中國銀行股份有限公司 BANK OF CHINA...

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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed

securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Bank of China Limited (中國銀行股份有限公司) (the “Bank”), you

should at once hand this circular and the enclosed proxy form and reply slip to the purchaser or transferee or to the bank or

licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or

transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the

contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability

whatsoever for any loss howsoever arising from wor in reliance upon the whole or any part of the contents of this circular.

中國銀行股份有限公司BANK OF CHINA LIMITED

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

(Stock Code: 3988 and 4601 (Preference Shares))

ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting of Bank of China Limited to be held at Four Seasons Hotel Hong Kong, 8

Finance Street, Central, Hong Kong, China and at Bank of China Head Office Building, No. 1 Fuxingmen Nei Dajie, Beijing,

China at 9:30 a.m. on Thursday, 29 June 2017 (registration will begin at 8:30 a.m.) is set out in pages 4 to 7 of this circular.

Whether or not you are able to attend the Annual General Meeting, you are advised to read the notice of Annual General

Meeting and to complete and return the enclosed proxy form in accordance with the instructions printed thereon. For H-Share

Holders, the proxy form should be returned to the Bank’s H Share Registrar, Computershare Hong Kong Investor Services

Limited in person or by post as soon as possible but in any event not less than 24 hours before the time stipulated for

convening the Annual General Meeting or any adjourned meeting thereof. Completion and return of the proxy form will not

preclude you from attending and voting at the Annual General Meeting or at any adjourned meeting if you so wish.

If you intend to attend the Annual General Meeting in person or by proxy, you are required to complete and return the reply

slip to the Bank’s Board Secretariat or to Computershare Hong Kong Investor Services Limited on or before Friday, 9 June

2017.

The English and Chinese versions of this circular and the accompanying form of proxy and reply slip are available on the

Bank’s website at www.boc.cn and the website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk. You

may access the aforesaid documents by clicking “Investor Relations” on the homepage of the Bank’s website or browsing

through the website of Hong Kong Exchanges and Clearing Limited.

12 May 2017

— i —

CONTENTS

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Page

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

APPENDIX I BUSINESS OF THE ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ATTACHMENT A 2016 WORK REPORT OF THE BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ATTACHMENT B 2016 WORK REPORT OF THE BOARD OF SUPERVISORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ATTACHMENT C 2016 ANNUAL FINANCIAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ATTACHMENT D ELECTION OF DIRECTORS OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

APPENDIX II REPORT ON THE CONNECTED TRANSACTIONS FOR 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

APPENDIX III DUTY REPORT OF INDEPENDENT DIRECTORS FOR 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

APPENDIX IV REPORT ON THE IMPLEMENTATION ON THE SCHEME

ON THE AUTHORIZATION TO THE BOARD OF DIRECTORS GRANTED

BY THE SHAREHOLDERS’ MEETING OF BANK OF CHINA FOR 2016 . . . . . . . . . . . . . . . . . . 40

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DEFINITIONS

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

“A Shares” Domestic shares with nominal value of RMB1.00 each in the share capital of the Bank which are listed on the Shanghai Stock Exchange (stock code: 601988)

“A-Share Holder(s)” Holder(s) of A Shares

“AGM” or “Annual General Meeting” The annual general meeting of the Bank to be held at Four Seasons Hotel Hong Kong, 8 Finance Street, Central, Hong Kong, China and at Bank of China Head Office Building, No. 1 Fuxingmen Nei Dajie, Beijing, China at 9:30 a.m. on Thursday, 29 June 2017 (registration will begin at 8:30 a.m.)

“Articles of Association” Articles of Association of the Bank (as amended from time to time)

“Bank” or “Bank of China” Bank of China Limited (中國銀行股份有限公司), a joint stock limited company incorporated in the PRC, the H Shares and A Shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively

“Board” or “Board of Directors” The Board of Directors of the Bank

“Board of Supervisors” The Board of Supervisors of the Bank

“CBRC” China Banking Regulatory Commission

“Company Law” The Company Law of the PRC (as amended from time to time)

“CSRC” China Securities Regulatory Commission

“Director(s)” The Director(s) of the Bank

“Executive Director(s)” The Executive Director(s) of the Bank

“Group” or “BOC Group” The Bank and its subsidiaries

“H Shares” Overseas listed foreign shares with nominal value of RMB1.00 each in the share capital of the Bank which are listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars (stock code: 3988)

“H-Share Holder(s)” Holder(s) of H Shares

“Hong Kong” The Hong Kong Special Administrative Region of the PRC

“Hong Kong Dollar” Hong Kong dollar, the lawful currency of Hong Kong

“Hong Kong Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (as amended from time to time)

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Independent Non-executive Director(s)” or “Independent Director(s)”

The Independent Non-executive Director(s) of the Bank

“Non-executive Director(s)” The Non-executive Director(s) of the Bank

“PRC” The People’s Republic of China

“Preference Shares” Preference shares with nominal value of RMB100 each in the preference share capital of the Bank

“Preference Shareholders” Holder(s) of Preference Shares

“RMB” Renminbi, the lawful currency of the PRC

“Supervisor(s)” The Supervisor(s) of the Bank

— 2 —

LETTER FROM THE BOARD

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Board of Directors:

Mr. Tian Guoli (Chairman)

Mr. Chen Siqing

Mr. Ren Deqi

Mr. Gao Yingxin

* Mr. Zhang Xiangdong

* Mr. Zhang Qi

* Mr. Liu Xianghui

* Mr. Li Jucai

** Mr. Nout Wellink

** Mr. Lu Zhengfei

** Mr. Leung Cheuk Yan

** Mr. Wang Changyun

** Ms. Angela Chao

* Non-executive Directors

** Independent Non-executive Directors

Registered Office:

No. 1 Fuxingmen Nei Dajie

Beijing 100818

PRC

Place of Business in Hong Kong:

8th Floor

Bank of China Tower

1 Garden Road

Hong Kong

12 May 2017

Dear H-Share Holders,

1. INTRODUCTION

On behalf of the Board of Directors, I invite you to attend the AGM to be held at Four Seasons Hotel Hong Kong, 8

Finance Street, Central, Hong Kong, China and at Bank of China Head Office Building, No. 1 Fuxingmen Nei Dajie,

Beijing, China at 9:30 a.m. on Thursday, 29 June 2017 (registration will begin at 8:30 a.m.).

The purpose of this circular is to provide you with all the information reasonably necessary to enable you to make an

informed decision on whether to vote for or against the proposed resolutions at the AGM.

2. BUSINESS TO BE CONSIDERED AT THE AGM

The items of business to be considered at the AGM are described in detail in the notice of AGM set out in pages 4

to 7 of this circular. At the AGM, ordinary resolutions will be proposed to approve (i) 2016 Work Report of the Board

of Directors; (ii) 2016 Work Report of the Board of Supervisors; (iii) 2016 Annual Financial Report; (iv) 2016 Profit

Distribution Plan; (v) 2017 Annual Budget for Fixed Assets Investment; (vi) the Appointment of Ernst & Young Hua Ming

as the Bank’s External Auditor for 2017; (vii) Election of Directors of the Bank; special resolution will be proposed to

approve (viii) the Issue of Bonds.

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LETTER FROM THE BOARD

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In order to enable you to have a better understanding of the resolutions to be proposed at the AGM and to make an

informed decision thereof, we have provided in this circular detailed background information, including the relevant

information and explanation, to the resolutions to be proposed at the AGM (see Appendix I).

Pursuant to the relevant regulatory requirements, the annual report on connected transactions, the annual duty report

of Independent Directors and the annual report on the implementation on the Scheme on the Authorization to the Board

of Directors Granted by the Shareholders’ Meeting of Bank of China are matters to be reported to the Annual General

Meeting but not for shareholders’ approval. The Report on the Connected Transactions for 2016, the Duty Report of

Independent Directors for 2016 and the Report on the Implementation on the Scheme on the Authorization to the Board

of Directors Granted by the Shareholders’ Meeting of Bank of China for 2016 are set out in Appendix II, Appendix III and

Appendix IV to this circular, respectively, for shareholders’ information.

3. THE AGM

The proxy form and the reply slip of the AGM are also enclosed herewith.

If you intend to appoint a proxy to attend the AGM, you are required to complete and return the enclosed proxy form in

accordance with the instructions printed thereon as soon as possible. For H-Share Holders, the proxy form should be

returned to the Bank’s H Share Registrar, Computershare Hong Kong Investor Services Limited in person or by post

as soon as possible but in any event not less than 24 hours before the time stipulated for convening the AGM or any

adjourned meeting thereof. Completion and return of the proxy form will not preclude you from attending and voting at

the AGM or at any adjourned meeting if you so wish.

If you intend to attend the AGM in person or by proxy, you are required to complete and return the reply slip to the

Bank’s Board Secretariat or to Computershare Hong Kong Investor Services Limited on or before Friday, 9 June 2017.

The Bank’s Board Secretariat is located at Bank of China Head Office Building, No. 1 Fuxingmen Nei Dajie, Beijing

100818, the PRC (Telephone: (8610) 6659 4582, Fax: (8610) 6659 4579, E-mail: [email protected]). The Bank’s H

Share Registrar, Computershare Hong Kong Investor Services Limited, is located at 17M Floor, Hopewell Centre, 183

Queen’s Road East, Wan Chai, Hong Kong (Telephone: (852) 2862 8555).

4. VOTING BY POLL

Pursuant to the Hong Kong Listing Rules, each of the resolutions set out in the Notice of AGM will be voted on by

poll. Results of the poll voting will be published on the Bank’s website at www.boc.cn and the website of Hong Kong

Exchanges and Clearing Limited at www.hkexnews.hk after the AGM.

5. RECOMMENDATION

The Board of Directors considers that the proposed resolutions set out in the Notice of AGM are in the interests of the

Bank and its shareholders as a whole. Accordingly, the Board of Directors recommends the shareholders to vote in

favour of the proposed resolutions.

Yours faithfully,

By order of the Board

Bank of China Limited

Tian Guoli

Chairman

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NOTICE OF ANNUAL GENERAL MEETING

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NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM” or “Annual General Meeting”) of Bank of China

Limited (the “Bank”) will be held at Four Seasons Hotel Hong Kong, 8 Finance Street, Central, Hong Kong, China and at Bank

of China Head Office Building, No. 1 Fuxingmen Nei Dajie, Beijing, China at 9:30 a.m. on Thursday, 29 June 2017 (registration

will begin at 8:30 a.m.) for the purpose of considering and approving the following resolutions:

ORDINARY RESOLUTIONS

1. To consider and approve the 2016 Work Report of the Board of Directors

2. To consider and approve the 2016 Work Report of the Board of Supervisors

3. To consider and approve the 2016 Annual Financial Report

4. To consider and approve the 2016 Profit Distribution Plan

5. To consider and approve the 2017 Annual Budget for Fixed Assets Investment

6. To consider and approve the Appointment of Ernst & Young Hua Ming as the Bank’s External Auditor for 2017

7. To consider and approve the Election of Directors of the Bank

7.01 To consider and approve the Election of Mr. Chen Siqing to be Re-appointed as Executive Director of the Bank

7.02 To consider and approve the Election of Mr. Zhang Xiangdong to be Re-appointed as Non-executive Director of

the Bank

7.03 To consider and approve the Election of Ms. Xiao Lihong to be Appointed as Non-executive Director of the Bank

7.04 To consider and approve the Election of Ms. Wang Xiaoya to be Appointed as Non-executive Director of the

Bank

7.05 To consider and approve the Election of Mr. Zhao Jie to be Appointed as Non-executive Director of the Bank

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SPECIAL RESOLUTION

8. To consider and approve the Issue of Bonds

By Order of the Board

Bank of China Limited

Geng Wei

Secretary to the Board of Directors and Company Secretary

12 May 2017

As at the date of this notice, the Directors of the Bank are: Tian Guoli, Chen Siqing, Ren Deqi, Gao Yingxin,

Zhang Xiangdong*, Zhang Qi*, Liu Xianghui*, Li Jucai*, Nout Wellink#, Lu Zhengfei#, Leung Cheuk Yan#, Wang Changyun# and

Angela Chao#.

* Non-executive Directors# Independent Non-executive Directors

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Notes:

1. Details of the above resolutions are set out in Appendix I to this circular. Additional information of the 2016 Work Report

of the Board of Directors, the 2016 Work Report of the Board of Supervisors, the 2016 Annual Financial Report, the

Election of Directors of the Bank are set out in Attachment A, Attachment B, Attachment C and Attachment D to this

circular, respectively.

2. Pursuant to the relevant regulatory requirements, the annual report on connected transactions, the annual duty report

of independent directors and the annual report on the implementation on the Scheme on the Authorization to the

Board of Directors Granted by the Shareholders’ Meeting of Bank of China are reporting matters to Annual General

Meeting but not for shareholders’ approval. The Report on the Connected Transactions for 2016, the Duty Report of

Independent Directors for 2016 and the Report on the Implementation on the Scheme on the Authorization to the Board

of Directors Granted by the Shareholders’ Meeting of Bank of China for 2016 are set out in Appendix II, Appendix III and

Appendix IV to this circular, respectively, for shareholders’ information.

3. The Board of Directors has recommended a final dividend of RMB0.168 per share (before tax) for the year

ended 31 December 2016 and, if such proposed dividend distribution set out in Resolution No. 4 is approved

by the shareholders, the final dividend will be distributed to those shareholders whose names appear on the

register of shareholders of the Bank on Thursday, 13 July 2017.

In accordance with Chinese tax laws and regulations, the dividends and bonuses received by overseas

resident individual shareholders from stocks issued by domestic non-foreign investment enterprises in

Hong Kong are subject to the payment of individual income tax, which shall be withheld by the withholding

agents. However, overseas resident individual shareholders of stocks issued by domestic non-foreign

investment enterprises in Hong Kong are entitled to the relevant preferential tax treatment pursuant to the

provisions in the tax agreements signed between the countries in which they are residents and China, or

to the tax arrangements between the Chinese mainland and Hong Kong and Macau. Accordingly, the Bank

generally withholds 10% of the dividends to be distributed to the individual H-Share Holders as individual

income tax unless otherwise specified by the relevant tax laws, regulations and agreements.

In accordance with the provisions of the Notice on Issues concerning Withholding the Enterprise Income

Tax on Dividends Paid by Chinese Resident Enterprises to H-share Holders who are Overseas Non-resident

Enterprises (Guoshuihan [2008] No. 897) published by the State Administration of Taxation of PRC, when

Chinese resident enterprises distribute annual dividends for 2008 onwards to H-share holders who are

overseas non-resident enterprises, the enterprise income tax shall be withheld at a uniform rate of 10%.

In accordance with the current practice of the Inland Revenue Department of Hong Kong, no tax is payable

in Hong Kong in respect of dividends on H Shares paid by the Bank.

The tax and tax relief of Shanghai-Hong Kong Stock Connect shall comply with the Notice on the Relevant

Taxation Policy regarding the Pilot Programme that Links the Stock Markets in Shanghai and Hong Kong

issued jointly by the Ministry of Finance of the PRC, the State Administration of Taxation of the PRC and the

CSRC.

The H-Share register of shareholders of the Bank will be closed from Monday, 10 July 2017 to Thursday, 13

July 2017 (both days inclusive) for the purpose of determining the list of shareholders entitled to the final

dividend. For such entitlements, H-Share Holders who have not registered the relevant transfer documents

are required to lodge them, together with the relevant share certificates, with the H Share Registrar of

the Bank, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17 Floor, Hopewell

Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later than 4:30 p.m. on Friday, 7 July 2017. The

ex-dividend date of the Bank’s Shares will be on Thursday, 6 July 2017.

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4. Pursuant to the Hong Kong Listing Rules, each of the resolutions set out in the Notice of AGM will be voted on by

poll. Results of the poll voting will be published on the Bank’s website at www.boc.cn and the website of Hong Kong

Exchanges and Clearing Limited at www.hkexnews.hk after the AGM.

5. Any shareholder entitled to attend and vote at the AGM convened by the above notice is entitled to appoint one or more

proxies to attend and vote instead of him/her. A proxy need not be a shareholder of the Bank.

6. In order to be valid, the instrument appointing a proxy together with the power of attorney or other authority, if any,

under which it is signed, or a notarially certified copy of such power of attorney or authority, must be completed and

deposited at the H Share Registrar of the Bank, Computershare Hong Kong Investor Services Limited, at least 24 hours

before the AGM or any adjourned meeting thereof. Computershare Hong Kong Investor Services Limited is located at

17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong. Completion and return of a proxy form

will not preclude a shareholder from attending and voting at the AGM or any adjourned meeting thereof should he/she

so wish.

7. The H-Share register of shareholders of the Bank will be closed, for the purpose of determining

shareholders’ entitlement to attend the AGM, from Tuesday, 30 May 2017 to Thursday, 29 June 2017 (both

days inclusive), during which period no transfer of shares will be registered. In order to attend the Annual

General Meeting, all share transfers, accompanied by the relevant share certificates, must be lodged for

registration with the Bank’s H Share Registrar, Computershare Hong Kong Investor Services Limited at

Shops 1712–1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not later than

4:30 p.m. on Monday, 29 May 2017. H-Share Holders who are registered with Computershare Hong Kong

Investor Services Limited on or before the aforementioned date are entitled to attend the Annual General

Meeting.

8. In case of joint shareholdings, the vote of the senior joint shareholder who tenders a vote, whether in person or by

proxy, will be accepted to the exclusion of the votes of the other joint shareholder(s) and for this purpose seniority will

be determined by the order in which the names stand in the register of shareholders of the Bank in respect of the joint

shareholding.

9. Shareholders who intend to attend the Annual General Meeting in person or by proxy should return the reply slip for the

Annual General Meeting to the Board Secretariat of the Bank or the Bank’s H Share Registrar, Computershare Hong

Kong Investor Services Limited, by hand, by post, by fax or by e-mail on or before Friday, 9 June 2017. The address

of the Bank’s Board Secretariat is Bank of China Head Office Building, No. 1 Fuxingmen Nei Dajie, Beijing 100818,

PRC (Telephone: (8610) 6659 4582, Fax: (8610) 6659 4579, E-mail: [email protected]). Computershare Hong Kong

Investor Services Limited is located at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong

(Telephone: (852) 2862 8555).

10. According to the Articles of Association of the Bank and the circumstances of the AGM, resolutions proposed at the

AGM are not required to be considered and approved by the Preference Shareholders. Therefore, the Preference

Shareholders will not attend the AGM.

11. Shareholders who attend the meeting in person or by proxy shall bear their own traveling, dining and accommodation

expenses. Shareholders or their proxies shall produce their identity documents when attending the AGM.

— 8 —

APPENDIX I BUSINESS OF THE ANNUAL GENERAL MEETING

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1. THE 2016 WORK REPORT OF THE BOARD OF DIRECTORS

According to the relevant regulatory requirements and the provisions of Articles of Association, at the 2017 third Board

of Directors meeting held on 31 March 2017, the Board has considered and approved the 2016 Work Report of the

Board of Directors.

Details of the above work report of the Board are set out in Attachment A to this circular.

2. THE 2016 WORK REPORT OF THE BOARD OF SUPERVISORS

According to the relevant regulatory requirements and the requirements of Articles of Association, at the 2017 first

Board of Supervisors meeting held on 31 March 2017, the Board of Supervisors has considered and approved the

2016 Work Report of the Board of Supervisors.

Details of the above work report of the Board of Supervisors are set out in Attachment B to this circular.

3. THE 2016 ANNUAL FINANCIAL REPORT

In accordance with International Financial Reporting Standards, in 2016, the Group achieved a profit for the year

of RMB184.051 billion, an increase of 2.58% compared with the prior year. Basic earnings per share decreased

by RMB0.02 to RMB0.54. Return on average total assets (ROA) was 1.05%, a decrease of 0.07 percentage point

compared with the prior year. Return on average equity (ROE) was 12.58%, a decrease of 1.95 percentage points

compared with the prior year. The Group’s common equity tier 1 capital adequacy ratio was 11.37%, tier 1 capital

adequacy ratio was 12.28%, and its capital adequacy ratio was 14.28%.

In 2016, the Group achieved a net interest income of RMB306.048 billion, a decrease of RMB22.602 billion or 6.88%

compared with the prior year. The Group’s net interest margin decreased by 29 basis points to 1.83% compared

with the prior year. The Group reported a non-interest income of RMB179.608 billion, an increase of RMB34.346

billion or 23.64% compared with the prior year, among which the Group earned a net fee and commission income

of RMB88.664 billion, a decrease of RMB3.746 billion or 4.05% compared with the prior year. Non-interest income

represented 36.98% of operating income. The Group recorded operating expenses of RMB175.069 billion, a decrease

of RMB10.332 billion or 5.57% compared with the prior year. The Group’s cost to income ratio (calculated in

accordance with domestic regulations) was 28.08%, a decrease of 0.22 percentage point compared with the prior year.

The Group’s impairment losses on loans and advances totalled RMB86.795 billion, an increase of RMB30.923 billion or

55.35% compared with the prior year. The Group incurred income tax of RMB38.361 billion, a decrease of RMB13.793

billion or 26.45% compared with the prior year.

As at 31 December 2016, the Group’s total assets amounted to RMB18,148.889 billion, an increase of 7.93%

compared with the prior year-end. Specially, the Group’s loans and advances to customers amounted to

RMB9,973.362 billion, an increase of 9.17% compared with the prior year-end. The Group’s total liabilities amounted

to RMB16,661.797 billion, an increase of 7.79% compared with the prior year-end. Specially, the Group’s due to

customers amounted to RMB12,939.748 billion, an increase of 10.32% compared with the prior year-end. The Group’s

total equity was RMB1,487.092 billion, an increase of 9.54% compared with the prior year-end.

Please refer to the Group’s “Consolidated Income Statement”, “Consolidated Statement of Comprehensive Income”,

“Consolidated Statement of Financial Position”, and “Consolidated Statement of Changes in Equity” prepared in

accordance with the International Financial Reporting Standards as set out in Attachment C. All of the above

statements are excerpted from the audited financial statements of the Group for the year 2016 prepared in accordance

with the International Financial Reporting Standards. The complete 2016 audited financial statements are available in

the 2016 annual report of the Bank as published on the Bank’s website at www.boc.cn and the website of Hong Kong

Exchanges and Clearing Limited at www.hkexnews.hk.

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4. THE 2016 PROFIT DISTRIBUTION PLAN

According to the audited results for 2016 and relevant laws and regulations, the Profit Distribution Plan of the Bank for

the year 2016 is proposed as follows:

(1) Appropriation to statutory surplus reserve of RMB14.310 billion.

(2) Appropriation to general and regulatory reserves of RMB15.245 billion.

(3) No appropriation shall be made to the discretionary reserve.

(4) Considering the bank’s business performance, financial position, and the capital requirements for future

development of the Bank, it is proposed to distribute RMB0.168 per ordinary share (before tax) as dividend to

A-share Holders and H-share Holders whose names appear on the register of shareholders of the Bank as at the

close of market on Thursday, 13 July 2017.

(5) The Bank is not proposing any capitalization of capital reserve into share capital for this profit distribution.

(6) The 2016 final dividend of the Bank’s ordinary shares will be denominated and declared in RMB and be paid in

RMB or equivalent amount in Hong Kong dollars. The dividend paid in Hong Kong dollars will be converted from

RMB based on the average of the exchange rates announced by People’s Bank of China in the week before 29

June 2017 (inclusive), being the date for holding the Bank’s 2016 Annual General Meeting.

5. THE 2017 ANNUAL BUDGET FOR FIXED ASSETS INVESTMENT

In 2017, the Bank’s fixed asset investment will continue to orient at the Group’s development strategies, strictly

implement various rules of the Central Government on practicing economy, reasonably arrange the total amount and

structure of fixed assets, strive to balance the input and output, the long-term returns and short-term benefits, and

continuously improve the role of resources allocation in boosting the Bank’s business development. On the basis of

ensuring normal and safe operation, the Bank will mainly support strategic investment demands such as information

technology construction and overseas channel expansion. In the full year, the Bank will earmark a total fixed asset

investment budget of RMB18.0 billion, as detailed in the table below:

Item

(Unit: RMB100 million)

Group

Domestic

institutions

Overseas

institutions

Budget 2017 Budget 2017 Budget 2017

Comprehensive business property 35.6 22.3 13.3

Channel construction 45.2 37.2 8.0

IT equipment 73.1 48.6 24.5

Comprehensive operation device and vehicle 26.1 21.3 4.8

Total 180.0 129.4 50.6

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6. THE APPOINTMENT OF ERNST & YOUNG HUA MING AS THE BANK’S EXTERNAL AUDITOR FOR 2017

The Board of Directors proposed to engage Ernst & Young Hua Ming LLP as the Bank’s domestic auditor and

external auditor on internal control for 2017 where it will offer auditing service on the Bank’s financial statements in

accordance with China Accounting Standards as well as internal control auditing service, and to engage Ernst & Young

as the Bank’s international auditor for 2017 where it will offer auditing service on the Bank’s financial statements in

accordance with International Financial Reporting Standards, with an aggregate fee of RMB143.13 million for 2017

which includes the financial statement audit fee of RMB129.13 million and the internal control audit fee of RMB14

million.

7. ELECTION OF DIRECTORS OF THE BANK

At the 2017 third Board of Directors meeting held on 31 March 2017, the Board has considered and approved the

proposal on the nomination of Mr. Chen Siqing and Mr. Zhang Xiangdong to be re-appointed as Directors of the Bank

and the proposal on the nomination of Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie as candidates for Non-

executive Directors of the Bank, respectively. Details of the proposals are set out in Attachment D to this circular.

8. THE ISSUE OF BONDS

To expand the source channels of funds for the Bank and meet the needs of business development, the Bank hereby

submits the following bond issuance plan to the Shareholders’ Meeting for consideration and approval.

On the premise of complying with relevant laws and regulations, listing rules in the localities where the Bank’s securities

are listed, as well as all other applicable laws, regulations, and rules issued by governments or regulators, the Bank

plans to issue bonds (excluding the bonds with the nature of capital replenishment, such as tier-2 capital bonds and

convertible corporate bonds) in overseas and domestic markets, with the net increase balance of bonds no more than

1% of the latest audited total assets of the Bank, and the proceeds will be used for general purpose of the Bank. The

resolution on the bond issuance will be valid for 12 months from the date of consideration and approval of issuance

plan by the Shareholders’ Meeting of the Bank.

To ensure effective performance of work related to the bond issue, the Shareholders’ Meeting is hereby requested

to authorize the Board of Directors and the Board of Directors be allowed to delegate such authority to the Senior

Management to handle all matters concerning the above-mentioned bond issue, including but not limited to deciding on

specific terms and conditions regarding issue scale, tenor, interest rate, markets for issue and issue modes pursuant to

market conditions and the Bank’s asset-liability structure.

The Bank will perform the obligation of disclosing the information on bond issuance in accordance with relevant laws

and regulations, as well as the listing rules in the localities where the Bank’s securities are listed.

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ATTACHMENT A 2016 WORK REPORT OF THE BOARD OF DIRECTORS

2016 WORK REPORT OF THE BOARD OF DIRECTORS

In 2016, the Chinese banking industry developed stably amid the sluggish growth in the global economy and the steady

economic growth in China. The Board of Directors of Bank of China (hereinafter the “Bank”) diligently performed its

duties towards the strategic objective of “Serving Society, Delivering Excellence”, proactively responded to the call of the

government’s strategies, and rigorously implemented the latest regulatory requirements in the domestic and overseas

markets. It proactively coped with changes in the external operating conditions, continuously improved the corporate

governance structure that was dominated by the “Shareholders’ Meeting, the Board of Directors, the Board of Supervisors

and the Senior Management”, and steadfastly proceeded with the key tasks in “innovation, transformation, mitigation,

management and control”. What’s more, the Board of Directors continued to upgrade the structure of assets and liabilities,

improved the comprehensive risk management system and realized steady and healthy development of all businesses. Major

work done by the Board of Directors of the Bank in 2016 is reported as follows:

I. Enhancing the guidance of strategic management and continuously improving the development competence

2016 is the first year for China to implement the “13th Five-Year Plan”. Against the new normal economic and financial

situations, the Board of Directors enhanced analysis of the operating environment, continued to closely watch over the

opportunities and challenges from the major strategic initiatives such as the “Belt & Road”, the RMB internationalization

and the interest rate liberalization, promoted implementation of the development strategies and continuously

strengthened the strategic management function. In 2016, the Bank achieved a profit for the year of RMB184.1 billion,

a year-on-year increase of 2.58%. Asset quality was controlled within the target range, and the ratio of allowance for

loan impairment losses to non-performing loans (NPLs) increased by 9.52 percentage points from last year to 162.82%.

i. Enhancing the top-level design and bringing the leading role of strategies into play

In 2016, the Board of Directors enhanced studies from the strategic height and rolled out a slew of important

development measures. It successfully completed the public offering of BOC Aviation on the main board of the

Stock Exchange of Hong Kong. It wrapped up the sale of the equities in Nanyang Commercial Bank and officially

announced the plan of selling off stake in Chiyu Banking Corporation, effectively promoting the integration among

the Southeast Asian institutions. The Board of Directors continued to steadily expand layout of the overseas

institutions, reviewed and approved the proposals on setting up Colombo Branch, Qatar Financial Center Branch

and Karachi Branch in order to further enhance the Bank’s global service capability. The Board of Directors

deepened reform of the Group’s organizational structure and management mechanism and adjusted the

institutional presence in Liaoning and Shandong, enabling the Bank to effectively enhance its competitiveness in

the Bohai-Rim area.

ii. Accelerating the internationalization in tandem with the government’s foreign strategies

In 2016, the Board of Directors proactively seized the market opportunities arising from the financial artery

construction for the “Belt & Road” initiative, the RMB internationalization and the “Going Global” move among the

Mainland enterprises, strove for becoming the premier bank of “Going Global” enterprises and a main channel

bank for the cross-border RMB business under the “Belt & Road” initiative, and aimed to raise the coverage

of countries along the “Belt & Road” to more than 50%. In 2016, the Bank’s overseas institutions contributed

36% of the Group’s total before-tax profit, up 12.3 percentage points from the last year. The Bank launched

comprehensive financial cooperation along the “Belt & Road”, enhanced cooperation with the domestic and

foreign peers, introduced innovative business development models and improved the effectiveness of financial

services. Fully leveraging the superior advantages in the cross-border RMB business, the Bank secured 11 out of

the global 23 licensed RMB clearing banks. It vigorously supported the “Belt & Road” infrastructure projects, and

actively offered credit support to help the domestic “Going Global” enterprises carry out M&A and investment in

countries along the “Belt & Road”. The Bank further improved its institutional layout among the countries along

the “Belt & Road”, and made presence in 50 countries/regions, including a record-high of 19 countries along the

“Belt & Road”.

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iii. Serving development of the domestic real economy and promoting transformation and upgrade of the

national economy

In 2016, the Board of Directors earnestly performed the “innovation, coordination, green, open and sharing”

development philosophies, actively fulfilled the tasks of “eliminating obsolete capacity, cutting the inventory,

bringing down the leverage, reducing the cost and making up for the weakness”, and achieved tangible progress

in serving development of the real economy, optimizing the business structure, driving ahead reform and

innovation, etc. It strongly supported the supply-side structural reform, and continued to ramp up the quality

and effectiveness of service to the real economy. It developed inclusive finance, actively supported development

of the small & micro businesses, and effectively eased the prominent problems such as difficulties to get

financial resources and high financing cost. In 2016, the Bank held 28 cross-border business matchmaking

activities across the five continents. The Bank also speeded up innovation of the business models, drove ahead

implementation of the pilot venture loan project and actively supported the development of new economies and

the cultivation of new growth engines. It proactively practiced the government’s “green development” philosophy,

and raised funds from the international market to support development of the domestic green credit business.

It gave play to the advantages of the diversified business platforms and increased the quality and efficacy of

collaborative services inside the Group.

iv. Performing the social responsibilities and maintaining the image as a large international bank

The Board of Directors performed responsibilities as a large state-owned bank and a global corporate citizen,

and strongly supported the senior management to serve, make contributions to and reward the society on the

premise of abiding by regulatory requirements and giving due attention to the interest of all parties concerned.

In 2016, the Bank actively organized a series of activities to fulfill the social responsibilities, made positive

contributions in the fields of economic diplomacy, targeted poverty alleviation, support to development of

the education, science, culture and art undertakings, protection of the ecological environment, etc., and

demonstrated a trustworthy and responsible enterprise image to the shareholders, employees, customers and

the society. As one of the G-SIFIs, the Bank has been dedicated to becoming a “server” of the global economic

development and a “stabilizer” in the global financial industry. In 2016, the Bank successively won a number of

honors including the “Most Socially Responsible Financial Institution”, the “Most Socially Responsible Enterprise”,

the “Chinese Enterprise with Special Contribution to Social Responsibility”, the “Best Social Responsibility Bank

2016”, the “Best Social Responsibility Bank” and the “Best Social Responsibility Bond Issuer”.

II. Improving the risk management system and enhancing internal control and external audit

Remaining committed to the position as a G-SIFI, the Bank proactively coped with the new normal of economic

development, and continued to push ahead with establishment of a long-term effective internal control system of

the Group. It insisted on the “problem-oriented” and top-level design principles, and accelerated establishment of a

comprehensive risk management system that perfectly adopted to its business models. The Board of Directors regularly

listened to and reviewed the senior management’s reports on the operations management, risk management, case

governance and internal control system building and evaluation, faithfully performed the responsibilities of improving

the risk management system and effectively implementing the internal control, and guaranteed that the Bank’s

development strategies and operating targets were implemented and attained on all fronts.

i. Enhancing the construction of a comprehensive risk management system

In 2016, the Board of Directors kept a close watch over the macroeconomic and financial situations, consistently

tracked the hot topics, and raised a number of important advices and opinions on improving the Bank’s risk

management mechanism, reviewing the risk management regulations and enhancing risk prevention, among

others. In 2016, the Board of Directors reviewed the risk management regulations such as the VaR policy, the

liquidity risk management policy and the stress test policy, approved and revised the Charter of the US Risk

Committee. It further enhanced the comprehensive risk management, and strengthened the management

capability of credit risk, market risk, liquidity risk, operational risk, compliance risk, reputation risk, country risk,

etc. The Bank continued to beef up efforts on NPA recovery and disposal, explored the new means such as

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NPA-backed securitization, and helped enterprises to bail out. The Risk Policy Committee closely supervised

and regularly assessed effectiveness of the Bank’s risk management system on a quarterly basis, believing

that the existing risk management system was adequate and effective. The Board of Directors strictly defended

the bottom line of risk, controlled the cost of risk, and earnestly undertook the ultimate responsibility for risk

management.

ii. Enhancing the construction of the internal control system

The Board of Directors took internal control supervision and external audit as an important means to guarantee

effective implementation of the Bank’s strategies and healthy operation of the Bank’s businesses. The Board of

Directors and its special committees regularly listened to and reviewed the senior management’s internal control

reports, internal audit & inspection reports and opinions on the internal control work, guided the management to

improve the management of internal control, and gave play to the role of internal audit in improving the Bank’s

risk management and internal control. They timely learnt advices of the external auditors on internal control, risk

case prevention and control, etc., and brought the independence, objectiveness and expertise of the external

auditors into full play. They guided and urged the senior management to continuously optimize the internal

control system and enhance the construction of the case prevention and control system. In 2016, the Bank

launched a special governance project on internal control and case prevention and a governance project on

illegal fundraising, completed the review to the “two enhances, two curbs”, set up the management mechanism

such as “reporting a case to five departments”, and noticeably improved the effect of internal control. It adjusted

the human resources management mechanism for the audit line, enhanced the independence and supervision

power of the audit line, and further reinforced the audit supervision capability.

iii. Enhancing the day-to-day monitoring and strictly controlling the risk of connected transactions

With continued attention to the management of connected transactions, the Board of Directors strengthened

the guidance over the effort, maintained a close watch on construction of the connected transactions monitoring

system and the transmission of the connected transaction policies, and brought forth advices and opinions on

the development of connected transaction policies and system, etc. In 2016, the Bank released the Connected

Transactions Management Manual, optimized the connected transactions monitoring system, organized the

whole group to perform special self-checks on connected transactions, strengthened the day-to-day risk control

and management of connected transactions and further raised the refined management level of connected

transactions, thus powerfully protecting the interests of all the shareholders and the Bank.

III. Continuing to ameliorate the corporate governance practice and improving the Bank’s image in the capital

market

Aiming at excellent corporate governance, the Bank continued to upgrade the overall governance level. In 2016, the

Bank’s corporate governance practice continued to be firmly affirmed by the capital world and the society. The Bank

won a number of corporate governance honors including the “Best Board of Directors” from the 12th Golden Prize of

Round Table for Excellent Board of Directors of Chinese Listed Companies, the “Gold Corporate Governance 2016”

from the Hong Kong Institute of Certified Public Accountants, the “Golden Bauhinia in Chinese Securities Industry: Best

Secretary of the Board of Directors of Listed Companies”.

i. Continuing to improve the corporate governance regulations

The Bank continued to improve the corporate governance structure comprising mainly of the Shareholders’

Meeting, the Board of Directors, the Board of Supervisors and the senior management in light of pertinent laws,

regulations and supervisory requirements such as the domestic and overseas listing rules. It set up a complete

set of corporate governance regulations that encompasses the Articles of Association, the procedural rules of the

Shareholders’ Meeting, the governance of the board of Directors, the governance of the Board of Supervisors,

the governance of the senior management, the information disclosure and investor relations, risk management

and internal control, capital and financial management, etc. In accordance with the supervisory requirements and

the Bank’s practical situation, the Board of Directors continued to revise the normative corporate governance

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documents such as the Articles of Association, fulfilled authorization of the Shareholders’ Meeting to the Board of

Directors and the authorization of the Board of Directors to the president, and set up a system of clearly defined

powers and responsibilities under effective check and balance.

ii. Improving the operational mechanism of the corporate governance

The Bank faithfully protected the minority shareholders’ right to know, attend and vote, convened the annual

meeting concurrently in Beijing and Hong Kong via the video conference system for shareholders at the two

markets, and offered the online voting methods to A-share investors to faithfully safeguard realization of the

minority shareholders’ rights. With a focus on improvement of the coordination between the Board of Directors’

operational mechanism, information disclosure mechanism and stakeholder mechanism, the Bank continued

to improve the constructiveness of the Board of Directors’ work, and supported the Board of Directors to

efficiently make scientific decisions, improved the work transparency and actively performed the responsibilities

to shareholders, customers, employees, and other social stakeholders.

iii. Continuing to upgrade the Group’s corporate governance level

The Bank took improvement of the Group’s corporate governance structure and level as an important means

to boost the development sustainability. It deepened the prospective exploration on the Group’s corporate

governance practice, continuously tracked the latest development of corporate governance theories and practice

in the domestic and overseas companies, and consistently pursued for higher governance standards. While

enhancing the standard operation inside itself, the Board of Directors also boosted construction of the Group’s

corporate governance, took the listing of the solely-owned BOC Aviation as an opportunity to regulate the

subsidiaries’ governance mechanism construction, continuously improved the Group’s corporate governance

system so that is could adapt to the Bank’s needs for diversified and international development.

IV. Promoting the information disclosure and continuously enhanced the management of investor relations

The Board of Directors maintained close attention to information disclosure and management of the investor relations,

timely disclosed the Bank’s material decisions, operations management and business development situations to the

capital market, and continuously improved the Bank’s transparency and reputation. In 2016, the Bank’s investor

relations management and information disclosure work was widely recognized in the market and became the winner of

the “Quamnet Outstanding Investor Relations” award in Hong Kong. The Bank’s annual report won the “Annual Report

Competition-Gold” from the League of American Communications Professionals and the silver prize for interior design

during the ARC (Annual Report Competition) of the US.

i. Improving the information disclosure level and leading the best disclosure practice in the market

In 2016, the Bank strictly followed the “authentic, accurate, integral, timely and impartial” principles in

preparing and disclosing the regular and interim reports, continued to upgrade the pertinence, effectiveness

and transparency of information disclosure, and faithfully safeguarded the investors’ right to know. It earnestly

organized the compliance demonstration and disclosure of major projects, and timely offered sufficient and

effective information to investors. The Bank created a number of best practice in the market, and ensured that

investors in both markets could get equal access to the information. In 2016, the Bank cumulatively disclosed

more than 320 documents in the Shanghai Stock Exchange and the Stock Exchange of Hong Kong.

ii. Optimizing the information disclosure management mechanism to improve the level of compliance

The Bank has developed a full set of information disclosure regulations to clearly define the scope and standards

of information disclosure, the functions and division of responsibilities among relevant departments, the

procedures of handling and releasing the information, the internal monitoring measures, etc. In 2016, the Bank

formulated the measures on suspension and exemption of information disclosure and revised the information

disclosure management measures and the regular report management measures in light of changes in the

domestic and overseas supervisory regulations, and further improved the completeness of the Bank’s regulations

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and the normalization of information disclosure management. The Bank finished registration of the information

insiders and progress of material projects in strict accordance with the supervisory requirements. It enhanced

the leader responsibility mechanism in the information disclosure and the information staff work mechanism, held

trainings on and reminded the obligations for information disclosure, and improved the initiative and foresight in

information disclosure management.

iii. Enhancing the communication with investors to maintain brand image

In 2016, the Bank enhanced communication and active promotion in the market, continued to publicize the

Bank’s differentiated advantages in the “Belt & Road” initiative, RMB internationalization, business diversification,

etc., and won the market recognition. The Bank successfully held the press conferences and the senior

management roadshows for the annual results in 2015 and the interim results in 2016, continued to introduce

the Bank’s development strategies and business development to the investors in Mainland China, Asia Pacific,

Europe, North America, etc., and was warmly welcomed by the investors. The Bank’s senior management and

the representatives from major business departments held nearly 200 meetings/talks with the domestic and

overseas institutional investors/analysts, which effectively enhanced the market’s understanding of the Bank’s

investment value. The Bank continued to improve and explore the new investor relations maintenance channels,

further improved contents in the investor relations column on the Bank’s website, timely and comprehensively

answered investors’ questions via the investor hotline, email, and e-interaction online platform run by SSE, as

well as other channels. In 2016, the Bank’s credit rating was slightly lifted: the Standard & Poor’s upgraded the

Bank’s credit rating to BBB+ and the Bank’s preferred share rating to BB.

V. Performing duties in a scientific manner and building a prudent and efficient Board of Directors

In 2016, the Board of Directors steadily pushed ahead with implementation of various work, and further upgraded

the level of operation. It strictly followed stipulations of the laws, regulations and the Articles of Association, and the

directors diligently and faithfully performed their duties by attending the meetings in person and actively delivering their

advices/opinions. The Board of Directors protected the interests of the shareholders and the Bank, voluntarily accepted

supervision of all the shareholders, the Board of Supervisors and the external regulatory authorities, and demonstrated

a high sense of responsibility and outstanding professional quality.

i. Directors diligently and faithfully performed their duties and continued to upgrade their duty

performance capability

In 2016, the Bank held one annual shareholders’ meeting and one extraordinary shareholders’ meeting, at

which it reviewed and approved 18 proposals, listened to three reports. The Bank’s Board of Directors held

11 meetings, at which the directors reviewed and approved 60 proposals, and listened to six reports. Special

committees of the Board of Directors held a total of 31 meetings.

In light of the Board of Directors’ working demand and in accordance with the annual survey plan, the directors

held surveys in the representative domestic and overseas branches on the topics such as impact of the supply-

side structural reform, employee incentive, development of the personal banking business, resolution of potential

NPAs, fluctuation of RMB exchange rate, optimization of the disaster backup system, enhancement of the audit

effectiveness, income growth, etc. pursuant to the economic principle, and timely fed back the survey results

to the senior management via the survey report. The diligent surveys enhanced directors’ understanding of

implementation of the business strategies, enhanced the communication between the Board of Directors and the

senior management, and effectively supported the Board of Directors to make scientific decisions.

The Board of Directors attached importance to the sustainable professional development of directors, and

organized directors to attend pertinent trainings. The Bank’s directors actively attended a number of trainings

themed on Internet finance, international strategy, corporate M&A in the backdrop of SOE reforms, main

regulatory rules and expectations in the US, challenges for the banking industry to implement the latest IFRS,

etc. in accordance with requirements of the Corporate Governance Code A.6.5 and the Mainland regulators.

The Bank held thematic introductions and trainings for the new directors taking office in 2016 on the Bank’s

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operations, the risk management system, functions of directors, and timely provided information regarding the

directors’ major concerns through means such as circular of the Board of Directors, management report, etc. In

addition, the Bank’s directors also attended the forums, workshops, talks with domestic and foreign regulators,

and field surveys on the advanced foreign peers and the Bank’s domestic and overseas branches to upgrade

their duty performance capability.

ii. Promoting the board diversity and enhancing the independence of independent director selection and

engagement

Pursuant to the board diversity policy of the Bank, the Board members are engaged based on the skills and

experiences that smooth operation of the Board of Directors needs with consideration to the objectives and

requirements on diversity of the Board members, to continuously promote the board diversity. Selection

and engagement of the independent directors is led and promoted by the independent director who chairs

the Personnel and Remuneration Committee of the Board of Directors. The independent director selection

procedures are compliant and independent, which effectively guarantees that the independent directors cold

objectively and impartially perform their functions, and maintain the interests of all shareholders, especially the

legitimate rights and interests of the minority shareholders. In 2016, the Bank initiated two rounds of independent

director selection work, and engaged two new independent directors to further diversify the structure of the

Board members.

iii. Bringing the special committees of the Board of Directors into play to support the Board of Directors’

scientific decision-making

In 2016, the special committees of the Board of Directors continued to bring their professional knowledge into

play and earnestly performed duties. The Bank developed the meeting plans for special committees to enable

the special committees to work in a well-planned way. Within the authority delegated by the Board of Directors,

the special committees profoundly understood the business operation based on their functions and positioning,

carefully studied various proposals and assisted the Board of Directors in performing duties with respect to a

series of matters concerned by the Board of Directors, e.g. strategic development, internal control, Group’s risk

and connected transactions management.

In 2017, against the complicated international environment and the arduous tasks for reform, development

and stabilization at home, the Board of Directors will continue to implement the government’s macro-financial

policies, firmly grasp the important and strategic opportunities during the national economic development,

steadily push ahead with implementation of the Bank’s strategic development plan, continue to enhance

the construction of corporate governance mechanism, improve the level of decision-making and operation

management, and boost sustained healthy development of various businesses.

It is hereby reported.

Board of Directors of Bank of China Limited

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ATTACHMENT B 2016 WORK REPORT OF THE BOARD OF SUPERVISORS

2016 WORK REPORT OF THE BOARD OF SUPERVISORS

Meetings of the Board of Supervisors

In 2016, the Bank convened five on-site meetings of the Board of Supervisors on 30 March, 26 April, 30 August, 27 October

and 18 November. At these meetings, the Board of Supervisors reviewed and approved 13 proposals on the Bank’s

regular reports, 2015 profit distribution plan, 2015 internal control assessment report, 2015 work report of the Board of

Supervisors, 2016 work plan of the Board of Supervisors, evaluation opinions on the duty performance of directors and senior

management members for 2015, and the nomination of candidates for supervisors of the Bank, among others.

In 2016, the attendance rate of each supervisor of the meetings of the Board of Supervisors is given below:

SupervisorsNumber of meetings attended in person/

Number of meetings convened during term of office

Incumbent Supervisors

Wang Xiquan 1/1

Wang Xueqiang 5/5

Liu Wanming 4/5

Deng Zhiying 4/5

Gao Zhaogang 3/4

Xiang Xi 5/5

Chen Yuhua 5/5

Former Supervisors

Li Jun 2/4

Liu Xiaozhong 1/1

In 2016, the Duty Performance and Due Diligence Supervision Committee of the Board of Supervisors held one on-site

meeting and one meeting by written resolution, at which it reviewed and approved the proposal on evaluation opinions on

the duty performance of directors and senior management members for 2015, the nomination of candidates for supervisors

of the Bank, as well as other proposals. The Finance and Internal Control Supervision Committee of the Board of Supervisors

held four on-site meetings, at which it reviewed and approved the Bank’s regular reports, 2015 profit distribution plan, 2015

internal control assessment report and other proposals.

Performance of Supervision and Inspection by the Board of Supervisors

In 2016, the Board of Supervisors made new progress in all working areas. Bearing the big picture of the Bank in mind and

adhering to the issue-focused approach, it closely followed up the Bank’s strategic development, operation and management,

and risk management dynamics and internal control, highlighted the key aims on supervision and strengthen the actual effects

of its supervision, intensified investigations into detected problems, developed reports in high quality, exercised its supervision

functions constructively, and pushed forward the Bank’s continued stable development, in accordance with the relevant laws

and regulations, regulatory requirements and the Articles of Association of the Bank.

Steadily improved the internal supervision mechanism and improved the supervision over duty performance of

directors, senior management members. The Board of Supervisors arranged supervisors to attend the shareholders’

meetings and the meetings of the Board of Directors, special committees and the Senior Management. This allowed

supervisors to stay informed of the major strategic decisions made in these meetings and to keep abreast of how major

operational and management measures are being implemented, as well as to share their supervisory opinions and

suggestions on major issues. It gathered and analysed the important speeches delivered by directors on the meetings

of the Board of Directors and its special committees as well as the information on implementation of resolutions and

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major instructions made on the special meetings of the Senior Management in order to gain an all-round understanding

of directors and senior management members’ day-to-day duty performance and develop the monthly analysis report of

how senior management members performed their duties and alerted the relevant parties to the major issues that needed

special attention. The Board of Supervisors studied and formulated the annual performance assessment plan, collected

and read reports on the annual duty performance of directors and senior management members and organised annual

duty performance interviews with them. Based on the day-to-day supervision as well as reporting and interviews on duty

performance, it objectively and fairly assessed the duty performance of the Board of Directors, the Senior Management

and their members, expressed opinions on annual performance assessment which were approved on the meetings of the

Board of Supervisors and then reverted back to the Board of Directors, the Senior Management and their members in an

appropriate manner. As per the regulatory requirements, such opinions were sent to the CBRC and the assessment results

were reported at the annual general meeting as well. According to the supervisory requirement, the Board of Supervisors

reviewed and formulated the 2016 assessment result on the performance of duties of the directors, supervisors and senior

management members of the bank that the directors, supervisors and senior management members were competent. The

duty performance assessment work won the emphasis and support of the Board of Directors and the Senior Management.

Directors were motivated to work diligently and proactively get involved in decision-making and senior management members

managed to maintain their enthusiasm for work. Additionally, the duty performance assessment further lifted the Bank’s

corporate governance and provided important institutional guarantee for its drive to advance reform and innovation and

secure continued stable development.

Persistently supervised the finance, risk management and internal control by adhering to the issue and risk-

focused approaches. First, the Board of Supervisors carried out the financial supervision with concrete efforts. Supervisory

priorities were the legality and compliance of financial activities and the authenticity, accuracy and completeness of financial

data. The Board of Supervisors followed up and learned about the Bank’s progress in implementing group development

strategies and plans, annual business plans and financial budgets as well as its major issues concerning establishment of

overseas institutions, restructuring of certain institutions, sales of major assets, bond issuance, distribution of dividends on

preference shares and connected transactions. It paid adequate attention to the Bank’s arrangement and execution in terms

of strategy, finance and accounting management, streamlined and analysed the Bank’s financial and accounting data on a

monthly basis, and gained an in-depth understanding of the bank-wide dynamics in operations and management. Through

the monthly summarisation and analysis of strategy implementation and financial & accounting management, it pertinently

reported on problems, explored for causes, gave suggestions, and provided guidance for the Board of Directors, the

Senior Management and functional department through various forms. Second, the Board of Supervisors strengthened the

supervision of risk management and internal control. It proactively adapted itself to the changes in operation environment.

Aimed to enhance the Bank’s ability in risk prevention and mitigation, it continuously tracked and comprehended the risk

profiles of such fields as collateral management, anti-money laundering, asset management business, physical precious

metals, reconciliation management, and liquidity management, heard and reviewed reports on risk control across the Group,

and alerted the Board of Directors, the Senior Management and functional departments to the major potential, tendentious

issues as well as the weak links identified in the relevant work through a variety of means like speeches at meetings,

supervision letters and face-to-face communication. Together with the Board of Supervisors, the Board of Directors and the

Senior Management fulfilled their respective responsibilities in risk prevention and control and held the risk bottom line. The

Board of Supervisors heard reports regarding the internal control status, internal control assessment and internal control

audit, and reviewed reports on internal control assessment. Through daily prompts and duty performance interviews, among

other means, it further urged the internal audit to reinforce their responsibilities and improve the means of audit. With respect

to the problems identified in internal and external audits and regulatory inspections, it improved analysis and urged the

Senior Management and functional departments to keep improving the relevant policies, procedures and systems as well as

the resource allocation. Third, the Board of Supervisors reviewed the problems identified in special surveys of last year. In

regard to the findings of last year’s special surveys concerning anti-money laundering, internal control case prevention, small

and micro credit business and other aspects, it proceeded from the daily supervision and followed up the implementation of

survey opinions and instructions of the Senior Management by relevant departments, branches and subsidiaries. Fourth, the

Board of Supervisors earnestly reviewed and oversaw regular reports. It regularly communicated on special issues with the

accounting and information, financial management, credit management, audit and other business departments as well as

external auditors. It heard reports on operations, financial position, changes in risk assets and provisioning, among others,

and gave suggestions such as enhancing risk management and control in key areas, rectifying problems identified in internal

control audits with intensified efforts, managing and controlling concentration risk and risk of renewed loans, putting high-risk

bonds under efficient oversight and early warning, mitigating the adverse influence arising from the decrease of net interest

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margin substantially, tapping new profit growth drives vigorously, and strengthening operation and management of non-

performing assets. The Board of Directors, the Senior Management and relevant functional departments actively responded to

these recommended measures, by proactively studying and improving the relevant work.

Strictly adhered to the Bank’s overall requirement for preventing risk and promoting development and arranged

special surveys. Concentrated on the key areas and links that involved the Bank’s drive to deepen reform and secure stable

development, the Board of Supervisors closely tracked the overall issues and weak links in terms of bank-wide strategy

implementation, operation and management and risk management control. It focused on carrying out three special surveys

on non-performing asset disposal, personal credit risk management and asset management business. The survey team made

up of supervisors and personnel from relevant departments of the Head Office communicated with the relevant Head Office

departments and a number of branches and institutions through interviews and other means. It heard relevant reports from

different levels, gathered and collated cases, explored for countermeasures, gave multiple suggestions, and submitted report

on the special surveys to the Board of Directors and the Senior Management. The Board of Directors and Senior Management

attached high importance and recognition to the report, requiring the relevant functional departments to study earnestly,

propose measures for improvement and improve the implementation of the rectification. In addition, the Senior Management

convened a meeting where the relevant departments made reports on their progress in and develop plans on rectifying the

problems raised by the survey report. The surveys carried out by the Board of Supervisors played active roles in realising the

Bank’s requirement for preventing risk and promoting development.

Stuck to stringent, concrete management and pushed forward self-improvement. According to regulatory

requirements, the Board of Supervisors amended the sections of the Bank’s Articles of Association regarding the Board of

Supervisors, to point out the direction for its duty performance. It organised and carried out the inspections and surveys to

communicate with and learn about its peers. It visited and held adequate discussions with the Board of Supervisors in multiple

banks about the functional structure and supervisory functions of the Board of Supervisors and its special committees,

dedicated examinations and inspections, building of the Board of Supervisors and other aspects. Starting from the

perspectives of organisation, institution, staffing and policies, it studied how to build itself into the Board of Supervisors which

could deliver excellence. Improvements were made with regards to the ideology, work style and competence. The Board

of Supervisors completed the procedures related to the selection, appointment and resignation of its chairman and some

members. According to regulatory requirements and the measures for assessment of duty performance of supervisors of the

Bank, the Board of Supervisors continued to conduct self-assessment of its duty performance and annual assessment of the

duty performance of supervisors, urging all supervisors to consciously perform their supervisory duties as defined in relevant

laws, regulations and the Articles of Association. It organised the seminars and training courses on supervision business for

2016, and arranged supervisors to attend the duty performance trainings given by regulators and the trainings held by the

Board of Directors on the US core laws and regulations and regulatory expectations. Through these trainings, supervisors

were expected to improve their understanding of the state of global banking and regulatory trends.

The Board of Directors and the Senior Management attached great importance to the supervision and guidance of the Board

of Supervisors, checked and implemented relevant rectifications, subdivided operation and management measures, effectively

mitigated potential risks and improved operation and management.

During the reporting period, the Board of Supervisors held no objection to such matters under its supervision regarding the

Bank’s operational and legal compliance, financial position, use of raised funds, purchase and sale of assets, connected

transactions, internal control and corporate information disclosure.


Board of Supervisors of Bank of China Limited

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ATTACHMENT C 2016 ANNUAL FINANCIAL REPORT

The statements below are prepared in accordance with the International Financial Reporting Standards.

Note: All of the below statements are excerpted from the audited financial statements of the Group for the year

2016 prepared in accordance with the International Financial Reporting Standards. The complete 2016 audited

financial statements are available on the Bank’s website at www.boc.cn and the website of Hong Kong Exchanges

and Clearing Limited at www.hkexnews.hk.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2016 (Amount in millions of Renminbi, unless otherwise stated)

Year ended 31 December

2016 2015

Interest income 566,139 615,056

Interest expense (260,091) (286,406)

Net interest income 306,048 328,650

Fee and commission income 98,319 100,905

Fee and commission expense (9,655) (8,495)

Net fee and commission income 88,664 92,410

Net trading gains 8,496 9,460

Net gains on financial investments 12,524 5,765

Other operating income 69,924 37,627

Operating income 485,656 473,912

Operating expenses (175,069) (185,401)

Impairment losses on assets (89,072) (59,274)

Operating profit 221,515 229,237

Share of results of associates and joint ventures 897 2,334

Profit before income tax 222,412 231,571

Income tax expense (38,361) (52,154)

Profit for the year 184,051 179,417

Attributable to:

Equity holders of the Bank 164,578 170,845

Non-controlling interests 19,473 8,572

184,051 179,417

Earnings per share

(Expressed in RMB per ordinary share)

— Basic 0.54 0.56

— Diluted 0.54 0.56

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


Year ended 31 December

2016 2015

Profit for the year 184,051 179,417

Other comprehensive income:

Items that will not be reclassified to profit or loss

— Actuarial gains/(losses) on defined benefit plans 259 (161)

— Other 18 14

Subtotal 277 (147)

Items that may be reclassified subsequently to profit or loss

— Net fair value (losses)/gains on available for sale financial assets (15,128) 6,573

— Share of other comprehensive income of associates and

joint ventures accounted for using the equity method (131) (361)

— Exchange differences from the translation of foreign operations 15,480 6,896

— Other 1,898 336

Subtotal 2,119 13,444

Other comprehensive income for the year, net of tax 2,396 13,297

Total comprehensive income for the year 186,447 192,714

Total comprehensive income attributable to:

Equity holders of the Bank 163,069 182,171


186,447 192,714

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2016 (Amount in millions of Renminbi, unless otherwise stated)

As at 31 December

2016 2015

ASSETS

Cash and due from banks and other financial institutions 659,982 654,378Balances with central banks 2,271,640 2,196,063Placements with and loans to banks and other financial institutions 594,048 426,848Government certificates of indebtedness for bank notes issued 117,421 91,191Precious metals 161,417 176,753Financial assets at fair value through profit or loss 124,090 119,062Derivative financial assets 130,549 82,236Loans and advances to customers, net 9,735,646 8,935,195Financial investments 3,848,794 3,476,033 — available for sale 1,609,830 1,078,533 — held to maturity 1,843,043 1,790,790 — loans and receivables 395,921 606,710Investment in associates and joint ventures 14,059 10,843Property and equipment 194,897 182,031Investment properties 21,659 23,281Deferred income tax assets 34,341 22,246Assets held for sale 50,371 237,937Other assets 189,975 181,500

Total assets 18,148,889 16,815,597

LIABILITIES

Due to banks and other financial institutions 1,420,527 1,764,320Due to central banks 867,094 415,709Bank notes in circulation 117,656 91,331Placements from banks and other financial institutions 302,792 447,944Derivative financial liabilities 107,109 69,160Due to customers 12,939,748 11,729,171 — at amortised cost 12,589,437 11,389,260 — at fair value 350,311 339,911Bonds issued 362,318 282,929Other borrowings 27,152 30,281Current tax liabilities 28,055 37,982Retirement benefit obligations 3,439 4,255Deferred income tax liabilities 4,501 4,291Liabilities classified as held for sale 42,488 196,850Other liabilities 438,918 383,769

Total liabilities 16,661,797 15,457,992

EQUITY

Capital and reserves attributable to equity holders of the BankShare capital 294,388 294,388Other equity instruments 99,714 99,714Capital reserve 141,972 140,098Treasury shares (53) (86)Other comprehensive income (3,854) (2,345)Statutory reserves 125,714 111,511General and regulatory reserves 193,462 179,485Undistributed profits 560,339 482,181

1,411,682 1,304,946


Total equity 1,487,092 1,357,605

Total equity and liabilities 18,148,889 16,815,597

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Attributable to equity holders of the Bank

Sharecapital

Other equityinstruments

Capitalreserve

Other comprehensive

incomeStatutoryreserves

General and regulatory

reservesUndistributed

profitsTreasury

shares

Non- controlling

interests Total

As at 1 January 2016 294,388 99,714 140,098 (2,345) 111,511 179,485 482,181 (86) 52,659 1,357,605

Total comprehensive income — — — (1,509) — — 164,578 — 23,378 186,447

Appropriation to statutory reserves — — — — 14,310 — (14,310) — — — Appropriation to general and regulatory reserves — — — — — 15,245 (15,245) — — — Dividends — — — — — — (58,236) — (6,003) (64,239)Net change in treasury shares — — — — — — — 33 — 33 Capital injection by non-controlling shareholders — — 1,738 — — — — — 5,995 7,733 Disposal of subsidiaries and other — — 136 — (107) (1,268) 1,371 — (619) (487)

As at 31 December 2016 294,388 99,714 141,972 (3,854) 125,714 193,462 560,339 (53) 75,410 1,487,092

Attributable to equity holders of the Bank

Sharecapital

Other equityinstruments

Capitalreserve

Other comprehensive

incomeStatutoryreserves

General and regulatory

reservesUndistributed

profitsTreasury

shares

Non-controlling

interests Total

As at 1 January 2015 288,731 71,745 130,797 (13,671) 96,105 159,341 407,836 (25) 42,569 1,183,428

Total comprehensive income — — — 11,326 — — 170,845 — 10,543 192,714

Conversion of convertible bonds and capital reserve 5,657 — 10,973 — — — — — — 16,630Capital injection by other equity instruments holders — 27,969 — — — — — — — 27,969Appropriation to statutory reserves — — — — 15,686 — (15,686) — — — Appropriation to general and regulatory reserves — — — — — 20,144 (20,144) — — — Dividends — — — — — — (60,946) — (3,497) (64,443)Net change in treasury shares — — — — — — — (61) — (61)Capital injection by non-controlling shareholders — — — — — — — — 3,077 3,077Equity component of convertible bonds — — (1,545) — — — — — — (1,545)Other — — (127) — (280) — 276 — (33) (164)

As at 31 December 2015 294,388 99,714 140,098 (2,345) 111,511 179,485 482,181 (86) 52,659 1,357,605

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ATTACHMENT D ELECTION OF DIRECTORS OF THE BANK

ELECTION OF DIRECTORS OF THE BANK

(Election of Mr. Chen Siqing and Mr. Zhang Xiangdong to be Re-appointed as Directors of the Bank)

Terms of office of Executive Director Mr. Chen Siqing and Non-executive Director Mr. Zhang Xiangdong are to expire on the

date of the Annual General Meeting to be held in 2017. According to the Articles of Association of the Bank, Directors shall be

elected by the Shareholders’ Meeting and serve a term of office of three years. A Director may serve consecutive terms if re-

elected upon the expiration of his/her term.

During their terms of office, Mr. Chen Siqing and Mr. Zhang Xiangdong have participated in the decision-making on the

material matters submitted to the Board of Directors and the special committees according to the laws and regulations

governing the Bank and the applicable provisions in the Articles of Association of the Bank. They have performed Director’s

responsibilities prudently, earnestly, diligently and faithfully.

Based on their willingness to be re-appointed as Directors and upon the approval by the Board of Directors of the Bank, it is

proposed by the Board of Directors that Mr. Chen Siqing be elected for re-appointment as Executive Director of the Bank, Mr.

Zhang Xiangdong be elected for re-appointment as Non-executive Director of the Bank. Their re-elected terms of office will be

three years which will commence from the date of approval by the Bank’s Annual General Meeting to be held in 2017 and end

on the date of the Bank’s Annual General Meeting to be held in 2020.

The biographic details of Mr. Chen Siqing and Mr. Zhang Xiangdong are respectively set out as follows:

Mr. Chen Siqing, born in 1960, has been serving as Vice Chairman of the Board of Directors since April 2014 and President

of the Bank since February 2014. Mr. Chen joined the Bank in 1990 and served as Executive Vice President of the Bank from

June 2008 to February 2014. Mr. Chen held various positions in the Bank from June 2000 to May 2008, including Assistant

General Manager and Vice General Manager of the Fujian Branch, General Manager of the Risk Management Department of

the Head Office and General Manager of the Guangdong Branch. Mr. Chen previously worked in the Hunan Branch of the

Bank before he was dispatched to the Hong Kong Branch of China and South Sea Bank Ltd. as Assistant General Manager.

Since December 2011, Mr. Chen has been serving as a Non-executive Director of BOC Hong Kong (Holdings) Limited and

Chairman of the Board of Directors of BOC Aviation Limited. Mr. Chen has been serving as Vice Chairman of the Board of

Directors of BOCHK (Holdings) since March 2014. Mr. Chen graduated from Hubei Institute of Finance and Economics in

1982. He obtained an MBA from Murdoch University, Australia in 1999. He is a Certified Public Accountant and holds the title

of Senior Economist.

Mr. Zhang Xiangdong, born in 1957, has been serving as Non-executive Director of the Bank since July 2011. Mr. Zhang

served as a non-executive director of China Construction Bank Corporation from November 2004 to June 2010, and served

as Chairman of the Risk Management Committee under its Board of Directors from April 2005 to June 2010. From August

2001 to November 2004, Mr. Zhang worked as Vice President of PBOC’s Haikou Central Sub-branch and concurrently

served in the SAFE as Deputy Director General of Hainan Province Branch and Deputy Director General and Inspector

of the General Affairs Department. Mr. Zhang served as a member of the Stock Offering Approval Committee of CSRC

from September 1999 to September 2001. He served as a member of China International Economic and Trade Arbitration

Commission from January 2004 to December 2008. Mr. Zhang graduated from Renmin University of China with a Bachelor’s

degree in Law in 1986. He completed his post-graduate studies in international economic law at Renmin University of China in

1988, and was awarded a Master’s degree in Law in 1990. Mr. Zhang holds the professional title of senior economist and is

qualified to practice law in China.

Mr. Chen Siqing is Vice Chairman and Non-executive Director of BOC Hong Kong (Holdings) Limited and also the Chairman

and Non-executive Director of BOC Aviation Limited.

Save as disclosed above, neither of the Directors hold any other position with the Bank or any of its subsidiaries.

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Currently, the remuneration of the Directors of the Bank are as follows: (i) Executive Directors do not receive director’s

remuneration from the Bank or its subsidiaries, but receive corresponding remuneration in accordance with the positions

in the Bank, including salaries, bonuses, employer’s contribution to compulsory insurances and housing allowances. The

remuneration of the Executive Directors is determined with reference to the relevant national policies. The Personnel and

Remuneration Committee of the Bank is responsible for reviewing the annual remuneration scheme, making suggestion to the

Board of Directors and submit the scheme to the Shareholders’ Meeting for consideration and approval. (ii) Non-executive

Directors (excluding Independent Non-executive Directors) do not receive remuneration from the Bank. Their remuneration

shall be paid by Central Huijin Investment Ltd..

As far as the Directors of the Bank are aware and save as disclosed above, the aforementioned Directors do not hold any

directorship in other public companies, the securities of which are listed on any securities market in Chinese mainland,

Hong Kong or overseas in the last three years, nor do they have any relationship with any Director, senior management or

substantial or controlling shareholder of the Bank. As at the date of this proposal, the aforementioned Directors do not have

any interests in the shares of the Bank or its associated companies according to Part XV of the Hong Kong Securities and

Futures Ordinance.

Save as disclosed above, there is no other information in relation to the re-appointment of the aforementioned Directors that

needs to be disclosed pursuant to any of the requirements set out in Rules 13.51(2)(h) to (v) of the Rules Governing the Listing

of Securities on The Stock Exchange of Hong Kong Limited, nor are there any other matters that need to be brought to the

attention of the shareholders of the Bank. The aforementioned Directors have not been penalized by the China Securities

Regulatory Commission or other relevant departments or stock exchanges.

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ELECTION OF DIRECTORS OF THE BANK

(Election of Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie to be

Appointed as Non-executive Directors of the Bank)

Upon consideration and approval at the third meeting of the Board of Directors of 2017 held on 31 March 2017, the Board of

Directors hereby proposes that Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie be elected as Non-executive Directors

of the Bank. Terms of office of Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie will be three years which will commence

from the date of approval of their qualifications by China Banking Regulatory Commission and end on the date of the Annual

General Meeting of the Bank to be held in 2020.

The biographic details of Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie are respectively set out as follows:

Ms. Xiao Lihong, born in 1965, has been serving as Inspector of the Current Account Management Department of the State

Administration of Foreign Exchange (“SAFE”) since April 2014. She was Deputy Director-General of the Current Account

Management Department of SAFE from September 2004 to April 2014. She served successively as Deputy Chief of the

Current Account Division and the Non-trade Foreign Exchange Management Division of the Supervision and Inspection

Department, and Chief of the Business Supervision Division of the Current Account Management Department of the SAFE

from October 1996 to September 2004. She graduated from the China Central University of Finance and Economics in

August 1988 with a Bachelor’s Degree, and from the Central University of Finance and Economics and Peking University in

September 2003 and July 2012, respectively, both with a Master’s Degree.

Ms. Wang Xiaoya, born in 1964, has been serving as Non-executive Director of Industrial and Commercial Bank of China

Limited since January 2012. From May 2007 to December 2011, she was Deputy Director-General of the Research Bureau

of the People’s Bank of China. She taught at the Central China Normal University where she served as Assistant Lecturer

and Lecturer from July 1985 to January 1995. She served as Deputy Chief and Chief of the Macroeconomic Analysis Division

of the Research Bureau of the People’s Bank of China from July 1997 to May 2007, and concurrently as Deputy Mayor of

Tongliao City in the Inner Mongolia Autonomous Region from October 2005 to February 2007. She received a professional

title of research fellow in 2005. Ms. Wang was a Member of the Post-Doctoral Academic Committee and a Post-Doctoral Co-

mentor at the People’s Bank of China Research Institute of Finance. Currently, she is Invited Professor at the Graduate School

of Chinese Academy of Social Sciences, a mentor at the PBC School of Finance, Tsinghua University and a member of the

Academic Committee of the China Institute for Rural Studies of Tsinghua University. Ms. Wang graduated from the Economics

Faculty of Central China Normal University and the Graduate School of Chinese Academy of Social Sciences in January 1990

and June 1997 with a Master’s Degree and a Doctorate’s Degree, respectively.

Mr. Zhao Jie, born in 1962, has been serving as Inspector of the Agricultural Department of the Ministry of Finance since

August 2014. He was an Inspector of the Office of Countryside Comprehensive Reform of the State Council from September

2008 to August 2014. From December 1991 to September 2008, Mr. Zhao served successively as Chief of Division of

Taxation and Chief of Comprehensive Division of the Department of Taxation, Deputy Chief of the Department of Taxation,

Deputy Chief of the Department of Tax System and Regulations of the Ministry of Finance, Chief of Office of Panel of

Countryside Taxation Reform of the State Council, and Deputy Chief and Inspector of Office of Countryside Comprehensive

Reform of the State Council. He graduated from Jiangxi University of Finance and Economics and Public Institute of the

Ministry of Finance in August 1982 and July 2005, respectively, with a Bachelor’s Degree and a Doctorate’s Degree.

Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie do not hold any position with the Bank or any of its subsidiaries.

Currently, Non-executive Directors (excluding independent Non-executive Directors) do not receive remuneration from the

Bank. Their remuneration shall be paid by Central Huijin Investment Ltd..

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As far as the Directors of the Bank are aware and save as disclosed above, Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr.

Zhao Jie do not hold any directorship in other public companies, the securities of which are listed on any securities market in

Chinese mainland, Hong Kong or overseas in the last three years, nor do they have any other relationship with any Director,

senior management or substantial or controlling shareholder of the Bank, nor have they received any remuneration from the

Bank. As of the date of this proposal, Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie do not have any interests in the

shares of the Bank or its associated companies within the meaning of Part XV of the Securities and Futures Ordinance of

Hong Kong.

Save as disclosed above, there is no other information in relation to the appointment of Ms. Xiao Lihong, Ms. Wang Xiaoya

and Mr. Zhao Jie that needs to be disclosed pursuant to any of the requirements set out in Rule 13.51(2)(h) to (v) of the Rules

Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, nor are there any other matters that need

to be brought to the attention of the shareholders of the Bank. Ms. Xiao Lihong, Ms. Wang Xiaoya and Mr. Zhao Jie have not

been penalized by China Securities Regulatory Commission or other relevant departments or stock exchanges.

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APPENDIX II REPORT ON THE CONNECTED TRANSACTIONS FOR 2016

REPORT ON THE CONNECTED TRANSACTIONS FOR 2016

In 2016, Bank of China Limited (hereinafter referred to as “the Bank”) continued implementing laws, regulations and

regulatory provisions, improved the connected transactions management institutions, optimized the connected transactions

monitoring system, implemented process and refined management of connected transactions, made every effort to improve

connected transactions management, and ensured continuous effectiveness of the connected transaction mechanism.

According to the Administrative Measures for Connected Transactions between Commercial Banks and Their Insiders

or Shareholders published by China Banking Regulatory Commission (hereinafter referred to as “CBRC Rules”) and the

Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 26 — Special Provisions on

Information Disclosure of Commercial Banks published by China Securities Regulatory Commission (hereinafter referred to as

“CSRC”), the report on the Bank’s connected transactions in 2016 is hereby given as follows:

I. Work of the Connected Transactions Control Committee

The Connected Transactions Control Committee held three meetings in 2016, at which it mainly reviewed and approved

the report on connected transactions in 2015 and the report on the connected party list, among others. It also reviewed

the statement of connected transactions of the Bank in 2015 and report on the thematic internal audit of connected

transaction management of the Group in 2015, among others.

During the reporting period, the Connected Transactions Control Committee paid constant attention to the

development of the Bank’s connected transaction monitoring system and the transmission of its connected transaction

policy. Committee members put forward constructive suggestions regarding connected transaction policymaking and

system development.

II. Connected transactions management

i. Improved the system of rules and promoted the transmission of connected transactions management

rules.

The Bank issued the Connected Transactions Management Handbook (2016) (hereinafter referred to as the

“Handbook”) to deepen the understanding and recognition of the connected transactions management among

managers and operation staff at all levels and promote the transmission of the management system. The

Handbook covers the external regulatory rules, internal management requirements and operational procedures

applicable to the Bank’s connected transactions and rules for different management roles were compiled

separately So far, the Bank has established a three-level connected transactions management rules’ system

comprising of basic rules, implementation details and transmission rules.

ii. Optimized connected transactions monitoring system and continued to enhance the technological

level of connected transactions management

The Bank continued to increase its input in construction of monitoring system based on the 2012–2015 versions.

In 2016, the Bank comprehensively optimized the connected transactions monitoring system and other related

systems. In the aspect of connected party management, the approximate string matching was put into operation,

which avoided the leakage of connected corporate customers caused by limited declaration information, and

improved the ability of system to identify connected parties. Several measures were deployed in the connected

transactions monitoring: first, the Bank expanded the scope of automatic collection, achieving the automatic

collection of connected transactions of overseas institutions; second, the hard control was embedded into the

personal loan service to strictly prevent prohibited matters regarding connected transactions defined by the

CBRC; third, the Bank further optimized retrieval, additional recording and report form statistics of the connected

transaction. The rollout and ongoing refinement of the system improved the technological level of connected

transactions management.

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iii. Regulated the management of connected parties and consolidated the basis of connected

transactions management

The Bank continued to implement the connected party management mechanism consisting of both real-time

and annual updates. The timeliness and effectiveness of connected party information were improved by leading

management departments supervising the relevant functional departments for the connected party to carry out

real-time updates of the connected parties and such functional management departments urging declaration

obligors of connected parties to fulfill the obligation to declare compliant with laws. In 2016, the Bank, on the

one hand, strengthened the verification and management of the completeness, accuracy and timeliness of the

information of connected parties. On the other hand, it strengthened the institutional transmission of the obligor

of the connected parties. Responsibilities and requirements of the connected party declaration were specifically

articulated in the Handbook.

iv. Reinforced the daily monitoring of connected transactions to strictly control connected transaction

risk.

The Bank strictly followed the Administrative Measures for Connected Transactions and the Implementation Rules

for Management of Connected Transactions in identifying connected transactions, conducting single transaction

monitoring and continuous monitoring over connected transactions, reporting and reviewing and supplementing

the record of connected transactions to meet the requirements of the external laws and regulations and

regulatory rules for the pricing of connected transactions, prohibition of special connected transactions and

approval and disclosure of connected transactions. The Bank provided continuous and targeted professional

trainings and transfer trainings for connected party transaction managers to further enhance the compliance

awareness of the institutions at all levels and improve the Group’s connected transactions management.

v. Strictly performed the obligation of connected transaction disclosure and protected shareholders’

right to know

The Bank strictly observed rules of regulatory authorities for disclosure of connected transactions. Firstly,

connected transactions were disclosed through interim and annual reports, including major connected

transactions and transactions with connected natural persons. Secondly, special reports on connected

transactions were submitted to the Shareholders’ Meeting to report Committee operations, connected

transaction management and connected transactions in the year. By fulfilling the above disclosure obligations,

the Bank protected the shareholders’ right to know the connected transactions and their management and

safeguarded interests of shareholders.

To conclude, the Bank’s connected transactions management mechanisms delivered stable performance in

2016, which provided reasonable assurance for the interests of all the shareholders and the Bank’s overall

interests as well.

III. Connected transactions

i. Connected parties

By December 31, 2016, the Bank had 1,395 connected parties including 1,189 connected natural persons,

representing an increase of 104 compared with the same period of 2015 and accounting for 85.23% of all the

connected parties; the Bank had 206 connected legal persons or other organizations, representing a increase of

175 compared with the same period of 2015 and accounting for 14.77% of all the connected parties. Specifically,

the Bank had 1,019 connected parties under CBRC Rules, 247 connected parties under the Rules Governing

the Listing of Stocks on Shanghai Stock Exchange (hereinafter referred to as “Listing Rules of Shanghai Stock

Exchange”) and 435 connected parties under the Hong Kong Listing Rules.

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ii. Connected transactions

In 2016, the Bank’s connected transactions were determined according to the general business principle;

the terms and conditions of the transactions were fair and reasonable and ensured the interests of all the

shareholders and the Bank’s overall interests as well.

1. Connected transactions under CBRC Rules

In 2016, the Bank had no significant connected transactions, and had no connected transactions of asset

transfer and rendering of services.

In respect of credit transactions, the Bank further implemented CBRC’s requirements for prohibiting

providing unsecured loans to connected parties, prohibiting providing guarantee for the financing of

connected parties and prohibiting accepting its own equity as pledge to provide loans, and all the

supervision indicators met CBRC’s regulatory requirements. As at December 31, 2016, the net balance of

the Bank’s loans to connected parties was RMB108,819,800, accounting for 0.0068% of its net capital;

specifically, the net amount of loans to the largest connected party was RMB10,022,700 accounting for

0.0006% of its net capital. The Bank’s loans to connected parties were priced with reference to the market

price of a third party and all the loans were classified by risk as Pass loans. As at December 31, 2016,

the Bank’s credit balance with the connected parties accounted for 0.0011% of the Bank’s total credit

balance.

2. Connected transactions under the listing rules of Shanghai Stock Exchange

In 2016, the Bank had no connected transactions that shall be disclosed timely and submitted to the

Board of Directors and the Shareholders’ Meeting for review. In respect of transactions with connected

natural persons, the Bank carried out transactions with the Head Office’s directors, supervisors and

senior management members and their relatives, and the transactions were mostly deposits, credit cards

and loans. As at December 31, 2016, the balance of the Bank’s loans to connected natural persons

was RMB11,488,200. In respect of transactions with connected legal persons, the Bank carried out

transactions with the other companies where the Bank’s independent directors work as independent

directors, and the transactions were mostly deposits, treasury transactions and wealth management.

3. Connected transactions under Hong Kong Listing Rules

In 2016, the Bank has engaged in a number of connected transactions with its connected persons in the

ordinary and usual course of its business. Such transactions are exempted from the reporting, annual

review, announcement and independent shareholders’ approval requirements according to the Hong

Kong Listing Rules. In respect of transactions with connected natural persons, the Bank carried out

transactions with the connected parties on the listed company level and the transactions were mostly

deposits, loans and credit cards. In respect of transactions with connected legal persons, the Bank carried

out transactions with companies controlled by directors of the affiliates and the transactions were mostly

deposits, wealth management and loans.



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APPENDIX III DUTY REPORT OF INDEPENDENT DIRECTORS FOR 2016

DUTY REPORT OF INDEPENDENT DIRECTORS FOR 2016

According to relevant laws, regulations and regulatory rules, the internal management rules of Bank of China (the “Bank”

or “BOC”) and the requirements set on independent directors for achieving sound corporate governance, the Bank’s

independent directors performed duties prudently, earnestly, diligently and faithfully in 2016. They played an active role

in safeguarding the legitimate rights and interests of the Bank and its shareholders, including minority shareholders. They

continuously advanced the implementation of strategic development plan and made great contributions to the Bank’s

development. The duty report of independent directors in 2016 is presented as follows:

I. Basic information on independent directors

The Board of Directors maintained a reasonable and diversified structure. Currently, the Board of Directors comprises

13 members. Besides the Chairman, there are three executive directors, four non-executive directors and five

independent directors. The proportion of independent directors exceeds one-third of the total number of directors,

complying with the quorum requirement specified in the Articles of Association and relevant regulatory requirements.

The independent directors serve as the Chairmen of the Audit Committee, Risk Policy Committee, Personnel and

Remuneration Committee and Connected Transactions Control Committee, respectively. In 2016, the Bank’s

composition of independent directors changed: Mr. Wang Changyun began to serve as independent director of the

Bank since August 18, 2016 and take up the position as member of the Strategic Development Committee, Audit

Committee, Risk Policy Committee, Personnel and Remuneration Committee of the Board of Directors since September

21, 2016; Mr. Chow Man Yiu, Paul ceased to serve as the Bank’s independent director and committee member

since August 18, 2016 due to term expiration; Mr. Jackson Tai ceased to serve as the Bank’s independent director

and committee member since September 1, 2016 due to work changes. Ms. Angela Chao began to serve as the

Bank’s independent director and take up the position as member of the Audit Committee, Risk Policy Committee, and

Connected Transactions Control Committee of the Board of Directors since January 4, 2017. Working experiences of

the Bank’s current independent directors as well as their positions in other institutions are as follows:

Nout Wellink, Independent Director of the Bank since October 2012. Mr. Wellink served as a member of the Executive

Board of the Dutch Central Bank (“DNB”) for almost 30 years, the last 14 years as its President. He retired from DNB

on 1 July 2011. DNB is part of the European System of Central Banks since 1999, but still holds supervision on national

pension funds and insurance companies. Since the establishment of the European Monetary Union, Mr. Wellink served

as a member of the Governing Council of the European Central Bank (“ECB”). Starting from 1997, Mr. Wellink served

as a member of the Board of Directors of the Bank for International Settlements, which he chaired from 2002 to 2006.

From 2006 to 2011, he also chaired the Basel Committee on Banking Supervision. From 1997 to 2011, Mr. Wellink

was a member of the Group of Ten Central Bank Governors and Governor of the International Monetary Fund. Prior

to his appointment in 1982 as an executive director of DNB, Mr. Wellink held several posts in the Dutch Ministry of

Finance, including as the Treasurer General from 1977 to 1982. After studying Dutch law at Leyden University from

1961 to 1968 with a Master’s degree obtained, Mr. Wellink obtained a doctor’s degree in economics at the Rotterdam

Erasmus University in 1975. In 2008 he received an honorary doctorate from Tilburg University. From 1988 to 1998,

Mr. Wellink was an Extraordinary Professor at the Free University in Amsterdam. Mr. Wellink is currently Vice Chairman

of Supervisory Board of PricewaterhouseCoopers Accountants N.V., and Member of Advisory Board of Systemic Risk

Council. Mr. Wellink had served many additional functions in the past, including member of the supervisory board of

a bank, a re-insurance company and other enterprises on behalf of the Dutch authorities, Chairman of the Board of

Supervisors of the Netherlands Open Air Museum, member and treasurer of the Royal Picture Gallery Mauritshuis and

the Westeinde Hospital in The Hague. He was awarded a Knighthood in the Order of the Netherlands Lion in 1980 and

is Commander of the Order of Orange-Nassau since 2011.

Lu Zhengfei, Independent Director of the Bank since July 2013. Mr. Lu currently serves as the distinguished professor

of Cheung Kong Scholar of Guanghua School of Management, Peking University. He served as the head of the

Accounting Department of the School of Business, Nanjing University between 1994 and 1999, and the head of

the Accounting Department of Guanghua School of Management, Peking University between 2001 and 2007, and

Associate Dean of Guanghua School of Management, Peking University between 2007 and 2014. Mr. Lu also currently

serves as an executive director of the Accounting Society of China and Deputy Director of Financial Management

Committee, an editorial board member of Accounting Research and Audit Research, and a member of the Disciplinary

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Committee of the Chinese Institute of Certified Public Accountants. In 2001, he was elected as a member of “The

Hundred People Project of Beijing New Century Social Science Theoretical Talent”. In 2005, he was elected to the “New

Century Excellent Talent Support Plan” of the Ministry of Education, PRC. In 2013, he was elected to the “Renowned

Expert Training Project” (first batch) of the Ministry of Finance. In 2014, he was elected as distinguished professor

of Cheung Kong Scholar of the Ministry of Education, PRC. He currently serves as an independent non-executive

director or an independent supervisor of a number of companies listed on the Hong Kong Stock Exchange, including:

Independent Non-executive Director of Sinotrans Ltd. since September 2004, Independent Non-executive Director of

Sino Biopharmaceutical Ltd. since November 2005, Independent Non-executive Director of China National Materials

Co., Ltd. since December 2009, and Independent Supervisor of PICC Property and Casualty Co., Ltd. (“PICC P&C”)

since January 2011. He was an independent non-executive director of PICC P&C from February 2004 to December

2010. Mr. Lu graduated from Renmin University of China in 1988 with a Master’s degree in Economics (Accounting),

and received his Doctor’s degree in Economics (Management) from Nanjing University in 1996.

Leung Cheuk Yan, Independent Director of the Bank since September 2013. He is a former partner of Baker &

McKenzie, which he joined in July 1987 and from which he retired in June 2011. During 2009 and 2010, he had served

as a part-time member of the Central Policy Unit of The Hong Kong Special Administrative Region Government. Mr.

Leung has been an independent non-executive director of MMG Limited, which is listed on The Stock Exchange of

Hong Kong Limited, since July 2012. Mr. Leung graduated from The Chinese University of Hong Kong with a Bachelor

of Social Science degree (First Class Honours) in 1976, obtained a Master of Philosophy degree from The University of

Oxford in 1981 and completed his legal study at The College of Law in England in 1982. He was admitted to practice

as a solicitor in Hong Kong in 1985, in England and Wales in 1988, in the Australian Capital Territory in 1989 and in

Victoria, Australia in 1991. He is a Senior Associate Member of St. Antony’s College, Oxford.

Wang Changyun, Independent Director of the Bank since August 2016. Mr. Wang currently serves as professor and

doctoral supervisor in finance at Renmin University of China (“RUC”). He served as a lecturer at RUC from 1989 to 1995

and as a lecturer at Business School, National University of Singapore from 1999 to 2005. He served successively as

the Chair of Applied Finance Department of RUC, Director of China Financial Policy Research Center (a key research

base of Ministry of Education) and Executive Vice Dean of Hanqing Advanced Institute of Economics and Finance at

RUC from 2006 to 2016. Mr. Wang is currently also the Vice Chairman of China Investment Specialty Construction

Association, Director of China Finance Annual Meeting Committee, Director of China Finance Association, Deputy

Editor of Finance Research Quarterly, Deputy Editor of China Finance Research, and Deputy Editor of China Financial

Review. He also serves as the standing committee member of Beijing Haidian District People’s Political Consultative

Conference, the Central Committee member of China Democratic League, the special auditor of State Auditing

Administration, the independent non-executive director of Hope Commercial Factoring Co., Ltd., Sichuan Star Cable

Co., Ltd. and Beijing Haohua Energy Resource Co., Ltd. Mr. Wang has received social recognition and prizes including

the Special Government Allowance of State Council, Best Paper Award of Chicago Board of Trade in 2001, and the

“Middle Age Experts with National Outstanding Contribution”, membership of “the Program for New Century Excellent

Talents” of Ministry of Education in 2004, “Financial Support of National Science Fund for Distinguished Young

Scholars” in 2007, a member of the “New Century National Hundred, Thousand and Ten Thousand Talent Program” in

2013, and the “Cheung Kong Distinguished Professor” of Ministry of Education in 2014. He obtained his Master degree

in economics from RUC in July 1989 and Doctorate in Financial Economics from the University of London in January

1999.

Angela Chao, Independent Director of the Bank since January 2017. Ms. Chao serves as Deputy Chairman of Foremost

Group where she is responsible for international shipping finance, strategy, chartering and ship management and

operations. From 1994 to 1996, Ms. Chao worked in the mergers & acquisitions department of Smith Barney, which

is now Morgan Stanley Smith Barney. From 1996 to 1999, Ms. Chao served as deputy general manager of Foremost

Group, and from 2001 to 2008, Ms. Chao had successively served as vice president and senior vice president of

Foremost Group. Since 2008, she has served as deputy chairman of Foremost Group. In May 2005, Ms. Chao was

unanimously voted to be BIMCO39’s (The Baltic and International Maritime Council 39) Counsellor. In September 2005,

she was selected as “Eminent Young Overseas Chinese” by the Overseas Chinese Affairs Office of the State Council

of China. In November 2007, she was invited as speaker of World Shipping (China) Summit. In April 2011, she became

a Founding Member of the Wall Street Journal’s Task Force on Women in the Economy. Ms. Chao currently serves on

the Boards of The Metropolitan Opera, Museum of Modern Art PS1, the UK P&I Marine Insurance Mutual, Foremost

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Foundation, Shanghai Mulan Education Foundation, and she also serves on the Harvard Business School’s Board of

Dean’s Advisors, Carnegie-Tsinghua Center for Global Policy Board of Advisors, Lincoln Center Global’s China Advisory

Council, the Chairman’s Council of the Metropolitan Museum of Art and American Bureau of Shipping Council. In

addition, she is also a member of the Council on Foreign Relations, serves on the Young Leaders Forum of the National

Committee on US-China Relations and serves as the member of Shanghai Jiao Tong University’s Antai College of

Economics and Management Advisory Board, and honorary chairperson of the Jiao Tong University Alumni Association

in America. Ms. Chao graduated from Harvard College in three years in 1994 with a Bachelor’s degree in economics

(Magna Cum Laude), and received her Master of Business Administration degree from Harvard Business School in

2001.

As stipulated in relevant domestic regulatory requirements and Rule 3.13 of the Hong Kong Listing Rules, the Bank

has received the annual confirmation in writing from each independent director with regard to his independence.

Based on these confirmations and relevant information in possession of the Board of Directors, the Bank confirms their

independent status.

II. Overview of Annual Duty Performance by Independent Directors

i. Attendance of the Shareholders’ Meeting, Meetings of the Board of Directors and Special Committees

In 2016, the Bank held one annual general meeting and one extraordinary general meeting, which reviewed and

approved 18 proposals and heard three reports; the Bank held 11 meetings of the Board of Directors, which

reviewed and approved 60 proposals and heard 6 reports; the Bank held 31 meetings of special committees of

the Board of Directors. Independent Directors’ attendance of the shareholders’ meeting, meetings of the Board

of Directors and special committees is as follows:

Number of meetings attended in person/Number of meetings convened during term of office

Meetings of the Special Committees of the Board of Directors

DirectorsShareholders’

Meetings

Meetings of the Board of

Directors

Strategic Development

CommitteeAudit

CommitteeRisk Policy Committee

Personnel and Remuneration

Committee

Related Party Transactions

Control Committee

Incumbent DirectorsNout Wellink 2/2 11/11 11/11 5/5 5/5 — —Lu Zhengfei 1/2 11/11 — 5/5 — 7/7 3/3Leung Cheuk Yan 2/2 11/11 — 5/5 — 7/7 3/3Wang Changyun 1/1 5/5 3/3 2/2 2/2 2/2 —Angela Chao — — — — — — —

Resigned DirectorsChow Man Yiu, Paul 1/1 4/6 — 2/2 2/2 4/4 1/1Jackson Tai 1/1 7/7 7/7 3/3 3/3 — 2/2

Notes: 1. Mr. Lu Zhengfei was not able to attend the Bank’s first Extraordinary General Meeting of 2016 on

November 18, 2016 due to other important business engagements.

2. Mr. Wang Changyun began to serve as independent director of the Bank since August 18, 2016

and take up the position as member of the Strategic Development Committee, Audit Committee,

Risk Policy Committee, Personnel and Remuneration Committee of the Board of Directors since

September 21, 2016.

3. Ms. Angela Chao began to serve as the Bank’s independent director and take up the position as

member of the Audit Committee, Risk Policy Committee, and Connected Transactions Control

Committee of the Board of Directors since January 4, 2017.

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4. Mr. Chow Man Yiu, Paul was not able to attend the meetings of the Board of Directors in person on

January 19 and May 12, 2016 due to other important business engagements. He ceased to serve as

the Bank’s independent director and member of the Personnel and Remuneration Committee, Audit

Committee, Risk Policy Committee, and Connected Transactions Control Committee since August

18, 2016 due to term expiration.

5. Mr. Jackson Tai ceased to serve as the Bank’s independent director and member of the Strategic

Development Committee, Audit Committee, Risk Policy Committee and Connected Transactions

Control Committee since September 1, 2016 due to work changes.

ii. Operation of the Board of Directors and special committees

1. In 2016, the Bank’s independent directors attended meetings of the Board of Directors, reviewed

proposals, participated in discussions, had a good knowledge of relevant information, offered their

professional opinions independently, objectively and diligently, in accordance with the Articles of

Association, the Procedural Rules for Board of Directors of Bank of China Limited and the Work Rules of

Independent Directors of Bank of China Limited.

The Bank convened eight on-site meetings of the Board of Directors on January 19, March 30, April 26,

May 12, June 8, August 30, October 26 and December 21, respectively. At these meetings, it reviewed

and approved 56 proposals, mainly involving the Bank’s significant decisions, personnel nomination and

appointment, and formulation and improvement of policies and rules. These board meetings also heard

six reports, including the external auditor’s report on internal control audit and management proposal

for 2015. In 2016, the Bank held three meetings of the Board of Directors via written resolutions, which

reviewed and approved such proposals as establishment of the “Charity Foundation of Bank of China”,

adjustments to chairmen and members of special committees of the Board of Directors and the Pilot

Investment-Loan Linkage Plan of Bank of China.

2. The Strategic Development Committee held eight on-site meetings and three meetings by written

resolution in 2016. At these meetings, it mainly approved the proposal on profit distribution for 2015,

the proposal on distribution of dividends of preference shares, the proposal on pilot investment-loan

linkage and establishment of an asset management company. In response to changes in international

and domestic economic and financial situations, the Strategic Development Committee stepped up its

analysis of the operating environment, paid constant attention to opportunities and challenges arising

from the supply-side structural reform on the Bank, and put forward many important comments and

recommendations regarding the implementation of the Bank’s strategic development plans and the

promotion of transformative development, thus providing strong support to the scientific decision-making

of the Board of Directors.

3. The Audit Committee held five meetings in 2016. At these meeting, it mainly deliberated on the proposals

related to the quarterly, interim and annual financial reports and annual internal control assessment reports,

adjustment to and optimization of human resource management system of the audit line, and appointment

and audit fee of the external auditor for 2017; it arranged for the internal audit work in 2016; it heard such

special reports as senior management’s response to proposal of the external auditor for 2015, overseas

regulatory information in 2016, internal audit work in 2015 and in the first half of 2016, asset quality in

the first quarter of 2016, internal control in 2016, prevention and control of external infringement cases in

2016, progress of internal control audit by the external auditor, independence compliance and audit plan

of the external auditor for 2017. Moreover, in response to changes in domestic and overseas economic

trends, the Audit Committee paid close attention to the changes in external environment and financial

situation and the Bank’s achievements in business performance improvement and cost-effectiveness

control and put forward many important comments and recommendations regarding the improvement

of the corporate governance mechanism, audit independence, credit asset quality and internal control

measures. The Audit Committee learnt about in detail the 2016 audit plan from the external auditor before

it launched the audit, including the priorities of the 2016 Annual Report, risk judgment and identification

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methods, accounting standards application, internal control, compliance, fraud test and HR arrangement

audit according to the Procedure Rules on the Preparation of Annual Report of the Board Audit Committee

of Bank of China Limited. Besides, it suggested the auditor making the Audit Committee know its

different judgments from the senior management on the same issue as well as the process and results of

reaching a consensus during the audit. The Audit Committee heard and reviewed reports from the senior

management concerning the Bank’s operating performance and major financial data. It also requested

that the senior management submit the annual financial statements to the auditor in a timely manner,

so as to ensure sufficient time for the annual audit. During the audit, the Audit Committee maintained

independent communications with the auditor and arranged separate communications between the auditor

and independent directors. At its first meeting in 2017, the Audit Committee reviewed and approved the

Bank’s 2016 financial statements, formed into a resolution and then submitted it to the Board of Directors

for approval.

4. The Risk Policy Committee held five meetings in 2016, at which it mainly reviewed and approved the

US Risk and Management Committee Charter, the market risk stress testing policy, the liquidity risk

management policy, the administrative measures for suspension and exemption of information disclosure,

country risk limit, market risk limit and the advanced capital management approach projects submitted for

approval. The committee also regularly reviewed the Group risk reports. In addition, the committee paid

particular attention to critical risk issues in response to changes in overseas and domestic economic and

financial conditions, adjustments of the government’s macro policies and overall supervision situations at

home and abroad. The committee members offered important opinions and recommendations regarding

the improvement of the Bank’s risk governance mechanism and the effective prevention and control of

risks, including credit risk, market risk, operational risk, legal and compliance risk, liquidity risk and so

on. The committee paid a close attention to the effectiveness of the Bank’s risk management system,

conducted quarterly assessment of the system and then came to the conclusion that the current risk

management system was solidly effective.

The US Risk and Management Committee, subordinate to the Risk Policy Committee, held five meetings in

2016, at which it heard the reports of each institution in the US on risk management and operating status

and the latest regulatory developments in the US, and approved the relevant framework documents and

important policies and rules of institutions in the US and New York Branch. The US Risk and Management

Committee put forward many important opinions and recommendations on how to strengthen risk

prevention and meet compliance requirements, in consideration of the regulatory developments in the US,

market changes and the business development strategies of BOC institutions in the US.

5. The Personnel and Remuneration Committee held five on-site meetings and two meetings via written

resolutions in 2016, at which it mainly reviewed and approved the plan on the performance assessment

results of and remuneration distribution for the Chairman, executive directors and senior management

in 2015 and the implementation plan on performance assessment of the Chairman, the President, the

Chairman of the Board of Supervisors and other senior management members in 2016, nominated

three executive director candidates, one non-executive director candidate and four independent director

candidates, appointed two senior management members, and adjusted the chairmen, members and

secretaries of special committees of the Board of Directors. The committee also reviewed the remuneration

distribution plan for the Chairman of the Board of Supervisors and shareholder supervisors in 2015.

Besides, the committee put forward important opinions and recommendations on further improving the

Bank’s performance management in line with regulatory requirements.

6. The Connected Transactions Control Committee held three meetings in 2016, at which it mainly reviewed

and approved such proposals as the report on connected transactions in 2015 and the report on the list

of related parties, deliberated on the statement of the connected transactions of the Bank in 2015 and

the report on special internal audit of connected transaction management of the Bank in 2015. During

the reporting period, the Connected Transactions Control Committee paid constant attention to the

development of connected transaction monitoring system and the dissemination of connected transaction

rules, and committee members put forward important and constructive suggestions on the connected

transaction rules and system development.

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In 2016, the independent directors did not raise any objection to the resolutions of the Board of Directors

or its special committees.

In 2016, independent directors put forward recommendations on the Bank’s strategic management,

group risk management, anti-money laundering, overseas institution development, and so on. The

recommendations have been adopted and diligently implemented by the Bank.

iii. Field survey

In 2016, independent directors actively engaged in the Bank’s affairs through field survey, comprehensively know

the Bank’s business development and branches’ implementation of strategies of the Bank. Independent directors

also made field surveys of domestic and overseas branches and institutions of the Bank. Domestically, in April

2016, all the then independent directors of the Bank, including Chow Man Yiu, Paul, Jackson Tai, Nout Wellink,

Lu Zhengfei and Leung Cheuk Yan, and all the other non-executive equity directors carried out surveys in Yunnan

Branch; in October 2016, the Bank’s independent directors Nout Wellink, Leung Cheuk Yan and Wang Changyun

and all the other non-executive directors carried out surveys in Qinghai and Gansu branches. During the period

of surveys, independent directors respectively heard branches’ reports on operation and management, business

development, internal control and management of risks and NPA management, paid visits to some key clients,

successively investigated the banking departments of branches and some grass-root outlets, communicated

with frontline employees to know grass-root institutions’ business operation, internal control, customer service,

team building, corporate culture, and so on. Internationally, in August 2016, the Bank sent a delegate, composed

of the then independent directors Jackson Tai, Nout Wellink and Leung Cheuk Yan and two non-executive

directors, to New York Branch, to hear its report on operation and management, risk control, anti-money

laundering, three lines of defense and business development. They also visited the headquarters of OCC in

Washington to know the latest regulatory developments.

iv. Training

In 2016, the Bank paid much attention to enhance independent directors’ expertise, with a special focus on

arranging relevant trainings. The Bank organized independent directors to participate in the “Latest Regulatory

Policy Interpretation” activity carried out in the Washington Headquarters of OCC, and invited David Samuels

from the US-based Promontory Group to provide the training of “Primary Regulatory Rules in the US and

Expectations” in the Bank, and Ernst & Young Certified Public Accountants to provide such special training

courses as “Challenges to the Banking Industry by Implementation of International Financial Reporting Standards

9” and the “Tax Base Erosion and Profit Shifting”. In November 2016, the Bank specially introduced its risk

management and internal control system to the independent directors appointed in 2016.

v. The Bank’s support to the work of independent directors

In 2016, the Bank enhanced communications in Board of Directors and the Board of Supervisors, and held

meetings to help independent directors know its operation and management more comprehensively, thereby

ensuring more efficient deliberation by the Board of Directors. In August and December 2016, apart from

the regular communications, the Bank also held video meetings to report and communicate on seven issues

that independent directors were concerned about, including interim report of 2016, investment-loan linkage

implementation plan, establishment of “Charity Foundation of Bank of China” and setup of an asset management

company, based on the individualized communication needs of independent directors.

In 2016, the Bank continued to enhance information support for independent directors, and presented 12

work reports of the Management and 15 circulars of the Board of Directors, providing directors with relevant

information on the Bank’s operation and management, regulatory policy, business development and other

major issues that directors were concerned about. Independent directors also requested the Management to

provide explanations or further information on related issues in line with the Bank’s operation and management

conditions, to pay attention to significant events and to put forward recommendations in due course.

In the course of performance of duties by independent directors, the Board of Directors, the senior management

and related employees also provided active and effective assistance and support.

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III. Key Issues That Concern Independent Directors

i. Connected Transactions

The Bank’s independent directors attached great importance to the management of connected transactions.

The Bank constantly strengthened connected transaction management. It updated databases of the Group’s

connected parties and enhanced the management quality and efficiency of connected party information. It

constantly improved functions of the monitoring system and mechanism for connected transactions.

ii. External Guarantee and Fund Occupation

Pursuant to the relevant provisions and requirements of CSRC, and according to the principles of justice, fairness

and objectivity, the Independent Directors of the Bank have provided the following information regarding the

Bank’s external guarantee business: The external guarantee business is one of the Bank’s ordinary business

activities approved by the PBOC and CBRC. It does not fall within the scope of guarantees as defined in the

Circular on Regulating External Guarantee Businesses of Listed Companies. The Bank has formulated specific

management measures, operational processes and approval procedures in light of the risks of the guarantee

business and carried out this business accordingly. As at December 31, 2016, the outstanding amount of letters

of guarantee issued by the Bank was RMB1,097.448 billion.

iii. Use of Raised Funds

All proceeds raised from initial public offerings, issuance of subordinated bonds, the stock placement and

issuance of tier-2 capital bonds and domestic and overseas preference shares have been fully used to replenish

the Bank’s capital and increase the level of its capital adequacy.

iv. Nomination and Remuneration of Senior Management Members

The Bank’s independent directors raised independent opinions on the appointment and dismissal of senior

management members of the Bank. In 2016, the Bank’s independent directors suggested that the Board of

Directors appoint Mr. Zhang Qingsong and Mr. Liu Qiang to be Vice Presidents of the Bank. According to the

Bank’s annual performance assessment, independent directors reviewed and approved the annual remuneration

distribution plan for the Chairman, the President and other senior management members in 2015.

v. Performance Reporting

In 2016, the Bank’s independent directors earnestly reviewed related performance reports with focus on the

authenticity, accuracy and completeness to ensure there were no false records, misleading statements or

material omissions. The Bank disclosed related performance reports in time pursuant to the requirements of the

stock exchanges in Chinese Mainland and Hong Kong.

vi. Appointment or Change of External Auditors

According to the requirements of the Policies of Selection, Rotation and Dismissal for External Auditors of Bank

of China Limited, the Audit Committee of the Board of Directors assessed the performance, effectiveness and

independence compliance of Ernst & Young Hua Ming LLP in 2016, discussed the re-engagement matters and

decided to appoint them to do the job again. On December 21, 2016, the Board of Directors of the Bank decided

to reappoint Ernst & Young Hua Ming LLP as the Bank’s domestic auditor and internal control auditor for 2017

and Ernst & Young as the Bank’s international auditor for 2017 and submit the proposal to the Shareholders’

Meeting for review and approval.

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vii. Cash Dividends and Other Returns to Investors

At the 2015 Annual General Meeting held on June 7, 2016, the Bank approved the dividend distribution plan

for 2015 at RMB0.175 per share (before tax), with a total amount of RMB51,518 million (before tax) distributed;

at the meeting of the Board of Directors held on January 19, 2016, the Board reviewed and approved the

dividend distribution plan for the second tranche of domestic preference shares, with a total dividend amount of

RMB1.54 billion (before tax) distributed and a dividend rate of 5.50% (before tax); at the meeting of the Board of

Directors held on August 30, 2016, the Board reviewed and approved the dividend distribution plan for overseas

preference shares and the first tranche of domestic preference shares, of which the total dividend amount of

overseas preference shares was USD439 million (after tax), with a dividend rate of 6.75% (after tax), and the that

of the first tranche of domestic preference shares was RMB1.92 billion (before tax), with a dividend rate of 6.00%

(before tax). The distribution plans above have been completed.

The Bank’s independent directors faithfully performed their duties, expressed opinions on the above dividend

distribution plans independently and performed their responsibilities effectively, so as to safeguard the interests

of all investors, particularly minority investors, and protect minority shareholders’ knowledge and voting rights.

viii. Anti-money Laundering

Independent directors attached great importance to anti-money laundering. In 2016, independent directors

required the Bank’s legal and compliance department and external auditor to conduct a comprehensive

assessment on the Bank’s anti-money laundering resources and capacity respectively. The Bank gradually

developed and refined the mechanism of embedding anti-money laundering management in business lines. It

enhanced its anti-money laundering expertise and promoted a centralized identification model for suspicious

transactions in all domestic institutions. The Bank enhanced suspicious transaction monitoring, and conducted

the construction and assessment of the suspicious transaction model. The Bank also closely tracked and studied

international situations and changes in the sanction compliance requirements of related countries and regions,

timely assessed risks and adjusted business policies. The Bank enhanced the functions of the anti-money

laundering system, optimized the domestic anti-money laundering system and promoted the overseas anti-

money laundering system.

ix. Fulfillment of Commitments of the Company and Shareholders

Independent directors paid particular attention to the fulfillment of commitments of the company and

shareholders. Huijin Group made a “non-competing commitment” when the Bank launched its IPO to the effect

that, so long as Huijin continues to hold any of the Bank’s shares or is deemed to be a controlling shareholder

or a connected person of a controlling shareholder in accordance with the laws or listing rules of PRC, or of the

place where the Bank’s shares are listed, it will not engage or participate in any competing commercial banking

activities, including but not limited to extending loans, taking deposits and providing settlement, or providing

fund custodian, bank card and currency exchange services. However, Huijin may, through its investment in other

commercial banks, undertake or participate in certain competing businesses. Therefore, Huijin has undertaken to

(i) treat its investment in commercial banks on an equal footing and not take advantage of its status as a holder

of the Bank’s shares or take advantage of the information obtained by the virtue of such status to make decisions

or judgments against the Bank and in favour of other commercial banks; and (ii) exercise its shareholder rights in

the Bank’s best interests. In 2016, there was no breach of material undertakings by Huijin. On July 8, 2015, Huijin

committed not to reduce its shareholding in the Bank during the abnormal fluctuations in the securities market.

Huijin has strictly observed such commitment.

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x. Implementation of Information Disclosure

In 2016, independent directors urged the Bank to prepare and disclose its regular and provisional reports in strict

adherence to the principles of truthfulness, accuracy, completeness, timeliness and fairness, so as to guarantee

investors’ access to relevant information.

In 2016, the Bank closely followed the changes in regulatory rules, systematically reviewed and revised the

Administrative Measures for Information Disclosure of Bank of China Limited, and formulated the Administrative

Measures for Suspension and Exemption of Information Disclosure of Bank of China Limited according to

regulatory requirements. It strictly controlled the number of insiders and strengthened insider information

management to protect shareholders’ rights and interests.

xi. Execution of Internal Control

The Board attached great importance to and continues to promote the construction of the Group’s effective

long-acting internal control system, and regularly heard and reviewed the senior management reports concerning

the implementation of the Guidelines for Internal Control of Commercial Banks, and the Bank’s operational

management, risk management, fraud case governance and internal control enhancement and assessment.

The Board has effectively taken the responsibility for establishing, improving and performing effective internal

controls.

The Audit Committee of the Board of Directors closely monitored the changing economic and financial

environment at home and abroad, as well as the overall conditions of the Group’s internal control, including the

establishment and operation of its internal control systems for financial and non-financial reports. In addition, the

committee heard and reviewed, on a regular and ad hoc basis, internal audit reports and assessment opinions on

internal control, the progress of internal control improvements and remediation suggested by external auditors,

as well as the overall situation regarding the prevention, control and redress of fraud cases and risk events. The

committee guided and urged the senior management to improve the three lines of defense for internal control,

and conducted special surveys on the effectiveness of audit.

During the reporting period, the Bank performed self-assessment on internal control in line with the Basic

Standard for Enterprise Internal Control and its supporting guidelines. No material deficiencies were identified in

the internal control systems of the Bank, including both financial and non-financial reports.

IV. Overall Assessment and Suggestions

In 2016, independent directors diligently, duly and actively performed their duties to protect the interests of the Bank

and all its shareholders, including minority shareholders.

In 2017, independent directors will continue to carefully, earnestly, diligently and faithfully fulfill their duties in

accordance with laws, regulations, the Bank’s Articles of Association and inherent requirements of sound corporate

governance on independent directors. They will safeguard the legitimate rights and interests of the Bank and its

shareholders, including minority shareholders, and make bigger contributions to the Bank.

Independent Directors of Bank of China Limited

Nout Wellink, Lu Zhengfei, Leung Cheuk Yan, Wang Changyun

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APPENDIX IV REPORT ON THE IMPLEMENTATION ON THE SCHEME ON THE AUTHORIZATION TO THE BOARD OF DIRECTORS GRANTED BY THE SHAREHOLDERS’ MEETING OF BANK OF CHINA FOR 2016

REPORT ON THE IMPLEMENTATION ON THE SCHEME ON THE AUTHORIZATION TO

THE BOARD OF DIRECTORS GRANTED BY THE SHAREHOLDERS’ MEETING OF BANK OF CHINA FOR 2016

According to Article 45 of the Scheme on the Authorization to the Board of Directors Granted by the Shareholders’ Meeting of

Bank of China (hereafter “Scheme”), The Scheme implementation for 2016 is reported as follows:

Self-examination on the Scheme implementation showed that by December 31, 2016, the Board of Director had strictly

followed requirements of the Scheme, made reasonable and prudential decisions and earnestly fulfilled its duties within

authority specified by the Scheme. There was no approval of the Board of Directors beyond its authority. The current

delegated authority from the Shareholders’ Meeting to the Board of Directors can basically meet the requirements of the work

of the Board of Directors and the Scheme has been effectively implemented.



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