Guangzhou Automobile Group Co., Ltd. - Proxy Solicitation & Information Statement 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Guangzhou Automobile Group Co., Ltd. , you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, stockbroker, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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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GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

(1) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; (2) PROPOSED ABSORPTION AND MERGER OF GUANGZHOU AUTO GROUP CORPORATION;

(3) PROPOSED GRANT OF GENERAL MANDATE FOR ISSUANCE OF A SHARES TO THE BOARD;

(4) PROPOSED ISSUANCE OF DOMESTIC CORPORATE BONDS;

(5) PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS;

(6) DIVIDEND DISTRIBUTION PLAN FOR THE SHAREHOLDERS FOR 2012 TO 2014

AND NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

Notice convening the Third Extraordinary General Meeting of 2012 of Guangzhou Automobile Group Co., Ltd. to be held at Company Conference Room of 23rd Floor, Chengyue Building, 448 Dong Feng Zhong Road, Yuexiu District, Guangzhou at 1:00 p.m. on Thursday, 15 November 2012 is set out on pages 61 to 65 of this circular. Whether or not you are able to attend the said meeting, you are requested to complete the accompanying reply slip and form of proxy in accordance with the instructions printed thereon and return the same to the Company.

The reply slip shall be sent by mail, telegraph or fax to the Company’s registered office at 23/F, Chengyue Building, 448-458 Dong Feng Zhong Road, Yuexiu District, Guangzhou, the PRC (fax number: (86) 20 8315 1081) on or before Thursday, 25 October 2012. The form of proxy shall be returned to the Company’s H Share Registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong at least 24 hours before the time of holding of the EGM. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting should you so wish.

28 September 2012

CONTENT

				Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.	. . . . . . . . . . . . . . . . . .	1
LETTER	FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	3
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	3
2.	Proposed Amendments to the Articles of Association		. . . . . . . . . . . . . . . . .	4
3.	Proposed Absorption and Merger of Guangzhou Auto . . . . . . . . . . . . . . . . .			4
4.	Proposed Grant of General Mandate for Issuance of
	A Shares to the Board . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	5
5.	Proposed Issuance of Domestic Corporate Bonds .	.	. . . . . . . . . . . . . . . . . .	6
6.	Proposed Issuance of A Share Convertible Bonds .	.	. . . . . . . . . . . . . . . . . .	8
7.	Dividend Distribution Plan for the Shareholders for	2012 to 2014 . . . . . . . .		14
8.	The Third Extraordinary General Meeting of 2012	.	. . . . . . . . . . . . . . . . . .	14
9.	Voting By Way of Poll . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	15
10.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	15
APPENDIX I – DETAILS OF THE AMENDMENTS TO THE ARTICLES
	OF ASSOCIATION . . . . . . . . . . . . .	.	. . . . . . . . . . . . . . . . . .	16
APPENDIX II – PROPOSAL IN RELATION TO THE ABSORPTION AND
	MERGER OF GUANGZHOU AUTO		. . . . . . . . . . . . . . . . . .	27
APPENDIX III – PROPOSAL IN RELATION TO THE		GRANT OF
	GENERAL MANDATE FOR THE ISSUANCE OF
	A SHARES TO THE BOARD . . . .	.	. . . . . . . . . . . . . . . . . .	30
APPENDIX IV – PROPOSAL FOR ISSUANCE OF
	DOMESTIC CORPORATE BONDS		. . . . . . . . . . . . . . . . . .	32
APPENDIX V – PROPOSAL FOR ISSUANCE OF
	A SHARE CONVERTIBLE BONDS		. . . . . . . . . . . . . . . . . .	36
APPENDIX VI – PROPOSAL ON FEASIBILITY OF THE USE OF
	PROCEEDS OF THE PROPOSED ISSUANCE OF
	A SHARE CONVERTIBLE BONDS	TOWARDS
	INVESTMENT PROJECTS . . . . . .	.	. . . . . . . . . . . . . . . . . .	46
APPENDIX VII – DIVIDEND DISTRIBUTION PLAN FOR
	THE SHAREHOLDERS (2012-2014)		. . . . . . . . . . . . . . . . . .	59
NOTICE	OF THE THIRD EXTRAORDINARY GENERAL MEETING
OF 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.	. . . . . . . . . . . . . . . . . .	61

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DEFINITIONS

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

“Articles of Association”
the articles of association of the Company as amended from time to time
“A Shares” domestic shares of RMB1.00 each in the ordinary share capital of the Company which are listed on the Shanghai Stock Exchange
“Board” the board of Directors of the Company
“CB Holder(s)” holder(s) of the Convertible Bonds proposed to be issued by the Company
“Company”
Guangzhou Automobile Group Co., Ltd., a sino-foreign joint venture joint stock limited company incorporated in the PRC, the issued H Shares of which are listed on the Hong Kong Stock Exchange
“Conversion Price”
the price at which the new A Shares will be issued upon conversion of the Convertible Bonds, as may be adjusted from time to time
“Convertible Bonds” or “A Share Convertible Bonds”
convertible corporate bonds in the total amount of not more than RMB2 billion which are convertible into new A Shares, proposed to be issued by the Company in the PRC
“CSRC”
China Securities Regulatory Commission
“Director(s)” the directors of the Company
“Domestic Corporate Bonds”
domestic corporate bonds in the principal amount of not more than RMB4 billion proposed to be issued by the Company in the PRC
“EGM”
the third extraordinary general meeting of 2012 of the Company to be held at Company Conference Room of 23rd Floor, Chengyue Building, 448 Dong Feng Zhong Road, Yuexiu District, Guangzhou at 1:00 p.m., Thursday, 15 November 2012
“EGM Notice”

the notice dated 28 September 2012 convening the third extraordinary general meeting of 2012, as set out in pages 61 to 65 of this circular

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DEFINITIONS

“H Share(s)” overseas listed foreign shares of RMB1.00 each in the ordinary share capital of the Company which are listed on the Hong Kong Stock Exchange
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited
“Offering Document” the offering memorandum in relation to the proposed issuance of the Convertible Bonds
“Listing Rules” the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
“GAIG” Guangzhou Automobile Industry Group Co., Ltd.（廣州汽車工業集團有限公司）, a state-owned enterprise incorporated in the PRC
“Guangqi Honda” Guangqi Honda Automobile Co., Ltd. （廣汽本田汽車有限公司）, a sino-foreign joint venture and joint stock limited company incorporated in the PRC
“Guangzhou Auto” Guangzhou Auto Group Corporation（廣州汽車集團公司）, a company incorporated in the PRC
“PRC” the People’s Republic of China (and where the context requires, references in this circular to the PRC do not apply to Hong Kong, the Macau Special Administrative Region of the PRC or Taiwan)
“RMB”
Renminbi, the lawful currency of the PRC for the time being
“Share(s)”
collectively, A Shares and H Shares and (where applicable) any other foreign shares of the Company
“Shareholders”
the shareholders of the Company

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LETTER FROM THE BOARD

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GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

Executive Directors: Zhang Fangyou (Chairman) Zeng Qinghong (Vice Chairman) Yuan Zhongrong Lu Sa

Registered office: 23/F, Chengyue Building 448-458 Dong Feng Zhong Road Yuexiu District Guangzhou, the PRC

Non-executive Directors: Fu Shoujie Liu Huilian Wei Xiaoqin Li Tun Li Pingyi Ding Hongxiang

Principal place of business in Hong Kong: Room 808, Citicorp Centre 18 Whitfield Road Causeway Bay, Hong Kong

Independent non-executive Directors: Wu Gaogui Ma Guohua Xiang Bing Law Albert Yu Kwan Li Zhengxi

28 September 2012

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; (2) PROPOSED ABSORPTION AND MERGER OF GUANGZHOU AUTO GROUP CORPORATION;

(3) PROPOSED GRANT OF GENERAL MANDATE FOR ISSUANCE OF A SHARES TO THE BOARD;
(4) PROPOSED ISSUANCE OF DOMESTIC CORPORATE BONDS;
(5) PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS;

(6) DIVIDEND DISTRIBUTION PLAN FOR THE SHAREHOLDERS FOR 2012 TO 2014 AND NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

1. Introduction

References are made to the announcements of the Company dated 28 August 2012 and 10 September 2012. The purpose of this circular is to provide you with information regarding (1) proposed amendments to the Articles of Association; (2) proposed absorption

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LETTER FROM THE BOARD

and merger of Guangzhou Auto; (3) proposed grant of general mandate for the issuance of A shares to the Board; (4) proposed issuance of Domestic Corporate Bonds; (5) proposed issuance of A Share Convertible Bonds and (6) dividend distribution plan for the Shareholders for 2012 to 2014 and to seek your approval of the resolutions relating to these matters to be proposed at the EGM.

2. Proposed Amendments to the Articles of Association

In order to (i) align with the expansion of the scale of the business of the Company and the requirements of the Listing Rules, and (ii) to meet the requirements of “Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies” issued by the CSRC, the Company intends to amend the Articles of Association. Such amendments will enhance the flexibility of the Company in considering and approving matters and the Company’s dividend distribution policy will be stated more clearly in the Articles of Association.

On 27 August 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the proposed amendments to the Articles of Association at the EGM by way of a special resolution. The relevant amendments will become effective upon approval by regulatory bodies. Details of the amendments to the Articles of Association are set out in Appendix I to this circular.

3. Proposed Absorption and Merger of Guangzhou Auto

Guangzhou Auto is a subsidiary directly wholly-owned by the Company.

Due to historical reasons, Guangzhou Auto, as a shareholder of Guangqi Honda, directly holds 50% equity interest in Guangqi Honda. In order to (a) facilitate the adjustment in the management mode of the Company, reduce management hierarchy, increase management efficiency, lower management cost, thus having a positive effect on the Company; and (b) assist the Company in concentrating and optimising its production resources and increase its operations efficiency; the Company intends to acquire all the assets, liabilities and business of Guangzhou Auto by way of full absorption and merger. Upon completion of the merger, the Company shall be the continuing entity, and the independent legal person status of Guangzhou Auto shall be de-registered, all the assets (including but not limited to fixed assets, current assets and other properties) of Guangzhou Auto shall be merged into the Company, while the liabilities and other obligations of Guangzhou Auto shall be assumed by the Company.

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LETTER FROM THE BOARD

On 27 August 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the absorption and merger of Guangzhou Auto at the EGM by way of a special resolution.

Proposal in relation to the absorption and merger of Guangzhou Auto is set out in Appendix II to this circular.

4. Proposed Grant of General Mandate for Issuance of A Shares to the Board

To satisfy the capital demand required for the Company’s rapid operational growth and to further reduce financial costs and enhance the competitiveness of the Company, the Company proposes to seek the Shareholders’ approval to authorize the Board or its authorized persons to allot, issue and/or deal A Shares not exceeding 20% of the aggregate nominal amount of A Shares in issue on the date of passing of the relevant resolution, and to execute offer recommendation, agreement or grant share options or options convertible into shares (including convertible bonds) in respect of the above.

The general mandate for the issuance of A Shares shall be effective from the date of passing of the relevant resolution until whichever is the earliest of:

(1) the expiration of 12 months following the passing of the special resolution approving the general mandate; or
(2) the conclusion of the first annual general meeting of the Company following the passing of the relevant resolution at which time it shall lapse unless, by ordinary resolution passed at that meeting, the mandate is renewed, either unconditionally or subject to conditions; or
(3) the date on which the Shareholders at any general meeting has by way of special resolution rescinded or amended the authority granted to the Board under the special resolution approving the general mandate.

As at 7 September 2012, being the latest practicable date for ascertaining information in this circular, the Company had in issue 6,435,020,097 Shares including 4,221,719,879 A Shares and 2,213,300,218 H Shares. Subject to the passing of the proposed resolution for the approval of the general mandate for the issuance of A Shares at the EGM and in accordance with the terms therein, the Company would be allowed to separately or concurrently allot, issue and deal with up to a maximum of 844,343,975 A Shares, representing 20% of the number of A Shares in issue.

On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the grant of general mandate to the Directors in respect of the issuance of A shares at the EGM by way of a special resolution.

Details of the general mandate are set out in Appendix III to this circular.

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LETTER FROM THE BOARD

5. Proposed Issuance of Domestic Corporate Bonds

To satisfy the capital demand required for the Company’s rapid operational growth and to further reduce financial costs and enhance the competitiveness of the Company, the Company intends to issue Corporate Bonds of not exceeding RMB 4 billion to the public in the PRC and has formulated the relevant issuance proposal pursuant to the relevant provisions of the laws, regulations and regulatory documents such as Company Law of the PRC, Securities Law of the PRC and “Corporate Bond Issuance Pilot Approach” with reference to the specific condition of the Company. The Domestic Corporate Bonds shall not be converted into the Shares of the Company.

On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the issuance of the Domestic Corporate Bonds at the EGM by way of a special resolution. According to the Company Law of the PRC and the Articles of Association, the issuance of the Domestic Corporate Bonds is subject to approval of the Shareholders at the EGM by special resolution and approval of the relevant PRC competent authorities.

A. Proposal for issuance of Domestic Corporate Bonds

The specific arrangement for the proposed issuance of the Domestic Corporate Bonds is set out in Appendix IV to this circular. The principal terms are as follows:

Issue size:

not more than RMB4 billion (including RMB4 billion), to be issued in one tranche or multiple tranches. The specific quantity of bonds to be issued and installment basis shall be determined by the Board or its authorised persons as authorised by the Shareholders at the EGM within the preceding range according to the capital requirement of the Company and the market condition at the time of issue and shall be issued of such size and in such manner as ultimately approved by CSRC;

Maturity: not exceeding 10 years (including 10 years); Interest: the interest rate and the payment mechanism shall be determined by the Board or its authorized persons (as authorized by the Shareholders at the EGM) together with the sponsor and the main underwriter within the above scope, with reference to the market condition before the time of issue; Guarantor: the guarantee arrangements shall be determined by the Board or its authorized persons as authorized by the Shareholders at the EGM;

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LETTER FROM THE BOARD

Use of proceeds:

mainly to adjust financial structure after deduction of issuance expenses;

Term of the validity of the Shareholders’ resolutions in respect of the issuance of the Domestic Corporate Bonds:
36 months from the date of passing the resolutions.

Further, the Board shall seek the Shareholders’ approval at the EGM to authorize the Board or any two of its authorized persons to handle matters related to the issuance of Domestic Corporate Bonds, details of which are set out in Appendix IV to this circular. The authorized persons of the Board for the issuance of the Domestic Corporate Bonds are proposed to be Mr. Zhang Fangyou, Mr. Zeng Qinghong and Ms. Lu Sa.

B. GAIG to provide guarantee for the issuance of the Domestic Corporate Bonds

To support the development of the Company, GAIG, the controlling Shareholder, will provide guarantee for the Company’s issuance of Domestic Corporate Bonds. The guarantee is a full-amount, unconditional, irrevocable, joint-liability guarantee. The subject of the guarantee is the Domestic Corporate Bonds issued by the Company as approved by CSRC. The aggregate issuance amount of the Domestic Corporate Bonds (i.e. the aggregate face value) shall not exceed RMB4 billion (inclusive of RMB4 billion). The actual issuance amount of the Domestic Corporate Bonds shall be the actual amount of Domestic Corporate Bonds issued by the Company within the scope as approved by CSRC.

The scope of guarantee includes the principal, interest, damages, compensation for loss of the Domestic Corporate Bonds and all expenses for realizing the bonds.

The term of guarantee shall be from the first day of the issuance of the Domestic Corporate Bonds until two years after the maturity date of the Domestic Corporate Bonds. GAIG shall charge an annual guarantee fee of 0.1% on the balance of the Domestic Corporate Bonds guaranteed (being the principal and interest which has not been paid on time, damages, etc. (if any)).

On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the guarantee to be provided by GAIG for the Company’s issuance of the Domestic Corporate Bonds at the EGM by way of an ordinary resolution. GAIG shall abstain from voting for such resolution.

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LETTER FROM THE BOARD

6. Proposed Issuance of A Share Convertible Bonds

A. The Company has satisfied the criteria for the issuance of A Share Convertible Bonds

In order to satisfy the capital demand of the Company’s business developments, reduce financial costs, improve the Company’s financial structure, further enhance the Company’s competitiveness and facilitate the Company’s sustainable development, the Company intends to apply for the issuance of A Share Convertible Bonds. Pursuant to the relevant requirements of the Company Law of the PRC, the Securities Law of the PRC, the Administrative Measures for the Issuance of Securities by Listed Companies and other laws and regulations, after careful scrutiny specific to the terms of the proposed issuance of the A Share Convertible Bonds and the actual circumstances of the Company, the Board is of the view that the Company has satisfied the relevant criteria for the issuance of A Share Convertible Bonds under existing laws, regulations and regulatory documents. On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve that the Company has satisfied the criteria for the issuance of A Share Convertible Bonds at the EGM by way of an ordinary resolution.

B. Proposal for the issuance of A Share Convertible Bonds

Pursuant to the relevant requirements of the applicable laws, regulations and regulatory documents, and combined with the actual circumstances of the Company, the Company has formulated the proposal for the issuance of A Share Convertible Bonds.

On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the proposal for the issuance of the Convertible Bonds at the EGM by way of a special resolution. It is contemplated that the Convertible Bonds would be issued by way of exercise of the general mandate for the issuance of A Shares to be approved by the Shareholders at the EGM, or such general mandates as from time to time renewed at the annual general meetings of the Company. The proposed issuance of the Convertible Bonds is subject to (i) approval of the Shareholders at the EGM by way of special resolution in accordance with the Articles of Association; and (ii) approval of the CSRC and other relevant PRC regulatory authorities.

The specific arrangements for the proposal for the issuance of A Share Convertible Bonds are set out in Appendix V. The major terms are as follows:

(1) Type of bonds to be issued

The type of the bonds to be issued by the Company is convertible corporate bonds which can be converted into A Shares (“A Share Convertible Bonds”). A Share Convertible Bonds and A Shares which may be converted from A Share Convertible Bonds in future shall be listed on the Shanghai Stock Exchange.

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LETTER FROM THE BOARD

(2) Issue size

The total amount of the Convertible Bonds proposed to be issued will be not more than RMB2 billion (including RMB2 billion). The actual size of the issuance shall be determined by the Board or its authorised persons as authorised by the Shareholders at the EGM within the above scope.

(3) Term

The term of the Convertible Bonds will be not more than 6 years (including 6 years) from the date of issuance. The actual term will be determined by the Board or its authorized persons as authorized by the Shareholders at the EGM.

(4) Par value and issue price

The Convertible Bonds will be issued at par with a nominal value of RMB100 each.

(5) Interest rate

The annual interest rate of the Convertible Bonds shall be determined before issuance of the Convertible Bonds by the Board or its authorised persons (as authorised by the Shareholders at the EGM) after discussion with the sponsor and the main underwriter with reference to state policies and the actual conditions of the market and the Company.

(6) Timing and method of interest payment

Interest will be accrued from the date of issuance of the Convertible Bonds and will be paid on each anniversary of the date of issuance of the Convertible Bonds based on the total outstanding principal amount of the Convertible Bonds held by the CB Holders from time to time.

The Company will not pay interest for those Convertible Bonds which have been converted or applied to be converted to A Shares on or before the relevant interest record dates.

(7) Conversion period

The CB Holders are entitled to convert the Convertible Bonds into A Shares from the first trading day immediately following the expiry of six months after the date of issuance of the Convertible Bonds until the maturity date.

(8) Ascertaining the Conversion Price

The initial Conversion Price shall not be lower than (i) the average trading price of the A Shares within 20 trading days preceding the date of publication of the Offering Document, and (ii) the average trading price of the A Shares on the trading day preceding the date of publication of the Offering Document. The

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LETTER FROM THE BOARD

actual initial Conversion Price will be determined by the Board or its authorized persons (as authorised by the Shareholders at the EGM) after taking into account the actual conditions of the market and the Company and discussing with the sponsor and the main underwriter.

(9) Adjustment and calculation of the Conversion Price

The Conversion Price is subject to adjustment upon the occurrence of certain prescribed events, including but not limited to scrip dividend, capitalization issue, issue of new shares (excluding share issuance as a result of conversion of the A Share Convertible Bonds), rights issue or cash dividend payment. The Company shall make cumulative adjustments to the Conversion Price according to the order of occurrence of the above conditions and based on the following formulae:

Assuming that “Po” means initial Conversion Price, “N” means scrip dividend rate, “K” means new share issue rate or rights issue rate, “A” means price of new share issue or rights issue, “D” means cash dividend per share, and “P” means Conversion Price after adjustment. The adjusted value shall be rounded up to two decimal places.

(1) Distribution of cash dividend: P = Po – D;
(2) Scrip dividend or capitalization issue: P = Po / (1 + N);
(3) Issue of new Shares or rights issue: P = (Po + A x K) / (1 + K);
(1), (2) and (3) occur concurrently: P = (Po – D+ A x K) / (1 + N + K)

(10) Downward adjustment to Conversion Price

The Conversion Price may be subject to downward adjustments if, during the term of the Convertible Bonds, the closing prices of the A Shares in at least 15 trading days out of any 30 consecutive trading days are lower than 90% of the prevailing Conversion Price. The Board may propose any such adjustments and submit the same to the Shareholders’ meeting for consideration and approval. The proposal will be subject to approval by two-thirds of the participating Shareholders with voting rights. Shareholders who hold the A Share Convertible Bonds should abstain from voting.

(11) Conversion method of fractional share

The number of the Shares to be requested by the CB Holders for conversion shall be in whole number. The remaining balance of the fractional share will be paid in cash by the Company to the CB Holders at par with the corresponding current accrued interest within five trading days after the date of conversion pursuant to the relevant requirements of the Shanghai Stock Exchange and other departments.

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LETTER FROM THE BOARD

(12) Terms of redemption upon maturity and redemption in advance

Within five trading days after the maturity of the Convertible Bonds, the Company will redeem all the Convertible Bonds which have not been converted into the A Shares at a certain ascent ratio of the par value (including the final term of annual interest). The specific ascent ratio will be determined by the Board or its authorised persons (as authorised by the Shareholders at the EGM) before the issuance after discussion with the sponsor and the main underwriter with reference to market conditions.

During the conversion period, if the closing price of the A Shares is not lower than 130% (including 130%) of the prevailing Conversion Price in at least 15 trading days out of any 30 consecutive trading days or when the balance of the unconverted Convertible Bonds is less than RMB30 million, the Company has the right to redeem all or part of the Convertible Bonds which have not been converted into the A Shares based on the par value plus the current accrued interest.

(13) Terms of Sale Back

During the last two interest accrual years of the Convertible Bonds, if the closing price of the A Shares is lower than 70% of the prevailing Conversion Price in any 30 consecutive trading days, the CB Holders have the right to sell back all or part of the Convertible Bonds held by them to the Company based on the par value plus the current accrued interest.

If the implementation of the use of proceeds from the issuance of the Convertible Bonds towards the investment projects by the Company deviates materially from its undertakings in the Offering Document, and it is regarded as a change in use of proceeds pursuant to the relevant requirements of the CSRC or it is so deemed by the CSRC, the CB Holders have a one-off right to sell back the Convertible Bonds at par plus any current accrued interest.

(14) Dividend rights after conversion

The new A Shares to be issued as a result of the conversion of the Convertible Bonds shall rank pari passu with all the existing A Shares.

(15) Method of issuance and target subscribers

The method of the issuance of the Convertible Bonds will be determined by the Board or its authorised persons (as authorised by the Shareholders at the EGM) after discussion with the sponsor and the main underwriter. The target investors are natural persons, legal persons, securities investment funds and other investors in compliance with legal requirements who have maintained securities accounts with the Shanghai branch of China Securities Depository and Clearing Corporation Limited (excluding those prohibited by state laws and regulations).

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LETTER FROM THE BOARD

(16) Subscription arrangement for the existing Shareholders

Existing Shareholders of A Shares are entitled to preferential rights to subscribe for the Convertible Bonds. The specific ratio of placing will be determined by the Board or its authorised persons (as authorised by the Shareholders at the EGM) with reference to the actual conditions at the time of issue, and shall be disclosed in the announcement for the issuance of the Convertible Bonds.

(17) Meetings of CB Holders

Circumstances that the CB Holders will convene meeting(s) include but not limited to: proposed changes to the terms of the Offering Document, the Company’s default in paying principal and interests on time, reduction of the Company’s capital, or merger, separation, dissolution or bankruptcy of the Company or other matters affecting the material interests of the CB Holders.

The Company shall provide in the Offering Document the methods to protect the interests of the CB Holders and the rights of CB Holders to CB Holders’ meetings, the procedures and the conditions for the resolutions to become effective.

(18) Use of proceeds from the issuance of the Convertible Bonds

(19) Guarantee

The arrangements for guarantee in relation to the issuance of A Share Convertible Bonds shall be determined by the Board or its authorized persons as authorized by the Shareholders at the EGM.

(20) The validity period of the resolution of the issuance of the A Share Convertible Bonds and timing of issuance

The resolution of the issuance of the Convertible Bonds will be valid for 12 months from the date on which the resolution is passed at the EGM. The A Share Convertible Bonds will be issued after 29 March 2013.

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LETTER FROM THE BOARD

(21) Matters relating to authorization in connection with the issuance of the Convertible Bonds

To ensure smooth implementation of the issuance of the A Share Convertible Bonds and to protect the interests of investors, it will be proposed at the EGM to authorize the Board or any two of its authorized persons to handle matters regarding the issuance of the A Share Convertible Bonds. The specific details in relation to the authorization are set out in Appendix V. The proposed authorized persons are Mr. Zhang Fangyou, Mr. Zeng Qinghong and Ms. Lu Sa.

C. Implications of issuance of the Convertible Bonds under the PRC regulatory requirements

The proposed issuance of the Convertible Bonds by the Company may lead to issuance of new A Shares upon conversion of the Convertible Bonds. The Board consider that conversion of the Convertible Bonds into new A Shares will result in dilution of the interests of the existing Shareholders in the share capital of the Company.

Under the relevant PRC laws and regulations, the proposed issuance of the Convertible Bonds is subject to the approval of the Shareholders at the EGM and the obtaining of the approvals from the relevant PRC regulatory authorities.

D. Implications of issuance of the Convertible Bonds under the Listing Rules

The terms of the proposed issuance of the Convertible Bonds to be offered to any A Shareholders (under their preferential entitlement or through application in the public tranche) and other institutional and public investors will be identical. All existing A Shareholders registered as at the record date relating to preferential subscription (which date shall be determined by the Board or persons authorized by the Board), including connected persons of the Company (within the meaning of the Listing Rules) (if any), shall be entitled to preferential rights to subscribe for Convertible Bonds which are pro rata to their shareholding on the same terms within the amount of Convertible Bonds allocated for preferential subscription. The Board will confirm at the time it decides to issue the Convertible Bonds whether there will be any connected persons of the Company subscribing under the preferential subscription.

If the controlling Shareholder or any other connected person(s) of the Company subscribe to the Convertible Bonds proposed to be issued, such subscription may constitute a connected transaction of the Company under the Listing Rules. The Company hereby confirms that it shall comply with the reporting, announcement and independent shareholders’ approval requirements (if applicable) under Chapter 14A of the Listing Rules when the Board decides to issue the Convertible Bonds pursuant to the general mandate granted in the EGM, or apply to the Hong Kong Stock Exchange for the relevant waivers if appropriate.

The Board anticipates that the Company will continue to maintain sufficient public float in compliance with the minimum requirement of the Listing Rules as applicable to the Company.

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LETTER FROM THE BOARD

E. Resolution in relation to the proposal on the feasibility of the use of proceeds of the issuance of A Share Convertible Bonds towards investment projects

The proceeds from the issuance of the Convertible Bonds, after deduction of issuance expenses, are intended to be applied towards the following projects: the expansion of production capacity and increase in product varieties by GAC Toyota Motor Co., Ltd., the expansion of new products by GAC Toyota Engine Co., Ltd., the increase in new car models and new engine platform by Guangzhou Automobile Group Motor Co. Ltd., the increase in investment and shareholding in Urtrust Insurance Co., Ltd. and the supplement of liquid capital. The details of the proposal on the use of proceeds from the issuance of Convertible Bonds towards investment projects are set out in the feasibility proposal, the full text of which is set out in Appendix VI to this circular. The feasibility proposal was approved by the Board on 10 September 2012. According to the relevant requirements of CSRC, the feasibility proposal is subject to approval by the Shareholders. The Board resolved on 10 September 2012 to propose to the Shareholders to consider and, if thought fit, approve the feasibility proposal at the EGM by way of an ordinary resolution.

7. Dividend Distribution Plan for the Shareholders for 2012 to 2014

To further improve and strengthen the distribution mechanism of the Company and to protect the legal interests of medium and small size investors, pursuant to the “Notice Regarding Further Implementation of Cash Dividends Distribution of Listed Companies” issued by the CSRC (Zheng Jian Fa [2012] No.37) and the relevant requirements of the Articles of Association, combined with the actual circumstances of the Company, the Company has formulated the dividend distribution plan for the Shareholders for the coming three years. The details of the proposed Dividend Distribution Plan for the Shareholders for 2012 to 2014 are set out in Appendix VII to this circular.

On 10 September 2012, the Board approved and resolved to propose to the Shareholders to consider and, if thought fit, approve the proposed Dividend Distribution Plan for the Shareholders for 2012 to 2014 at the EGM by way of an ordinary resolution.

8. The Third Extraordinary General Meeting of 2012

The EGM Notice is set out on pages 61 to 65 of this circular to consider the special and ordinary resolutions relating to, inter alia, the following: (1) proposed amendments to the Articles of Association; (2) proposed absorption and merger of Guangzhou Auto; (3) proposed grant of general mandate for the issuance of A Shares to the Board; (4) proposed issuance of Domestic Corporate Bonds; (5) proposed issuance of A Share Convertible Bonds and (6) dividend distribution plan for the Shareholders for 2012 to 2014.

The EGM will be held at Company Conference Room of 23rd Floor, Chengyue Building, 448 Dong Feng Zhong Road, Yuexiu District, Guangzhou at 1:00 p.m. on Thursday, 15 November 2012. A reply slip and a form of proxy for use at the EGM are enclosed with this circular.

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LETTER FROM THE BOARD

In order to determine the list of Shareholders who are entitled to attend the EGM, the Company’s register of members will be closed from Tuesday, 16 October 2012 to Thursday, 15 November 2012, both days inclusive, during which period no transfer of Shares will be registered. Shareholders whose names appear on the register of members by 4:30 p.m. on Monday, 15 October 2012 are entitled to attend and vote at the meeting. In order to be qualified to attend and vote at the meeting, all transfers of Shares accompanied by relevant share certificates must be lodged with the Company’s Share Registrar by 4:30 p.m. on Monday, 15 October 2012.

The Articles of Association require that the Shareholders who intend to attend any general meeting of the Company shall send a written reply to the Company 20 days before the date of the meeting. In the case the written replies received from the Shareholders indicating that those intend to attend the general meeting represent holders of not more than one half of the total number of Shares with voting rights, the Company shall within 5 days inform its Shareholders again by public notice the proposed matters for consideration at the general meeting and the date and venue of the general meeting. The general meeting may be convened after such notice has been published. In view of the above requirements in respect of the EGM convened by the EGM Notice, whether or not you intend to attend the EGM, you are requested to complete and return the reply slip by post, by telegraph or by fax to the Company’s H Share Registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong (fax no. (852) 2810 8185), on or before Thursday, 25 October 2012.

Whether or not you intend to attend the EGM, you are requested to complete and return the form of proxy to the Company’s H Share Registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon, not less than 24 hours before the time fixed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting at the meeting in person should you so wish.

9. Voting By Way of Poll

In accordance with the requirement of Rule 13.39(4) of the Listing Rules, except where the chairman of the EGM, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands, votes for all the resolutions at the EGM will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

10. Recommendation

The Directors believe that the resolutions set out in the EGM Notice are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend all Shareholders to vote in favour of the relevant resolutions as set out in the EGM Notice.

By order of the Board Guangzhou Automobile Group Co., Ltd. Zhang Fangyou Chairman

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Details of the proposed amendments are as follows:

1. The original text of Article 1:

To safeguard the legitimate rights and interests of Guangzhou Automobile Group Co., Ltd. (the “Company”), its shareholders and creditors, and to regulate the organization and activities of the Company, the Company formulated the Articles of Association in accordance with the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China (the “Securities Law”), the Special Regulations of the State Council on the Overseas Offer and Listing of Shares by Joint Stock Limited Companies (the “Special Regulations”), the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (“Mandatory Provisions”), the Guidelines on Articles of Association of Listed Companies (as amended in 2006) (the “Guidelines”) and other relevant requirements under the laws, administrative rules and regulations.

To be amended as:

To safeguard the legitimate rights and interests of Guangzhou Automobile Group Co., Ltd. (the “Company”), its shareholders and creditors, and to regulate the organization and activities of the Company, the Company formulated the Articles of Association in accordance with the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China (the “Securities Law”), the Special Regulations of the State Council on the Overseas Offer and Listing of Shares by Joint Stock Limited Companies (the “Special Regulations”), the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (“Mandatory Provisions”), the Guidelines on Articles of Association of Listed Companies (as amended in 2006) (the “Guidelines”), the Listing Rules of the Shanghai Stock Exchange and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and other relevant requirements under the laws, administrative rules and regulations.

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DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

2. The original text of Article 13:

The scope of operation of the Company shall be based on the items approved by the company registration authorities.

The scope of operation of the Company includes: the investment services for automobile industry and ancillary industry; the development, application, sales, technical consultancy and services for automobile engineering technologies and products; the wholesale and retailing of automobiles (including vehicles) and parts and components; the import and export of goods and technologies (save for the items prohibited by laws and regulations and the import and export of such items should only be conducted upon obtaining the requisite permit); and the operation of imported material processing and three categories of processing and one category of compensation trade.

To be amended as:

The scope of operation of the Company shall be based on the items approved by the company registration authorities.

The scope of operation of the Company includes: the investment services for automobile industry and ancillary industry; the development, application, sales, technical consultancy and services for automobile engineering technologies and products; the wholesale and retailing of automobiles and parts and components; the exhibition of automobiles; the import and export of goods and technologies (save for the items prohibited by laws and regulations and the import and export of such items should only be conducted upon obtaining the requisite permit); equity investment; property investment and management; and the operation of imported material processing trade.

3. The original text of Article 68:

When convening a general meeting, the Company shall give written notice to all shareholders in the register forty-five (45) days prior to the convening of the meeting to inform them of the matters to be considered in the meeting as well as the date, time and venue of the meeting. Shareholders who intend to attend the general meeting shall reply the Company in writing that they will attend the meeting twenty (20) days prior to the convening of the meeting.

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DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

To be amended as:

When convening a general meeting, the Company shall give written notice to all shareholders in the register forty-five (45) days prior to the convening of the meeting to inform them of the matters to be considered in the meeting as well as the date, time and venue of the meeting. The venue of the general meeting shall be the Company’s address or a place designated by the Board. Shareholders who intend to attend the general meeting shall reply the Company in writing that they will attend the meeting twenty (20) days prior to the convening of the meeting.

4. The original text of Article 144:

The Board shall report to the general meeting and exercise the following powers:

(1) to convene general meetings and report its work to the general meeting;
(2) to implement the resolutions of the general meetings;
(3) to decide on the business plans and investment plans of the Company;
(4) to formulate the mid-term and long-term development plans of the Company;
(5) to formulate the plans on annual financial budgets and final accounts of the Company;
(6) to formulate the profit distribution plans and plans on making up losses of the Company;
(7) to formulate proposals for increase or reduction of the registered capital of the Company and issue and listing of bonds or other securities of the Company;
(8) to formulate plans for major acquisitions, purchase of shares of the Company or plans for merger, division, dissolution or alteration of corporate form of the Company;

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DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

(9) to the extent as authorized by the shareholders at general meetings, to determine external investments, purchases and sales of assets, pledge of assets, external guarantees, loans, entrusted asset management, disposal of assets and connected transactions of the Company:
(i) to decide on the external investments of the Company each in an amount not exceeding 10% of the latest audited net assets of the Company and, when aggregated with investments made within one year, not exceeding 30% of the latest audited net assets of the Company;
(ii) to decide on the purchases and disposal of assets of the Company made within one year in an amount not exceeding 30% of the latest audited total assets of the Company;
(iii) to examine and approve pledging assets of the Company the accumulated net value of which not exceeding 20% of the latest audited net assets of the Company;
(iv) to examine and approve external guarantees which are within the limit as stated in Article 64; in addition to be approved by the majority of the Board, guarantees within the Board’s authority shall also require the consent of not less than two-thirds of the Directors present in the Board meeting;
(v) to decide on loans of the Company each in an amount not exceeding 10% of the latest audited net assets of the Company and, when aggregated with loans within one year, not exceeding 50% of the latest audited net assets of the Company;
(vi) to conduct entrusted asset management, provided that the value of such assets entrusted within one year does not exceed 10% of the latest audited net assets of the Company;
(vii) to examine and approve disposals of assets of value not exceeding 5% of the latest audited net assets of the Company;
(viii) to examine and approve donations and sponsors in the annual budget of the Company each in an amount exceeding RMB2 million and in aggregate not exceeding 0.5% of the latest audited net asset;
(10) to determine the establishment of the Company’s internal management structure and manpower deployment;
(11) to appoint or remove the general manager and the secretary to the Board based on the nomination by the Chairman of the Board; to appoint or remove the deputy general manager and other senior management (including the chief financial officer) of the Company based on the nomination by the general manager and to determine their remunerations and rewards and penalties;

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(12) to formulate the basic management system of the Company;
(13) to formulate proposals for amendment to the Articles of Association;
(14) to formulate the information disclosure system of the Company and to manage information disclosure of the Company;
(15) to propose the appointment or removal of the Company’s auditors to the general meeting;
(16) to receive the work report and inspect the work of the general manager of the Company;
(17) to formulate share incentive schemes;
(18) to exercise any other powers authorized by relevant laws, administrative regulations, departmental rules and the Articles of Association.

The abovementioned exercise of power by the Board or any transactions or arrangements of the Company shall be proposed for consideration and approval in the general meeting should the listing rules of the place where the shares of the Company are listed so require.

Except for the Board resolutions in respect of the matters specified in paragraphs (7), (8), (13) and (17) of this Article which shall be passed by not less than two-thirds of the Directors, the Board resolutions in respect of all other matters may be passed by the a simple majority of the Directors voting for the relevant resolution.

To be amended as:

The Board shall report to the general meeting and exercise the following powers:

(1) to convene general meetings and report its work to the general meeting;
(2) to implement the resolutions of the general meetings;
(3) to decide on the business plans and investment plans of the Company;
(4) to formulate the mid-term and long-term development plans of the Company;
(5) to formulate the plans on annual financial budgets and final accounts of the Company;
(6) to formulate the profit distribution plans and plans on making up losses of the Company;

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(7) to formulate proposals for increase or reduction of the registered capital of the Company and issue and listing of bonds or other securities of the Company;
(8) to formulate plans for major acquisitions, purchase of shares of the Company or plans for merger, division, dissolution or alteration of corporate form of the Company;
(9) to decide on the Company’s external investments, sale and purchase of assets, pledge of assets, provision of external guarantees, loans, appointment of financial management, disposal of assets and connected transactions etc., excluding matters which have to be decided by the Company in general meeting pursuant to the laws, regulations, the Articles of Association and other constitutional documents;
(10) to determine the establishment of the Company’s internal management structure and manpower deployment;
(11) to appoint or remove the general manager and the secretary to the Board based on the nomination by the Chairman of the Board; to appoint or remove the deputy general manager and other senior management (including the chief financial officer) of the Company based on the nomination by the general manager and to determine their remunerations and rewards and penalties;
(12) to formulate the basic management system of the Company;
(13) to formulate proposals for amendment to the Articles of Association;
(14) to formulate the information disclosure system of the Company and to manage information disclosure of the Company;
(15) to propose the appointment or removal of the Company’s auditors to the general meeting;
(16) to receive the work report and inspect the work of the general manager of the Company;
(17) to formulate share incentive schemes;
(18) to decide on other matters which shall be decided by the Board pursuant to the laws, administrative regulations, departmental rules, the listing rules of the place where the shares of the Company are listed and the Articles of Association.

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

5. The original text of Article 148:

The Chairman of the Board shall exercise the following powers:

(1) to preside over general meetings and to convene and preside over Board meetings;
(2) to supervise and check on the implementation of resolutions of the Board;
(3) to sign the securities certificates, corporate bonds and other equity securities issued by the Company;
(4) to sign important documents of the Board and other documents that require signing by the Company’s authorized representative/ Chairman of the Board;
(5) to exercise the power of authorized representative;
(6) to propose to convene work meeting with general manger;
(7) to examine and approve matters of the Company including each single disposal of asset and borrowings in an amount less than RMB50 million;
(8) to decide on matters of the Company exceeding not more than 10% of the annual budget, provided that such excess shall be reported for record in the forthcoming Board meeting and general meeting after its occurrence.
(9) to examine and approve each single disposal of assets of the Company with net book value less than RMB10 million and asset loss within 20% or RMB0.5 million;
(10) to formulate plans of the Company for acquisition of fixed assets of more than RMB10 million but not exceeding RMB50 million;
(11) to examine and approve plans of the Company for the application of funds of the Board;
(12) to issue dismissal or appointment letters for general manager, deputy general manager, secretary to the Board, chief financial officer and other senior management of the Company pursuant to resolutions of the Board;

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DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

(13) to exercise the special disposal power to handle corporate affairs in compliance with the law and the Company’s interests in cases of emergency caused by natural disasters or other force majeure, and report to the Board and general meeting thereafter;
(14) to examine and approve donations and sponsors in the annual budget each in an amount not exceeding RMB2 million and in aggregate not exceeding RMB3 million;
(15) to exercise other powers conferred by the Board.

The abovementioned exercise of power by the Chairman or any transactions or arrangements of the Company shall be proposed for consideration and approval in the general meeting should the listing rules of the place where the shares of the Company are listed so require.

To be amended as:

The Chairman of the Board shall exercise the following powers:

(1) to preside over general meetings and to convene and preside over Board meetings;
(2) to supervise and check on the implementation of resolutions of the Board;
(3) to sign the securities certificates, corporate bonds and other equity securities issued by the Company;
(4) to sign important documents of the Board and other documents that require signing by the Company’s authorized representative/ Chairman of the Board;
(5) to exercise the power of authorized representative;
(6) to propose to convene work meeting with general manger;
(7) to examine and approve plans of the Company for the application of funds of the Board;
(8) to exercise the special disposal power to handle corporate affairs in compliance with the law and the Company’s interests in cases of emergency caused by natural disasters or other force majeure, and report to the Board and general meeting thereafter;
(9) to examine and approve donations and sponsors in the annual budget each in an amount not exceeding RMB2 million and in aggregate not exceeding RMB3 million;
(10) to exercise other powers conferred by the Board.

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DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

6. The original text of Article 163:

The general manager of the Company shall be accountable to the Board and exercise the following powers:

(1) to lead the Company’s production, operation and management, to organize resources to carry out the Board’s resolutions, and to report to the Board;
(2) to organize the implementation of the Company’s annual business plan and investment plan;
(3) to draft plans for the establishment of the Company’s internal management structure;
(4) to formulate the Company’s basic management system;
(5) to formulate the specific rules and regulations of the Company;
(6) to propose the appointment or dismissal of the Company’s deputy general manager(s) and chief financial officer;
(7) to decide on the appointment or dismissal of management personnel other than those required to be appointed or dismissed by the Board;
(8) to determine the salary, benefits and rewards and penalty of the staff of the Company and to decide on their appointment and dismissal;
(9) to propose the convening of extraordinary Board meeting;
(10) to examine and approve donations and sponsors in the annual budget each in an amount not exceeding RMB1 million and in aggregate not exceeding RMB2 million;
(11) to exercise other powers conferred by the Articles of Association and the Board.

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The general manager may attend Board meetings.

To be amended as:

The general manager of the Company shall be accountable to the Board and exercise the following powers:

(1) to lead the Company’s production, operation and management, to organize resources to carry out the Board’s resolutions, and to report to the Board;
(2) to organize the implementation of the Company’s annual business plan and investment plan;
(3) to draft plans for the establishment of the Company’s internal management structure;
(4) to formulate the Company’s basic management system;
(5) to formulate the specific rules and regulations of the Company;
(6) to propose the appointment or dismissal of the Company’s deputy general manager(s) and chief financial officer;
(7) to decide on the appointment or dismissal of management personnel and staff other than those required to be appointed or dismissed by the Board;
(8) to propose the convening of extraordinary Board meeting;
(9) to examine and approve donations and sponsors in the annual budget each in an amount not exceeding RMB1 million and in aggregate not exceeding RMB2 million;
(10) to exercise other powers conferred by the Articles of Association and the Board.

The general manager may attend Board meetings.

7. To add a new Article 215 as follows:

The profit distribution policy of the Company is as follows:

(1) Principle for profit distribution: The Company implements a sustainable and stable profit distribution policy. The profit distribution by the Company should focus on investors’ reasonable investment returns as well as the sustainable development of the Company;
(2) Mode of profit distribution: The Company adopts an active cash and/or share distribution policy;

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APPENDIX I DETAILS OF THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(3) Cash dividend ratio: The profit distributed by the Company in cash annually shall not be less than 10% of the realised and distributable profit that year;
(4) If the Board has not prepared a cash profit distribution budget, it should disclose the reason(s) thereof in regular reports, and independent directors should give independent opinion in this regard;
(5) The profit distribution policy adjusted according to the conditions of business operations, investment planning and long-term development needs shall be reviewed by the Board and then approved by the Company at general meeting.
8. The original Articles 215 to 265 shall be renumbered accordingly as Articles 216 to 266.

(Note: In case of any discrepancies between the Chinese and English versions of the Articles of Association, the Chinese version shall prevail.)

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APPENDIX II PROPOSAL IN RELATION TO THE ABSORPTION AND MERGER OF GUANGZHOU AUTO

PROPOSAL IN RELATION TO THE ABSORPTION AND MERGER OF GUANGZHOU AUTO

To optimize the internal management structure and enhance the operation efficiency, the Company intends to implement the Absorption and Merger of Guangzhou Auto, its wholly owned subsidiary.

The Absorption and Merger does not constitute a connected transaction, and pursuant to the provisions of the Company Law and the Articles of Association, the Absorption and Merger is subject to the consideration and approval of the Shareholders at the EGM.

I. Basic information of the Merger parties

Merging Party – Guangzhou Automobile Group Co., Ltd.

Merged Party – Guangzhou Auto Group Corporation

1. Guangzhou Automobile Group Co., Ltd.

Guangzhou Automobile Group Co., Ltd. was established in June 1997 with a current registered capital of RMB 6,435.02 million. The registered address is 23/F, Chengyue Building, 448-458 Dong Feng Zhong Road, Yuexiu District, Guangzhou and the legal representative is Mr. Zhang Fangyou.

Scope of operation: the investment services for automobile industry and ancillary industry; the development, transfer, consultancy services for the technology of automobile industry; the wholesale and retailing of automobiles (including vehicles) and parts and components; the import and export of goods and technologies (save for the items prohibited by laws and regulations and the import and export of such items should only be conducted upon obtaining the requisite permit); and the operation of imported material processing and three categories of processing and one category of compensation trade of its member companies. According to the audited consolidated financial statement pursuant to the PRC accounting standards, as at 31 December 2011, the total assets of the Company amounted to RMB 44.337 billion, equity attributable to owners of the parent amounted to RMB 29.159 billion. In 2011, an operating income of RMB 10.984 billion was realized and the equity attributable to owners of the parent amounted to RMB 4.272 billion.

2. Guangzhou Auto Group Corporation

Guangzhou Auto Group Corporation, the wholly owned subsidiary of the Company was established in December 1988 with a registered capital of RMB 468.20 million. The registered address is Room A-K, 17/F Chengyue Building, 448-458 Dong Feng Zhong Road, Yuexiu District, Guangzhou and the legal representative is Mr. Zhang Fangyou.

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PROPOSAL IN RELATION TO THE ABSORPTION AND MERGER OF GUANGZHOU AUTO

APPENDIX II

Scope of operation: manufacturing, processing and repair of automobile, agricultural machinery and parts, exporting products and relevant technology of the member companies, importing the raw and ancillary materials, machinery and equipment, instrumentation and technology as required for the production of the Company, the operation of processing business and three categories of processing and one category of compensation trade, procurement, allocation and wholesale of the steel, pig iron, copper, aluminum, zinc, tin, nickel, copper, aluminum, wood and cable needed for the production by the subsidiaries of the Group, the wholesale, purchase and distribution of parts of agricultural machinery, parts of vehicles, consultation services of the automobile production technology, information services and undertaking automobile production projects.

According to the audited consolidated financial statement pursuant to the PRC accounting standards, as at 31 December 2011, the total assets of the Guangzhou Auto Group Corporation amounted to RMB 8.503 billion, equity attributable to owners amounted to RMB 589 million. In 2011, an operating income of RMB 0 million was realized and the net profit amounted to RMB 2.095 billion.

II. Method, scope and related arrangements of the Absorption and Merger

The Company shall acquire all the assets, liabilities and business of Guangzhou Auto Group Corporation by way of full Absorption and Merger. Upon completion of the Merger, the Company shall be the continuing entity, and the independent legal person status of Guangzhou Auto Group Corporation shall be de-registered.
The Merger benchmark date is 31 August 2012.
The profit or loss incurred during the period from the Merger benchmark date to the completion date of the Merger shall be assumed by the Company.
Upon completion of the Merger, all the assets (including but not limited to fixed assets, current assets and other properties) of Merged Party shall be merged into the Company, while its liabilities and other obligations and responsibilities shall be assumed by the Company.
Balance sheets and inventory of assets shall be prepared and the procedures for notifying the creditors and announcement shall be fulfilled.
Completing the matters in relation to the delivery of all assets of the Merged Party to the Company, formalities relating to assets transfer and registration of assets ownership changes.
Upon the completion of the Merger, the settlement of the staff of the Merged Party shall be executed in accordance with the relevant provisions of the management of the Company’s staff.

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PROPOSAL IN RELATION TO THE ABSORPTION AND MERGER OF GUANGZHOU AUTO

APPENDIX II

The merged party shall perform its procedures of consideration and approval, while the Company shall submit the matter to general meeting for consideration and approval upon performing the procedures of consideration and approval by the Board. The Merger parties shall enter into the Agreement of Absorption and Merger after the matter was considered and passed at the general meeting.
Subsequent to the relevant consideration and approval procedures, the parties shall jointly complete the formalities relating to the changes in production licence, transfer of licence, amendments to the scope of operation in the Articles of Association and registration.
The Parties shall perform other procedures as required by laws, administrative regulations and the State Council.

III. Purpose of the Absorption and Merger and its effect on the Company

Upon the completion of the Absorption and Merger, the existing fixed assets of Guangzhou Auto Group Corporation will be merged into the Company. The effects of the Merger on the Company are mainly reflected on that:

There is no change in the actual equity held by the Company before and after the Absorption and Merger.
The Absorption and Merger can enhance overall influence and control of GAC Group over the market and conform to the development strategy of the Company.
The Absorption and Merger is beneficial to the Company in optimizing the internal management structure, reducing the management hierarchy and management costs, enhancing the management efficiency which will have a positive impact on the Company.
The Absorption and Merger is beneficial to the Company in focusing and optimizing production resources as well as enhancing the operating efficiency.
(Note: In case of any discrepancies between the Chinese and English versions of the terms of the absorption and merger of Guangzhou Auto, the Chinese version shall prevail.)

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PROPOSAL IN RELATION TO THE GRANT OF GENERAL MANDATE FOR THE ISSUANCE OF A SHARES TO THE BOARD

APPENDIX III

(1) Details of general mandate for issuance of new A Shares

According to the applicable statutes and codes of the PRC, the Listing Rules and the Articles of Association, upon approval of the resolution in respect of the grant of a general mandate to the Board for the issuance of new A Shares by the Shareholders at the EGM, the Board and/or its authorized persons will be granted a general mandate to allot, issue and/or deal with A Shares, and to execute offer recommendation, agreement or grant share options or options convertible into A Shares (including convertible bonds) in respect of the above.

Subject to the conditions under sub-paragraphs (1), (2) and (3) of this paragraph, the Board be and is granted a general mandate to allot, issue and/or deal with A Shares, and to execute offer recommendation, agreement or grant share options or options convertible into A Shares (including convertible bonds) in respect of the above during the Relevant Period (as defined below):
(1) the mandate shall not exceed the Relevant Period, except for offer recommendation, agreement executed or share options or options convertible into A Shares granted during the Relevant Period which may be required to be carried on or exercised after the Relevant Period;
(2) the aggregate value of A Shares proposed to be allotted, issued, and/or dealt with by the Board, or conditionally or unconditionally agreed by the Board to be allotted, issued and/or dealt with, shall not exceed 20% of the aggregate value of the Company’s A Shares issued as at the date of passing of this resolution at a general meeting; and
(3) the grant of general mandate to the Board is subject to compliance with the Company Law of the PRC, the Listing Rules and all other applicable laws, rules and regulations of any other governmental or regulatory bodies, and approval of the CSRC and other relevant government departments of the PRC.
In respect of this special resolution, “Relevant Period” means the period from the date on which this special resolution is passed to the earliest of the following dates:
(1) 12 months after this special resolution is passed; or
(2) the conclusion of the first annual general meeting of the Company following the passing of this resolution at which time it shall lapse unless, by ordinary resolution passed at that meeting, the mandate is renewed, either unconditionally or subject to conditions; or
(3) the date on which the Shareholders at any general meeting has by way of special resolution rescinded or amended the authority granted to the Board under this special resolution.

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APPENDIX III PROPOSAL IN RELATION TO THE GRANT OF GENERAL MANDATE FOR THE ISSUANCE OF A SHARES TO THE BOARD

Subject to issuance of A Shares in compliance with paragraph 1 of this special resolution, the Board be and is authorized to deal with all matters relevant to the increase in the Company’s registered capital and paid up capital in order to reflect the amount of A Shares that the Company is authorized to issue pursuant to paragraph 1 of this special resolution, and to make any appropriate and necessary amendments to the Articles of Association to reflect the increase in the Company’s registered and paid up capital, and to take any other necessary action and conduct any necessary procedure to realize the issuance of A Shares and increase in registered and paid up capital contemplated under paragraph 1 of this special resolution.

(2) Authorize the Board to deal with all matters relevant to issuance of A Shares

In order to improve efficiency in decision-making, minimize internal approval procedures and grasp market opportunities, after the grant of the general mandate for the issuance of new A Shares by the Shareholders to the Board, the executive directors of the Company be and are authorized to jointly and severally handle all matters relating to the issuance of A Shares in their full discretion, within the scope and under the principles approved at the general meeting.

(Note: In case of any discrepancies between the Chinese and English versions of the terms of the grant of general mandate for the issuance of A Shares, the Chinese version shall prevail.)

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APPENDIX IV PROPOSAL FOR ISSUANCE OF DOMESTIC CORPORATE BONDS

To satisfy the capital demand required for the Company’s rapid operational growth and to further reduce financial costs and enhance the competitiveness of the Company, the Company proposes to publicly issue Domestic Corporate Bonds not exceeding RMB4 billion, in accordance with the relevant provisions in laws, regulations and regulatory documents such as the Company Law of the PRC, Securities Law of the PRC, Pilot Rules on Issuance of Corporate Bonds etc. and combining with the Company’s specific circumstances, the Company has formulated the relevant issuance proposal to issue Domestic Corporate Bonds of not more than RMB4 billion. The proposed arrangements are set forth below:

(1) Number of bonds to be issued

The principal amount of the Domestic Corporate Bonds to be issued in the PRC shall not exceed RMB4 billion (inclusive of RMB4 billion) (hereinafter referred to as the Domestic Corporate Bonds) and the Domestic Corporate Bonds may be issued in one tranche or in multiple tranches. The exact issuance amount of the bonds and the manner of tranches shall be determined by the Board or its authorized persons (as authorised by the Shareholders at the EGM) according to the capital demand of the Company and market conditions at the time of issue within the above limit and the bonds shall be issued of such size and in such manner as ultimately approved by CSRC.

(2) Term and type of bonds

The term of the Domestic Corporate Bonds shall not exceed 10 years (including 10 years) and they can be issued for one fixed term or a mixture of various terms. The constitution of the terms and the issue size of each tranche of bonds shall be determined by the Board or its authorized persons (as authorised by the Shareholders at the EGM) according to the market conditions after discussion with the sponsor and main underwriter.

(3) Interest rate of bonds and its method of determination

The interest of the Domestic Corporate Bonds and its manner of payment shall be determined before issue according to the market conditions by the Board or its authorized persons (as authorised by the Shareholders at the EGM), together with the sponsor and main underwriter.

(4) Arrangement of Guarantee

The guarantee arrangement of the Domestic Corporate Bonds shall be determined by the Board or its authorized persons (as authorised by the Shareholders at the EGM).

(5) Use of proceeds

The proceeds from the Domestic Corporate Bonds issuance after deduction of issuance expenses are mainly used to adjust financial structure.

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APPENDIX IV PROPOSAL FOR ISSUANCE OF DOMESTIC CORPORATE BONDS

(6) Subscription arrangement for existing Shareholders

No preferential subscription arrangement of the Domestic Corporate Bonds will be offered to existing Shareholders.

(7) Method of issuance and target subscribers

The method of Domestic Corporate Bonds issuance shall be determined by the Board or its authorized persons as authorized by the Shareholders at the Shareholders’ meeting, after discussion with the sponsor and main underwriter before issuance with reference to the market conditions. The target subscribers shall be investors who fulfill the requirements of the relevant laws and regulations.

(8) Listing of bonds

After completion of the Domestic Corporate Bonds issue and conditional upon fulfilling requirements for listing, the Company will apply to list the Domestic Corporate Bonds on the Shanghai Stock Exchange. After approval of regulatory authorities and subject to compliance with the relevant laws and regulations, the Company may also apply to list the Domestic Corporate Bonds at other trading venues.

(9) Term of validity of this resolution

The Shareholders’ resolution relating to the issuance of Domestic Corporate Bonds shall be valid for 36 months after the passing of the Shareholders’ resolution.

(10) Authorization to the Board and the persons authorized by the Board

To enhance the efficiency of the issue and cater to the requirement of the Domestic Corporate Bonds issuance, the Board submits to the Shareholders to consider and approve at the EGM, in accordance with the relevant laws, regulations and regulatory documents such as the Company Law of the PRC, the Securities Law of the PRC and the Pilot Rules on the Issuance of Corporate Bonds of CSRC and the then prevailing market conditions, and under the framework and principles passed in the Shareholders’ meeting and with the view to maximize the interests of Shareholders, to authorize the Board or any two of its authorized persons to deal with all matters relevant to the issuance of Domestic Corporate Bonds, including but not limited to:

(1) to determine and appoint intermediaries participating in this issuance of Domestic Corporate Bonds and select bonds trustee manager;
(2) within the scope permitted under the laws, regulations and regulatory documents of the PRC and considering the practical need of the Company and the prevailing market conditions, to formulate the specific plans for the Domestic Corporate Bonds issuance and to amend or adjust the terms of issuance, including but not limited to the exact issue size, terms and types of bonds, interest rate, interest determination method and whether the bond interest rate shall be adjusted during the term of the bond, timing of issuance, whether the bonds shall be issued in tranches and if so the number of tranches, whether there shall be a sale back or redemption provision, option for increase in interest rate, option for sale back by investors, rating

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APPENDIX IV PROPOSAL FOR ISSUANCE OF DOMESTIC CORPORATE BONDS

arrangement, guarantee matters, term and manner of principal repayment and interest payment, place of listing, use of proceeds (within the scope as approved by the Shareholders) and any other matters in relation to the Domestic Corporate Bonds issuance;

(3) to determine and take all actions necessary for the reporting, listing and other incidental matters of the Domestic Corporate Bonds issuance, including but not limited to, handling the reporting matter of the Domestic Corporate Bonds issuance; handling the listing of Domestic Corporate Bonds after completion of issuance; executing signing performing amending completing all necessary documents contracts agreements relevant to the issuance and listing of Domestic Corporate Bonds (including but not limited to offering prospectus, sponsor agreement, underwriting agreement, bond trustee management agreement, rules of bond holders’ meeting, listing agreement, all announcements and other legal documents, etc.), making disclosure required under the applicable laws, and all other matters relevant to the issuance and listing of the Domestic Corporate Bonds;
(4) if there shall be any changes in policies of regulatory bodies or market conditions, to authorize the Board or its authorised persons to adjust the specific proposal of the Domestic Corporate Bonds issuance and its relevant matters, or to decide whether to continue the work in relation to the issuance of the Domestic Corporate Bonds in view of actual circumstances, unless that matter must be reapproved by the Shareholders’ meeting by virtue of the provisions in the relevant laws, regulations and the Articles of Association;
(5) During the term of Domestic Corporate Bonds, if the Company foresees that it cannot repay the principal and interest of the Domestic Corporate Bonds on time or when due, provided that the relevant laws and regulations are complied with, the Board or its authorised persons is authorized to at least take the below protective measures:
1) not to distribute profits to Shareholders;
2) to suspend the implementation of capital expenditure projects such as substantial external investment, acquisition and merger;
3) to reduce or suspend the salary and bonus of directors and senior management staff;
4) to forbid the transfer of key responsible persons;
(6) to do all other matters relevant to the issuance and listing of Domestic Corporate Bonds.

The authorization shall be valid from the date on which the resolution is passed until all authorized matters aforementioned are completed.

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APPENDIX IV PROPOSAL FOR ISSUANCE OF DOMESTIC CORPORATE BONDS

The authorized persons of this resolution are proposed to be Mr. Zhang Fangyou, Mr. Zeng Qinghong and Ms. Lu Sa. Any two of the authorized persons may exercise the above authorization to handle matters relevant to the issuance of Domestic Corporate Bonds in full discretion.

(Note: In case of any discrepancies between the Chinese and English versions of the terms of the Domestic Corporate Bonds, the Chinese version shall prevail.)

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

Proposal for issuance of A Share Convertible Bonds

I. Type of bonds to be issued

II. Issue size

In accordance with the requirements of the relevant laws and regulations and taking into account the Company’s financial condition and investment plan, the total amount of the A Share Convertible Bonds to be issued will be not more than RMB2 billion (including RMB2 billion). The actual size of the issuance shall be determined by the Board or its authorised persons within the above scope, subject to the authorization by the Shareholders at the Shareholders’ meeting of the Company.

III. Term

In accordance with the relevant requirements and the progress of implementation arrangement of the proposed investment projects towards which the proceeds from the Company’s issuance of A Share Convertible Bonds are proposed to be used, as well as the issue size and the Company’s future operational, financial and other conditions, the term of the A Share Convertible Bonds will be not more than six years (including 6 years) from the date of issuance. The actual term shall be determined by the Board or its authorized persons as authorized by the Shareholders’ meeting.

IV. Par value and issue price

The A Share Convertible Bonds will be issued at par with a nominal value of RMB100 each.

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

V. Interest rate

The annual interest rate of the A Share Convertible Bonds shall be determined before issuance of the Convertible Bonds by the Board or its authorized persons (as authorized by the Shareholders at the EGM) after discussion with the sponsor and the main underwriter with reference to state policies and the actual condition of the market and the Company.

If prior to the completion of the issuance of A Share Convertible Bonds, the bank deposit interest rate is adjusted, subject to the authorization by the Shareholders at the Shareholders’ meeting, the Board or its authorized persons shall make adjustments to the interest rate of the A Share Convertible Bonds accordingly.

VI. Interest payment

1. Calculation of the annual interest

Annual interest means the interest to be paid to the CB Holders on each anniversary of the date of issuance of the A Share Convertible Bonds based on the aggregate nominal value of the A Share Convertible Bonds, accrued from the date of issuance.

The formula of calculating annual interest: I = B × i

I: means annual interest;
B: means total par value of the A Share Convertible Bonds held by the CB Holders on the interest record day during an interest calculation year (“ that year ” or “ every year ”); and
i: means annual interest rate of the A Share Convertible Bonds.

2. Means of payment

(A) Interest of the A Share Convertible Bond will be paid annually, beginning from the first day of the issuance of the A Share Convertible Bond. Tax payable from the interest income shall be borne by the CB Holders.
(B) Interest payment date: Interest is payable annually commencing on the full year after the issue date of the A Share Convertible Bonds. If that day is a statutory holiday or rest day, interest shall be payable on the following working day, but no interest shall accrue during that period. Interest will be accrued between the period of preceding interest payment date and the next interest payment date. The ascription of the interest and dividend during the year of conversion and other matters will be determined by the Board in accordance with the relevant laws and regulations and the regulations of the Shanghai Stock Exchange.

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

(C) Interest record date: The annual interest record date will be the trading date preceding the interest payment date. The Company will not pay interest in respect of that year and the subsequent interest calculation years for those A Share Convertible Bonds being transferred or applied to be transferred to the shares of the Company on or before the interest record date.

VII. Conversion period

The conversion period starts from the trading day immediately following the expiry of six months after the date of issuance of the A Share Convertible Bonds until the maturity date.

VIII. Ascertaining the Conversion Price

The initial Conversion Price shall not be lower than (1) the average trading price of the A shares of the Company within 20 trading days preceding the date of publication of the Offering Document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the average trading price of each of these trading days should be adjusted with reference to the share price after ex-rights or ex-dividend), and (2) the average trading price of the A shares of the Company on the trading day preceding the date of the Offering Document of the A Share Convertible Bonds. Subject to the authorization by the Shareholders at the Shareholders’ meeting, the Board or its authorized persons, after discussion with the sponsor and the main underwriter shall determine the actual initial Conversion Price with reference to the actual conditions of the market and the Company.

The average trading price of the A Shares of the Company within 20 trading days preceding the date of publication of the Offering Document = The total trading price of the A Shares of the Company within 20 trading days preceding the date of publication of the Offering Document / the total trading volume of the A Shares of the Company within those 20 trading days;

The average trading price of the A Shares of the Company on the trading day preceding the date of the Offering Document = The total trading price of the A Shares of the Company on the trading day preceding the date of the Offering Document / the total trading volume of the A Shares of the Company that day.

IX. Adjustments to Conversion Price and calculation formulae

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

Assuming that “Po” means initial Conversion Price, “N” means scrip dividend or capitalisation issue rate, “K” means new share issue rate or rights issue rate, “A” means price of new share issue or rights issue, “D” means cash dividend per share, and “P” means Conversion Price after adjustment. The adjusted value shall be rounded up to two decimal places.

(1) Distribution of cash dividend: P = Po – D;
(2) Scrip dividend or capitalization issue: P = Po / (1 + N);
(3) Issue of new Shares or rights issue: P = (Po + A x K) / (1 + K); and
(1), (2) and (3) occur concurrently: P1 = (Po – D+ A x K) / (1 + N + K)

Where the abovementioned changes in shareholding or shareholder’s interests occurs, the Conversion Price will be adjusted accordingly. The adjustment of the Conversion Price, having been resolved by the Board, will be published in the form of an announcement on the media designated by CSRC. The announcement will indicate the date of adjustment to the Conversion Price, adjustment method and suspension period of share conversion (if necessary). If the Conversion Price adjustment date is on or after the CB Holder’s application for conversion, and before the share registration date, then such conversion application will proceed on the basis of the adjusted Conversion Price.

In the event that the rights and benefits of the CB Holders derived from share conversion rights are affected by the change in the Company’s share class, quantity and/or shareholders’ interest due to the possible share repurchase, consolidation, subdivision or any other action which may be taken by the Company, the Company will adjust the Conversion Price based on the principles of fairness, justice, equality and protection of the Holders’ rights. The Conversion Price will be adjusted with reference to the relevant laws and regulations of the state and the relevant provisions of the securities regulatory authorities.

X. Downward adjustment to Conversion Price

1. Adjustment terms and magnitude

The Conversion Price may be subject to downward adjustments if, during the term of the A Share Convertible Bonds, the closing prices of the A shares in any 15 trading days out of any 30 consecutive trading days are lower than 90% of the prevailing Conversion Price. The Board may propose any such adjustments for the Shareholders to consider and seek their approval at a general meeting. The above-mentioned proposal is subject to approval of two-thirds of the participating Shareholders with voting rights. Shareholders who hold the A Share Convertible Bonds should abstain from voting. The adjusted Conversion Price should be not less than (a) the average trading price of the A shares of the Company for the 20 trading days prior to the aforementioned general meeting, (b) the average trading

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

price of the A shares of the Company on the trading day immediately before the general meeting of Shareholders, (c) the net asset value per share based on the latest audited financial statement, and (d) the nominal value per share.

In the event that another adjustment of Conversion Price has been implemented in the aforementioned 30 trading days, the Conversion Price will be calculated based on the date prior to and after the adjustment, in accordance with the adjusted Conversion Price and closing price.

2. Procedures of downward adjustment to Conversion Price

If the Company decides to make a downward adjustment to the Conversion Price, the Company will publish an announcement in the print media and the website designated by the CSRC for information disclosure. The information disclosed will include the resolutions of general meeting of Shareholders and will cover the magnitude of the adjustment, the Conversion Price adjustment date and the suspension period of share conversion. An announcement will also be published (if necessary) on the website of the Hong Kong Stock Exchange if so required by the Listing Rules and the Articles of Association.

XI. Conversion method of fractional share

The number of the shares to be requested by the CB Holders for conversion shall be in whole number. The remaining balance of the fractional share will be paid by the Company in accordance with the relevant requirements of the Shanghai Stock Exchange and other departments to the CB Holders at par with the corresponding accrued interest in cash within the five trading days after the date of conversion.

XII. Terms of redemption

1. Terms of redemption at maturity

Within five trading days after the maturity of the A Share Convertible Bonds, the Company will redeem all the A Share Convertible Bonds which have not been converted into the A shares of the Company at a certain ascent ratio of the par value (including the final term of annual interest). Subject to the authorization by the Shareholders’ at the Shareholders’ meeting, the Board or its authorized persons shall, after discussion with the sponsor and the main underwriter, determine the specific ascent ratio with reference to market conditions.

2. Terms of redemption in advance

During the conversion period, the Company has the right to redeem all or part of the A Share Convertible Bonds based on the par value plus the current accrued interest upon the occurrence of any of the two following situations:

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

A. During the conversion period, if the closing price of the A shares of the Company is equal to or not lower than 130% of the Conversion Price in at least 15 trading days out of any 30 consecutive trading days, or
B. When the balance of the unconverted A Share Convertible Bonds is less than $30 million.

Formula for calculating current accrued interest is: IA = B × i × t / 365

IA: Accrued interest for the current period;
B: Aggregate nominal value of the A Share Convertible Bond held by the CB Holders;
i: Interest rate of the A Share Convertible Bond that year; and
t: Number of days of interest accrued, actual calendar days from the last interest payment date to the redemption date (excluding the redemption date).

In the event that any adjustment of share conversion price has been implemented in the aforementioned 30 trading days, the Conversion Price will be calculated based on the date prior to and after the adjustment, in accordance with the adjusted Conversion Price and closing price.

XIII. Sale back

(1) Terms of conditional sale back

During the last two interest accrual years within the term of the A Share Convertible Bonds, if the closing prices of the shares in any 30 consecutive trading days are lower than 70% of the prevailing conversion price, the CB Holders are entitled to sell back all or part of the A Share Convertible Bonds they hold to the Company at par plus current accrued interest. If the conversion price has been adjusted in the abovementioned trading days as a result of issuance of bonus shares, capitalization issue, issuance of new shares (excluding any increase in the share capital as a result of the conversion of the A Share Convertible Bonds), rights issue or the distribution of cash dividends, in respect of the trading days prior to the adjustment, the calculation shall be based on the unadjusted conversion price and the closing price of the shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the shares on each such day. If a downward adjustment to the conversion price occurs, the abovementioned “30 consecutive trading days” shall be recalculated from the first trading day after such adjustment.

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

The CB Holders can exercise their sale back rights once every year when the sale back conditions are initially satisfied according to the abovementioned agreed terms in the last two interest accrual years. If the sale back conditions are initially satisfied, but the CB Holders do not apply for and exercise their sale back rights during the sale back declaration period announced by the Company, they shall not exercise the sale back rights during such accrual year. The CB Holders are not allowed to exercise part of their sale back rights repeatedly.

(2) Additional terms of sale back

If the actual use of proceeds from the issuance of the A Share Convertible Bonds by the Company deviates materially from the description in the Offering Document, which is considered as a change of use of proceeds pursuant to relevant rules of the CSRC or is so deemed by the CSRC, the CB Holders will have a one-off right to sell back the A Share Convertible Bonds at par value plus any accrued interest to the Company. The CB Holders will be entitled to sell back all or part of the A Share Convertible Bonds they hold to the Company at par plus current accrued interest. Upon the satisfaction of the additional terms of sale back, the CB Holders may sell their A Share Convertible Bonds to the Company during the additional sale back declaration period after it is announced by the Company. If the CB Holders do not exercise their sale back rights such period, they shall not exercise such rights later on.

XIV. Dividend rights after conversion

The new A shares of the Company to be issued as a result of the conversion of the A Share Convertible Bonds shall rank pari passu with all the existing issued shares of the Company, and all the ordinary Shareholders registered as at the date of shareholder registration (including persons becoming Shareholders by reason of conversion of A Share Convertible Bonds) shall enjoy dividend rights for that period.

XV. Method of issuance and target subscribers

The specific method of the issuance of the A Share Convertible Bonds will be determined by the Board or its authorized persons as authorized by the Shareholders’ meeting after discussion with the sponsor and the main underwriter. The target investors are natural persons, legal persons, securities investment funds and other investors in compliance with legal requirements who have maintained securities accounts with the Shanghai Branch of China Securities Depository and Clearing Corporation Limited (excluding those prohibited by state laws and regulations).

XVI.Subscription arrangement for the existing Shareholders

The existing A Shareholders are entitled to preferential rights to subscribe the A Share Convertible Bonds. The specific preferential allocation ratio will be determined by the Board or its authorized persons under the authorization of the general meeting of the Shareholders in accordance with the actual market conditions, and should be disclosed in the Offering Document. The remaining portion of the preferential issuance

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

and those which have been given up by the existing A Shareholders will be subscribed through the combination of offline placement to institutional investors and online issuance through the online pricing system of Shanghai Stock Exchange, and the rest of the A Share Convertible Bonds will be underwritten by the underwriting syndicates.

XVII. Matters relating to CB Holders’ meetings

The Board should convene a meeting of the CB Holders if one of the following situations occur:

(1) Proposed changes to the terms of the Offering Document of the A Share Convertible Bonds;
(2) The Company’s default in paying principal and interests on time;
(3) Reduction of the Company’s capital, or merger, separation or dissolution or bankruptcy of the Company;
(4) Other matters affecting the material interests of the CB Holders.

XVIII. Use of proceeds from the issuance of the A Share Convertible Bonds

The proceeds from the issuance of the Convertible Bonds, after deduction of expenses, are intended to be applied towards the following projects: the expansion of production capacity and increase in product varieties by GAC Toyota Motor Co., Ltd., the expansion of new products by GAC Toyota Engine Co., Ltd., the increase in new car models and new development of engine platform by Guangzhou Automobile Group Motor Co. Ltd., the increase in investment and shareholding in Urtrust Insurance Co., Ltd. and the supplement of work capital.

XIX. Guarantee

The arrangements for guarantee in relation to the issuance of A Share Convertible Bonds shall be determined by the Board or its authorized persons as authorized by the Shareholders’ meeting.

XX. The validity period of the resolution of the issuance of the A Share Convertible Bonds and timing of the issuance

The resolution of the issuance of the A Share Convertible Bonds will be valid for 12 months from the date of the passing of the relevant resolutions at the Shareholders’ meeting. The A Share Convertible Bonds will be issued after 29 March 2013.

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

XXI. Authorization by the Shareholders’ meeting of the Board or its authorized persons

To ensure smooth implementation of the issuance of the A Share Convertible Bonds and to protect the interests of investors, it will be proposed at the Shareholders’ meeting to authorize the Board or any two of its authorized persons to handle matters regarding the issuance of the A Share Convertible Bonds, including but not limited to those set out below:

(1) Determine the timing for issuance in accordance with the requirements of the relevant laws and regulations and the actual implementation plan;
(2) To the extent permitted by the requirements of the law and regulations and the Articles of Association, and following the opinion issued by the securities regulatory authorities in respect of the disclosure documents of the issuance of A Share Convertible Bonds or taking into account the actual conditions of the Company, amend, adjust or supplement the terms of issuing A Share Convertible Bonds as is necessary, determine the exact issue terms and plan prior to issuance, devise and implement the final plan for the issuance of A Share Convertible Bonds, including but not limited to determine the issue size, proportion of preferential rights to subscribe for the A Share Convertible Bonds to be allocated to existing Shareholders, initial Conversion Price, adjustment of the Conversion Price, redemption, sale back, interest rate, guarantee and security, CB Holders’ rights to meetings and procedure for convening CB Holders’ meetings and conditions for the resolutions to become effective, open a monitoring account for the proceeds of issuance of A Share Convertible Bonds, execute three-party monitoring agreements for the account and other matters related to the proposal for the issuance of A Share Convertible Bonds and future conversion;
(3) Sign, amend, supplement, submit, present, effect all agreements, contracts and documents in the issuance process (including but not limited to underwriting and guarantee agreements, guarantee contract, agreements related to the investment of the proceeds and agreements for engaging intermediaries) and agreements related to the execution of the investment projects of the proceeds;
(4) Within the uses of proceeds as approved by the Shareholders’ meeting, adjust or determine the actual use of the proceeds in accordance with the actual progress of the investment projects and the actual capital needs; prior to the realization of the proceeds, the Company may raise funds on its own to implement the investment projects of the issuance of A Share Convertible Bonds according to the actual progress of the project and operational needs, and replace the same upon the realization of the proceeds; make necessary adjustments to the investment projects in accordance with the requirements of the state and relevant regulatory authorities and the market condition;

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APPENDIX V PROPOSAL FOR ISSUANCE OF A SHARE CONVERTIBLE BONDS

(5) If there are changes in the policy of the regulatory authorities in relation to the issuance of A Share Convertible Bonds or in the market conditions, authorize the Board or its authorized persons to make corresponding adjustments to the issuance plan, save and except those matters which have to be resolved at a Shareholders’ meeting pursuant to relevant laws and regulations and the Articles of Association;
(6) If as a result of an Act of God or other matters, the issuance plan cannot be implemented or if implemented may lead to adverse consequences to the Company, or if the policy in relation to the issuance of A Share Convertible Bonds changes, decide to postpone or terminate the issuance plan at its discretion;
(7) Engage relevant intermediaries to handle the matters relating to the issuance of A Share Convertible Bonds and listing disclosure; make, amend and issue disclosure materials relevant to the issuance and listing of A Share Convertible Bonds pursuant to the requirements of the regulatory authorities;
(8) Amend the relevant provisions of the Articles of Association according to the issuance and conversion conditions of the A Share Convertible Bonds, and attend to matters such as filing with industrial and commercial authorities, registration of change of registered capital and listing of A Share Convertible Bonds;
(9) Deal with other matters in relation to the issuance of A Share Convertible Bonds insofar as permitted by the law, regulations and the Articles of Association.

(Note: In case of any discrepancies between the Chinese and English versions of the terms of the Convertible Bonds, the Chinese version shall prevail.)

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PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

APPENDIX VI

To alleviate the capital pressure of the Company and optimize the debt structure, the Company analyzed the feasibility of the use of proceeds of the issuance of A Share Convertible Bonds towards investment projects as follows:

I. The plan of using the proceeds towards investment projects

The Company intends to issue A Share Convertible Bonds of no more than RMB2 billion, and to apply the proceeds towards the following projects according to priority after deduction of issuance expenses:

Unit: Million

Sequence No. Project Name Project Type 1 Expansion of production capacity and increase in product varieties by GAC Toyota Motor Co., Ltd. Expansion of production capacity and increase in new products 2 Expansion of products by GAC Toyota Engine Co., Ltd. Expansion of production capacity and increase of product varieties 3 Research and development for increasing new car models by Guangzhou Automobile Group Motor Co. Ltd. New products research and development 4 Research and development of engine platform and new products by Guangzhou Automobile Group Motor Co. Ltd. Research and development of platform and products 5 Increase in investment and shareholding in Urtrust Insurance Co., Ltd. Increase in investment 6 Supplement of work capital Total	Total Investment for the Project 3,547.45 998.58 577.30 145.00 1,000.00 18.34 6,286.67	Proceeds intended to be utilized 703.26 80.75 461.69 135.96 600.00 18.34
		2,000.00

In the event that the net amount of the actual proceeds raised in the issuance is less than the amount proposed above, the Company will reduce the amount of proceeds intended to be utilized for single or multiple specific projects, or the Company will make up the shortfall by self-financing. Before the proceeds from the issuance are in place, the Company

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PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

APPENDIX VI

shall invest in the projects in advance by self-financing according to the progress of the projects, the self-financing capital will be replaced by the proceeds after the proceeds are in place.

II. The significance on the Group by the implementation of the use of proceeds towards investment project

(1) Increase the product varieties of the Group and strengthen the competitiveness of mid class sedans

Through the implementation of the use of proceeds towards investment projects, the Group will further increase production capacity and introduce various vehicle models and the relevant technology of engines, and research and develop new models for proprietary brand, with new products covering various segments including A class and A0 class sedans and SUV. Such projects will further broaden the spectrum of the Group’s products, increase the profit points of the Group, and enhance the competitiveness of the Group in the relevant markets.

(2) Strengthen the ability in technological research and development of proprietary brands of the Group and enhance the core competitiveness of the Group

In recent years, the vehicle products of domestic proprietary brands gradually gain the recognition from the consumers, and the market share has been rising steadily. The Group started to arrange a field of proprietary brands. However, there are less vehicle models for its proprietary brand at present, the business foundation of such field is relatively weak. Implementation of investment projects using the proceeds will further enhance the ability in research and development for the proprietary brands of the Group, further advance the establishment of the system of the Group proprietary brands and accelerate the development of the products of the proprietary brands of the Company which have great significance in enhancement of the core competitiveness of the Group.

(3) Fully leverage upon the advantage of the Great GAC geographical layout, expand and strengthen the automobile financial services

Through the implementation of using the proceeds towards the investment projects, and on the basis of integrating and utilizing the resources of automobile industrial chain, the Group will further integrate the automobile financial services including insurance service and so on into the automobile industrial chain and fully mobilize the internal and external resources of the Group. The Company will also establish a complete system of customer service network and service process, provide our customers with comprehensive, professional, quality and convenient services as well as expand and strengthen the automobile financial services.

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APPENDIX VI

III. The particulars of the use of proceeds towards the investment projects

(1) Expansion of production capacity and increase in product varieties by GAC Toyota Motor Co., Ltd. (“GAC Toyota”)

1. Project Overview

Implementing Body: GAC Toyota

The approval obtained: The project has obtained the approval formalities from the industry’s executive department and environmental protection department.

2. Project Background

In recent years, as oil prices continue to increase rapidly and as consumer mentality continues to change, the market structure of car models of different engine displacements has changed considerably. Low-carbon, environmentally friendly and energy saving car models will be the target and direction for the change in consumer trend in the PRC. At the same time, as the competition in the automobile industry continues to increase, whether new products adapted to the market can be made available has become the key to the survival and development of enterprises.

3. Guiding principles of the project

By introducing new car models with Toyata’s advance technologies, expand the production line, broaden the choices for consumers and ensure the sustainable, stable and healthy development for the next stage.

4. The project construction plan

The project construction plan includes: adjust and make over the existing production capacity, add some of the industrial equipment and related tools, make adaptive changes to the existing production lines and undergo necessary construction of supporting facilities in order to increase the relevant production capacity.

5. The prospects and benefits of the project

The car models proposed to be added are targeted at the demand which is of most concern to PRC consumers. With outstanding competitiveness, one can effectively gain consumer recognition and take a share in the divisional market. It is expected that after the implementation of the project, good financial result will be achieved.

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(2) Expansion of products and production capacity by GAC Toyota Engine Co., Ltd. (“GAC Toyota Engine”)

1. Project Overview

Implementing Body: GAC Toyota Engine

The approval obtained: The project has been approved for filing by the Yue Fa Gai Chan Ye [2011] No. 1368 issued by Development and Reform Commission of Guangdong Province on 8 November 2011 and Yue Huan Shen [2011] No. 471, an approval of environment impact assessment of such project issued by Environmental Protection Office of the Guangdong Province on 21 October 2011.

2. Project background

Currently, the sales of sedan in China is distinguished by displacement, passenger vehicles with displacement below 1.6L takes the leading market position. According to the vehicle developing experiences in the developed countries and to cope with the energy shortage, global warming and environment pollution problems, it is expected that the passenger vehicle in high performance and small displacement (below 1.6L) will continue to maintain the leading position in the vehicle market in China. In line with the demand of the development, GAC Toyota will introduce compatible small displacement vehicles in 2013. GAC Toyota Engine is the engine supplier of GAC Toyota. In order to meet its production requirements, GAC Toyota Engine is proposed to introduce the advanced technology NR type small displacement engine.

3. Project construction programme

This project will execute the expansion and reconstruction in the current production line of GAC Toyota Engine and enhance the production capacity of the NR type engine by introducing the NR type engine with displacement of 1.3L and 1.5L respectively. After the completion of the project, the production capacity of NR type engine will be 108,000 units/year.

4. Project construction plan

The major construction plan of this project is the expansion of the existing casting workshop, machine processing workshop and assembly workshop and addition of production line to meet the production requirement of the NR type engine.

This project is expected to put into production at the end of 2013 and the production capacity is expected to be reached in 2014.

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APPENDIX VI

PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

5. Project prospect and benefits

In order to cope with the current energy shortage, global warming and environment pollution problems, the State will continue to introduce new regulations in respect of energy saving of vehicles, emission reduction and safety, which means that vehicle engine enterprises are required to continuously pursue technological innovation and adopt new method to meet the strict requirements of the national laws. According to the sales of the vehicles in China (distinguished by displacement), passenger vehicles with displacement below 1.6L takes the leading market position. In 2009 to 2010, the PRC government introduced the policies regarding to the development of small displacement vehicles, such as issuing the Notice of State Council Forward the Opinion of Encouraging the Development of Energy Saving Environmental Friendly Small Displacement Vehicles by The National Development and Reform Commission and Other Departments （《國務院辦公廳轉發發展改革委等部門關於鼓勵發展節能環保型小排量汽車意見的通知》）(Guo Ban Fa [2005] No.61) and reducing the purchase tax of the vehicles with displacement below 1.6L. According to the Europe, America and Japan markets, vehicles with displacement below 1.6L takes the leading market position in terms of the amounts in the market and the annual sales volume of the vehicles. From the foregoing, the passenger vehicle with high performance and small displacement (below 1.6L) will maintain the leading position in the future automobile market in China. The strategy of introducing NR type engine of this project is in line with the developing trend. By constantly improving the technology and developing products of higher capacity which are energy saving and environmental friendly, the market competitiveness of GAC Toyota Engine is guaranteed and will have booming prospect.

The payback period after tax for this project (including construction period) will be 5.21 years and the internal rate of return after tax will be 15%.

(3) Research and development for increasing new car models by Guangzhou Automobile Group Motor Co. Ltd.

Project AF (A-class 3 Compartment Sedan)

1. Project Overview

Implementing body: Guangzhou Automobile Group Motor Co. Ltd. and Guangzhou Automobile Group Company Automotive Engineering Institute

Approval obtained: The project has been approved by the Board.

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APPENDIX VI

2. Project Background

The industry development of automobiles in China is relatively rapid. The number of automobiles sold in the country in 2000 was 2.089 million and has escalated to 18.5051 million in 2011, the average annual increase exceeding 25%. As the citizen’s living standards rise, automobile consumption has changed from consumption by elites to consumption by the general public. The trend in the automobile market in China is now “smaller cars, lighter cars and more economical fuel”. Having a 40% market share, development of A-class automobiles has a very bright future.

In recent years, automobiles of Chinese proprietary brands have gained market recognition gradually through advantage in price and improvements in techniques and quality, and have developed rapidly. In order to share the potential growth in the market of A-class automobiles, the Company plans to start from the middle-class market of A-class automobiles, and develop and introduce middle-end A-class automobiles mainly for private use while also adapting to partly business use (the “AF Model”), such model will focus on satisfying the fun of driving, and emphasize the elements of safety, smoothness and economical price while possessing qualities such as humanity and comfort.

3. Implementation plan of the project

The investment of this project will be mainly applied towards the integration and manufacturing of automobile, style, simultaneous development of auto parts, trial making of engineering prototypes and trial and testing etc.

The construction cycle of the project is approximately 3.5 years (2010-2013). The project is mainly to develop an A/A0-class platform and to develop the first A-class model on this platform. The project adopts the building block design concept, which can subsequently be developed into A/A0-class two-compartment automobile, rapid MPV/SUV/cross border automobile, 2-wheel-drive/ 4-wheel-drive automobile, mixed power automobile and other series of automobile. This may maximize the rate of common use of auto parts to the greatest possible extent, reduce the acquisition costs of auto parts and enhance the pricing competitiveness of A/A0 series of automobile models.

4. Prospects and benefits of the project

A-class automobiles comprise the largest divisional market in the automobile industry and are the first choice for family cars. After the introduction of the AF Model, it is aspired that the Company would take a certain share in such largest and not highly concentrated market, and that the production line of the Company’s proprietary brand would be enriched and its development prospects widened.

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APPENDIX VI

PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

The project will develop brand new A-class platform and introduce the first automobile model based on this platform. Further, A-class two-cabin automobiles, compact MPV/SUV/cross-border automobiles, 2-wheel-drive/4-wheel-drive automobiles and hybrid-power automobiles and other automobiles will also be subsequently introduced on this platform, fully demonstrating the techniques and cost advantage of the platform. The development of this project will be beneficial to the nurture of the Company’s core skills for proprietary research and development, and will be beneficial to the product line of the Company’s proprietary brand, creating the Company’s ideals of “quality goods of the same class”, achieving further increase in the brand’s volume and quality and accelerating the sustainable and healthy development of the proprietary brand of the Company.

Project AE+ (Trumpchi Plug-in model)

1. Project Overview

Implementing body: Guangzhou Automobile Group Motor Co. Ltd. and Guangzhou Automobile Group Company Automotive Engineering Institute

Approval obtained: The project has been approved by the Board.

2. Project Background

For a long time, it has been the Guangdong Province’s major concern to develop new energy cars, especially electrical cars. The Development and Reform Commission of Guangdong Province has labeled electrical automobiles as a new strategic industry the nurture and development of which is to be focused on by the Guangdong Province. As the research and development of electrical automobiles becomes a trend, the Company has included new energy automobiles such as electrical automobiles in its research and development agenda and strives to make technological breakthroughs in this area, and has set out the overall goal in the energy saving and new energy automobile plan which complements the National 12th Five-Year Plan as follows: (1) to achieve the production and sale of approximately 200,000 energy-saving and new energy automobiles in 2015, (2) to master the five core techniques, namely the manufacture and control of CBUs, integration of electrical systems, the integration techniques for battery systems, techniques for battery control and the fuel battery techniques, (3) to build up the manufacturing capacity for the three key products, namely the electric machinery, battery and controller, (4) to construct a national engineering laboratory for electrical automobiles.

Energy-saving and new energy automobiles are the Company’s key development projects in future. It is expected that in 2015, the energy-saving and new energy passenger vehicles of the Company’s proprietary brand will achieve breakthrough in key techniques and platform techniques, realizing comprehensive

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PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

APPENDIX VI

industrialization in energy saving and new energy passenger vehicles of the proprietary brand, and becoming the core power supporting the Company’s sustainable development in future.

The AE+ model will be a plug-in hybrid-power four-wheel-drive model based on the AC base platform of the Company’s first proprietary brand automobiles which will comply with the requirements of national regulations on environmental production, energy-saving and safety, and will lay the technical foundation for future development of other new energy models.

3. Implementation plan for the project

The focus of this project is to develop the research and development of the Company’s proprietary brand of plug-in hybrid-power four-wheel-drive model. The development cycle of the project is 3 years (2011-2013). The project investments will mainly be applied towards the simultaneous development of auto parts, manufacture of prototypes and costs for trial and testing and so on.

The implementation of this project will lay the foundation for subsequent development of extended range vehicles, alternative energy vehicles (AEV) and battery electric vehicles (BEV).

4. Prospects and benefits of the project

New energy automobile models are the current trend of research and development. The state and local government are looking into the launch of relevant supporting policies and strategic direction, which greatly facilitates the promotion of new energy automobile models.

The AE+ model utilizes the resources of AC platform and conducts researches and development of plug-in automobile models on the basis of the AE Model. Apart from having the advantages of AE hybrid-power 4-wheel-drive automobiles, the battery can also be recharged externally, increasing the frequency of using the purely electrical mode and is more advantageous than the AE Model in terms of emission, power and economical fuel consumption, resulting in the ability to travel longer distance using pure electricity.

The project meets the actual needs of the Company for new energy automobile plan which complements the National 12th Five-Year Plan and corporate development, and is beneficial to the Company’s development of its energy-saving and new energy automobile business and enhancing its competitiveness, being of vital importance to the Company’s persistence in independence and innovation, improvement of its capacity for research and development, achievement of technical breakthrough and establishment of its proprietary automobile brand.

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PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

APPENDIX VI

(4) Research and development of engine platform and new products by Guangzhou Automobile Group Motor Co. Ltd.

Project P7 (Development of small GS engine platform and model)

1. Project Overview

Implementing body: Guangzhou Automobile Group Motor Co. Ltd. and Guangzhou Automobile Group Company Automotive Engineering Institute

Approval obtained: The project has been approved by the Board.

2. Project Background

Currently, automobiles with 1.6 litres or less emission take the lead in the prevailing PRC passenger vehicle market, having a market share of over 60%. As the State’s restrictions on the fuel consumption of automobiles are promulgated one after another, the market share of automobiles with low emission will further increase. Furthermore, in order to satisfy the customers’ demand for lower fuel consumption while achieving motor power and driving satisfaction at the same time, future development of passenger vehicle engines will be directed towards the use of techniques such as turbo-charging and direct injection in small engines and the increase of the power of engines and torque level (so as to replace high-emission engines), and these will be the key points of research and development in future.

At present, the Volkswagen Group uses EA111 series small engine platform with 1.4T main force to replace natural air induction engine of 1.6 litres to 2.0 litres, and has made a relatively greater success in the global market. In China, EA111 series engines are also very popular in the market.

At present, the Company’s proprietary brand has mastered the G series engine platform techniques, which mainly focus on 1.6 litres to 2.0 litres emission. In order to adapt to the rapidly increasing market demand for automobiles with 1.6 litres or less emission and to increase its market competitiveness, the Company plans to fully implement the small engine platform strategy on the basis of fully integrating its existing experience on research and development of VTML engines and commence the development of GS platform and model.

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APPENDIX VI

3. Implementation plan for the project

The project is mainly to commence and develop a platform for small engines of the Company’s proprietary brand and a series of engine products. The term of implementation of the project is 5 years (2011-2016), the project investments will mainly be applied towards the integration and design, simultaneous development of auto parts, trial making of engineering prototype and trial and testing etc.

Subsequently, the implementation of this project will develop a total of 4 series (from 2 cylinders to 4 cylinders, from 0.7 litres to 1.5 litres) and a series of advanced engine products including chargers and direct injection products.

The project will give priority to the compact, lighten and friction-reducing techniques, and introduce NVH improvements, cost control, quality control in the initial stage of design, and will consider the common use of auto parts and manufacture equipment to the greatest extent.

4. Prospects and benefits of the project

When the project is completed, a platform for small engines of the Company’s proprietary brand will be formed, and the design and development of a series of models will be completed. At the same time, through development of this project, the Company will master series of important engine techniques in relation to electronic gas pedal, high-temperature combustion, electronically controlled multi-spot petrol emission, central cooling, gasoline direct injection and changeable gas valve and so on. The engines developed through the project will help the Company’s proprietary brand of passenger automobiles to take the lead in the regulatory requirements such as the third-stage fuel consumption level, Euro V emission standards and other statutory requirements, and effectively realize energy saving and emission reduction.

The GS series engines can meet the demand from the Company’s proprietary brand of A-class and A0-class passenger vehicles, hybrid-power automobiles and minivan automobiles in future. GS high efficiency engines can also meet the demand from B-class passenger vehicles. All these will greatly enrich the engine product series of the Company’s proprietary brand.

The implementation of the project can greatly increase the level of research and development of engines of the Company’s proprietary brand, increase the core competitiveness of the Company and further enhance the improvements in level of techniques and skills of the motor engine industry in the country.

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APPENDIX VI

(5) Increase of investment and shareholding in Urtrust Insurance Co., Ltd. (“Urtrust Insurance”)

1. Basic information of the company

Urtrust Insurance was established on 8 June 2011, approved by Bao Jian Fa Gai [2011] No. 807 issued by China Insurance Regulatory Commission (“CIRC”), and a joint stock insurance company founded by the Company. Urtrust Insurance is the first Chinese-funded insurance corporate body with its headquarters located in Guangzhou and the first domestic professional motor insurance company controlled by a motor group.

The business of Urtrust Insurance includes various motor vehicle insurance businesses; other assets insurance business relating to motor vehicle insurance; short term health insurance and accident insurance business; reinsurance of the above business; use of insurance funds permitted by national laws and regulations; other business approved by the CIRC.

The Company and its wholly-owned subsidiaries, Guangzhou Automobile Group Component Co., Ltd. and Guangzhou Automobile Group Business Co., Ltd., hold an aggregate of 60% equity interest in Urtrust Insurance.

2. Capital increase and use of capital

Urtrust Insurance intended to increase the capital by the way of voluntary participation for existing shareholders and introducing new shareholders, as well as an one-off capital increase of RMB1 billion, increasing the total capital to RMB1.5 billion.

The specific price for the capital increase will be in accordance with the Company Law of the PRC and regulations for state-owned assets administration, the price of additional shares of Urtrust Insurance will be determined according to the price per shares after assets valuation.

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APPENDIX VI

PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

All funds raised by capital increase for Urtrust Insurance will be capitalized. Investment operations will commence in a stable and prudent way in order to provide a financial cover for various fundamental business of Urtrust Insurance, including:

(1) Commence the use of insurance funds

Adhering to the principle of safety, liquidity and profitability, Urtrust Insurance will use the investment capital in a prudent way in line with the requirements of asset-liability management and comprehensive risk management. On the basis of maintaining the stable operation, Urtrust Insurance aims to obtain long term and stable investment revenue.

(2) Set up branches

After the capital increase, funds for establishing branches for Urtrust Insurance is secured. Urtrust Insurance will continuously put more efforts on setting up branches and accelerating the establishment of sales and service network by utilizing the resources from automobile manufacturers and car sales outlet of the Group and resources from the shareholders. According to the development plan, sales and service network of Urtrust Insurance will spread all over the major automobile consumption cities across the nation in 2016.

(3) Establish an advanced platform of information technology

Urtrust Insurance will build, upgrade and transform the existing network system and business management system through the building and development of sales network. On the other hand, Urtrust Insurance will make greater efforts in investment, set up a customer service platform and online selling platform and establish an information and data centre based on a platform for end customer service of automotive industrial chain.

(4) Proactive participation in the establishment of Guangzhou regional financial centre

Guangzhou is striving to establish itself as the regional financial centre, and encouraging policies for financial enterprises will be launched soon. According to such policy, Urtrust Insurance will fulfill the relevant encouraging conditions upon increase in investment such that it may apply for the subsidy for corporate financial institution in purchasing land for the construction of self-occupied office buildings as well as other incentives. Urtrust Insurance, being the first Chinese-funded insurance corporate institution in Guangzhou region, shall proactively participate in the establishment of Guangzhou as a regional financial centre and strive to enjoy

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APPENDIX VI

PROPOSAL ON FEASIBILITY OF THE USE OF PROCEEDS OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS TOWARDS INVESTMENT PROJECTS

the land purchase subsidy and other incentive policies in Guangzhou, so that Urtrust Insurance may seek for greater development by leveraging upon all the conditions of the Guangzhou region.

(Note: In case of any discrepancies between the Chinese and English versions of the proposal on feasibility of the use of proceeds of the proposed issuance of A Share Convertible Bonds towards investment projects, the Chinese version shall prevail.)

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DIVIDEND DISTRIBUTION PLAN FOR THE SHAREHOLDERS (2012-2014)

APPENDIX VII

The sustainable development of Guangzhou Automobile Group Co., Ltd. (the “Company”) relies on the staunch support of the Shareholders, hence, the Company concerns about its development while attaching great importance to the reasonable returns of investment for the Shareholders. To continuously improve and perfect the scientific, continuous and stable dividend distribution decision and supervision mechanism of the Company, to have positive returns to the investors and to lead the investors in building the concept of long term and rational investment, the Board particularly formulated the plan of returns to the Shareholders for the next three years (the “Plan”) by integrating the factors such as profitability of the Company, operation and development plan, returns to Shareholders, cost of social funding as well as external financing environment and so on, the details are as follows:

I. Factors considered by the Company in formulating the plan

The Company focuses on the long term and sustainable development, after considering the profitability, operation planning, capital requirement for investment in future projects and so on as a whole, the continuous, stable and scientific returns planning and mechanism for the investors are established, so that a systematic arrangement is made for profit distribution in order to ensure the continuity and stability of the profit distribution policy.

II. The principle of plan formulation

The formulation of plan shall conform with the relevant provisions relating to profit distribution in the Articles of Association. The Company shall, according to the current operation and capital requirement plan of the project investment and giving full consideration to the interest of the Shareholders, determine a reasonable profit distribution proposal, and pursuant to which a plan for implementing the profit distribution policy in a certain period shall also be formulated to ensure the continuity and stability of the profit distribution policy.

III. The frequency of plan formulation and relevant decision making mechanism

The Board of the Company shall formulate plans in accordance with the profit distribution policy determined in the Articles of Association. In the event that the Company needs to adjust the profit distribution policy due to the significant changes in the external operating environment and its operating condition, the protection of the interest of the Shareholders (especially the public shareholders) shall be of the first priority and detailed argumentation and reasons shall be given, and detailed explanation on the adjustments of the profit distribution policy shall be given in the regular report of the Company. The Board shall ensure that the plan will be reviewed every three years and the content of the plan conforms to the profit distribution policy as determined in the Articles of Association.

IV. The plan of returns to the Shareholders for the next three years (2012-2014)

The Company may distribute the profits by cash, shares, combination of cash and shares or other method as permitted by laws and regulations.

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DIVIDEND DISTRIBUTION PLAN FOR THE SHAREHOLDERS (2012-2014)

APPENDIX VII

According to the laws and regulations such as the Company Law and the provisions in the Articles of Association, provided that the profit and cash of the Company fulfill the continuous operation and long term development, the profit distributed in cash in each of the year between 2012 to 2014 shall be no less than 10% of the distributable profit realized in such year, whereas the cumulative profit distributed in cash for the three consecutive years shall be no less than 30% of the average distributable profits realized in such three years.
In principle, a cash dividend shall be distributed by the Company annually in the next three years (2012 to 2014). The Board of the Company may propose to distribute interim cash dividend based on the profit and the capital requirement of the Company.
In the next three years (2012 to 2014) depending on the cumulative distributable profits, reserves and the condition of cash flow, the Company may distribute profits by way of shares to match share capital expansion with business growth provided that the minimum cash dividend payout ratio and an optimal share capital base and shareholding structure are maintained.

V. Supplementary Provisions

The Plan shall enter into force from the date of consideration and approval at the general meeting of the Company and shall be interpreted by the Board of the Company.

(Note: In case of any discrepancies between the Chinese and English versions of the dividend distribution plan for the Shareholders (2012-2014), the Chinese version shall prevail.)

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NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

==> picture [209 x 42] intentionally omitted <==

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

NOTICE IS HEREBY GIVEN that the third extraordinary general meeting of 2012 of Guangzhou Automobile Group Co., Ltd. (the “ Company ”) will be held at Company Conference Room of 23rd Floor, Chengyue Building, 448 Dong Feng Zhong Road, Yuexiu District, Guangzhou at 1:00 p.m. on Thursday, 15 November 2012 to consider and, if thought fit, approve the following resolutions:

SPECIAL RESOLUTIONS

1. Resolution in relation to the amendments to the Articles of Association

“ THAT the Company, be and is hereby approved to adopt the proposed amendments to the articles of association of the Company (“ Articles of Association ”) set out in Appendix I to the circular dated 28 September 2012 which has been sent to the Shareholders of the Company (the “ Circular ”); and the Board be and is hereby authorised to handle all matters relating to the amendments to the Articles of Association, including to make other amendments to the Articles of Association that are necessary, expedient or desirable in accordance with the applicable laws and regulations and under the requirements of the PRC government authorities, and to apply for approval from the relevant government authorities, and that all such actions of the Board be and are hereby approved, ratified and confirmed.”

2. Resolution in relation to the absorption and merger of wholly-owned subsidiary, Guangzhou Auto Group Corporation（廣州汽車集團公司）

“ THAT the Company be and is hereby approved to absorb and merge Guangzhou Auto Group Corporation (“ Guangzhou Auto ”) in accordance with the proposal set out in Appendix II to the Circular; the Board be and is hereby authorised to implement all matters relating to the absorption and merger of Guangzhou Auto, including without limitation to prepare, amend and execute necessary documents (including but not limited to absorption and merger agreements, applications and documents for approval and any related announcements and circulars), carry out necessary formalities (including but not limited to handle all approval, registration, filing, consent, and other procedural matters with all relevant domestics and overseas regulatory departments and authorities, and handle all registration requirements in relation to the amendments to the Articles of Association, registered capital and the changes of registration of the Company upon the completion of the absorption and merger), and to take all other necessary actions, and that all such actions of the Board be and are hereby approved, ratified and confirmed.”

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NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

3. Resolution in relation to the grant of general mandate to the Board for the issuance of A Shares

“ THAT the grant of the general mandate to the Board for the issuance of A shares of the Company as set out in Appendix III in the Circular be and is hereby approved.”

4. Resolution in relation to the public issuance of the Domestic Corporate Bonds by the Company

“ THAT

each of the following items in respect of the issuance of the domestic corporate bonds with an aggregate principal amount of not more than RMB4,000 million (“ Domestic Corporate Bonds ”) within the People’s Republic of China (the “ PRC ”, which, for the purpose of this Notice, excludes Hong Kong Special Administrative Region of the PRC, the Macau Special Administrative Region of the PRC or Taiwan) by the Company (details of which are set out in Appendix IV to the Circular) be and is hereby individually approved, and that such issuance be implemented subsequent to the granting of the approval by the relevant governmental authorities in the PRC:

4.1 Number of bonds to be issued
4.2 Term and type of bonds
4.3 Interest rate of bonds and its method of determination
4.4 Arrangement of guarantee
4.5 Use of proceeds
4.6 Subscription arrangement for the existing Shareholders of the Company’s shares
4.7 Method of issuance and target subscribers
4.8 Listing of bonds
4.9 Term of validity of this resolution
4.10 Authorization of the Board and the persons authorized by the Board”

5. Resolution in relation to the issuance of A Share Convertible Corporate Bonds by the Company

“ THAT

each of the following items in respect of the issuance of the convertible corporate bonds (the “ Convertible Bonds ”) in the total amount of not more than RMB2,000 million which are convertible into new A Shares of the Company within the PRC by

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NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

the Company (details of which are set out in Appendix V of the Circular) be and is hereby individually approved, and shall be implemented subsequent to the granting of the approval from the relevant governmental authorities in the PRC upon application:

5.1 Type of bonds to be issued
5.2 Issue size
5.3 Term of Convertible Bonds
5.4 Par value and issue price
5.5 Par interest rate
5.6 Interest payment
5.7 Conversion period
5.8 Determination of Conversion Price
5.9 Adjustment and calculation of Conversion Price
5.10 Downward adjustment to Conversion Price
5.11 Conversion method of fractional share
5.12 Price of redemption
5.13 Terms of sale back
5.14 Dividend distribution after conversion
5.15 Method of issuance and target subscribers
5.16 Subscription arrangement for the existing Shareholders
5.17 Matters relating the meetings of CB Holders
5.18 Use of proceeds
5.19 Guarantee
5.20 The validity period of the CB proposal and the time of issuance
5.21 Authorization of the Board and the persons authorized by the Board”

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NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

ORDINARY RESOLUTIONS

6. Resolution in relation to the provision of guarantee by Guangzhou Automobile Industry Group Co., Ltd. for the issuance of the Domestic Corporate Bonds

“ THAT

the guarantee to be provided by Guangzhou Automobile Industry Group Co., Ltd. (“ GAIG ”) for the Company’s issuance of Domestic Corporate Bonds for the aggregate principal amount of the Domestic Corporate Bonds to be issued, which shall not exceed RMB 4 billion (inclusive of RMB 4 billion), and interest, damages, compensation for loss and all expenses for realising the bonds, for a term commencing on the first day of issuance of the Domestic Corporate Bonds until two years after the maturity date thereof be and is hereby approved; and that the guarantee fee to be charged by GAIG of 0.1% on the balance of the Domestic Corporate Bonds guaranteed (being the principal amount, interest which has not been paid on time and damages etc (if any)) be and is hereby approved.”

7. Resolution in relation to the satisfaction by the Company of the criteria for the issuance of A Share Convertible Bonds

“ THAT the Company has satisfied the relevant criteria for the issuance of A Share Convertible Bonds under existing laws and regulations and regulatory documents, including the Company Law of the PRC, the Securities Law of the PRC and the Administrative Measures for the Issuance of Securities by Listed Companies and other laws and regulations.”

8. Resolution in relation to the feasibility of investment projects in respect of the use of proceeds raised by the issuance of A Share Convertible Bonds

“ THAT the proposal on feasibility of the use of proceeds raised by the issuance of A Share Convertible Bonds towards investment projects as set out in Appendix VI to the Circular be and is hereby approved.”

9. Resolution in relation to the Dividend Distribution Plan for Shareholders for 2012 to 2014

“ THAT the Dividend Distribution Plan for Shareholders for 2012 to 2014 as set out in Appendix VII to the Circular be and is hereby approved.”

By order of the board of directors Guangzhou Automobile Group Co., Ltd. Lu Sa

Company Secretary

Guangzhou, the PRC, 28 September 2012

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NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

Notes:

Details of the resolutions are set out in the circular of the Company dated 28 September 2012.
Any shareholder entitled to attend and vote at the said meeting is entitled to appoint one or more than one proxy to attend and vote on his behalf according to the Articles of Association of the Company. A proxy need not be a member of the Company.
In order to be valid, the proxy form and, if such proxy form is signed by a person under a power of attorney or other authority on behalf of the appointer, a notarially certified copy of that power of attorney or authority shall be deposited at the Company’s H Share Registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time for holding the meeting or 24 hours before the time appointed for taking the poll.
Shareholders or their proxies shall present proofs of identities when attending the meeting.
In order to determine the list of shareholders entitled to attend the third extraordinary general meeting of 2012, the register of members of the Company will be closed from Tuesday, 16 October 2012 to Thursday, 15 November 2012 (both dates inclusive), during which period no transfer of shares will be registered.
Shareholders whose names appear on the register of members of the Company at 4:30 p.m. on Monday, 15 October 2012 will be entitled to attend and vote at the meeting. In order to attend and vote at the meeting, all transfer documents together with the relevant share certificates must be lodged with the Company’s Share Registrar before 4:30 p.m. on Monday, 15 October 2012 to register the transfer of Shares.
Shareholders who intend to attend the meeting shall complete and return the reply slip of the meeting by mail, telegraph or fax to the Company’s H Share Registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, (fax number:(852) 2810 8185) on or before Thursday, 25 October 2012.
The third extraordinary general meeting of 2012 is not expected to take more than half a day, and Shareholders shall be responsible for their own travel and accommodation expenses.
Pursuant to Rule 13.39(4) of the Listing Rules, except where the chairman of the third extraordinary general meeting of 2012, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands, all votes at the meeting will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.
As at the date of this notice, the executive directors of the Company are ZHANG Fangyou, ZENG Qinghong, YUAN Zhongrong and LU Sa, the non-executive directors of the Company are FU Shoujie, LIU Huilian, WEI Xiaoqin, LI Tun, LI Pingyi and DING Hongxiang and the independent non-executive directors of the Company are WU Gaogui, MA Guohua, XIANG Bing, LAW Albert Yu Kwan and LI Zhengxi.

– 65 –

AI assistant

Guangzhou Automobile Group Co., Ltd. — Proxy Solicitation & Information Statement 2012

50469_rns_2012-09-27_6699560f-35b0-4e69-ab5c-d47a43692b1c.pdf

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(3) PROPOSED GRANT OF GENERAL MANDATE FOR ISSUANCE OF A SHARES TO THE BOARD;

(5) PROPOSED ISSUANCE OF A SHARE CONVERTIBLE BONDS;

AND NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

DEFINITIONS

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(6) DIVIDEND DISTRIBUTION PLAN FOR THE SHAREHOLDERS FOR 2012 TO 2014 AND NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING OF 2012

1. Introduction

2. Proposed Amendments to the Articles of Association

3. Proposed Absorption and Merger of Guangzhou Auto

4. Proposed Grant of General Mandate for Issuance of A Shares to the Board

5. Proposed Issuance of Domestic Corporate Bonds

A. Proposal for issuance of Domestic Corporate Bonds

LETTER FROM THE BOARD

B. GAIG to provide guarantee for the issuance of the Domestic Corporate Bonds

6. Proposed Issuance of A Share Convertible Bonds

A. The Company has satisfied the criteria for the issuance of A Share Convertible Bonds

B. Proposal for the issuance of A Share Convertible Bonds

(1) Type of bonds to be issued

(2) Issue size

(3) Term

(4) Par value and issue price

(5) Interest rate

(6) Timing and method of interest payment

(7) Conversion period

(8) Ascertaining the Conversion Price

(9) Adjustment and calculation of the Conversion Price

(10) Downward adjustment to Conversion Price

(11) Conversion method of fractional share

(12) Terms of redemption upon maturity and redemption in advance

(13) Terms of Sale Back

(14) Dividend rights after conversion

(15) Method of issuance and target subscribers

(16) Subscription arrangement for the existing Shareholders

(17) Meetings of CB Holders

(19) Guarantee

C. Implications of issuance of the Convertible Bonds under the PRC regulatory requirements

D. Implications of issuance of the Convertible Bonds under the Listing Rules

E. Resolution in relation to the proposal on the feasibility of the use of proceeds of the issuance of A Share Convertible Bonds towards investment projects

7. Dividend Distribution Plan for the Shareholders for 2012 to 2014

8. The Third Extraordinary General Meeting of 2012

LETTER FROM THE BOARD

9. Voting By Way of Poll

10. Recommendation

1. The original text of Article 1:

2. The original text of Article 13:

3. The original text of Article 68:

APPENDIX I

4. The original text of Article 144:

5. The original text of Article 148:

6. The original text of Article 163:

7. To add a new Article 215 as follows:

PROPOSAL IN RELATION TO THE ABSORPTION AND MERGER OF GUANGZHOU AUTO

I. Basic information of the Merger parties

APPENDIX II

II. Method, scope and related arrangements of the Absorption and Merger

APPENDIX II

III. Purpose of the Absorption and Merger and its effect on the Company

(1) Details of general mandate for issuance of new A Shares

APPENDIX III PROPOSAL IN RELATION TO THE GRANT OF GENERAL MANDATE FOR THE ISSUANCE OF A SHARES TO THE BOARD

(2) Authorize the Board to deal with all matters relevant to issuance of A Shares

(1) Number of bonds to be issued

(2) Term and type of bonds

(3) Interest rate of bonds and its method of determination

(4) Arrangement of Guarantee

(5) Use of proceeds

(6) Subscription arrangement for existing Shareholders

(7) Method of issuance and target subscribers

(8) Listing of bonds

(9) Term of validity of this resolution

(10) Authorization to the Board and the persons authorized by the Board

Proposal for issuance of A Share Convertible Bonds

I. Type of bonds to be issued

II. Issue size

III. Term

IV. Par value and issue price

V. Interest rate

Guangzhou Automobile Group Co., Ltd. Proxy Solicitation & Information Statement 2012