THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchange 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.

This circular appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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

If you have sold all your shares in 南京三寶科技股份有限公司 (Nanjing Sample Technology Company Limited*) (the “Company”), you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

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

(Stock Code: 1708)

(1) PROPOSED ISSUE OF A SHARES (2) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND ADOPTION OF THE RULES OF PROCEDURES AND THE ADMINISTRATIVE SYSTEM OF PROCEEDS

(3) ADOPTION OF THE INTERNAL RULES

(4) PROPOSED ESTABLISHMENT OF A STRATEGY COMMITTEE OF THE BOARD AND ADJUSTMENT OF THE COMPOSITION OF BOARD COMMITTEES

(5) PROPOSED CHANGE OF THE COMPANY’S AUDITORS AND

(6) PROPOSED TERMINATION OF THE SHARE OPTION SCHEME AND

NOTICE OF EXTRAORDINARY GENERAL MEETING AND NOTICES OF THE CLASS MEETINGS

A notice convening the EGM of the Company to be held at No. 10 Maqun Avenue, Maqun Technology Park, Qixia District, Nanjing City, Jiangsu Province, the PRC at 10:00 a.m. on 30 December 2011 and notices convening the class meetings of the Company to be held at the same place and on the same day are set out on pages 181 to 187 on this circular.

A proxy form for use at the EGM is enclosed with this circular. Whether or not you intend to attend the EGM, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the Company’s H Shares registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for the holders of the H Shares only) or the Company’s registered office at Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High and New Technology Industrial Development Zone, Nanjing City, Jiangsu Province, the PRC (for the holders of the Domestic Shares only), as soon as possible but in any event not less than 24 hours before the respective time fixed for holding the EGM or any adjournment thereof. Completion and delivery of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

This circular will remain on the website of The Stock Exchange of Hong Kong Limited at http:// www.hkex.com.hk on the “Latest Company announcements” page for at least 7 days from the date of its posting.

For identification purpose only

14 November 2011

			Pages
Definitions . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	–	Proposed Amendments to the Articles of Association. . . . . . . . . .	15
Appendix II	–	Proposed Rules of Procedures of
		General Meeting of the Shareholders
		for adoption by the Company . . . . . . . . . . . . . . . . . . . . . . . . . .	121
Appendix III	–	Proposed Rules of Procedures of meetings of the Board
		for adoption by the Company . . . . . . . . . . . . . . . . . . . . . . . . . .	145
Appendix IV	–	Proposed Rules of Procedures of meetings
		of the Supervisory Committee
		for adoption by the Company . . . . . . . . . . . . . . . . . . . . . . . . . .	160
Appendix V	–	Proposed Administrative System of Proceeds
		for adoption by the Company . . . . . . . . . . . . . . . . . . . . . . . . . .	169
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			181
Notice of Class Meeting for Holders of H Shares . . . . . . . . . . . . . . . . . . . . . . . . . . .			188
Notice of Class Meeting for Holders of Domestic Shares . . . . . . . . . . . . . . . . . . . . .			194

– i –

DEFINITIONS

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

“A Share(s)”
the share(s) with a nominal value of RMB1.00 each in the share capital of the Company to be issued and listed on the Shenzhen Stock Exchange
“Articles of Association”
the articles of association of the Company, as amended from time to time
“Board”
board of Directors
“CASBE”
China Accounting Standards for Business Enterprises
“Company”

南京三寶科技股份有限公司 (Nanjing Sample Technology Company Ltd.*), a joint stock limited company incorporated in the PRC with limited liability and whose H Shares are listed on the main board of the Stock Exchange

“Class Meetings”

the class meeting for holders of H Shares to be held immediately after the conclusion of the EGM, and the class meeting for holders of Domestic Shares to be held immediately after the conclusion of the said class meeting for holders of H Shares, or any adjourned meeting thereof respectively

“CSRC”
China Securities Regulatory Committee（中國證券監督管理委員會）
“Director(s)”
the director(s) of the Company
“Domestic Share(s)”

the ordinary domestic share(s) of nominal value of RMB1.00 each in the share capital of the Company, which are subscribed for in RMB, and all of such Shares are not listed on the Stock Exchange

– 1 –

DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be convened and held at 10:00 a.m. on 30 December 2011 for the Shareholders to consider and, if thought fit, approve, among other things, the Issue of A Shares, the proposed amendments to the Articles of Association and adoption of the Rules of Procedures, proposed adoption of Administrative System of Proceeds, the proposed establishment of a strategy committee of the Board and adjustment of the composition of Board committees, the proposed change of the Company’s auditors and the proposed termination of Share Option Scheme
“Group” the Company and its subsidiaries
“H Share(s)” the overseas listed foreign invested share(s) of nominal value of RMB1.00 each in the share capital of the Company, which are listed on the main board of the Stock Exchange and subscribed for and traded in Hong Kong dollars
“HK$” or “Hong Kong dollars” Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Internal Rules” the Working System of Independent Directors, the Working System of the Secretary to the Board, the Administrative System of Proceeds, the Internal Control System, the Management System for External Guarantee, Management System for External Investment, the Decision Making System for Connected Transactions, the Rules of Procedures for Nomination Committee of the Board, the Rules of Procedures for Audit Committee of the Board, the Rules of Procedures for Remuneration Committee of the Board and the Rules of Procedures for Strategy Committee of the Board

“Issue of A Shares” the proposed issue of not more than 73,900,000 A Shares with a nominal value of RMB1.00 each to natural persons, legal persons and other institutional investors recognised by the CSRC, who maintain A Share account with the China Securities Depository and Clearing Corp. Ltd., Shenzhen Branch (except those prohibited by PRC laws and regulations and other regulatory requirements to which the Company is subject to)

– 2 –

DEFINITIONS

“Latest Practicable Date”	10 November 2011, being the latest practicable date
	prior to the printing of this circular for the purpose of
	ascertaining certain information for inclusion in this
	circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange, as amended from time to time
“PRC”	the People’s Republic of China, for the purpose of this
	circular only, excludes Hong Kong, the Macau Special
	Administrative Region and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“Rules of Procedures”	the Rules of Procedures for General Meetings, Rules of
	Procedures for Board Meetings and Rules of
	Procedures for Meetings of the Supervisory Committee
“Share(s)”	the Domestic Share(s) and the H Share(s)
“Share Option Scheme”	the share option scheme of the Company conditionally
	approved by a resolution of the Shareholders dated 24
	April 2004
“Shareholder(s)”	holders of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent

– 3 –

LETTER FROM THE BOARD

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

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

(Stock Code: 1708)

Executive Directors: Mr. Sha Min Mr. Chang Yong Mr. Guo Ya Jun

Non-executive Director: Mr. Ma Jun

Independent non-executive Directors: Mr. Xu Suming Mr. Li Haifeng Mr. Shum Shing Kei

Registered Office: Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High and New Technology Industrial Development Zone Nanjing City Jiangsu Province PRC

Principal place of business in Hong Kong: Room 3112A, 31/F, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong

14 November 2011 Nanjing, the PRC

To Shareholders

Dear Sir or Madam,

(1) PROPOSED ISSUE OF A SHARES

(2) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND ADOPTION OF THE RULES OF PROCEDURES AND THE ADMINISTRATIVE SYSTEM OF PROCEEDS

(3) ADOPTION OF THE INTERNAL RULES

(4) PROPOSED ESTABLISHMENT OF A STRATEGY COMMITTEE OF THE BOARD AND ADJUSTMENT OF THE COMPOSITION OF BOARD COMMITTEES
- (5) PROPOSED CHANGE OF THE COMPANY’S AUDITORS AND
(6) PROPOSED TERMINATION OF THE SHARE OPTION SCHEME AND

NOTICE OF EXTRAORDINARY GENERAL MEETING AND NOTICES OF THE CLASS MEETINGS

INTRODUCTION

Reference is made to the announcement issued by the Company on 18 October 2011.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details of (i) the proposed Issue of A Shares, (ii) the proposed amendments to the Articles of Association and adoption of the Rules of Procedures and the Administrative System of Proceeds, (iii) the adoption of the Internal Rules, (iv) the proposed establishment of a strategy committee of the Board and adjustment of the composition of Board committees, (v) the proposed change of the Company’s auditors and (vi) the proposed termination of the Share Option Scheme, as well as the notices of the EGM and the Class Meetings respectively.

I PROPOSED ISSUE OF A SHARES

On 18 October 2011, the Company announced that at a meeting of the Board held on 18 October 2011, the Company proposed to apply to the relevant regulatory authorities in the PRC for the allotment and issue of not more than 73,900,000 A Shares with a nominal value of RMB1.00 each to natural persons, legal persons and other institutional investors recognised by the CSRC, who maintain A Share account with the China Securities Depository and Clearing Corp. Ltd., Shenzhen Branch (except those prohibited by PRC laws and regulations and other regulatory requirements to which the Company is subject to), and apply to the Shenzhen Stock Exchange for the listing of, and permission to deal in, the A Shares. The Issue of A Shares will be subject to, among other things, the approval by the Shareholders at the EGM and the Class Meetings, as well as the approval by the CSRC.

Details of the Issue of A Shares

(i) Class, nominal value of and the rights attaching to the new Shares to be issued

A Shares with a nominal value of RMB1.00 each in the share capital of the Company.

Holders of the A Shares will have the same rights and obligations as the holders of any other Shares.

(ii) Number of A Shares to be issued

Not more than 73,900,000 A Shares with a nominal value of RMB1.00 each, which represent:

(1) approximately 55.86% of the aggregate Domestic Shares of the Company in issue as at the Latest Practicable Date;
(2) approximately 35.84% of the aggregate Domestic Shares of the Company in issue as enlarged by the Issue of A Shares;
(3) approximately 32.98% of the entire issued share capital of the Company in issue as at the Latest Practicable Date; and
(4) approximately 24.8% of the entire issued share capital of the Company as enlarged by the Issue of A Shares.

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LETTER FROM THE BOARD

The final number of A Shares to be issued and the structure of such issue shall be subject to approval by the CSRC and other relevant regulatory authorities in the PRC, and subject to adjustment (if any) by the Board as authorised by the Shareholders at the EGM and the Class Meetings and within the range approved by the CSRC having regard to the relevant circumstances.

(iii) Basis for determination of the issue price

Subject to the approval of the CSRC for the Issue of A Shares, the issue price range of the A Shares will be determined on the basis of market conditions prevailing in the PRC securities market at the time of the issue of A Shares by way of market consultation or any such other price determination method(s) as approved by the CSRC.

There is no benchmark issue price for the A Shares. The final issue price for the A Shares shall be determined by the Board after having taken into account the consolidated net asset value of the Group and the abovementioned market conditions, but it will not be lower than the consolidated net asset value of the Group per each Share as disclosed in the then latest published audited financial statements of the Company.

(iv) Target subscribers

The target subscribers of the Issue of A Shares are natural persons, legal persons and other institutional investors recognised by the CSRC, who maintain A Share account with the China Securities Depository and Clearing Corp. Ltd., Shenzhen Branch (except those prohibited by PRC laws and regulations and other regulatory requirements to which the Company is subject to).

If any of the subscribers of the Issue of A Shares are connected persons of the Company, the Company will take every reasonable step to comply with the relevant requirements under Chapter 14A of the Listing Rules.

(v) Proposed stock exchange for listing

The Shenzhen Stock Exchange.

(vi) Method and time of issue

The issue will be conducted via placement through offline offering to investors subject to market consultation and online application of public offering shares, or such other method(s) as approved by the CSRC, and will be issued within 6 months after the approval of such issue by the CSRC.

– 6 –

LETTER FROM THE BOARD

(vii) Use of proceeds

The amount of fund to be raised from the Issue of A Shares cannot be confirmed as at the Latest Practicable Date. However, the Company intends to apply the proceeds in the following projects with a total estimated investment amount of approximately RMB476.21 million:

(1) the development and marketing project for cognitive transportation projects, with an investment amount of RMB157.50 million;
(2) the upgrade project of logistics monitoring product with internet of things (IOT)-based technology, with an investment amount of RMB98.71 million;
(3) R&D and industrialisation project of front-end intelligent equipment of IOT, with an investment amount of RMB100 million; and
(4) the construction project of research center for RFID system technology, with an investment amount of RMB120 million;

The Company may, in accordance with the actual circumstances and the progress of the above projects, utilize its internal resources or raise bank loans to finance the aforesaid projects prior to the completion of the Issue of A Shares, and to repay the funds raised and already applied by the Company and the Group in developing such projects upon completion of the Issue of A Shares.

In the event the proceeds from the Issue of A Shares are not sufficient to finance the above projects, the shortfall will be covered by internal resources or bank loans to be raised by the Group. In case the actual proceeds of the Issue of A Shares exceed the estimated investment amount mentioned above, the surplus will be used to supplement the liquidity of the Company.

(viii) Distribution plan of accumulated undistributed profits

Prior to this public issue of A Shares, the Company may distribute its profit available for distribution for 2011 in accordance with relevant laws, regulations and the Articles of Association. After the completion of this public issue of A Shares, all shareholders of the Company will be entitled to the undistributed profits carried forward after implementation of the distribution plan for the profits of 2011, and the profits arising prior to this Issue of A Shares. Holders of A Shares shall not be entitled to any dividend declared prior to completion of the Issue of A Shares.

(ix) Validity of the resolution

The resolution for the Issue of A Shares will be effective for a period of 12 months commencing from the date on which it is considered and approved at the EGM and at the Class Meetings.

– 7 –

LETTER FROM THE BOARD

(x) Approval and authorisation by the Shareholders

The EGM and the Class Meetings will be held to consider and, if thought fit, approve, among other things, the Issue of A Shares.

It is further proposed that the Board be authorised in the EGM and the Class Meetings to take all such actions and to sign/execute all such documents or instruments for and on behalf of the Company as may be necessary or expedient and make arrangements for all specific matters relating to, in connection with, or to effect, the Issue of A Shares, in accordance with the relevant requirements of the CSRC, the Stock Exchange and the Shenzhen Stock Exchange. The authorisation proposed to be granted to the Board shall include without limitation:

(1) to be responsible for and to effect the listing proposal of this issue, including without limitation, to determine the timing of issue, the number of A Shares to be issued, the issue price and its determination mechanism, the structure of the issue, the target subscribers of the A Shares, the method of issue, the stock exchange to be listed and other related application procedures and formalities subject to the relevant requirements under the relevant rules and regulations and the relevant securities rules, and pursuant to the listing proposal of this issue as approved by the Shareholders at the EGM and the Class Meetings;
(2) to deal with all filing and application matters relating to or in connection with the listing of this issue, including without limitation, applying for approval to, register with, filing with, seeking licences and consents from relevant governmental and regulatory authorities, the relevant stock exchange and securities clearing institution; to approve, sign, execute, amend or complete any agreement, contract or necessary document relating to the listing of this issue (including without limitation, offering circular, prospectus, sponsor agreement, underwriting agreement, listing agreement and all kinds of announcement and notice to the shareholders of the Company);
(3) to adjust and amend the proposal for the listing of this issue according to implementation of the listing proposal of this issue, market conditions, policies adjustments and comments from governmental and regulatory authorities;
(4) to make necessary or appropriate adoption of and amendments to the relevant provisions of the Articles of Association, the rules of procedures and internal rules of the Company relating to, in connection with the listing of this issue, and to deal with the application for approval, and the change of business registration, the filing and registration with relevant governmental authorities;

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LETTER FROM THE BOARD

(5) to make necessary or appropriate adoption of and amendments to the Articles of Association, the rules of procedures and internal rules of the Company in the event they conflict with the regulatory rules or documents promulgated by the CSRC and/or the relevant stock exchange, or in accordance with the comments from the CSRC and/or the relevant stock exchange;
(6) to deal with all matters in relation to the application or the use of net proceeds from the Issue of A Shares subject to the approval of the CSRC, including without limitation, to utilize the internal resources or raise bank loans to finance its projects prior to the completion of the Issue of A Shares, and to repay the funds raised and already applied by the Company and the Group in developing such projects upon completion of the Issue of A Shares; to adjust and amend related matters according to the actual circumstances and comments from relevant governmental authorities in the course of implementation in financing and investing in the projects, including without limitation: to adjust the budget for each project already included in the scope of investment by application of proceeds (including adjusting the number of projects), the subject, progress and means of implementation, etc.; to confirm the specific saving account for the proceeds; other project related matters in relation to the implementation of the application of the proceeds after the completion of the listing of this issue, including the signing and execution of any agreement, contract or other documents relating to the application of the proceeds; to finance the projects with internal resources or bank loans in the event the proceeds is not sufficient to finance the projects, and to apply any surplus to supplement the liquidity of the Company;
(7) to engage relevant intermediaries and to liaise and agree on their respective remuneration; and
(8) to process all related matters in connection with the Issue of A Shares, take all such actions as may be necessary or expedient and to determine and make arrangements for all specific matters relating to or in connection with the Issue of A Shares as permitted by the relevant laws and regulations.

The authorisation, if approved by the Shareholders at the EGM and the Class Meetings, shall be effective for a period of 12 months commencing from the date on which such approval is obtained.

It should be noted that the Issue of A Shares, upon approval by the Shareholders by way of special resolution at the EGM and the Class Meetings, is still subject to approvals by the CSRC and other relevant regulatory authorities. In addition, the examination and consent of the Shenzhen Stock Exchange for the listing of, and permission to deal in, the A Shares on Shenzhen Stock Exchange is also required. The approval in respect of the Issue of A Shares, if obtained from Shareholders at the EGM and the Class Meetings, shall be effective for a period of 12 months commencing from the date on which such approval is obtained.

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LETTER FROM THE BOARD

Reasons for the Issue of A Shares

The Directors believe that the Issue of A Shares will further broaden the Company’s funding channels, and thereby improve the Company’s capital structure and its debt financing capacity. In addition, the Issue of A Shares will provide the Company with financial resources for the specific needs as stipulated in the paragraph headed “Use of Proceeds” above and improve the competitiveness of the Group. The Directors believe that the Issue of A Shares will enhance the profile and corporate image of the Company, and is beneficial to the long term development of the Group. The Directors consider that the Issue of A Shares is in the interests of the Group and the Shareholders as a whole.

Effects of the Issue of A Shares on Shareholding Structure of the Company

Assuming that a total of 73,900,000 A Shares are to be issued, the shareholding structure of the Company as at the Latest Practicable Date and immediately after the completion of the Issue of A Shares is as follow:

(1) Non-Overseas unlisted shares of which: A Shares to be issued (2) H Shares (3) Total number	As at the Latest Practicable Date Number of Shares Approximate % 132,300,000 59.04 – – 91,800,000 40.96 224,100,000 100	Immediately after the completion of the Issue of A Shares Number of Shares Approximate % 206,200,000 69.19 73,900,000 24.80 91,800,000 30.81 298,000,000 100	Immediately after the completion of the Issue of A Shares Number of Shares Approximate % 206,200,000 69.19 73,900,000 24.80 91,800,000 30.81 298,000,000 100
			100

The Company will ensure that at least 25% of the Company’s total issued share capital will be held by the public upon completion of the Issue of A Shares.

II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND ADOPTION OF THE RULES OF PROCEDURES

In light of the Issue of A Shares, certain amendments are proposed to be made to the Articles of Association and the Rules of Procedures are proposed to be adopted by the Company pursuant to the applicable laws and regulatory requirements, including Rules of Procedures for General Meetings, Rules of Procedures for Board Meetings and Rules of Procedures for Meetings of the Supervisory Committee. The proposed amendments to the Articles of Association shall come into effect upon (i) the passing of a special resolution at the EGM to approve the amendments; (ii) the completion of the proposed A Shares Issue; and (iii) obtaining the required approval or endorsement from or the registration with relevant regulatory authorities. The proposed adoption of the Rules of Procedures are subject

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LETTER FROM THE BOARD

to (i) the Shareholders’ approval by way of a special resolution at the EGM; (ii) the completion of the proposed A Shares Issue; and (iii) the amended Articles of Association coming into effect.

The proposed amendments to the Articles of Association will include changes in, inter alia, the following main areas in the Articles of Association:

(i) capital structure of the Company;
(ii) restrictions in the transfer of the Shares or A Shares;
(iii) situations in which the Company can redeem its Shares or A Shares;
(iv) rights of the Shareholders in requesting the Company to institute legal proceedings against Directors or senior management who are in breach of any laws when performing their duties;
(v) proceedings of the general meetings of the Shareholders;
(vi) composition and powers of the Board;
(vii) powers of the supervisory committee and the proceedings of its meetings;
(viii) the Company’s obligations in reporting financial results to the CSRC and the Shenzhen Stock Exchange;
(ix) conditions in the declaration and payment of dividends; and
(x) other miscellaneous and corresponding changes.

The above list of the areas of changes in the Articles of Association are not exhaustive. Details of the proposed amendments to the Articles of Association and the Rules of Procedures to be adopted by the Company are set out in Appendices I to IV to this circular.

III PROPOSED ADOPTION OF THE ADMINISTRATIVE SYSTEM OF PROCEEDS

The Company proposed to adopt the Administrative System of Proceeds, as set out in Appendix V to this circular, pursuant to the requirements of the applicable PRC laws and regulations and the relevant rules of the Shenzhen Stock Exchange. Ordinary resolution to consider and approve the adoption of the Administrative System of Proceeds will be proposed at the EGM of the Company. The proposed Administrative System of Proceeds shall come into effect upon the completion of the Issue of A Shares.

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LETTER FROM THE BOARD

IV PROPOSED ESTABLISHMENT OF A STRATEGY COMMITTEE OF THE BOARD AND ADJUSTMENT OF THE COMPOSITION OF BOARD COMMITTEES

According to the circumstances of the Company, it is proposed that a new strategy committee of the Board be established. Its main duty is to study and advise on the long-term development strategy and major investment decisions of the Company. The proposed new strategy committee will be chaired by Mr. Sha Min, the Chairman and executive Director, with Mr. Chang Yong and Mr. Guo Ya Jun, executive Directors, as the members. Also, pursuant to the relevant requirements of the CSRC and the Shenzhen Stock Exchange, it is proposed that the following adjustments be made to the composition of the following Board committees:

Nomination Committee:

Mr. Xu Suming (chairman), Mr. Li Haifeng and Mr. Chang Yong

Remuneration Committee: Audit Committee:

Mr. Xu Suming (chairman), Mr. Shum Shing Kei and Mr. Guo Ya Jun

Mr. Shum Shing Kei (chairman), Mr. Xu Suming and Mr. Li Haifeng.

Mr. Xu Suming, Mr. Li Haifeng and Mr. Shum Shing Kei are independent non-executive Directors.

The establishment of the strategy committee and the abovementioned adjustments to the composition of the Board committees will be proposed as an ordinary resolution in the EGM.

V PROPOSED CHANGE OF THE COMPANY’S AUDITORS

The Company proposed to change its auditors and appoint Shulun Pan Certified Public Accountants (Special General Partnership) as the auditors of the Company, the term of engagement will commence from the date of its approval by Shareholders at the EGM until the date of the next annual general meeting. Shulun Pan Certified Public Accountants (Special General Partnership) is one of the approved mainland China accounting firms eligible for acting as auditors of the companies incorporated in the PRC whose shares are listed on the Stock Exchange.

The reason for the change of the Company’s auditors is due to the fact that the Company could not reach consensus with BDO Limited on the audit fee for the year ending 31 December 2011.

The resigning auditors, BDO Limited, has tendered its resignation on 18 October 2011 with immediate effect and confirmed that there are no matters that need to be brought to the attention of Shareholders. It is further proposed that the Board be authorised at the EGM to

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LETTER FROM THE BOARD

fix the remuneration of Shulun Pan Certified Public Accountants (Special General Partnership) with reference to the prevailing market conditions and the negotiation between the parties.

The aforesaid appointment of new auditors and the authorisation to the Board will be proposed as an ordinary resolution at the EGM.

In connection with the Issue of A Shares and for compliance with the regulatory requirements for both the listing of the A Shares on Shenzhen Stock Exchange and the listing of H Shares on the Stock Exchange, the Company also proposes to adopt CASBE as the reporting standard for its future financial statements. Having consulted with Shulun Pan Certified Public Accountants (Special General Partnership), the Board considers that the adoption of CASBE as the reporting standard for the Company’s future financial statements will not have any material impact on the financial positions of the Company.

Upon having obtained the Board’s approval for the adoption of CASBE as the reporting standard for its future financial statements (such approval will only be obtained after the EGM), the Company will issue an announcement disclosing such change and the financial effect of the change, if any, on the Company’s immediately preceding published financial statements.

VI PROPOSED TERMINATION OF SHARE OPTION SCHEME

The Share Option Scheme was conditionally approved by a resolution of the Shareholders dated 24 April 2004. The purpose of the Share Option Scheme is to recognize and encourage the contribution by the employees and other eligible persons to the Group. As at the Latest Practicable Date, the condition of the Share Option Scheme has not been satisfied. Therefore, there has not been any option granted under the Share Option Scheme and there is no outstanding option as at the Latest Practicable Date. The Company will not grant any option under the Share Option Scheme before completion of the Issue of A Shares. In view of the Issue of A Shares, the Company proposed to pass a special resolution at the EGM to terminate the Share Option Scheme.

VII ADOPTION OF THE INTERNAL RULES

To meet the Company’s need for the Issue of A Shares, and pursuant to the requirements of relevant laws and regulations of the PRC and the relevant rules of the CSRC and the Shenzhen Stock Exchange, on 18 October 2011, the Board has approved the adoption of or the amendments to the following Internal Rules and the Rules of Procedures for various Board committees with immediate effect, including the Working System of Independent Directors, the Working System of the Secretary to the Board, the Internal Control System, the Management System for External Guarantee, Management System for External Investment, the Decision Making System for Connected Transactions, the Rules of Procedures for Nomination Committee of the Board, the Rules of Procedures for Audit Committee of the Board, the Rules of Procedures for Remuneration Committee of the Board and the Rules of Procedures for Strategy Committee of the Board, among which the Rules of Procedures for Strategy Committee of the Board will only become effective after obtaining the approval of the establishment of the Strategy Committee at the EGM.

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LETTER FROM THE BOARD

VIII EGM

A notice convening the EGM is set out on pages 181 to 187 of this circular, special resolutions will be proposed to approve (i) the proposed Issue of A Shares; (ii) the amendments to the Articles of Association; (iii) the adoption of the Rules of Procedures; and (iv) the termination of the Share Option Scheme, and ordinary resolutions will be proposed to approve (i) the adoption of the Administrative System of Proceeds; (ii) the establishment of the strategy committee of the Board; and (iii) the appointment of Shulun Pan Certified Public Accountants (Special General Partnership) as the Company’s auditors and the granting of the authorisation to the Board to fix the remuneration of the new auditors at the EGM. A form of proxy for use at the EGM is also enclosed. Whether or not you intend to attend the EGM, you are requested to complete and return the enclosed proxy form (for use at the EGM) in accordance with the instructions printed thereon as soon as possible to the Company’s Hong Kong H share registrar and transfer office, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Company’s registered office, Room 103, Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High Technology Development Region, Qixia District, Nanjing City, Jiangsu Province, the PRC (in case of holders of Domestic Shares) but in any event not less than 24 hours before the time appointed for the holding of the EGM.

Completion and return of the said proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

According to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. Therefore, all resolutions at the EGM will be voted by poll.

An announcement on the poll vote results will be made by the Company after the EGM in the manner prescribed under the Listing Rules.

IX RECOMMENDATIONS

The Directors consider that the aforesaid matters proposed to be approved at the EGM are in the interests of the Company and the Shareholders as a whole, and recommend the Shareholders to vote in favor of the relevant resolutions to be proposed at the EGM.

Yours faithfully, By order of the Board

南京三寶科技股份有限公司 Nanjing Sample Technology Company Limited* Sha Min

Chairman

for identification purpose only.

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APPENDIX I

The English version of this Appendix is an unofficial translation of its Chinese version prepared for reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail.

The Articles of Association, after the proposed amendments thereto having been made, are set out as follows (words and provisions deleted therein are shown with strike-through lines, whereas newly added words and provisions are shown with underlines):

ARTICLES OF ASSOCIATION

Passed by the Annual General Meeting on 23 May 2011

(The Articles of Association are formulated in accordance with the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China, the Mandatory Provisions for Articles of Association of Companies to be Listed Overseas (“Mandatory Provisions”), the Letter of Opinions on Supplementary Amendment to Articles of Association of Companies to be Listed in Hong Kong (“Zheng Jian Hai Han[1995]No.1”), Further Standardizing Operations and Reform of Companies Listed Outside China Opinion (the “Opinion”), the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (“Hong Kong Listing Rules”), the Guidelines on Articles of Association of Listed Companies (as amended in 2006) (the “Guidelines”), Shenzhen Stock Exchange Guidelines on the Regulated Operation for Companies Listed on the Small and Medium Enterprises Board (“Guidelines on the Regulated Operation for Companies Listed on the SME Board”)

CHAPTER 1 GENERAL PROVISIONS

Article 1

In a bid to safeguard the legitimate rights and interests of 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”) and other relevant regulations.

Guidelines Article 1

Article 1 2

Nanjing Sample Technology Co., Ltd. (the “ Company ”) is a joint stock limited company incorporated pursuant to the Company Law of the People’s Republic of China (the “ Company Law ”), the Securities Law of the People’s Republic of China, the Special Regulations of the State Council on the Overseas Offer and Listing of Shares by Joint Stock Limited Companies (the “ Special Regulations ”) and other relevant laws and administrative regulations and listed on the Main Board of the Stock Exchange of Hong Kong Limited (“ Hong Kong Stock Exchange ”).

Mandatory Provisions Article 1

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Company was established by way of promotion with the approval of the People’s Government of Nanjing City, Jiangsu Province, People’s Republic of China, as evidenced by the approval document Ning Zheng Fu [2000] No.119 Approval of the Municipal Government regarding the conversion of Nanjing Sample Computer Technology Company Limited to Nanjing Sample Technology Co., Ltd. dated 29 December 2000. It was registered with the Nanjing Administration for Industry and Commerce and was granted the Company’s Business License for Enterprises as a Legal Person on 29 December 2000. The number of the Company’s business license is: 3201082000869.

The promoters of the Company include Nanjing Sample Technology Group Company Limited, Nanjing Zhongbei (Group) Company Limited, Nanjing Huadong Electronics Information & Technology Company Limited, Nanjing Sample Technology Commerce City Company Limited, Nanjing Daily Newspaper Office and Sha Min. At the time of incorporation, the said promoters each made a one-time payment in full of their respective capital contributions with the net assets they then held in Nanjing Sample Computer Technology Company Limited.

~~The Company was listed on the Main Board of the Hong Kong Stock Exchange on 1 December 2010.~~

Article 2 3

The registered name of the Company (In Chinese): 南京三寶科技股份有限公司 (In English): Nanjing Sample Technology Co., Ltd.

Mandatory Provisions Article 2

Article 3 4

The Company’s legal domicile:

Building No.1, Software Venture Center, High and New Technology Industrial Development Zone, Nanjing City

Telephone: 8625-84356666 Facsimile: 8625-84356650 Postcode: 210049

Article 4 5

The Company’s legal representative is the chairman of the Board of the Company.

Mandatory Provisions Article 4

Article 5 6

The Company is a joint stock limited company in perpetual existence.

Mandatory Provisions Article 5

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Article 6 7

~~These amendments to the Articles of Association shall become effective from the date of listing of the Company on the Main Board of the Hong Kong Stock Exchange.~~

Mandatory Provisions Article 6

From the date of the ~~amendments to the A~~ rticles of Association becoming effective, the Articles of Association constitute a legally binding document regulating the Company’s organization and activities, and the rights and obligations between the Company and each shareholder and among the shareholders.

From the date of the Articles of Association becoming effective, the Articles of Association constitute a legally binding document regulating the Company’s organization and activities, and the rights and obligations between the Company and each shareholder and among the shareholders.

Mandatory Provisions Article 7

The Articles of Association are binding on the Company and its shareholders, Directors, supervisors, president and other senior management, all of whom are entitled to claim rights regarding the Company’s affairs in accordance with the Articles of Association.

In accordance with the Articles of Association, shareholders may sue shareholders, shareholders may sue the Directors, supervisors, president and other senior management of the Company, shareholders may sue the Company and the Company may sue shareholders, Directors, supervisors, president and other senior management.

The term “sue” referred to in the preceding paragraph include court proceedings and arbitration proceedings.

Article 7

~~The Articles of Association are binding on the Company and its shareholders, Directors, supervisors, president, general managers, deputy general managers and other senior management, all of whom are entitled to claim rights regarding the Company’s affairs in accordance with the Articles of Association.~~

~~The Articles of Association are actionable by a shareholder against the Company and vice versa; shareholders may sue shareholders according to the Articles of Association; and shareholder may sue the Directors, supervisors, president, general managers, deputy general managers and other senior management members of the Company.~~

~~The actions referred to in the preceding paragraph include court proceedings and arbitration proceedings.~~

Article 8

Other senior management referred to in the Articles of Association refer to Vice President, Secretary to the Board and financial controller of the Company.

Mandatory Provisions Article 8

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Article 9

~~The Company may invest in other limited liability companies and joint stock limited companies, to which the Company shall be liable to the extent of the amount of its capital contribution. However, the Company shall not be the shareholder of any other economic organizations with unlimited liabilities. T~~ he Company may invest in other enterprises. However, unless stipulated by laws otherwise, the Company shall not be jointly and severally liable to such enterprise(s) for their liabilities as their investor.

Article 9 10

The Company is an independent legal entity, all acts of the Company shall comply with the laws and regulations of the PRC and the place of listing of overseas listed foreign shares, and the Company shall protect the shareholders’ legal rights. All capital of the Company is divided into shares with same par value per share. The rights and liabilities of the shareholders of the Company are limited to the shares held by them, and the Company is liable for its debts to the extent of its entire assets.

Article 11

On condition of compliance with applicable laws and administrative regulations of PRC, the Company has the power to raise or borrow money which power includes (but without limitation) the issue of corporate bond, the charging or pledging of part or whole of the ownership or usage right of the Company’s assets and other rights permitted by PRC laws and administrative regulations. Subject to the provisions under the laws and regulations of PRC and/or place of listing and in compliance with the provisions under the laws and regulations of PRC and/or place of listing and the corporate procedures stipulated herein, the Company may provide various forms of guarantee against any third party (including but not limited to the Company’s subsidiaries or associated companies) obligations; however, the Company shall not prejudice or abolish the rights of holders of shares of any class when exercising the said rights.

CHAPTER 2 PURPOSES AND SCOPE OF BUSINESS

Article 12

The business purposes of the Company are: to serve and rejuvenate the country through industry development and provide the country and the community with system solutions and services regarding, inter alias , computer and communication technology and application software, to provide the users with high quality, efficient and professional services, to achieve the objectives of user satisfaction, investors’ benefits and sustainable and stable corporate development by the advantages in technology and talents.

Mandatory Provisions Article 9

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APPENDIX I

Article 1 1 3

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

Major scope of business of the Company: computer networks, industrial automation engineering design, installation; electronic products, electronic computer development, manufacture, production for product sales, system integration; electronic computer technology consulting and information services; research and development of ITS-based basic information collection technology and equipment (not including commodities under the special control of the State and projects with special approval). (Those involving permits are licensed to operate)

Mandatory Provisions Article 10

According to the domestic and international market trends, business needs in the PRC and its own growth capability and its business performance, the Company may adjust its investment policies and business scope and mode on a timely basis; as well as set up branches and offices in the PRC and areas including Hong Kong, Macau and Taiwan (whether wholly-owned or not), subject to approvals by resolution of the general meeting and relevant governmental authorities.

CHAPTER 3 SHARES AND REGISTERED CAPITAL

Article 1 2 4

Mandatory Provisions Article 11

The shares of the Company shall take the form of share certificates. The Company shall have ordinary shares at all times. It may have other kinds of shares according to needs, upon approval of the company approval authorities that are authorized by the State Council.

Article 1 3 5

All the shares issued by the Company shall have a par value which shall be RMB1.00 for each share.

Mandatory Provisions Article 12

For the purposes of the above paragraph, the term “RMB” shall refer to the legal tender of the People’s Republic of China.

Where the capital of the Company includes shares which do not carry voting rights, the words “non-voting” must appear in the designation of such shares.

Where the equity capital includes shares with different voting rights, the designation of each class of shares, other than those with the most favourable voting rights, must include the words “restricted voting right” or “limited voting right”.

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APPENDIX I

Article 16

Shares of the Company shall be issued in an open, fair and just manner. Shares of the same class shall rank pari passu with each other.

Guidelines Article 15

For the same class of shares issued in the same tranche, each share shall be issued at the same price and subject to the same conditions. For the shares subscribed by any organization or individual, the price payable for each of such shares shall be the same.

Article 1 4 7

Subject to the approval of China Securities Regulatory Commission (“ CSRC ”), the Company may issue shares to domestic and foreign investors.

Mandatory Provisions Article 13

For the purposes of the preceding paragraph, the term “foreign investors” shall refer to investors from foreign countries or from Hong Kong, Macau or Taiwan that subscribe for shares issued by the Company, and the term “domestic investors” shall refer to investors inside the People’s Republic of China, excluding the above-mentioned regions, that subscribe for shares issued by the Company.

Article 1 5 8

Shares issued by the Company to domestic investors for subscription in Renminbi shall be referred to as domestic shares. Shares issued by the Company to overseas investors for subscription in foreign currency shall be referred to as foreign shares. Foreign shares which are listed outside the PRC shall be referred to as overseas listed foreign shares. Domestic shares which are listed in the PRC shall be referred to as PRC-listed domestic shares ( A shares). Both the holders of domestic shares and foreign shares are the shareholders of ordinary shares, and have the same rights and obligations.

Mandatory Provisions Article 14 Hong Kong Listing Rules Appendix 3 paragraph 9

The Company’s domestic shares are held on trust by the Shenzhen branch of the China Securities Registration and Clearing Company Limited. The issue or listing of the Company’s overseas listed foreign shares will be registered in the register of holders of overseas-listed foreign shares as provided under Article 48 hereof.

The foreign currency referred to in the preceding paragraph is a legal currency (other than Renminbi) of other countries or regions which is recognized by the foreign exchange administration authority of the State and can be used for payment of the Company’s shares.

Overseas listed foreign shares issued by the Company and listed in Hong Kong shall be referred to as H shares. H shares refer to the shares approved to be listed on the Hong Kong Stock Exchange, the par value of which are denominated in Renminbi, and are subscribed for and traded in Hong Kong dollars.

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APPENDIX I

Article 1 6 9

Upon approval of the company approval authorities that are authorized by the State Council, the total number of issuable ordinary shares of the Company upon its incorporation is 45,000,000 domestic shares of RMB1.00 each. The number of shares issued to the promoters upon the Company’s incorporation was 45,000,000 shares, representing 100% of the total number of issuable ordinary shares of the Company, all of which were subscribed by the promoters as follows:

Mandatory Provisions Article 15 Hong Kong Listing Rules Appendix 3 paragraph 9

18,000,000 shares subscribed by Nanjing Sample Technology Group Company Limited representing 40.00% of the total number of issuable ordinary shares of the Company upon its incorporation.

12,000,000 shares subscribed by Nanjing Zhongbei (Group) Company Limited representing 26.67% of the total number of issuable ordinary shares of the Company upon its incorporation.

12,000,000 shares subscribed by Nanjing Huadong Electronics Information & Technology Company Limited representing 26.67% of the total number of issuable ordinary shares of the Company upon its incorporation.

1,650,000 shares subscribed by Nanjing Sample Technology Commerce City Company Limited representing 3.66% of the total number of issuable ordinary shares of the Company upon its incorporation.

900,000 shares subscribed by Nanjing Daily Newspaper Office representing 2.00% of the total number of issuable ordinary shares of the Company upon its incorporation.

450,000 shares subscribed by Sha Min representing 1.00% of the total number of issuable ordinary shares of the Company upon its incorporation.

Article 17 20

(1) The number of ordinary overseas listed foreign shares issued for the first capital increase after incorporation of the Company was 20,400,000 shares (including 19,500,000 new shares and 900,000 exiting sale shares), accounting for 31.63% of the issuable ordinary shares of the Company.

Mandatory Provisions Article 16 Hong Kong Listing Rules Appendix 3 paragraph 9

The equity structure of the Company is: 64,500,000 ordinary shares, including 44,100,000 shares held by the promoters, accounting for 68.37% of the issuable ordinary shares of the Company, and 20,400,000 overseas listed foreign shares held by H shares holders, accounting for 31.63% of the issuable ordinary shares of the Company.

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APPENDIX I

(2) With the approval of the examination and approval authority authorized by the State Council, 12,000,000 shares acquired by the promoter namely Nanjing Zhongbei (Group) Co., Ltd. at the time of incorporation of the Company were all transferred to Jiangsu Century Gold Bull Technology and Trading Co., Ltd.
(3) With the approval of the examination and approval authority authorized by the State Council, 12,000,000 shares acquired by the promoter namely Nanjing Huadong Electronics Information & Technology Co., Ltd. at the time of incorporation of the Company were all transferred to Active Gold Holding Limited.
(4) With the approval of the examination and approval authority authorized by the State Council, 4,515,000 shares held by the Company’s shareholder namely Jiangsu Century Gold Bull Technology and Trading Co., Ltd. were all transferred to foreign shareholder Active Gold Holding Limited.
(5) With the approval of the examination and approval authority authorized by the State Council, the Company issued 96,750,000 bonus shares (15 bonus shares for every 10 shares) and increased 32,250,000 shares by way of capitalization of capital reserve (5 capitalization shares for every 10 shares), thereafter the total equity of the Company changed to 193,500,000 shares, with 132,300,000 shares (68.37% of the total number of the ordinary shares issued by the Company) held by domestic shareholders, including:

54,000,000 shares held by Nanjing Sample Technology Group Co., Ltd., accounting for approximately 27.91% of the total number of the ordinary shares issued by the Company.

22,455,000 shares held by Jiangsu Century Gold Bull Technology and Trading Co., Ltd., accounting for approximately 11.60% of the total number of the ordinary shares issued by the Company.

49,545,000 shares held by Active Gold Holding Limited, accounting for approximately 25.60% of the total number of the ordinary shares issued by the Company.

4,950,000 shares held by Nanjing Sample Technology and Business Co., Ltd., accounting for approximately 2.56% of the total number of the ordinary shares issued by the Company.

1,350,000 shares held by Sha Min, accounting for 0.70% of the total number of the ordinary shares issued by the Company.

61,200,000 overseas listed foreign shares held by H shareholders, accounting for 31.63% of the total number of the ordinary shares issued by the Company.

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APPENDIX I

(6) With the approval of the extraordinary general meeting of the Company held on 3 August 2009, the Company issued additional ordinary shares of 30,600,000 overseas listed foreign shares, thereafter the total equity of the Company changed to 224,100,000 shares, with 132,300,000 shares (59.04% of the total number of the ordinary shares issued by the Company) held by domestic shareholders, including:

54,000,000 shares held by Nanjing Sample Technology Group Co., Ltd., accounting for approximately 24.10% of the total number of the ordinary shares issued by the Company.

22,455,000 shares held by Jiangsu Century Gold Bull Technology and Trading Co., Ltd., accounting for approximately 10.02% of the total number of the ordinary shares issued by the Company.

49,545,000 shares held by Active Gold Holding Limited, accounting for approximately 22.11% of the total number of the ordinary shares issued by the Company.

4,950,000 shares held by Nanjing Sample Technology and Business Co., Ltd., accounting for approximately 2.21% of the total number of the ordinary shares issued by the Company.

1,350,000 shares were subscribed by Sha Min, accounting for 0.60% of the total number of the ordinary shares issued by the Company.

91,800,000 overseas listed foreign shares held by H shareholders, accounting for 40.96% of the total number of the ordinary shares issued by the Company.

(7) With the approval of the examination and approval authority authorized by the State Council, 6,770,000 shares held by the Company’s shareholder namely Jiangsu Century Gold Bull Technology and Trading Co., Ltd. were transferred to the Company’s shareholder Nanjing Sample Technology Group Co., Ltd.
(8) With the approval of Jiangsu Administration for Industry and Commerce, the Company’s shareholder Jiangsu Century Gold Bull Technology and Trading Co., Ltd. changed its name to Jiangsu Red Stone Technology Corporation.
(9) On [�], with the approval of China Securities Regulatory Commission, the Company initially issued to the public [�] PRC-listed domestic shares, which have been listed on Shenzhen Stock Exchange on [�].
Guidelines Article 3

Upon completion of the aforesaid PRC-listed domestic share issue, the Company’s share capital structure is as follows: [�] ordinary shares, of which [�] shares are held by holders of A shares, representing [�]% of the Company’s total ordinary shares in issue; [�] shares are held by holders of H shares, representing [�]% of the Company’s total ordinary shares in issue.

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APPENDIX I

Article 18 21

Upon approval of CSRC of the Company’s proposal for issue of overseas-listed foreign shares and domestic shares, the Board of the Company may make implementation arrangements of separate issue. The Company’s proposal for separate issue of overseas-listed foreign shares and domestic shares pursuant to the preceding paragraph may be implemented within fifteen (15) months from the date of approval by CSRC for overseas-listed foreign shares and implemented within six (6) months from the date of approval by CSRC for PRC-listed domestic shares.

Mandatory Provisions Article 17

~~May be implemented within fifteen (15) months from the date of approval by CSRC.~~

Article 19 22

Where the Company issues overseas-listed foreign shares and domestic shares respectively within the total number of shares as stated in the issuance proposal, the respective shares shall be subscribed for in full at one time. If they cannot be subscribed for in full at one time under special circumstances, these shares may be issued in several issues subject to the approval of CSRC.

Article 23

Mandatory Provisions Article 18

Mandatory Provisions Article 19

The Company’s registered capital is RMB[�] ~~224,100,000~~ .

Article 2 1 4

The Company may, based on its requirements for operation and development and in accordance with the relevant provisions of the Articles of Association, approve an increase of capital.

Mandatory Provisions Article 20

The Company may increase its capital in the following manners:

(1) by offering new shares for subscription by unspecified investors;
(2) by non-public issue of shares;
~~(2)~~
(3) by placing new shares to its existing shareholders;
~~(3)~~
(4) by allotting bonus shares to its existing shareholders;
~~(4)~~
(5) by capitalizing its capital reserve;

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APPENDIX I

~~(5)~~

(6) by any other means which is permitted by laws, administrative regulations and authorized by the securities regulatory authorities.

The Company’s increase of capital by issuing new shares shall, after being approved in accordance with the provisions of the Company’s Articles of Association, be conducted in accordance with the procedures stipulated by relevant laws and administrative regulations of the State.

Article 2 2 5

Unless otherwise provided by laws and administrative regulations, shares of the Company are freely transferable and are not subject to any lien.

Domestic shares and overseas-listed foreign shares of the Company shall be purchased, sold, donated, inherited and pledged in accordance with PRC laws and the Articles of Association. The transfer and assignment of shares of the Company shall be registered in the registration office of shares entrusted by the Company and be handled in accordance with the transfer procedures provided for in relevant regulations.

Mandatory Provisions Article 21 Hong Kong Listing Rules Appendix 3 Paragraphs 1(1) and (2)

Article 2 3 6

Upon transfer of the Company’s shares, the transferees of the shares will become the holders of such shares with their names being entered in the register of shareholders.

Article 27

Guidelines Article 27

Company Law Article 142

The Company shall not accept any shares of the Company as the subject of a pledge.

Article 28

Shares of the Company held by the promoters shall not be transferred within one (1) year from the date of the establishment of the Company. The transfer of domestic shares issued prior to the Company’s initial public offering of A shares shall be implemented in accordance with the provisions of laws, administrative regulations and relevant listing rules.

The Directors, supervisors and senior management of the Company shall report to the Company their shareholdings and changes therein and shall not transfer more than 25% per year of the total number of shares held by them during their tenure. The shares held by them shall not be transferred within one (1) year from the date the shares of the Company being listed and traded on the stock exchange(s). The aforesaid person(s) shall not transfer the shares of the Company held by them within six (6) months commencing from the termination of their service.

Notice on Further Regulating the Purchase of Stock of the Listed Companies on the Growth Enterprise by Their Own Board Directors, Supervisors and Senior Managers Article 3

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APPENDIX I

The number of shares of the Company sold by the Directors, supervisors and senior management of the Company through trading on a stock exchange within twelve (12) months after six (6) months from the reported termination of their service shall account for not more than 50% of the total number of shares held by them in the Company.

Article 29

Any gains from sale of shares in the Company by any Directors, supervisors, senior management or shareholders holding 5% or more of the shares in the Company within six (6) months after their purchase of the same, and any gains from purchase of shares in the Company by any of the aforesaid parties within six (6) months after sale of the same shall be paid to the Company. The Board of the Company shall forfeit such gains from the abovementioned parties. However, if a securities company holds 5% or more shares by buying the remaining shares pursuant to an underwriting arrangement, the six (6) month limitation for selling the said shares shall not apply.

Guidelines Article 29

Should the Board of the Company does not observe the preceding paragraph, the shareholders shall be entitled to request the Board to effect the same within thirty (30) days. If the Board of the Company fails to do so within the aforesaid time limit, the shareholders may directly initiate court proceedings in their own name for the interests of the Company.

Should the Board of the Company fail to comply with the requirements set out in the first provision, the responsible Director(s) shall assume joint and several liabilities under the law.

Article 24 30

All issues and transfers of overseas-listed foreign shares shall be registered in the register of holders of overseas-listed foreign shares kept in Hong Kong in accordance with Article 4 ~~1~~ 8.

Hong Kong Listing Rules Appendix 13 Part D Section 1(b)

Article 25 31

The transfer of all or part of the shares by any holders of overseas-listed foreign shares shall be effected by the standard transfer form and instrument of transfer specified by the Hong Kong Stock Exchange. The instrument of transfer shall be signed by hand or in a machine-imprinted format by the transferor or transferee.

Article 26 32

The Company shall ensure that the share certificates of all overseas-listed foreign shares carry the following representations, and instruct and cause the share registrar of the Company to refuse to register any person as holder of any shares of the Company subscribed, purchased or transferred unless and until the person has produced to the share

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APPENDIX I

registrar a share certificate carrying the following representations and has signed proper forms:

(I) The purchaser agrees with the Company and each shareholder, and the Company agrees with each shareholder, to observe and comply with the Company Law and other relevant laws, administrative regulations as well as the Articles of Association;
(II) The purchaser agrees with the Company, each shareholder, Director, supervisor and management of the Company, and the Company on behalf of itself and each Director, supervisor and management, agrees with each shareholder, to refer to arbitration all the disputes and claims concerning the Articles of Association or any rights or obligations provided for in the Company law and other relevant laws and administrative regulations, and to authorize the arbitration to be exposed to public hearing and the result of the arbitration to be publicly announced;
(III) The purchaser and the Company and the shareholders of the Company have agreed that shares of the Company can be transferred freely by shareholders;
(IV) The purchaser authorizes the Company to represent him/her to enter into an agreement with the Directors and management of the Company whereby the Directors and management promise to bear and comply with their duties to shareholders provided for in the Articles of Association.

Article 27 33

Regarding overseas-listed foreign shares, the Company may cease sending dividend warrants by post, if:

Hong Kong Listing Rules Appendix 3 Paragraph 13(1)

(1) such warrants have been left uncashed on two consecutive occasions; or
(2) the first occasion on which such warrants are returned undelivered.

The Company may sell the shares of a member who is untraceable and keep the Hong Kong proceeds if: ListingAppendixRules3 Paragraph (1) during a period of twelve (12) years at least three dividends in respect of the 13(2) Hong Kong shares in question have become payable and no dividend during that period has Listing Rules been claimed by the member; and Appendix 3 Paragraph 13(2)

(2) on expiry of the twelve (12) years the Company gives notice upon approval of CSRC of its intention to sell the shares by way of an advertisement published in newspapers and notifies the authority and the relevant foreign securities regulators of such intention.

Where power is taken to forfeit unclaimed dividends, such power shall only be exercised after the expiration of six (6) years after the date of declaration of dividends.

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CHAPTER 4 REDUCTION OF CAPITAL AND REPURCHASE OF SHARES

Article 28 34

In accordance with the provisions of the Articles of Association, the Company may reduce its registered capital.

Mandatory Provisions Article 22 Mandatory Provisions Article 23

Article 29 35

The Company must prepare a balance sheet and an inventory of assets when it reduces its registered capital.

prepare a an Hong Kong its registered capital. ListingAppendixRules3 Paragraph 7(1) The Company shall notify its creditors within ten (10) days from the date of the Hong Kong Company’s resolution on reduction of registered capital and shall publish an announcement ListingAppendixRules3 in the newspaper within thirty (30) days from the date of such resolution. A creditor has the Paragraph 7(2) right, within thirty (30) days of receiving the notice from the Company or, in the case of a creditor who does not receive the notice, within forty-five (45) days from the date of the announcement, to require the Company to repay its debt or provide a corresponding guarantee for such debt.

The registered share capital of the Company following the reduction of capital shall not fall below the minimum statutory requirement.

Article 36

The Company may, in accordance with the procedures set out in the Articles of Association and with the approval of the relevant governing authority of the State, repurchase its outstanding shares under the following circumstances:

Mandatory Provisions Article 24

(1) cancellation of shares for the purposes of reducing its capital;
(2) merging with another company that holds shares in the Company;
(3) granting shares to employees of the Company as incentives;
(4) acquiring shares held by shareholders (upon their request) who vote against any resolution proposed in any general meeting on the merger or division of the Company;
( ~~3~~ 5) other circumstances as permitted by laws and administrative regulations.

The Company shall not engage in the trading of its shares save for the circumstances specified above.

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Article 3 1 7

The Company may, with the approval of the relevant governing authority of the State for repurchasing its shares, conduct the repurchase in one of the following manners:

Mandatory Provisions Article 25

(1) to make an offer of repurchase to all of its shareholders at the same proportion;
(2) to repurchase shares through public trading on a stock exchange;
(3) to repurchase through an off-market agreement;
(4) other means as permitted by the securities regulatory authority.

Article 3 2 8

Where the Company repurchases its shares through an off-market agreement, it shall seek prior approval of the shareholders at general meeting in accordance with the Articles of Association. The Company may release or vary a contract so entered into by the Company or waive its rights thereunder with prior approval by shareholders at general meeting obtained in the same manner.

Mandatory Provisions Article 26

The contract to repurchase shares as referred to in the preceding paragraph includes, but not limited to, an agreement to become obliged to repurchase or to acquire the right to repurchase shares.

The Company shall not assign a contract for repurchasing its shares or any of its right thereunder.

Article 3 3 9

Where the Company has the power to repurchase redeemable share, purchases not made through the market or by tender shall be limited to a maximum price; if purchases are by tender, tenders shall be available to all shareholders alike.

~~Shares repurchased in accordance with the laws by the Company shall be cancelled within the period prescribed by laws and administrative regulations, and the Company shall apply to the original company registration authority for registration of the change of its registered capital and make relevant announcements.~~

Hong Kong Listing Rules Appendix 3 Paragraphs l 8(1) and (2)

Mandatory Provisions Article 27

~~The amount of the Company’s registered share capital shall be reduced by the aggregate par value of those cancelled shares.~~

Article 40

The Company’s purchase of its shares for any of the reasons as mentioned in items (1) to (3) of Article 36 shall be subject to a resolution at the shareholders’ general meeting. After purchase by the Company of its shares pursuant to the provisions of Article 36, shares

Mandatory Provisions Article 27 Guidelines Article 25

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

purchased under item (1) shall be cancelled within ten (10) days from the date of acquisition; for those circumstances described under items (2) and (4), the shares shall be transferred or cancelled within six (6) months.

Shares purchased by the Company under item (3) of Article 36 shall not exceed 5% of the total number of shares of the Company in issue; payment by the Company for purchase shall be made out of the after-tax profit of the Company; and the shares purchased shall be transferred to the employees within one (1) year.

The amount of the Company’s registered capital shall be reduced by the aggregate par value of those cancelled shares.

Article 34 41

Unless the Company is in the course of liquidation, it must comply with the following provisions in respect of repurchase of its outstanding shares:

Mandatory Provisions Article 28

(1) where the Company repurchases its shares at par value, payment shall be made out of book balance of the distributable profits of the Company or out of proceeds of a fresh issue of shares made for that purpose;
(2) where the Company repurchases its shares at a premium to their par value, payment up to the par value shall be made out of the book balance of distributable profits of the Company or out of the proceeds of a fresh issue of shares made for that purpose. Payment of the portion in excess of the par value shall be effected as follows:
if the shares being repurchased were issued at par value, payment shall be made out of the book balance of the distributable profits of the Company;
if the shares being repurchased were issued at a premium to their par value, payment shall be made out of the book balance of the distributable profits of the Company or out of the proceeds of a fresh issue of shares made for that purpose, provided that the amount paid out of the proceeds of the fresh issue shall not exceed the aggregate of premiums received by the Company on the issue of the shares repurchased nor the current amount of the Company’s share premium account (or capital reserve account) (including the premiums on the fresh issue);
(3) payment by the Company in consideration of the following shall be made out of the Company’s distributable profits:
acquisition of rights to repurchase shares of the Company;
variation of any contract for repurchasing shares of the Company;
release of its obligation under any contract for repurchasing its shares;

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(4) after the Company’s registered capital has been reduced by the total par value of the cancelled shares in accordance with the relevant provisions, the amount deducted from the distributable profits of the Company for payment of the par value portion of the shares repurchased shall be transferred to the Company’s share premium account (or capital reserve account).

CHAPTER 5 FINANCIAL ASSISTANCE FOR ACQUISITION OF THE COMPANY’S SHARES

Article 35 42

The Company or its subsidiaries shall not, by any means at any time, provide any kind of financial assistance to a person who is acquiring or is proposing to acquire shares of the Company. The said acquirer of shares of the Company includes a person who directly or indirectly assumes any obligations due to the acquisition of shares of the Company.

Mandatory Provisions Article 29

The Company or its subsidiaries shall not, by any means at any time, provide financial assistance to the said acquirer for the purpose of reducing or discharging the obligations assumed by that person.

This provision does not apply to the circumstances stated in Article 44 ~~37~~ .

Article 36 43

The financial assistance referred to in this Chapter includes, (without limitation), the following means:

Mandatory Provisions Article 30

(1) gift;
(2) guarantee (including the assumption of liability by the guarantor or the provision of assets by the guarantor to secure the performance of obligations by the obligor), or compensation (other than compensation in respect of the Company’s own default) or release or waiver of any rights;
(3) provision of loan or any other agreement under which the obligations of the Company are to be fulfilled before the obligations of another party, or a change in the parties to, or the assignment of rights arising under, such loan or agreement;
(4) any other form of financial assistance given by the Company when the Company is insolvent or has no net assets or when its net assets would thereby be reduced to a material extent.

The expression “assuming an obligation” referred to in this Chapter includes the assumption of obligations by the changing of the obligor’s financial position by way of contract or the making of an arrangement (whether enforceable or not, and whether made on its own account or with any other persons), or by any other means.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

Article 37 44

The following activities shall not be deemed to be activities as prohibited in Article ~~35~~ 42:

Mandatory Provisions Article 31

(1) the provision of financial assistance by the Company where the financial assistance is given in good faith in the interest of the Company, and the principal purpose of giving the financial assistance is not for the acquisition of shares of the Company, or the giving of the financial assistance is an incidental part of a master plan of the Company;
(2) the lawful distribution of the Company’s assets by way of dividend;
(3) the allotment of bonus shares as dividends;
(4) a reduction of registered capital, a repurchase of shares or a reorganization of the shareholding structure of the Company effected in accordance with the Articles of Association;
(5) the lending of money by the Company within its scope of business and in the ordinary course of its business (provided that the net assets of the Company are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance is provided out of the distributable profits of the Company);
(6) the provision of money by the Company for contributions to staff and workers’ share schemes (provided that the net assets of the Company are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance is provided out of the distributable profits of the Company).

CHAPTER 6 SHARE CERTIFICATES AND REGISTER OF MEMBERS

Article 38 45

Share certificates of the Company shall be in registered form.

Mandatory Provisions Article 32

The following major items shall be specified on the share certificate of the Company:

(1) the Company’s name;
(2) the date of registration of the Company;
(3) the class of the share certificate, the par value and the number of shares represented by the share certificate;
(4) the serial number of the share certificate;

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

(5) In addition to those provided in the Company Law and Special Regulations, a share certificate of the Company shall also contain other items required to be specified by the stock exchange(s) on which the shares of the Company are listed.

Mandatory Provisions Article 33

Article 39 46

The share certificates shall be signed by the Chairman. Where the stock exchange on which the shares of the Company are listed requires the share certificates to be signed by other senior management, the share certificates shall also be signed by such other senior management. The share certificates shall take effect after being affixed, or affixed by way of printing, with the seal of the Company. The share certificates shall only be affixed with the Company’s seal under the authorization of the Board. The signatures of the Chairman of the Company or other relevant senior management on the share certificates may also be in printed form.

Article 47

Mandatory Provisions Article 34

The Company shall keep a register of shareholders which shall contain the following particulars:

(1) the name, address (domicile), occupation or nature of each shareholder;
(2) the class and number of shares held by each shareholder;
(3) the amount paid-up or payable in respect of shares held by each shareholder;
(4) the serial numbers of the shares held by each shareholder;
(5) the date on which a person registers as a shareholder;
(6) the date on which a person ceases to be a shareholder; ~~.~~
(7) Pledge, freezing and other restrictions of rights of the shares held by each shareholder.

The register of shareholders shall be sufficient evidence of the holding of the Company’s shares by a shareholder, unless there is evidence to the contrary.

Article 4 1 8

The Company may, in accordance with the mutual understanding and agreements made between CSRC and overseas securities regulatory authorities, maintain its register of holders of overseas-listed foreign shares outside the PRC and appoint overseas agent(s) to manage such register. The original register of holders of H shares shall be maintained in Hong Kong.

Mandatory Provisions Article 35 Zheng Jian Hai Han [1995]No.1

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Company shall maintain a duplicate of the register of holders of overseas listed foreign shares at the Company’s domicile; the appointed overseas agent(s) shall ensure the consistency between the original and the duplicate of the register of holders of overseas-listed foreign shares at all times.

Hong Kong Listing Rules Appendix 13 Part D

If there is any inconsistency between the original and the duplicate of the register of holders of overseas-listed foreign shares, the original version shall prevail.

Article 4 2 9

The Company shall maintain a complete register of shareholders.

The register of shareholders shall include the following:

Mandatory Provisions Article 36

(1) the register of shareholders maintained at the Company’s domicile (other than those parts as described in items (2) and (3) of this Article);
(2) the register of shareholders in respect of the holders of overseas-listed foreign shares of the Company maintained at the place where the overseas stock exchange on which the shares are listed is located;
(3) the register of shareholders maintained at such other place as the Board may consider necessary for the purpose of listing of the Company’s shares.

Article 43 50

Different parts of the register of shareholders shall not overlap one another. No transfer of the shares registered in any part of the register shall, during the existence of that registration, be registered in any other part of the register of shareholders.

Alteration or rectification of each part of the register of shareholders shall be made in accordance with the laws of the place where that part of the register of shareholders is maintained.

Mandatory Provisions Article 37

Hong Kong Listing Rules Appendix 3 Paragraph 1(2)

Article 44 51

All overseas-listed foreign shares shall be transferred by an instrument in writing in any usual or common form or any other form which the Board may approve. The instrument of transfer of any share may be executed by hand without seal. If the shareholder is a recognized clearing house as defined in the laws of Hong Kong (“Recognized Clearing house”) or its nominee, the share transfer form may be executed in mechanically-printed form.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

All fully paid-up overseas-listed foreign shares which are listed in Hong Kong are freely transferable pursuant to the Articles of Association. However, the Board may refuse to recognize any instrument of transfer without giving any reason unless such transfer fulfills the following conditions:

(1) A fee of HK$2 ~~.5~~ per instrument of transfer or such higher amount as the Board may from time to time require but no more than the amount agreed from time to time by the Hong Kong Listing Rules has been paid to the Company for registration of transfer and other documents relating or which will affect the right of ownership of the shares;

Zheng Jian Hai Han [1995]No.1 Article 12

Hong Kong Listing Rules Appendix 3 Paragraph 1(1)

(2) the instrument of transfer involves only the overseas-listed foreign shares listed on the Main Board of the Hong Kong Stock Exchange;
(3) the stamp duty payable on the instrument of transfer has been paid;
(4) the relevant share certificates and evidence reasonably required by the Board showing that the transferor has the right to transfer such shares have been provided;
(5) if the shares are to be transferred to joint holders, the number of such joint holders shall not exceed four (4);
(6) the Company does not have any lien over the relevant shares.
Hong Kong Listing Rules Appendix 3 Paragraph 1(3)

If the Company refuses to register the transfer of shares, it shall provide a notice of refusal to the transferor and the transferee within two (2) months from the date of the formal application of such transfer.

~~The Directors, supervisors, president, general managers, deputy general managers and other senior management of the Company shall report to the Company their shareholdings in the Company and no transfer shall be allowed during their tenure.~~

Hong Kong Listing Rules Appendix 3 Paragraph 1(2)

Article 45 52

Transfers may not be entered in the register of shareholders within ~~ten (10)~~ thirty (30) days prior to the date of a shareholders’ general meeting or within five (5) days before the benchmark date set by the Company for the purpose of distribution of dividends.

Article 46 53

When the Company intends to convene a shareholders’ general meeting, distribute dividends, liquidate and engage in other activities that involve determination of shareholdings, the Board shall decide on a date for the determination of rights attaching to shares in the Company (shareholding record date). Shareholders whose names appear in the register of shareholders at the end of the record date are shareholders of the Company.

Mandatory Provisions Article 39

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

Article 47 54

Any person who objects to the register of shareholders and requests to have his name entered in or removed from the register of shareholders may apply to a court of competent jurisdiction for rectification of the register.

Mandatory Provisions Article 40

Article 48 55

Any shareholder who is registered in, or any person who requests to have his name entered in, the register of shareholders may (if his share certificates (the “original certificates”) are lost) apply to the Company for a replacement share certificate in respect of such shares (the “relevant shares”).

Mandatory Provisions Article 41

If a holder of domestic shares loses his share certificates and applies for their replacement, it shall be dealt with in accordance with the provisions of Article 144 of the Company Law.

If a holder of overseas-listed foreign shares loses his share certificates and applies for their replacements, it may be dealt with in accordance with the relevant laws, the rules of the stock exchange or other relevant regulations of the place where the original register of holders of overseas-listed foreign shares is maintained.

The issue of replacement share certificates to holders of H shares shall comply with the following requirements:

(1) The applicant shall submit an application to the Company in prescribed form accompanied by a notarial act or statutory declaration, containing the grounds upon which the application is made and the circumstances and evidence of the loss of the share certificates as well as declaring that no other person shall be entitled to request to be registered as the shareholder in respect of the relevant shares.
(2) No statement has been received by the Company from a person other than the applicant for having his name registered as a holder of the relevant shares before the Company came to a decision to issue the replacement share certificate.
(3) The Company shall, if it decides to issue a replacement share certificate to the applicant, make an announcement of its intention to issue the replacement share certificate in such newspapers designated by the Board. The announcement shall be made at least once every thirty (30) days in a period of ninety (90) days.

Hong Kong Listing Rules Appendix 3 Paragraph 7(1)

(4) The Company shall have, prior to the publication of its announcement of intention to issue a replacement certificate, delivered to the stock exchange on which its shares are listed a copy of the announcement to be published. The Company may publish the announcement upon receiving a confirmation from such stock

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

exchange that the announcement has been exhibited at the premises of the stock exchange. The announcement shall be exhibited at the premises of the stock exchange for a period of ninety (90) days.

In case an application to issue a replacement share certificate has been made without the consent of the registered holder of the relevant shares, the Company shall send by post to such registered shareholder a copy of the announcement to be published.

(5) If, upon expiration of the 90-day period referred to in items (3) and (4) of this Article, the Company has not received from any person any objection to such application, the Company may issue a replacement share certificate to the applicant according to his application.
(6) Where the Company issues a replacement share certificate under this Article, it shall forthwith cancel the original certificate and enter the cancellation and issue in the register of shareholders accordingly.

Hong Kong Listing Rules Appendix 3 Paragraph 2(2)

(7) All expenses relating to the cancellation of an original share certificate and the issue of a replacement share certificate by the Company shall be borne by the applicant. The Company may refuse to take any action until a reasonable guarantee is provided by the applicant for such expenses.

Where power is granted to the Company to issue warrants to bearer, no new warrants shall be issued to replace the one that has been lost, unless the Company is satisfied beyond reasonable doubt that the original has been destroyed.

Article 49 56

Where the Company issues a replacement share certificate pursuant to the Articles of Association, the name of a bona fide purchaser who obtains the aforementioned new share certificate or a shareholder who thereafter registers as the owner of such shares (in the case that he is a bona fide purchaser) shall not be removed from the register of shareholders.

Mandatory Provisions Article 42

Article 57

The Company shall not be liable for any damages sustained by any person by reason of the cancellation of the original certificate or the issuance of the replacement certificate, unless the claimant proves that the Company had acted fraudulently.

Mandatory Provisions Article 43

CHAPTER 7 SHAREHOLDERS’ RIGHTS AND OBLIGATIONS

ARTICLE 5 1 8

Mandatory Provisions Article 44

A shareholder of the Company is a person who lawfully holds shares of the Company and whose name is entered in the register of shareholders.

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

A shareholder shall enjoy the relevant rights and assume the relevant obligations in accordance with the class and number of shares he holds. Shareholders holding the same class of shares shall be entitled to the same rights and assume the same obligations.

Hong Kong Listing Rules Appendix 3 Paragraph 9

Article 59

The joint holders of any shares shall jointly or severally assume the liability to pay for all amounts payable for the relevant shares.

For joint holding of any shares, if one of the joint shareholders is deceased, only the other existing shareholders of the joint shareholder shall be deemed as the persons who have the ownership of the relevant shares. But the Board has the power to require them to provide a certificate of death of the relevant shareholder as necessary for the purpose of modifying the relevant register of shareholders. In respect of any of the joint shareholders of the shares, only the joint shareholder ranking first in the register of shareholders have the right to accept certificates of the relevant shares from the Company, receive notices of the Company, attend and vote at shareholders’ general meetings of the Company of all the relevant shares. Any notice which is delivered to the aforesaid shareholder shall be considered as having been delivered to all the joint shareholders of the relevant shares.

Article 52 60

The ordinary shareholders of the Company shall be entitled to the following rights:

Mandatory Provisions Article 45

(1) the right to dividends and other distributions in proportion to the number of shares held;
(2) the right to propose, convene, preside over, attend or appoint a proxy to attend Hong Kong shareholders’ general meetings and to exercise the corresponding voting right ListingAppendixRules3 thereat in accordance with laws; Paragraph 9
(3) the right to supervise and manage the business activities of the Company and to put forward proposals and raise inquiries;
(4) the right to transfer, donate, or pledge shares held by them in accordance with the laws, administrative regulations and provisions of the Articles of Association;
(5) the right to obtain relevant information in accordance with the provisions of the Articles of Association, including:
to obtain a copy of the Articles of Association, subject to payment of the cost of such copy;
to inspect and copy, subject to payment of a reasonable charge: (i) all parts of the register of shareholders;

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APPENDIX I

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(ii) personal particulars of each of the Company’s Directors, supervisors, president ~~, general managers, deputy general managers~~ and other senior management, including:
- (a) present name and alias and any former name and alias;
- (b) principal address (domicile);
- (c) nationality;
- (d) primary and all other part-time occupations;
- (e) identification document and its number;
- (f) financial reports.
(iii) report on the state of the Company’s share capital;
(iv) reports showing the aggregate par value, quantity, maximum and minimum price paid in respect of each class of shares repurchased by the Company since the end of the last accounting year and the aggregate amount incurred by the Company for this purpose;
(v) minutes of shareholders’ general meetings and resolutions of Board meetings and Supervisory Committee meetings;
(vi) financial reports;
(vii) corporate bond counterfoils;
(6) in the event of the termination or liquidation of the Company, to participate in the distribution of remaining assets of the Company in accordance with the number of shares held;
(7) with respect to shareholders who vote against any resolution adopted at the shareholders’ general meeting on the merger or division of the Company, the right to demand the Company to acquire the shares held by them;
(8) as stipulated under the Company Law or other laws, administrative regulations or departmental rules, in the event that any act has prejudiced the Company’s interests or infringed the legitimate interest of a shareholder, the right to prosecute claims thereagainst;
(9) other rights conferred by laws, administrative regulations and the Articles of Association.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

The Company may not exercise any power to freeze or infringe in any other way the rights carried by any share held by any person who enjoys interests directly or indirectly merely for the reason that he has not disclose his interests to the Company.

Hong Kong Listing Rules Appendix 3 Paragraph 12

Article 53 61

Shareholders demanding inspection of the relevant information or copies of the materials mentioned in the preceding provision shall provide to the Company written documents evidencing the class and number of shares of the Company they hold. Upon verification of the shareholder’s identity, the Company shall provide such information at the shareholder’s request.

Article 62

If a resolution passed at the Company’s general meeting or Board meeting violates the laws or administrative regulations, the shareholders shall have the right to initiate a proceeding to render the same as invalid.

If the procedures for convening, or the method of voting at, a shareholders’ general meeting or Board meeting violate the laws, administrative regulations or the Articles of Association, or the contents of a resolution violates the Articles of Association, shareholders shall be entitled to initiate a proceeding to rescind such resolutions within sixty (60) days from the date on which such resolution is adopted.

Article 63

Where the Company incurs losses as a result of Directors’ and senior management’s violation of the laws, administrative regulations or the Articles of Association in the course of performing their duties with the Company, shareholders individually or jointly holding 1% or more of the Company’s shares for more than 180 consecutive days shall be entitled to request in writing the Supervisory Committee to initiate proceedings in the court. Where the Company incurs losses as a result of the Supervisory Committee’s violation of any provision of laws, administrative regulations or the Articles of Association in the course of performing its duties with the Company, the shareholders shall be entitled to make a request in writing to the Board to initiate proceedings.

Guidelines Article 35

In the event that the Supervisory Committee or the Board refuses to initiate proceedings after receiving the written request of shareholders stated in the foregoing paragraph, or fails to initiate such proceedings within thirty (30) days from the date on which such request is received, or in case of emergency where failure to initiate such proceedings immediately will result in irreparable damage to the Company’s interests, shareholders described in the preceding paragraph shall have the right to initiate proceedings directly in their own names in the interest of the Company.

Shareholders described in the first paragraph of this Article may also initiate proceedings in accordance with the preceding two paragraphs in the event that the lawful interests of the Company are infringed upon by any third parties.

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

Article 64

Shareholders may initiate proceedings in the event that a director or a senior management has violated the laws, administrative regulations or the Articles of Association, thereby infringing the interests of shareholders.

Article 54 65

The ordinary shareholders of the Company shall assume the following obligations:

Mandatory Provisions Article 46

(1) To abide by laws, administrative regulations and the Articles of Association;
(2) To pay subscription monies according to the number of shares subscribed and the method of subscription;
(3) Not to divest the shares unless required by the laws and regulations;
(4) Not to abuse their shareholders’ rights to harm the interests of the Company or other shareholders; and not to abuse the independent legal person status of the Company and the limited liability of shareholders to harm the interests of any creditor of the Company;

Shareholders of the Company who abuse their shareholder’s rights and thereby cause loss on the Company or other shareholders shall be liable for indemnity according to the law.

Where shareholders of the Company abuse the Company’s position as an independent legal person and the limited liability of shareholders for the purposes of evading repayment of debts, thereby materially impairing the interests of the creditors of the Company, such shareholders shall be jointly and severally liable for the debts owed by the Company.

(5) Other obligations imposed by laws, administrative regulations and the Articles of Association.

Shareholders are not liable to make any further contribution to the share capital other than as agreed by the subscribers of the relevant shares on subscription.

Article 66

Where a shareholder holding 5% or more voting shares of the Company pledges any shares in his possession, he shall report the same to the Company in writing on the day on which he pledges his shares.

Guidelines Article 38

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

Article 67

The controlling shareholder and the de facto controller of the Company shall not use their connected relationship to act in detriment to the interests of the Company. If they have violated the provision and caused damage to the Company, they shall be liable for such damages. The controlling shareholder and the de facto controller of the Company shall have fiduciary duties towards the Company and its public shareholders. The controlling shareholder shall exercise its rights as a contributor in strict compliance with the law. The controlling shareholder shall not do harm to the lawful interests of the Company and its public shareholders through means such as profit distribution, asset restructuring, foreign investment, possession of capital and lending guarantees and shall not make use of its controlling status against the interests of the Company and public shareholders.

Guidelines Article 39

Article 55 68

In addition to obligations imposed by laws, administrative regulations or required by the listing rules of the stock exchange on which shares of the Company are listed, a controlling shareholder (as defined hereunder) shall not exercise his voting rights in respect of the following matters in a manner prejudicial to the interests of all or some of the shareholders of the Company:

Mandatory Provisions Article 47

(1) to relieve a Director or supervisor of his duty to act honestly in the best interests of the Company;
(2) to approve the deprivation by a Director or supervisor (for his own benefit or for the benefit of another person), by any means, of the Company’s assets, including (without limitation) opportunities beneficial to the Company;
(3) to approve the deprivation by a Director or supervisor (for his own benefit or for the benefit of another person) of the individual rights of other shareholders, including (without limitation) rights to distributions and voting rights save for a restructuring of the Company submitted to the general meeting of shareholders for approval in accordance with the Articles of Association.

Article 56 69

The term “controlling shareholder” referred to in the preceding article means a person who satisfies any one of the following conditions:

Mandatory Provisions Article 48

(1) a person who, acting alone or in concert with others, has the power to elect more than half of the Board members;
(2) a person who, acting alone or in concert with others, has the power to exercise or to control the exercise of 30% (inclusive) or more of the voting rights in the Company;

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(3) a person who, acting alone or in concert with others, holds 30% (inclusive) or more of the issued and outstanding shares of the Company;
(4) a person who, acting alone or in concert with others, has de facto control of the Company in any other way.

CHAPTER 8 SHAREHOLDERS’ GENERAL MEETINGS

Article 57 70

The shareholders’ general meeting is the organ of authority of the Company and shall exercise its functions and powers in accordance with the law.

Mandatory Provisions Article 49

Article 58 71

The shareholders’ general meeting may exercise the following functions and powers:

Mandatory Provisions Article 50

(1) to decide on the operating policies and investment plans of the Company;
(2) to elect and replace Directors and decide on matters relating to the remuneration of Directors;
(3) to elect and replace the supervisors ~~and independent supervisors~~ who are representatives of shareholders and decide on matters relating to the remuneration of supervisors;
(4) to examine and approve reports of the Board;
(5) to examine and approve reports of the Supervisory Committee;
(6) to examine and approve the Company’s proposed annual preliminary and final financial budgets;
(7) to examine and approve the Company’s profit distribution plans and plans for making up losses;
(8) to decide on increases or reductions in the Company’s registered capital;
(9) to decide on matters such as merger, division, dissolution and liquidation of the Company;
(10) to decide on the issue of bonds by the Company;
(11) to examine and approve the Company’s option plan, management holding plan or other incentive plan, scheme or mechanism;

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

(12) to adopt resolutions on the Company’s appointments, dismissals or non-reappointments of accounting firms;
(13) to amend the Articles of Association;
(14) to examine and approve matters relating to guarantee under the next article of the Articles of Association;
(15) to examine matters relating to the purchases and disposals of the Company’s material assets within one year, which exceed 30% of the Company’s latest audited total assets;

(16) to examine and approve matters relating to changes in the use of proceeds;

(13)

(17) to examine the proposals submitted by shareholders holding not less than 3% (inclusive) of the Company’s voting shares;

~~(14)~~

(18) other matters required by laws, administrative regulations and the Articles of Association to be resolved by the general meeting of shareholders.

~~Authorize or delegate to the Board to handle other matters authorized or delegated by~~

~~it.~~

The aforesaid functions and powers of the general meeting of shareholders shall not be exercised by the Board or other institutions and individuals by means of authorization.

Article 72

The following guarantees provided to third parties by the Company are subject to the review and approval of the general meeting of shareholders:

(1) any guarantee provided after the total amount of guarantee to third parties provided by the Company and its controlled subsidiaries has reached or exceeded 50% of the Company’s latest audited net assets;
(2) any guarantee provided after the total amount of guarantee to third parties provided by the Company has reached or exceeded 30% of the Company’s latest audited total assets;

Guidelines Article 41 Guidelines on the Regulated Operation for Companies Listed on the SME Board Article 7.4.4

(3) a guarantee to be provided to a party which has an asset-liability ratio in excess of 70%;
(4) a single guarantee amount in excess of 10% of the Company’s latest audited net assets;

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

(5) the guarantee to be provided in favour of shareholders, de facto controllers and their related parties.

Where the general meeting is reviewing a resolution on guarantees to be provided to shareholders, de facto controllers and its related parties, such shareholders, or shareholders under the control of such de facto controllers, shall abstain from voting. Such resolution is subject to the approval of not less than half of the voting rights held by the other shareholders present at the meeting.

Guarantee to third parties shall be approved and resolved by not less than two-thirds of the Directors present at the Board meeting and be passed by not less than two-thirds of the Independent Directors.

Article 59 73

Unless a prior approval is obtained in a shareholders’ general meeting, the Company shall not enter into any contract with any party other than the Directors, supervisors, president ~~, general managers, deputy general managers~~ and other senior management pursuant to which such party shall be responsible for managing the whole or any substantial part of the Company’s business

Mandatory Provisions Article 51

Article 60 74

General meetings of shareholders shall be annual general meetings of shareholders and extraordinary general meetings of shareholders. A general meeting of shareholders shall be convened by the Board. The annual general meeting of shareholders shall be held once every year within six months after the end of the previous accounting year.

Mandatory Provisions Article 52

The Board shall hold an extraordinary general meeting of shareholders within two months upon the occurrence of one of the following circumstances:

(1) the number of Directors is less than the number required by the Company Law or less than two-thirds of the number required by the Articles of Association;
(2) the uncovered losses are in excess of one third of the Company’s total share capital;
(3) shareholders holding not less than 10% (inclusive) of the Company’s issued shares with voting rights request in writing to hold an extraordinary general meeting;
(4) the Board considers it necessary or the Supervisory Committee proposes to hold such a meeting;
(5) two or more Independent Directors propose to hold such a meeting; ~~.~~

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(6) such other circumstances as provided for by laws and regulations, departmental rules or the Articles of Association.

Opinion Article 2

Article 61 75

The place for holding the general meeting of shareholders of the Company shall be the domicile of the Company.

The general meeting shall have a venue and be held on-site.

Where necessary, the Company shall also provide the internet or other conveniences to facilitate the participation of shareholders in the general meeting in accordance with relevant provisions. A shareholder who participated in a general meeting in the aforesaid manners shall be deemed to have been present at the meeting.

When the Company convenes a shareholders’ general meeting, it shall issue a written notice and make announcement ~~twenty-five (25)~~ forty-five (45) days prior to the meeting informing all the registered shareholders of the matters to be examined at the meeting as well as the date and place of the meeting. Shareholders that intend to attend the shareholders’ general meeting shall, within ~~five (5)~~ twenty (20) days prior to the meeting, deliver a written reply to the Company on meeting attendance.

Regarding the calculation of the notice period, the date of the meeting and the date on which the notice is given shall not be included.

Article 62 76

~~When the Company convenes a shareholders’ annual general meeting, shareholder(s) holding 3% (inclusive) or more of the total voting shares of the Company shall have the right to propose new motions in writing, and the Company shall place such proposed motions on the agenda for such annual general meeting if they are matters falling within the functions and powers of the general meetings.~~

~~Such proposed motions in general meetings shall satisfy the following criteria:~~

~~(1) Its contents shall not be in conflict with the laws, administrative regulations and the Articles of Association and shall be within the scope of business of the Company and the powers of the general meeting;~~
~~(2) it shall set out specific matters for consideration and resolution;~~
~~(3) it shall be submitted or delivered to the board of Directors in written form.~~

The Board, the Supervisory Committee, and shareholders individually or jointly holding not less than 3% of the Company’s shares shall have the right to submit proposals to the Company in general meeting of shareholders convened by the Company.

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Shareholders individually or jointly holding not less than 3% of the Company’s shares may submit an extempore proposal to the convener in writing ten (10) days prior to date of the meeting. The convener shall dispatch a supplementary notice of the general meeting and announce the contents of such extempore proposal within two (2) days upon receipt of the proposal.

Unless otherwise required by the preceding paragraph, the convener shall not amend the proposals listed in the aforesaid notice or add any new proposals subsequent to the dispatch of a notice of the general meeting.

The general meeting shall not vote and adopt a resolution on any proposal that is not listed in the notice of the general meeting or that is inconsistent with the next article of the Articles of Association.

Article 77

The content of proposals shall be matters falling within the functions and powers of shareholders’ general meeting, with definite topics to discuss and specific matters to resolve and comply with laws, administrative regulations and the relevant requirements set out in the Articles of Association.

Guidelines Article 52

Article 63 78

Our Company shall, based on the written replies received ~~five (5)~~ twenty (20) days before the date of the shareholders’ general meeting, calculate the number of voting shares represented by shareholders who intend to attend the meeting. If the number of voting shares represented by the shareholders who intend to attend the meeting reaches not less than one half of the Company’s total voting shares, the Company may hold the general meeting. If not, the Company shall within ~~three (3)~~ five (5) days notify the shareholders again by notice of the matters to be considered, the place and the date of the meeting. The Company then may hold the meeting after such publication of such notice.

Mandatory Provisions Article 55

A shareholders’ ~~extraordinary~~ general meeting shall not decide on any matter not stated in the notice of the meeting.

Article 64 79

A notice of the general meeting shall meet the following requirements:

Mandatory Provisions Article 56

(1) be in writing;
(2) specify the place, date and time of the meeting;
(3) state the date of registration of equity entitlements for shareholders having the right to attend the general meeting;

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

(4) state the names and contact telephone numbers of the contact persons in connection with the meeting;
(5) state the matters to be discussed at the meeting;
(6) provide such information and explanation as are necessary for the shareholders to make an informed decision on the proposals put before them. Without limiting the generality of the foregoing, where a proposal is made to amalgamate the Company with another, to repurchase the shares of the Company, to reorganize its share capital, or to restructure the Company in any other way, the terms of the proposed transaction must be provided in detail together with copies of the proposed contract, if any, and the cause and effect of such proposal must be properly explained;
(7) contain a disclosure of the nature and extent, if any, of the material interests of any Director, supervisor, chief executive officer ~~, general managers, deputy managers~~ and other senior management in the proposed transaction and the effect which the proposed transaction will have on them in their capacity as shareholders in so far as it is different from the effect on the interests of shareholders of the same class;
(8) contain the full text of any special resolution to be proposed at the meeting;
(9) contain a conspicuous statement that a shareholder entitled to attend and vote at such meeting is entitled to appoint one (1) or more proxies to attend and vote at such meeting on his behalf and that a proxy need not be a shareholder;
(10) specify the time and place for lodging proxy forms for the relevant meeting.

Article 80

Where the elections of Directors and supervisors are to be discussed, a notice of the general meeting of shareholders shall fully disclose the particulars of the candidates for Directors and supervisors and at least shall include the following contents:

Guidelines Article 56

(1) personal particulars such as educational background, working experience and part-time jobs;
(2) whether or not the candidate has any connected relationship with the Company or its controlling shareholders and de facto controllers;
(3) disclose the number of shares of the Company held by the candidate;
(4) whether or not the candidate has been subject to penalties by the CSRC and other relevant authorities as well as sanctions by any stock exchange.

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Save the elections of Directors and supervisors by cumulative voting system, each candidate for a director or supervisor shall be proposed by way of single proposal.

Article 65 81

Notice of shareholders’ general meetings shall be served on each shareholder (whether or not such shareholder is entitled to vote at the meeting), by personal delivery or prepaid airmail to the address of the shareholder as shown in the register of shareholders (whether such addresses are within Hong Kong or in regions outside Hong Kong). For the holders of domestic shares, notice of the meetings may ~~also~~ be issued by way of public announcement.

Mandatory Provisions Article 57 Hong Kong Listing Rules Appendix 3 Paragraphs 7(1) and (3)

The public announcement referred to in the preceding paragraph shall be published in one (1) or more national newspapers designated by CSRC within the interval of ~~twenty-five (25) to thirty (30)~~ forty-five (45) days to fifty (50) days before the date of the meeting. After the publication of such announcement, the holders of domestic shares shall be deemed to have received the notice of the relevant shareholders’ general meeting. The Chinese and English versions of such public announcement shall be published in accordance with the provisions of the Articles of Association. ~~Such public announcements shall also be published in accordance with Article 203 of the Articles of Association.~~

~~The Company shall give notice of a general meeting to ensure that holders of foreign shares, whose registered addresses are in Hong Kong, will have sufficient time to exercise their rights or act in accordance with the terms of the notice.~~

Article 66

~~After issuance of the notice convening a shareholders’ general meeting, the Board shall not alter the session time of the shareholders’ general meeting unless there is force majeure or other incidents; where there is a need to alter the session time of the shareholders’ general meeting in case of force majeure, the record date shall not be changed by virtue thereof.~~

Article 67

~~The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive such notice shall not invalidate the meeting and the resolutions passed at the meeting.~~

Article 82

The Company shall issue notice to shareholders in advance of the time as provided under the Articles of Association so that the holders of foreign shares with their registered address in Hong Kong would have enough time to exercise their right or act in accordance with the notice.

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Article 83

Subsequent to the dispatch of a notice of the general meeting, the general meeting shall not be postponed or cancelled without proper reasons, and the proposals set out in the notice of the general meeting shall not be withdrawn. Once the meeting is postponed or cancelled, the convener shall make an announcement and give reasons therefor at least two (2) working days prior to the original date of the meeting.

Article 84

Guidelines Article 57

Guidelines Article 58

The Board of the Company and other conveners shall take the necessary measures to safeguard the proper order of the general meeting. The Board shall take measures to stop and report in a timely manner to the relevant departments for investigation any acts of disturbing the general meeting, stirring up fights and causing troubles, or infringing upon shareholders’ legal rights and interests.

Article 85

Guidelines Article 59

All shareholders whose names appear on the register of members on the date of registration of equity entitlements or their proxies shall be entitled to attend the general meeting and exercise their voting rights in accordance with relevant laws, regulations and the Articles of Association.

Shareholders may attend in person or appoint proxies to attend and vote at general meetings on their behalf.

Article 86

Individual shareholders attending the meeting in person shall present their identity cards or other valid credentials or proof of their identities as well as stock account cards; in the case of attendance by proxies, the proxies shall present valid proof of their identities and the letter of authorization from shareholders.

Guidelines Article 60

Where a shareholder is a legal entity, its legal representative or proxy authorized by its legal representative shall attend the meeting on behalf of such legal entity. In case of attendance by legal representatives, they shall present their identity cards, valid certificates of their capacities of legal representatives and, in the case of attendance by proxies, the proxies shall present their identity cards and letter of authorization duly issued by the legal representatives of the legal entity.

Article 68 87

Any shareholder entitled to attend and vote at the general meeting shall have the right to appoint one (1) or several persons (who may not be shareholders) to act as his proxy to attend, speak and vote at the meeting on his behalf. ~~The proxy so appointed by the shareholder may, pursuant to the instructions of the shareholder, exercise the following rights:~~

Mandatory Provisions Article 59

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~~(1) the right which the shareholder has to speak at the meeting;~~
~~(2) the right to demand a poll alone or jointly with others;~~
~~(3) the right to exercise voting rights on a show of hands or on a poll, provided that where more than one proxy is appointed, the proxies may only exercise such voting rights on a poll.~~

If the said shareholder is a recognized clearing house by the Law of Hong Kong, the shareholder may authorize one (1) or more suitable person to act as its representative at any shareholders’ general meeting or at any class meeting; however, if more than one (1) person are authorized, the power of attorney shall clearly indicate the number and types of the stocks involved by way of the said authorization. The persons after such authorization may represent the recognized clearing house to exercise the rights, as if they were the individual shareholders of the Company.

Article 69 88

The instrument appointing a proxy must be in writing under the hand of the shareholder or his attorney duly authorized in writing; for a corporate shareholder, the proxy must be affixed with the common seal or signed by its director or attorney or officer duly authorized in writing. ~~The letter of authorization shall contain the number of the shares to be represented by the attorney. If several persons are authorized as the attorney of the shareholder, the letter of authorization shall specify the number of the shares to be represented by each attorney.~~ Such letter of attorney shall state the following:

Mandatory Provisions Article 60 Hong Kong Listing Rules Appendix 3 Paragraphs 11(2)

(1) the name of the proxy and the number of shares of the shareholder represented by the proxy. If several proxies are appointed, such letter of attorney shall clearly indicate the number of shares of the shareholder represented by each proxy;
(2) whether or not the proxy is entitled to vote;
(3) the instructions in relation to voting for or against, or abstaining from voting on each item to be considered at the general meeting;
(4) the date of the issue and the valid term of the letter of attorney;
(5) the signature (or seal) of the appointing party. Where the appointing party is a legal entity shareholder, the letter of authorization shall be affixed with its common seal.

Any form issued to a shareholder by the Board for use by him for appointing a proxy shall allow the shareholder to freely instruct the proxy to cast vote in favour of or against each resolution dealing with the businesses to be transacted at the meeting. Such letter of authorization shall contain a statement that in the absence of instructions by the shareholder, his proxy may vote as he thinks fit.

Mandatory Provisions Article 62

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Article 70 89

Proxy forms shall be lodged at the domicile of the Company or other places specified in the notice of meeting 24 hours before the relevant meeting for voting according to the proxy form, or 24 hours before the designated time of voting. Where the proxy form is signed by a person under a power of attorney on behalf of the appointer, the power of attorney or other authorization documents authorized to be signed shall be notarized. A notarially certified copy of that power of attorney or other authorization documents, together with the proxy form, shall be deposited at the domicile of the Company or other places specified in the notice of meeting.

Mandatory Provisions Article 61

Where the appointer is a legal person, its legal representative or other persons authorized by the resolutions of the Board or other decision-making organ to act as its representatives may attend the general meeting of the Company as a representative of the appointer.

Article 71

~~Any form issued to a shareholder by the Board for use by him for appointing a proxy shall allow the shareholder to freely instruct the proxy to vote in favour of or against each resolution relating to each matter to be considered at the relevant meeting. Such form shall contain a statement that in the absence of instructions by the shareholder, his proxy may vote as he thinks fit.~~

Article 72 90

The Company is entitled to ask the proxy who represents an individual shareholder to attend the shareholders’ general meeting to provide his identification document as well as the power of attorney signed by the appointer or the representative authorized by the appointer.

In the case of a corporate shareholder appoints its legal representative to attend the meeting, the Company is entitled to ask the legal representative to provide the valid copy of the resolution or the power of attorney by which the board of directors or other authoritative department of the corporate shareholder appoints the legal representative and which has been notarized (other than a recognized clearing house) as well as valid copy of the corporate shareholder’s identification document and power of attorney.

Article 73 91

Where the appointer has deceased, incapacitated to act, withdrawn the appointment or the power of attorney, or where the relevant shares have been transferred prior to the voting, a vote given in accordance with the letter of authorization shall remain valid provided that no written notice of such event has been received by the Company prior to the commencement of the relevant meeting.

Mandatory Provisions Article 63

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Article 92

A registration book for attending the general meeting shall be prepared by the Company. The registration book shall set forth the names of attendees (or the attending units), their identity card numbers, residential address, number of voting shares held or represented, and name of the appointer (or the appointing unit), etc.

Guidelines Article 64

Article 93

The convener and the lawyers engaged by the Company shall jointly verify the validity of the shareholders’ qualifications based on the register of members provided by the securities registration and clearing authority, and shall register the names of the shareholders as well as the number of their voting shares. The registration for a meeting shall end before the chairman of the meeting announces the number of shareholders and proxies attending the meeting in person and the total number of their voting shares held.

Guidelines Article 65

Article 94

All Directors, supervisors and the Secretary to the Board shall be present at the general meeting, and the chief executive officer and other senior management shall be in attendance at the meeting.

Guidelines Article 66

Article 74 95

There shall be two (2) types of resolutions of shareholders’ general meetings, namely ordinary resolutions and special resolutions.

Mandatory Provisions Article 64

To adopt an ordinary resolution, votes representing not less than one-half of the voting rights represented by the shareholders (including proxies) present at the meeting must be exercised in favour of the resolution in order for it to be passed.

To adopt a special resolution, votes representing not less than two-thirds of the voting rights represented by the shareholders (including proxies) present at the meeting must be exercised in favour of the resolution in order for it to be passed.

~~A shareholder (including his proxy) attending the meeting shall vote in favour of or against each resolution relating to every matter which has been put to vote at the relevant meeting; if such shareholder or his proxy abstains from voting, any vote by such shareholder or his proxy shall not be counted in the voting results of the Company.~~

Article 75 96

A shareholder (including proxy) when voting at a shareholders’ general meeting may exercise voting rights in accordance with the number of shares carrying the right to vote and each share shall have one vote.

Mandatory Provisions Article 65

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Where any shareholder is, under the Hong Kong Listing Rules and/or any applicable laws and regulations, required to abstain from voting on a particular resolution or restricted to voting only in favour of or against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

Hong Kong Listing Rules Appendix 3 Paragraphs 14

The shares held by the Company have no voting rights, and that part of the shareholding is not counted as the total number of shares with voting rights held by shareholders attending the meeting.

The Board, Independent Directors and shareholders who are qualified under the relevant conditions may collect from other shareholders the rights to vote. The collection of voting rights from other shareholders of the Company shall be effected in accordance with the provisions of the relevant regulators and the stock exchange(s) on which the shares of the Company are listed.

Article 76

~~At any shareholders’ general meeting, a resolution shall be decided on a show of hands unless a poll is demanded as provided by Hong Kong Listing Rules or other applicable laws and regulations of Hong Kong, or a poll is demanded by the following persons before or after deciding on a show of hands:~~

Guidelines Article 85

~~(1) the chairman of the meeting;~~
~~(2) at least two (2) shareholders entitled to vote or their proxies; or~~
~~(3) one (1) or more shareholders (including proxies) individually or jointly holding more than 10% (inclusive) of the voting shares represented by all shareholders present at the meeting.~~

~~Unless a poll is so demanded, a declaration by the chairman of the meeting that a resolution has on a show of hands been carried, and an entry to that effect in the minutes of the meeting shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution at the meeting.~~

~~The demand for a poll may be withdrawn by the person who makes such demand.~~

Article 97

The same voting right can only choose one method of voting amongst voting at the meeting, by internet or by other methods. If one voting right has voted more than once, it will be counted according to the result when voted for the first time.

Article 98

Voting at shareholders’ general meeting will record the name of the voter.

Guidelines Article 86 Guidelines Article 80

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The Company shall, while assuring legality and effectiveness of the shareholders’ general meeting, through different methods and channels, including supplying modern information technology methods such as the internet voting platform, provide convenience to shareholders attending the shareholders’ general meeting.

Before the shareholders’ general meeting vote on resolutions, it shall nominate 2 shareholder representatives to count and supervise the voting. If the matter to be discussed and a shareholder have conflict of interests, the relevant shareholder and his proxy cannot count or supervise the voting.

Guidelines Article 87

When a shareholders’ general meeting vote on resolutions, the counting and supervision of voting shall be conducted together by lawyers, shareholder representatives and supervisor representatives. The voting results shall be announced during the meeting. The voting results shall be contained in the minutes of meeting.

A shareholder of the Company or its proxy, who uses the internet or other voting methods, is authorised to verify his voting results through relevant voting system.

Article 99

The completion of the shareholders’ general meeting at the venue cannot be earlier than voting by internet or other methods. The conductor of the meeting shall announce the voting circumstances and results of each resolution. He shall also announce whether the resolutions have been passed according to the voting results.

Guidelines Article 88

Before officially announcing the voting results, the Company, counting officers and scrutinizers and major shareholder, and the internet server has a duty keep confidential the voting circumstances when they are involved with voting at the venue of the meeting, by internet or other methods.

Article 100

Guidelines Article 89

Shareholders attending the shareholders’ general meeting shall present one of the following views during the voting of a resolution: consent, objection or abstention.

A voting ticket that is incomplete, wrongly completed, illegible, or not yet cast, will be treated as the voter giving up his voting rights. The votes represented by his shares will be treated as “abstention”.

Article 101

The list of candidates for director and supervisor shall be proposed to the shareholders’ general meeting for voting.

Guidelines Article 82

When a shareholders’ general meeting votes to elect two (2) or more Directors and supervisors, it can adopt a cumulative voting system.

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The cumulative voting system mentioned in the last paragraph means that when a shareholders’ general meeting elects Directors or supervisors, each share has the number of votes equivalent to the number of Director or supervisor candidates. A shareholder can vote by concentrating the number of shares held. The Board shall publicly announce to the shareholders the resumes and basic circumstances of the candidates for Directors and supervisor.

Article 77 102

A poll demanded on such matters as the election of chairman or the adjournment of the meeting, shall be taken forthwith. A poll demanded on any other matters shall be taken at such time as the chairman may decide, and the meeting may proceed to discuss other matters, while the results of the poll shall still be deemed to be a resolution of that meeting.

Mandatory Provisions Article 67

Article 78 103

On a poll taken at a meeting, a shareholder (including proxy) entitled to two or more votes need not cast all his votes in the same way.

Mandatory Provisions Article 68

Article 79 104

When the number of votes for and against a resolution is equal, ~~whether the vote is taken by raising hands or by ballot,~~ the chairman of the meeting shall be entitled to one additional vote.

Mandatory Provisions Article 69

Article 80 105

When the shareholders’ general meeting resolves on the connected transaction of the Company, the connected shareholders shall refrain from voting and the number of voting shares that they represent may not be counted as part of the total number of valid voting. The public announcement of the shareholders’ general meeting shall fully disclose the voting of non-connected shareholders.

Article 811 06

The following matters shall be resolved by an ordinary resolution at a shareholders’ general meeting:

Mandatory Provisions Article 70

(1) work reports of the Board and the Supervisory Committee;
(2) plans formulated by the Board for distribution of profits and for making up losses;
(3) remuneration and payment methods of members of the Board;
(4) the appointment and removal of members of the Board and the Supervisory Committee and their remuneration and payment methods;

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(5) the Company’s annual financial budgets and final accounts, balance sheets, income statements and other financial statements;
~~(5)~~
(6) matters other than these required by the laws and administrative regulations or by the Articles of Association to be adopted by special resolutions.

~~option plan, management holding plan or other incentive plan, scheme or mechanism formulated by the Board;~~

Article 82 107

The following matters shall be resolved by a special resolution at a shareholders’ general meeting:

Mandatory Provisions Article 71

(1) increase or reduction of the share capital and issue of shares of any class, stock warrants or other similar securities;
(2) buying-back of the shares of the Company;
(3) issuance of corporate bonds;
(4) the division, merger, dissolution, liquidation or change of corporate forms of the Company;
~~(4)~~
(5) amendments to the Articles of Association;
(6) purchase or disposal of material assets or any guarantee made within a year, and the amount of which exceeds 30% of the latest audited total assets of the Company;

Hong Kong Listing Rules Appendix 3 Paragraph 4(3)

(7) option plan, management holding plan or other incentive plan, scheme or mechanism formulated by the Board;
(8) any other matters required by the law, administrative regulations, relevant listing rules and other regulatory documents or the Articles of Association and considered by the shareholders’ general meeting, by way of an ordinary resolution, to have a substantial impact on the Company and to require approval by a special resolution.

~~Other matters considered by the shareholders’ general meeting, by way of an ordinary resolution, to have a substantial impact on the Company and require approval by a special resolution.~~

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Article 108

When the Independent Directors, the Supervisory Committee or shareholder(s) individually or jointly holding 10% or more of the shares of the Company request for the convening of an extraordinary general meeting or any class meeting, the following procedures shall be followed:

Mandatory Provisions Article 72 Guidelines Articles 46 to 50

(1) Independent Directors are authorised to suggest to the Board to convene extraordinary general meetings. Concerning the above request, the Board shall, in accordance with the requirements of the law, administrative regulations and the Articles of Association, provide a written opinion to agree or disagree to convene an extraordinary general meeting within ten (10) days of receipt of the suggestion.

If the Board agrees to convene an extraordinary general meeting, it will issue a notice of shareholders’ general meeting within five (5) days of the decision of the Board. If the Board does not agree to convene an extraordinary general meeting, it will publicly announce the reasons.

(2) The Supervisory Committee is authorised to suggest to the Board to convene an extraordinary general meeting which suggestion shall be presented to the Board in writing. Concerning the above request, the Board shall, in accordance with the requirements of the law, administrative regulations and the Articles of Association, provide a written opinion to agree or disagree to convene an extraordinary general meeting within ten (10) days of receipt of the suggestion.

If the Board agrees to convene the extraordinary general meeting, it will issue a notice of shareholders’ general meeting within five (5) days of the decision of the Board. If there are changes to the original request in the notice, they shall be agreed by the Supervisory Committee.

If the Board does not agree to convene the extraordinary general meeting, or does not reply within ten (10) days of receipt of the suggestion, this is treated as the Board being not able to or not discharging its duties to convene shareholders’ general meeting. The Supervisory Committee is authorised to convene and hold the meeting by themselves.

(3) Shareholders individually or together holding more than 10% of the shares of the Company are authorised to request to the Board to hold an extraordinary general meeting which suggestion shall be presented to the Board in writing. Concerning the above request, the Board shall, in accordance with the requirements of the law, administrative regulations and the Articles of Association, provide a written opinion to agree or disagree to convene an extraordinary general meeting within ten (10) days of receipt of the suggestion.

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If the Board does not agree to convene the extraordinary general meeting, or does not reply within ten (10) days of receipt of the suggestion, shareholders individually or together holding more than 10% of the shares of the Company are authorised to request to the Supervisory Committee to hold an extraordinary general meeting which suggestion shall be presented to the Supervisory Committee in writing.

If the Supervisory Committee agrees to convene the extraordinary general meeting, it will issue a notice of shareholders’ general meeting within five (5) days of the decision of the Supervisory Committee. If there are changes to the original request in the notice, they shall be agreed by the relevant shareholders. If the Supervisory Committee does not issue the notice of shareholders’ general meeting within the prescribed period, this is treated as the Supervisory Committee not convening and not holding the shareholders’ general meeting. Then shareholders who individually or together hold more than 10% of the shares of the Company for more than ninety (90) consecutive days can convene and hold the meeting by themselves.

(4) Where the Supervisory Committee or shareholder decides to convene a shareholders’ general meeting by themselves, they should inform the Board in writing and shall file the decision with the local office of CSRC and the stock exchange of the place of domicile of the Company.

Before issuing a notice of resolutions of shareholders’ general meeting, the convening shareholders shall have a shareholding of no less than 10%.

Upon issuance of the notice of shareholders’ general meeting and notice of resolutions of shareholders’ general meeting, the convening shareholders shall submit relevant proof to the local office of CSRC and the stock exchange of the place of domicile of the Company.

(5) When a shareholders’ general meeting is convened by the Supervisory Committee or by the shareholders, the Board and the Secretary to the Board shall act in concert therewith. The Board shall provide the register of shareholders as on the record date.

Article 109

When a shareholders’ general meeting is convened by the Supervisory Committee or by the shareholders, the Company shall bear all the necessary expenses thereof, which shall be set-off against sums owed by the Company to the defaulting directors.

Mandatory Provisions Article 72 Guidelines Articles 51

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APPENDIX I

Article 110

During the annual general meeting of shareholders, the Board and the Supervisory Committee shall respectively give a report on their work in the previous year to the general meeting, and each Independent Director shall also make his duty report correspondingly.

Article 111

Guidelines Articles 84

When considering a proposal at a shareholders’ general meeting, no change shall be made thereto. Otherwise, such related change shall be treated as a new proposal which shall not be processed for voting at the general meeting.

~~Shareholders who request for the convening of an extraordinary general meeting or a class meeting shall comply with the following procedures:~~

Mandatory Provisions Article 72

~~(1) Two (2) or more shareholders holding in aggregate 10% (inclusive) or more of the shares carrying the right to vote at the meeting sought to be held shall sign one (1) or more counterpart requisitions stating the object of the meeting and requiring the Board to convene a shareholders’ extraordinary general meeting or a class meeting thereof. The Board shall as soon as possible proceed to convene the extraordinary general meeting of shareholders or a class meeting thereof after receipt of such requisition(s). The amount of shareholdings referred to above shall be calculated as at the date of deposit of the requisition(s).~~
~~(2) If the Board fails to issue a notice of such a meeting within thirty (30) days from the date of receipt of the requisition(s), the shareholders may themselves convene such a meeting (in a manner as similar as possible to the manner in which shareholders’ general meetings are convened by the Board) within four (4) months from the date of receipt of the requisition(s) by the Board.~~

~~Any reasonable expenses incurred by the shareholders by reason of failure by the Board to duly convene a meeting shall be repaid to the shareholders by the Company and any sum so repaid shall be set-off against sums owed by the Company to the defaulting directors.~~

Article 84

~~Except for involving trade secrets of the Company which cannot be publicized, the Board and Supervisory Committee shall make response to or give explanation of the inquiries and suggestions made by shareholders at shareholders’ general meetings.~~

Article 112

The Directors, supervisors and senior management shall make response to and give explanation of the inquiries and suggestions made by shareholders at a shareholders’ general meeting.

Guidelines Articles 70

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APPENDIX I

Article 85 113

Guidelines Articles 67

Shareholders’ general meetings shall be presided over by the Chairman of the Board. If the Chairman cannot or fails to fulfill the duty thereof, the Vice Chairman shall preside; if the Vice Chairman cannot or fails to fulfill the duty thereof, one Director shall be elected to convene or preside over the meeting with the approval of not less than half of the Directors.

~~Where the Board is unable or fails to perform its duties and responsibilities in holding the shareholders’ general meeting, the Supervisory Committee may hold and preside over such meeting by itself in a timely manner; if the Supervisory Committee fails to hold and preside over such meeting, shareholders individually or jointly holding not less than 10% of the Company’s shares for not less than ninety (90) consecutive days shall have the right to hold and preside over such meeting by themselves.~~ For a shareholders’ general meeting convened by the Supervisory Committee itself, such meeting shall be presided over by the chairman of the Supervisory Committee. If the chairman of the Supervisory Committee is unable to perform or fails to perform his duties and responsibilities, a supervisor jointly elected by not less than one half of all supervisors shall preside over the meeting.

Mandatory Provisions Article 73

New Company Law Article 102

For a shareholders’ general meeting convened by the shareholders themselves, such meeting shall be presided over by a representative of shareholders elected by the convener.

During the course of a shareholders’ general meeting, if the chairman of the meeting is in breach of the rules of procedures and renders it impossible for the meeting to continue, with the consent of the shareholders present at the meeting and representing more than one half of the total voting rights of all shareholders so present, the shareholders’ general meeting may elect one individual to be the chairman of the meeting and the meeting shall continue.

Article 114

The chairman of the meeting shall, prior to voting, announce the number of shareholders and proxies attending the meeting in person as well as the total number of their voting shares, which shall be the number of shareholders and proxies attending the meeting in person and the total number of their voting shares as indicated in the meeting’s registration record.

Article 86 115

The chairman of the meeting shall determine whether or not a resolution of the shareholders’ general meeting shall be adopted. His decision shall be final and conclusive and shall be announced at the meeting and recorded in the minutes.

Mandatory Provisions Article 74

Article 87 116

In the event that the chairman of the meeting has any doubt as to the result of a resolution put forward to the vote, he may have the votes counted. In the event that the chairman of the meeting does not have the votes counted, any shareholder present in person

Mandatory Provisions Article 75

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or by proxy objects to the result announced by the chairman of the meeting may demand that the votes be counted immediately after the declaration of the voting result, the chairman of the meeting shall have the votes counted immediately.

Article 88 117

In the event that the votes are counted at the shareholders’ general meeting, the counting results shall be recorded in the minutes of the meeting.

Mandatory Provisions Article 76

Article 89 118

Minutes of shareholders’ general meetings shall be compiled with the decisions of the businesses thereof ~~signed by directors present at the meeting~~ by the Secretary to the Board. The minutes shall contain the following items:

~~(1) The number of shares carrying voting rights present at the meeting and the percentage of such shares accounting for of the total shares of the Company;~~
~~(2) The date and place of the meeting;~~
~~(3) The name of the chairman of the meeting and the agenda for the meeting;~~
~~(4) The key points of every speaker to every matter examined;~~
~~(5) The result of every matter which has been put to vote;~~
~~(6) The inquiry opinions and suggestions of shareholders, the replies or explanations of the Board and Supervisory Committee;~~
~~(7) Other contents which the shareholders’ general meeting deems and the Articles of Association prescribes to be included in the minutes of meetings.~~
(1) the date, place and agenda of the meeting, and the name of the convener;

Mandatory Provisions Article 76

(2) the name of the chairman of the meeting, and the names of Directors, supervisors, managers and other senior management of the Company present or in attendance at the meeting;
(3) the number of holders of domestic shares (including their proxies) and holders of foreign shares (including their proxies) attending the meeting, the total number of voting shares they represent and the percentage of the total number of shares of the Company they represent;
(4) the discussions in respect of each proposal, highlights of the speeches made at the meeting and the results of voting;

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(5) details of the queries or recommendations of the shareholders, and the corresponding answers or explanations;
(6) the name of lawyers, counting officers and scrutinizers;
(7) voting result of the meeting; when recording the voting result it should also record the voting circumstances of each voting matter, by the holders of domestic shares and holders of foreign shares;
(8) such other matters which shall be recorded in the minutes of the meeting in accordance with the provisions of the Articles of Association.

~~The minutes of meeting and the attendance records signed by the attending shareholders and proxies shall be kept at the Company’s domicile.~~

~~Legal opinions offered by lawyers shall be prepared for such matters as the attendance number of shareholders’ general meetings, the amount of shareholding held by attending shareholders, power of attorney, the result of every matter which has been put to be voted, the validity of the minutes of meetings and the procedures of meetings, etc. T~~ he convener shall ensure the truthfulness, accuracy and completeness of the minutes of the meeting. The Directors and supervisors attending the meeting, the Secretary to the Board, the convener or his representative, and the chairman of the meeting shall sign the minutes of the meeting. The minutes of the meeting and the signed attendance record of the shareholders who attended in person, the proxy forms and the valid information relating to voting online and by other means shall be kept together for a term of fifteen (15) years.

Article 119

The resolution of the shareholders’ general meeting shall be announced in a timely manner and the announcement shall indicate the number of shareholders and proxies that attended the meeting, the total amount of their voting shares and its proportion to the total voting shares of the Company, and the voting method, voting results of each proposal and detailed contents of each resolution. The attendance and voting circumstances of the holders of domestic shares and holders of foreign shares shall be analyzed statistically and announced respectively.

Guidelines Articles 91 and 92

Where a proposal has not been adopted or the resolution of any previous shareholders’ general meeting has been modified in the current shareholders’ general meeting, a special explanation shall be given in the announcement on the resolutions of the shareholders’ general meeting.

Article 120

Where the proposals on the election of Directors and supervisors have been adopted at the shareholders’ general meeting, the new Directors and supervisors shall be appointed from the date on which the resolution is adopted or the time specified in the relevant resolutions of such meeting.

Guidelines Articles 93

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Article 121

Guidelines Articles 94

Where the proposals on cash dividends, bonus shares or stock dividends from capital reserves have been passed by the shareholders’ general meeting, the Company shall implement the specific plans within two (2) months from the conclusion of the shareholders’ general meeting.

Article 122

The convener shall ensure that a shareholders’ general meeting is held continuously until final resolutions have been reached. In the event that the shareholders’ general meeting is suspended or the shareholders fail to reach any resolution due to force majeure or other special reasons, necessary measures shall be taken to resume the meeting as soon as possible or the meeting shall be terminated directly and an announcement of such termination shall be made promptly. At the same time, the convener shall report to the agency of the CSRC in the locality of the Company and the stock exchange.

Guidelines Articles 74

Article 90 123

Copies of the minutes of the meeting shall be available for inspection during business hours of the Company by any shareholder without charge. If a shareholder demands from the Company a copy of such minutes, the Company shall send a copy to him within seven (7) days after receipt of reasonable charges.

Mandatory Provisions Article 77

Article 124

The rules of procedures for shareholders’ general meetings shall be formulated by the Company, which shall stipulate the procedures for convening the shareholders’ general meeting and voting procedures, including notice, registration, consideration and approval of proposals, voting, vote counting, announcement of voting results, type of resolution of the meeting, minutes of the meeting and its signature, announcement, and the principle for the shareholders’ general meeting authorizing power to the Board. The content of the authorization shall be clear and specific. The rules of procedures of shareholders’ general meetings shall constitute an appendix to the Article of Association, which shall be proposed by the Board and approved by the shareholders’ general meeting.

Guidelines Articles 68

Article 125

The Company shall, in connection with the convening of a shareholders’ general meeting, engage lawyers to issue legal opinions in respect of the following matters and make relevant announcements accordingly:

Guidelines Articles 45

(1) whether the procedures relating to the convening and the holding of such meeting comply with the law, administrative regulations and the Articles of Association;
(2) the legality and validity of the qualifications of the attendees and the convener of the meeting;

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(3) the legality and validity of the voting procedures and results of the voting at the meeting;
(4) legal opinions issued on other related matters as requested by the Company.

CHAPTER 9 SPECIAL PROCEDURES FOR VOTING BY A CLASS OF SHAREHOLDERS

Article 911 26

Shareholders holding different classes of shares shall be class shareholders.

Mandatory Provisions Article 78

Class shareholders shall be entitled to the rights and assume obligations pursuant to the provisions of the law, administrative regulations and the Articles of Association.

Article 92 127

Any variation or abrogation of the rights of any class of shareholders proposed by the Company may only come into effect upon the adoption of a special resolution at a shareholders’ general meeting and approval by the affected shareholders of that class at a separate meeting held in accordance with Articles ~~94~~ 129 to ~~98~~ 133 of the Articles of Association.

Mandatory Provisions Article 79

Article 93 128

The following circumstances shall be deemed to be a variation or abrogation of the rights of shareholders of a certain class:

Mandatory Provisions Article 80

(1) to increase or decrease the number of shares of a particular class, or increase or decrease the number of shares of another class having rights on voting, distribution or other privileges equal or superior to those of the shares of such class;
(2) to effect an exchange of all or part of shares of such class into shares of other classes, or to effect an exchange or grant a right of exchange of all or part of the shares of other classes into shares of such class;
Mandatory Provisions Article 81
(3) to remove or reduce rights to accrued dividends or cumulative dividends attached to shares of such class;
(4) to reduce or remove the rights to a dividend preference or a liquidation preference to distribution of property attached to shares of such class;
or remove a or a Hong Kong Listing Rules
to distribution of property attached to shares of such class; Appendix 3 Paragraph 6(1)
(5) to add, remove or reduce the rights to conversion, options, voting, transfer, pre-emptive rights to placement and acquire securities of the Company attached to shares of such class;

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(6) to remove or reduce rights to receive payment payable by the Company in particular currencies attached to shares of such class;
(7) to create a new class of shares having rights on voting, distribution or other privileges equal or superior to those of the shares of such class;
(8) to restrict the transfer or ownership of the shares of such class or increase such restrictions;
(9) to issue subscription rights or share conversion rights for shares of such class or other classes;
(10) to increase the rights and privileges of shares of other classes;
(11) to restructure the Company where the proposed restructuring scheme will result in different classes of shareholders bearing a disproportionate burden of obligations of such restructuring;
(12) to vary or abrogate the terms provided in this chapter.

Article 94 129

Shareholders of the affected class, whether or not having the right to vote at the shareholders’ general meeting, shall nevertheless have the right to vote at class meetings on matters referred to in clause (2) to (8) and (11) to (12) of Article ~~93~~ 128 of the Articles of Association, but interested shareholders shall not be entitled to vote at class meetings.

The interested shareholders mentioned in the preceding paragraph shall have the following meanings:

(1) in the case of a repurchase of its own shares by the Company by making offers to all shareholders on a same pro rata basis or through public dealing on a stock exchange in accordance with Article ~~31~~ 37 of the Articles of Association, “interested shareholder” shall refer to the controlling shareholders as defined in Article ~~56~~ 69 of the Articles of Association;
(2) in the case of a repurchase of its own shares by the Company through an off-market agreement in accordance with the provisions of Article ~~31~~ 37 of the Articles of Association, “interested shareholders” shall refer to the shareholders to which the proposed agreement relates;
(3) in the case of a restructuring of the Company, “interested shareholder” shall refer to a shareholder within a class who bears liabilities less than the proportion burden imposed on other shareholders of that class or who has interests different from those held by shareholders of the same class.

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Article 95 130

A resolution of the class meeting shall be passed in accordance with Article ~~94~~ 129 of the Articles of Association by shareholders present in the meeting representing not less than two-thirds of voting rights.

Mandatory Provisions Article 82

Article 96 131

Written notice of a class meeting convened by the Company shall be dispatched ~~twenty-five (25)~~ forty-five (45) days prior to the date of the class meeting to all shareholders of such class whose names appear on the register of shareholders, specifying the matters to be considered and the date and place of the meeting. Shareholders who intend to attend the meeting shall serve on the Company written replies of their intention to attend ~~five (5)~~ twenty (20) days prior to the date of the meeting.

Hong Kong Listing Rules Appendix 3 Paragraph 6(2)

If the number of voting shares at such meeting held by shareholders who intend to attend such meeting reaches not less than one-half of the total number of voting shares at such meeting, the Company may hold such class meeting; if this cannot be attained, the Company shall further notify the shareholders by way of announcement within ~~three (3)~~ five (5) days thereof specifying the matters to be considered and the date and place of the meeting. After such announcement has been given, the Company may then hold the class meeting.

Article 97 132

Notices of the class meeting only need to be served on shareholders entitled to vote thereat.

The procedures for holding the class meeting shall be similar to those for holding the shareholders’ general meeting as far as possible, and the provisions in the Articles of Association relating to the procedures for a shareholders’ general meeting shall apply to the class meeting.

Mandatory Provisions Article 84

Mandatory Provisions Article 85 Zheng Jian Hai Han [1995]No.1

Article 98 133

Save for shareholders of shares of other classes, the holders of domestic shares and holders of overseas-listed foreign shares are deemed to be different classes of shareholders.

The special procedures for voting by class shareholders shall not apply in the following circumstances:

(1) where the Company issues, upon approval by a special resolution at a shareholders’ general meeting, domestic shares and overseas-listed foreign shares once every twelve (12) months, either separately or concurrently, and the respective numbers of domestic shares and overseas-listed foreign shares proposed to be issued do not exceed 20% of the respective numbers of the issued domestic shares and overseas-listed foreign shares;

Hong Kong Listing Rules Appendix 13 Part D Section

1(f)(i) and (ii)

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(2) where the Company’s plan to issue domestic shares and overseas listed foreign shares at the time of incorporation is carried out within fifteen (15) months from the date of approval by CSRC.

CHAPTER 10 BOARD OF DIRECTORS

Article 99 134

The Company sets a Board, which shall comprise 7 Directors, including one Chairman and one Vice Chairman.

Mandatory Provisions Article 86

The Board is independent of the controlling organizations (herein meaning those corporations, enterprises or institutions ~~with the status of legal person~~ which control the Company).

The external Directors (herein meaning those Directors who do not hold office in the Company) shall represent more than 50% of the members of the Board, of which at least one-third shall be Independent Directors (herein meaning those Directors who are independent to the shareholders and do not hold office in the Company) and at least one of the Independent Directors shall be an accounting professional.

Managers or other senior management may concurrently serve as a Director, provided that the aggregate number of the Directors who concurrently serve as managers or other senior management or who are representatives of the staff shall not exceed one half of all the Directors of the Company. ~~At least two (2) directors shall be Independent (non-executive) Directors (herein meaning those Directors who are independent to the shareholders and do not hold office in the Company).~~

Opinion Article 1 Opinion Article 6

Guidelines Articles 96

Article 100 135

Directors shall be elected or replaced ~~created~~ at shareholders’ general meeting. The term of office of the Directors shall be three (3) years. Upon maturity of the current term of office, a Director shall be eligible to offer himself for re-election and reappointment. Independent Directors may stand for re-election upon expiry of their terms, but the period of re-appointment shall not exceed six (6) years.

Mandatory Provisions Article 87 Zheng Jian Hai Han [1995]No.1 Article 4

Prior to the maturity of his term, a Director shall not be removed without reason from his office by the shareholders’ general meeting.

The written notice of an intention to nominate a candidate of director and that of a willingness to accept the nomination by the candidate shall be delivered no earlier than the day after the dispatch of the notice of the meeting for election of the relevant director and end no later than seven (7) days prior to the date of such meeting. The term of office of Directors shall commence from the date of appointment up to the maturity of the current term of office of the Board. In the event that the terms of Directors fall upon maturity whereas new members of the Board are not re-elected in time, the existing Directors shall

Hong Kong Listing Rules Appendix 3 paragraph 4 (3) to (5)

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continue to perform their duties in accordance with the law, administrative regulations, departmental rules and the Articles of Association until the re-elected Directors assume their office.

The Chairman and Vice Chairman of the Board shall be elected and removed by more than one-half of all Directors. The term of office of the Chairman and Vice Chairman shall be three (3) years, renewable upon re-election.

The shareholders’ general meeting may by ordinary resolution remove any Director before the expiration of his term of office (but without prejudice to such Director’s right to claim damages based on any contract), subject to full compliance with relevant laws and administrative regulations.

Zheng Jian Hai Han [1995]No.1 Article 4

~~Any person who has been appointed by the Board to fill any casual vacancy in the office of the Board or serve as an additional Director, his term of office shall expire at the next shareholders’ annual general meeting and such person shall be eligible for election for successive terms.~~

Not more than two (2) persons of the Chairman of the Board, Vice Chairman and executive Directors of the Company may be senior management (chairman of the board, vice chairman and executive director) of the controlling organizations.

The external Directors shall have sufficient time and necessary knowledge and ability to perform their duties. When an external Director performs his duties, the Company must provide necessary information. Independent Directors may directly report to the shareholders’ general meeting, CSRC and other relevant departments thereon.

The Directors shall not be required to hold shares of the Company.

Opinion Article 6

Guidelines Articles 99

Article 136

A Director will be deemed to have failed to perform his duties if he fails to attend the meetings of the Board in person twice consecutively nor appointed other Directors to attend the meetings on his behalf. The Board shall make recommendations to shareholders’ general meetings to replace such Director.

Guidelines Articles 100

Article 137

Directors may resign before expiry of their terms of office. The Directors who resign shall submit to the Board a written report in relation to their resignation. The relevant information shall be disclosed within two (2) days by the Board.

In the event that the resignation of any Director during his term of office results in the number of members of the Board being less than the statutory minimum requirement, the existing Directors shall continue to perform their duties in accordance with the law, administrative regulations, departmental rules and the Articles of Association until the re-elected Directors assume their office. Where the resignation of an Independent Director

Guidelines on the Regulated Operation for Companies Listed on the SME Board Article 3.2.10

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will result in the percentage of Independent Directors in the Board of the Company falling below the prescribed minimum requirement of related regulatory departments, the resignation report of such Independent Director shall become effective only when his vacancy has been filled by a new Independent Director.

Save for the circumstances referred to in the preceding paragraph, the resignation of a Director becomes effective upon submission of his resignation report to the Board.

Article 138

Upon effective resignation or expiration of his term of office, a Director shall complete his hand-over procedures with the Board. The fiduciary duties of a Director to the Company and the shareholders do not necessarily cease upon the termination of his tenure of office and shall remain valid within the reasonable period as prescribed in the Articles of Association.

Article 139

Any Independent Director who does not have the qualifications or ability of independent director, or fails to perform his duties independently, or fails to maintain the legitimate interests of the Company and small and medium investors, shareholders individually or jointly holding not less than 1% of the Company’s shares may submit proposals to the Board of the Company in relation to their queries against the Independent Director or his dismissal. The Independent Director concerned shall promptly provide explanation on the queries and make disclosure thereof. The Board of the Company shall promptly convene special meeting for discussions upon receipt of the relevant proposals of query or dismissal and disclose the results of the discussions.

Guidelines on the Regulated Operation for Companies Listed on the SME Board Article 2.2.2

Article 140

No Directors shall act, in their personal capacity, on behalf of the Company or the Board beyond provisions of the Articles of Association or without appropriate authorisation by the Board. The Director shall, when acting in his personal capacity, state his standings and identities in advance if a third party has reasons to believe that the said Director is acting on behalf of the Company or the Board.

Guidelines Articles 102

Article 141

Any Director who violates any the law, administrative regulations, departmental rules or the Articles of Association during the course of performing his duties and causes losses to the Company shall be liable for compensation to any loss caused to the Company.

Guidelines Articles 103

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Article 1011 42

The Board shall report to the shareholders’ general meeting and exercises the following powers:

Mandatory Provisions Article 88

(1) to convene shareholders’ general meetings and report its work to the shareholders’ general meeting;
(2) to implement the resolutions of shareholders’ general meetings;
(3) to decide on the Company’s business plans and investment plans;
(4) to formulate the Company’s plans on annual financial budgets and final accounts;
(5) to formulate the Company’s profit distribution plans (including final dividends plan) and plans on making up losses;
(6) to formulate the proposals for increase or decrease of the registered capital of the Company and issue and listing of bonds or other securities of the Company;
(7) to formulate plans for merger, division and dissolution of the Company;
~~(7)~~
(8) to formulate plans for substantial acquisition, purchase of shares of the Company and alteration of corporate form of the Company;

(8)

(9) to determine the establishment of the Company’s internal management structure;

(9)

(10) to appoint or remove the ~~chief executive officer~~ president ~~, to appoint or remove the general manager of the Company~~ and to appoint or remove the ~~deputy manager Vice~~ vice ~~President~~ president and other senior management (including the financial officer) of the Company based on the nomination by the ~~general manager~~ president ~~chief executive officer~~ and to decide on their remunerations; to appoint or replace the members of the board of directors and the supervisory committee of the Company’s wholly-owned subsidiaries, appoint, replace or recommend the shareholders’ proxies, directors and supervisors of its subsidiaries which are controlled or invested by the Company;

~~(10)~~

(11) to formulate the basic management system of the Company;
~~(11)~~
(12) to formulate proposals for amendment to the Articles of Association;

~~(12)~~

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(13) under the premise of observing relevant laws and regulations and the Articles of Association and within the authorization of the shareholders’ general meeting, ~~to determine external investments, external guarantees, entrusted asset management and connected transactions of the Company, to exercise the Company’s rights of financing and borrowing and to determine pledge, lease, contracting or transfer of the Company’s important assets; and the chief executive officer and other senior management are to a certain extent authorized to exercise the rights mentioned herein~~ to determine external investments, external guarantees, entrusted asset management and connected transactions of the Company, to exercise the Company’s rights of financing and borrowing and to determine pledge, lease, contracting or transfer of the Company’s important assets; and the chief executive officer and other senior management are to a certain extent authorized to exercise the rights mentioned herein;

(13)

(14) under the premise of observing relevant laws and regulations, to formulate option plan, management holding plan or other incentive plan, scheme or mechanism according to the actual situation of the Company;

(14)

(15) to propose the appointment or removal of the Company’s auditors to the general meetings of the shareholders;

(16) to manage information disclosure of the Company;

(17) to hear the work report and inspect the work of the chief executive officer of the Company;

(15)

(18) to exercise any other powers specified in relevant laws, administrative regulations, departmental rules and the Articles of Association and conferred by the shareholders’ general meetings.

~~other duties according to the provisions of the Articles of Association or conferred by the shareholders’ general meeting.~~

Except for the Board resolutions in respect of the matters specified in subparagraphs (6), (7) and ( ~~111~~ 2) 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 affirmative vote of a simple majority of the Directors.

Board resolutions in respect of the Company’s connected transactions must be endorsed by an Independent (non-executive) Director before they can become effective.

Opinion Article 6

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Article 143

The Board shall explain to the shareholders’ general meeting any non-standard auditors’ opinions issued by the certified public accountants regarding the financial statements of the Company.

Article 144

The Board shall formulate the rules of procedures of Board meetings to ensure the Board to implement the resolutions approved at the shareholders’ general meeting, work efficiently and be scientific in decision making. Such rules of procedures, which defines the convening and voting procedures, shall be submitted to the shareholders’ general meeting for approval.

Article 145

The Board shall determine the scope of its power as to external investments, assets acquisition and disposals, asset pledges, external guarantees, entrusted financial management and connected transactions and shall establish stringent examination and decision-making procedures; and specialists or professional personnel shall be organized to assess and examine any material investment projects, and such investment projects shall be submitted to the shareholders’ general meeting for approval.

Guidelines Article 110 Rules Governing Listing of Stocks on Shenzhen Stock Exchange Rules 9.3 and 9.6

When a transaction of the Company (excluding cash donation received by the Company) reaches any of the following standards, the transaction shall be submitted to the shareholders’ general meeting for consideration and approval. Other transactions (excluding those which must be subject to the consideration and approval of the shareholders’ general meeting) shall be considered and passed by the Board or decided by the chief executive officer within the scope of his authorization.

(1) total assets involved in the transaction account for more than 50% of the Company’s latest audited total assets. Where the total assets involved in the transaction have both book value and valuation, whatever is higher shall be taken as the calculation figure;
(2) operating revenue related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 50% of the Company’s audited operating revenue for the latest accounting year, with an absolute amount exceeding RMB50 million;
(3) net profit related to the subject of the transaction (for instance, equity interest) for the latest accounting year accounts for more than 50% of the Company’s audited net profit for the latest accounting year, with an absolute amount exceeding RMB5 million;

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(4) transaction turnover (including the debt and expenses incurred) accounts for more than 50% of the Company’s latest audited net assets, with an absolute amount exceeding RMB50 million;
(5) profit derived from the transaction accounts for more than 50% of the Company’s audited net profit for the latest accounting year, with an absolute amount exceeding RMB5 million.

Where the transaction of the Company only reaches the standard prescribed in (3) or (5) in the preceding paragraph and the absolute value of the earnings per share of the Company for the latest accounting year is below RMB0.05, the Company may be exempted from the approval of the shareholders’ general meeting and may be considered and decided by the Board.

In case a certain figure in the aforesaid calculation is of negative value, the absolute value thereof shall be taken as the calculation figure.

Where the accumulated amount of the Company’s acquisition or disposal of assets for twelve (12) consecutive months exceeds 30% of the Company’s latest audited total assets, the transactions shall be submitted to the shareholders’ general meeting for consideration and passed by a special resolution after consideration and approval by the Board.

Article 146

Where a connected transaction between the Company and its related person is worth more than RMB30 million and accounts for more than 5% of the absolute value of the Company’s latest audited net assets, the Company shall submit the transaction to the shareholders’ general meeting for consideration and approval after consideration and approval by the Board. Other connected transactions shall be implemented in accordance with the law, regulations, rules, the provisions of the stock exchange(s) on which the shares of the Company are listed as well as the systems otherwise formulated by the Company.

Rules Governing Listing of Stocks on Shenzhen Stock Exchange Rule 10.2.5

Where there are special provisions otherwise prescribed by the law, administrative regulations, departmental rules, CSRC and the stock exchange(s) on which the shares of the Company are listed as to external investments, assets acquisition and disposals, entrusted financial management, asset pledges, external guarantees transactions, the transactions shall be implemented in accordance with the relevant provisions.

Article 102 147

In cases where the expected value of fixed assets proposed for disposal by the Board, when aggregated with value of fixed assets disposed within four (4) month before the proposed disposal, exceeds 33% of the fixed assets value set out in the latest balance sheet considered by the shareholders’ general meetings, the Board shall not dispose or consent to dispose such fixed assets without prior approval by the shareholders’ general meeting. Should there be any inconsistency between the aforesaid provisions and the rules of the stock exchange(s) on which the shares of the Company are listed in respect of the said

Mandatory Provisions Article 89

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matter, the provisions of the rules of the stock exchange(s) on which the shares of the Company are listed concerning the matter shall prevail. If the shares of the Company are listed on two (2) or more stock exchanges and that there is inconsistency between the listing rules of those stock exchanges in respect of such matter, the listing rules of the stock exchange which set out the most stringent provisions shall prevail.

The term “fixed assets disposal” referred to in this Article represents (among other things) transferring certain interests in assets, but not including provision of guarantees by way of fixed assets.

The validity of transactions regarding fixed assets disposal by the Company shall not be affected due to a breach of the first paragraph of this Article.

When making decisions on market development, mergers and acquisitions or investment in a new field, the Board shall engage an outside consultancy organization to provide a professional opinion to be used as an important basis for the Board’s decision, if the investment or the merger/acquisition assets amount to 10% or more of the Company’s total assets.

Opinion Article 4

Article 103 148

The Chairman of the Board is entitled to the following powers:

Mandatory Provisions Article 90

(1) to preside over shareholders’ 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 issued by the Company;
(4) to sign important documents of the Board and other documents that require signing by the Company’s authorized representative;
(5) to exercise the power of authorized representative;
(6) to exercise the power to handle corporate affairs in accordance 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 shareholders’ general meeting thereafter;
(7) to exercise other powers conferred by the Board.

If the Chairman is unable or fails to perform his duties, the Vice Director shall perform the duties of the Chairman; where the Vice Chairman fails to perform his duties, a Director jointly elected by not less than half members of the Board shall perform the duties of the Chairman.

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APPENDIX I

Article 104 149

The Board of the Company may establish special committees such as audit committee, nomination committee, remuneration committee and strategy committee in accordance with the provisions of the Articles of Association or the resolutions of shareholders’ general meeting.

~~The Board of the Company may establish special committees.~~

Duties of the special committees of the Board of the Company are determined according to the relevant provisions of the State and the resolutions of the Board of the Company and implemented subject to the approvals of the shareholders’ general meeting of the Company by way of resolution.

(1) Main duties of the Audit Committee:
to check the Company’s accounting policies, financial status and financial reporting procedures;
to recommend and engage Certified Public Accountants and communicate with the Company’s external auditors on the audit procedures;
to check the internal control structure and internal audit functions;
to perform internal control assessment of the Company;
to check and monitor the existing and potential risks of the Company, including logistics risk, financial risk, security risk, investment risk, senior management compliance risk and computer systems security risks;
to check the Company’s compliance with laws and other legal obligations;
to check and supervise the Company’s rules of conduct;
other duties conferred by the Board.
(2) Main duties of the Nomination Committee:
to analyze the composition of the Board, specify requirements for the Directors and make recommendations to the Board on its scale and composition;
to formulate the criteria and procedures for the election of Directors;
to widely search for qualified Directors and senior management candidates of the Company and submit a list of candidates for election as Directors or senior management to the Board;

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

to conduct appraisal against the Director candidates nominated by the shareholders and Supervisory Committee;
to identify Director candidates and submit a list of candidates as a voting proposal to the shareholders’ general meeting;
other duties conferred by the Board.
(3) Main duties of the Remuneration ~~and Assessment~~ Committee:
to be responsible for formulating the standards of appraisal for the Directors, Supervisors and senior management and conduct appraisals;
to be responsible for formulating and reviewing the remuneration policies and plans for the Directors, supervisors and senior management;
other duties conferred by the Board.
(4) Main duties of the Strategy Committee:
to conduct research and make recommendations on the long-term development strategy and major investment decisions of the Company;
other duties conferred by the Board.

Article 105 150

Meetings of the Board shall be held at least twice every year and shall be convened by the Chairman of the Board. All of the Directors and supervisors shall be notified about the meeting ~~fifteen (15)~~ ten (10) days beforehand. ~~In case of emergency, a special Board meeting may be held if it is so requested by two (2) or more Directors or the chief executive officer of the Company.~~

Mandatory Provisions Article 91

Special board meeting may be convened when proposed by the shareholders representing not less than 10% of the voting rights and not less than one-third of the Directors or supervisors. The Chairman of the Board shall convene and chair a board meeting within ten (10) days after the proposal is received. In case of emergency, special board meeting may be convened when proposed by two (2) or more of the Directors or the chief executive officer of the Company.

Article 151

The reasonable expenses incurred by the Directors who attend Board meetings shall be borne by the Company. These expenses include the traffic expenses covering the distance between the place where a Director is located and the place where a meeting is held (in the event that these two places are not the same), the fees of room and board during the term of the meeting, the rent of the place of the meeting and the local traffic expenses.

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APPENDIX I

Article 106 152

Regular and special Board meetings shall be noticed by way as follows:

Mandatory Provisions Article 92

(1) If the Board has specified the time and place of the regular Board meeting in advance, no service of notice is required.
(2) If the Board has not specified the time and place of the board meeting in advance, the Chairman of the Board shall, at least ~~fifteen (15)~~ ten (10) days beforehand, inform the Directors and Supervisors the time and the place of the Board meeting by way of telegraph, telex, fax, courier, registered mail or by specially designated person.
(3) If there is a need to hold a Board meeting in case of emergency, the Chairman of the Board shall ask the Secretary to the Board to, not less than three (3) days and not more than five (5) days prior to the day when the special Board meeting is held, inform all the Directors and supervisors the time and the place of the Board meeting by way of telegraph, telex, fax, courier, registered mail or by specially designated person.
(4) The notice shall be written in Chinese, if necessary, the English version can be attached ~~, including the agenda for the meeting~~ , including the date and place of the meeting, deadlines and reasons of and agenda for the meeting, the date of the notice, etc. Any Director may waive the right of receiving the notice of Board meeting.

Article 107 153

Notice of a meeting shall be deemed to have been given to any Director who attends the meeting without protest against, before or at its commencement, any lack of notice.

Article 108 154

Unless otherwise provided by laws, regulations and other regulatory documents, any regular or special meeting of the Board may be held by way of telephone conference or similar communication equipment so long as all Directors participating in the meeting can clearly hear and communicate with each other. All such Directors shall be deemed to be present in person at the meeting.

Article 109 155

The Board meeting may not be held unless not less than half of the Directors (including any Director entrusted to attend pursuant to the provisions of ~~Article 110 of~~ the Articles of Association) are present.

Mandatory Provisions Article 93 Opinion Article 3

Each Director shall have a ballot for voting. Resolutions of the Board shall be passed by more than half of all Directors, unless otherwise required by the Articles of Association.

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APPENDIX I

Resolutions of Board meeting are voted on by poll or by a show of hands.

In the case of equal division of votes, the Chairman of the Board of Directors is entitled to a casting vote.

When more than a quarter of Directors or more than 2 external Directors think the materials so provided are not sufficient or the argument contained therein is not clear, they may suggest jointly to defer the Board meeting or defer the discussion of such matter, and the Board shall accept such suggestion.

Where a Director or his affiliate (as defined under the Hong Kong Listing Rules) is interested in any resolution proposed at a Board meeting or such Director has associated relationship with the enterprises involved in any resolution proposed at a Board meeting, such director shall not be present at such meeting, shall not have the right to vote and shall not exercise voting rights on behalf of other directors. Such director shall not be counted in the quorum of such meeting. ~~Where a Director is interested in any matter to be resolved at a Board meeting, such Director shall not vote on such resolution, whether on its own behalf or as the proxy of another Director.~~ Such Board meeting shall not be held unless attended by a majority of Directors having no interest in such matter, and any resolution made thereon shall be subject to affirmative votes of a majority of Directors having no interest in such matter. Where there are less than three (3) Directors having no interest in such matter attend the meeting, the matter shall be submitted to the shareholders’ general meeting for consideration and approval.

Article 110 156

Directors shall attend Board meetings in person. Where a Director is unable to attend a meeting for any reason, he may by a written power of attorney appoint another Director to attend the meeting on his behalf. The power of attorney shall set out the name of the proxy, the subject and scope of authorization and validity of the time limit of the proxy, which shall be signed or officially sealed by the authorizing party. ~~The power of attorney shall specify the extent of authorization.~~

Mandatory Provisions Article 94

A Director appointed as the representative of another Director to attend the meeting shall exercise the rights of a Director within the scope of authority conferred by the appointing Director. Where a Director is unable to attend a Board meeting and has not appointed a proxy to attend the meeting on his behalf, he shall be deemed to have waived his right to vote at the meeting.

Article 111

~~In respect of the matters examined on a special Board meeting, if the Board has delivered in written form the proposal to be voted to all Directors, and the number of the Directors who give their signatures and consent has constituted the quorum required for making a decision pursuant to Article109 of the Articles of Association, this proposal shall be taken as the resolution of the Board, instead of holding the Board meeting.~~

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APPENDIX I

Article 112 157

The Board shall keep minutes of resolutions passed at Board meetings. The minutes shall be signed by the Directors present at the meeting and the person who recorded the minutes. Opinions of the Independent Directors shall be clearly stated in the resolutions of the Board. The Directors shall be liable for the resolutions of the Board. If a resolution of the Board violates the laws, administrative regulations or the Articles of Association and the Company suffers serious losses as a result thereof, the Directors who participated in the passing of such resolution are liable to compensate the Company. However, if it can be proven that a Director expressly objected to the resolution when the resolution was voted on, and that such objection was recorded in the minutes of the meeting, such Director may be released from such liability.

Mandatory Provisions Article 95 Opinion Article 6

The minutes of Board meetings shall be maintained in corporate archives for a period no shorter than fifteen (15) years. Article 158

The minutes of Board meetings shall include the following:	Guidelines
	Articles 123
(1) the date, venue and name of the convener of the meeting;
(2) the names of attending Directors and Directors appointed as proxies to attend the
meeting;
(3) the agenda of the meeting;
(4) the major comments and opinions of each Director;
(5) the voting method and results of each proposal (the number of affirmative,
negative and abstention votes shall be specifically indicated).
Article 159	Guidelines
	Articles 104
An Independent Director shall carry out the requirements according to the law,
administrative regulations and departmental rules.
CHAPTER 11 SECRETARY TO THE BOARD
Article ~~113 ~~160
The Company shall have a Secretary to the Board, who is a senior management	Mandatory
member of the Company.	Provisions Article 96
The Board may establish its secretarial department when necessary.

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APPENDIX I

The management of the controlling entity shall not serve as the Board Secretary concurrently.

Opinion 1

Article 114 161

Secretary to the Board of the Company shall be a natural person with the requisite professional knowledge and experience, and shall be appointed by the Board. His/ her primary responsibilities are:

Mandatory Provisions Article 97

i. to ensure that the Company has complete organisational documents and records;
ii. to ensure that the Company prepares and delivers the reports and documents required by competent authorities in accordance with the laws;
iii. to ensure that the Company’s registers of shareholders are properly maintained, and that persons entitled to access to the relevant records and documents are furnished with such records and documents without delay;
iv. be responsible for the preparation of the meetings of shareholders’ and the Board, custody of documents and the management of the information of the shareholders of the Company and to handle matters relating to the information disclosure to ensure the timely, accurate, legal, true and complete disclosure of the Company’s information;
v. to perform other duties as specified under the Articles of Association and the listing rules of the stock exchange where the shares of the Company are listed.

Article 115 162

Mandatory Provisions Article 98

The president, ~~general managers (excluding the deputy ones)~~ and chief financial officer shall not concurrently hold the post of the secretary to the Board. Director or other senior management members may concurrently hold the post of the secretary to the Board. The accountant(s) of the certified public accountants’ firm appointed by the Company shall not concurrently hold the post of the secretary to the Board.

Where the office of the secretary to the Board is held concurrently by a Director, and an act is required to be done by a Director and the secretary to the Board separately, the person who holds the office of Director and secretary to the Board may not perform the act in dual capacity.

CHAPTER 12 PRESIDENT , GENERAL MANAGER

Article 116 163

The Company shall have one president, who shall be appointed and dismissed by the Board. ~~The president shall be accountable to the Board. The Company shall have one general manager, who shall be appointed and dismissed by the Board. The general manager~~

Mandatory Provisions Article 99 Opinion 1

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APPENDIX I

~~shall be independent to the controlling entity. The Board may determine the Board members to act as the president and / or general manager concurrently but the management staff shall not act as the president, general manger, deputy general manager and chief financial officer, marketing director concurrently. The term of office of each of the president and general manager shall be 3 years and they shall be eligible to offer themselves for reappointment.~~

Article 117

~~The general manager of the Company shall be accountable to the president. T~~ he president of the Company shall be accountable to the Board and exercise the following powers:

Mandatory Provisions Article 100

(1) to lead the Company’s production, operation and management, organize resources to carry out the Board’s resolutions, and 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 draft the Company’s basic management system;
(5) to formulate the basic rules and regulations of Company;
(6) to propose the appointment or dismissal of the Company’s ~~deputy manager(s), chief financial officer and other senior management staff~~ deputy president and chief financial officer;
(7) to appoint or dismiss management personnel other than those required to be appointed or dismissed by the Board;
(8) ~~to determine the reward and penalty, promotion and demotion, increase or decrease of salary, recruitment, dismissal and termination of the staff of the Company~~ under the authorization of the Board, to exercise the power relating to the mortgage, lease, sub-contract or transfer of the assets of the Company;
(9) ~~to handle the external significant business for the Company under the authorization of the Board;~~
~~(10)~~ to exercise other powers conferred by the Articles of Association and the Board.

The deputy president and the chief financial officer shall assist and, be accountable to, the president. The deputy president and the chief financial officer shall be nominated by the president and appointed or dismissed by the Board.

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APPENDIX I

The term of office of each of the president, the deputy president and the chief financial officer shall be 3 years and they shall be eligible to offer themselves for reappointment.

Article 164

The president shall formulate the detailed working rules of the president, which shall be submitted to the Board for approval before implementation.

Guidelines for Article of Association 129,130,131

The detailed working rules of the president shall include the following:

(1) the conditions for convening, and procedures and attendants of the president’s meeting;
(2) the duties and division of responsibilities of president and other senior management members;
(3) the fund and assets applications, authorities of execution of important contracts of the Company, and the mechanism of reporting to the Board and Supervisory Committee;
(4) other matters deemed as necessary by the Board.

The president may resign prior to the expiration of their terms of office. The specific procedures and formalities of the said resignations shall be provided for in the employment contracts between the president and the Company.

Article 165

The management of the Company shall be independent to the controlling entity. The Board of the Company may determine the Board members to act as the president and other senior management members concurrently, except for those have also taken up positions, other than acting as the directors, in the controlling shareholders or actual controller of the Company shall not act as the president or other senior management staff.

Guidelines to Article of Association 126 Opinion 1

Article 118 166

The president ~~and general manager~~ of the Company shall attend Board meetings. The president ~~general manager~~ who is not a Director does not have any voting rights at Board meetings.

Mandatory Provisions Article 101

Article 119 167

In exercising the duties, the president ~~, the general manager and the deputy general manager~~ shall not alter the resolutions of the shareholders meeting and the Board or act beyond his scope of authority.

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APPENDIX I

Article 120 168

The president ~~, the general manager and the deputy general manager,~~ in performing his functions, shall act honestly and diligently and in accordance with the laws, administrative regulations, departmental rules and the Articles of Association.

Mandatory Provisions Article 102

CHAPTER 13 SUPERVISORY COMMITTEE

Article 121 169

The Company shall have a supervisory committee which shall be a standing supervisory body of the Company responsible for supervising the board of directors and its members, and the senior management staff such as the president, ~~general manager and deputy general manager,~~ so as to prevent any abuse of their functions and powers and violation of the legal rights and interests of the shareholders, the Company and its employees.

Mandatory Provisions Article 103

Article 170

The Supervisory Committee is made up of representatives of the shareholders and an appropriate proportion of representatives of the company’s staff and workers, provided that the proportion of representatives of the company’s staff and workers shall not be less than one third. Representatives of the company’s staff and workers at the Supervisory Committee shall be democratically elected by the Company’s staff at the staff representative assembly, general staff meeting or otherwise.

The Supervisory Committee shall consist of external supervisors (that is, supervisors who do not hold an internal office in the Company) which account for more than one half of the total number of supervisors and at least two independent supervisors (that is, supervisors who are independent of the shareholders of the Company and who do not hold an internal office in the Company). External supervisors (independent supervisors) shall be appointed or dismissed by the shareholders’ meeting. External supervisors shall serve an independent report to the shareholders’ meeting on the honesty and diligence of the management staff of the Company.

Guidelines for Articles of Association 143

Mandatory Provisions Article 105 Opinion 7

Article 122 171

The Supervisory Committee shall be composed of 3 Supervisors. One of the members of the Supervisory Committee shall act as the chairman of the Committee. The term of office of a Supervisor shall be three years, renewable upon re-election and re-appointment.

The appointment and dismissal of the chairman of the Supervisory Committee shall be passed by not less than two-thirds (inclusive) of its members. The chairman of the Supervisory Committee shall convene and preside over Supervisory Committee meetings. In the event that the chairman of the Supervisory Committee is incapable of performing or not performing his duties, a supervisor nominated by the majority of supervisors shall convene and preside over Supervisory Committee meetings.

Mandatory Provisions Article 104 Provision 5 of CSRC Notice No. [1995]1 Clause (i) of provision 5 section 1 of Part D of Appendix 13 of the Listing Rules

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX I

The term of office of the chairman of the Supervisory Committee shall be three years, renewable upon re-election and re-appointment.

Article 123

~~The Supervisory Committee shall comprise one external supervisor, one independent supervisor, one representative of the Company’s staff and workers. The Representatives of the Company’s staff and workers shall be democratically elected and dismissed by the Company’s staff. External supervisor (independent supervisor)shall be elected and dismissed by the shareholders’ meeting.~~

Mandatory Provisions Article 105

~~The Supervisory Committee shall consist of external supervisors (that is, supervisors who do not hold an internal office in the Company) which account for more than one half of the total number of supervisors and at least two independent supervisors (that is, supervisors who are independent of the shareholders of the Company and who do not hold an internal office in the Company). External supervisors shall report independently to the shareholders’ general meeting the performance of the management members of the Company in relation to their fiduciary and diligence.~~

Opinion 7

Article 172

In the event that the terms of office of supervisors fall upon maturity whereas new members of the Supervisory Committee are not re-elected in time, or the resignation of any supervisor during his term of office results in the number of members of the Supervisory Committee falling below the statutory minimum requirement, the said supervisors shall continue to perform their duties in accordance with the laws, the administrative regulations and the Articles of Association until the re-elected supervisors assume their office.

Guidelines for Articles of Association 138

Article 124 173

The Directors, president ~~, general managers, deputy general managers and chief~~ Mandatory ~~financial officers~~ and other senior management members of the Company shall not assume ProvisionsArticle 106 the position of supervisors.

Article 174

The supervisors shall ensure the truthfulness, accuracy and completeness of the information disclosed by the Company.

Guidelines for Articles of Association 139

Article 175

The supervisors may attend board meetings as non-voting participants, and deliver enquiry or suggestion regarding resolutions at Board meetings.

Guidelines for Articles of Association 140

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APPENDIX I

Article 176

The supervisors shall not use their relationship to prejudice the Company’s interests	Guidelines for
and shall be liable for indemnity to any loss caused to the Company.	Articles of Association
	141
Article 177

Any supervisor who violates any laws, administrative regulations, departmental rules or Guidelines for the Articles of Association during the course of performing his duties and causes losses to ArticlesAssociationof the Company shall be liable for making compensation for any loss caused to the Company. 142 Article ~~125~~ 178 Mandatory Provisions Article 107 Meetings of the Supervisory Committee shall be held at least once ~~a year~~ every six months and convened by the Chairman of the Supervisory Committee. Supervisors may propose to convene extraordinary supervisory meeting.

Article 126 179

The Supervisory Committee shall be accountable to the shareholders’ general meeting and exercise the following powers in accordance with the laws:

Mandatory Provisions Article 108

(1) to review and provide a written opinion on the regular reports of the Company prepared by the Board;
( ~~1~~ 2) to examine the Company’s financial affairs;
( ~~2~~ 3) to supervise Directors, president and other senior management members in performing their duties to the Company and to propose dismissal of Directors, president and senior management members who violate any laws, administrative regulations, the Articles of Association or resolutions of shareholders’ general meetings ~~general managers, deputy general manager and other senior management members on the violation of laws, administrative regulations or the Articles of Association in performing their duties to the Company;~~
( ~~3~~ 4) to demand rectification from a Director, president ~~, the general manager, deputy general manager~~ and any other senior management members when the acts of such persons are harmful to the Company’s interest;
( ~~4~~ 5) to examine the financial information such as the financial report, business report and plans for distribution of profits to be submitted by the Board to the shareholders’ general meetings and, should any queries arise, to engage, in the name of the Company, certified public accountants and practicing auditors to conduct a re-examination;

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APPENDIX I PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

( ~~5~~ 6) to propose the convening of a shareholders’ extraordinary general meeting and to convene and preside over the shareholders’ general meeting when the Board fails to perform such duties under the Company Ordinance;
( ~~6~~ 7) to deal with or take legal actions against Directors and senior management members on behalf of the Company;
~~(7) to exercise other powers specified in the Articles of Association.~~
(8) to put forward proposals to the shareholders’ general meeting;
(9) to conduct investigations whenever unusual conditions of operation of the Company arises and if necessary, to engage professional institutions such as firms of accountants and lawyers to assist in the investigations at the costs of the Company;
(10) to exercise other powers specified under the laws, regulations and the Articles of Association.

The ~~supervisory~~ Supervisory ~~committee~~ Committee may express its opinion on the appointment of an accountants’ firm of the Company. It may appoint a different accounting firm if necessary on behalf of the Company to examine the financial conditions of the Company independently, and may directly report to CSRC and other relevant authorities.

Opinion 7

The external supervisors shall report independently to the shareholders’ general meeting the performance of the senior management members of the Company in relation to their fiduciary and diligence.

~~The supervisors shall attend Board meetings.~~

Article 127 180

The method of discussion for the Supervisory Committee shall be by way of holding a ~~supervisory~~ Supervisory Committee meeting which shall be convened with written notice of not less ten days but not more than 30 days be served to all supervisors.

Mandatory Provisions Article 109 PProvision 6 of CSRC Notice No. [1995] 1

~~The A~~ n Extraordinary Supervisory Committee meeting shall be convened with written notice of not less three days but not more than five days be served to all supervisors.

The notice of the Supervisory Committee meeting shall include the following particulars: the date of the meeting, the place and duration of the meeting, the agenda and business to be discussed and the date of the notice.

Meetings of the Supervisory Committee shall be held only if not less than two-thirds (inclusive) of the supervisors are present and each supervisor shall have one vote.

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APPENDIX I

Resolution at a ~~supervisory~~ Supervisory Committee meeting shall be passed by two-thirds (inclusive) of the supervisors by poll.

The Supervisory Committee shall make the rules of procedure of the Supervisory Committee and voting procedure so as to ensure the work efficiency and scientific decision-making of the Supervisory Committee. The rules of procedure of the Supervisory Committee shall be made by the Supervisory Committee and approved by general meeting.

Sub-clause (ii) of clause d of Section 1 of Appendix 13D of Hong Kong Listing Rules

~~Meetings of the Supervisory Committee shall be held only if not less than one half (exclusive) of the supervisors are present and each supervisor shall have one vote.~~

~~Resolution at a supervisory meeting shall be passed by two-thirds (inclusive) of the supervisors by poll.~~

Article 128 181

All reasonable expenses incurred in respect of the employment of professionals such as lawyers, certified public accountants or practicing auditors as are required by the Supervisory Committee in discharging its duties shall be borne by the Company.

Mandatory Provisions Article 110

Article 131 182

Minutes shall be prepared, on which the supervisors present at the meeting and the person who has prepared the minutes shall sign. Each supervisor is entitled to request that an explanation of his comments made at the meetings be noted in the minutes. The minutes of Supervisory Committee meetings shall be maintained as corporate archives ~~the Secretary to the Board~~ for a period of 15 years.

Article 130 183

A supervisor shall carry out his duties honestly and faithfully in accordance with the laws, administrative regulations and the Articles of Association.

Mandatory Provisions Article 111

CHAPTER 14 QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS, PRESIDENT, GERNEARL MANAGER, DEPUTY GENERAL MANAGER A ND OTHER SENIOR MANAGERMENT MEMBERS OF THE COMPANY

Article 131 184

A person may not serve as a Director, supervisor, president, ~~general manager, deputy general manager~~ or any other senior management member of the Company if any of the following circumstances applies:

Mandatory Provisions Article 112

(1) a person without legal or with restricted legal capacity;

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APPENDIX I

(2) a person who has committed an offence of corruption, bribery, infringement of property, misappropriation of property or sabotaging the social economic order and has been punished because of committing such offence; or who has been deprived of his political rights, in each case where less than five (5) years have elapsed since the date of the completion of implementation of such punishment or deprivation;
(3) a person who is a former director, factory manager or manager of a company or enterprise which has entered into insolvent liquidation and he is personally liable for the insolvency of such company or enterprise, where less than three (3) years have elapsed since the date of the completion of the insolvency and liquidation of the company or enterprise;
(4) a person who is a former legal representative of a company or enterprise which had its business licence revoked due to a violation of the law and who incurred personal liability, where less than three (3) years has elapsed since the date of the revocation of the business license;
(5) a person who has a relatively large amount of debts due and outstanding;
(6) a person who is under criminal investigation or prosecution by a judicial organization for violation of the criminal law where said investigation or prosecution is not yet concluded;
(7) a person who is not eligible for enterprise leadership according to laws and administrative regulations;
(8) a non-natural person;
(9) a person convicted of the contravention of provisions of relevant securities regulations by a relevant competent authority, and such conviction involves a finding that he has acted fraudulently or dishonestly, where less than five (5) years has elapsed since the date of the conviction.

Article 132 185

The validity of an act of a Director, president, ~~general manager, deputy general manager~~ and any other senior management member on behalf of the Company is not, vis-a-vis a bona fide third party, affected by any irregularity in his office, election or any defect in his qualification.

Mandatory Provisions Article 113

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APPENDIX I

Article 133 186

In addition to obligations imposed by laws, administrative regulations or required by the stock exchanges on which the Company’s shares are listed, each of the Company’s Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members owes a duty to each shareholder, in the exercise of the functions and powers of the Company entrusted to him:

Mandatory Provisions Article 114

(1) not to cause the Company to exceed the scope of the business stipulated in its business licence;
(2) to act honestly in the best interest of the Company;
(3) not to expropriate in any guise the Company’s property, including (without limitation) usurpation of opportunities advantageous to the Company;
(4) not to expropriate the individual rights of shareholders, including (without limitation) rights to distribution and voting rights, save pursuant to a restructuring of the Company submitted to shareholders for approval in accordance with the Articles of Association.

Article 134 187

Each of the Company’s Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members owes a duty, in the exercise of his powers and discharge of his duties, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Mandatory Provisions Article 115

Article 135 188

Each of the Company’s ~~Directors, supervisors, president, general manager, deputy general manager and other senior management members~~ Directors, supervisors, president and other senior management members shall exercise his powers or carry on his duties in accordance with the principle of fiduciary and shall not put himself in a position where his duty and his interest may conflict. This principle includes (without limitation) discharging the following obligations:

Mandatory Provisions Article 116

(1) to act honestly in the best interests of the Company;
(2) to exercise powers within the scope of his powers and not to exceed those powers;
(3) to exercise the discretion vested in him personally and not to allow himself to act under the control of another and, unless and to the extent permitted by laws, administrative regulations or with the informed consent of shareholders given in a general meeting, not to delegate the exercise of his discretion;

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APPENDIX I

(4) to treat shareholders of the same class equally and to treat shareholders of different classes fairly;
(5) except in accordance with the Articles of Association or with the informed consent of shareholders given in general meeting, not to enter into any contract, transaction or arrangement with the Company;
(6) without the informed consent of shareholders given in general meeting, not to use the Company’s property for his own benefit by any means;
(7) not to exploit his position to accept bribes or other illegal income or expropriate the Company’s property by any means, including (without limitation) opportunities advantageous to the Company;
(8) without the informed consent of shareholders given in general meeting, not to accept commissions in connection with the Company’s transactions;
(9) to abide by the Articles of Association, faithfully execute his official duties and protect the Company’s interests, and not to exploit his position and power in the Company to advance his own private interests;
(10) not to compete with the Company in any form unless with the consent of shareholders given in general meeting;
(11) not to misappropriate the Company’s funds or to lend the Company’s funds to others, not to open accounts in his own name or other names for the deposit of the Company’s assets and not to provide a guarantee for the shareholder(s) of the Company or other individual(s) with the Company’s assets;
(12) unless otherwise permitted by informed shareholders in general meeting, to keep in confidence information relating to the Company acquired by him in the course of and during his tenure and not to use such information in purposes other than in furtherance of the interests of the Company, save that disclosure of such information to the court or other governmental authorities is permitted if:
disclosure is made under compulsion of law;
the interests of the public require disclosure;
the interests of the relevant Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member require disclosure.

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APPENDIX I

Article 136 189

Each Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company shall not cause the following persons or institutions (“associates”) to do what he is prohibited from doing:

Mandatory Provisions Article 117

(1) the spouse or minor child of that Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member;
(2) a person acting in the capacity of trustee of that Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member or any person referred to in paragraph (1) of this Article;
(3) a person acting in the capacity of partner of that Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member or any person referred to in paragraphs (1) and (2) of this Article;
(4) a company in which that Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member, alone or jointly with one or more persons referred to in paragraphs (1), (2) and (3) above or other Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members of the Company have a de facto controlling interest; and
(5) the Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members of the controlled company referred to in paragraph (4) of this Article.

Article 137 190

The fiduciary duties of the Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members of the Company do not necessarily cease with the termination of their tenure. The duty of confidence in relation to trade secrets of the Company survives the termination of their tenure. Other duties may continue for such period as fairness may require depending on the time lapse between the termination of tenure and the occurrence of the event concerned and the circumstances under which the relationships between them and the Company are terminated.

Mandatory Provisions Article 118

Article 138 191

Except for circumstances prescribed in ~~Article 55 A~~ rticle 68 of the Articles of Association, a Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company may be relieved of liability for specific breaches of his duty by the informed consent of shareholders given at a general meeting.

Mandatory Provisions Article 119

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Article 139 192

Where a Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company is in any way, directly or indirectly, materially interested in a contract, transaction or arrangement or proposed contract, transaction or arrangement with the Company, (other than his contract of service with the Company), he shall declare the nature and extent of his interests to the Board at the earliest opportunity, whether or not the contract, transaction or arrangement or proposal therefor is otherwise subject to the approval of the Board.

A Director shall not vote nor shall he be counted in the quorum on any board resolution approving any contract, arrangement or any other proposal in which he or any of his associates (as defined in the Hong Kong Listing Rules) has a material interest, save for the exceptional circumstances specified in the Articles of Associations approved by the Hong Kong Stock Exchange. The following circumstances are not subject to the above restrictions:

Mandatory Provisions Article 120

Section 1 of Rule 3 of the Hong Kong Listing rules

(1) 1. the giving of any security or indemnity to the Director or his associates in respect of money lent or obligations incurred or undertaken by him or his associates for the benefit of the Company or any of its subsidiaries; or
the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/ themselves assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;
(2) any proposal concerning an offer of shares or debentures or other securities of or by the Company or any other company, which the Company may promote or be interested in, for subscription or purchase where the Director or his associate(s) is/are or is/ are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(3) any proposal made by any other company in which the Director or his associate(s) is/are interested, whether directly or indirectly (as an officer or executive or shareholder); or any proposal made by any other company in which the Director or his associate(s) is/ are beneficially interested in shares of that company, provided that such Director and any of his associates are not in aggregate beneficially interested in five percent or more of the issued shares of any class of such company (or of any third company through which his interest or that of his associates is derived) or of the voting rights;
(4) any proposal or arrangement concerning the benefit of employees of the Company or its subsidiaries including:
the adoption, modification or operation of any employees’ share scheme or any share incentive or share option scheme under which any Director or his associate(s) may benefit; or

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the adoption, modification or operation of a provident fund or pension fund, death or disability benefits scheme in relation to the Directors, his associates and employees of the Company or any of its subsidiaries, which does not provide in respect of any Director (or his associates), as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and
(5) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company.

Unless the interested Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member discloses his interests in accordance with the preceding paragraph of this Article and the contract, transaction or arrangement is approved by the Board at a meeting in which the interested Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member is not counted in the quorum and refrains from voting, a contract, transaction or arrangement in which that Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member is materially interested is voidable at the instance of the Company except as against a bona fide party thereto acting without notice of the breach of duty by the interested Director, president, ~~general manager, deputy general manager~~ and other senior management member.

A Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company is deemed to be interested in a contract, transaction or arrangement in which an associate (as defined in the Listing Rules) of him is interested.

Article 140 193

Where a Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company gives to the Board a general notice in writing stating that, by reason of the facts specified in the notice, he is interested in contracts, transactions or arrangements of any description which may subsequently be made by the Company, such notice shall be deemed for the purposes of the preceding paragraph of this Article to be a sufficient declaration of his interests, so far as the content stated in such notice is concerned, provided that such general notice shall have been given before the date on which the question of entering into the relevant contract, transaction or arrangement is first taken into consideration on behalf of the Company.

Mandatory Provisions Article 121

Article 141 194

The Company shall not in any manner pay taxes for or on behalf of its Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members.

Mandatory Provisions Article 122

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Article 142 195

The Company shall not directly or indirectly make a loan to, or provide any guarantee in connection with, the making of a loan to a Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management member of the Company or of the Company’s parent company or any of their respective associates.

Mandatory Provisions Article 123

However, the following transactions are not subject to such prohibition:

(1) the provision by the Company of a loan or a guarantee for a loan to a company which is a subsidiary of the Company;
(2) the provision by the Company of a loan or a guarantee in connection with the making of a loan or any other funds to any of its Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members to meet expenditure incurred or to be incurred by him for the purposes of the Company or for the purpose of enabling him to perform his duties properly, in accordance with the terms of a service contract approved by the shareholders in general meeting; and
(3) The Company may make a loan or provide a guarantee in connection with the making of a loan to any of the relevant Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members or their respective associates in the ordinary course of its business on normal commercial terms, provided that the ordinary course of business of the Company includes the lending of money or the giving of guarantees.

Article 143 196

A loan made by the Company in breach of the above provisions shall be forthwith repayable by the recipient of the loan regardless of the terms of the loan.

Mandatory Provisions Article 124

Article 144 197

A loan guarantee provided by the Company in breach of ~~clause 1 of Article 142~~ clause 1 of Article 195 shall be unenforceable against the Company, provided that:

Mandatory Provisions Article 125

(1) a loan was advanced to an associate of any of the Directors, supervisors, president, ~~general manager, deputy general manager~~ and other senior management members of the Company or of the Company’s parent company where the lender did not know the relevant circumstances; or
(2) the collateral provided by the Company has been lawfully disposed of by the lender to a bona fide purchaser.

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Article 145 198

For the purposes of the foregoing provisions of this Chapter, a guarantee includes an undertaking or property provided to secure the performance of obligations by the obligor.

Mandatory Provisions Article 126

Article 146 199

In addition to any rights and remedies provided by the laws and administrative regulations, where a Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members of the Company is in breach of his duties to the Company, the Company has a right to:

Mandatory Provisions Article 127

(1) claim damages from the Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members in compensation for losses sustained by the Company as a result of such breach;
(2) rescind any contract or transaction entered into by the Company with the Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members or with a third party (where such third party knows or should know that there is such a breach of duties by such Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members);
(3) demand the Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members to surrender the profits made by him in breach of his duties;
(4) recover any monies received by the Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members which should have been otherwise received by the Company, including (without limitation) commissions; and
(5) demand payment of the interest earned or which may have been earned by the Director, supervisor, president, ~~general manager, deputy general manager~~ and other senior management members on the monies that should have been paid to the Company.

Article 147 200

The Company shall, with the prior approval of shareholders in general meeting, enter into a contract in writing with a Director or supervisor wherein his emoluments are stipulated, including;

Mandatory Provisions Article 128

(1) emoluments in respect of his service as Director, supervisor or senior management member of the Company;

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(2) emoluments in respect of his service as Director, supervisor or senior management member of any subsidiary of the Company;
(3) emoluments in respect of the provision of other services in connection with the management of the affairs of the Company or any of its subsidiaries; and
(4) compensation for loss of office, or as consideration for or in connection with his retirement from office.

Except under a contract entered into in accordance with the foregoing, no proceedings may be brought by a Director or supervisor against the Company for any benefits in respect of the matters mentioned in this Article.

Article 148 201

The contract for emoluments entered into between the Company and its Directors or supervisors should provide that in the event of a takeover of the Company, the Company’s Directors and supervisors shall, subject to the prior approval of the shareholders in general meeting, have the right to receive compensation or other payment for loss of office or retirement. A takeover of the Company as referred to above means:

Mandatory Provisions Article 129

(1) a takeover offer made by any person to all shareholders; or
(2) an offer made by any person with a view to the offeror becoming a “controlling shareholder” within the meaning of Article ~~56~~ 69.

If the relevant Director or supervisor does not comply with this Article, any sum so received by him shall belong to those persons who have sold their shares as a result of the said offer made. The expenses incurred in distributing that sum pro rata amongst those persons shall be borne by the relevant Director or supervisor and shall not be paid out of that sum.

CHAPTER 15 FINANCIAL AND ACCOUNTING SYSTEM AND PROFIT DISTRIBUTION

Article 149 202

The Company shall establish its financial and accounting system in accordance with the laws, administrative regulations and PRC accounting standards formulated by the finance regulatory department of the State Council.

Mandatory Provisions Article 130

Article 150 203

~~（一） At the end of each fiscal year, the Company shall prepare a financial report which shall be audited in compliance with the laws. and shall include the following financial statements and breakdown analysis:~~

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~~(1) Balance sheet;~~

Mandatory Provisions Article 131

~~(2) Profit and loss account;~~
~~(3) Statement of changes in financial status;~~
~~(4) Description of the financial situation;~~
~~(5) Statement of profit distribution.~~

The Company shall submit its annual financial reports to the CSRC and the stock exchange(s) within four months from the ending date of each fiscal year, its half-year financial reports to the local office of the CSRC and the stock exchange(s) within two months from the ending date of the first six months of each fiscal year, and the quarterly reports to the local office of the CSRC and the stock exchange(s) within one month from the ending dates of the first three and first nine months of each fiscal year respectively.

The above financial reports shall be prepared in accordance with the relevant laws and administrative rules and regulations of the relevant government department.

The fiscal year of the Company shall coincide with the calendar year, i.e. from January 1 to December 31 on the Gregorian calendar.

Article 151 204

The Board shall place before the shareholders at every annual general meeting such financial reports as are required by any laws, administrative regulations or directives promulgated by competent regional and central governmental authorities to be prepared by the Company.

Mandatory Provisions Article 132

Article 152 205

The Company’s financial reports shall be made available for shareholders’inspection at the Company twenty (20) days before the date of every annual shareholders’ general meeting. Each shareholder shall be entitled to obtain a copy of the financial reports referred to in this Chapter.

The Company shall at least deliver or send to each shareholder of overseas-listed foreign-invested shares by prepaid mail the abovementioned reports together with the report of directors not later than twenty-one (21) days before the date of every annual shareholders’ general meeting. The address of the recipient shall be the address registered in the share register.

Mandatory Provisions Article 133 Article 7 of CSRC Notice No. [1995]1) Rule 5 of Appendix 3 of Hong Kong Listing Rules

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Article 153 206

The financial statements of the Company shall, in addition to being prepared in accordance with PRC accounting standards and regulations, be prepared in accordance with either international accounting standards or that of the overseas place where the Company’s shares are listed. If there is any material difference between the financial statements prepared respectively in accordance with the two accounting standards, explanations shall be made in the financial statements. When the Company is to distribute its after-tax profits, the lower of the after-tax profits as shown in the two financial statements shall be adopted.

Mandatory Provisions Article 134

Article 154 207

The interim results or financial information published or disclosed by the Company shall be prepared in accordance with PRC Accounting Standards and regulations as well as the international accounting standards or such accounting standards in the place of listing overseas.

Mandatory Provisions Article 135

Article 155

~~The Company shall release two financial reports for each accounting year.~~

~~The Company shall undergo the necessary procedures and publish the completed interim accounting reports and annual accounting reports in accordance with the relevant securities laws and regulations of the PRC and the listing rules of the stock exchange where the shares of the Company are listed.~~

Article 156 208

The Company shall not keep accounts other than those provided by law. Assets of the Company shall not be deposited in an account maintained in the name of any individual.

Mandatory Provisions Article 137

Article 157 209

The Company shall implement an internal audit system, and shall establish internal audit department and retain full-time auditors to conduct internal audit of its income and expenditure and economic activities.

Article 158 210

The internal audit system and duties of the internal auditors of the Company shall be implemented after the approval by the Board. The chief auditor shall be accountable and report to the Board.

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Article 159 211

Profit after taxation of the Company is used in the following order:

(1) to offset losses;
(2) to provide for statutory reserve;
(3) to provide for discretionary reserve as resolved at shareholders’ meeting;
(4) to pay for dividends of ordinary shares.

The Company shall not distribute dividends or proceed with other distributions in the form of bonus dividends before offsetting against losses and providing for statutory reserve.

Article 160 212

The Company’s common reserve fund includes surplus common reserve fund and capital common reserve fund. The surplus common reserve fund is divided into statutory surplus common reserve fund and discretionary surplus common reserve fund.

Article 161 213

When distributing each year’s after-tax profits, the Company shall set aside 10 per cent of its after-tax profits for the Company’s statutory surplus reserve fund. When the aggregate balance in the statutory surplus reserve fund has reached 50 per cent or more of the Company’s registered capital, the Company need not make any further allocations to that fund.

Where the Company’s statutory surplus reserve fund is not enough to make up losses of the Company for the preceding year, the current year’s profits shall be applied firstly to make up the losses before being allocated to the statutory surplus reserve fund in accordance with the preceding paragraph.

Subject to a resolution of the shareholders’ general meeting, after allocation has been made to the Company’s statutory surplus reserve fund from its after-tax profits, the Company may set aside funds for the discretionary reserve fund.

The remaining profit after taxation, after recovery of losses and appropriation of reserve fund shall be distributed to shareholders in proportion to their shareholdings except the part of profit that is not to be distributed in proportion to shareholdings as stipulated in the Articles of Association.

If a shareholders’ general meeting violates the provisions in the preceding paragraph of this Article and profits are distributed to the shareholders before the Company makes up losses or makes allocations to the statutory reserve fund, the profits distributed in violation of the provisions must be returned to the Company.

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No profit shall be distributed in respect of the shares of the Company which are held by the Company.

Article 162 214

Capital reserve fund includes the following items:

Mandatory Provisions Article 138

(1) premium received when shares are issued at a premium to their par value; and
(2) any other income required to be included in the capital reserve fund by the governing finance department of the State Council.

Article 163 215

The common reserve funds of the Company can only be used for the following purposes:

(1) making up losses (capital reserve shall not be used for making up the losses sustained by Company);
(2) expansion of the Company’s production and operation; or
(3) increasing the capital of the Company. The Company may, in accordance with relevant regulations, convert its capital reserve fund and discretionary reserve fund into capital upon a resolution adopted in shareholders’ general meeting and issue new shares to existing shareholders in proportion to their respective shareholdings, provided, however, that when the statutory reserve fund is converted into capital, the balance of the statutory reserve fund shall not fall below 25% of the Company’s registered capital.

Article 164 216

Capital common reserve fund is not available for offsetting the loss of the Company.

Article 217

The Company’s profit distribution policy shall be:

(1) The Company’s profit distribution shall attach importance to the investors’ reasonable investment return and the profit distribution policy shall keep continuity and stability while adhering to the following principles:
profit shall be distributed in accordance with the sequence of distribution;
profit shall not be available for distribution whenever loss has not been compensated;

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domestic shares and foreign-invested shares shall entitle to the same rights and same dividend;
shares held by the Company are not entitled to any dividend.
(2) The Company may distribute its dividends in cash or in shares and distribute interim dividends in cash.
(3) Subject to the compliance of the profit distribution principles, the maintenance of the normal operation and the long-term development of the Company, the Company attaches importance to the cash dividend payment. The Company’s accumulated profits for distribution in cash for the latest three years shall be no less than 30% of average profits for distribution realized in the latest three years.
(4) If the Board of the Company does not make any cash profit distribution proposal, the Company shall disclose the reason(s) and the use of the fund not available for distribution in its periodic reports.

Article 218

After the profit distribution plan has been resolved at a shareholders’ general meeting, the Board shall complete the dividend (or share) distribution within two (2) months after the holding of such meeting or such other shorter time as prescribed by the applicable laws and regulations and rules of the government department or the rules of the stock exchange in which the shares are listed.

Guidelines for Article of Association 154

Article 219

Unless otherwise determined by the shareholders’ meeting, the shareholders’ meeting may authorize the Board to distribute interim dividend. Unless otherwise prescribed by the laws and regulations, the amount of interim dividend shall not exceed 50% of the profit available for distribution in the interim profit statement of the Company.

Section 1 of Rule 3 of Appendix 3 of Hong Kong Listing Rules

Any paid share capital before the notice of the collection of share capital can enjoy interest. However, the shareholder is not entitled to any dividends of such pre-paid share capital.

The rights to expropriate unclaimed dividend must not be exercised until the effective period since the announcement of dividend distribution date ends.

Article 165

~~Dividends shall be distributed in proportion to the shareholdings of the shareholders within six (6) months after the end of each fiscal year.~~

Sections 1 and 2 of Rule 3 of Appendix 3 of Hong Kong Listing Rules

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~~Unless otherwise determined by the shareholders’ meeting, the shareholders’ meeting may authorize the Board to distribute interim dividend. Unless otherwise prescribed by the laws and regulations, the amount of interim dividend shall not exceed 50% of the profit available for distribution in the interim profit statement of the Company.~~

~~Any paid share capital before the notice of the collection of share capital can enjoy interest. However, the shareholder is not entitled to any dividends of such pre-paid share capital.~~

~~The rights to expropriate unclaimed dividend must not be exercised until the effective period since the announcement of dividend distribution date ends.~~

Article 166

Mandatory Provisions Article 139

~~The Company may distribute dividends in the following manner:~~

~~(1) in cash; or~~
~~(2) by shares.~~

Article 167 220

The Company shall calculate, declare and pay dividends and other amounts which are payable to holders of domestic shares in Renminbi ~~within 3 months after the date on which the dividend is declared~~ within the period as prescribed by the Article of Association. The Company shall calculate and declare dividends and other payments which are payable to holders of Overseas-Listed Foreign-Invested Shares in Renminbi, and shall pay such amounts in the local currency of the place in which such Overseas-Listed Foreign-Invested Shares are listed (if such shares are listed in more than one place, then the currency of the principal place on which such shares are listed as determined by the board of directors) ~~within 3 months after the date on which the dividend is declared~~ within the period as prescribed by the Article of Association. Any paid share capital before call for the share capital is made can enjoy interest. However, the shareholder is not entitled to be distributed dividends of such pre-paid share capital.

Section 1 of Rule 3 of Appendix 3 of Hong Kong Listing Rules

Article 168 221

The Company shall pay dividends and other amounts to holders of Foreign-Invested Shares in accordance with the relevant foreign exchange control regulations of the State. If there is no applicable regulation, the applicable exchange rate shall be the average closing rate for the relevant foreign currency announced by the People’s Bank of China during the week prior to the announcement of payment of dividend and other amounts.

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Article 169 222

When distributing dividends to its shareholders, the Company shall, in accordance with the tax law of the PRC, withhold and pay on behalf of shareholders the tax payable on their dividend income.

Article 170 223

The Company shall appoint receiving agents on behalf of the holders of overseas listed foreign-invested shares to receive on behalf of such shareholders dividends declared and all other monies owing by the Company in respect of such shares.

The receiving agents appointed by the Company shall satisfy the relevant requirements of the laws of the place and relevant regulations of the stock exchange where the Company’s shares are listed.

Mandatory Provisions Article 140 Article 8 of CSRC Notice No. [1995]1) Clause c of section 1 of Appendix 13 D of Hong Kong Listing Rules

The receiving agents appointed on behalf of holders of overseas-listed foreign invested shares listed on the Hong Kong Stock Exchange shall be a company registered as a trust company under the Trustee Ordinance of Hong Kong.

CHAPTER 16 APPOINTMENT OF ACCOUNTANTS’ FIRM

Article 171 224

The Company shall appoint an independent firm of certified public accountants which is qualified under the relevant regulations of the State to audit the Company’s annual financial statements and review the Company’s other financial reports.

Mandatory Provisions Article 141

The first certified public accountants’ firm of the Company may be appointed by the inaugural meeting of the Company before the first annual general meeting of shareholders and the certified public accountants’ firm so appointed shall hold office until the conclusion of the first annual general meeting.

If the inaugural meeting fails to exercise its aforesaid powers, those powers shall be exercised by the Board.

Article 172 225

The certified public accountants’ firm appointed by the Company shall hold office from the conclusion of the annual general meeting of shareholders at which the appointment is made until the conclusion of the next annual meeting of shareholders.

Mandatory Provisions Article 142

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Article 173 226

The certified public accountants’ firm appointed by the Company shall have the following rights:

Mandatory Provisions Article 143

(1) a right to inspect at any time the books, records and vouchers of the Company, and to require the Directors, president, ~~general manager, deputy general manager~~ and other senior management members of the Company to provide any relevant information and explanation thereof;
(2) a right to require the Company to take all reasonable steps to obtain from its subsidiaries such information and explanation as are necessary for the performance of duties of such accountants’ firm; and
(3) a right to attend shareholders’ general meetings and to receive all notices of, and other communications relating to, any shareholders’ general meeting which any shareholder is entitled to receive, and to be heard at any shareholders’ general meeting in relation to matters concerning its role as the accountants’ firm of the Company.

The Company shall guarantee that the accounting evidence, accounting books, financial reports and other accounting information provided to the accountants’firm it engages are true and complete and it shall not refuse or withhold any such information nor shall it provide any false information.

Article 174

Mandatory Provisions Article 144

~~Before the convening of the shareholders’ general meeting, the Board may fill any casual vacancy in the office of the certified public accountants’ firm, but while any such vacancy continues, the surviving or continuing firm, if any, may act.~~

Article 227

The appointment of the accountants’ firm of the Company shall be decided at Guidelines for shareholders’ general meeting. Other than the circumstances prescribed herein, the Board ArticlesAssociationof shall not appoint the Company’s accountants’ firm prior to obtaining approval at 159 shareholders’ general meeting.

Article 175 228

The shareholders in general meeting may, by ordinary resolution, remove a certified public accountants’ firm before the expiration of its office, notwithstanding the stipulations in the contract between the Company and the firm, but without prejudice to the firm’s right to claim, if any, for damages in respect of such removal.

Mandatory Provisions Article 145

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Article 176 229

The remuneration of a certified public accountants’ firm or the manner in which such firm is to be remunerated shall be determined by the shareholders in general meeting. ~~The remuneration of a certified public accountants’ firm appointed by the Board shall be determined by the Board.~~

Article 177 230

The Company’s appointment of, removal of and non-reappointment of a certified public accountants’ firm shall be resolved by shareholders in general meeting. The resolution of the shareholders’ general meeting shall be filed with the securities regulating authority of the State Council.

Where it is proposed that any resolution be passed at a shareholders’ general meeting concerning the appointment of a certified public accountants’ firm, which is not an incumbent firm, to replace an existing accountant’s firm or to fill a casual vacancy in the office of the certified public accountants’ firm, or to reappoint a retiring certified public accountants’ firm which was appointed by the Board to fill a casual vacancy, or to remove the certified public accountants’ firm before the expiration of its term of office, the following provisions shall apply:

Mandatory Provisions Article 146

Mandatory Provision Article 147 Provision 9 of CSRC Notice No. [1995] 1 Sub-clause (i) of Clause e of Section 1 of Appendix 13D of Hong Kong Listing Rules

(1) A copy of the proposal about appointment or removal shall be sent to the firm proposed to be appointed or proposing to leave its post or the firm which has left its post in the relevant fiscal year before notice of meeting is given to the shareholders.

Leaving includes leaving by removal, resignation and retirement.

(2) If the leaving firm makes representations in writing and requests the Company to notify the shareholders of such representations, the Company shall (unless the representations are received too late):
in any notice given to shareholders about a resolution to be made, state the representations that has been made by the accountants’ firm which is about to leave; and
attach a copy of the representations to the notice and deliver it to the shareholders in the manner stipulated in the Articles of Association.
(3) If the firm’s representations are not sent in accordance with paragraph (2) above, the relevant firm may require that the representations be read out at the shareholders’ general meeting and may lodge further complaints.
(4) A certified public accountants’ firm which is leaving its post shall be entitled to attend:

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the shareholders’ general meeting relating to the expiry of its term of office;
any shareholders’ general meeting at which it is proposed to fill the vacancy caused by its removal; and

Mandatory Provisions Article 148 Provision 10 of CSRC Notice No. [1995] 1

any shareholders’ general meeting convened on its resignation;

and to receive all notices of, and other communications relating to, any such meetings, and to speak at any such meeting in relation to matters concerning its role as the former certified public accountants’ firm of the Company.

Article 178 231

Prior to the removal or the non-renewal of the appointment of a certified public accountants’ firm, notice of such removal or non-renewal shall be given to the certified public accountants’ firm concerned and such firm shall be entitled to make representation at the shareholders’ general meeting. Where the certified public accountants’ firm resigns from its post, it shall make clear to the shareholders’general meeting whether there has been any impropriety on the part of the Company.

Sub-clause (ii) to (iv) of Clause e of Section 1 of Appendix 13D of Hong Kong Listing Rules

Any certified public accountants’ firm may resign from its office by depositing at the Company’s legal residence a resignation notice which shall become effective on the date of such deposit or on such later date as may be stipulated in such notice. Such notice shall include the following:

(1) a statement to the effect that there are no circumstances connected with its resignation which it considers should be brought to the notice of the shareholders or creditors of the Company; or
(2) a statement of any matters of which an account should be given.

Where a notice is deposited under the preceding paragraph, the Company shall within fourteen (14) days send a copy of the notice to the competent authority. If the notice contains a statement referred to in subparagraph (2) above, a copy of such statement shall be placed at the Company’s registered office for shareholders’inspection. The Company shall also send a copy of such statement to every holder of overseas-listed foreign-invested shares by prepaid post, and it shall be sent to the addresses recorded in the register of shareholders.

Where the notice of resignation of a certified public accountants’ firm contains a statement of any matters of which an account should be given, the certified public accountants’ firm may require the Board to convene a shareholders’ extraordinary general meeting for the purpose of giving an explanation of the circumstances connected with its resignation.

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CHAPTER 17 INSURANCE

Article 179 232

The Company’s various types of insurance shall be taken out with the People’s Insurance Company (Group) of China Limited or other insurance companies that are registered in the PRC and are permitted by the PRC laws to provide insurance to Chinese companies. The types of coverage, the insured amounts, periods and other terms shall be discussed and decided by the Board by reference to the practices of peer companies in other countries and the practices and legal requirements in the PRC.

CHAPTER 18 LABOUR MANAGEMENT

Article 180 233

The Company establishes a staff policy that is applicable to the actual conditions of the Company, based on the relevant requirements under the “Labour Law of the People’s Republic of China”.

Article 181 234

The Company may at its discretion employ and dismiss employees based on the business development needs of the Company and in accordance with the requirements of the laws and administrative regulations of the State and implement the contract system.

Article 182 235

The Company may formulate its labour and payroll systems and payment methods in accordance with the relevant laws and regulations of the State and the economical benefits of the Company.

Article 183 236

The Company shall endeavour to improve its employee benefits and to continually improve the working environment and living standards of its employees.

Article 184 237

The Company shall provide medical, retirement and unemployment insurance for its employees and put in place a labour insurance system, in accordance with the relevant laws and regulations of the State.

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CHPATER 19 TRADE UNION

Article 185 238

The employees of the Company may organize trade union and carry out activities of the union in accordance with the Trade Union Law of the PRC and other laws and regulations of the State, and to protect the lawful interests of the employees. The Company shall provide the requisite facilities for the activities of the labor union of the Company.

Article 186 239

If the employees have established a trade union, the Company shall allocate certain fund to the trade union every month based on the actual situation. Such funds shall be used by the trade union of the Company in accordance with the Measures for the Management of Trade Union Funds formulated by the All China Federation of Trade Unions.

CHAPTER 20 MERGER AND DIVISION OF THE COMPANY

Article 187 240

In the event of the merger or division of the Company, a plan shall be proposed by the Board of the Company and shall be approved in accordance with the procedures stipulated in the Articles of Association and the relevant examining and approving formalities shall be processed as required by law. Shareholders who oppose the plan of merger or division of the Company shall have the right to request that the Company or the shareholders who consent to such plan purchase their shares at a fair price. A special document of the Company’s resolution on the merger or division should be prepared for inspection by the shareholders.

Mandatory Provisions Article 149

The aforesaid document should also be dispatched to the holders of overseas-listed foreign-invested shares by mail. The recipient’s address should be based on the information contained in the register of shareholders.

Article 188 241

The merger of the Company may take the form of either merger by absorption or merger by the establishment of a new company.

Merger by absorption means the absorption by one company of other company(ies) in which case the absorbed company(ies) shall be dissolved. Merger by new establishment means the merger of two or more companies to form a new company, in which case the parties to the merger shall be dissolved.

Mandatory Provisions Article 150 Section 1 of Rule 7 of Appendix 3 of Hong Kong Listing Rules

In the event of a merger, the parties to the merger shall enter into a merger agreement and prepare balance sheets and inventories of assets. The Company shall notify its creditors within ten (10) days of the date of the Company’s resolution on merger and shall make newspaper announcement specified by the CSRC within thirty (30) days of the date of the Company’s resolution on merger. Creditors may, within thirty (30) days after receipt of such

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notice from the Company, or within forty-five (45) days of the date of the newspapers announcement for those who do not receive such notice, to demand that the Company repay their debts to that creditor or provide a corresponding guarantee for such debts.

After the merger, claims and liabilities of parties to the merger shall be taken over by the continuing company or the newly established company.

Article 189 242

When the Company is divided, its assets shall be split up accordingly.

Mandatory Provisions Article 151

In the event of a division of the Company, all the parties involved shall execute a division agreement and prepare balance sheets and inventories of assets. The Company shall notify its creditors within ten (10) days of the date of the Company’s resolution on division and shall make a newspaper announcement within thirty (30) days of the date of the Company’s resolution on division.

~~Debts incurred by the Company before its division shall be borne by the companies after the division according to the respective agreement reached.~~ Unless otherwise agreed by the Company and creditors on settling liabilities in writing prior to the division, the ancillary obligation with respect to debts incurred by the Company before its division shall be borne by the companies after the division.

Section 1 of Rule 7 of Appendix 3 of Hong Kong Listing Rules

Article 192 243

When the merger or division of the Company involves changes in registered particulars, such changes shall be registered with the company registration authority in accordance with the law. When the Company dissolves, the Company shall cancel its registration in accordance with the law. When a new company is established, its establishment shall be registered in accordance with the law.

Mandatory Provisions Article 152

Any increase or decrease in the registered capital of the Company shall be filed for registration with the company registration office in accordance with the laws.

CHAPTER 21 DISSOLUTION AND LIQUIDATION OF THE COMPANY

Article 191 244

The Company shall be dissolved and liquidated upon the occurrence of any of the following events:

Mandatory Provisions Article 153

(1) the expiry of the term of operation under the Article of Association or the occurrence of an event that results in dissolution as prescribed under the Article of Association;

( ~~1~~ 2) a resolution on dissolution is passed by shareholders at a general meeting;

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( ~~2~~ 3) dissolution is necessary due to a merger or division of the Company;
( ~~3~~ 4) where the Company gets into serious trouble in operations and management and its continuation may cause substantial loss to the interests of its shareholders, and no solution can be found through any other channel, shareholders representing 10% or more of the total voting rights of the Company may request the ~~people’s~~ court to dissolve the Company.
( ~~4~~ 5) the Company’s business license is revoked or it is ordered to close down or it is cancelled according to law.

Article 245

Where the Company is to be dissolved pursuant to paragraph (1) of the preceding article, the Company may continue to exist by amending the Articles of Association.

Guidelines for Article of Association 179

The amendment to the Articles of Association pursuant to the previous paragraph shall be passed by the two-thirds of the votes by shareholders at the extraordinary general meeting.

Article 192 246

~~Where the Company is dissolved under subparagraphs (1), (3) and (4) of the preceding Article W~~ here the Company is dissolved under subparagraphs (1), (2), (4) and (5) of Article 244, a liquidation committee shall be set up within fifteen (15) days of the occurrence of the dissolution events and commence liquidation afterwards, and its members shall be determined by Directors or determined at a general meeting. If a liquidation committee is not set up within the specified period to carry out liquidation procedures, creditors may apply to the people’s court for appointment of relevant persons to form a liquidation committee so as to proceed with the liquidation.

Article 193 247

Where the Board proposes to liquidate the Company due to causes other than where the Company has declared that it is insolvent, the Board shall include a statement in its notice convening a shareholders’ general meeting to consider the proposal to the effect that, after making full inquiry into the affairs of the Company, the Board is of the opinion that the Company will be able to pay its debts in full within twelve (12) months from the commencement of the liquidation.

Mandatory Provisions Article 154 Mandatory Provisions Article 155

Upon the passing of the resolution by the shareholders in general meeting for the liquidation of the Company, all functions and powers of the Board shall cease.

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The liquidation committee shall act in accordance with the instructions of the shareholders’ general meeting to make a report at least once every year to the shareholders’ general meeting on the committee’s receipts and payments, the business of the Company and the progress of the liquidation and to present a final report to the shareholders’ general meeting on completion of the liquidation.

Article 194 248

The liquidation committee shall notify creditors within ten (10) days from the date of its establishment and make newspaper announcement within sixty (60) days of that date.

Creditors should, within thirty (30) days after receipt of the notice, or for those who do not receive the notice, within ~~forty-five~~ ninety ( ~~45~~ 90) days from the date of the announcement, declare their claims to the liquidation committee. ~~Any undeclared claims after the due date shall be deemed to have it waived. W~~ hen declaring their claims, creditors shall explain relevant particulars of their claims and provide supporting materials. The liquidation committee shall register the claims.

Mandatory Provisions Article 156 Section 1 of Rules 7 of Appendix 3 of Hong Kong Listing Rules

During the period of declaration of claims, the liquidation committee shall not repay any debts to the creditors.

Article 195 249

During the liquidation period, the liquidation committee shall exercise the following functions and duties:

Mandatory Provisions Article 157

(1) to ascertain the Company’s assets and separately prepare a balance sheet and an inventory of assets;
(2) to notify creditors by sending notice or by making announcement;
(3) to deal with and settle the Company’s outstanding business deals in relation to the liquidation;
(4) to settle outstanding taxes as well as taxes arising in the course of liquidation;
(5) to ascertain all claims and debts;
(6) to dispose of the remaining assets of the Company after the repayment of debts; and
(7) to represent the Company in any civil proceedings.

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Article 196 250

After checking the Company’s assets and preparing a balance sheet and an inventory of assets, the liquidation committee shall formulate a liquidation plan and submit the same to the company review and approval authority for registration after submitting to a shareholders’ general meeting or the ~~people’s~~ court for confirmation.

Mandatory Provisions Article 158

The Company’s assets shall be applied to liquidation following the order under the legal requirements and if no laws are applicable, they shall be applied by the impartial and reasonable order as determined by the liquidation committee.

During the liquidation period, the Company shall continue to exist but shall not carry out any business activities not relating to liquidation. The assets of the Company shall not be distributed to the shareholders before the repayment of debts in accordance with provisions of the preceding article.

The remaining assets of the Company after repayment of its debts in accordance with the provisions above shall be distributed to the shareholders of the Company according to the class of shares held by them and in proportion to their respective shareholdings.

~~During the liquidation period, the Company shall not carry out any new business activities.~~

Article 197 251

In the event of Company’s liquidation owing to dissolution, if the liquidation committee, after ascertaining the Company’s assets and preparing a balance sheet and an inventory of assets, discovers that the Company’s assets are insufficient to repay its debts, it shall immediately apply to the ~~people’s~~ court for a declaration of bankruptcy.

Mandatory Provisions Article 159

After the Company is declared bankrupt by a ruling of the people’s court, the liquidation committee shall transfer the liquidation matters to the people’s court.

Article 198 252

Following the completion of liquidation, the liquidation committee shall present a report on liquidation and prepare a statement of the receipts and payments and the financial accounts for the period of the liquidation which shall be audited by PRC certified public accountants and then submitted to the shareholders’ general meeting or relevant competent authorities for confirmation and filed to review and approval authority for registration.

Mandatory Provisions Article 160

Upon the submission of the liquidation report to the corporate review and approval authority, the liquidation committee should, pursuant to the legal requirement, proceed to the procedures on the cancellation of the Company’s registration with the tax bureau and the company registration department and announce the Company ceases to exist.

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Article 253

Members of the liquidation committee shall perform their duties faithfully and carry out the liquidation in accordance with the laws.

Guidelines for Article of Association 186

Members of the liquidation committee shall not take advantage of their position to take bribes or other illegal income, or misappropriate the assets of the Company.

If members of the liquidation committee cause loss to the Company or its creditors, either willfully or due to gross negligence, they shall be liable for compensation.

Article 254

If the Company is declared insolvent pursuant to law, insolvent liquidation shall be carried out in accordance with laws regarding enterprise insolvency.

Guidelines for Article of Association 187

CHAPTER 22	PROCEDURES FOR AMENDMENT TO
THE	ARTICLES OF ASSOCIATION

Article 199 255

The Company may, pursuant to the requirements of the laws, administrative regulations and the Articles of Association, amend the Articles of Association.

Mandatory Provisions Article 161

The Company shall amend the Articles of Association under any of the following situations:

(1) there is a discrepancy between the provisions of the Articles of Association and those of laws and administrative regulations after the amendment to the Company Law or relevant laws and administrative regulations;
(2) there are changes in the situation of the Company resulting in inconsistency in relation to the scenarios mentioned in the Articles of Association;
(3) the shareholders’ general meeting resolves to amend the Articles of Association.

Article 200 256

Any amendment to the Articles of Association shall be made in the following procedures:

(1) the Board shall, in accordance with the Articles of Association, adopt a resolution to propose to the shareholders’ general meeting to amend the Articles of Association, and draw up a proposal for such amendments;
(2) the foregoing proposal shall be notified to shareholders in writing, and a shareholders’general meeting shall be convened to vote on the amendments;

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(3) the amendments submitted to the general meeting for approval shall be approved by way of special resolution.

The ~~board~~ Board of ~~directors~~ Directors may be authorized by an ordinary resolution of a shareholders’ general meeting: (1) in the event that the Company increase its registered capital, to amend the Articles of Association of the Company in respect of the registered capital of the Company according to specific situations; and (2) in the event that the Articles of Association of the Company approved by shareholders’ general meeting need to be altered in letter and sequence of articles when submitted to the authorities that are authorized by the Sate Council to examine and approve companies and CSRC to be examined and approved, to make relevant amendments according to the requirements of the above-mentioned authorities.

Article 201

~~Amendment of the Company’s Articles of Association which involves the content of the Mandatory Provisions of Overseas-Listed Companies’ Articles of Association (signed by the Securities Committee of the State Council and the Economic Reform Committee of the State on 27 August 1994) shall become effective upon receipt of approvals from the securities authority of the State Council and the companies approving department authorised by the State Council. If there is any change relating to the registered particulars of the Company, application shall be made for change in registration in accordance with law.~~

Mandatory Provisions Article 162

Article 257

If the amendments are subject to approval by the competent government authorities, such amendments shall submit to such competent authority for approval. If a registration is necessary for the amendments, such registration shall be carried out in compliance with the relevant laws.

Guidelines for Article of Association 189

Article 258

Guidelines for Articles of Association The Board may amend the Articles of Association in accordance with the resolution on 190 amendments to the Articles of Association passed at the shareholders’ general meeting and GuidelinesArticles of for the approval opinions of the relevant competent authorities. Association 191

Article 259

Any amendment to the Articles of Association shall be subject to announcement if so required by the laws and regulations.

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CHAPTER 23 SETTLEMENT OF DISPUTES

Article 202 260

The Company shall act according to the following principles to settle disputes:

Mandatory Provisions Article 163

(1) Whenever any disputes or claims arise between holders of the overseas-listed foreign-invested shares and the Company, holders of the overseas-listed foreign-invested shares and the Company’s Directors, supervisors, president ~~, general managers, deputy general managers~~ or other senior management members, or holders of the overseas-listed foreign-invested shares and holders of domestic-invested shares, based on the Articles of Association or any rights or obligations conferred or imposed by the PRC Company Law or any other relevant laws and administrative regulations concerning the affairs of the Company, such disputes or claims shall be referred by the relevant parties to arbitration.

Where a dispute or claim of rights abovementioned is referred to arbitration, the entire claim or dispute must be referred to arbitration and any person (being the Company or a shareholder, Director, supervisor, president ~~, general managers, deputy general managers~~ or other senior management members of the Company) who has a cause of action based on the same facts giving rise to the dispute or claim or whose participation is necessary for the resolution of such dispute or claim, shall abide by the arbitration.

Provision 11 of CSRC Notice No. [1995]1

Disputes in relation to the identification of shareholders and disputes in relation to the register of shareholders need not be referred to arbitration.

(2) A claimant may elect arbitration at either the China International Economic and Trade Arbitration Commission in accordance with its rules or the Hong Kong International Arbitration Centre in accordance with its Securities Arbitration Rules. Once a claimant refers a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant.

If a claimant elects arbitration at Hong Kong International Arbitration Centre, any party to the dispute or claim may apply for a hearing to take place in Shenzhen in accordance with the Securities Arbitration Rules of the Hong Kong International Arbitration Centre.

(3) If any disputes or claims of rights prescribed in subparagraph (1) above are referred to arbitration, the laws of the People’s Republic of China shall apply, save as otherwise provided in laws and administrative regulations.
(4) The award of an arbitration body shall be final and conclusive and binding on all parties.

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CHAPTER 24 NOTICE

Article 261

Corporate communications may be sent by any of the following means:	Corporate communications may be sent by any of the following means:	Guidelines for
		Articles of
		Association
(1)	by hand;	163
(2)	by post;
(3)	by public announcements;
(4)	by any other means provided in these Articles of Association.

Article 262	Guidelines for
	Articles of
	Association
Any notice of the Company given by public announcement shall be deemed to be	164
received by all relevant persons once the public announcement is published.

Article 263

Where a notice of the Company is served by hand, the addressee shall be required to Guidelines for sign his name (or affix his chop) on the receipt, and the date on which the addressee signs ArticlesAssociationof the receipt shall be the date of service; where a notice is to be sent by post, such notice is 168 deemed to be served five (5) working days after the date on which it is deposited at the post office. For any notices issued by the Company by way of public announcement, the date of first publication shall be the date of service.

Article 264

The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive such notice shall not invalidate the meeting and the resolutions passed at the meeting.

Guidelines for Articles of Association 169

Article 203 265

Unless otherwise stated in this Articles of Association, the notices, information or written statements issued by the Company to the shareholders of the overseas listed foreign shares listed in Hong Kong shall be despatched to such shareholders by hand or by mail to the addresses of such shareholders as shown in the register of the overseas listed foreign shareholders (whether such registered addresses are within Hong Kong or in regions outside Hong Kong). Notices given to the shareholders of the overseas listed foreign shares listed in Hong Kong shall, to the practicable extent, be sent in Hong Kong.

Sections 1 and 3 of Rule 7 of Appendix 3 of the Hong Kong Listing Rules

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As to the notices to be issued by the Company to the holder of Domestic Shares, the Company shall publish an announcement on one or more newspaper designated by CSRC; once the announcement is published, the holder of Domestic Shares shall be deemed to have received the relevant notice.

Article 204 266

Where a notice is to be sent by post, it shall be placed in an envelope properly addressed with postage prepaid, and any such notice is deemed to be served to shareholders five (5) days after the date of dispatch.

Article 205 267

Any notice, document, information or written statement given by a shareholder or Director to the Company shall be delivered by hand or by registered mail to the legal address of the Company.

Article 206 268

Shareholders or Directors of the Company who want to prove that certain notices, documents, information or written statements have been served on the Company shall provide evidential materials showing the same has been served on the Company within the designated periods by common practice of delivery, or evidential materials showing that the mailing address is correct and the postage is fully paid.

CHAPTER 25 MISCELLANCES SUPPLEMENTARY PROVISIONS

Article 269

“Actual controller” and “affiliated relationship” in the Article of Association shall have the following meanings:

Guidelines for Articles of Association 192

(1) Actual controller means the person who is not the shareholder of the Company, but could control the act of the Company actually through investment, agreement or other arrangement.
(2) Affiliated relation means the relation between the controlling shareholder of the Company, actual controller, directors, supervisors, senior management personnel and the enterprise that they control directly or indirectly, and other relation that may cause the transfer of interest of the Company. However, the relation between fellow State-controlled enterprises shall not be deemed as affiliated relation merely because they are both controlled by the State.

Article 207 270

“Accountant’s firm” in these Articles of Association shall have the same meaning as “auditors”.

Mandatory Provisions Article 165

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Article 208 271

All “over”, “within” and “under” in these Articles of Association include themselves; “less than”, “except”, “lower than” and “more than” does not include themselves; “include” shall mean “include but not limited to”. ~~“less than”, “except” does not include themselves.~~

Article 272

All domestic listed RMB common shares shall observe the following provisions: Should such shares be de-listed on the domestic stock exchange, the domestic shares of the Company will continue to be traded under the agency share transfer system. The Company shall not amend this Article in the Articles of Association.

Article 209 273

The Board of Directors may formulate detailed rules of the Articles of Association in accordance with the provisions thereof. Such detailed rules shall not contravene the provisions in the Articles of Association.

Article 274

The appendices include rules of procedure of general meeting, ~~board~~ Board of ~~directors~~ Directors and ~~board of supervisors~~ Supervisory Committee.

The ~~board~~ Board of Directors of the Company shall be responsible for interpreting these Articles of Association.

Guidelines for Articles of Association 197 Guidelines for Articles of Association 194

Article 210 275

The Articles of Association is written in Chinese. In case of any discrepancy between versions in other languages or different versions and the Articles of Association, the latest Chinese version approved for registration with the Nanjing Municipal Administration for Industry & Commerce shall prevail.

[This page is not part of the body of content]

Nanjing Sample Technology Group Company Limited (Seal)

Authorized representative(Signature)

Jiangsu Red Stone Technology Corporation (Seal)

Authorized representative(Signature)

Active Gold Holding Limited(Seal)

Authorized representative(Signature)

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PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Nanjing Sample Technology Commerce City Company Limited (Seal)

Authorized representative(Signature)

Sha Min (Signature)

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PROPOSED RULES OF PROCEDURES OF GENERAL MEETING OF THE SHAREHOLDERS FOR ADOPTION BY THE COMPANY

APPENDIX II

The Rules of Procedures of General Meeting of the Shareholders to be adopted by the Company are set out as follows:

RULES OF PROCEDURES OF THE GENERAL MEETING

GENERAL PROVISIONS

Article 1

In accordance with the Company Law of the People’s Republic of China, the Articles of Association of Nanjing Sample Technology Company Limited (hereinafter referred as the “Articles of Association”) and the relevant laws, regulations and regulatory documents, these Rules of Procedures (hereinafter referred as the “Rules”) are formulated to protect the legal rights of the Company, the shareholders and the creditors, and regulate the organization and actions of the General Meeting of the Company.

CHAPTER 1 GENERAL PROVISIONS OF THE GENERAL MEETING

Article 2

The General Meeting is the authority of the Company with the power to exercise duties according to the law.

Article 3

The General Meeting can exercise the following duties:

(1) Determine business directions and investment plans of the Company;
(2) Elect and replace directors who are not staff representatives, and determine remuneration issues of related directors and supervisors;
(3) Consider and approve guarantee matters stipulated in the Articles of Association;
(4) Consider and approve report from the Board;
(5) Consider and approve report from the Supervisory Committee;
(6) Consider and approve financial budget and final account of the Company for each fiscal year;

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(7) Consider and approve profit distribution plan and loss recovery plan of the Company;
(8) Consider change in the use of investment proceeds;
(9) Resolve the Company’s plan to increase or decrease registered capital;
(10) Resolve the Company’s plan to issue bonds;
(11) Resolve issues such as merger, division, change of company forms, dissolution and liquidation of the Company;
(12) Amend the Articles of Association;
(13) Resolve the appointment, dismissal and discontinuation of engagement of accounting firms;
(14) Consider proposition from shareholders who individually or jointly hold over 3% of the Company’s issued shares with voting rights;
(15) Consider material purchase or sale of assets of the Company within 1 year with value over 30% of the aggregate asset value in the latest audited account of the Company;
(16) Consider the share incentive plan;
(17) Consider other issues to be determined by the General Meeting according to the laws, administrative regulations and the Articles of Association.

Article 4

General Meetings are classified into Annual General Meetings and Extraordinary General Meetings. General Meetings are convened by the Board. Annual General Meetings are held once a year and shall be conducted within 6 months after the end of the previous financial year.

Should any of the following situations occur, the Company shall convene an Extraordinary General Meeting within 2 months after the incident:

(1) When the number of directors is less than the quorum required by the Company Law or less than two-thirds of the number required by the Articles of Association;
(2) Losses not recovered reach one-third of the aggregate paid-in share capital of the Company;
(3) Shareholders who individually or jointly hold over 10% of the shares (with voting rights) of the Company request in writing;

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APPENDIX II PROPOSED RULES OF PROCEDURES OF GENERAL MEETING OF THE SHAREHOLDERS FOR ADOPTION BY THE COMPANY

(4) The Board considers necessary;
(5) The Supervisory Committee suggests to convene;
(6) Other situations required by law, administrative regulations, departmental rules or the Articles of Association.

The number of shares held by shareholders mentioned in (3) above is calculated on the date of which the request is made.

Article 5

The General Meetings are held at the domicile of the Company.

The Company will arrange a venue and hold the meeting in the form of on-the-spot meeting. The Company may utilize safe, economical and convenient network or other means to offer convenience to shareholders for attending the General Meetings. Shareholders attending the General Meeting via the abovementioned methods are considered as participants of the meeting.

CHAPTER 2 CONVENING OF THE GENERAL MEETING

Article 6

The Board shall convene General Meetings according to the regulations set out in the Articles of Association.

Article 7

The independent directors have the right to propose the Board to convene Extraordinary General Meetings. The Board shall reply in written form regarding the acceptance or refusal to convene an Extraordinary General Meeting within 10 days upon receiving the request in accordance with the requirements of the law, administrative regulations and the Articles of Association.

If the Board agrees to convene Extraordinary General Meeting, notice convening the meeting shall be issued within 5 days after the Board resolved to do so. If the Board does not agree to convene Extraordinary General Meeting, reasons shall be explained and announced.

Article 8

The Supervisory Committee has the right to request the Board to convene Extraordinary General Meetings in writing. The Board shall reply in writing regarding the acceptance or refusal to convene the Extraordinary General Meeting within 10 days upon receiving the request in accordance with requirements of the law, administrative regulations and the Articles of Association.

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APPENDIX II

If the Board agrees to convene the Extraordinary General Meeting, notice convening the meeting shall be issued within 5 days after the Board reached the resolution to do so. Should there be amendments to the original proposals in the notice, consent has to be obtained from the Supervisory Committee.

If the Board does not agree to convene the Extraordinary General Meeting or does not reply within 10 days upon receiving the request, the Board will be considered as unable or refused to fulfill the obligation to convene General Meetings and the Supervisory Committee may convene and preside over the meeting on its own.

Article 9

Independent directors, the Supervisory Committee and shareholders individually or jointly holding over 10% of the Company shall follow the following procedures when requesting to convene Extraordinary General Meetings or Class Meetings:

(1) Two or more shareholders jointly holding over 10% of the shares with voting rights in the proposed meeting can sign one or several copies of the same written requests and demand the Board to convene Extraordinary General Meetings or Class Meetings and explain the subjects of the meeting. Number of shares held by shareholders mentioned above is calculated on the date on which the written request is made. The Board shall reply in writing regarding the acceptance or refusal to convene the Extraordinary General Meeting or Class Meeting within 10 days upon receiving the request in accordance with the requirements of the law, administrative regulations and the Articles of Association.

If the Board agrees to convene an Extraordinary General Meeting or Class Meeting, notice convening the General Meeting or Class Meeting shall be issued within 5 days after the Board has resolved to do so. Should there be amendments to the original requests in the notice, consent has to be obtained from the related shareholders.

(2) If the Board does not agree to convene an Extraordinary General Meeting or Class Meeting or does not reply within 10 days upon receiving the request, shareholders individually or jointly holding over 10% voting shares in the proposed meeting have the right to request the Supervisory Committee to convene the Extraordinary General Meeting or Class Meeting in writing.

If the Supervisory Committee agrees to convene the Extraordinary General Meeting or Class Meeting, notice convening the Extraordinary General Meeting or Class Meeting shall be issued within 5 days upon receiving the request. Should there be amendments to the original requests in the notice, consent has to be obtained from the related shareholders.

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APPENDIX II

If the Supervisory Committee does not issue notice of the General Meeting or Class Meeting within the required period, it will be considered as not going to convene and preside over the General Meeting, and shareholders individually or jointly holding over 10% of the voting shares in the proposed meeting for 90 consecutive days have the right to convene and preside over the meeting on their own.

All necessary costs for convening a General Meeting by the Supervisory Committee or shareholders on their own shall be borne by the Company, and to be deducted from the reduction in remuneration to the directors or supervisors who failed to perform their duties.

Article 10

Supervisory Committee or shareholders, if decided to convene General Meetings on their own, shall inform the Board in writing and make record with the appointed organization of the CSRC and the stock exchange in the locality of the Company for record.

Before publication of announcement regarding resolutions of the General Meeting, the proportion of shares held by shareholders convening the meeting shall not be less than 10%.

Shareholders convening the meeting shall submit evidences to the appointed organization of the securities regulatory department of the State Council and the stock exchange in the locality of the Company upon publication of the notice and announcement regarding resolutions of the General Meeting.

Article 11

The Board and the secretary to the Board should cooperate with the Supervisory Committee or shareholders convening General Meetings on their own. The Board shall provide the register of members as of the share capital registration day. The Company will bear all the costs for the General Meeting convened by the Supervisory Committee or shareholders.

CHAPTER 3 PROPOSITIONS AND NOTICE OF GENERAL MEETING

Article 12

Contents of motions shall fall within the terms of reference of a General Meeting, cover specific topics for discussion and specific issues to be resolved, and comply with the requirements of laws, administrative regulations and the Articles of Association.

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APPENDIX II

Article 13

Method and procedure for the nomination of directors and supervisors:

(1) Shareholders who individually or jointly hold over 3% of the voting shares among the issued shares of the Company, the Board and the Supervisory Committee may nominate director and supervisor candidates in writing; candidates for independent directors shall be nominated by the Board, the Supervisory Committee, or shareholders individually or jointly holding over 1% of the total issued shares of the Company.
(2) When making nomination, the nominator shall provide detailed information of the relevant nominee to the Board and the Supervisory Committee; in case of nomination of independent director, opinions about such candidate’s qualification and independence shall also be given. The Board shall announce the details of these candidates before the convening of the General Meeting, and shall draw the investors’ attention to details of the candidates as announced.
(3) When matters concerning the election of directors or supervisors will be discussed at the General Meeting, the notice of the General Meeting shall disclose detailed information about the director candidates or supervisor candidates and shall at least include the followings:
Personal information including educational background, work experiences, part time professions, etc;
Any connected relationship with the Company, the controlling shareholders and the beneficial controller of the Company;
Disclosure of the number of shares of the Company held;
Whether he/she has been penalized by the securities regulatory authority of China, other related departments and the stock exchange.

Except for using cumulative voting mechanism for the election of directors and supervisors, each nomination of director and supervisor shall be submitted as separate proposition.

(4) Director and supervisor candidates shall give written undertaking before the convening of General Meeting to give consent to their nomination, undertaking that the information of director and supervisor candidates disclosed are true and complete, and ensuring that the responsibilities of director and supervisor are duly performed after being elected. Independent director candidates being nominated shall also make a public statement stating that there does not exist any relationship between him/her and the Company which may affect his/her

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independence and objectivity. The Board and the Supervisory Committee shall announce the aforesaid contents according to the relevant requirements. The Board shall provide the biography and basic information of the director and supervisor candidates to the shareholders before convening the General Meeting, so as to ensure that shareholders are familiar with the candidates when casting their votes. When considering proposals for the election of directors and supervisors in the General Meeting, each director and supervisor candidate shall be put to vote individually. In case proposals for the re-election of directors and supervisors are passed, new directors and supervisors shall assume office immedidately after the conclusion of the meeting.

When making a vote in the election of directors and supervisors in General Meeting, a cumulative voting system shall be implemented according to the requirements of the Articles of Association. In the aforesaid cumulative voting system, when more than two directors or supervisors are to be elected in the Company’s General Meeting, the voting right of a shareholder attending the General Meeting equals to the product of the total number of shares which he/she holds times the number of directors or supervisors being elected. Shareholders attending the meeting may cast all their votes to one director or supervisor candidate, and may also cast their votes to various director or supervisor candidates. Candidates receiving the most votes will be elected as director or supervisor.

In case the election of directors is carried out by a cumulative voting system in the General Meeting, the election of independent directors and non-independent directors shall be carried out separately.

Article 14

When the appointment of directors and supervisors are being considered at the General Meeting, the involved directors and supervisors shall attend the General Meeting in person to explain their qualification for the post, professional capabilities, work experiences, whether they have breached any law or regulation, whether there is any conflict of interest with the listed company, as well as their relationship with the controlling shareholder, beneficial controller, other directors, supervisors and senior management staff of the Company.

Article 15

When convening a General Meeting, the Company shall give written notice to all shareholders in the register 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 20 days prior to the convening of the meeting. When calculating the time for the issue of notice, the date of the meeting and the date of issue of the notice shall not be counted.

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Article 16

When the Company convenes a General Meeting, the Board, the Supervisory Committee and shareholders individually or jointly holding over 3% of the total issued shares of the Company with voting rights are entitled to propose new motions to the Company in writing. The Company shall include in the motions those matters which fall within the terms of reference of the General Meeting into the agenda of that meeting.

Shareholders individually or jointly holding over 3% of the total issued shares of the Company with voting rights are entitled to propose extraordinary motions to the Company and submit them to the convener 10 days before the convening of the General Meeting. The convener shall issue supplementary notice of the General Meeting to announce the content of the extraordinary motions within 2 days after receiving the proposed motions.

Except as stipulated above, the convener shall not alter the motions listed in the notice of General Meeting or add new motions after the notice of General Meeting has been published.

Motions not listed in the notice of General Meeting or not compliant with the requirements of Article 12 of these Rules shall not be put to vote and passed as a resolution.

Article 17

The Company shall calculate the number of shares with voting rights represented by the shareholders planning to attend the General Meeting in accordance with the written replies received 20 days before the meeting is convened. In the event that the number of shares with voting rights represented by the shareholders planning to attend reaches more than half of our total number of shares with voting rights, the Company may convene the General Meeting. If this requirement is not met, the Company shall again inform the shareholders of the matters to be deliberated and the date and venue within five days in the form of an announcement before the General Meeting may be convened. The related announcement shall be published in newspapers in compliance with the relevant requirements.

Article 18

The notice of a General Meeting shall meet the following criteria:

(i) is made in writing;
(ii) specifying the venue, date and time of the meeting;
(iii) setting out the matters and motions to be considered at the meeting;
(iv) containing a prominent written statement that a shareholder eligible for attending and voting is entitled to appoint one or more proxies to attend and vote on his behalf and that a proxy need not be a shareholder;

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(v) specifying the date of equity registration of shareholders entitled to attend the General Meeting;
(vi) specifying the name and phone number of the regular contact person for the meeting;
(vii) providing shareholders with such information and explanation as necessary for them to make informed decisions on the matters to be considered. This principle includes (but not limited to) where a proposal is made to merge the Company with another, to repurchase shares, to restructure the share capital, or to reorganize the Company in any other way, the terms of the proposed transaction must be provided in detail together with copies of the proposed agreement, if any, and the cause and effect of such proposal shall be properly explained;
(viii) disclosing the nature and degree of the material interest of any director, supervisor, president and other senior management member in the matters to be considered. In case that the impact of the matters to be considered on such director, supervisor, general manager and other senior management member as a shareholder is different from that on other holders of the same class of shares, the difference shall be clarified;
(ix) setting out the full text of any special resolution proposed to be approved at the meeting;
(x) specifying the delivery time and place of the authorization letter for proxy voting of the meeting.

Article 19

Notice of General Meeting shall be served on each shareholder (whether or not such shareholder is entitled to vote thereat) in person or by prepaid mail to the address of the shareholder as recorded in the register of members. For holders of domestic shares, notice of meeting may also be issued by way of announcement.

Notice by announcement referred to in the preceding paragraph should be published in one or more newspapers designated by the State Council’s securities regulatory authority 45 to 50 days before the meeting. Upon publication, all the domestic shareholders are deemed to have received notice of the General Meeting.

Article 20

Any meeting and resolutions of such meeting shall not be invalidated in the event of any accidental omission in sending the notice of meeting to persons entitled to receive the same or that such persons have not received the notice of meeting.

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Article 21

After the notice of the General Meeting is sent out, the General Meeting shall not be postponed or cancelled, nor shall the motions listed in the notice of the General Meeting be withdrawn without justifying reason. In case the General Meeting is postponed or cancelled, the convener shall make announcement at least two business days prior to the original date of the General Meeting with reasons for not holding the meeting.

CHAPTER 4 CONVENING OF THE GENERAL MEETING

Article 22

The Board of the Company and other conveners shall take necessary measures to ensure the order at the General Meeting. Any actions that cause interference to the General Meeting, provocation and troubles, and damages to the legal rights and interests of other shareholders, measures shall be taken to stop such actions and reports shall be made promptly to related departments for further consideration and handling.

Article 23

Any shareholder with the right to attend and vote in the General Meeting has the right to appoint one or several persons (who may or may not be a shareholder) as their proxy to attend, speak and vote in the meeting on their behalf.

If the shareholder concerned is an “authorized clearing house” (or its agent) under the definition of the Securities and Futures (Clearing Houses) Ordinance (Chapter 420 of the Laws of Hong Kong), the abovementioned shareholder may authorize one or more persons it considers suitable to represent it at any General Meeting or any class meeting. However, should there be more than one person being authorized, the authorization letter shall clearly state the number and classes of shares each of these persons are authorized with. Such authorized persons are entitled to exercise the rights of the authorized clearing house (or its agents), as if these persons are individual shareholders of the Company.

Article 24

Shareholders shall appoint proxies in writing, and the authorization letter shall be signed by the shareholder or by the proxies appointed in writing by the shareholder. Should the shareholder be a legal person, the letter shall bear the stamp of the legal person or be signed by its proxies duly authorized.

Article 25

Individual shareholders attending the meeting in person shall present their personal identity cards or other valid documents, certificates or shareholding proofs that can prove their identity; Proxies attending the meeting shall present their personal identity cards, authorization letters from the shareholder and shareholding certificates.

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Corporate shareholders shall be represented by its legal representative or proxies authorized by the legal representative. Legal representatives attending the meeting shall present their personal identity cards or valid documents that can prove its identity as the legal representative.

Proxies authorized to attend the meeting shall present their personal identity cards or the authorization letter legally issued by the corporate shareholder.

Article 26

The authorization letter issued by shareholders to authorize other persons to attend the General Meeting shall clearly state the followings:

(1) The name of the proxies;
(2) Whether the proxies have the right to vote;
(3) Instructions to vote for, against or abstain from voting on each of the items in the agenda of the meeting;
(4) The signing date and the effective period of the authorization letter;
(5) Signature (or seal) of the shareholders who appoint the proxies. For authorization letters from domestic corporate shareholders, the seal of the corporate entity shall be affixed.

Article 27

It shall be stated in the authorization letter that, should there be no instructions from the shareholders, the proxies may vote on their own discretion.

Article 28

Letters authorizing proxies shall, at least 24 hours before convening the meeting that requires the votes to be cast or at least 24 hours before the designated voting time, be delivered to the Company’s address or any other places specified in the notice convening the meeting. For authorization letters signed by other representatives of the shareholders, the letters authorizing the representative to sign or other documents of authorization shall be notarized. Such notarized authorization letters or other documents of authorization shall, along with the letters authorizing proxies, be placed at the Company’s address or any other places specified in the notice convening the meeting.

Should the shareholder be a legal person, it should be represented at the General Meeting by its legal representative or persons authorized by the Board or other decision-making bodies.

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Article 29

The Company is responsible for compiling a register of the participants of the meeting. The register shall clearly bear the names of the participants (or units), identity card numbers, home addresses, number of shares with voting rights held or represented, the name of the shareholders (or units) represented by the proxies, etc.

Article 30

Should the authorizing person pass away, become incapacitated, cancel the authorization of proxies, cancel the authorization to sign the authorization letter or the related shares have been transferred before voting, as long as the Company has not received written notification on the abovementioned events, votes cast by their proxies according to the authorization letter remain effective.

Article 31

The convener and the lawyer appointed by the Company will jointly examine the legitimacy of the eligibility of the shareholders according to the register of shareholders provided by the registration and settlement institution, and register the names of the shareholders and the number of shares with voting rights they hold.

Registration of the meeting shall stop before the chairman of the meeting announces the number of participating shareholders and proxies and the total number of shares with voting rights they hold.

Article 32

During the General Meeting, all of the Company’s directors, supervisors and the secretary to the Board shall attend the meeting, the president and other senior management staff shall attend as observers.

Article 33

The General Meeting shall be convened and presided over by the chairman in accordance with the laws. When the chairman is unable or fails to perform his duties, the vice-chairman shall perform the said duties; when the vice-chairman is unable or fails to perform his duties, a director jointly elected by more than half of the total number of the directors shall perform the said duties.

In a General Meeting convened by the Supervisory Committee, the chairman of the Supervisory Committee serves as the chairman of the meeting. Should the chairman of the Supervisory Committee be unable or fail to perform his duties, a supervisor elected by more than half of the supervisors shall serve as the chairman of the meeting.

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In a General Meeting convened by the shareholders, the convener shall nominate a representative to chair the meeting.

Article 34

During a General Meeting, should the chairman of the meeting violates the rules of procedures and hence the meeting cannot continue, the General Meeting may elect a person to preside over and continue the meeting with the approval of more than half of the participating shareholders with voting rights.

Article 35

At the Annual General Meeting, the Board and the Supervisory Committee shall report to the General Meeting their work in the past year. Each independent director shall also report on their work.

Article 36

Directors, supervisors, senior management staff shall offer clarifications and explanations to the interpellations and proposals made by shareholders during the General Meeting.

Article 37

Prior to voting, the chairman of the General Meeting shall announce the number of shareholders and proxies present and the total number of shares with voting rights held by them. The number of shareholders and proxies present and the total number of shares with voting rights held by them shall be that as stated in the registration of the meeting.

Article 38

The secretary to the Board shall be responsible for the minutes of the General Meetings, The minutes shall record the following information:

(1) The time, venue, agenda and the name of the convener of the meeting;
(2) The name of the chairman of the General Meeting, and the names of the directors, supervisors, the president and other senior management staff who attend or observe in the meeting;
(3) Number of shareholders and proxies who attend the meeting, the total number of shares with voting rights held and the percentage of the total number of shares of the Company;

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(4) The number of shares carrying voting rights held respectively by holders of domestic shares (including their proxies) and holders of overseas-listed foreign shares (including their proxies) attending the meeting, and the percentage of the total number of shares of the Company they represent;
(5) The discussions in respect of each motion, highlights of the speeches and the voting results on each resolution by holders of domestic shares and holders of overseas listed foreign shares;
(6) The interpellations and proposals raised by shareholders and the corresponding answers or explanations;
(7) The names of the lawyer, counting officer and scrutineer;
(8) Other details that are required by the Articles of Association of the Company to be recorded in the minutes.

Article 39

The convener shall ensure the truthfulness, accuracy and completeness of the meeting minutes. Directors, supervisors, the secretary to the Board, the convener or his/her representative and the chairman of the meeting who attend the meeting shall sign on the meeting minutes. The minutes shall be kept together with the signature book of shareholders attending the meeting, the authorization letter of proxies as well as all valid materials of voting through the internet or other ways for no less than 15 years.

Article 40

The convener shall ensure that the General Meeting is held continuously until final resolutions are reached. In the event that the General Meeting is adjourned or resolutions failed to be reached due to force majeure or other special reasons, measures shall be adopted to resume the meeting as soon as possible or the meeting shall be concluded immediately, and an announcement shall be promptly made accordingly. The convener shall also report the same to the local authority of the securities regulatory department of the State Council of the place where the Company is domiciled as well as the stock exchanges.

CHAPTER 5 VOTING AND RESOLUTIONS OF THE GENERAL MEETING

Article 41

Shareholders (including their proxies) are entitled to voting rights in proportion to the number of their voting shares and shall have one vote for every share held. Shares held by the Company do not carry any voting rights and shall not be counted towards the total voting shares held by the shareholders present at the General Meeting.

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Article 42

The resolutions of the General Meeting shall be classified as ordinary resolutions and special resolutions.

Ordinary resolutions put forward in the General Meeting shall be adopted by a simple majority of shareholders (including their proxies) with voting rights attending the meeting.

Special resolutions put forward in the General Meeting shall be adopted by not less than two thirds of the shareholders (including their proxies) with voting rights attending the meeting.

Article 43

The following resolutions shall be adopted as ordinary resolutions at a General Meeting:

(1) working reports of the Board and the Supervisory Committee;
(2) profit distribution proposals and plans for making up losses formulated by the Board;
(3) appointment and removal of the members of the Board and the members of the Supervisory Committee, and determination of their emoluments and method of payment;
(4) annual financial budgets, final accounts, balance sheets and profit and loss accounts and other financial statements of the Company;
(5) annual report of the Company;
(6) other matters unless otherwise required to be adopted as special resolutions in accordance with the applicable laws and administrative regulations or the Articles of Association.

Article 44

The following resolutions shall be adopted as special resolutions at a General Meeting:

(1) increase or decrease of share capital and issuance of shares of any class, warrants and other similar securities of the Company;
(2) repurchasing shares of the Company;
(3) issuance of debentures of the Company;

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(4) division, merger, change in corporate form, dissolution or liquidation of the Company;
(5) a mendments to the Articles of Association;
(6) the major assets purchased and sold by the Company or the guaranteed amount within one year reach or exceed 30% of the latest period’s audited total assets;
(7) the option scheme, management shareholding scheme or other incentive scheme, plan or mechanism drafted by the Board;
(8) other matters approved by ordinary resolution of the General Meeting pursuant to the laws, administrative regulations, relevant listing rules or other regulatory documents or the Articles of Association which are believed could materially affect the Company and need to be approved by special resolution.

Article 45

The Board, independent directors and shareholders who conform to conditions set out in related regulations may collect voting right from shareholders. If the collector openly collects the voting rights of the Company’s shareholders, the collector shall comply with the requirements of the relevant regulatory authorities and the stock exchange(s) on which the Company’s shares are listed.

Article 46

Except for special circumstances such as emergence of crisis, the Company is forbidden from entering into any contracts with any person other than the Company’s directors, supervisors and the president and other senior management staff to hand over all the management responsibilities or that of important businesses, unless it is approved by the General Meeting.

Article 47

When the General Meeting is examining items related to connected transactions, the connected shareholders should not participate in the voting process. The number of shares with voting rights represented by the connected shareholders will not be counted as effective ballots cast; the announcement of resolutions made by the General Meeting should fully disclose the voting details of the non-connected shareholders.

Article 48

The Company may provide convenience for shareholders to attend General Meeting by whatever means including the use of modern information technology such as online voting platform, provided that the General Meeting shall be held legally and effectively.

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Article 49

When considering any motions in the General Meeting, no amendments shall be made to the motions, otherwise, any such change shall be considered as a new motion and voting thereon shall not take place in that meeting.

Article 50

Should the item which requires voting by poll be the election of chairman or the suspension of the meeting, such poll shall be conducted immediately; for other items which require voting by poll, the chairman shall decide when to conduct the poll. The meeting may proceed to discuss other items. The poll results shall be regarded as the resolutions passed in the General Meeting.

Article 51

The same voting rights can only be exercised either through on-the-spot voting, online voting or other means of voting. Should there be repeated voting by the same voting right, the first vote cast shall be taken.

Article 52

During the poll, shareholders (including their proxies) with two or more votes do not necessarily have to cast all their votes in the same way.

Article 53

Where the number of votes cast for and against a resolution is equal, the chairman shall have a casting vote.

Article 54

Before voting on motions in the General Meeting, two shareholder representatives shall be recommended to participate in vote counting and scrutiny. Should any shareholders have interests in the item to be considered, the related shareholders and their proxies shall not participate in vote counting and scrutiny.

During the vote on a motion in the General Meeting, vote counting and scrutiny shall be carried out jointly by lawyer, shareholder representatives and supervisor representatives, and the result of the vote shall be announced on the spot.

Shareholders or their proxies who vote via the internet or other means have the right to check the results of their votes in the corresponding voting system.

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Article 55

The chairman of the meeting shall determine, according to the results of the votes, whether the resolutions of the General Meeting are approved. The chairman’s decision is the final decision, and the results of the votes shall be announced in the meeting. The results of the votes shall be recorded in the meeting minutes.

Article 56

Before the formal announcement of the voting results, all related parties including the Company, counting officer, scrutineer, major shareholders, internet service providers involved in the process, whether on the spot, through the internet or other means of vote, have the obligation to keep the details of voting confidential.

Article 57

Shareholders attending the General Meeting shall express one of the following opinions on the motion submitted for voting: for, against or abstain from voting. Votes that are not filled, not correctly filled, or the writing on which is not legible, or are not cast, the voters concerned shall be deemed to have given up their rights to vote and the voting result of the number of shares they hold will be counted as “abstention”.

Article 58

Should the chairman of the meeting has any doubts on the result of the vote on any resolution, he may carry out a ballot count; should the chairman has yet to conduct a ballot count and any participating shareholder or his or her proxy has dissenting view on the announced voting result, they have the right to request a ballot count immediately after the announcement of the voting result, and the chairman shall carry out a ballot count immediately. Should a ballot count be conducted in the General Meeting, the result of the ballot count shall be recorded in the meeting minutes.

Article 59

The minutes, together with the book of signatures of attending shareholders and the authorization letters for proxies shall be kept at the Company’s registered address.

Article 60

Shareholders may examine photocopies of the minutes for free during office hours of the Company. Should any shareholder request photocopies of the minutes, the Company shall send the photocopies within 7 days after receiving a reasonable fee.

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Article 61

When convening General Meetings, the Company shall engage a lawyer to attend the meeting and seek for legal advice regarding the following issues and make announcement thereof:

(1) Whether the convening and procedures of the General Meeting are in accordance with the laws, administrative regulations and the Articles of Association;
(2) Whether the qualifications of participants and convener are lawful and valid;
(3) Whether the voting mechanism and voting results are lawful and valid;
(4) Other legal advice as requested by the Company.

Shareholders shall have the right to apply for rescission if any resolution passed at the General Meeting is in contravention of the laws or administrative regulations.

Where the procedures for holding General Meeting, or the voting procedures thereof are in contravention of any law or administrative regulations or the Articles of Association, or the substance of the resolutions is in contravention of the Articles of Association, the shareholders shall have the right to, within sixty days of the date of passing of the relevant resolution, apply for rescission of such resolution.

Article 62

The resolutions of the General Meeting shall be announced in a timely manner, and the announcement shall indicate the number of domestic and foreign shareholders and proxies that attended the meeting, the total number of voting shares and its proportion to the total share capital carrying voting rights of the Company, and the voting method, voting results of each resolution and detailed contents of each resolution passed.

Article 63

Should a motion be rejected, or resolutions from a previous General Meeting be changed in the current General Meeting, special note should be made in the announcement of resolution results of the General Meeting.

Article 64

Should motion on appointments of directors or supervisors be approved in the General Meeting, the date of the approval shall be the beginning of the time these new directors or supervisors assume office.

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CHAPTER 6 SPECIAL PROCEDURES FOR THE VOTING OF CLASS SHAREHOLDERS

Article 65

Shareholders holding different classes of shares are referred to as “class shareholders”.

Class shareholders enjoy rights and bear responsibilities according to the requirements of law, administrative regulations and the Articles of Association of the Company.

Article 66

The Company’s proposition to amend or cancel rights of class shareholders is required to be passed as special resolution in General Meetings and passed by the General Meeting convened by the class shareholders affected according to the requirements of the Articles of Association of the Company and these Rules before actions can be taken.

Article 67

The following circumstances shall be deemed to be a variation or abrogation of the rights of holders of certain class shares:

(1) the increase or decrease in the number of shares of such class, or the increase or decrease in the number of shares of a class having equal or additional voting rights, distribution rights or other privileges;
(2) to convert all or part of a class of shares into another class, or to convert all or part of another class of shares into that class of shares, or to grant such conversion right;
(3) the removal or reduction of rights to accrued dividends or cumulative dividends attached to shares of such class;
(4) the reduction or removal of a dividend preference or a liquidation preference attached to shares of such class;
(5) the increase, removal or reduction of conversion privileges, options, voting rights, transfer or pre-emptive rights or rights to acquire securities of the Company attached to shares of such class;
(6) the removal or reduction of rights to receive amounts payable by the Company in particular currencies attached to shares of such class;
(7) the creation of a new class of shares having equal or additional voting rights, distribution rights or other privileges;

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(8) the imposition of restrictions or additional restrictions on the transfer of ownership of the shares of such class;
(9) the issue of rights to subscribe for, or convert into, shares of such class or another class;
(10) the increase in rights or privileges of shares of another class;
(11) the restructuring of the Company which will result in shareholders of different classes bearing a disproportionate burden of such proposed restructuring; and
(12) the variation or abrogation of the provisions of this chapter.

Article 68

Shareholders of the affected class, whether or not otherwise entitled to vote at General Meetings, shall nevertheless be entitled to vote at class meetings in respect of matters concerning sub-paragraphs (2) to (8), (11) to (12) of Article 67, but interested shareholder(s) shall not be entitled to vote at class meetings.

The meaning of “interested shareholder(s)” as mentioned in this Article is:

(1) in the case of a repurchase of shares by pro rata offers to all shareholders or public dealing on the stock exchange according to the Articles of Association of the Company, a controlling shareholder within the meaning of the Articles of Association of the Company;
(2) in the case of a repurchase of shares by an off-market agreement outside of the stock exchange under the Articles of Association of the Company, a shareholder to whom the proposed agreement relates; or
(3) in the case of a restructuring of the Company, a shareholder within a class who bears less than a proportionate burden imposed on that class under the proposed restructuring or who has an interest in the proposed restructuring different from the interest of other shareholders of that class.

Article 69

Resolutions of a class meeting shall be passed by votes representing two-thirds or more of the voting rights of shareholders of that class attending the class meeting who have the right to vote at the meeting according to Article 71 of these Rules.

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Article 70

A written notice convening a class meeting shall be given 45 days before the convention of the meeting, to notify shareholders whose names appear in the register of shareholders of such class shares of the matters proposed to be considered and the date and place of the meeting. The shareholders who intend to attend the meeting shall serve written reply to the Company 20 days prior to the date of the meeting.

If the number of voting shares represented by the shareholders who intend to attend the meeting reaches one half or more of the Company’s total voting shares of that class at the meeting, the Company may hold the class meeting; if not, the Company shall within 5 days notify the shareholders by announcement of the matters to be transacted at, the place and date for, the meeting again.

The Company may convene such a meeting after such announcement, which shall be published on the newspapers required by relevant regulations.

Article 71

Notice of a class meeting shall be served exclusively on shareholders entitled to vote at such meeting. Any class meeting shall be conducted as nearly as possible as any General Meeting. Provisions in the Articles of Associations which relate to any General Meeting shall apply to any class meeting.

Article 72

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

The special procedures for voting by a class shareholder shall not apply to the following circumstances:

(1) any proposed issuance of domestic shares and foreign shares listed overseas by the Company in every 12 months, whether separately or together, if such proposed issuance of domestic shares and foreign shares listed overseas are approved by the shareholders in a General Meeting by way of special resolution, and the domestic shares and foreign shares listed overseas proposed to be issued by the Company not exceeding 20% of the shares of such class in issue;
(2) where the Company’s plan to issue domestic shares and foreign shares listed overseas at the time of its establishment is carried out within 15 months from the date of approval of the regulatory department of the State Council.

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CHAPTER 7 AUTHORIZATION TO THE BOARD BY GENERAL MEETING

Article 73

The General Meeting may grant authorization to the Board by passing a resolution concerning the same.

Article 74

Issues which require approval by General Meeting as stipulated by laws, administrative regulations, departmental rules, relevant regulations of the securities regulatory authorities of the places where the shares of the Company are listed as well as the Articles of Association shall be considered at the General Meeting in order to protect the decision-making power of the shareholders of the Company. Under necessary, reasonable and legal circumstances, the General Meeting may authorize the Board to determine specific issues relating to matters which shall be resolved but cannot or is not necessary to be decided upon immediately at such General Meeting.

An authorization to the Board by the General Meeting that falls into the scope of an ordinary resolution shall be approved by shareholders (including their proxies) representing more than half of the voting rights present at the General Meeting. An authorization to the Board that falls into the scope of a special resolution shall be approved by shareholders (including their proxies) representing not less than two-thirds of the voting rights present at the General Meeting. The contents of the authorization shall be clear and specific.

Article 75

When deciding on issues so authorized, the Board shall discuss and verify the matters thoroughly and may appoint intermediaries to provide advice, if necessary, to ensure scientific and reasonable decision-making on the matters.

The Board, in the course of decision-making of authorized issues, shall fulfill its obligation of information disclosure, under the supervision of shareholders, the supervisory committee and relevant securities regulatory authorities on its own initiative.

CHAPTER 8 EXECUTION OF RESOLUTIONS OF GENERAL MEETINGS

Article 76

The Board shall complete the dividend (or share) distribution (or capitalization) within 2 months in which the proposal of profit distribution and capitalization of capital reserve is passed.

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Article 77

The Board shall submit specific progress reports to the General Meeting in respect of those resolutions passed at the previous General Meeting, the implementation of which is the responsibility of the Board. If such resolutions of the General Meeting cannot be executed due to certain reasons, the Board shall explain the reasons.

CHAPTER 9 SUPPLEMENTARY PROVISIONS

Article 78

In case of any conflicts between these Rules and the laws, regulations and regulatory documents to be promulgated in future or any legitimate amendments to the Articles of Association of the Company, the laws, regulations and regulatory documents and the amended Articles of Association of the Company shall prevail.

Article 79

These Rules are subject to interpretation by the Board of the Company.

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The Rules of Procedures of Meetings of the Board to be adopted by the Company are set out as follows:

RULES AND PROCEDURES OF THE BOARD

CHAPTER 1 GENERAL PROVISIONS

Article 1

In order to safeguard the independence, scope of work and effective execution of duties of the Board of directors under the law so as to ensure the working efficiency and scientific decision-making of the Board of directors, Nanjing Sample Technology Company Limited (the “Company”) hereby formulates the Rules and Procedures of the Board of directors (the “Rules”) in accordance with the requirements of Company Law of the People’s Republic of China (the “Company Law”), the Articles of Association of Nanjing Sample Technology Company Limited (the “Articles of Association”) as well as other relevant laws and regulations and regulatory documents and in light of actual conditions of the Company.

Article 2

The Board is a permanent establishment responsible for the business decision of the Company and accountable to the general meeting, The Board performs its obligations in accordance with requirements of the Company Law, the Articles of Association as well as other relevant laws and regulations and regulatory documents.

CHAPTER 2 STRUCTURE OF BOARD OF DIRECTORS AND ITS DUTIES AND AUTHORITIES

Article 3

A Board of directors is set up in the Company, comprising of 7 directors with one chairman and one vice-chairman.

Article 4

The Board is independent of controlling organizations (referring to companies, enterprises and institutions with legal person identity that hold any interests in the Company and having the same meaning hereinafter).

More than half of the members of the Board should be external directors (referring to directors who do not hold any position within the Company and having the same meaning hereinafter) and there shall be more than two independent non-executive directors (referring

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to directors who are independent of the Company’s shareholders and do not hold position within the Company and having the same meaning hereinafter). At least one independent director should be an accountant by profession (referring to person who holds a senior position or is a certified public accountant).

Article 5

The general manager or other senior management can be appointed as a director on a concurrent basis. Directors holding a concurrent post as general manager or other senior management and employee representative shall account for less than 50% of the members of the Board.

Article 6

The chairman and vice-chairman shall be directors of the Company and elected and removed with approval of more than half of the directors. The term of office of chairman and vice-chairman shall be three years, and renewable upon re-election.

Article 7

The Board of directors is responsible to the general meeting, with the following duties and authorities:

Be responsible for calling the general meeting, and report details of their work at the general meeting;
To execute resolutions adopted at the general meeting;
To formulate operational plans, investment proposals of the Company;
To formulate the Company’s annual budget proposals and final accounts proposals;
To formulate the Company’s profit allocation and loss recovery compensation proposals;
To formulate the Company’s proposals of increasing or decreasing registered capital and bond issuance and other proposals of securities and listings;
To draft proposals of mergers, division, and dissolution;
To draft proposals of major acquisitions, repurchase of company stocks or alterations of forms of the Company;
To draw up the Company’s internal management organization;

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To appoint or dismiss the president or the Company’s general manager; appoint or dismiss the deputy general manager and the Company’s other senior management members, including the chief financial officer, upon nomination by the general manager and make decisions on issues related to their remuneration; delegate or replace members of the board of directors and supervisory committee of the Company’s wholly-owned subsidiaries, and delegate, replace or recommend candidates for shareholders’ representatives, directors and supervisors of its holding subsidiaries and joint-stock subsidiaries;
To formulate the Company’s basic management systems;
To formulate amendments to the Company’s Articles of Association;
Subject to compliance with the relevant laws, regulations and the Articles of Association, to determine matters including external investment, external guarantee, entrusted financial management and connected transactions etc., of the Company within the authorization of the general meeting; to exercise the power to finance and to borrow for the Company as well as to exercise the power to determine mortgage, leasing, subcontracting or transfer of material assets of the Company and to authorize the president, general manager and deputy general manager to exercise the power specified in this article to some extent;
Subject to compliance with the relevant laws and regulations and in light of actual conditions of the Company, to formulate the option proposal, management shareholding proposal or other incentive proposal, plan or mechanism;
To propose the appointment or replacement of the accounting firm responsible for the auditing of the Company at the general meeting;
To manage the issues relating to information disclosure;
To listen to the report of work of the president and evaluate his work;
To perform other duties and authorities granted by the laws, administrative regulations and rules, the Articles of Association or general meeting;

All of the above resolutions adopted by the Board of directors, except those in (6), (7), and (12) that must be approved by more than two-thirds of votes of the directors, shall be approved by a simple majority of votes by the directors.

Article 8

Resolutions in respect of connected transactions of the Company made by the Board of directors shall take effect only when signed by independent non-executive directors.

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Article 9

The Board shall explain to the general meeting any non-standard auditors’ opinions issued by the certified public accountants regarding the financial statements of the Company.

Article 10

The Board should establish stringent examination and decision-making procedures in respect of external investments, assets acquisition and disposal, assets pledge, external guarantee, entrusted financial management and its authority for connected transactions; and specialists or professional personnel shall be organized to assess and examine any material investment projects, and such investment projects shall be submitted to the general meeting for approval.

Article 11

Transactions of the Company (other than cash given as a gift to the Company) under one of the following criteria shall be proposed to the general meeting for approval. Other transactions which are not subject to approval on the general meeting, shall be approved by the Board or decided by the president within his authorities granted.

(1) the total investment amount of such transaction accounts for more than 50% of the latest audited total assets of the Company for which the calculation shall be based on the higher of carrying value and appraised value (if any) of total investment amount in respect of such transaction;
(2) the relevant operating income of the transaction subject (such as equity) during the latest accounting year accounts for more than 50% of the latest audited operating income of the Company during the latest accounting year with an absolute amount exceeding RMB 50 million;
(3) the relevant net profit of the transaction subject (such as equity) during the latest accounting year accounts for more than 50% of the latest audited net profit of the Company during the latest accounting year with an absolute amount exceeding RMB 5 million;
(4) the final price of such transaction (including assumed liability and costs) accounts for more than 50% of the latest audited net asset of the Company with an absolute amount exceeding RMB 50 million;
(5) profit from the transaction accounts for more than 50% of the audited net profit during the latest accounting year with an absolute amount exceeding RMB 5 million.

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For such transactions only meeting the criterion stated in (3) or (5) above, and the absolute value of earnings per share of the Company is less than RMB0.05 for the latest accounting year, they are not required to be submitted to the general meeting for consideration, but shall be considered and determined by the Board.

In the event that the data for calculation set out above is of negative value, the absolute value shall be taken for calculation.

For the accrued acquisitions and disposals of assets within twelve consecutive months which represent more than 30% of the latest audited total assets of the Company, such transactions shall be submitted to the general meeting for consideration and approval by special resolution after being examined and approved by the Board.

Article 12

In the event that a connected transaction between the Company and a connected party involves a transaction amount of more than RMB30 million, and accounting for more than 5% of the absolute value of the latest audited net assets of the Company, it shall be submitted to the general meeting for consideration after being examined and approved by the Board. Other connected transactions may be conducted in accordance with relevant laws, regulations, rules, requirements of the stock exchange where shares of the Company are listed, and other systems formulated by the Company.

In the event there are special requirements imposed by laws, administrative regulations, departmental rules, the securities regulatory authority of the State Council and the stock exchange where shares of the Company are listed on the authority of examination and approval in respect of overseas investments, acquisitions or disposals of assets, entrusted wealth management, assets pledge and external guarantees, such transactions shall be conducted in accordance with the relevant requirements.

Article 13

The chairman shall exercise and perform the following functions:

to preside over and to convene general meetings of shareholders, and to preside over Board meetings;
to supervise and oversee the implementation of the resolutions passed by the Board of directors;
to sign securities issued by the Company;
to sign important documents of the Board and other documents which shall be signed by the Company’s legal representative;
to perform the duties of a legal representative;

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in case of major natural disaster or other events of force majeure, to exercise his power in managing affairs of the Company in accordance with laws, regulations, and in the interests of the Company, and subsequently to report to the Board and the general meeting;
other duties authorized by the Board.

When the chairman is unable or fails to perform his duties, the vice-chairman shall perform the said duties; when the vice-chairman is unable or fails to perform his duties, a director elected by half or more of the total number of the directors shall perform the said duties.

CHAPTER 3 CONVENING AND HOLDING OF THE BOARD MEETING

Article 14

Regular board meetings shall be held at least twice a year, and shall be convened by the Chairman. All the directors and supervisors shall be notified in writing of the meeting 15 days prior to such meeting.

Extraordinary meetings shall be convened at the request of shareholder(s) having 10% or more of the total voting shares, or one-third or more of the directors or members of the supervisory committee. The chairman shall convene and preside over the meeting within 10 days from receipt of the request. In case of emergency, an extraordinary meeting shall be convened at the request of two or more directors or the Company’s president.

Article 15

Before the notice of a regular board meeting is dispatched, the secretary to the Board shall seek the opinions of each director to form preliminary proposals for discussion at the meeting and submitted to the Chairman who shall finalize such proposals.

Before finalizing the proposals, the chairman shall, where necessary, seek the opinions of the general manager and other senior management.

Article 16

When an extraordinary board meeting is convened, a written proposal signed (or sealed) by a person proposing the meeting shall be submitted through the secretary to the Board or directly to the chairman. The written proposal shall contain:

(1) the name of the proposer;
(2) reasons for the proposal or the objective facts on which the proposal is based;
(3) time or duration, venue and form of the meeting proposed;

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(4) clear and specific particulars of the proposal;
(5) contacts of the proposer and date of proposal, etc.

The proposal shall be within the authority and powers of the Board of directors as specified in the Articles of Association and the materials in relation to the proposal shall be submitted together.

The secretary to the Board shall pass the said written proposal and relevant materials to the chairman in a timely manner upon receipt. If the chairman considers that the particulars of the proposal are unclear or not specific or the relevant materials are inadequate, the chairman may require the proposer to amend or supplement the proposal.

Article 17

Notice of convening the board meetings and extraordinary board meetings shall be served in the following ways:

(1) No advance notice is required if the time and venue of a regular meeting have been decided by the Board in advance.
(2) If the Board has not decided the time and venue of a meeting, the chairman shall notify directors and supervisors of the time and venue of the Board meeting by telex, telegraph, fax, courier or registered mail or in person at least 15 days in advance.
(3) In case a Board meeting is required to be held for urgent matters, the chairman shall instruct the secretary to the Board to notify all directors and supervisors of the time and venue of the extraordinary Board meeting through telegraph, telex, fax, courier, registered mail or in person at least 3 days and at most 5 days before the holding of the extraordinary Board meeting.
(4) Notice shall be in Chinese, or with an English version attached if necessary. Agenda shall be included in the notice. Any directors can waive the right to receive the notice of the board meeting.

Article 18

The notice calling for board meeting shall at least include the following information:

(1) date and venue of the meeting;
(2) form of the meeting;
(3) matters to be discussed (proposals);

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(4) convener and chairman of the meeting and the proposer of an extraordinary meeting and his/her written proposal;
(5) materials necessary for directors’ consideration for voting;
(6) requirement of directors to attend in person or by proxy of other directors;
(7) the person and way of contact.

Article 19

If, after the notice of a regular board meeting is sent, the time, venue, etc. of the meeting shall be changed or any proposal shall be added to, amended or withdrawn from the meeting, a written notice for such changes shall be sent three days before the date originally scheduled for the meeting providing explanations and details of the new proposals and the relevant materials. If the notice of change is sent less than three days, the date of meeting shall be postponed accordingly or convened on schedule upon obtaining written confirmation from all attending directors.

If, after the notice of an extraordinary board meeting is sent, the time, venue, etc. of the meeting shall be changed or any proposal shall be added to, amended or withdrawn from the meeting, prior consent of all attending directors must be sought and proper records shall be maintained.

Article 20

The quorum of board meeting shall be more than half of the directors. If a quorum cannot be formed as a result of directors’ refusal to attend or directors’ absence without reasons, the chairman and the secretary to the Board shall promptly report the same to the regulatory authority.

Supervisors may attend board meetings as non-voting attendees. The general manager and the secretary to the Board shall attend board meetings as a non-voting attendee. The chairman of the board meeting may, if he deems necessary, invite other relevant persons to attend board meetings as non-voting attendees.

Article 21

In principle, board meetings shall be held face-to-face. Unless otherwise required by the laws, regulatory documents and the Articles of Association, when necessary, a board meeting may also be held and voting thereat conducted by way of video or telephone conferencing, facsimile or e-mail, etc. subject to the consent of the convener (chairman) and the proponent of the meeting and provided that the directors are able to fully express their opinions. A board meeting can also be held face-to-face and simultaneously by other means.

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In the case of any board meeting not held face-to-face, the number of attending directors shall be calculated having regard to the directors who are present by way of video conferencing, the directors who have expressed opinions by way of telephone conferencing, valid votes actually received within the prescribed period by way of facsimile or e-mail or written confirmation letters submitted by directors after the meeting confirming that they have attended the meeting.

When the Board considers a material connected transaction which shall be submitted to the general meeting for approval (other than an ordinary connected transaction), the board meeting shall be held face-to-face only and all directors shall attend in person. In such case, attendance by proxy or vote in other means is not allowed.

Article 22

Directors shall attend the board meeting in person. Where a director is unable to attend for some reasons, he may authorize in writing another director to attend the board meeting on his behalf. He shall review the materials to be tabled at the meeting in advance and formulate his views for submission at the meeting by another director appointed by him as proxy in writing. The power of attorney shall set out the name of the proxy, the particulars and the scope of authorization and duration of the validity of such authorization, and shall be signed or affixed a seal by the appointer. A director appointed as the proxy of another director to attend the meeting shall exercise the rights of a director within the scope of authority conferred by the appointing director. A director who is appointed as a proxy shall submit to the chairman the written power of attorney and specify in the attendance record that he attends the meeting as a proxy.

Where a director is unable to attend the board meeting and has not appointed a proxy to attend the meeting on his behalf, he shall be deemed to have waived his right to vote at the meeting.

Article 23

The following shall be observed when appointing a proxy and accepting the appointment as proxy in attending the board meeting:

(1) If any connected transaction is to be considered, a non-connected director shall not appoint a connected director to attend the meeting on his behalf, and a connected director shall not accept the appointment by a non-connected director;
(2) An independent director shall not appoint a non-independent director to attend the meeting on his behalf, and a non-independent director shall not accept the appointment by an independent director;

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(3) A director shall not give any other director carte blanche to attend the meeting and vote on his behalf without giving his/her own views and voting instruction, and the relevant director shall not accept the carte blanche or any unspecified appointment;
(4) A director shall not accept appointments from more than two directors, and a director shall not appoint any other director who has been appointed by two other directors to attend the meeting and vote on their behalf.

Article 24

If a director attended the meeting and did not raise the issue that he has not received any notice prior to the meeting or at the start of the meeting, his presence shall be deemed as due notice.

CHAPTER 4 VOTING AND RESOLUTION OF BOARD MEETING

Article 25

At the board meeting, every director has one vote. Unless otherwise stipulated in the Articles of Association, resolutions of the board of directors must be passed by over half of the whole board of directors.

In case when there is equal number of dissenting and affirmative votes, the chairman has the casting vote.

Article 26

Where more than one-fourth of directors or more than two external directors deem the information on the items for resolution as inadequate or the justification is not clear, they may jointly propose to adjourn the board meeting or postpone the discussion on some topics, and the Board shall adopt such proposal.

Article 27

In the event that a director is connected to companies associated with matters to be resolved at the board meeting, such director shall not exercise his voting rights on such resolution, nor shall he vote on behalf of other directors. Such board meeting may be convened with the presence of a majority of the non-connected directors. Any resolution at the meeting shall be passed by a majority of the non-connected directors. When there are less than three non-connected directors present at the board meeting, such matters shall be submitted to the general meeting for consideration.

Article 28

The voting methods of a board meeting shall be by poll or by show of hands.

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Article 29

The chairman shall ask the attending directors one by one to express definite opinions on respective resolutions.

For any resolution requiring prior consent of independent directors, the chairman shall, before discussing the relevant resolution, appoint one independent director to read the written consent of independent directors.

The chairman of the meeting shall promptly stop any director from affecting the speech of other directors or hindering the normal progress of the meeting as he makes repetitive speech or his speech exceeds the scope of the resolution.

The board meeting shall not vote on any resolution not included in the notice of the meeting unless with the unanimous consent of the attending directors (including those who appoint other directors to attend on their behalf). When a proxy director attends the meeting, he shall seek for the opinion of his appointer separately in such respect; otherwise he should not vote on any resolution which is not included in the notice of the meeting. A proxy director shall be deemed as abstaining from voting in respect of such new resolution.

Article 30

(1) When the directors grant authorization for a resolution, judgment shall be made in respect with its scope, reasonableness and risk concerned. Directors shall perform on-going supervision on the execution of such authorization.
(2) When the directors consider any material investment, they shall carry out in-depth analysis for the investment prospect and fully evaluate the investment risks as well as the corresponding measures.
(3) When the directors consider a material transaction, they shall comprehensively understand the reasons for such transaction, prudently evaluate the impact of the transaction on the Company’s financial position and long term development and pay particular attention to that whether it is in substance a connected transaction covered by non-connected transaction.

When considering a connected transaction, the directors shall fairly judge its necessity, actual intention and the impact on the Company of such connected transaction, especially its pricing policy and pricing basis, including the fairness during the valuation process and the inter relationship between the transaction price and carrying amount or valuation of transaction subject. And the abstention system shall be strictly observed to avoid tunneling interests to connected party by means of connected transaction.

(4) Prior to proposing a resolution in relation to external guarantees, directors shall clearly understand the basic information of the guaranteed subject, such as operating and financial positions, credit status and tax paying status.

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When considering external guarantees, directors shall prudently judge the law compliance and reasonableness of the guarantee, the debt repayment ability of the guaranteed party and the actual affordability of the guaranteeing party.

(5) When the directors consider the resolution in relation to asset impairment provision, they shall consider the formation process of such asset and the reason for provision, whether making the provision meets with the Company’s actual situation and financial position, and the impact on its operating result.

When the directors consider the resolution in relation to the write-off of an asset, they shall consider the efficiency of the internal control system in respect of the follow-up recovery and improvement measures, handling of responsible personnel, asset impairment provision and loss treatment.

(6) When the directors consider the resolutions in relation to the amendments to the accounting policy, changes of accounting estimation, correction for the material accounting errors and provision and write-off of an asset, they shall consider whether the Company would mislead the investors by adjusting the profits for the periods in the above manner.
(7) When the directors consider the resolution in relation to material financing, they shall consider the actual situation of the Company and analyze the pros and cons of various means of financing to determine which way is reasonable.

When voting on the above material issues or other matters which create material impact on the Company’s operation, the directors shall clearly express their opinion about whether the issue will be in compliance with the state laws and regulations and regulatory requirements and whether it would prejudice the legal interests of minority shareholders. Such opinion shall be recorded in the minutes of board meeting.

Article 31

The directors shall carefully read the materials to be tabled at the meeting and express their well-informed, independent and discreet opinions.

The directors may, before the meeting, inquire about information necessary for decision making from relevant persons or institutions such as the secretary to the Board, convener of the meeting, the president and other senior management, special committees, accounting firms or law firms, and may, while the meeting is underway, suggest the chairman of the meeting to invite the aforesaid persons or institutions to give explanations at the meeting.

Article 32

After adequate discussion, the chairman of the meeting shall put each resolution to the vote of the attending directors.

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Each director may vote for or against a resolution or abstain from voting. Each attending director shall choose one out of the aforesaid intents. If any director does not make any choice or takes two or more choices, the chairman of the meeting shall require the director to make his choice again, otherwise the director shall be deemed as having abstained from voting. Any director who has left the meeting without making any choice shall be deemed as having abstained from voting.

Article 33

After voting by attending directors, relevant personnel shall promptly collect the ballots cast by the directors for counting by the secretary to the Board under the supervision of a supervisor or an independent director.

For meetings being held onsite, the chairman of the meeting shall announce the voting result immediately. Otherwise, the chairman of the meeting shall require the secretary to the Board to notify the directors of the voting result before the next business day after the voting deadline.

The vote cast by any director after the chairman of the meeting announces the voting result or after the voting deadline shall not be counted.

Article 34

Other than the circumstances as stipulated in Article 27, resolutions adopted at board meetings shall be passed if voted for by more than 50% of all directors of the Company. If the laws, administrative regulations and the Articles of Association require approval by more directors, such requirement shall be observed.

If different resolutions are in conflict with each other in context or implication, the resolution passed at the latter time shall prevail.

Article 35

The Board shall act in strict accordance with the authorization of the general meeting and the Articles of Association and shall not form a resolution by exceeding its authority.

Article 36

If any resolution is not passed, the same resolution shall not be considered by the board meeting within one month unless the relevant conditions and factors have changed significantly.

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Article 37

The Board shall record the resolutions passed in the meeting as minutes of the meeting. The directors and recorder attending the meeting shall sign on the minutes of the meeting. Opinions expressed by independent directors shall be clearly stated in the resolutions of the Board. Directors shall bear responsibility for the resolutions passed. Participating directors who passed resolutions that are against the laws, administrative regulations and the Articles of Association, and whose action causes serious damages to the Company, shall be responsible for indemnifying the Company. A director can be exonerated if he can prove that he was recorded in disagreement when such resolution was passed.

Directors who neither confirm by signing, make any written note of their different opinions, submit any report to the regulatory authority nor make any public announcement as provided hereinabove shall be deemed as giving full consent to the meeting minutes.

Article 38

Minutes of board meetings shall include the following:

(1) the date and place of the meeting and the name of the convener;
(2) the names of the attending directors and of directors as proxy who are authorized to attend the meeting of the Board by another party;
(3) the agenda of the meeting;
(4) the essential points of the directors’ presentations;
(5) the voting methods and result of each resolution (the voting result shall include the respective numbers of affirmative votes, dissenting votes and abstention votes for each resolution).

Article 39

The announcement of the resolutions passed by the Board shall be made by the secretary to the Board according to the relevant provisions of the stock exchange. Before the announcement of such resolutions, the attending directors, the persons attending without the right to vote at the relevant meeting, the personnel for recording and other services, etc. shall be obliged to keep the resolutions confidential.

Article 40

The chairman of the Board shall procure the relevant persons to implement the resolutions of the Board, check the implementation of such resolutions, and report at subsequent meetings of the Board of directors on the implementation of resolutions passed.

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Article 41

Records of meetings of the Board, including the notices of such meetings, conference materials, attendance book, letters of authority in relation to the appointment of proxies, the audio records of such meetings, votes, the minutes of such meetings, meeting summaries, resolution records, announcements of the resolutions, etc. as signed and confirmed by the attending directors shall be maintained by the secretary to the Board as part of the corporate documents for not less than 15 years.

CHAPTER 6 SUPPLEMENTARY PROVISIONS

Article 42

In case of any conflicts between these Rules and the laws, regulations and regulatory documents to be promulgated in future or any amendments to the Articles of Association through legal procedures, the laws, regulations and regulatory documents and the amended Articles of Association shall prevail.

Article 43

These Rules are subject to interpretation by the Board of the Company.

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APPENDIX IV

The Rules of Procedures of Meetings of the Supervisory Committee to be adopted by the Company are set out as follows:

RULES AND PROCEDURES OF THE SUPERVISORY COMMITTEE

CHAPTER 1 GENERAL PROVISIONS

Article 1

In accordance with the requirements of the Company Law of the People’s Republic of China (the “Company Law”), the Articles of Association of Nanjing Sample Technology Company Limited (the “Articles of Association”) as well as other relevant laws and regulations and regulatory documents, these Rules and Procedures (hereinafter referred as the “Rules”) are formulated to improve the governance structure of the Company and ensure that the Supervisory Committee exercise its supervisory power legally and independently.

Article 2

The Company has a Supervisory Committee, which is a standing regulatory organization of the Company responsible for supervising the Board and its members as well as the senior management such as the president, so as to prevent them from abusing their power and infringing the legal rights of shareholders, the Company and its staff.

CHAPTER 2 COMPOSITION AND POWER OF THE SUPERVISORY COMMITTEE

Article 3

The Supervisory Committee shall have 3 supervisors. One of the members of the Supervisory Committee shall act as the chairman of the Committee. The term of office of a supervisor shall be three years, renewable upon re-election and re-appointment. The appointment and removal of the chairman of the Supervisory Committee should be resolved and passed by two-thirds or above of the members of the Supervisory Committee. Meetings of the Supervisory Committee shall be convened and presided over by the chairman of the Supervisory Committee. Where the chairman of the Supervisory Committee is incapable of performing or fails to perform his/her duties, a supervisor elected by more than half of the supervisors shall convene and preside over Supervisory Committee meetings.

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Article 4

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

More than half of the supervisors of the Supervisory Committee shall be external supervisors (supervisors who do not hold any office within the Company) and there shall be more than two external (independent) supervisors (supervisors who are independent of the Company’s shareholders and do not hold position within the Company). The external (independent) supervisors shall be elected and removed by the general meeting. The external supervisors shall have the right to independently report to the general meeting the good faith and due diligence of the management of the Company.

Article 5

In the event that the terms of office of supervisors fall upon maturity whereas new members of the Supervisory Committee are not re-elected in time, or that any supervisor resigns during his term of office resulting in the number of members of the Supervisory Committee falling below the statutory minimum requirement, the said supervisors shall continue to perform their duties in accordance with the laws, the administrative regulations and the Articles of Association until the newly elected supervisors assume their office.

Article 6

The directors, president, chief financial officer and other senior management of the Company shall not assume the position of supervisors.

Article 7

The supervisors shall ensure the truthfulness, accuracy and completeness of the information disclosed by the Company.

Article 8

The supervisors may attend board meetings as non-voting participants, and raise enquiry or give suggestion regarding resolutions at board meetings.

(1) to review the regular reports of the Company prepared by the Board, and to provide written comments in respect thereof;
(2) to review the Company’s financial position;

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PROPOSED RULES OF PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE FOR ADOPTION BY THE COMPANY

(3) to monitor behaviors of the directors, president and other senior management in their performance of the Company’s power and duties, and to propose the removal of any directors, president and senior management who have acted in contravention of any laws, administrative regulations or the Articles of Association or resolutions passed at a general meeting;
(4) to demand the directors, president and other senior management to make remedial measures in respect of their conducts that would prejudice the Company’s interests;
(5) to examine the financial information such as the financial report, business report and plans for distribution of profits to be submitted by the Board to the shareholders’ general meeting and, should any queries arise, to engage, in the name of the Company, certified public accountants and practicing auditors to conduct a re-examination;
(6) to propose the convening of extraordinary general meeting and to convene and preside over the general meeting when the Board fails to perform such duties as stipulated under the Company Law;
(7) to represent the Company to negotiate with or to bring actions against a director or senior management;
(8) to propose motions to the general meeting;
(9) to carry out investigation when irregularities are found in the operation of the Company, and if necessary, to engage professional institutions, such as accounting firms and law firms to assist its work at the cost of the Company;
(10) other duties and powers as may be stipulated in the Articles of Association.

The Supervisory Committee may give recommendations to the accounting firm engaged by the Company, or otherwise engage other accounting firms in the name of the Company for independent auditing of the Company’s finance when necessary, and may directly report to CSRC and other relevant departments.

Article 9

All reasonable fees incurred in respect of the employment of professionals such as lawyers, certified public accountants or practicing auditors by the Supervisory Committee in exercising its functions and powers shall be borne by the Company.

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PROPOSED RULES OF PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE FOR ADOPTION BY THE COMPANY

CHAPTER 3 CONVENING OF MEETING OF THE SUPERVISORY COMMITTEE

Article 10

The Supervisory Committee shall convene at least one meeting in every 6 months, to be presided over by the chairman of the Supervisory Committee. The supervisors may propose to convene extraordinary meetings of the Supervisory Committee.

Article 11

In any of the following circumstances, the Supervisory Committee shall convene an extraordinary meeting within ten days:

(1) Any of the supervisors proposes convening the meeting;
(2) Any resolution in violation of laws, regulations, rules, requirements of regulatory authorities and the Articles of Association has been approved in the general meeting or the board meeting;
(3) Misconducts of directors or senior management which may possibly bring huge loss to the Company or cause bad influence within the market;
(4) Any action is brought against the Company, any director, supervisor, senior management by shareholders;
(5) If the Company, directors, supervisors or senior management are punished by the securities regulatory authorities or publicly reprimanded by the stock exchanges;
(6) If the meeting is demanded by the securities regulatory authorities;
(7) Other circumstances stipulated by the Articles of Association.

Article 12

Before serving notice of convening a Supervisory Committee regular meeting, the chairman of Supervisory Committee shall collect proposals for the meeting from all supervisors, and shall ask for opinions from the staff of the Company. When collecting proposals and asking for opinions, the chairman of Supervisory Committee shall explain that the focus of the Supervisory Committee is on the orderly operation of the Company and the monitoring of the behaviors of the directors and senior management in carrying out their duties, rather than decision-making on the Company’s operation and management.

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Article 13

When a supervisor proposes to convene an extraordinary meeting of the Supervisory Committee, a written proposal signed by the proposing supervisor shall be submitted to the chairman of the Supervisory Committee. The written proposal shall contain the following details:

(1) The name of the proposer;
(2) The reasons for the proposal or the objective facts upon which the proposal is based;
(3) The proposed time or deadline, venue and means of convening the meeting;
(4) Clear and specific proposal for consideration;
(5) Contact details of the proposer and the date of the proposal, etc.

The chairman of the Supervisory Committee shall serve notice of convening the extraordinary meeting of the Supervisory Committee within three days after he has received the written proposal from the proposing supervisor.

Where the chairman of the Supervisory Committee delays in serving the notice of meeting, the proposing supervisor shall report to the regulatory authorities in due course.

Article 14

The meeting of Supervisory Committee shall be convened in the following manner: if a regular meeting of the Supervisory Committee is convened, notice shall be sent to all supervisors in writing not less than 10 days and not more than 30 days before the convening of the meeting. If an extraordinary meeting of the Supervisory Committee is convened, notice shall be sent to all supervisors in writing not less than 3 days and not more than 5 days before the convening of the meeting.

Article 15

The notice calling for a meeting of Supervisory Committee shall at least include the following information:

(1) date and venue of the meeting;
(2) matters to be discussed (proposals);
(3) convener and chairman of the meeting and the proposer of an extraordinary meeting and his/her written proposal;

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APPENDIX IV

(4) materials necessary for supervisors’ consideration for voting;
(5) requirement of supervisors to attend in person or by proxy of other supervisors;
(6) the person and way of contact.

Article 16

A meeting of Supervisory Committee shall not be conducted unless it is attended by two-thirds or more of the supervisors. Each supervisor has one vote.

The resolutions of the Supervisory Committee shall be passed by two-thirds or more of its members.

The meeting of Supervisory Committee shall be held face-to-face.

In an emergency situation, voting at a meeting may be conducted by way of communications, but the convener of the Supervisory Committee (the chairman of the meeting) shall explain to the supervisors the specific emergency situation. When voting is conducted by way of communications, the supervisors shall fax to the Supervisory Committee their views in writing on the matters they have considered and their vote intentions after they have signed and confirmed the same.

Article 17

After receiving the written notice, the supervisors should attend the meetings of the Supervisory Committee in person, failure of which for any reason, such supervisors may appoint other supervisors in writing to act as their proxies. External supervisors can appoint other external supervisors to attend on their behalf.

The letter of authorization shall indicate the name of proxy, authorized items, scope of authorization and validity period, and shall be signed or sealed by the authorizing party.

The supervisor attending the meeting as proxy shall execute rights of supervisor within the scope of authorization. Supervisor who has not been present in the meeting of the Supervisory Committee and has not authorized any representative to attend the meeting shall be deemed as waiving his voting right in the meeting.

Article 18

If a supervisor fails to attend or appoint other supervisors to attend on his behalf the meetings of the Supervisory Committee for two consecutive times, he shall be deemed to have failed to perform his duties. The Supervisory Committee shall propose to the general meeting or staff representatives’ meeting to have such supervisor dismissed.

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PROPOSED RULES OF PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE FOR ADOPTION BY THE COMPANY

CHAPTER 4 RESOLUTIONS OF THE SUPERVISORY COMMITTEE

Article 19

Each supervisor shall have one vote upon voting at the meeting, which shall be conducted by way of casting written votes with the identity of the voter stated on the voting papers or a show of hands.

A supervisor may cast a vote to affirm, object or abstain. Each attending supervisor shall indicate his/her voting intention by choosing one of the above. The chairman of the meeting shall request each supervisor who fails to choose any of the above or have chosen two or more of the above to vote again, refusal to do so shall be regarded as having abstained from voting. Any supervisor who leaves during the meeting and does not return and has not voted by choosing any of the above shall be regarded as having abstained from voting.

Article 20

Based on the voting results, resolutions of the meetings shall be announced by the chairman of the Supervisory Committee and the process of passing the resolution shall be reported. Voting results shall be recorded in the minutes of meetings.

Article 21

The approval of any resolutions and reports of the Supervisory Committee shall require an affirmative vote by two-thirds or above of all supervisors.

Where a supervisor holds fundamentally different views on the said resolutions or reports, such views shall be stated in such resolutions or reports.

Article 22

Minutes shall be taken at meetings of the Supervisory Committee and must be signed by the supervisors and minutes taker present thereat. Supervisors have the right to request inclusion of explanations in the minutes regarding the views they have expressed at the meeting. Where necessary, the supervisor shall promptly report the same to the regulatory authority or may make a public announcement. Supervisors shall be responsible for the resolutions of the Supervisory Committee and may only be exempt from responsibility provided that he/she is verified to have stated different opinions and such opinions have been recorded in the minutes.

Where any supervisor neither signs as per the preceding paragraph nor provides his different opinions in writing, reports to the regulatory department or makes public statements, the said supervisor shall be deemed as agreeing with the minutes and the records of the resolutions.

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PROPOSED RULES OF PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE FOR ADOPTION BY THE COMPANY

Article 23

Minutes of Supervisory Committee meetings shall include the following:

(1) the number of session, time, venue of the meeting and the form in which it is held;
(2) the dispatch of the notice of the meeting;
(3) the convener and the presider of the meeting;
(4) attendance of the meeting;
(5) the proposals considered at the meeting, the major comments and opinions of each supervisor on the relevant matters and their voting intentions for the proposals;
(6) the voting method and results of each proposal (the number of affirmative, negative and abstention votes shall be specifically indicated);
(7) other matters the supervisors consider necessary to be recorded.

In the event of a meeting of the Supervisory Committee held by way of communication, the personnel taking record shall compile the minutes of the meeting in accordance with the aforesaid requirements.

Article 24

The resolutions adopted by the Supervisory Committee shall be announced to the public by the secretary to the Board in accordance with the relevant provisions of the stock exchange.

Article 25

The supervisors shall procure the relevant persons to implement the resolutions adopted by the Supervisory Committee. The chairman of the Supervisory Committee shall, at a future meeting of the Supervisory Committee, report to the supervisors on the implementation of resolutions adopted.

Article 26

Records of meetings of the Supervisory Committee, including the notices of such meetings, conference materials, attendance book, votes, the minutes of such meetings signed and confirmed by the attending directors, announcements of the resolutions, etc. shall be maintained by the personnel designated by the chairman of the Supervisory Committee as part of the corporate documents for not less than 15 years.

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PROPOSED RULES OF PROCEDURES OF MEETINGS OF THE SUPERVISORY COMMITTEE FOR ADOPTION BY THE COMPANY

CHAPTER 6 SUPPLEMENTARY PROVISIONS

Article 27

Any matters not contained herein can be conducted with reference to the Rules and Procedures of the Board if stipulated therein.

Article 28

Article 29

These Rules are subject to interpretation by the Supervisory Committee of the Company.

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APPENDIX V PROPOSED ADMINISTRATIVE SYSTEM OF PROCEEDS FOR ADOPTION BY THE COMPANY

The proposed Administrative System of Proceeds to be adopted by the Company are set out as follows:

ADMINISTRATIVE SYSTEM OF PROCEEDS

CHAPTER 1 GENERAL PROVISIONS

Article 1

In order to regulate the administration of proceeds of Nanjing Sample Technology Company Limited (hereinafter referred to as the “Company”) and to raise the efficiency of the use of proceeds, the System is hereby formulated according to the requirements of the relevant laws, regulations and regulatory documents such as the Company Law of the People’s Republic of China （《中華人民共和國公司法》）, Securities Law of the People’s Republic of China （《中華人民共和國證券法》）, Measures for the Administration of Initial Public Offering and Listing of Stocks（《首次公開發行股票並上市管理辦法》）of CSRC and the Administrative Measures for the Issuance of Securities by Listed Companies （《上市公司證券發行管理辦法》）, taking into account the actual situation of the Company.

Article 2

Proceeds mentioned in the System refer to the funds raised by the Company by way of securities issues (including initial public offering of shares, placement of shares, additional share offer, issuance of convertible corporate bonds, issuance of convertible corporate bonds that can be separately traded, issuance of corporate bonds and issuance of warrants), as well as funds raised from investors by way of non-public issue of shares after the listing of the Company’s shares.

Article 3

After the proceeds is received, the Company shall promptly carry out capital verification procedures. It shall be verified and a verification report shall be issued by an accounting firm qualified for securities business.

Article 4

The board of directors the Company (the “Board”) shall ensure the effective implementation of the System.

As to investment projects financed by proceeds (“Investment Projects Financed by Proceeds”) which are implemented through the Company’s subsidiary or other entities controlled by the Company, the Company shall ensure compliance with the requirements of the System by such subsidiary or such other entities controlled by it.

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Article 5

The sponsor and its representative shall perform sponsor responsibilities in respect of the management of the Company’s proceeds during the course of continuous supervision, and is entitled to carry out continuous supervision of the management of the Company’s proceeds according to the relevant requirements and the requirements of the System.

CHAPTER 2 DEPOSIT OF PROCEEDS IN SPECIAL ACCOUNT

Article 6

The Company shall carefully select commercial banks to set up a special account for the proceeds (hereinafter referred to as “Special Account”). The Company’s proceeds shall be deposited into a Special Account as decided by the Board for centralized administration, and the Special Account shall not be used for the deposit of funds other than the proceeds or for other use. The number of Special Accounts for proceeds(including special accounts set up by subsidiaries of the Company or other entities controlled by the Company)shall, in principle, be no more than the number of Investment Projects Financed by Proceeds. Proceeds for the same investment project shall be deposited in the same special account. Separate special accounts for proceeds shall be set up in case there are two or more fund raising. Should the Company intend to increase the number of Special Accounts for proceeds for reasons such as there are too few Investment Projects for Proceeds, prior written application shall be made to and approval shall be sought from the stock exchange.

Article 7

A tripartite regulatory agreement (hereinafter referred to as the “Agreement”) shall be signed between the Company, the sponsor(s) and the commercial bank in which the proceeds are deposited (hereinafter referred to as the “Commercial Bank”) within one month upon receipt of the proceeds. The Agreement shall include at least the following elements:

(1) All proceeds shall be deposited by the Company into the Special Accounts;
(2) The account number of Special Account and the project financed by proceeds which such account involves and amount deposited;
(3) Should an amount drawn by the Company from the Special Accounts at one time or within a 12 months period exceed RMB10 million in aggregate or 5% of the net amount of the total proceeds after deducting issuance expenses (hereinafter referred to as “Net Proceeds”), notification to the sponsor(s) shall be made by the Company and the Commercial Bank in a timely manner;
(4) The Commercial Bank shall provide monthly bank reconciliation statements to the Company with copy to the sponsor(s);
(5) The sponsor(s) may at any time inquire information on the Special Accounts from the Commercial Bank;

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APPENDIX V

(6) Rights, obligations and liability for breach of contract of the Company, Commercial Bank and sponsor(s).

The Company, the sponsor(s) and the Commercial Bank may agree upon regulatory requirements stricter than the above terms in the Agreement.

Upon signing of the abovementioned Agreement, the Company shall promptly report to the stock exchange for record thereof and make an announcement on the main contents of the Agreement.

In case of early termination of any of the abovementioned Agreement before expiry of validity, the Company shall sign a new agreement with the related parties within one month from the date of termination of the Agreement and promptly report to the stock exchange before making an announcement thereon.

Article 8

The Company shall actively procure performance of the Agreement by the Commercial Bank. In case of the Commercial Bank’s failure, for three consecutive times, to provide reconciliation statements or make notification to the sponsor(s) on large lump sum drawing from the Special Account(s), and failure to meet the sponsor(s)’ request to inquire and investigate into information on the Special Account(s), the Company may terminate the Agreement and cancel such Special Account(s) in which the proceeds are placed.

Article 9

In case of the Company’s slacking off in performing its supervision obligation or prevents the Commercial Bank from performing the Agreement, the sponsor(s) shall report to the stock exchange in a timely manner after knowing the relevant facts.

CHAPTER 3 USE OF PROCEEDS

Article 10

The Company shall use the proceeds in accordance with the proceeds investment plan as committed in the issue application document. In situations which could seriously affect normal operation of the proceeds investment plan, the Company shall promptly report to the stock exchange and make an announcement thereon.

Article 11

The Investment Projects Financed by Proceeds shall not be for the holding of financial investment such as trading financial assets and available-for-sale financial assets, loan to others, entrusted financial management, and shall not invest directly or indirectly in companies mainly engaged in the trading of marketable securities.

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The proceeds shall not be used by the Company in pledge, trust loan or such other investments which would in a way alter the use of proceeds.

Article 12

The Company shall ensure truthfulness and fairness of the use of proceeds to avoid use or misappropriation of proceeds by associated party such as controlling shareholder and beneficial controller, and shall take effective measures to avoid obtaining illegitimate interests by associated party through taking advantage of the Investment Projects Financed by Proceeds.

Article 13

The basis, application, approval, execution rights and procedures for the use of the Company’s proceeds are as follows:

(1) The basis for the use of proceeds is the proposal for the use of proceeds.
(2) The proposal for the use of proceeds is prepared and approved according to the following procedures:
(a) The department of the Company responsible for projects prepares a proposal for the use of proceeds based on the feasibility report of the Investment Projects Financed by Proceeds;
(b) The proposal for the use of proceeds is reviewed by the meeting of the president office;
(c) The proposal for the use of proceeds is considered and approved by the Board.
(3) The President of the Company shall be responsible for the organization and implementation of the use of proceeds according to the proposal for the use of proceeds considered and approved by the Board. When using the proceeds, an application form shall be completed by the specific department (unit) using the proceeds, which shall be jointly signed by the President and the financial officer and executed by the finance department of the Company.
(4) When the use of proceeds exceeds the planned progress, if the exceeded amount is within 30% of the planned amount (including 30%), a decision shall be made by the meeting of the president office; if the exceeded amount is above 30% of the planned amount, it shall be approved by the Board.

Article 14

The Company shall perform comprehensive verification against the progress of Investment Projects Financed by Proceeds after the end of each accounting year.

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APPENDIX V PROPOSED ADMINISTRATIVE SYSTEM OF PROCEEDS FOR ADOPTION BY THE COMPANY

In case of a discrepancy of more than 30% between the annual actual amount of proceeds used under the Investment Projects Financed by Proceeds and the expected amount of proceeds to be used for the year according to the proceeds investment plan as previously disclosed, the Company shall adjust the proceeds investment plan and disclose the previous year’s annual proceeds investment plan, current actual investment progress, expected investment plan by year after adjustment, and reasons for the changes in investment plan, etc in the special statement for annual usage of proceeds.

Article 15

In case of the following situations, the Company shall examine the feasibility of, and expected income from, etc., the Investment Project Financed by Proceeds to decide whether or not to proceed with the project, and disclose the progress of the project, reasons for the occurrence of the abnormal situations and the adjusted proceeds investment plan (if any) in the latest regular report:

(1) Occurrence of significant changes in the market environment related to an Investment Project Financed by Proceeds;
(2) the Investment Project Financed by Proceeds has been shelved for more than one year;
(3) the Project has been delayed beyond the time of completion of the latest proceeds investment plan with an invested amount out of proceeds amounts to less than 50% of the relevant amount as planned;
(4) Other abnormal situations occurred in the Investment Projects Financed by Proceeds.

Article 16

Should the Company decide to terminate an existing Investment Project for Proceeds, a new investment project shall be selected promptly on a scientific basis.

Article 17

Replacement of the Company’s self-raised funds pre-invested in the Investment Project Financed with proceeds shall be implemented only upon consideration and approval by the Board, the issue of verification report by certified accountant, the issue of explicit consent from independent directors, supervisory committee and the sponsor(s) and the performance of information disclosure obligations. The time of replacement shall be less than 6 months from the receipt of proceeds.

In case the intention to replace the pre-invested self-raised fund with proceeds is disclosed in the application document for issuance and the pre-invested amount is confirmed, it shall be publicly announced before the implementation of the replacement.

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Article 18

Alteration made by the Company to the place of implementation of an Investment Project for Proceeds shall be subject to consideration and approval by the Board. A report shall be made to the stock exchange and an announcement on the reasons for alteration and the opinion of the sponsor(s) shall also be published within two trading days.

Changes of the implementation subject of an Investment Project for Proceeds and implementation methods such as the acquisition method of significant assets shall be submitted to the shareholder’s meeting for consideration after the independent directors and the supervisory committee expressed their opinion.

Article 19

In case the Company intends to change the implementation of an Investment Project for Proceeds to joint venture, the necessity of the joint venture shall be carefully considered on the basis of a thorough understanding of the basic condition of the joint venture partner, and the Company shall be a controlling shareholder so as to ensure the effective control of the Investment Project for Proceeds.

Article 20

Idle proceeds may be used by the Company to temporarily supplement working capital on the following conditions:

(1) It shall not alter the use of proceeds in disguised form;
(2) It shall not affect normal progress of the proceeds investment plan;
(3) Amount of a single working capital supplement shall not exceed 50% of the net proceeds;
(4) The period for use of a single working capital supplement shall not last for more than six months;
(5) Proceeds temporarily used to supplement working capital in the previous time has been returned (if applicable);
(6) No securities investment or risk investment with an amount exceeding RMB10 million was made in the past 12 months;
(7) Undertaking that no securities investment or risk investment with an amount exceeding RMB10 million will be made during the period when idle proceeds is temporarily used to supplement working capital;
(8) An explicit consent has been issued by the sponsor(s), independent directors and the supervisory committee.

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APPENDIX V

The abovementioned issues shall be subject to consideration and approval by the Board and a report shall be made to the stock exchange and an announcement thereon shall also be published within two trading days containing the following contents:

(1) The basic information of the proceeds, including the raising time, the amount of proceeds, the net amount of proceeds and investment plan, etc;
(2) The use of proceeds;
(3) The amount of idle proceeds used to supplement working capital and the period;
(4) Amount of financial expenses expected to be saved in the supplement of working capital by idle proceeds, the reasons for the insufficiency of working capital, whether there is any act of changing the use of proceeds in disguised form, and measures to ensure that the normal operation of projects financed by proceeds is not affected;
(5) Opinions given by independent directors, the supervisory committee and the sponsor(s);
(6) Other contents requested by the stock exchange.

Idle proceeds for working capital supplement representing more than 10% of the net amount of proceeds shall be subject to consideration and approval at shareholders’ meeting and providing the option of online voting.

Before the expiry date of the supplementary working capital, the Company shall return such part of the capital to the Special Account for proceeds, and shall report to the stock exchange and make announcement thereon within two trading days after all the capital is returned.

CHAPTER 4 CHANGE OF THE INVESTMENT PROJECT FOR PROCEEDS

Article 21

Investment Project for Proceeds shall only be changed by the Company after being considered and approved by the Board and the passing of resolutions in shareholders’ meeting.

Article 22

The existence of the following conditions in the Company is deemed to be a change of the use of proceeds:

(1) Cancellation of the original project financed by proceeds and implement new projects;

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(2) Change of the subject of implementation of an Investment Project for Proceeds;
(3) Change of the way of implementation of an Investment Project for Proceeds;
(4) Other situations considered by the stock exchange as a change of the use of proceeds.

Article 23

The Board shall carefully conduct feasibility analysis for the new Investment Project for Proceeds after the proposed change, ensure that the investment project has better market outlook and profitability, effectively avoid investment risks and raise the efficiency in the use of proceeds.

The Company’s proceeds investment after the change shall, in principle, be made in the main businesses.

Article 24

The Company’s intention to alter the Investment Project for Proceeds shall be reported to stock exchange within two trading days after its submission to the Board for consideration with an announcement being made to provide information as follows:

(1) Basic facts about the original project and specific reasons for the change;
(2) Basic facts, feasibility study and risk warning about the new project;
(3) Investment plan for the new project;
(4) Explanation on approval obtained from or pending approval by the relevant departments (where applicable) in relation to the new project;
(5) Opinion of the independent directors, supervisory committee and sponsor(s) on altering the Investment Project for Proceeds;
(6) Explanation on pending submission of the alteration of Investment Project for Proceeds to a shareholders’ meeting for consideration;
(7) Other contents as required by the stock exchange.

New projects involving connected transaction, asset acquisition or external investments shall also be disclosed according to the requirements of the relevant regulations.

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APPENDIX V

Article 25

If the Company changed the Investment Project for Proceeds to acquire the assets (including interests) of controlling shareholders or beneficial controller, effective avoidance of intra-industry competition and minimization of connected transactions shall be ensured after the acquisition.

The Company shall make disclosure on the reasons for entering into transaction with its controlling shareholders or beneficial controller, pricing policy and pricing basis for connected transaction, impact of connected transaction on the Company and solutions to relevant issues.

Article 26

In case the Company intends to transfer or replace Investment Project for Proceeds in the latest 3 years to an external party(excluding the case in which the external transfer or replacement of Investment Project for Proceeds is part of a major asset restructuring proposal), the followings shall be announced and submitted to the shareholder’s meeting for consideration within 2 trading days after being considered and approved by the Board:

(1) Specific reasons for the external transfer or replacement of Investment Project for Proceeds;
(2) Amount of proceeds used for investing in that project;
(3) The degree of completion of such project and the benefits achieved;
(4) The basic conditions, feasibility study and risk warning of the substitute project in (if applicable);
(5) Pricing basis and relevant benefits of the transfer or replacement;
(6) Opinions of independent directors, the supervisory committee and the sponsor(s) on the transfer or replacement of Investment Projects Financed by Proceeds;
(7) Other contents required by the stock exchange.

The Company shall give full attention to the receipt and use of the transfer consideration, the change of ownership and the continued operation of the substitute assets.

Article 27

Change of the place of implementation of the Investment Project for Proceeds shall be considered and approved by the Board, and shall be announced within 2 trading days with explanation on the changes, the reasons, the impact on the implementation of the Investment Project for Proceeds as well as the opinions given by the sponsor(s).

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APPENDIX V

Article 28

After a single Investment Project for Proceeds is completed, if the Company utilizes the saved and remaining proceeds of such project (including interest income) for other Investment Project for Proceeds, it shall be considered and approved by the Board and an explicit consent shall be given by the sponsor(s) before such usage.

In case the saved and remaining proceeds (including interest income) is less than RMB500,000 or less than 1% of the committed investment amount of proceeds of such project, the procedures in the preceding provisions can be exempted. Its usage shall be disclosed in the annual report.

In case the Company uses the saved and remaining proceeds of such project (including interest income) for non-Investment Project Financed by Proceeds (including the supplement of working capital), the relevant procedures and disclosure obligations stated in Article 21 and Article 24 shall be performed.

Article 29

After all Investment Projects Financed by Proceeds are completed, if the saved and remaining proceeds(including interest income)is more than 10% of the net proceeds, the use of the saved and remaining proceeds by the Company shall meet the following conditions:

(1) Independent directors and the supervisory committee giving explicit opinion;
(2) The sponsor(s) giving explicit consent;
(3) Considered and approved by the Board and shareholders’ meeting.

If the saved and remaining proceeds(including interest income)is less than 10% of the net proceeds, its use shall be subject to consideration and approval by the Board and the sponsor(s) giving explicit consent.

If the saved and remaining proceeds(including interest income) is less than RMB3 million or 1% of the net proceeds, the procedures in the preceding provisions can be exempted, and its usage shall be disclosed in the annual report.

CHAPTER 5 MANAGEMENT AND REGULATION OF PROCEEDS

Article 30

The accounting department of the Company shall set up ledger for the use of proceeds, recording in detail the expense of proceeds and the input into projects financed by proceeds. The Company’s internal audit department shall at least quarterly perform checking on the deposit and use of proceeds and promptly make report on the check results to the audit committee.

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APPENDIX V

In case of significant violation or risk existed in the administration of the Company’s proceeds as considered by the audit committee or the internal audit department’s failure to submit a report on check results as prescribed above, a report thereon shall be made to the Board on a timely basis. The Board shall, within two trading days upon receipt of the report from the audit committee, report to the stock exchange and make an announcement, the contents of which shall include the significant violation or risk existed in the administration of proceeds, consequences incurred or may be incurred and measures taken or intended to be taken.

Article 31

In case proceeds is used in the year, the Board shall issue a special report on the annual deposit and use of proceeds and engage certified public accountants to issue a verification report on the deposit and use of proceeds.

Certified public accountants shall provide reasonable assurance and make verification conclusion as to whether the special report of the Board has been prepared in accordance with this administrative system and the relevant guidance of the securities regulatory authority, and whether the annual deposit and use of proceeds have been actually reflected.

In case the verification conclusion is a “conclusion with reservation”, “negative conclusion” or “unable to make conclusion”, the Board shall conduct analysis in respect of the reasons for the conclusion given by the certified public accountant in the verification report, propose corrective measures and make disclosure in the annual report. The sponsor(s) shall carry out on-site checking and issue special examination report in respect of the annual deposit and use of proceeds within 10 trading days after the verification report is disclosed. The reasons for the above verification conclusion given by certified public accountant shall be seriously analyzed in the examination report, and explicit examination opinion shall be given. The Company shall report to the stock exchange within 2 trading days after receiving the examination report and make an announcement thereon.

Article 32

In case the Company issues securities as a payment method to acquire assets or raises proceeds to acquire assets from a specific subject, the operation of the assets and the performance of the relevant undertakings shall be disclosed at least in the annual reports in 3 consecutive years after the ownership of such assets is changed.

The disclosure on operation of such assets shall at least include the change of carrying value of the assets, the production and operation condition, the contribution of benefits and whether the profit forecast (if any) is met, etc.

If the relevant undertaking period is longer than the aforementioned disclosure period, the Company shall continue to disclose the performance of the undertaking in the annual reports in the subsequent periods until the performance of the undertaking is completed.

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PROPOSED ADMINISTRATIVE SYSTEM OF PROCEEDS FOR ADOPTION BY THE COMPANY

APPENDIX V

Article 33

The independent directors shall concern about whether there is a significant discrepancy between the actual use of proceeds and the information disclosure made by the Company. Upon agreement by more than 1/2 of the independent directors, the independent directors may engage certified public accountants to issue verification report in respect of the use of proceeds. The Company shall fully cooperate with the special audit work and pay the audit fees as necessary.

Article 34

The sponsor(s) and the Company shall agree in the sponsor agreement that the sponsor(s) shall carry out on-site inspection on the deposit and use of proceeds of the Company at least once a quarter. In case the sponsor(s) discover significant violation or material risks in the management of the Company’s proceeds during the inspection, it shall be reported to the stock exchange in a timely manner.

CHAPTER 6 SUPPLEMENTARY PROVISIONS

Article 35

Upon consideration and approval by the shareholders’ meeting of the Company, the System shall take effect from the date on which the shares of the Company are initially issued domestically.

Article 36

For all matters in the system which are not mentioned, the relevant laws, regulations, regulatory document and articles of association shall be followed. In case the System is contradictory to the laws, regulations and regulatory documents promulgated in future or the articles of association legitimately amended, the relevant laws, regulations, regulatory document and articles of association shall be followed.

Article 37

The System is subject to the interpretations of the Board.

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NOTICE OF EGM

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1708)

NOTICE OF EGM

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting (the “ EGM ”) of Nanjing Sample Technology Company Limited (the “ Company ”) shall be held at No.10 Maqun Avenue, Maqun Technology Park, Qixia District, Nanjing City, Jiangsu Province, the PRC on Friday, 30 December 2011 at 10:00 a.m. for the purposes of considering, and if thought fit, passing the following resolutions:

SPECIAL RESOLUTIONS

“ THAT , subject to the approval by the relevant regulatory authorities, including the China Securities Regulatory Committee (the “ CSRC ”), the allotment and issue of A shares (the “ A Shares ”) by the Company in the PRC (the “ Issue of A Shares ”) and each of the following principle terms and conditions of the Issue of A Shares be approved and confirmed (each and every item as a separate resolution):

(i) Class and nominal value of new Shares to be issued

A Shares with a nominal value of RMB1.00 each in the share capital of the Company.

(ii) Number of A Shares to be issued

Not more than 73,900,000 A Shares with a nominal value of RMB1.00 each.

The final number of A Shares to be issued and the structure of such issue shall be subject to approval by the CSRC and other relevant regulatory authorities in the PRC, and subject to adjustment (if any) which may be made by the board of directors (the “ Board ”) of the Company as authorised by this resolution and at the relevant class meetings of holders of H shares of the Company and holders of domestic shares of the Company (“ Class Meetings ”) and within the range approved by the CSRC having regard to the relevant circumstances.

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NOTICE OF EGM

(iii) Basis for determination of the issue price

(iv) Target subscribers

(v) Proposed stock exchange for listing

The Shenzhen Stock Exchange.

(vi) Method and time of issue

(vii) Use of proceeds

The Company intends to apply the proceeds in the following projects with a total estimated investment amount of approximately RMB476.21 million:

(1) the development and marketing project for cognitive transportation projects, with an investment amount of RMB157.50 million;
(2) the upgrade project of logistics monitoring product with internet of things (IOT)-based technology, with an investment amount of RMB98.71 million;
(3) R&D and industrialisation project of front-end intelligent equipment of IOT, with an investment amount of RMB100 million; and
(4) the construction project of research center for RFID system technology, with an investment amount of RMB120 million.

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NOTICE OF EGM

(viii) Distribution plan of accumulated undistributed profits

Prior to this public issue of A Shares, the Company may distribute its profit available for distribution for 2011 in accordance with relevant laws, regulations and the Articles of Association. After the completion of the public issue of A Shares, all shareholders of the Company will be entitled to the undistributed profits carried forward after implementation of the distribution plan for the profits of 2011, and the profits arising prior to the Issue of A Shares. Holders of A Shares shall not be entitled to any dividend declared prior to completion of the Issue of A Shares.

(ix) Validity of the resolution

The resolution for the Issue of A Shares shall be effective for a period of 12 months commencing from the date on which this resolution is passed at this EGM and at the Class Meetings.

(x) Authorisation to the Board

The Board be and is hereby authorised to take all such actions and to sign/ execute all such documents or instruments for and on behalf of the Company as may be necessary or expedient and make arrangements for all specific matters relating to, in connection with, or to effect, the Issue of A Shares, in accordance with the relevant requirements of the CSRC, the Stock Exchange and the Shenzhen Stock Exchange. The authorisation proposed to be granted to the Board shall include without limitation:

(1) to be responsible for and to effect the listing proposal of this issue, including without limitation, to determine the timing of issue, the number of A Shares to be issued, the issue price and its determination mechanism, the structure of the issue, the target subscribers of the A Shares, the method of issue, the stock exchange to be listed and other related application procedures and formalities subject to the relevant requirements under the relevant rules and regulations and the relevant securities rules, and pursuant to the listing proposal of this issue as approved by the Shareholders at the EGM and the Class Meetings;

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NOTICE OF EGM

(2) to deal with all filing and application matters relating to or in connection with the listing of this issue, including without limitation, applying for approval to, register with, filing with, seeking licences and consents from relevant governmental and regulatory authorities, the relevant stock exchange and securities clearing institution; to approve, sign, execute, amend or complete any agreement, contract or necessary document relating to the listing of this issue (including without limitation, offering circular, prospectus, sponsor agreement, underwriting agreement, listing agreement and all kinds of announcement and notice to the shareholders of the Company);
(3) to adjust and amend the proposal for the listing of this issue according to implementation of the listing proposal of this issue, market conditions, policies adjustments and comments from governmental and regulatory authorities;
(4) to make necessary or appropriate adoption of and amendments to the relevant provisions of the articles of association of the Company, the rules of procedures and internal rules of the Company relating to, in connection with the listing of this issue, and to deal with the application for approval, and the change of business registration, the filing and registration with relevant governmental authorities;
(5) to make necessary or appropriate adoption of and amendments to the articles of association of the Company, the rules of procedures and internal rules of the Company in the event they conflict with the regulatory rules or documents promulgated by the CSRC and/or the relevant stock exchange, or in accordance with the comments from the CSRC and/or the relevant stock exchange;
(6) to deal with all matters in relation to the application or the use of net proceeds from the Issue of A Shares subject to the approval of the CSRC, including without limitation, to utilize the internal resources or raise bank loans to finance its projects prior to the completion of the Issue of A Shares, and to repay the funds raised and already applied by the Company and the Group in developing such projects upon completion of the Issue of A Shares; to adjust and amend related matters according to the actual circumstances and comments from relevant governmental authorities in the course of implementation in financing and investing in the projects, including without limitation: to adjust the budget for each project already included in the scope of investment by application of proceeds (including adjusting the number of projects), the subject, progress and means of implementation, etc.; to confirm the specific saving account for the proceeds; other project related matters in relation to the implementation of the application of the proceeds after the completion of the listing of this issue, including the signing and execution of any agreement, contract or other documents relating to the application of the proceeds; to finance the

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NOTICE OF EGM

projects with internal resources or bank loans in the event the proceeds is not sufficient to finance the projects, and to apply any surplus to supplement the liquidity of the Company;

(7) to engage relevant intermediaries and to liaise and agree on their respective remuneration; and
(8) to process all related matters in connection with the Issue of A Shares, take all such actions as may be necessary or expedient and to determine and make arrangements for all specific matters relating to or in connection with the Issue of A Shares as permitted by the relevant laws and regulations.

The above authorization granted to the Board shall be effective for a period of 12 months commencing from the date on which this resolution is passed.”

“ THAT the amendments to the articles of association of the Company (the “ Articles of Association ”) as set out in the amended Articles of Association (details of which are set out in the appendix to the circular of the Company dated 14 November 2011) be approved and adopted by the Company with effect from (i) the completion of the Issue of A Shares; and (ii) obtaining the required approval or endorsement from or the registration with relevant regulatory authorities, and that the Board be authorised to modify the wordings of such Articles of Association as appropriate and to take all such actions and execute all such documents or instruments for and on behalf of the Company as the Board may, in its absolute discretion, consider necessary or expedient in order to effect the Issue of A Shares, and to deal with other related issues arising from or relating to the amendments to the Articles of Association accordingly .”
“ THAT the Rules of Procedures for General Meetings (details of which are set out in the appendix to the circular of the Company dated 14 November 2011) shall, subject to (i) the completion of the Issue of A Shares; and (ii) the amended Articles of Association coming into effect, be approved and adopted by the Company, and that the Board be authorised to modify the wordings of such rules of procedures as appropriate and take all such actions and execute all such documents or instruments for and on behalf of the Company as the Board may, in its absolute discretion, consider necessary or expedient in order to effect the Issue of A Shares, and to deal with other related issues arising from or relating to the amendments to such rules of procedures accordingly.”
“ THAT the Rules of Procedures for Board Meetings (details of which are set out in the appendix to the circular of the Company dated 14 November 2011) shall, subject to (i) the completion of the Issue of A Shares; and (ii) the amended Articles of Association coming into effect, be approved and adopted by the Company, and that the Board be authorised to modify the wordings of such rules of procedures as appropriate and take all such actions and execute all such documents or instruments for and on behalf of the Company as the Board may, in

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NOTICE OF EGM

its absolute discretion, consider necessary or expedient in order to effect the Issue of A Shares, and to deal with other related issues arising from or relating to the amendments to such rules of procedures accordingly.”

“ THAT the Rules of Procedures for Meetings of the Supervisory Committee (details of which are set out in the appendix to the circular of the Company dated 14 November 2011) shall, subject to (i) the completion of the Issue of A Shares; and (ii) the amended Articles of Association coming into effect, be approved and adopted by the Company, and that the Board be authorised to modify the wordings of such rules of procedures as appropriate and take all such actions and execute all such documents or instruments for and on behalf of the Company as the Board may, in its absolute discretion, consider necessary or expedient in order to effect the Issue of A Shares, and to deal with other related issues arising from or relating to the amendments to such rules of procedures accordingly.”
“ THAT the existing share option scheme of the Company which was conditionally approved by a resolution of the shareholders dated 24 April 2004 be and is hereby terminated with immediate effect.”

ORDINARY RESOLUTIONS

“ THAT the Administrative System of Proceeds (details of which are set out in the appendix to the circular of the Company dated 14 November 2011) shall, subject to the completion of the Issue of A Shares, be adopted by the Company and that the Board be authorised to modify the wordings of the Administrative System of Proceeds as appropriate and take all such actions execute all such documents or instruments for and on behalf of the Company as the Board may, in its absolute discretion, consider necessary or expedient in order to effect the Issue of A Shares, and to deal with other related issues arising from or relating to the adoption of the Administrative System of Proceeds accordingly.”
“ THAT a strategy committee of the Board whose main duty is to study and advise on the long-term development strategy and major investment decisions of the Company be and is hereby established. The strategy committee shall consist of such members as may be determined by the Board from time to time.”
“ THAT Shulun Pan Certified Public Accountants (Special General Partnership) be appointed as the auditors of the Company for the term commencing from the passing of this resolution to the date of the upcoming annual general meeting of the Company, and that the Board be and is hereby authorised to fix the remuneration of Shulun Pan Certified Public Accountants (Special General Partnership).”
“ THAT the composition of the Nomination Committee of the Board shall be adjusted and shall consist of the following members: Mr. Xu Suming (chairman), Mr. Li Haifeng and Mr. Chang Yong.”

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NOTICE OF EGM

“ THAT the composition of the Remuneration Committee of the Board shall be adjusted and shall consist of the following members: Mr. Xu Suming (chairman), Mr. Shum Shing Kei, and Mr. Guo Ya Jun.”
“ THAT the composition of the Audit Committee of the Board shall be adjusted and shall consist of the following members: Mr. Shum Shing Kei (chairman), Mr. Xu Suming and Mr. Li Haifeng.”

By Order of the Board **Nanjing Sample Technology Company Limited* Sha Min** Chairman

Nanjing, the PRC 14 November 2011

for identification purpose only

Notes:

Any member of the Company (“ Member ”) entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. In the case of a joint holding, the form of proxy may be signed by any joint holder, but if more than one joint holder is present at the meeting, whether in person or by proxy, that one of the joint holders whose name stands first on the register of Members in respect of the relevant joint holding shall alone be entitled to vote in respect thereof.
To be valid, a proxy form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such authority must be delivered to the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or to the Company’s registered office at Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High Technology Development Region, Qixia District, Nanjing City, Jiangsu Province, the PRC (in case of holders of Domestic Shares) not less than 24 hours before the time appointed for the holding of the EGM or 24 hours before the time appointed for taking the poll. Delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Holders of the H Shares or Domestic Shares who intend to attend the EGM are requested to complete the enclosed REPLY SLIP FOR ATTENDANCE AT THE EXTRAORDINARY GENERAL MEETING and return it to the Company’s Hong Kong H Share registrar and transfer office, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Company’s registered office at Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High and New Technology Industrial Development Zone, Nanjing City, Jiangsu Province, the PRC (in case of holders of Domestic Shares) on or before Friday, 9 December 2011. The reply slip may be delivered by hand or by post.
The register of members of the Company will be closed from 30 November 2011 (Wednesday) to 30 December 2011 (Friday) (both days inclusive), during which period no transfer of Shares will be effected. Shareholders whose names appear on the register of members of the Company at the close of trading on 29 November 2011 will be entitled to attend and vote at the EGM convened by the above notice.
Members or their proxies shall present identity proof (and form of proxy in case of proxies) upon attending the EGM.

As at the date hereof, the executive Directors are Mr. Sha Min (Chairman), Mr. Chang Yong, Mr. Guo Ya Jun, the non-executive Director is Mr. Ma Jun; and the independent non-executive Directors are Mr. Xu Suming, Mr. Li Haifeng and Mr. Shum Shing Kei.

– 187 –

NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1708)

NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

NOTICE IS HEREBY GIVEN that a class meeting for holders of H shares (the “ H Shares Class Meeting ”) of Nanjing Sample Technology Company Limited (the “ Company ”) shall be held at No.10 Maqun Avenue, Maqun Technology Park, Qixia District, Nanjing City, Jiangsu Province, the PRC at 10:30 a.m. (or immediately after the extraordinary general meeting of the Company to be convened and held on the same date and at the same place) on Friday, 30 December 2011 for the purposes of considering, and if thought fit, passing the following resolutions:

SPECIAL RESOLUTIONS

“ THAT , subject to the approval by the relevant regulatory authorities, including the China Securities Regulatory Committee (the “ CSRC ”), the allotment and issue of A shares (the “ A Shares ”) by the Company in the PRC (the “ Issue of A Shares ”) and each of the following principle terms and conditions of the Issue of A Shares be approved and confirmed (each and every item as a separate resolution):

(i) Class and nominal value of new Shares to be issued

A Shares with a nominal value of RMB1.00 each in the share capital of the Company.

(ii) Number of A Shares to be issued

Not more than 73,900,000 A Shares with a nominal value of RMB1.00 each.

The final number of A Shares to be issued and the structure of such issue shall be subject to approval by the CSRC and other relevant regulatory authorities in the PRC, and subject to adjustment (if any) which may be made by the board of directors (the “ Board ”) of the Company as authorised by this resolution, and by the resolutions passed at the relevant extraordinary general meeting (the “ EGM ”) of the Company and at the relevant class meeting of holders of domestic shares of the Company (“ Domestic Shares Class Meeting ”) and within the range approved by the CSRC having regard to the relevant circumstances.

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NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

(iii) Basis for determination of the issue price

(iv) Target subscribers

(v) Proposed stock exchange for listing

The Shenzhen Stock Exchange.

(vi) Method and time of issue

(vii) Use of proceeds

The Company intends to apply the proceeds in the following projects with a total estimated investment amount of approximately RMB476.21 million:

(1) the development and marketing project for cognitive transportation projects, with an investment amount of RMB157.50 million;
(2) the upgrade project of logistics monitoring product with internet of things (IOT)-based technology, with an investment amount of RMB98.71 million;
(3) R&D and industrialisation project of front-end intelligent equipment of IOT, with an investment amount of RMB100 million; and
(4) the construction project of research center for RFID system technology, with an investment amount of RMB120 million.

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NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

(viii) Distribution plan of accumulated undistributed profits

Prior to this public issue of A Shares, the Company may distribute its profit available for distribution for 2011 in accordance with relevant laws, regulations and the Articles of Association. After the completion of the public issue of A Shares, all shareholders of the Company will be entitled to the undistributed profits carried forward after implementation of the distribution plan for the profits of 2011, and the profits arising prior to the Issue of A Shares. Holders of A Shares shall not be entitled to any dividend declared prior to completion of the Issue of A Shares.

(ix) Validity of the resolution

The resolution for the Issue of A Shares shall be effective for a period of 12 months commencing from the date on which this resolution is passed at the EGM, this H Shares Class Meeting and the Domestic Shares Class Meeting.

(x) Authorisation to the Board

(1) to be responsible for and to effect the listing proposal of this issue, including without limitation, to determine the timing of issue, the number of A Shares to be issued, the issue price and its determination mechanism, the structure of the issue, the target subscribers of the A Shares, the method of issue, the stock exchange to be listed and other related application procedures and formalities subject to the relevant requirements under the relevant rules and regulations and the relevant securities rules, and pursuant to the listing proposal of this issue as

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NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

approved by the holders of the H shares and the domestic shares at the EGM, this H Shares Class Meeting and the Domestic Shares Class Meeting;

(2) to deal with all filing and application matters relating to or in connection with the listing of this issue, including without limitation, applying for approval to, register with, filing with, seeking licences and consents from relevant governmental and regulatory authorities, the relevant stock exchange and securities clearing institution; to approve, sign, execute, amend or complete any agreement, contract or necessary document relating to the listing of this issue (including without limitation, offering circular, prospectus, sponsor agreement, underwriting agreement, listing agreement and all kinds of announcement and notice to the shareholders of the Company);
(3) to adjust and amend the proposal for the listing of this issue according to implementation of the listing proposal of this issue, market conditions, policies adjustments and comments from governmental and regulatory authorities;
(4) to make necessary or appropriate adoption of and amendments to the relevant provisions of the articles of association of the Company, the rules of procedures and internal rules of the Company relating to, in connection with the listing of this issue, and to deal with the application for approval, and the change of business registration, the filing and registration with relevant governmental authorities;
(5) to make necessary or appropriate adoption of and amendments to the articles of association of the Company, the rules of procedures and internal rules of the Company in the event they conflict with the regulatory rules or documents promulgated by the CSRC and/or the relevant stock exchange, or in accordance with the comments from the CSRC and/or the relevant stock exchange;
(6) to deal with all matters in relation to the application or the use of net proceeds from the Issue of A Shares subject to the approval of the CSRC, including without limitation, to utilize the internal resources or raise bank loans to finance its projects prior to the completion of the Issue of A Shares, and to repay the funds raised and already applied by the Company and the Group in developing such projects upon completion of the Issue of A Shares; to adjust and amend related matters according to the actual circumstances and comments from relevant governmental authorities in the course of implementation in financing and investing in the projects, including without limitation: to adjust the budget for each project already included in the scope of investment by application of proceeds (including adjusting the number of projects), the subject, progress and means of implementation, etc.; to confirm the specific saving account for the proceeds; other project

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NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

related matters in relation to the implementation of the application of the proceeds after the completion of the listing of this issue, including the signing and execution of any agreement, contract or other documents relating to the application of the proceeds; to finance the projects with internal resources or bank loans in the event the proceeds is not sufficient to finance the projects, and to apply any surplus to supplement the liquidity of the Company;

(7) to engage relevant intermediaries and to liaise and agree on their respective remuneration; and
(8) to process all related matters in connection with the Issue of A Shares, take all such actions as may be necessary or expedient and to determine and make arrangements for all specific matters relating to or in connection with the Issue of A Shares as permitted by the relevant laws and regulations.

The above authorization granted to the Board shall be effective for a period of 12 months commencing from the date on which this resolution is passed.”

By Order of the Board **Nanjing Sample Technology Company Limited* Sha Min** Chairman

Nanjing, the PRC 14 November 2011

for identification purpose only

Notes:

Any holder of H shares of the Company (“ Member ”) entitled to attend and vote at the H Share Class Meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. In the case of a joint holding, the form of proxy may be signed by any joint holder, but if more than one joint holder is present at the meeting, whether in person or by proxy, that one of the joint holders whose name stands first on the register of Members in respect of the relevant joint holding shall alone be entitled to vote in respect thereof.
To be valid, a proxy form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such authority must be deposited at the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong (“ H Share Registrar ”) not less than 24 hours before the time appointed for the holding of the H Shares Class Meeting or 24 hours before the time appointed for taking the poll. Delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Holders of the H Shares who intend to attend the Class Meeting for holders of H Shares are requested to complete the enclosed REPLY SLIP FOR ATTENDANCE AT THE CLASS MEETING FOR HOLDERS OF H SHARES and return it to the Company’s Hong Kong H Share registrar and transfer office, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong on or before Friday, 9 December 2011. The reply slip may be delivered by hand or by post.

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NOTICE OF CLASS MEETING FOR HOLDERS OF H SHARES

The register of members of the Company will be closed from 30 November 2011 (Wednesday) to 30 December 2011 (Friday) (both days inclusive), during which period no transfer of Shares will be effected. Holders of H Shares whose names appear on the register of members of the Company at the close of trading on 29 November 2011 will be entitled to attend and vote at the Class Meeting for holders of H Shares convened by the above notice.
Members or their proxies shall present identity proof (and form of proxy in case of proxies) upon attending the H Shares Class Meeting.

– 193 –

NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1708)

NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

NOTICE IS HEREBY GIVEN that a class meeting for holders of domestic shares (the “ Domestic Shares Class Meeting ”) of Nanjing Sample Technology Company Limited (the “ Company ”) shall be held at No.10 Maqun Avenue, Maqun Technology Park, Qixia District, Nanjing City, Jiangsu Province, the PRC at 11:00 a.m. (or immediately after the class meeting for holders of H shares of the Company to be convened and held on the same date and at the same place) on Friday, 30 December 2011 for the purposes of considering, and if thought fit, passing the following resolutions:

SPECIAL RESOLUTIONS

“ THAT , subject to the approval by the relevant regulatory authorities, including the China Securities Regulatory Committee (the “ CSRC ”), the allotment and issue of A shares (the “ A Shares ”) by the Company in the PRC (the “ Issue of A Shares ”) and each of the following principle terms and conditions of the Issue of A Shares be approved and confirmed (each and every item as a separate resolution):

(i) Class and nominal value of new Shares to be issued

A Shares with a nominal value of RMB1.00 each in the share capital of the Company.

(ii) Number of A Shares to be issued

Not more than 73,900,000 A Shares with a nominal value of RMB1.00 each.

The final number of A Shares to be issued and the structure of such issue shall be subject to approval by the CSRC and other relevant regulatory authorities in the PRC, and subject to adjustment (if any) which may be made by the board of directors (the “ Board ”) of the Company as authorised by this resolution, and by the resolutions passed at the relevant extraordinary general meeting (the “ EGM ”) of the Company and at the relevant class meeting of holders of H shares of the Company (“ H Shares Class Meeting ”) and within the range approved by the CSRC having regard to the relevant circumstances.

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NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

(iii) Basis for determination of the issue price

(iv) Target subscribers

(v) Proposed stock exchange for listing

The Shenzhen Stock Exchange.

(vi) Method and time of issue

(vii) Use of proceeds

The Company intends to apply the proceeds in the following projects with a total estimated investment amount of approximately RMB476.21 million:

(1) the development and marketing project for cognitive transportation projects, with an investment amount of RMB157.50 million;
(2) the upgrade project of logistics monitoring product with internet of things (IOT)-based technology, with an investment amount of RMB98.71 million;
(3) R&D and industrialisation project of front-end intelligent equipment of IOT, with an investment amount of RMB100 million; and
(4) the construction project of research center for RFID system technology, with an investment amount of RMB120 million.

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NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

(viii) Distribution plan of accumulated undistributed profits

Prior to this public issue of A Shares, the Company may distribute its profit available for distribution for 2011 in accordance with relevant laws, regulations and the Articles of Association. After the completion of the public issue of A Shares, all shareholders of the Company will be entitled to the undistributed profits carried forward after implementation of the distribution plan for the profits of 2011, and the profits arising prior to the Issue of A Shares. Holders of A Shares shall not be entitled to any dividend declared prior to completion of the Issue of A Shares.

(ix) Validity of the resolution

The resolution for the Issue of A Shares shall be effective for a period of 12 months commencing from the date on which this resolution is passed at the EGM, this Domestic Shares Class Meeting and the H Shares Class Meeting.

(x) Authorisation to the Board

(1) to be responsible for and to effect the listing proposal of this issue, including without limitation, to determine the timing of issue, the number of A Shares to be issued, the issue price and its determination mechanism, the structure of the issue, the target subscribers of the A Shares, the method of issue, the stock exchange to be listed and other related application procedures and formalities subject to the relevant requirements under the relevant rules and regulations and the relevant securities rules, and pursuant to the listing proposal of this issue as

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NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

approved by the holders of the H shares and the domestic shares at the EGM, this Domestic Shares Class Meeting and the H Shares Class Meeting;

(2) to deal with all filing and application matters relating to or in connection with the listing of this issue, including without limitation, applying for approval to, register with, filing with, seeking licences and consents from relevant governmental and regulatory authorities, the relevant stock exchange and securities clearing institution; to approve, sign, execute, amend or complete any agreement, contract or necessary document relating to the listing of this issue (including without limitation, offering circular, prospectus, sponsor agreement, underwriting agreement, listing agreement and all kinds of announcement and notice to the shareholders of the Company);
(3) to adjust and amend the proposal for the listing of this issue according to implementation of the listing proposal of this issue, market conditions, policies adjustments and comments from governmental and regulatory authorities;
(4) to make necessary or appropriate adoption of and amendments to the relevant provisions of the articles of association of the Company, the rules of procedures and internal rules of the Company relating to, in connection with the listing of this issue, and to deal with the application for approval, and the change of business registration, the filing and registration with relevant governmental authorities;
(5) to make necessary or appropriate adoption of and amendments to the articles of association of the Company, the rules of procedures and internal rules of the Company in the event they conflict with the regulatory rules or documents promulgated by the CSRC and/or the relevant stock exchange, or in accordance with the comments from the CSRC and/or the relevant stock exchange;
(6) to deal with all matters in relation to the application or the use of net proceeds from the Issue of A Shares subject to the approval of the CSRC, including without limitation, to utilize the internal resources or raise bank loans to finance its projects prior to the completion of the Issue of A Shares, and to repay the funds raised and already applied by the Company and the Group in developing such projects upon completion of the Issue of A Shares; to adjust and amend related matters according to the actual circumstances and comments from relevant governmental authorities in the course of implementation in financing and investing in the projects, including without limitation: to adjust the budget for each project already included in the scope of investment by application of proceeds (including adjusting the number of projects), the subject, progress and means of implementation, etc.; to confirm the specific saving account for the proceeds; other project

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NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

(7) to engage relevant intermediaries and to liaise and agree on their respective remuneration; and
(8) to process all related matters in connection with the Issue of A Shares, take all such actions as may be necessary or expedient and to determine and make arrangements for all specific matters relating to or in connection with the Issue of A Shares as permitted by the relevant laws and regulations.

The above authorization granted to the Board shall be effective for a period of 12 months commencing from the date on which this resolution is passed.”

By Order of the Board **Nanjing Sample Technology Company Limited* Sha Min** Chairman

Nanjing, the PRC 14 November 2011

for identification purpose only

Notes:

Any holder of the domestic shares of the Company (“ Member ”) entitled to attend and vote at the Domestic Shares Class Meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company. In the case of a joint holding, the form of proxy may be signed by any joint holder, but if more than one joint holder is present at the meeting, whether in person or by proxy, that one of the joint holders whose name stands first on the register of Members in respect of the relevant joint holding shall alone be entitled to vote in respect thereof.
To be valid, a proxy form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such authority must be delivered to the Company’s registered office at Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High Technology Development Region, Qixia District, Nanjing City, Jiangsu Province, the PRC not less than 24 hours before the time appointed for the holding of the Domestic Shares Class Meeting or 24 hours before the time appointed for taking the poll. Delivery of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
Holders of the Domestic Shares who intend to attend the Class Meeting for holders of Domestic Shares are requested to complete the enclosed REPLY SLIP FOR ATTENDANCE AT THE CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES and return it to the Company’s registered office at Building No. 1, Ruan Jian Chuang Ye Zhong Xin, High and New Technology Industrial Development Zone, Nanjing City, Jiangsu Province, the PRC on or before Friday, 9 December 2011. The reply slip may be delivered by hand or by post.

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NOTICE OF CLASS MEETING FOR HOLDERS OF DOMESTIC SHARES

The register of members of the Company will be closed from 30 November 2011 (Wednesday) to 30 December 2011 (Friday) (both days inclusive), during which period no transfer of Shares will be effected. Holders of Domestic Shares whose names appear on the register of members of the Company at the close of trading on 29 November 2011 will be entitled to attend and vote at the Class Meeting for holders of Domestic Shares convened by the above notice.
Members or their proxies shall present identity proof (and form of proxy in case of proxies) upon attending the Domestic Shares Class Meeting.

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AI assistant

Nanjing Sample Technology Company Limited — Proxy Solicitation & Information Statement 2011

50106_rns_2011-11-14_40cf0545-7937-45f6-8516-18787331f515.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

NOTICE OF EXTRAORDINARY GENERAL MEETING AND NOTICES OF THE CLASS MEETINGS

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

南京三寶科技股份有限公司 NANJING SAMPLE TECHNOLOGY COMPANY LIMITED*

(1) PROPOSED ISSUE OF A SHARES

INTRODUCTION

LETTER FROM THE BOARD

I PROPOSED ISSUE OF A SHARES

Details of the Issue of A Shares

(iii) Basis for determination of the issue price

(iv) Target subscribers

(v) Proposed stock exchange for listing

(vi) Method and time of issue

(vii) Use of proceeds

(viii) Distribution plan of accumulated undistributed profits

(ix) Validity of the resolution

LETTER FROM THE BOARD

(x) Approval and authorisation by the Shareholders

LETTER FROM THE BOARD

Reasons for the Issue of A Shares

Effects of the Issue of A Shares on Shareholding Structure of the Company

II PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND ADOPTION OF THE RULES OF PROCEDURES

III PROPOSED ADOPTION OF THE ADMINISTRATIVE SYSTEM OF PROCEEDS

IV PROPOSED ESTABLISHMENT OF A STRATEGY COMMITTEE OF THE BOARD AND ADJUSTMENT OF THE COMPOSITION OF BOARD COMMITTEES

V PROPOSED CHANGE OF THE COMPANY’S AUDITORS

LETTER FROM THE BOARD

VI PROPOSED TERMINATION OF SHARE OPTION SCHEME

VII ADOPTION OF THE INTERNAL RULES

VIII EGM

IX RECOMMENDATIONS

ARTICLES OF ASSOCIATION

~~Passed by the Annual General Meeting on 23 May 2011~~

CHAPTER 1 GENERAL PROVISIONS

Article 1

Article ~~1~~ 2

APPENDIX I

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Article ~~2~~ 3

Article ~~3~~ 4

Article ~~4~~ 5

Article ~~5~~ 6

Article ~~6~~ 7

~~Article 7~~

Article 8

Article 9

Article ~~9~~ 10

Article 11

CHAPTER 2 PURPOSES AND SCOPE OF BUSINESS

Article 12

Article 1 ~~1~~ 3

CHAPTER 3 SHARES AND REGISTERED CAPITAL

Article 1 ~~2~~ 4

Article 1 ~~3~~ 5

Article 16

Article 1 ~~4~~ 7

Article 1 ~~5~~ 8

Article 1 ~~6~~ 9

Article ~~17~~ 20

Article ~~18~~ 21

Article ~~19~~ 22

Article 23

Article 2 ~~1~~ 4

Article 2 ~~2~~ 5

Article 2 ~~3~~ 6

Article 27

Article 28

Article 29

Article ~~24~~ 30

Article ~~25~~ 31

Article ~~26~~ 32

APPENDIX I

Article ~~27~~ 33

APPENDIX I

Nanjing Sample Technology Company Limited Proxy Solicitation & Information Statement 2011

Passed by the Annual General Meeting on 23 May 2011

Article 1 2

Article 2 3

Article 3 4

Article 4 5

Article 5 6

Article 6 7

Article 7

Article 9 10

Article 1 1 3

Article 1 2 4

Article 1 3 5

Article 1 4 7

Article 1 5 8

Article 1 6 9

Article 17 20

Article 18 21

Article 19 22

Article 2 1 4

Article 2 2 5

Article 2 3 6

Article 24 30

Article 25 31

Article 26 32

Article 27 33

Article 28 34

Article 29 35

Article 3 1 7

Article 3 2 8

Article 3 3 9

Article 34 41

Article 35 42

Article 36 43

Article 37 44

Article 38 45

Article 39 46

Article 4 1 8

Article 4 2 9

Article 43 50

Article 44 51

Article 45 52

Article 46 53

Article 47 54

Article 48 55

Article 49 56

ARTICLE 5 1 8

Article 52 60

Article 53 61

Article 54 65

Article 55 68

Article 56 69

Article 57 70

Article 58 71

(13)

Article 59 73

Article 60 74

Article 61 75

Article 62 76

Article 63 78

Article 64 79

Article 65 81

Article 66