Nanjing Panda Electronics Company Limited — Proxy Solicitation & Information Statement 2013

Sep 4, 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Nanjing Panda Electronics Company Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

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(1) PROPOSED APPOINTMENT OF A DIRECTOR;

(2) PROPOSED APPOINTMENT OF A SUPERVISOR;

(3) PROVISION OF GUARANTEE IN FAVOUR OF A SUBSIDIARY;

(4) PROPOSED ADDITIONS OF IMPLEMENTING ENTITLES FOR PROCEEDS INVESTMENT PROJECTS; AND (5) AMENDMENTS TO ARTICLES OF ASSOCIATION

Capitalised terms used in this cover page shall have the same meanings as those defined in this circular.

A notice convening the EGM and the Proxy Form were despatched to the Shareholders on 14 August 2013. Whether or not you are able to attend and vote at the EGM, please complete and return the Proxy Form in accordance with the instructions printed thereon to the office of the Company (in respect of A Shares) or to the H-Share registrar of the Company, Hong Kong Registrars Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong (in respect of H Shares) as soon as possible and in any event not less than 24 hours before the time of the EGM or any adjournment thereof. Completion and return of the Proxy Form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

4 September 2013

CONTENTS

		Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
I.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
II.	PROPOSED APPOINTMENT OF A DIRECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
III.	PROPOSED APPOINTMENT OF A SUPERVISOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
IV.	PROVISION OF GUARANTEE IN FAVOUR OF A SUBSIDIARY . . . . . . . . . . . . . . . .	5
V.	PROPOSED ADDITIONS OF IMPLEMENTING ENTITIES
	FOR PROCEEDS INVESTMENT PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
VI.	AMENDMENTS TO ARTICLES OF ASSOCIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
VII.	THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
VIII.	PROXY ARRANGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
IX.	VOTING BY POLL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
X.	RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

— i —

DEFINITIONS

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

“A Shares”	the domestic ordinary shares issued by the Company with a nominal
	value of RMB1.00 each which are subscribed for and paid in
	Renminbi, and which are listed on the Shanghai Stock Exchange;
“Articles of Association”	the existing articles of association of the Company;
“Board”	the board of Directors;
“Company”	Nanjing Panda Electronics Company Limited, a joint stock company
	incorporated in the PRC with limited liability;
“connected person(s)”	has the meaning ascribed to it under the Hong Kong Listing Rules;
“controlling shareholder”	has the meaning ascribed thereto under the Hong Kong Listing Rules;
“Director(s)”	the director(s) of the Company;
“EGM”	the extraordinary general meeting of the Company to be convened and
	held on Thursday, 26 September 2013 for the purposes of considering
	and, if thought fit, approving, inter alia, the proposed appointment of
	a Director, the proposed appointment of a Supervisor, the provision
	of a guarantee in favour of a Subsidiary, the proposed additions of
	implementing entities for the Proceeds Investment Projects, and the
	proposed amendments to the Articles of Association;
“Electronics Equipment	Nanjing Panda Electronics Equipment Co., Ltd. (南京熊猫電子裝備
Company”	有限公司), a company incorporated according to the PRC laws and a
	subsidiary of the Company;
“Group”	the Company and its subsidiaries;
“H Shares”	the overseas listed foreign invested shares issued by the Company
	with a nominal value of RMB1.00 each which are subscribed for and
	traded in Hong Kong Dollars, and which are listed on the Main Board
	of the Stock Exchange;
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong;
‘‘Hong Kong’’	Hong Kong Special Administration Region of the PRC;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange;

— ii —

DEFINITIONS

“Information	Nanjing Panda Information Industry Co., Ltd. (南京熊猫信息產業有
Industry Company”	限公司), a company incorporated according to the PRC laws and a
	subsidiary of the Company;
“Latest Practicable Date”	4 September 2013, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information contained
	herein;
“Non-public Issue	the issue of 258,823,529 A Shares by the Company by way of non-
of A Shares”	public issue of A Shares in June 2013;
“PRC”	the People’s Republic of China (for the purpose of this circular,
	excluding Hong Kong, Macau and Taiwan);
“Proceeds Investment	the investment projects to be financed by the proceeds raised from the
Projects”	Non-public Issue of A Shares;
“Proxy Form”	the form of proxy for use at the EGM;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of Laws of Hong
	Kong)
“Shareholder(s)”	holder(s) of the share(s) of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Supervisor(s)”	the supervisor(s) of the Company;
“Supervisory Committee”	the supervisory committee of the Company;
“Technology Development	Nanjing Panda Electronic Technology Development Co., Ltd. (南京熊
Company”	猫電子科技發展有限公司), a company incorporated according to the
	PRC laws and a subsidiary of the Company;
“US$”	United States of America Dollar, the lawful currency of the United
	States of America; and
“%”	percentage.

The English names of the PRC established companies/ entities in this circular are only translation of their official Chinese names. In case of inconsistency, the Chinese names prevail.

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LETTER FROM THE BOARD

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Executive Directors

Mr. Lai Weide (Chairman) Mr. Xu Guofei

Non-executive Directors

Mr. Deng Weiming Mr. Lu Qing Mr. Jason Hsuan

Independent non-executive Directors

Ms. Zhang Xiuhua Ms. Liu Danping Mr. Chu Wai Tsun, Vincent

Registered Address:

Level 1-2, Block 5, North Wing, Nanjing High and New Technology Development Zone, Nanjing, the PRC

Office Address: 301 Zhongshan Road East, Nanjing, the PRC Postal Code: 210002

4 September 2013

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED APPOINTMENT OF A DIRECTOR;

(2) PROPOSED APPOINTMENT OF A SUPERVISOR;

(3) PROVISION OF GUARANTEE IN FAVOUR OF A SUBSIDIARY;

(4) PROPOSED ADDITIONS OF IMPLEMENTING ENTITLES FOR PROCEEDS INVESTMENT PROJECTS; AND (5) AMENDMENTS TO ARTICLES OF ASSOCIATION

I. INTRODUCTION

Reference is made to the announcements issued by the Company dated 13 May 2013 in relation to, among other matters, the nomination of a Director, and dated 8 August 2013 in relation to, among other matters, the nomination of a Supervisor, the provision of a guarantee in favour of a Subsidiary, amendments to the Articles of Association, and the proposed additions of implementing entities for the Proceeds Investment Projects, which are subject to the approval of Shareholders at the EGM.

— 1 —

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details of the proposed appointment of a Director, the proposed appointment of a Supervisor, the provision of a guarantee in favour of a Subsidiary, the proposed additions of implementing entities for the Proceeds Investment Projects, and the proposed amendments to the Articles of Association.

II. PROPOSED APPOINTMENT OF A DIRECTOR

Reference is made to the announcement of the Company dated 13 May 2013. As previously disclosed, on 13 May 2013, Mr. Xia Dechuan was nominated by the Board as a candidate for non-executive Director of the seventh session of the Board of the Company, with effect from the date of passing the relevant resolution at the EGM.

At the extraordinary meeting convened by the seventh session of the Board of the Company on 13 May 2013, the nomination of Mr. Xia Dechuan as a candidate for non-executive Director of the seventh session of the Board of the Company, for a term of office until the expiration of the seventh session of the Board of the Company, and submission of the same to the general meeting of the Company were considered and approved.

Biography of Mr. Xia Dechuan

The biographical details of Mr. Xia Dechuan are as follows:

Mr. Xia Dechuan, aged 43, is a senior post-graduate engineer and holds a master’s degree in business administration from the Southeast University. Mr. Xia has served as Deputy Head and Head of the Short-wave Communications Design Institute ( 短波通信設計所 ) of Panda Electronics Group Limited, and Deputy General Manager of Nanjing Panda Information Industry Co., Ltd., etc. He served as the Deputy General Manager of the Company from July 2008 to September 2011; and has concurrently served as the General Manager of Nanjing Panda Information Industry Co., Ltd. since July 2008 up to now, and the General Manager and Party Secretary of the Company since October 2011 up to now. Mr. Xia Dechuan has long been engaged in the management of information technology industries, and has extensive professional knowledge and experience in operations management.

Save as disclosed above, Mr. Xia Dechuan did not hold any position in the Company or any of its subsidiaries and has not held any directorship in any other listed public company during the past three years.

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LETTER FROM THE BOARD

The term of service of Mr. Xia Dechuan will expire at the end of the seventh session of the Board of the Company. The remuneration payable to Mr. Xia Dechuan will be determined with reference to market conditions, his duties and responsibilities in the Company and on the basis that the total remuneration of all Directors, supervisors and senior management of the Company shall not exceed the limit of RMB3,500,000.00.

Save as disclosed above, Mr. Xia Dechuan does not have any relationship with any Directors, senior management or substantial or controlling shareholders. As at the Latest Practicable Date, Mr. Xia Dechuan does not have any interests in the shares of the Company within the meaning of Part XV of the SFO.

Save as disclosed above, there is no other information in relation to the appointment of Mr. Xia Dechuan which needs to be brought to the attention of the shareholders of the Company and there is no other information that needs to be disclosed pursuant to the requirement of Rules 13.51(2)(h) to (v) of the Listing Rules.

III. PROPOSED APPOINTMENT OF A SUPERVISOR

Reference is made to the announcement of the Company dated 8 August 2013. As previously disclosed, on 8 August 2013, Mr. Zhang Yinqian was nominated by the Supervisory Committee as a candidate for non-employee representative Supervisor of the seventh session of the Supervisory Committee of the Company, with effect from the date of passing the relevant resolution at the EGM.

At the meeting of the seventh session of the Supervisory Committee of the Company convened by the Supervisory Committee on 8 August 2013, the nomination of Mr. Zhang Yinqian as a candidate for non-employee representative Supervisor of the seventh session of the Supervisory Committee of the Company, for a term of office until the expiration of the seventh session of the Supervisory Committee of the Company, and submission of the same to the general meeting of the Company were considered and approved.

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LETTER FROM THE BOARD

Biography of Mr. Zhang Yinqian

The biographical details of Mr. Zhang Yinqian are as follows:

Mr. Zhang Yinqian, born in 1955, is a senior engineer with Bachelor’s degree. Mr. Zhang previously served as the deputy president, the deputy secretary of the Party Committee and the secretary of the Discipline Inspection Committee of Huadong Electronics Group Company ( 華 東電子集團公司 ), the general manager of Huadong Electronics Information & Technology Co., Ltd. ( 華東電子信息科技股份有限公司 ), and the secretary of the Party Committee and the deputy executive president of Huadong Electronics Group Co., Ltd ( 華東電子集團有限公 司 ), etc. He was the provisional deputy secretary of the Party Committee and the provisional secretary of the Discipline Inspection Committee of Nanjing Electronics Information Industrial Corporation ( 南京中電熊猫信息產業集團有限公司 ) from March 2008 to October 2008. He served as the deputy secretary of the Party Committee and the secretary of the Discipline Inspection Committee of Nanjing Electronics Information Industrial Corporation from October 2008 to August 2013. He has been the secretary of the Party Committee and the secretary of the Discipline Inspection Committee of Nanjing Electronics Information Industrial Corporation since August 2013 up to now. He was also the secretary of the Party Committee of Huadong Electronics Group Co., Ltd from March 2008 to December 2008, and has served as the chief legal counsel of Nanjing Electronics Information Industrial Corporation since August 2008 up to now, the chairman of the Labor Union of Nanjing Electronics Information Industrial Corporation since December 2010 up to now and the secretary of the Party Committee of Panda Electronics Group Limited ( 熊猫電子集團有限公司 ) since April 2011 up to now. Mr. Zhang has long been engaged in enterprise management and has extensive experience in operation and management.

Save as disclosed above, Mr. Zhang Yinqian did not hold any position in the Company or any of its subsidiaries and has not held any directorship in any other listed public company during the past three years.

The term of office of Mr. Zhang Yinqian will expire at the end of the seventh session of the Supervisory Committee of the Company. The remuneration payable to Mr. Zhang Yinqian will be determined with reference to market conditions, his duties and responsibilities in the Company and on the basis that the total annual remuneration of all Directors, supervisors and senior management of the Company shall not exceed the limit of RMB3,500,000.00.

Save as disclosed above, Mr. Zhang Yinqian does not have any relationship with any Directors, senior management or substantial or controlling shareholders. As at the Latest Practicable Date, Mr. Zhang Yinqian does not have any interests in the shares of the Company within the meaning of Part XV of the SFO.

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LETTER FROM THE BOARD

Save as disclosed above, there is no other information in relation to the appointment of Mr. Zhang Yinqian which needs to be brought to the attention of the shareholders of the Company and there is no other information that needs to be disclosed pursuant to the requirement of Rules 13.51(2)(h) to (v) of the Listing Rules.

IV. PROVISION OF GUARANTEE IN FAVOUR OF A SUBSIDIARY

Reference is made to the announcement of the Company dated 8 August 2013, which disclosed the Company has approved the provision of financial guarantees in favour of Information Industry Company, a subsidiary of the Company, with a total amount of not more than RMB300,000,000, with a term expiring on 30 June 2016 at the 2012 annual general meeting convened on 20 May 2013.

In order to support Information Industry Company to further expand business and undertake various engineering projects, the Board proposes to provide a guarantee for the new comprehensive credit line of RMB200,000,000 to Information Industry Company with a term expiring on 30 June 2016 (“Provision of Guarantee in favour of a Subsidiary”). The Board convened a meeting on 8 August 2013, at which the Provision of Guarantee in favour of a Subsidiary was considered and approved. The Provision of Guarantee in favour of a Subsidiary is subject to the approval of the Shareholders by way of passing an ordinary resolution at the EGM.

The main content of the guarantee agreement

The extraordinary meeting of the seventh session of the Board considered and unanimously passed the proposal for the provision of a guarantee for the new comprehensive credit line of RMB200,000,000 to Information Industry Company and agreed to submit the same to the forthcoming Shareholders’ general meeting for consideration and approval. As the act of providing the guarantee has not taken place, the Company will, pursuant to relevant regulations, disclose in a timely manner the information relevant to the guarantee when the guarantee is made, including, among others, the date of execution of the agreement, the names of the party guaranteed and creditor, the guarantee amount and the total external guarantee amount of the Company. Meanwhile, pursuant to the mandate granted at the Shareholders’ general meeting, the Company will require Information Industry Company to provide a counter guarantee when the Company signs the guarantee agreement.

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LETTER FROM THE BOARD

Basic information on the party guaranteed

1. General information on Information Industry Company

Registered capital: US$23 million

Domicile:

No.1, Hengtong Avenue, Nanjing Economic and Technological Development Zone

Legal representative: Xia Dechuan Company type: Limited liability company Business scope:

Licensed business items: R&D and manufacture of satellite digital TV receivers and antennas, sale of selfproduced products and provision of relevant technical service. General business items: design and manufacture of electronic information products, digital audio products, digital communications terminal products and ancillary services, household appliances, lighting appliances, electrical engineering, electrical materials; design, construction, installation and service for intelligent building engineering; mechanical and electrical equipment installation, electronic engineering, fire fighting engineering; software development, information services; sale of self-produced products.

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LETTER FROM THE BOARD

2. Financial position

Unit: RMB0’000

	31 December 2012	30 June 2013
	(audited)	(unaudited)
Total assets	74,823.61	68,605.76
Total liabilities	57,713.48	50,554.71
Total loans	3,000	4,500.00
Current liabilities	57,713.48	50,554.71
Net assets	17,110.13	16,830.45
	**2012 **	January-June, 2013
Operating income	70,597	21,070.73
Net profit	489.94	940.92

3. Information Industry Company is a controlled subsidiary of the Company. The Company holds 75% equity interests in Information Industry Company and the remaining 25% is held by Galant Limited, a wholly-owned subsidiary of the Company.

Opinion of the Board

The Board considers that Information Industry Company is an important subsidiary of the Company and its business also forms an important part of the Company’s main business. The Company’s provision of a guarantee for the new comprehensive credit line of RMB200,000,000 to the Information Industry Company for its business development is in the interests of the Company. In addition, the Company will require Information Industry Company to provide a counter guarantee which is sufficient to protect the interests of the Company. Hence, the risk of providing the aforesaid guarantee is low.

The independent Directors consider that business of Information Industry Company is an important part of the Company’s principal businesses and it has maintained healthy production and operation as well as a steadfast business development in recent years. The provision of the guarantee to Information Industry Company would help it expand business and undertake engineering projects, which is in the interests of the Company and the Shareholders as a whole. The provision of the guarantee is subject to the consideration and approval at the Shareholders’ general meeting. Upon execution of the the guarantee agreement, Information Industry Company will be required to provide a counter guarantee. As such, the risk of providing the aforesaid guarantee is low.

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LETTER FROM THE BOARD

The Provision of Guarantee in favour of a Subsidiary does not constitute a connected transaction under Chapter 14A of the Listing Rules. Nevertheless, according to the Articles of Association and the applicable PRC laws and regulations, the Provision of Guarantee in favour of a Subsidiary is subject to approval of the Shareholders by way of an ordinary resolution at the EGM and no Shareholder is required to abstain from voting.

V. PROPOSED ADDITIONS OF IMPLEMENTING ENTITLES FOR PROCEEDS INVESTMENT PROJECTS

Reference is made to the announcement of the Company dated 8 August 2013. Pursuant to the “Approval for Non-public Issue of Shares by Nanjing Panda Electronics Company Limited (Zheng Jian Xu Ke [2013] No.332)” (《關於核准南京熊猫電子股份有限公司非公開發行股票 的批覆》( 證監許可 [2013]332號 )) given by the China Securities Regulatory Commission, the Company issued 258,823,529 RMB-denominated ordinary shares (A Shares) by way of nonpublic issue at the issue price of RMB5.10 per share in June 2013. The proceeds raised totaled RMB1,319,999,997.90. After deduction of issuance expenses of RMB25,596,285.35, the net proceeds amounted to RMB1,294,403,712.55. As at 24 June 2013, the said subscription monies, after deducting underwriting and sponsorship fees, had been transferred by the lead underwriter to the designated account of the Company for deposit of the net proceeds. The relevant details are set out in the Verification Report on Capital of Nanjing Panda Electronics Company Limited (TZ Hu QJ[2013] No.1907) (《南京熊猫電子股份有限公司驗資報告》（天職滬 QJ[2013]1907 號）) issued by Baker Tilly China (Special General Partnership) on 25 June 2013.

According to the original plan for the Non-public Issue of A Shares, the proceeds so raised will be invested in the Proceeds Investment Projects as follows:

Unit: RMB0’000

No. Project name Implementing entities 1 Automation equipment industrialization project Technology Development Company 2 Communication equipment industrialization project Technology Development Company 3 Traffic electronic equipment industrialization project Information Industry Company 4 R&D center project Technology Development Company 5 Supplement working capital the Company Total	Total investment in project 61,563 24,544 14,955 20,996 — —	Proposed amount of proceeds to be applied 61,563 24,544 14,955 20,938 10,000 132,000

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LETTER FROM THE BOARD

The Board proposes to add Electronics Equipment Company and Communications Technology Company as the respective entities to implement the “automation equipment industrialization project” and the “communication equipment industrialization project” financed by the raised proceeds from the Non-public Issue of A Shares. They will be in charge of the equipment procurement and operation of their corresponding projects, while Technology Development Company will undertake plant construction and related work for the two projects. The proposed additions of the implementing entitles for the said two Proceeds Investment Projects are subject to approval of the Shareholders by way of an ordinary resolution at the EGM.

INFORMATION ON ADDITIONS OF THE IMPLEMENTING ENTITIES FOR THE PROCEEDS INVESTMENT PROJECTS

(I) Automation equipment industrialization project

The proposed total investment in the “automation equipment industrialization project” is RMB615.63 million, all of which would be funded with the raised proceeds. As at the end of June 2013, RMB137.27 million had been invested in this project by the implementing entity, Technology Development Company.

Electronics Equipment Company is a wholly-owned subsidiary of the Company, with a registered capital of RMB80 million. Its legal representative is Liu Kun ( 劉坤 ). Its business scope includes: (i) licensed business item: nil; and (ii) general business items: industrial automation equipment, environmental equipment, instruments and ancillary environmental services, power protection products, logistics supporting equipment (including industrial assembly lines and auxiliary equipment, three-dimensional parking garages and automated warehousing systems ); metal product coating, heat treatment processing, design, installation, maintenance, consulting services for system engineering (including industrial automation systems, environmental systems, power protection systems, electronic information systems, electro-mechanical systems), structural design and graphic design; research and development, design, manufacturing, processing and sale of instruments and meters, Class I medical devices, general machinery and components, mold products, office automation equipment, electronic products, decoration materials, metal products, clamps, cultural and sports goods, plastic products and motor vehicle assembly; sale of industrial control products, hardware and electrical equipment, chemicals (excluding hazardous goods), plumbing equipment, metal materials, packaging materials, handicrafts (excluding calligraphies and paintings) and office supplies; selfoperated and commissioned import and export business for various commodities and technologies (other than commodities and technologies whose dealing, import or export is restricted or prohibited to operate by the State).

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LETTER FROM THE BOARD

At the extraordinary meeting of the seventh session of the Board, it was resolved that Electronics Equipment Company is added as the implementing entity for “automation equipment industrialization project” to take charge of the equipment procurement and operation of the project, while Technology Development Company will take charge of the construction of plants and related work for the project, and authorization to the Board to, on the condition that the total investment in “automation equipment industrialization project” is unchanged, make necessary and reasonable adjustments to the sequence in which the raised proceeds goes to Technology Development Company and Electronics Equipment Company as well as the amount of the raised proceeds that goes to the two companies respectively, depending on the actual conditions of the project, and to submit the resolution to the general meeting for Shareholders’ consideration and approval.

Pursuant to the “Raised Fund Management System of Nanjing Panda Electronics Company Limited” (《南京熊猫電子股份有限公司募集資金管理制度》), the Company, Electronics Equipment Company, the bank with which the account for deposit of the raised proceeds is maintained and the Company’s sponsor will enter into “A Four-party Custody Agreement for the Raised Proceeds” (《募集資金四方監管協議》) to ensure the proper management and use of the raised proceeds.

(II) Communication equipment industrialization project

The proposed total investment in the communication equipment industrialization project is RMB245.44 million, all of which will be funded from the raised proceeds. As at the end of June 2013, Technology Development Company, the implementing entity, had not invested in this project.

Communications Technology Company, a wholly-owned subsidiary of the Company, has a registered capital of RMB50 million. Its legal representative is Dong Zhiming ( 董 志明 ) and business scope comprises the development and manufacture of systems and products for mobile communication, digital communication and network communication, related hi-tech products and complete sets of equipment and provision of relevant service; development and sales of software for network digital communication; self-operated and commissioned import and export business for various commodities and technologies (other than commodities and technologies whose dealing, import or export is restricted or prohibited to operate by the State).

— 10 —

LETTER FROM THE BOARD

At the extraordinary meeting of the seventh session of the Board, it was resolved that Communications Technology Company is added as the implementing entity for the “communication equipment industrialization project” to take charge of the equipment procurement and operation of the project, while Technology Development Company will take charge of the construction of plants and related work for the project, and authorization to the Board to, on the condition that the total investment in the “communication equipment industrialization project” is unchanged, make necessary and reasonable adjustments to the sequence in which the raised proceeds goes to the Technology Development Company and Communications Technology Company as well as the amount of the raised proceeds which goes to the two companies respectively, depending on the actual conditions of the project, and to submit the resolution to the general meeting for Shareholders’ consideration and approval.

Pursuant to the “Raised Fund Management System of Nanjing Panda Electronics Company Limited”, the Company, Communications Technology Company, the bank with which the account for deposit of the raised proceeds is maintained and the Company’s sponsor will enter into “A Four-party Custody Agreement for the Raised Proceeds” to ensure the proper management and use of the raised proceeds.

III. REASONS FOR THE ADDITIONS OF THE IMPLEMENTING ENTITIES FOR THE PROCEEDS INVESTMENT PROJECTS AND THE IMPACT

(I) Reasons for the additions of the implementing entities for the Proceeds Investment Projects

1. Automation equipment industrialization project

• (1) Electronics Equipment Company specializes in the research and development, production and sales of automation equipment-related products, with strong research and development capabilities, and has mastered core robot technologies, independently developing and manufacturing highly-automatic intelligent welding robots. With its successful research and development of the LCD panels factory cleaning system, it is one of the few providers of fully-automatic transmission system solutions to LCD panels factory cleaning in the PRC. Its developed automatic bottle filling equipment which broke the monopoly of foreign companies and filled a gap in the domestic market. With the manufacturing of metal plates, machineries and moulds all having fulfilled large-scale development, it ranks at top in the domestic mechanical-electrical integration sector in terms of comprehensive strength.

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LETTER FROM THE BOARD

• (2) With expanding business scale and increasing number of projects undertaken, Electronics Equipment Company has established a high profile in the domestic market.

• (3) Adjustment to corporate structure is a progressive process. In promoting the rapid development of the electronic equipment business, it is necessary for Electronics Equipment Company to leverage its advantages and aggressively seize market opportunities.

In view of the aforesaid, and to ensure smoother operation upon completion and commencement of operation of the “automation equipment industrialization project”, fully leverage existing advantages, effectively consolidate internal resources, reduce operating costs and enhance the operational efficiency of the Company, the Board approved that Electronics Equipment Company be added as the implementing entity of the “automation equipment industrialization project”. As a result, Electronics Equipment Company will take charge of equipment procurement and operation of the project, while Technology Development Company will be in charge of plant construction and related work for the project.

2. Communication equipment industrialization project

• (1) Communications Technology Company is a national high-tech enterprise as well as a provincial software enterprise in Jiangsu Province, and enjoys preferential tax policies.

• (2) Communications Technology Company, with strong technical research and development capabilities, owns two provincial-level technical research and development centers, i.e. Engineering and Technological Research Center for Mobile Communication in Jiangsu ( 江蘇省移 動通信工程技術研究中心 ), and Engineering and Technological Research Center for Optical Communication in Jiangsu ( 江蘇省光 通信工程技術研究中心 ). It is principally committed to the research and development, and marketing of broadband mobile communication systems, access networks, core networks, the Internet of Things, mobile communication terminals and other products. By closely following the development trend of the high-tech industries such as mobile communication, information security, the Internet of Things, and tri-networks integration, it has a systematic mastery of the core technologies relating to the mobile communication system, and is capable of providing comprehensive solutions to dedicated mobile communication, which command a leading technological position in the PRC.

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LETTER FROM THE BOARD

• (3) Adjustment to corporate structure is a progressive process. The succession and taxation of the research and development centers are priorities for consideration. The research and development strength of Communications Technology Company is a major guarantee for the implementation of the “communication equipment industrialization project” as scheduled.

In view of the aforesaid, and to ensure smoother operation upon completion and commencement of operation of the “communication equipment industrialization project”, fully leverage existing advantages, effectively consolidate internal resources, reduce operating costs and enhance the operational efficiency of the Company, the Board approved that Communications Technology Company be added as the implementing entity of the “communication equipment industrialization project”. As such, Communications Technology Company will take charge of equipment procurement and operation of the project, while Technology Development Company will be in charge of plant construction and related work for the project.

(II) Impact of Additions of the Implementing Entities for the Proceeds Investment Projects

Adding Electronics Equipment Company as the implementing entity of the “automation equipment industrialization project” and Communications Technology Company as the implementing entity of the “communication equipment industrialization project” is in line with the Company’s practical conditions and the operational needs of the projects and will help accelerate the implementation of the said two Proceeds Investment Projects. It does not involve any disguised change to the use of raised proceeds nor detriment to Shareholders’ interest, and will have no material impact on the implementation of the projects. It is in compliance with the relevant requirements of China Securities Regulatory Commission and Shanghai Stock Exchange in relation to the management of raised proceeds of listed companies, in the interests of the Company and all Shareholders and beneficial to the Company’s long-term development.

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LETTER FROM THE BOARD

IV. OPINIONS OF INDEPENDENT DIRECTORS, THE SUPERVISORY COMMITTEE AND THE SPONSOR ON ADDITIONS OF THE IMPLEMENTING ENTITIES FOR THE PROCEEDS INVESTMENT PROJECTS

The Company’s independent non-executive directors, namely, Ms. Zhang Xiuhua, Ms. Liu Danping and Mr. Chu Wai Tsun, Vincent, the supervisory committee of the Company and the sponsor of the Non-public Issue of A Shares all agree with the proposed additions of the implementing entities for the Proceeds Investment Projects and believe that the proposed additions of the implementing entities for the said two Proceeds Investment Projects are in the interests of the Company and Shareholders as a whole in compliance with relevant laws and regulations and the Articles of Association.

VI. AMENDMENTS TO ARTICLES OF ASSOCIATION

Reference is made to the announcement of the Company dated 8 August 2013. Pursuant to the “Approval for Non-public Issue of Shares by Nanjing Panda Electronics Company Limited” (Zheng Jian Xu Ke[2013]No. 332)（《關於核准南京熊猫電子股份有限公司非公開發行股票 的批覆》）（證監許可 [2013]332號）） given by the China Securities Regulatory Commission, the Company issued 258,823,529 RMB-denominated ordinary A shares by way of non-public issue of A shares in June 2013. On 28 June 2013, the Company completed the registration procedures for the securities change with respect to the Non-public Issue of A shares with China Securities Depository and Clearing Corporation Limited Shanghai Branch. Upon completion of such issue, the Company’s equity structure comprises 913,838,529 ordinary shares, with 671,838,529 A shares and 242,000,000 H shares. The Company’s registered capital was changed to RMB913,838,529.

The Board held a meeting on 8 August 2013 to consider and approve the amendments to corresponding provisions about registered capital and the total number of shares stated in the Articles of Association so as to reflect the change in the Company’s share capital. The unofficial English translation of the proposed amendments to the Articles of Association are set out below:

1. Article 26 of the Articles of Association is amended to read:

“Pursuant to the “Approval for Non-public Issue of Shares by Nanjing Panda Electronics Company Limited” (Zheng Jian Xu Ke[2013]No. 332)（《關於核准南京熊猫電子股 份有限公司非公開發行股票的批覆》（證監許可 [2013]332號））given by the China Securities Regulatory Commission, the Company issued 258,823,529 RMB-denominated ordinary shares by way of non-public issue in June 2013. Upon completion of such issue, the Company’s equity structure is as follows:

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LETTER FROM THE BOARD

913,838,529 ordinary shares, comprising 671,838,529 domestic shares, representing 73.52% of the total share capital, and 242,000,000 overseas-listed foreign shares, representing 26.48% of the total share capital.”

2. The original Article 26 of the Articles of Association:

“Article 26 The Company’s registered capital is RMB655,015,000.”

shall be amended as:

“Article 27 The Company’s registered capital is RMB913,838,529.”

3. The contents of the original Article 27 of the Articles of Association shall remain unchanged, with sequence numbers adjusted sequentially.

• Note: The proposed amendments to the Articles of Association are written in Chinese and there is no official English translation in respect thereof. The translation into English language above is for reference only. In case of any inconsistency between the English and Chinese versions, the Chinese version shall prevail.

The Board confirms that the proposed amendments to the Articles of Association conforms with the requirements of Appendix 3 and the applicable requirements set out in Part D of the Appendix 13 of the Listing Rules.

VII. THE EGM

A notice convening the EGM was despatched to the Shareholders on 14 August 2013. The register of members of H Shares of the Company was closed from Tuesday, 27 August 2013 and will be closed till Thursday, 26 September 2013 (both days inclusive), during which no transfer of H Shares will be registered. In order to be entitled to attend and vote at the EGM, holders of H shares must deposit the share certificates together with the transfer documents at the H-Share registrar of the Company, Hong Kong Registrars Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, on or before 4:00 p.m. on Monday, 26 August 2013.

VIII. PROXY ARRANGEMENT

The Proxy Forms were despatched to the Shareholders on 14 August 2013. Whether or not you intend to attend the EGM, you are requested to complete the Proxy Form in accordance with the instructions printed thereon and return the same to the office of the Company as soon as possible but in any event not less than 24 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the Proxy Form will not preclude you from attending and voting at the EGM or any adjourned meeting should you so wish.

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LETTER FROM THE BOARD

IX. VOTING BY POLL

Pursuant to Rule 13.39(4) of the Hong Kong Listing Rules, any vote of shareholders at a general meeting must be taken by way of poll. The results of the poll will be published on the HKExnews website at www.hkexnews.hk and the Company’s website at www.panda.cn after the EGM as soon as possible.

X. RECOMMENDATION

Having considered the reasons set out herein, the Directors are of the opinion that the proposed appointment of a Director, the proposed appointment of a Supervisor, the Provision of Guarantee in favour of a Subsidiary, the proposed additions of implementing entities for the Proceeds Investment Projects, and the proposed amendments to the Articles of Association are all in the interests of the Company and the Shareholders. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM.

By order of the Board Nanjing Panda Electronics Company Limited Lai Weide Chairman

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