Committee of the Company shall be accountable and report to the general meeting. The Supervisory Committee shall supervise the financial operations of the Company and the legality of the fulfillment of duties of the Company’s directors, general manager and other senior executives to protect the legitimate rights and interests of the Company and its shareholders.
Article 3 The Company shall take measures to guarantee the supervisors’ right to know and responsively provide the supervisors with necessary information to enable the Supervisory Committee to effectively supervise, inspect and evaluate the financial position and operations management of the Company. All the supervisors may attend Board meetings without voting rights and if necessary, attend meetings of the general manager’s office without voting rights.
Article 4 The supervisory records of the Supervisory Committee and the results of financial inspections or other special inspections shall be important basis for evaluating the performance of directors, general manager and other senior executives.
Article 5 The general manager shall, as required by the Supervisory Committee, report to the Supervisory Committee on the conclusion and performance of important contracts, the use of funds, and losses and profits of the Company. The general manager shall undertake that such report is true to the fact.

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Chapter 2 Composition and Office of the Supervisory Committee

Article 6 The Supervisory Committee of the Company consists of three to nine supervisors. The Supervisory Committee shall have one chairman. The chairman of the Supervisory Committee shall be elected by the votes of more than two thirds of the members of the Supervisory Committee.

The Supervisory Committee shall comprise shareholder representatives and an appropriate proportion of employee representatives of the Company, which proportion shall not be lower than 1/3 or higher than 1/2. The employee representatives in the Supervisory Committee shall be elected democratically at employee representatives’ meetings, employees’ meetings or in other forms.

Directors, general manager, other senior executives and financial director of the Company shall not serve as supervisors.

Article 7 A supervisor shall serve a term of three years, and may seek reelection upon expiry of the said term. Shareholder supervisors shall be elected or replaced at general meetings, and employee representative supervisors shall be elected or removed through democratic election by the employees of the Company.
Article 8 A supervisor may tender a resignation before expiry of his term of office. In resigning his duties, a supervisor shall tender a written resignation to the Supervisory Committee.

If the term of office of a supervisor expires but reelection is not made responsively or if any supervisor resigns during his term of office so that the membership of the Supervisory Committee falls short of the quorum, the said supervisor shall continue fulfilling the duties as supervisor pursuant to relevant laws, administrative regulations and the Articles of Association until a new supervisor is elected.

Article 9 Apart from complying with qualifications stipulated in Company Law , Articles of Association and relevant listing rules of the place where the shares of the Company are listed, a supervisor shall also have professional knowledge and working experience in such areas as law, accounting, auditing and macro economy.

Article 10 The Supervisory Committee shall set an office for handling the daily affairs of the Supervisory Committee.

Article 11 The chairman of the Supervisory Committee may appoint financing and auditing staff or other staff to help handle the daily affairs of the Supervisory Committee provided that such appointment does not conflict with the duties specified in the Articles of Association .

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Chapter 3 Functions and Powers of the Supervisory Committee

Article 12 The Supervisory Committee shall exercise the following functions and powers according to law:
(I) to examine the regular reports of the Company prepared by the Board and produce written opinions thereon;
(II) to review the financial affairs of the Company;
(III) to supervise the work of the directors and senior executives, and propose dismissal of directors and senior executives who have violated laws, administrative rules, the Articles of Association or the resolutions of general meetings;
(IV) if any act of the directors, general manager, and other senior executives damages the interests of the Company, to require them to rectify such act accordingly;
(V) to present motions to general meetings;
(VI) to propose the convening of extraordinary general meetings and, in case the Board does not perform the obligations to convene and preside over the general meetings in accordance with Company Law , to convene and preside the general meetings;
(VII) to propose to convene a provisional Board meeting;
(VIII) to elect chairman of the Supervisory Committee;
(IX) to initiate legal proceedings against the directors or senior management personnel in accordance with Company Law ;
(X) if there are any unusual circumstances in the Company’s operations, to conduct investigation, and, if necessary, to engage an accounting firm, law firm or other professionals to assist in their work at the costs of the Company;
(XI) to exercise other functions and powers stipulated by laws, regulations and the Articles of Association .

Article 13 The Supervisory Committee usually inspects the Company for one to two times regularly every year, and may irregularly carry out special inspections on the Company in light of actual needs.

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Article 14 The Supervisory Committee may carry out inspections as follows:

i) listen to reports relating to the financial and asset positions and operations management, and convene meetings relating to the inspection matters;
ii) refer to financial and accounting documents like financial reports, accounting vouchers and accounting books, and other materials relating to business operations;
iii) check up relevant financial and asset positions, and make explanations to relevant person in charge if necessary;
iv) inquire auditing department etc fulfilling supervisory duty on the Company about the financial position and business operations of the Company.

The Company shall regularly and promptly send the Supervisory Committee the financial and accounting reports, economic activity analysis reports, internal audit reports and relevant documents.

Article 15 The Supervisory Committee shall, upon completion of inspection on the Company each time, promptly write an inspection report which shall be subject to discussion among members of the Supervisory Committee and then be signed by the chairman of the Supervisory Committee, and if necessary, be submitted to the general meeting for consideration.

Article 16 At an annual general meeting, the Supervisory Committee shall read the special reports relating to supervision on the Company in the previous year, including:

i) verification of the financial position of the Company;
ii) implementation of relevant laws, regulations, the Articles of Association and resolutions of the general meeting by directors, general manager and other senior executives of the Company;
iii) the Supervisory Committee’s evaluation on the integrity and diligence of the directors, general manager and other senior executives of the Company in performing their duties;
iv) other material events to be reported to the general meeting as deemed necessary by the Supervisory Committee.

The Supervisory Committee may, if it thinks necessary, comment on motions reviewed by the general meeting, and file an independent report accordingly.

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Article 17 To excise its powers, the Supervisory Committee shall have the right to freely engage lawyers, certified public accountants and practicing auditors to provide professional assistance at reasonable expenses which shall be borne by the Company.

Reasonable expenses of supervisors for daily work and attendance in meetings of the Supervisory Committee shall be borne by the Company. The said expenses cover traffic fees from the location of the supervisors to the venue (not the same as the location of the supervisors) of the meeting, room and board fees and local traffic fees during the meeting.

Article 18 The chairman of the Supervisory Committee shall exercise the following functions and powers:

i) to convene and preside over meetings of the Supervisory Committee;
ii) to organize fulfillment of the duties of the Supervisory Committee;
iii) to review and sign the report and other important documents of the Supervisory Committee;
iv) to report, on behalf of the Supervisory Committee, to the general meeting on its work;
v) to fulfill other duties according to law or as specified in the Articles;

Where the chairman of the Supervisory Committee cannot or does not fulfill the duty thereof, more than half of the supervisors may elect a supervisor to convene and preside over the meetings of the Supervisory Committee.

Article 19 Where, in performing its supervisory duty, the Supervisory Committee discovers any non-compliance in the financial operations of the Company or any act committed by any director, general manager or other senior executive against the laws, regulations or Articles of Association , the Committee may report to the Board or general meeting, or report directly to the securities regulatory authority of the State Council or other relevant authority.
Article 20 Supervisors shall observe laws, administrative regulations and the Articles of Association , and fulfill the obligation of integrity and diligence.

Article 21 The other departments of the Company shall support the work and normal operation of the Supervisory Committee. The Company shall formulate specific methods, procedures, etc. for the relevant functional departments and staff to support the work of the Supervisory Committee.

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Chapter 4 Proceedings of Meetings of Supervisory Committee

Section 1 Regular and Provisional Meetings of the Supervisory Committee

Article 22 Meetings of the Supervisory Committee include regular meetings and provisional meetings.
Article 23 Regular meetings of the Supervisory Committee shall be held once every 6 months. In any of the following circumstances, the Supervisory Committee shall hold a provisional meeting within 10 days:
i) if the chairman of the Supervisory Committee deems necessary;
ii) jointly proposed by more than two thirds of the supervisors;
iii) if there has been or is significant loss of assets of the Company and the interests of the shareholders are harmed;
iv) if any directors, general manager and other senior executives of the Company violate relevant laws, regulations or the Articles of Association or seriously harm the interests of the Company;
v) if the securities regulatory authority requires holding such a meeting; and
vi) if any other circumstance so specified in the Articles of Association occurs.

Section 2 Motions to Regular Meetings

Article 24 Before sending the notice of regular meeting of the Supervisory Committee, the office of the Supervisory Committee shall collect proposals from all the supervisors and shall spend at least two days seeking opinions from the staff of the Company. In collecting proposals and seeking opinions, the office of the Supervisory Committee shall state that the Supervisory Committee focuses on supervising the operations of the Company and the conduct of the directors and senior executives, not on making decisions on the operations and management of the Company.

Section 3 Procedure for Proposing Provisional Meetings

Article 25 Any proposal of any supervisor for convening a provisional meeting of the Supervisory Committee shall be made in written form, affixed with the signature of the said supervisor and submitted via the office of the Supervisory Committee. A written proposal shall specify:
i) the name of the proposing supervisor;
ii) reason or objective circumstance for the proposal;
iii) time or time limit, venue or form of the meeting proposed;
iv) well-defined, specific motions; and
v) means to contact the proposing supervisor, date of proposal, etc.

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APPENDIX IV PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

Article 26 The office of the Supervisory Committee shall transfer to the chairman of the Supervisory Committee the aforesaid proposal and related documents promptly after receipt of the same. The chairman of the Supervisory Committee shall convene and preside over a meeting of the Supervisory Committee within 10 days after receipt of the proposal or requirement of the securities regulatory authority.

Where the chairman of the Supervisory Committee deems the contents of the proposal as not well-defined, specific or complete, the chairman may require the proposer to modify or supplement the proposal and shall convene and preside over a meeting within 10 days after receipt of the modified or supplemented proposal.

Section 4 Convening and Presiding of Meetings

Article 27 Meetings of the Supervisory Committee shall be convened and presided over by the chairman of the Supervisory Committee; where the chairman of the Supervisory Committee cannot or does not fulfill the duty thereof, the vice chairman of the Supervisory Committee shall convene and preside; where no vice chairman is available or the vice chairman cannot or does not fulfill the duty thereof, the majority of the supervisors may elect a supervisor to convene and preside.

Section 5 Notice of Meeting

Article 28 The office of the Supervisory Committee shall send the written notice of meeting affixed with the seal of the Supervisory Committee to all the supervisors by direct delivery, fax, email or other means 10 days and 5 days before a regular meeting and a provisional meeting of the Supervisory Committee respectively. Where the notice is not served by direct delivery, telephone acknowledgement and relevant records shall be made.

Where a provisional meeting of the Supervisory Committee needs to be convened in emergency, the notice of meeting may be sent by telephone or by other verbal means, but the convener shall make explanations at the meeting.

Section 6 Contents of Notice of Meeting

Article 29 A written notice of meeting shall at least include:

i) time, date, venue and duration of the meeting;
ii) reasons and topics for discussion to be considered;
iii) convener and presider of the meeting, proposer of and written proposal for the provisional meeting;
iv) documents needed for voting of supervisors;
v) the requirement for the supervisor to attend the meeting in person;
vi) contact person and means of contact;
vii) date on which the notice is sent.

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APPENDIX IV PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

A verbal notice of meeting shall at least include (I) and (II) above, and explanation for a provisional meeting of the Supervisory Committee in emergency.

Section 7 Form of Meeting

Article 30 Meetings of the Supervisory Committee shall be held onsite. In emergency, a meeting of the Supervisory Committee allows voting in an offsite way, but the convener (presider) of the meeting shall explain to the attending supervisors the particulars about the emergency. In the case of voting by correspondence, the supervisors shall fax to the office of the Supervisory Committee their written and signed opinions and voting intents on the matters to be considered. The supervisors shall not merely provide voting opinions without expressing their written opinions or reasons for voting.

Section 8 Convening of Meeting

Article 31 A meeting of the Supervisory Committee shall be attended by more than two thirds of the supervisors. Where any relevant supervisor refuses or fails to attend the meeting so that the number of attendees falls short of the quorum required for convening the meeting, other supervisors shall responsively report to the regulatory authority. The secretary of the Board and the securities affair representative shall be present at meetings of the supervisory committee as non-voting representatives.
Article 32 The Supervisory Committee may, when considering relevant motions and reports, require the directors, general manager, deputy general manager, chief financial officer, internal and external auditors to attend meetings as non-voting representatives to give necessary explanations to and answer any questions raised by the Supervisory Committee.

Section 9 Agenda of Meeting

Article 33 The presider of the meeting shall ask the attending supervisors separately to provide definite opinions on respective proposals.
Article 34 The presider may, as proposed by supervisors, require directors, senior executives, other members of staff of the Company or relevant agency institution to stand on inquiry.

Section 10 Resolutions of Supervisory Committee

Article 35 At meetings of the Supervisory Committee, each attendant shall cast one vote, by open ballot or in writing or otherwise.
Article 36 The voting intent of a supervisor may be pro, con or abstention. Every attending supervisor shall choose one out of the aforesaid intents. Where any supervisor does

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APPENDIX IV PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

not make any option or makes two or more options, the presider shall require the said supervisor to make an option again, otherwise the said supervisor shall be deemed as having abstained from voting; any supervisor who has left the meeting midway without coming back and has not made any option shall be deemed as having abstained from voting.

Article 37 Resolutions of the meeting of the Supervisory Committee shall be approved by more than two thirds of the supervisors.

Section 11 Meeting Minutes

Article 38 Office clerks of the Supervisory Committee shall keep minutes of onsite meetings. The minutes shall include the following information:

i) the time, venue and form of the meeting;
ii) sending of the notice of meeting; iii) convener and presider of the meeting;
iv) attendance of the meeting;
v) procedure and process of the meeting;
vi) the proposals considered at the meeting, chief comments and opinions of supervisors on relevant issues;
vii) the voting method and result for each proposal (the voting result shall set out the respective numbers of pros, cons and abstentions); and
viii) other issues that the attending supervisors think should be included into the minutes.

For a meeting held by correspondence, the office of the Supervisory Committee shall sort out the meeting minutes as per the preceding provision.

Section 12 Signatures of Supervisors

Article 39 The attending supervisors shall sign and confirm the minutes, summary and resolutions of the meeting.
Article 40 If any supervisor has different opinions on the minutes, summary and resolutions of the meeting, the said supervisor may make a written explanation when signing them and may have an explanatory note made in the minutes regarding his speech at the meeting. Where necessary, they shall responsively report to the regulatory authority or announce public statements.
Article 41 Where any supervisor neither signs as per the preceding provision nor provides his different opinions in writing, reports to the regulatory authority or announces public statement, the said supervisor shall be deemed as agreeing with the minutes, summary (if any) or resolutions of the meeting.

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APPENDIX IV PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

Section 13 Information Disclosure of Meetings of Supervisory Committee

Article 42 The Supervisory Committee must strictly comply with the information disclosure requirements of the stock exchange and the regulatory authority at the location where the shares of the Company are listed, and shall disclose matters or resolutions considered or adopted at the meetings of the Supervisory Committee timely and precisely. The specific operation procedure shall be subject to relevant regulations of the Company.
Article 43 Announcement of resolutions and information disclosure of the Supervisory Committee shall be made by the Board secretary pursuant to the relevant provisions of the stock exchange with which the Company is listed.
Article 44 The attendees shall fulfill the obligation of confidentiality where necessary, otherwise they shall be pursued for relevant liability.
Section 14 Implementation of and Feedback on
Resolutions of Meetings of Supervisory Committee
Article 45 The chairman of the Supervisory Committee shall urge relevant staff to execute the resolutions of the Supervisory Committee and report at future meetings of the Supervisory Committee how the resolutions are executed.
Article 46 The office of the Supervisory Committee shall, under the leadership of the Supervisory Committee and chairman thereof, proactively collect information about execution of relevant resolutions, and responsively report and make suggestions to the Supervisory Committee and chairman thereof.
Article 47 Where any resolution made by the Supervisory Committee involves a proposal for convening an extraordinary Board meeting or an extraordinary general meeting or a temporary proposal to the annual general meeting, the Supervisory Committee shall submit written detailed proposals to the Board and make sure that the said proposals comply with the relevant laws, regulations and the Articles of Association .

Section 15 Keeping of Meeting Archives

Article 48 Archives of meetings of the Supervisory Committee including notices of meeting, meeting documents, attendance book, meeting recordings, votes, meeting minutes signed by the attending supervisors, summaries of meetings, records and announcements of the resolutions, etc., shall be kept by a person designated by the chairman of the Supervisory Committee.
Article 49 Archives of meetings of the Supervisory Committee shall be kept for at least 10 years.

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APPENDIX IV

PROPOSED RULES AND PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE

Chapter 5 Supplementary Provisions

Article 50 Matters not covered herein shall be handled with reference to Rules of Procedure for Meetings of the Board of Directors .
Article 51 Save otherwise specified, the terms used in these Rules shall have the same meanings as identical terms in the Articles of Association .
Article 52 These Rules shall take effect upon adoption through a resolution at the general meeting, and shall be an appendix to the Articles of Association .
Article 53 These Rules shall be subject to the interpretation of the Supervisory Committee.

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

APPENDIX V

Please note that the following proposed rules of management of connected transactions are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix V is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed Rules of Management of Connected Transactions

Article 1 General provisions

In order to regulate the administration of connected transactions of China Shipping Development Co., Ltd. (“CSD” or “the Company”), these Measures are formulated pursuant to regulatory requirements of the Stock Exchange of Hong Kong Limited and Shanghai Stock Exchange (“SEHK” and “SSE”, respectively) so as to conduct connected transactions according to laws and regulations, ensure fairness and justifiableness of specification on connected transactions, the completeness and timeliness of relevant statistics and the truth and accuracy of information disclosed to the public, better protect the lawful rights and interests of the investors and improve the governance of the Company.

Article 2 Scope of applications

These Measures apply to CSD and its controlling subsidiaries.

Article 3 Governing laws and regulations

These Measures are formulated in accordance with Company Law of the People’s Republic of China , Securities Law of the People’s Republic of China , other prevailing laws, regulations, regulatory documents of China, relevant securities or stock listing rules (“Listing Rules”) of the stock exchanges (including but not limited to SEHK and SSE) with which the Company’s shares are listed and Articles of Association of the Company (“the Articles of Association”).

As the Company is listed in Hong Kong and Mainland China, the connected transactions thereof shall also be governed by the laws of Hong Kong and the Mainland and the listing rules of SEHK and SSE; in the event of discrepancy between the laws or listing rules of Hong Kong and the Mainland, the stricter shall prevail.

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

Article 4 Connected parties and transactions

I. Connected transactions

The connected transactions mentioned in these Measures mainly refer to matters which might give rise to a transfer of resources or obligations between the Company or its controlling subsidiaries and the connected parties of the Company, specifically, the transactions specified in the Listing Rules of SEHK and SSE.

II. Connected parties

The connected parties include the connected legal persons and connected natural persons.

Legal persons or other organizations in any of the following circumstances shall be the connected legal persons of the Company.
(1) legal persons or other organizations controlling the Company directly or indirectly;
(2) legal persons or other organizations other than the Company and its holdings subsidiaries directly or indirectly controlled by the legal persons or organizations as specified in (1) above;
(3) legal persons or other organizations other than the Company and its holdings subsidiaries directly or indirectly controlled by the connected natural persons set out in Article 10.1.5 of the SSE Listing Rules or served by the connected natural persons as directors or senior executives;
(4) legal persons or other organizations holding more than 5% shares of the Company;
(5) legal persons or other organizations deemed by China Securities Regulatory Commission (“CSRC”), SEHK, SSE or the Company in the “Substance over Form” principle as having special relations with the Company and likely enjoying more interests of the Company, including legal persons or other organizations holding more than 10% shares of the controlling subsidiaries which have a significant influence over the Company.

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

Natural persons in any of the following circumstances shall be the connected natural persons of the Company:
(1) natural persons each holding more than 5% shares of the Company directly or indirectly;
(2) directors, supervisors and senior executives of the Company;
(3) directors, supervisors and senior executives of the connected legal persons set out in (I) of Article 10.1.3 of the SSE Listing Rules;
(4) closely related family members of the persons set out in (1) and (2) of this Article, including spouses, issues aged 18 or above and spouses thereof, parents and spouses’ parents, siblings and spouses thereof, spouses’ siblings, and parents of issues’ spouses;
(5) natural persons deemed by CSRC, SEHK,SSE, or the Company in the “Substance over Form” principle as having special relations with the Company and likely enjoying more interests of the Company, including natural persons holding more than 10% shares of the controlling subsidiaries which have a significant influence over the Company.

Article 5 Types of connected transactions

Connected transactions are classified as one-off connected transactions and continuing connected transactions, of which the latter refers to the connected transactions which are expected to happen continuously or regularly in a certain period and involves provision of goods, services or financial assistance in daily businesses.

Trust is not considered here.

Article 6 Principles for connected transactions

I. Honesty, equality, free will, equal price and benefit; and principles conforming to common commercial terms and legal procedures in daily businesses of the Company;
II. fair, reasonable, just and impartial quotation;
III. in the interests of the Company and its shareholders.

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Article 7 Quotation of connected transactions

I. Prices of connected transactions

The prices of connected transactions mentioned in these Measures refer to the transaction prices of commodities or labor involved in the connected transactions between the Company and the connected parties.

II. Quotation principles and methods
The quotation of connected transactions shall refer to market prices; in the event of no market prices, negotiated prices shall prevail; or the prices specified by the state government shall apply if any.
For transactions in which the price is guided by the government, the transaction price may be properly determined within the range of price guided by the government.
Apart from the price being determined or guided by the government, the transaction price may be determined by first making reference to comparable market prices or charging standars of independent third parties if such prices or standards are available for the transaction.
If no market prices of independent third parties or separate non-connected transaction prices are available for reference, prices may be properly constructed as the basis of pricing. The constructed price represents reasonable costs plus reasonable profits.
III. Price payment of connected transactions

The two parties of the transaction shall calculate the transaction price pursuant to the price and actual transaction volume specified in the connected transaction agreements and make payment in accordance with method and time under the connected transaction agreements.

Article 8 Functional bodies for the management of connected transactions

I. The Board of the Company shall delegate the duty of the regulation and routine management of connected transactions to the audit committee or the connected transaction regulation committee under its supervision.

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

II. The connected transaction regulation committee of the Board of the Company shall meet the following requirements:
1 It shall comprise at least three directors with the majority of independent directors. At least one of the independent directors shall be an accounting professional;
2 It shall be chaired by an independent director who is in charge of the work of the connected transaction regulation committee;
3 The connected transaction regulation committee shall not be nominated or recommended by the controlling shareholder (other than independent directors) and its members shall not be employees of the entities of the controlling shareholder;
4 Other requirements as requested by the SSE.

Article 9 Filing of connected parties

The directors, supervisors and senior management of the Company and shareholders holding more than 5% shares, the actual controlling person and parties acting in concert with it shall inform their connected relationship with the Company to the Company in a timely manner. The audit committee (or the connected transaction regulation committee) of the Company shall confirm the list of the Company’s connected parties and report to the Board and the supervisory committee in a timely manner.

Article 10 In respect of any connected transaction planned by the Company, the relevant department of the Company shall submit a proposal specifying the particulars and quotation basis of the connected transaction and the impact of the connected transaction on the interests of the Company and its shareholders.

Article 11 Right to make decisions on connected transactions:

I. Consideration at the general meeting

Where a connected transaction (excluding provision of guarantee, taking of cash assets and pure reduction of the Company’s obligated debts) between the Company and the connected person involves more than RMB30,000,000 (inclusive) and accounts for more than 5% (inclusive) of the absolute value of the latest audited net assets of the Company, subject to the listing rules in force from time to time and in accordance with its relevant requirements, the said connected transaction shall be disclosed responsively and an intermediary qualified for conducting business relating to securities and futures shall be

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

engaged to audit or assess the object of transaction, and the said transaction shall be submitted to the general meeting for consideration (the object of transaction in respect of connected transactions relating to daily operations may not be audited or assessed).

II. Any guarantees provided to connected parties by the Company shall be considered at the general meeting.
III. Under the Hong Kong Listing Rules, if the latest published asset value is exceeded the connected transaction shall be considered at the general meeting and approved by the independent shareholders.
IV. The Board may consider and resolve on connected transactions (excluding provision of guarantee to shareholders, effective controllers and their connected parties) in the following circumstances;
1 The connected transactions involving less than RMB30,000,000 and accounting for less than 5% of the absolute value of the latest audited net assets of the listed company;
2 The connected transactions involving less than RMB30,000,000 but accounting for more than 5% of the absolute value of the latest audited net assets of the listed company;
3 The connected transactions involving more than RMB30,000,000 but accounting for less than 5% of the absolute value of the latest audited net assets of the listed company;
V. The Board may authorize the chairman to examine and approve connected transactions (excluding external guarantees) in the following circumstances;
1 The connected transactions (except for the external guarantees of the Company) involving less than RMB3,000,000 (not inclusive) and accounting for less than 0.5% (not inclusive) of the latest audited net asset value of the Company.
2 The connected transactions involving less than RMB3,000,000 but accounting for more than 0.5% of the absolute value of the latest audited net assets of the listed company;
3 The connected transactions involving more than RMB3,000,000 but accounting for less than 0.5% of the absolute value of the latest audited net assets of the listed company;

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

VI. Where a planned connected transaction between the Company and a connected person involves more than RMB3,000,000 or accounts for more than 5% of the latest audited net asset value of the Company, the said connected transaction shall first be approved by independent directors and then considered by the Board. Resolutions made by the Board in relation to connected transactions shall not be effective unless signed by the independent directors. Before making a judgment, the independent directors may appoint an intermediary to provide independent financial and advisory reports as a basis for their judgment. With regard to the connected transactions conforming to the disclosure standards in Listing Rules and other regulations, the respective opinions of each of the independent directors and other materials needing to be disclosed shall be disclosed.
VII. The audit committee (or the connected transaction regulation committee) of the listed company shall at the same time review the connected transaction, form written opinions and report to the supervisory committee. The audit committee (or the connected transaction regulation committee) may engage an independent financial consultant to issue a report as the basis of its judgement.
VIII. Connected transactions arising from provision or reception of labor and acquisition or disposal of products between the connected parties and the Company shall be determined as per the market prices.
Article 12 A written agreement with specific contents shall be concluded for any connected transaction between the Company and its connected persons. The Company shall, pursuant to the listing rules, disclose conclusion, change, termination and performance if connected transaction agreements.
Article 13 Where the Board is considering a connected transaction, the connected directors shall abstain from voting for themselves or on behalf of other directors. The Board meeting may be held when more than half of the non-connected directors attend. The resolution of the Board meeting shall be passed by more than half of the non-connected directors. If the number of non-connected directors attending the meetings is less than 3, the Company shall submit the said transaction to the general meeting for consideration.

The non-connected directors as referred to in the preceding paragraph include the following directors or the directors in any of the following circumstances:

(I) the other party of the transaction;
(II) direct or indirect controller of the other party of the transaction;
(III) holding a post in the other party of the transaction or in the legal person directly or indirectly controlling the said other party of the transaction or in the legal person directly or indirectly controlled by the said other party of the transaction;

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APPENDIX V PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

(IV) closely related family members of the other party of the transaction or direct or indirect controller thereof;
(V) closely related family members of directors, supervisors or senior executives of the other party of the transaction or direct or indirect controller thereof;
(VI) directors whose independent business judgment is likely to be affected as determined by CSRC, SSE or the Company on other grounds.
Article 14 Connected shareholders shall not vote on any connected transaction under consideration at the general meeting.

The non-connected shareholders as referred to in the preceding paragraph include the following shareholders or the shareholders in any of the following circumstances:

(I) the other party of the transaction;
(II) direct or indirect controller of the other party of the transaction;
(III) directly or indirectly controlled by the other party of the transaction;
(IV) together with the other party of the transaction, directly or indirectly controlled by the same legal person or natural person;
(V) a shareholder whose voting right is restricted because of incomplete performance of equity transfer agreement or other agreement with the other party of the transaction or connected person thereof;
(VI) shareholders which are likely to enjoy more interests of the Company as determined by CSRC or SSE.

Article 15 Purchasing the assets of connected parties at a premium

For major connected transactions in which the price of the assets of connected parties the listed company intends to purchase exceeds 100% of the carrying value, apart from announcing the cause of the premium, the Company shall provide Internet voting or other convenient voting means to shareholders participating in the general meeting and shall comply with the relevant requirements of the SSE and the HKSE. The audit committee (or the connected transaction regulation committee) of the Company shall express opinions on the aforesaid connected transaction.

Article 16 Any connected transaction between the Company and the connected natural person involving more than RMB300,000 shall be disclosed responsively. Any connected transaction between the Company and the connected legal person involving more than RMB3,000,000 and accounting for more than 0.5% of the absolute value of the latest audited net assets of the Company shall be disclosed responsively.

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Article 17 Where a connected transaction between the Company and the connected person involves more than RMB30,000,000 and accounts for more than 5% of the absolute value of the latest audited net assets of the Company, the said connected transaction shall be disclosed responsively and an intermediary qualified for conducting business relating to securities and futures shall be engaged pursuant to relevant provisions to audit or assess the object of transaction, and the said transaction shall be submitted to the general meeting for consideration.
Article 18 In disclosing a connected transaction, the Company shall submit the following documents to the stock exchange:
(I) manuscript of the announcement;
(II) agreement or letter of intent relating to the transaction;
(III) resolution of the Board, manuscript of the announcement of the resolution and opinions of independent directors (if applicable);
(IV) government approval involved in the transaction (if applicable);
(V) report issued by an intermediary (if applicable);
(VI) written document of approval of independent directors before the said transaction;
(VII)opinions of independent directors;
(VIII) other documents required by the stock exchange.

Article 19 The announcement of the transaction disclosed by the Company shall specify:

(I) overview of the transaction and the object of the transaction;
(II) prior consent and independent opinions of independent directors;
(III) resolution of the Board (if applicable);
(IV) connected relations between the parties to the transaction and basic information about the connected persons;
(V) the quotation policy and basis of the transaction, the relation between the transaction price and the book value or assessed value of the object of the transaction and specific and fair market price, and other quotation related matters needing explanation because of the special nature of the object of the

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PROPOSED RULES OF MANAGEMENT OF CONNECTED TRANSACTIONS

transaction; if the transaction price differs significantly from the book value or assessed value or market price, an explanation shall be made for the reason therefor; where the transaction is unfair, the direction of transfer of interests arising from the transaction shall be disclosed;

(VI) other major contents of the transaction agreement, including transaction price and settlement method, nature of rights and interests of the connected persons in the transaction, validation conditions and time and validity period of the agreement; in respect of a continuing or regular connected transaction in the daily operations, the estimated total value of the said transaction over an entire year shall also be described;
(VII)the object of the transaction and impact of the transaction on the Company, including the true purpose and necessity of the transaction, and impact on the current and future financial positions and operating results of the Company;
(VIII) total value of the connected transactions already concluded with the said connected person from the beginning of the year to the date of disclosure;
(IX) other contents required by CSRC and SSE and helping to set out the facts of the transaction.
Article 20 If, during negotiation over a connected transaction, the stock price of the Company fluctuates significantly because of market rumor or report about the said transaction, the Company shall immediately report to the stock exchange and CSRC and make an announcement.
Article 21 Besides the aforesaid provisions on procedures for making decisions on connected transactions, if a planned transaction of the Company constitutes a connected transaction according to the rules of SEHK, the Company shall make decisions and examine and approve and disclose information in accordance with the said rules of SEHK.
Article 22 In respect of amendment to these Regulations, the Board shall propose an amendment draft and submit the same to the general meeting for consideration.
Article 23 These Regulations shall be subject to the interpretation of the Board.

Article 24 These Regulations shall take effect upon adoption by resolution on the general meeting and shall be subject to the interpretation of China Shipping Development Co., Ltd. In the event of any inconsistency of these Regulations with the listing rules of the stock exchange(s) in force from time to time, the relevant listing rules shall prevail.

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APPENDIX VI

PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

Please note that the following proposed rules and procedures on independent non-executive directors’ work are written in Chinese and there is no official English translation in respect thereof. The translation into English language in this Appendix VI is for reference only. In case of any inconsistency between the English and Chinese version, the Chinese version shall prevail.

Proposed Rules and Procedures on Independent Non-executive Directors’ Work

To further improve the corporate governance and board structure of China Shipping Development Co., Ltd. (“the Company”), strengthen the constraints and supervision mechanism of inside directors and management staff, maintain the rights and interests of small and medium shareholders and interested parties and promote the regulated operation of the Company, these Regulations are formulated pursuant to Company Law of the People’s Republic of China (“ Company Law” ), Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (“ Listing Rules of SEHK” ), Stock Listing Rules of Shanghai Stock Exchange (amended in 2008) (“ Listing Rules of SSE” ), Guidance Opinions Regarding the Establishment of the System of Independent Directors issued by China Securities Regulatory Committee (“ Guidance Opinions” ), Standards for the Governance of Listed Companies , Guideline of Shanghai Stock Exchange for Independent Director Registration and Training for Listed Companies and Articles of Association .

Article 1 “Independent directors, also known as independent outside directors and independent non-executive directors, are directors who do not hold any positions in the Company other than as director, do not maintain with the Company and its substantial shareholders (shareholders severally or jointly holding more than 5% voting shares of the Company) a connection which may possibly hamper their independent and objective judgments, and comply with the independence provision of the rules of the stock exchange with which the Company is listed.

Article 2 Independent directors shall have the qualifications required to perform their duties and meet the following basic conditions:

(I) With qualifications required to be a director of listed companies according to laws and regulations; Where an independent director candidate fails to obtain the qualification required before nomination, he shall undertake in writing to participate in the soonest qualification training for independent directors and receive the qualifications.
(II) Meeting the independence requirements as stated in Article 3 of these Regulations;
(III) With basic knowledge on the operation of listed companies and familiar with the relevant laws, administrative regulations and rules;

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(IV) With more than five years’ experience in legal and economic work or other work required for fulfilling duties as independent director;
(V) Other conditions specified in the Articles of Association .

Article 3 Independent directors must be independent. The following persons shall not serve as independent director:

(I) Persons employed by the Company or its subsidiaries and their immediate family members and major social connections (immediate family members shall include spouse, parents and issues and major social connections shall include siblings, parents-in-law, sons/daughters-in-law, spouses of siblings, siblings of spouse);
(II) Natural person shareholders and their immediate family members who directly or indirectly hold 1% or more of the Company’s issued shares or who are top ten shareholders of the Company;
(III) Persons and their immediate family members employed by the shareholder entities which directly or indirectly holds 5% or more of the Company’s issued shares or which are top five shareholder entities of the Company;
(IV) Persons employed by the actual controllers of the listed company and its subsidiaries;
(V) Persons providing financial, legal or consulting services to the listed company and its controlling shareholders or its subsidiaries, including all the members of the project team of intermediaries, reviewing officers at all levels, persons signing the report, partners and principal officers in charge;
(VI) Persons serving as directors, supervisors or senior executives in the companies which have significant relations with the listed company and its controlling shareholders or its subsidiaries, or persons serving as directors, supervisors or senior executives in the controlling shareholder entities of the said companies;
(VII)Persons who belonged to categories (I) to (VI) within the preceding year;
(VIII) Persons stipulated in the Articles of Association and determined by the SSE and SEHK.

Article 4 The nomination, election and replacement of independent directors shall be made in accordance with the laws and regulations:

(I) Board of Directors, Supervisory Committee and shareholder(s) severally or jointly holding more than 1% of total shares issued by the Company may nominate independent directors candidates and submit the data to SSE in

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PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

accordance with relevant provisions of the SSE for review of the qualifications of the independent director candidates. Where SSE has no objection to the nominations of independent director candidates, the listed company may perform its decision-making procedures and elect independent directors at a general meeting, provided that no objection is received after notifying the HKSE.

(II) The party nominating any independent director candidate shall have obtained the nominee’s consent prior to the nomination. The person nominating candidate for independent director shall fully understand the occupation, academic qualification, title and detailed working experience including all part-time jobs of the candidate and give opinion on his qualification and independence to act an independent director. The candidate for independent directorship shall make an announcement as to the absence of any relationship between the Company and him which may possibly affect his independent and objective judgment. Before the general meeting is convened for election of independent directors, the Board shall announce the above in accordance with the relevant requirements. Before the general meeting for the election of independent directors, if the governing laws, regulations and/or the relevant listing rules have relevant provisions, the Company shall pursuant to the said provisions submit the relevant documents concerning the nominee to the securities regulatory authority of the State Council and/or its local office and the stock exchange with which the Company’s shares are listed. If the Board disputes the particulars pertaining to the nominee, the written opinions of the Board shall also be submitted. If the securities regulatory authority under the State Council or the relevant stock exchange opposes to the nomination of any candidate, such candidate may not be included as an independent director candidate. When a general meeting is convened to elect independent directors, the Board shall make a statement on whether the securities regulatory authority under the State Council objects to the nominations.
(III) The Company shall disclose detailed information relating to the director candidates prior to the general meeting to ensure sufficient understanding of the candidates by shareholders.
(IV) The term of office for independent directors is the same as other directors, and the term is renewable upon re-election when it expires, but the renewed term shall not exceed six years.
(V) If any independent director has not attended Board meetings in person for three times consecutively, the Board shall propose to the general meeting to replace the said independent director. Unless in the above circumstances and in circumstances as specified in Company Law where a person is prohibited from acting as a director, no independent director shall be removed before his term of

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PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

office expires without cause. In case of early removal, the Company shall disclose it by way of special disclosure. If the removed independent director considers that he is removed by the Company improperly, he may make an open declaration.

(VI) An independent director may resign before his term of office expires. Where any circumstance arises in which an independent director holding office becomes unqualified as independent director in accordance with laws and regulations, the said independent director shall resign within 30 days from the date on which the said circumstance arises. Where the said independent director does not resign as required, the Board of the listed company shall within 2 days start the decision-making procedures and remove him as independent director. In resigning his duties, an independent director shall tender a resignation to the Board in writing and specify any matter which is related to his resignation or which he considers necessary to bring to the attention of the Company’s shareholders and creditors, and provide personal particulars required to be provided to the Company and the HKSE in accordance with the requirements of the Listing Rules of the HKSE. If the percentage of independent directors of the Board falls below the minimum requirement of the Guidance Opinions as a result of resignation of any independent director, such resignation shall not become effective until the vacancy resulting from such resignation is filled up by a succeeding independent director.
(VII)If any independent director does not meet the condition of independence or has any other circumstance disqualifying him as independent director, so that the number of independent directors of the Supervisory Committee falls short of the quorum as specified in Guidance Opinions and Listing Rules of SEHK , the Company shall supplement independent directors pursuant to relevant regulations and notify to the SSE and HKSE, making announcements correspondingly.

Article 5 The role of independent directors of the Company shall be adequately activated.

(I) In order to give full play to the functions of independent directors, independent directors shall have the following special functions and powers other than those stipulated in the Company Law and other relevant laws and regulations:
Where a planned connected transaction between the Company and a connected legal person involves more than RMB3,000,000 and accounts for more than 5% of the latest audited net assets of the Company, the said connected transaction shall first be approved by independent directors and then considered by the Board; a resolution on the Company’s related transaction shall not be valid unless it is signed by the independent directors; before making a judgment, the independent directors may appoint an intermediary to provide independent financial and advisory reports as a basis for their judgment.

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PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

to propose to the Board for appointment or dismissal of accounting firm;
to propose to convene an extraordinary general meeting;
to propose to convene a Board meeting;
to independently appoint external audit and consulting institutions;
to openly collect voting rights from shareholders before a general meeting is held;
to directly report to the general meeting, CSRC and other relevant authorities.
(II) Independent directors shall seek the consent of more than half of all the independent directors before exercising the above powers. More than two independent directors may exercise the powers under (III).
(III) If the above proposals are not adopted or the above powers cannot be exercised normally, the Company shall report the relevant information to the Board.
(IV) If the Board of the Company sets Remuneration and Evaluation Committee, Audit Committee and Nomination Committee, the majority of the memberships of the said committees shall be independent directors.

Article 6 Independent directors shall provide the Board with independent opinions on the following matters:

(I) Independent directors shall, in addition to fulfilling the aforesaid duties, provide the Board or general meeting with independent opinions on the following matters:
nomination, appointment and dismissal of directors;
appointment or dismissal of senior executives;
remunerations of directors and senior executives of the Company;
existing or new transactions totaling more than RMB3,000,000 between the shareholders, effective controllers and connected enterprises and the Company or loan exceeding 5% of the latest audited net assets or other financial transaction, and whether the Company has taken effective measures to collect outstanding receivables;

— VI-5 —

APPENDIX VI

PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

matters which independent directors deem likely to damage the equity of small and medium shareholders;
other matters specified in the Articles of Association and relevant listing rules of the place where the shares of the Company are listed.
(II) Independent directors shall express one of the following types of opinions on the aforesaid issues: agreement; qualified opinion and reason therefor; objection and reason therefor; inability to express opinion and reason therefor.

If the independent directors are of divergent views and cannot reach a consensus, the Board shall report the respective opinions of each of the independent directors to the Board.

Article 7 Independent directors owe the Company and all the shareholders thereof the obligation of honesty and diligence, and shall, pursuant to the relevant laws, regulations and the Articles of Association, diligently perform their duties and protect the interests of the Company as a whole, in particular the legitimate rights and interests of the minority shareholders. Independent directors shall perform duties independently and shall not be influenced by the Company’s major shareholders, effective controllers or other units or persons having interest relations with the Company.

Article 8 In order to ensure that the independent directors shall perform their duties effectively, the Company shall provide them with necessary conditions.

(I) The Company shall ensure that the independent directors have the same right to know as other directors. In respect of any issue to be decided by the Board, the Company shall inform the independent directors in advance before the specified deadline and provide adequate documents. Where any independent director deems the documents as inadequate, he can require supplementation. Where 2 or more independent directors are of the opinion that the information provided is insufficient or unclear, they may make a joint written proposal to the Board to postpone the holding of the Board meeting or postpone consideration of the issues, and the Board shall adopt such a proposal.

The Company and the independent directors shall keep the documents provided by the Company for at least 5 years.

(II) The Company shall provide the independent directors with necessary working conditions for fulfilling duties. The Secretary of the Board shall actively provide assistance for independent directors in fulfilling duties, for example, information description and document provision.

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APPENDIX VI PROPOSED RULES AND PROCEDURES ON INDEPENDENT NON-EXECUTIVE DIRECTORS’ WORK

(III) When the independent directors are performing their duties, relevant persons of the Company shall actively support and shall not refuse, hinder or conceal or interfere in their independent performance of duties.
(IV) The expenses for intermediaries appointed by the independent directors and other expenses for performing duties shall be borne by the Company.
(V) The Company shall provide appropriate allowances to independent directors. Allowance standards shall be subject to pre-arranged planning formulated by the Board, consideration and approval of the general meeting and disclosure in the annual report of the Company.
Other than that, independent directors shall not obtain any other additional interests which are not disclosed from the Company and its substantial shareholders or other interested institutions and persons.
(VI) The Company can establish necessary liability insurance systems for independent directors to reduce the possible risks arising from the normal duty performance of independent directors.

Article 9 These Regulations shall be subject to the formulation and interpretation of the Board.

Article 10 These Regulations shall take effect upon adoption of the general meeting. In the event of any conflicts between these Regulations and the Listing Rules of the HKSE and the listing rules of the SSE in force from time to time, the relevant listing rules shall prevail.

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SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [77 x 51] 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)

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Reference is made to the notice of the extraordinary general meeting of China Shipping Development Company Limited (the “Company”) dated 16 February 2011 (the “EGM Notice”) which sets out the resolutions to be considered by shareholders at the extraordinary general meeting (the “EGM”) to be held at 700 Dong Da Ming Road, Shanghai, the People’s Republic of China on Wednesday, 6 April 2011 at 2:00 p.m..

Reference is also made to the announcement of the Company dated 31 January 2011 (the “Announcement”) and the circular of the Company dated 16 February 2011 in respect of the proposal for the issue of bonds convertible into A shares of the Company and appointment of executive director of the Company and the EGM Notice (the “Circular”), which calls for the approval of the aforesaid matters by the shareholders of the Company by way of poll at the EGM.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the EGM, which will be held as originally scheduled, will consider and, if thought fit, pass the following resolutions in addition to the resolutions set out in the EGM Notice:

ORDINARY RESOLUTIONS

“ THAT the proposed rules of management of connected transactions, the form of which has been included in the circular of China Shipping Development Company Limited (the “Company”) dated 21 March 2011 and produced to this meeting marked “A” and signed by the chairman of the meeting for the purpose of identification, be and are hereby approved and adopted and the directors of the Company be and are hereby authorized to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit, expedient or desirable in order to effect the foregoing.”
“ THAT the proposed rules and procedures on independent non-executive directors’ work, the form of which has been included in the circular of China Shipping Development Company Limited (the “Company”) dated 21 March 2011 and produced to this meeting marked “B” and signed by the chairman of the meeting for the purpose of identification, be and are hereby approved and adopted and the directors of the Company be and are hereby authorized to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit, expedient or desirable in order to effect the foregoing.”

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SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

SPECIAL RESOLUTION

“ THAT the new articles of association, the form of which has been included in the circular of China Shipping Development Company Limited (the “Company”) dated 21 March 2011 and produced to this meeting marked “C” and signed by the chairman of the meeting for the purpose of identification, together with the rules and procedures of shareholders’ general meetings, meetings of the board of directors and meetings of supervisory committee to be attached to the new articles of association produced to this meeting and marked “D”, “E”and “F” respectively and signed by the chairman of the meeting for the purpose of identification, be and are hereby approved and adopted in replacement and to the exclusion of the Company’s existing articles of association and the directors of the Company be and are hereby authorized to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit, expedient or desirable in order to effect the foregoing.”

Yours faithfully, China Shipping Development Company Limited Li Shaode Chairman

21 March 2011 Shanghai The People’s Republic of China

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 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.

Notes:

(A) The H share register of the Company will be closed from Saturday, 5 March 2011 to Wednesday, 6 April 2011 (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, 4 March 2011, are entitled to attend and vote at the EGM after completing the registration procedures for attending the meeting. In order to be entitled to attend and vote at the EGM, share transfer documents should have been lodged with the Company’s H share registrar not later than 4:30 p.m. on Friday, 4 March 2011.

— N-2 —

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

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 and return the reply slip to the Office of the Secretary to the Board of Directors of the Company not later than Friday, 1 April 2011.

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, 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 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) To be valid, for the holders of H Shares, the form of the revised proxy, and if the revised form of the revised 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 Shares share registrar, Hong Kong Registrars Limited, at 17M Floor Hopewell Centre, 163 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time for holding the EGM or any adjournment thereof in order for such documents to be valid.
(F) 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 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,

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SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

appoints a Company representative of a company 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 the shareholder (which is a legal person) and duly signed by its legal representative.

(G) The EGM is expected to last for an hour. Shareholders attending the EGM are responsible for their own transportation and accommodation expenses.
(H) IMPORTANT: If you have not yet lodged the old proxy form which was sent to you together with the circular of the Company dated 16 February 2011 with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company, you are requested to lodge the revised proxy form if you wish to appoint proxies to attend the EGM on your behalf. In this case, the old proxy form should not be lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company.
(I) IMPORTANT: If you have already lodged the old proxy form with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company, you should note that:
(i) If the revised proxy form is not lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company, the old proxy form will be treated as a valid proxy form lodged by you if correctly completed. The proxy so appointed by you will be entitled to vote at his or her discretion or to abstain on any resolution properly put to the EGM other than those referred to in the notice of EGM dated 16 February 2011 and the old proxy form, including the newly added resolutions as set out in the circular of the Company dated 21 March 2011.
(ii) If you have lodged the revised proxy form with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company before the deadline as mentioned in paragraph (E) above, the revised proxy form will revoke and supersede the old proxy form previously lodged by you. The revised proxy form will be treated as a valid proxy form lodged by you if correctly completed.
(iii) If the revised proxy form is lodged with the Company’s H share registrar or the Office of the Secretary to the Board of Directors of the Company after the deadline as mentioned in paragraph (E) above, the revised proxy form will be invalid. However, it will revoke the old proxy form previously lodged by you, and any vote that may be cast by the purported proxy (whether appointed under the old proxy form or the revised proxy form) will not be counted in any poll which may be taken on a proposed resolution. Accordingly, you are advised not to lodge the revised proxy form after the deadline as mentioned in paragraph (E) above. If you wish to vote at the EGM, you will have to attend in person and vote at the EGM yourself. You are reminded that completion and delivery of the old proxy form and/or the revised proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

— N-4 —

AI assistant

Dida Inc. — Proxy Solicitation & Information Statement 2011

50671_rns_2011-03-20_6d3518cc-9f45-44fd-8a3d-6bdb91e8694c.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND ADOPTION OF CERTAIN RULES AND PROCEDURE

CONTENTS

LETTER FROM THE BOARD

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

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND ADOPTION OF CERTAIN RULES AND PROCEDURE

INTRODUCTION

PROPOSED ADOPTION OF NEW ARTICLES OF ASSOCIATION AND THE ADOPTION OF CERTAIN RULES AND PROCEDURE

LETTER FROM THE BOARD

EGM

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION ABOUT THE COMPANY

RECOMMENDATION

ADDITIONAL INFORMATION

Proposed New Articles

Chapter 1 General Provisions

APPENDIX I

PROPOSED NEW ARTICLES

Chapter 2 Objective and Scope of Business

Chapter 3 Shares, Registered Capital and Transfer of Shares

PROPOSED NEW ARTICLES

PROPOSED NEW ARTICLES

Chapter 4 Increase, Decrease and Buyback of Shares

PROPOSED NEW ARTICLES

Chapter 5 Financial Assistance for Buying Company Shares

Chapter 6 Shares and Shareholders’ Register

Chapter 7 Rights and Duties of Shareholders

PROPOSED NEW ARTICLES

PROPOSED NEW ARTICLES

Chapter 8 Shareholders’ Meeting

Section 1 General Provisions of Shareholders’ Meeting

Section 2 Convening of General Meetings

Section 3 Proposals and Notice of General Meetings

PROPOSED NEW ARTICLES

Section 4 Convening of General Meetings

PROPOSED NEW ARTICLES

PROPOSED NEW ARTICLES

Section 5 Voting and Resolutions of General Meetings

PROPOSED NEW ARTICLES

PROPOSED NEW ARTICLES

Chapter 9 Special Voting Procedures for Category Shareholders

PROPOSED NEW ARTICLES

Chapter 10 Board of Directors

Section 1 Directors

Section 2 Independent Directors

PROPOSED NEW ARTICLES

Section 3 Board of Directors

PROPOSED NEW ARTICLES

Chapter 11 Secretary to the Board of Directors

Chpater 12 Managerial Team

Chapter 13 Supervisory Committee

Section 1 Supervisors

Section 2 Supervisory Committee

Chapter 14 Qualifications and Duties of the Directors, Supervisors, and Senior Management Officers of the Company

PROPOSED NEW ARTICLES

Chapter 15 Accounting regulation and profit distribution

Section 1 Accounting regulation and profits

Section 2 Internal Auditing

Chapter 16 Appointment of accounting firm

PROPOSED NEW ARTICLES

Chapter 17 Notices

Chapter 18 Merger, Separation, Dissolution and Liquidation

Section 1 Merger and Separation

PROPOSED NEW ARTICLES

Section 2 Dissolution and Liquidation

Chapter 19 Amendment of Articles of Association

Chapter 20 Settlement of Disputes

Chapter 21 By-laws

PROPOSED NEW ARTICLES

APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Proposed Rules and Procedures of Shareholders’ General Meetings

CHAPTER 1 GENERAL PROVISIONS

APPENDIX II

PROPOSED RULES AND PROCEDURES OF SHAREHOLDERS’ GENERAL MEETINGS

Dida Inc. Proxy Solicitation & Information Statement 2011