(Stock Code: 00753) · On 27 July 2015, CNAHC entered into the Share Subscription Agreement with...

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

This announcement appears for information purposes only and does not constitute an invitation oroffer to acquire, purchase or subscribe for securities of Air China Limited.

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)(Stock Code: 00753)

(1) PROPOSED NON-PUBLIC ISSUE OF A SHARES(2) CONNECTED TRANSACTION: SUBSCRIPTION OF

NEW A SHARES BY CNAHC(3) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION(4) PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OFSHAREHOLDERS’ MEETINGS AND MEETINGS OF THE BOARD OF

DIRECTORS(5) SHAREHOLDERS’ RETURN PLAN FOR THE THREE YEARS

FROM 2015 TO 2017AND

(6) RESUMPTION OF TRADING

Independent Financial Adviser to the Independent Board Committee andthe Independent Shareholders

PROPOSED NON-PUBLIC A SHARE ISSUE

At the Board meeting of the Company held on 27 July 2015, the Board approved the proposedissuance of not more than 994,200,497 new A Shares to CNAHC and the Investors at the IssuePrice. Gross proceeds to be raised from the proposed Non-public A Share Issue will not be morethan RMB12,000 million.

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SHARE SUBSCRIPTION AGREEMENT

On 27 July 2015, CNAHC entered into the Share Subscription Agreement with the Company,pursuant to which, CNAHC will commit RMB1,000 million in cash to subscribe for not more than82,850,042 A Shares to be issued under the proposed Non-public A Share Issue at the Issue Price.

LISTING RULES IMPLICATIONS

Since CNAHC is the controlling shareholder of the Company, and hence a connected person ofthe Company, CNAHC A Share Subscription constitutes a connected transaction of the Companyunder Chapter 14A of the Listing Rules and is subject to the announcement, reporting andindependent shareholders’ approval requirements. An Independent Board Committee comprisingthe independent non-executive Directors has been formed to advise the Independent Shareholderson the terms of the Share Subscription Agreement. Opus Capital Limited has been appointed asthe Independent Financial Adviser to advise the Independent Board Committee and theIndependent Shareholders on the same.

According to the relevant requirements of Chapter 19A of the Listing Rules, the Company willproceed with the Non-public A Share Issue after obtaining approvals from the IndependentShareholders at the EGM by way of special resolution and from the A Shareholders at the AShareholders’ Class Meting and from the H Shareholders at the H Shareholders’ Class Meeting tobe convened in accordance with the Articles of Association by way of special resolutions.

A circular containing, among other things, details of the Non-public A Share Issue will bedespatched to the Shareholders on or before 18 August 2015.

RESUMPTION OF TRADING

At the request of the Company, trading of H Shares of the Company on the Hong Kong StockExchange was suspended with effect from 9:00 a.m. on 30 June 2015 pending the release of thisannouncement. The Company has made an application to the Hong Kong Stock Exchange for theresumption of trading of H Shares on the Hong Kong Stock Exchange with effect from 9:00 a.m.on 29 July 2015.

The Company advises its Shareholders and potential investors to note that the proposedNon-public A Share Issue is subject to certain conditions being satisfied, and consequentlythe proposed Non-public A Share Issue may or may not proceed. Accordingly, they areadvised to exercise caution when dealing in the securities of the Company.

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A. PROPOSED NON-PUBLIC A SHARE ISSUE

1. General

At the Board meeting of the Company held on 27 July 2015, the Board approved theproposed issuance of 994,200,497 new A Shares to CNAHC and the Investors at the IssuePrice on the terms and conditions set out in this announcement.

Accordingly, on 27 July 2015, CNAHC entered into the Share Subscription Agreementwith the Company, pursuant to which, CNAHC will commit RMB1,000 million in cash tosubscribe for not more than 82,850,042 new A Shares at the Issue Price.

2. Structure of the Non-public A Share Issue

Class of shares to beissued and thenominal value:

A Shares with a par value of RMB1.00 each

Subscribers: The new A shares under the Non-public A Share Issue isproposed to be issued to not more than 10 Investors(including CNAHC). The Investors will be securitiesinvestment fund management companies, securitiescompanies, trust investment companies, finance companies,insurance institutional investors, qualified foreign institutionalinvestors, other domestic legal person investors and naturalpersons that meet the requirements of the CSRC.

After the Company obtains the approval in respect of theNon-public A Share Issue from the CSRC, it will determinethe Investors based on the subscription levels and pricequoted by potential Investors, following the price priorityprinciple.

CNAHC will remain as the controlling shareholder of theCompany after the subscription of new A Shares under theNon-public A Share Issue by CNAHC and the Investors.

As at the date of this announcement, the Company has notentered into any agreements with any Investor in connectionwith the Non-public A Share Issue. To the best of theDirectors’ knowledge, information and belief, having made allreasonable enquiries, the potential Investors and theirrespective ultimate beneficial owners are third partiesindependent of the Company and its connected persons. It is

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expected that each of the Investors and their ultimatebeneficial owners, upon subscription of the new A Sharesunder the Non-public A Share Issue, will remain anindependent third party of the Company. The Company willuse its best efforts to ensure that the Investors and theirultimate beneficial owners are third parties independent of theCompany and its connected persons.

Number of A Shares tobe issued:

The number of A Shares to be issued under the Non-public AShare Issue will not be more than 994,200,497 A Shares(including A Shares to be subscribed by CNAHC under theCNAHC A Share Subscription), which is subject toadjustment to the Issue Price as set forth in the paragraph“Basis for determining the Issue Price” below if there is anyex-rights or ex-dividend arrangement from the PricingBenchmark Date to the date of issuance. Within the rangeof the issuance mentioned above, the ultimate number of AShares to be issued will be determined by the Board and itsauthorised person(s) in accordance with the authorisationgranted by the Shareholders at the EGM and the marketconditions after consultation with the lead underwriter of theNon-public A Share Issue.

Method of issue: Non-public offering. The new A Shares will be issued within6 months after the Company obtains the relevant approvalfrom the CSRC.

Basis for determiningthe Issue Price:

The Issue Price of new A Shares shall be not less thanRMB12.07 per A Share. The Issue Price is determined withreference to a benchmark price, which is 90% of the averagetrading price of the A Shares during the 20 trading dayspreceding the Pricing Benchmark Date, which isRMB12.12193 per A Share. Such price is then adjusted inlight of the distribution of final dividend of the Company forthe year 2014, which was approved by the Shareholders at theannual general meeting of the Company for the year 2014,pursuant to which the Company distributed a cash dividend ofRMB0.5223 per 10 Shares (including tax) on 8 July 2015. Asa result of the distribution of the final dividend for the year2014, the Issue Price is adjusted to not less than RMB12.07per A Share. The Issue Price so determined is in accordancewith the requirements under the Implementation Rules forNon-public Issue of Shares by Listed Companies (《上市公司非公開發行股票實施細則》).

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After obtaining the relevant approval from the CSRC, thefinal Issue Price will be determined by the Board and itsauthorised person(s) in accordance with the authorisationgranted by the Shareholders at the EGM, and the subscriptionlevels and price quoted by potential Investors based on theprice priority principle after consultation with the leadunderwriter for the Non-public A Share Issue. CNAHC willnot take part in the bidding in the bookbuilding under theNon-public A Share Issue and will make subscription at thesame price as the other subscribers. The Issue Price will beadjusted accordingly if there is any ex-rights or ex-dividendarrangement from the Pricing Benchmark Date to the date ofissuance.

The Issue Price shall be paid in cash.

Assuming the Issue Price is fixed at RMB12.07 per A Share,it represents: (i) a discount of approximately 21.42% of theclosing price of RMB15.360 per A Share immediately prior tothe suspension of trading of A Shares on 30 June 2015; (ii) adiscount of approximately 21.15% of the closing price of theA Shares, adjusted in light of the distribution of final dividendof the Company for the year 2014, immediately prior to 30June 2015; (iii) a discount of approximately 14.84% of theaverage closing price of RMB14.174 per A Share for the lastfive trading days immediately prior to 30 June 2015; and (iv)a discount of approximately 14.53% of the average closingprice of A Shares, adjusted in light of the distribution of finaldividend of the Company for the year 2014, for the last fivetrading days immediately prior to 30 June 2015.

The net price to the Company of each new A Share to beissued will be determined and disclosed upon completion ofthe Non-public A Share Issue and the determination ofrelevant expenses incurred or to be incurred in relation to theNon-public A Share Issue in accordance with therequirements of the Listing Rules.

Rights attached to thenew A Shares:

The new A Shares to be issued pursuant to the Non-public AShare Issue will rank pari passu with the existing A Sharesand H Shares in all respects.

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Conditions for the Non-public A Share Issue:

The Non-public A Share Issue is subject to:

(1) the approvals by the Shareholders at the EGM and theClass Meetings, respectively; and

(2) the approval by the SASAC and the CSRC, etc.

Gross Proceeds from theNon-public A ShareIssue:

Gross proceeds to be raised from the Non-public A ShareIssue will be not more than RMB12,000 million beforededuction of the fees and expenses relating to the Non-publicA Share Issue.

Use of proceeds: Proceeds to be raised from the Non-public A Share Issue areintended to be used in the following ways:

No. Name of ProjectProceeds tobe utilised

(RMB inmillion)

1 Purchase of 15 Boeing B787 aircraft(including supplemental in-cabinfacilities such as seats)

7,450

2 Upgrade of e-commerce direct saleproject

800

3 On-board WIFI (first phase) project 1504 Replenish working capital 3,600

Total 12,000

Purchase of 15 Boeing B787 aircraft (includingsupplemental in-cabin facilities such as seats)

Based on the relevant agreement between the Company andThe Boeing Company, it is expected that the Company wouldtake delivery of 7, 6 and 2 Boeing B787 aircraft in 2016,2017 and 2018, respectively. The 15 Boeing B787 aircraftwould be equipped with seats and other facilities that aredesigned to enhance passenger experience. The basic price ofeach of the 15 Boeing B787 aircraft to be purchased by theCompany from The Boeing Company is US$257 million,equivalent to approximately RMB24,000 million for the 15Boeing B787 aircraft in aggregate. The Company plans to use

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RMB7,450 million from the proceeds of the Non-public AShare Issue for the payment of part of the total considerationto The Boeing Company for the 15 Boeing B787 aircraft. TheCompany plans to deploy the 15 Boeing B787 aircraft toroutes originating from its Beijing hub to enhance itscoverage and frequency of flights to North America andEurope.

Upgrade of e-commerce direct sale project

The Company plans to use RMB800 million from theproceeds of the Non-public A Share Issue to upgrade itsflight tickets e-commerce direct sale platform so to increasethe proportion of direct sale of flight tickets and to cut downcost of sales, and to unify order data and user data on variouse-commerce channels, including website, call centre andmobile phone applications to enable consistent userexperience on various e-commerce channels. In themeantime, the integration of user information and orderinformation is to be realised through the upgrade ofe-commerce platform, laying down a technologicalfoundation for the big data collection of passengers in thefuture.

On-board WIFI (first phase) project

The Company plans to develop its on-board WIFI project intwo phases by first establishing the aircraft wireless networkplatform and then constructing air-ground integration systembased on big data cloud computing. The Company plans touse RMB150 million from the proceeds of the Non-public AShare Issue to fund part of the total estimated costs of the firstphase of its on-board WIFI project, which includesconducting the necessary retrofitting of its aircraft anddeveloping related software platform.

The Company plans to achieve wireless network coverage onall of its long-haul wide-body jets within the next three years.As of June 2015, the Company had completed the necessaryretrofitting on 20 of its 90 long-haul wide-body jets. It isexpected that the Company would spend approximatelyRMB123 million to complete the retrofitting of theremaining 70 long-haul wide-body jets, based on an

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estimated cost of retrofitting of approximately RMB1.75million per aircraft. It is expected that the development of therelated software platform will incur a cost of RMB35 million.

Replenish working capital

With the continued development of the Company’s businessand improvement of its results of operation, the scale of itsindebtedness has been increasing in recent years. As at 31March 2015, the current ratio and the quick ratio of theCompany was 0.34 and 0.32, respectively. As at the samedate, the Company’s non-current liabilities due within oneyear was RMB13,407 million and its short-term loan wasRMB17,755 million.

In addition, the operation of the Company as an airlinedemands a fairly large amount of working capital. TheCompany also expects to incur large capital expenditure onpurchase of new aircraft for each of 2015, 2016 and 2017 andits demand for working capital will increase as a result of theexpansion of its fleet.

Based on the above, the Company plans to use RMB3,600million from the proceeds of the Non-public A Share Issue tooptimise its financial structure, enhance its repaymentcapability of its short-term debts and to satisfy itsincreasing need for working capital.

If the actual proceeds to be raised from the Non-public AShare Issue are less than the aggregate amount of theproceeds proposed to be invested in the aforementionedprojects, the Company will adjust and determine the specificinvestment amount to each project based on the net proceedsactually raised and the priority of each project, and will makeup for the shortfall by utilising internal resources or throughother financing methods.

Before the actual receipt of the proceeds to be raised from theNon-public A Share Issue, the Company will, depending onthe actual situations of the progress of the projects, financethese projects by proceeds raised through other measures,which will be replaced once the proceeds from the Non-publicA Share Issue have been received according to proceduresrequired by relevant regulations.

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Lock-up Arrangement: The new A Shares to be subscribed for by the Investors shallnot be disposed of within 12 months from the completion dateof the issuance of such new A Shares.

Please refer to the paragraph headed “Lock-up arrangement”under “3. CNAHC A Share Subscription” below for details ofthe lock-up arrangement for CNAHC A Share Subscription.

Validity Period of theresolution:

The resolution with respect to the Non-public A Share Issueshall be valid for 12 months from the date of considerationand approval at the EGM and the Class Meetings.

Listing Application: Application will be made by the Company to the ShanghaiStock Exchange for the granting of the listing of, andpermission to deal in, all new A Shares to be issued pursuantto the Non-public A Share Issue.

Arrangement relating tothe accumulatedundistributed profitsof the Company priorto the Non-public AShare Issue:

The new and existing Shareholders will share the accumulatedundistributed profits of the Company prior to the Non-publicA Share Issue.

3. CNAHC A Share Subscription

Parties: (1) the Company as issuer; and

(2) CNAHC as subscriber.

Number of A Shares tobe subscribed for:

CNAHC will commit RMB1,000 million to subscribe for notmore than 82,850,042 A Shares to be issued under the Non-public A Share Issue, which is subject to adjustment as aresult of an adjustment to the Issue Price as set forth in theparagraph “Basis for determining the Issue Price” under “2.Structure of the Non-public A Share Issue” above if there isany ex-rights or ex-dividend arrangement from the PricingBenchmark Date to the date of issuance.

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Subscription price: The Issue Price of the new A Shares to be subscribed for byCNAHC shall be the same as the final Issue Price for theInvestors to be determined by the Company in the manner asset forth in the paragraph “Basis for determining the IssuePrice” under “2. Structure of the Non-public A Share Issue”above. The Company and CNAHC will execute a writtenconfirmation in respect of the final Issue Price and thenumber of new A Shares to be issued to CNAHC under theCNAHC A Share Subscription once they are determined.

The subscription price will, pursuant to the terms of the ShareSubscription Agreement, be paid in cash into the specialsavings account as designated by the lead underwriter whenthe Company issues the new A Shares to CNAHC after theCompany obtains, among other things, the approval from theCSRC for the Non-public A Share Issue.

Conditions for the ShareSubscriptionAgreement:

The Share Subscription Agreement will take effect on the datewhen all of the following conditions are met:

(1) the Share Subscription Agreement is duly executed byboth the Company and CNAHC;

(2) the approvals from the Independent Shareholders byway of special resolutions of the Non-public A ShareIssue at both the EGM and the Class Meetings areobtained;

(3) the approvals from the Independent Shareholders byway of special resolutions of the Share SubscriptionAgreement at both the EGM and the Class Meetings areobtained; and

(4) all necessary approvals, consents from the relevantgovernmental and regulatory authorities, including butnot limited to the approvals from the SASAC and theCSRC, in relation to the Non-public A Share Issue areobtained.

Lock-up Arrangement: Pursuant to the relevant rules of the CSRC, the new A Sharesto be subscribed for by CNAHC shall not be disposed ofwithin 36 months from the completion date of the issuance ofsuch new A Shares.

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4. Effects of the Non-public A Share Issue on the Shareholding Structure of theCompany

For illustration purpose only, set out below are the implication of the Non-public A ShareIssue on the shareholding structure of the Company.

4.1 As at the date of this announcement, the shareholding structure of the Company is asfollows:

ShareholderNumber ofShares held

Percentage of thetotal issued share

capital of theCompany

A Shareholders 8,522,067,640 65.13%H Shareholders 4,562,683,364 34.87%

Total 13,084,751,004 100.00%

Note: The percentages shown are rounded to the nearest 2 decimal places.

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4.2 Immediately following the completion of the Non-public A Share Issue, assumingthat (i) CNAHC has subscribed for 82,850,042 new A Shares; (ii) the Investors(which are all independent third parties of the Company after subscription of AShares under the Non-public A Share Issue) have in aggregate subscribed for911,350,455 new A Shares; and (iii) no additional Shares will be issued after thedate of this announcement until the completion of the Non-public A Share Issue, it isanticipated that the shareholding structure of the Company will be as follows:

ShareholderNumber ofShares held

Percentage of thetotal issued share

capital of theCompany

A Shareholders 9,516,268,137 67.59%H Shareholders 4,562,683,364 32.41%

Total 14,078,951,501 100%

Note: The percentages shown are rounded to the nearest 2 decimal places.

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5. Listing Rules Implications

CNAHC A Share Subscription

As at the date of this announcement, CNAHC directly holds 5,427,546,093 A Shares inthe Company, representing 41.48% of the existing issued share capital of the Company.As at the date of this announcement, CNACG holds 1,332,482,920 A Shares and223,852,000 H Shares in the Company, representing 10.18% and 1.71% of the existingissued share capital of the Company, respectively. CNACG is a wholly-owned subsidiaryof CNAHC. CNAHC, by itself and through CNACG, owns in aggregate 53.37% of theexisting issued share capital of the Company.

Since CNAHC is the controlling shareholder of the Company, and hence a connectedperson of the Company, CNAHC A Share Subscription constitutes a connected transactionof the Company under Chapter 14A of the Listing Rules and is subject to theannouncement, reporting and independent shareholders’ approval requirements. AnIndependent Board Committee comprising the independent non-executive Directors hasbeen formed to advise the Independent Shareholders on the terms of the ShareSubscription Agreement. Opus Capital Limited has been appointed as the IndependentFinancial Adviser to advise the Independent Board Committee and the IndependentShareholders on the same.

Non-public A Share Issue

The new A Shares under the Non-public A Share Issue will be issued pursuant to aspecific mandate to be sought from the Shareholders at the EGM and the Class meetings.According to the relevant requirements of Chapter 19A of the Listing Rules, the Companywill proceed with the Non-public A Share Issue after obtaining approvals from theIndependent Shareholders at the EGM by way of special resolution and from the AShareholders at the A Shareholders’ Class Meting and from the H Shareholders at the HShareholders’ Class Meeting to be convened in accordance with the Articles ofAssociation by way of special resolutions.

CNAHC, being a subscriber under the Non-public A Share Issue, has a material interest inthe Non-public A Share Issue. CNAHC and its close associates (including CNACG) shalltherefore abstain from voting on the resolutions at the EGM and the Class Meetingsapproving the Non-public A Share Issue.

The Directors (including the independent non-executive Directors) consider that the termsand conditions of the issue of new A Shares under the Non-public A Share Issue and theShare Subscription Agreement are fair and reasonable, normal commercial terms or betterand in the interests of the Company and its Shareholders as a whole.

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Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong and Mr. Feng Gang areconsidered to have a material interest in CNAHC A Share Subscription and therefore haveabstained from voting on the relevant Board resolutions approving the Shares SubscriptionAgreement and the Non-public A Share Issue. Save as mentioned above, none of the otherDirectors has a material interest in CNAHC A Share Subscription and the Non-public AShare Issue and hence no other Director has abstained from voting on such Boardresolutions.

6. Reasons for and benefit of the proposed Non-public A Share Issue

The Non-public A Share Issue will help the Company enhance the capital structure andimprove its financial condition, satisfy the capital needs of its business development,maintain its competitive advantage and ensure its sustainable and sound development. TheNon-public A Share Issue can also raise funds for the Company to finance its purchase of15 Boeing B787 aircraft, upgrade of e-commerce direct sale project and its on-board WIFIproject.

7. Fund raising activities in the past twelve months

The Company has not conducted any equity fund raising activities during the twelvemonths immediately before the date of this announcement.

B. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Over the recent two years, the CSRC issued the Guidance on the Articles of Association ofListed Companies (2014 Second Revision) (《上市公司章程指引（二零一四年第二次修訂）》),the Rules Governing Shareholders’ General Meeting of Listed Companies (2014 SecondRevision) (《上市公司股東大會規則（二零一四年第二次修訂）》) and the Regulatory GuidanceNo. 3 of Listed Companies — Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號—上市公司現金分紅》), setting out further requirements on matters related tomeasures for protecting the interest of minority shareholders of listed companies and profitdistribution. The Board has resolved to propose to the Shareholders certain amendments to theArticles of Association in accordance with these new requirements. The proposed amendmentsto the Articles of Association are subject to approval by the Shareholders by way of specialresolution at the EGM and will become effective upon approval by the relevant PRCgovernment authorities. The full text of the proposed amendments to the Articles of Associationis set out in the appendix to this announcement.

The proposed amendments to the Articles of Association are prepared in the Chinese languageand the English version is therefore a translation only. In the event of any discrepancy betweenthe English translation and the Chinese version of the Articles of Association, the Chineseversion shall prevail.

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C. PROPOSED AMENDMENTS TO THE RULES AND PROCEDURES OFSHAREHOLDERS’ MEETINGS AND THE MEETINGS OF THE BOARD OFDIRECTORS

In light of the proposed amendments to the Articles of Association, the Board has resolved topropose to the Shareholders certain amendments to the Rules and Procedures of Shareholders’Meetings and the Meetings of the Board of the Company, so as to align with relevantregulations and the Articles of Association and comply with the requirements made byregulatory authorities. The proposed amendments to the Rules and Procedures of Shareholders’Meetings and the Meetings of the Board are subject to approval by the Shareholders by way ofspecial resolutions at the EGM.

D. PROPOSED ADOPTION OF THE SHAREHOLDERS’ RETURN PLAN

Pursuant to the Notice Regarding Further Implementation of Cash Dividends Distribution ofListed Companies (《關於進一步落實上市公司現金分紅有關事項的通知》) and the RegulatoryGuidance No. 3 of Listed Companies – Cash Dividends Distribution of Listed Companies (《上市公司監管指引第3號－上市公司現金分紅》) issued by the CSRC and relevant requirementsof the Articles of Association, the Board has formulated and resolved to propose to adopt theShareholders’ Return Plan. The proposed adoption of the Shareholders’ Return Plan will besubject to approval by the Shareholders at the EGM.

E. RESUMPTION OF TRADING

At the request of the Company, trading of H Shares of the Company on the Hong Kong StockExchange was suspended with effect from 9:00 a.m. on 30 June 2015 pending the release of thisannouncement. The Company has made an application to the Hong Kong Stock Exchange forthe resumption of trading of H Shares on the Hong Kong Stock Exchange with effect from 9:00a.m. on 29 July 2015.

F. SHAREHOLDERS’ CIRCULAR

A circular containing, among other things, further details of: (i) the proposed Non-public AShare Issue; (ii) the recommendation of the Independent Board Committee in respect of theShare Subscription Agreement, (iii) a letter from Opus Capital Limited to the IndependentBoard Committee and the Independent Shareholders containing its advice on the ShareSubscription Agreement; (iv) the proposed amendments to the Articles of Association; (v) theproposed amendments to the Rules and Procedures of Shareholders’ meetings and the meetingsof the Board; (vi) the Shareholders’ Return Plan; and (vii) the notices of the EGM and the HShareholders’ Class Meeting, is expected to be issued by the Company and dispatched to theShareholders on or before 18 August 2015.

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The Company advises its Shareholders and potential investors to note that the proposed Non-public A Share Issue and the CNAHC A Share Subscription are subject to certain conditionsbeing satisfied, and consequently the proposed Non-public A Share Issue and the CNAHC AShare Subscription may or may not proceed. Accordingly, they are advised to exercise cautionwhen dealing in the securities of the Company.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have thefollowing meanings:

“A Shareholders” holders of A Shares

“A Shareholders’ ClassMeeting”

the class meeting of the A Shareholders to be convened by theCompany to consider and, if thought fit, approve, among otherthings, the Non-public A Share Issue

“A Share(s)” the ordinary shares issued by the Company, with a par value ofRMB1.00 each, which are listed on the Shanghai Stock Exchange

“Articles of Association” the articles of association of the Company

“associates” has the meaning ascribed thereto under the Listing Rules

“Board” the board of directors of the Company

“Cathay Pacific” Cathay Pacific Airways Limited

“Class Meetings” the A Shareholders’ Class Meeting and the H Shareholders’ ClassMeeting

“CNACG” China National Aviation Corporation (Group) Limited, a companyincorporated under the laws of Hong Kong and a wholly-ownedsubsidiary of CNAHC and a substantial shareholder of theCompany, which directly holds approximately 11.89% of theCompany’s issued share capital as at the date of thisannouncement. CNACG is an investment holding company whoseprincipal businesses include passenger terminal operation, cargoterminal operation, airport ground handling services, airline cateringservices, property investment, ticket and tourism services, logisticsand other businesses conducted through its subsidiaries

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“CNAHC” China National Aviation Holding Company, a wholly PRC state-owned enterprise and the controlling shareholder of the Company,which directly and indirectly holds an aggregate of approximately53.37% of the Company’s issued share capital as at the date of thisannouncement and whose principal business is to manage the state-owned assets of CNAHC and the equity it holds in variouscompanies

“CNAHC A ShareSubscription”

the proposed subscription of new A Shares by CNAHC pursuant tothe Share Subscription Agreement as part of the Non-public AShare Issue

“Company” Air China Limited, a company incorporated in the People’sRepublic of China, whose H shares are listed on the Hong KongStock Exchange as its primary listing venue and on the Official Listof the UK Listing Authority as its secondary listing venue, andwhose A shares are listed on the Shanghai Stock Exchange, andwhose principal business is the operation of scheduled airlineservices

“connected person” has the meaning ascribed thereto under the Listing Rules

“controlling shareholder” has the meaning ascribed thereto under the Listing Rules

“CSRC” the China Securities Regulatory Commission

“Directors” the directors of the Company

“EGM” the extraordinary general meeting of the Company to be convenedto consider and, if thought fit, approve, among other things, theNon-public A Share Issue

“H Shareholders” holders of the H Shares

“H Shareholders’ ClassMeeting”

the class meeting of the H Shareholders to be convened by theCompany to consider and, if thought fit, approve, among otherthings, the Non-public A Share Issue

“H Share(s)” the ordinary shares issued by the Company, with a par value ofRMB1.00 each, which are listed on the Hong Kong Stock Exchange

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

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

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“Independent BoardCommittee”

a board committee comprising Mr. Fu Yang, Mr. Pan Xiaojiang,Mr. Simon To Chi Keung and Mr. Stanley Hui Hon-chung, allbeing the independent non-executive directors of the Company

“Independent FinancialAdviser”

Opus Capital Limited, a corporation licensed under the Securitiesand Futures Ordinance to conduct type 1 (dealing in securities) andtype 6 (advising on corporate finance) regulated activities, being theindependent financial adviser to the Independent Board Committeeand the Independent Shareholders in relation to the ShareSubscription Agreement

“Independent Shareholders” the shareholders of the Company, other than CNAHC and itsassociates

“Investor(s)” the investors other than CNAHC which would subscribe for new AShares to be issued by the Company under the proposed Non-publicA Share Issue

“Issue Price” the issue price of not less than RMB12.07 (subject to adjustment)per A Share under the Non-public A Share Issue

“Listing Rules” The Rules Governing the Listing of Securities on The StockExchange of Hong Kong Limited

“Non-public A Share Issue” the proposed issue of not more than 994,200,497 new A Shares tospecified investors including CNAHC by the Company at the IssuePrice

“PRC” or “China” the People’s Republic of China, excluding, for the purpose of thisannouncement only, Hong Kong, Macau Special AdministrativeRegion of the PRC and Taiwan

“Pricing Benchmark Date” 29 July 2015

“RMB” Renminbi, the lawful currency of the PRC

“SASAC” the State Asset Supervision and Administration Commission of theState Council of the PRC

“Share SubscriptionAgreement”

the subscription agreement entered into between CNAHC and theCompany on 27 July 2015, pursuant to which, CNAHC agrees tocommit RMB1,000 million to subscribe for, and the Companyagrees to issue, not more than 82,850,042 new A Shares at the IssuePrice

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“Shareholders” the shareholders of the Company

“Shareholders’ Return Plan” the proposed shareholders’ return plan of the Company for the threeyears from 2015 to 2017

“substantial shareholder” has the meaning ascribed thereto under the Listing Rules

“trading day” a day on which the Shanghai Stock Exchange is open for dealing ortrading in securities

“US$” United States dollar, the lawful currency of the United States ofAmerica

“%” per cent

By order of the BoardAir China Limited

Rao Xinyu Tam Shuit MuiJoint Company Secretaries

Beijing, the PRC, 28 July 2015

As at the date of this announcement, the directors of the Company are Mr. Cai Jianjiang, Ms. WangYinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr.Song Zhiyong, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Pan Xiaojiang*, Mr. Simon To Chi Keung* andMr. Stanley Hui Hon-chung*.

* Independent non-executive Director of the Company

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APPENDIXPROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

Particulars of amendments to the Articles of Association are as follows, with the amendmentsunderlined, where appropriate, just for easy reference.

No. Existing Articles Revised Articles

Notes: For the purpose of the marginal notescontained in the Articles of Association, CoLaw means the amended Company Law cameinto force on 1 January 2006; the SecuritiesLaw means the amended Securities Law cameinto force on 1 January 2006; MP means theMandatory Provisions in the Articles ofAssociation of Companies Listed Overseasjointly promulgated by the former StateSecurities Commission and the former StateRestructuring Commission (SRC); LR meansthe Rules Governing the Listing of Securitieson the Stock Exchange of Hong KongLimited; Hong Kong Clearing HouseAdvices means the Advices of Hong KongClearing House promulgated by Hong KongSecurities Clearing Company Limited; ZhengJian Hai Han means the Letter of Opinion onthe Supplementary Amendment to Articles ofAssociation of Companies Listed in HongKong promulgated by the Overseas ListingDivision of the CSRC and the ProductionSystem Department of the State Commissionfor Restructuring the Economic System(Zheng Jian Hai Han [1995] No. 1);Opinion means the Opinion on FurtherPromoting the Standardized Operations andDeepening the Reform of Overseas ListedCompanies jointly promulgated by StateEconomic and Trade Commission and ChinaSecurities Regulatory Commission; SecretaryGuidance means the Guidance on the Worksof the Secretary of the Board of Directors ofan Overseas-Listed Company promulgated bythe CSRC; and Guidance means the Guidanceon the Articles of Association of ListedCompanies, as amended in 2006; CGStandards mean the Standards on CorporateGovernance for Listed Companies; GM Rulesmeans Rules Governing Shareholders’General Meeting of Listed Companies;

Notes: For the purpose of the marginal notescontained in the Articles of Association, CoLaw means the amended Company Law cameinto force on 1 January 2006; the SecuritiesLaw means the amended Securities Law cameinto force on 1 January 2006; MP means theMandatory Provisions in the Articles ofAssociation of Companies Listed Overseas(Zheng Wei Fa [1994] No. 21) jointlypromulgated by the former State SecuritiesCommis s i on and the fo rme r S t a t eRestructuring Commission (SRC); LR meansthe Rules Governing the Listing of Securitieson the Stock Exchange of Hong KongLimited; Hong Kong Clearing HouseAdvices means the Advices of Hong KongClearing House promulgated by Hong KongSecurities Clearing Company Limited; ZhengJian Hai Han means the Letter of Opinion onthe Supplementary Amendment to Articles ofAssociation of Companies Listed in HongKong promulgated by the Overseas ListingDivision of the CSRC and the ProductionSystem Department of the State Commissionfor Restructuring the Economic System(Zheng Jian Hai Han [1995] No. 1);Opinion means the Opinion on FurtherPromoting the Standardized Operations andDeepening the Reform of Overseas ListedCompanies (Guo Jing Mao Qi Gai [1999] No.230) jointly promulgated by State Economicand Trade Commission and China SecuritiesRegulatory Commission; Secretary Guidancemeans the Guidance on the Works of theSecretary of the Board of Directors of anOverseas-Listed Company (Zheng Jian FaXing Zi [1999] No. 39) promulgated by theCSRC; and Guidance means the Guidance onthe Articles of Association of ListedCompanies (CSRC Announcement [2014]No. 47);

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Publ ic Shareholders means Cer ta inProvisions Concerning Strengthening theProtection of the Interests of PublicShareholders; Guiding Advice means theGuiding Advice on Establishing IndependentDirectorship in Listed Companies; SecurityNotice means the Notice Regulating theProvision of Security by Listed Companiesto Third Parties; Revising Certain Provisionson Cash Dividends means the Decision onRevising Certain Provisions on CashDividends by Listed Companies; NoticeRegarding Cash Dividends Distributionme a n s N o t i c e R e g a r d i n g F u r t h e rImp lemen ta t i on o f Cash Div idendsDistribution of Listed Companies, all ofwhich are promulgated by the ChinaSecurities Regulatory Commission.

CG Standards mean the Standards onCorporate Governance for Listed Companies(Zheng Jian Fa [2002] No. 1); GM Rulesmeans Rules Governing Shareholders’General Meeting of Listed Companies(CSRC Announcement [2014] No. 46);Publ ic Shareholders means Cer ta inProvisions Concerning Strengthening theProtection of the Interests of PublicShareholders (Zheng Jian Fa [2004] No.118); Guiding Advice means the GuidingAdvice on Establ ishing IndependentDirectorship in Listed Companies (ZhengJian Fa [2001] No. 102); Security Noticemeans the Notice Regulating the Provision ofSecurity by Listed Companies to Third Parties(Zheng Jian Fa [2005] No. 120); RevisingCertain Provisions on Cash Dividends meansthe Decision on Revising Certain Provisionson Cash Dividends by Listed Companies(CSRC Decree No. 57); Notice RegardingCash Dividends Distribution means NoticeRegarding Further Implementation of CashDividends Distribution of Listed Companies(Zheng Jian Fa [2012] No. 37); RegulatoryGuidance No. 3 means Regulatory GuidanceNo. 3 of Listed Companies — CashDividends Distribution of Listed Companies(CSRC Announcement [2013] No. 43), all ofwhich are promulgated by the ChinaSecurities Regulatory Commission.

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CHAPTER 1: GENERAL PROVISIONS CHAPTER 1: GENERAL PROVISIONS

1 Artic le 1 . Air China Limi ted ( the“Company”) is a joint stock limitedcompany established in accordance with theCompany Law of the People’s Republic ofChina (the “Company Law”), the StateCouncil’s Special Regulations Regarding theIssue of Shares Overseas and the Listing ofShares Overseas by Companies Limited byShares (the “Special Regulations”) and otherrelevant laws and regulations of the State.

Artic le 1 . Air China Limi ted ( the“Company”) is a joint stock limitedcompany established in accordance with theCompany Law of the People’s Republic ofChina (the “Company Law”), the StateCouncil’s Special Regulations Regarding theIssue of Shares Overseas and the Listing ofShares Overseas by Companies Limited byShares (the “Special Regulations”) and otherrelevant laws and regulations of the State.

The Company was established by way ofpromotion with the approval of the State-owned Assets Supervision and AdministrationCommission of the State Council on 30September 2004, as evidenced by theapproval document Guo Zi Gai Ge [2004]No.872. It was registered with and hasobtained a business licence from the StateAdministration for Industry & Commerce ofthe People’s Republic of China.

The promoters of the Company are: ChinaNational Aviation Holding Company andChina National Aviation Corporation(Group) Limited (registered in Hong KongSpecial Administration Region).

The Company was established by way ofpromotion with the approval of the State-owned Assets Supervision and AdministrationCommission of the State Council on 30September 2004, as evidenced by theapproval document Guo Zi Gai Ge [2004]No. 872. It was registered with and hasobtained a business licence from the StateAdministration for Industry & Commerce ofthe People’s Republic of China.

The promoters of the Company are: ChinaNational Aviation Holding Company andChina National Aviation Corporation(Group) Limited (registered in Hong KongSpecial Administration Region).

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2 Article 8. The Articles of Association arebinding on the Company and its shareholders,directors, supervisors, president, vicepresidents and other senior officers; all ofwhom may, according to the Company’sArticles of Association, assert their rights inrespect of the affairs of the Company.

Subject to Article 22 of these Articles ofAssociation, a shareholder may take actionagainst the Company pursuant to theCompany’s Articles of Association. TheCompany may take action against ashareholder, directors, supervisors, president,vice presidents and other senior officers ofthe Company pursuant to the Company’sArticles of Association. A shareholder mayalso take action against another shareholder,and may take action against the directors,supervisors, president, vice presidents andother senior officers of the Companypursuant to the Company’s Articles ofAssociation.

The actions referred to in the precedingparagraph include court proceedings andarbitration proceedings.

Article 8. The Articles of Association arebinding on the Company and its shareholders,directors, supervisors, president, vicepresidents and other senior officers; all ofwhom may, according to the Company’sArticles of Association, assert their rights inrespect of the affairs of the Company.

Subject to Article 22 of these Articles ofAssociation, a shareholder may take actionagainst the Company pursuant to theCompany’s Articles of Association. TheCompany may take action against ashareholder, directors, supervisors, president,vice presidents and other senior officers ofthe Company pursuant to the Company’sArticles of Association. A shareholder mayalso take action against another shareholder,and may take action against the directors,supervisors, president, vice presidents andother senior officers of the Companypursuant to the Company’s Articles ofAssociation.

The actions referred to in the precedingparagraph include court proceedings andarbitration proceedings.

The “other senior officers” referred to inthese Articles of Association mean the boardsecretary, chief accountant and, chief pilotand other senior officers appointed by theboard of directors of the Company.

The “other senior officers” referred to inthese Articles of Association mean the boardsecretary, chief accountant, and chief pilotand other senior officers appointed by theboard of directors of the Company.

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CHAPTER 3: SHARES ANDREGISTERED CAPITAL

CHAPTER 3: SHARES ANDREGISTERED CAPITAL

3 Article 24. The Company may, based on itsoperating and development needs, authorizethe increase of its capital pursuant to theArticles of Association.

The Company may increase its capital in thefollowing ways:

(1) by offering new shares for subscriptionby unspecified investors;

(2) by placing new shares to its existingshareholders;

(3) by issuing new shares to its existingshareholders;

(4) by converting the common reserve intoshare capital;

(5) by any other means which is prescribedby law and administrative regulationsand approved by the CSRC.

After the Company’s increase of capital bymeans of the issuance of new shares has beenapproved in accordance with the provisions ofthe Articles of Association, the issuancethereof should be made in accordance withthe procedures set out in the relevant Statelaws and administrative regulations.

Article 24. The Company may, based on itsoperating and development needs, authorizethe increase of its capital pursuant to theArticles of Association.

The Company may increase its capital in thefollowing ways:

(1) by offering new shares for subscriptionby unspecified investors by publicoffering of shares;

(2) by placing new shares to its existingshareholders by non-public offering ofshares;

(3) by issuing newbonus shares to itsexisting shareholders;

(4) by converting the common reserve intoshare capital;

(5) by any other means which is prescribedby law and administrative regulationsand approved by the CSRC.

After the Company’s increase of capital bymeans of the issuance of new shares has beenapproved in accordance with the provisions ofthe Articles of Association, the issuancethereof should be made in accordance withthe procedures set out in the relevant Statelaws and administrative regulations.

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CHAPTER 6: SHARE CERTIFICATESAND REGISTER OF SHAREHOLDERS

CHAPTER 6: SHARE CERTIFICATESAND REGISTER OF SHAREHOLDERS

4 Article 48. When the Company intends toconvene a shareholders’ general meeting,distribute dividends, liquidate and engage inother activities that involve determination ofshareholding, the board of directors or theconvener of the shareholders’ general meetingshall decide on a date for the determination ofshareholding. Shareholders whose names areregistered on the share register after theclosing of the market on such date shall bethe Company’s shareholders with theentitlement to the relevant rights.

Article 48. When the Company intends toconvene a shareholders’ general meeting,distribute dividends, liquidate and engage inother activities that involve determination ofshareholding, the board of directors or theconvener of the shareholders’ general meetings h a l l d e c i d e o n a d a t e f o r t h edeterminat ionrecord of shareholding.Shareholders whose names are registered onthe share register after the closing of themarket on such date shall be the Company’sshareholders with the entitlement to therelevant rights. Should the Articles ofAssociation have contrary requirements, theCompany sha l l c omp ly w i t h s u chrequirements.

5 Article 50. Any person who is a registeredshareholder or who claims to be entitled tohave his name (title) entered in the register ofshareholders in respect of shares in theCompany may, if his share certificate (the“original certificate”) relating to the shares islost, apply to the Company for a replacementshare certificate in respect of such shares (the“Relevant Shares”).

Application by a holder of A Shares, who haslost his share certificate, for a replacementshare certificate shall be dealt with inaccordance with Article 144 of the CompanyLaw.

Article 50. Any person who is a registeredshareholder or who claims to be entitled tohave his name (title) entered in the register ofshareholders in respect of shares in theCompany may, if his share certificate (the“original certificate”) relating to the shares islost, apply to the Company for a replacementshare certificate in respect of such shares (the“Relevant Shares”).

Application by a holder of A Shares, who haslost his share certificate, for a replacementshare certificate shall be dealt with inaccordance with Article 1443 of theCompany Law.

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Application by a holder of Overseas-ListedForeign Shares, who has lost his sharecer t i f icate , for a replacement sharecertificate may be dealt with in accordancewith the law of the place where the originalregister of shareholders of holders ofOve r s ea s -L i s t ed Fo r e i gn Sha r e s i smaintained, the rules of the stock exchangeor other relevant regulations.

Application by a holder of Overseas-ListedForeign Shares, who has lost his sharecer t i f icate , for a replacement sharecertificate may be dealt with in accordancewith the law of the place where the originalregister of shareholders of holders ofOve r s ea s -L i s t ed Fo r e i gn Sha r e s i smaintained, the rules of the stock exchangeor other relevant regulations.

The issue of a replacement share certificate toa holder of H Shares, who has lost his sharecertificate, shall comply with the followingrequirements:

(1) The appl ican t sha l l submi t anapplication to the Company in aprescribed form accompanied by anotarial certificate or a statutorydeclaration, stating the grounds uponwhich the application is made, thecircumstances and evidence of the loss;and declaring that no other person isentitled to have his name entered in theregister of shareholders in respect of theRelevant Shares.

(2) The Company has not received anydeclaration made by any person otherthan the applicant declaring that hisname shall be entered into the registerof shareholders in respect of such sharesbefore it decides to issue a replacementshare certificate to the applicant.

(3) The Company shall, if it intends to issuea replacement share certificate, publisha notice of its intention to do so at leastonce every thirty (30) days within aperiod of ninety (90) consecutive daysin such newspapers as may beprescribed by the board of directors.

The issue of a replacement share certificate toa holder of H Shares, who has lost his sharecertificate, shall comply with the followingrequirements:

(1) The appl ican t sha l l submi t anapplication to the Company in aprescribed form accompanied by anotarial certificate or a statutorydeclaration, stating the grounds uponwhich the application is made, thecircumstances and evidence of the loss;and declaring that no other person isentitled to have his name entered in theregister of shareholders in respect of theRelevant Shares.

(2) The Company has not received anydeclaration made by any person otherthan the applicant declaring that hisname shall be entered into the registerof shareholders in respect of such sharesbefore it decides to issue a replacementshare certificate to the applicant.

(3) The Company shall, if it intends to issuea replacement share certificate, publisha notice of its intention to do so at leastonce every thirty (30) days within aperiod of ninety (90) consecutive daysin such newspapers as may beprescribed by the board of directors.

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(4) The Company shall, prior to publicationof its intention to issue a replacementshare certificate, deliver to the stockexchange on which its shares are listed,a copy of the notice to be published andmay publish the notice upon receipt ofconfirmation from such stock exchangethat the notice has been exhibited in thepremises of the stock exchange. Suchnotice shall be exhibited in the premisesof the stock exchange for a period ofninety (90) days.

In the case of an application which ismade without the consent of theregistered holders of the RelevantShares by an applicant who is not aregistered shareholder of RelevantShares and, the Company shall deliverby mail to such registered shareholder acopy of the notice to be published.

(5) If, by the expiration of the 90-dayperiod referred to in paragraphs (3)and (4) of this Article, the Companyhas not have received any objectionsfrom any person in respect of theissuance of the replacement sharecertificate, it may issue a replacementshare certificate to the applicantpursuant to his application.

(6) Whe r e t h e Company i s s u e s areplacement share certificate pursuantto this Article, it shall forthwith cancelthe original share certificate anddocument the cancellation of theoriginal share certificate and issuanceof a replacement share certificate in theregister of shareholders accordingly.

(4) The Company shall, prior to publicationof its intention to issue a replacementshare certificate, deliver to the stockexchange on which its shares are listed,a copy of the notice to be published andmay publish the notice upon receipt ofconfirmation from such stock exchangethat the notice has been exhibited in thepremises of the stock exchange. Suchnotice shall be exhibited in the premisesof the stock exchange for a period ofninety (90) days.

In the case of an application which ismade without the consent of theregistered holders of the RelevantShares by an applicant who is not aregistered shareholder of RelevantShares and, the Company shall deliverby mail to such registered shareholder acopy of the notice to be published.

(5) If, by the expiration of the 90-dayperiod referred to in paragraphs (3)and (4) of this Article, the Companyhas not have received any objectionsfrom any person in respect of theissuance of the replacement sharecertificate, it may issue a replacementshare certificate to the applicantpursuant to his application.

(6) Whe r e t h e Company i s s u e s areplacement share certificate pursuantto this Article, it shall forthwith cancelthe original share certificate anddocument the cancellation of theoriginal share certificate and issuanceof a replacement share certificate in theregister of shareholders accordingly.

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(7) All expenses relating to the cancellationof an original share certificate and theissuance of a replacement sharecertificate shall be borne by theapplicant and the Company is entitledto refuse to take any action untilreasonable security is provided by theapplicant therefore.

(7) All expenses relating to the cancellationof an original share certificate and theissuance of a replacement sharecertificate shall be borne by theapplicant and the Company is entitledto refuse to take any action untilreasonable security is provided by theapplicant therefore.

CHAPTER 8 : SHAREHOLDERS ’GENERAL MEETINGS

CHAPTER 8 : SHAREHOLDERS ’GENERAL MEETINGS

6 Article 65. Shareholders’ general meetingsare divided into annual general meetings andextraordinary general meetings. The annualgeneral meetings shall be convened onceevery year and shall be held within sixmonths from the end of the precedingfinancial year. Meeting venues shall be fixedfor the shareholders’ general meetings, andthe shareholders’ general meetings shall beconvened in the on-site conference mode.

The Company may facilitate the shareholdersparticipating in the shareholders’ generalmeetings through all practicable mannersand means including providing moderninformation technological means such asvoting platform through internet, providedthat the legality and effectiveness of theshareholders’ general meeting are ensured.Shareholders are deemed to be present in theshareholders’ general meetings through theaforesaid means.

Article 65. Shareholders’ general meetingsare divided into annual general meetings andextraordinary general meetings. The annualgeneral meetings shall be convened onceevery year and shall be held within sixmonths from the end of the precedingfinancial year. Meeting venues shall be fixedfor the shareholders’ general meetings, andthe shareholders’ general meetings shall beconvened in the on-site conference mode.

The Company mayshall facilitate thes h a r e h o l d e r s p a r t i c i p a t i n g i n t h eshareholders’ general meetings through allpracticable manners and means and priorityshall be given to including providing moderninformation technological means such asvoting platform through internet, providedthat the legality and effectiveness of theshareholders’ general meeting are ensured.Shareholders are deemed to be present in theshareholders’ general meetings through theaforesaid means.

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The Company shall convene an extraordinarygeneral meeting within two months of theoccurrence of any one of the followingevents:

(1) where the number of directors is lessthan the minimum number stipulated inthe Company Law or two-thirds of thenumber specified in the Articles ofAssociation;

(2) where the unrecovered losses of theCompany amount to one-third of thetotal amount of its share capital;

(3) where shareholders who separately orjointly holds more than 10% of the totalCompany’s shares make such request inwriting;

(4) whenever the board of directors deemsnecessary or the supervisory committeeso requests;

(5) under other conditions as provided forby the laws, administrative regulations,departmental rules and regulations orthe Articles of Association.

The shareholding mentioned in sub-paragraph(3) above shall be calculated from the date onwhich a shareholder submits his/her request inwriting.

The Company shall convene an extraordinarygeneral meeting within two months of theoccurrence of any one of the followingevents:

(1) where the number of directors is lessthan the minimum number stipulated inthe Company Law or two-thirds of thenumber specified in the Articles ofAssociation;

(2) where the unrecovered losses of theCompany amount to one-third of thetotal amount of its share capital;

(3) where shareholders who separately orjointly holds more than 10% of the totalCompany’s shares make such request inwriting;

(4) whenever the board of directors deemsnecessary or the supervisory committeeso requests;

(5) under other conditions as provided forby the laws, administrative regulations,departmental rules and regulations orthe Articles of Association.

The shareholding mentioned in sub-paragraph(3) above shall be calculated from the date onwhich a shareholder submits his/her request inwriting.

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7 Article 81. The board of directors,independent directors and shareholders whohave satisfied certain conditions (which aredetermined based on such standards aspromulgated from time to time by therelevant competent authorities) may solicitthe voting rights from shareholders at ashareholders’ general meeting. Any personwho publicly solicits voting rights from theshareholders of the Company shall complywith provisions stipulated by the relevantcompetent authorities and the stock exchangeson which the shares of the Company arelisted and traded.

Article 81. The Company’s board ofdirectors , independent directors andshareholders who have satisfied certainconditions (which are determined based onsuch standards as promulgated from time totime by the relevant competent authorities)may publicly solicit the voting rights fromshareholders at a shareholders’ generalmeeting. In soliciting voting rights ofshareholders, information such as specificvoting intention shall be sufficientlydisclosed to the shareholders from whomvo t i ng r i gh t s a r e be i ng so l i c i t e d .Consideration or de facto consideration forsolicitation of voting rights is prohibited. TheCompany may not propose any minimumshareholding restriction on the solicitation ofvoting rights. Any person who publiclysolicits voting rights from the shareholdersof the Company shall also comply with otherprovisions stipulated by the relevantcompetent authori t ies and the stockexchanges on which the shares of theCompany are listed and traded.

8 Article 83. A shareholder (including a proxy),when voting at a shareholders’ generalmeeting, may exercise such voting rights asare attached to the number of voting shareswhich he represents. Except otherwiseprovided for election of directors in Article108 and election of supervisors in Article 146of these Articles of Association in connectionwith the adoption of the cumulative votingsystem for election of directors, each shareshall have one vote. The shares held by theCompany itself shall not be attached withvoting rights. Those shares shall not becounted as the total number of voting shareshe ld by shareholders a t tending theshareholders’ general meetings.

Article 83. A shareholder (including a proxy),when voting at a shareholders’ generalmeeting, may exercise such voting rights asare attached to the number of voting shareswhich he represents. Except otherwiseprovided for election of directors in Article108 and election of supervisors in Article 146of these Articles of Association in connectionwith the adoption of the cumulative votingsystem for election of directors, each shareshall have one (1) vote. The shares held bythe Company itself shall not be attached withvoting rights. Those shares shall not becounted as the total number of voting shareshe ld by shareholders a t tending theshareholders’ general meetings.

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Where a shareholder is, under the applicablelisting rules as amended from time to time,required to abstain from voting on anyparticular resolution or to vote only for oronly against any particular resolution, anyvotes cast by or on behalf of such shareholderin contravention of such requirement orrestriction shall not be counted.

Where material issues affecting the interestsof small and medium investors are beingconsidered in the shareholders’ generalmeeting, the votes by small and mediuminvestors shall be counted separately. Theseparate counting results shall be disclosed tothe public in a timely manner.

Where a shareholder is, under the applicablelisting rules as amended from time to time,required to abstain from voting on anyparticular resolution or to vote only for oronly against any particular resolution, anyvotes cast by or on behalf of such shareholderin contravention of such requirement orrestriction shall not be counted.

CHAPTER 10: BOARD OF DIRECTORS CHAPTER 10: BOARD OF DIRECTORS

9 Article 110. The board of directors isresponsible to the shareholders’ generalmeeting and shall exercise the followingduties and powers:

(1) to be responsible for the convening ofthe shareholders’ general meeting and toreport on its work to the shareholders ingeneral meetings;

(2) to implement the resolutions passed bythe shareholders in general meetings;

(3) to determine the Company’s businessplans and investment proposals;

(4) to formulate the Company’s preliminaryand final annual financial budgets;

(5) to formulate the Company’s profitdistribution proposal and loss recoveryproposal;

Article 110. The board of directors isresponsible to the shareholders’ generalmeeting and shall exercise the followingduties and powers:

(1) to be responsible for the convening ofthe shareholders’ general meeting and toreport on its work to the shareholders ingeneral meetings;

(2) to implement the resolutions passed bythe shareholders in general meetings;

(3) to determine the Company’s businessplans and investment proposals;

(4) to formulate the Company’s preliminaryand final annual financial budgets;

(5) to formulate the Company’s profitdistribution proposal and loss recoveryproposal;

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(6) to formulate proposals for the increaseor reduct ion of the Company’sregistered capital and for the issuanceof the Company’s debentures;

(7) to draw up the Company’s proposals forthe merger, division, dissolution orchange of the form of the Company;

(8) to decide on other issues relating to theprovision of guarantee in favor of athird party other than those must beapproved at a shareholders’ generalmee t ing pursuan t to the laws ,administrative regulations and theseArticles of Association;

(9) to decide on the external investments,purchase and sale of assets, creation ofmortgage over assets, entrusted assetmanagement, connected transactions andother matters within the scope ofau thor iza t ion confe r red by theshareholders’ general meeting;

(10) to decide on the Company’s internalmanagement structure;

(11) to appoint or dismiss the president ofthe Company, secretary to the board ofdirectors; and to appoint or dismiss,with reference to the nomination by thepresident, the vice presidents, chiefaccountant and chief pi lot anddetermine their remunerations;

(12) to formulate the basic managementstructure of the Company;

(6) to formulate proposals for the increaseor reduct ion of the Company’sregistered capital and for the issuanceof the Company’s debentures;

(7) to draw up the Company’s proposals forthe merger, division, dissolution orchange of the form of the Company;

(8) to decide on other issues relating to theprovision of guarantee in favor of athird party other than those must beapproved at a shareholders’ generalmee t ing pursuan t to the laws ,administrative regulations and theseArticles of Association;

(9) to decide on the external investments,purchase and sale of assets, creation ofmortgage over assets, entrusted assetmanagement, connected transactions andother matters within the scope ofau thor iza t ion confe r red by theshareholders’ general meeting;

(10) to decide on the Company’s internalmanagement structure;

(11) to appoint or dismiss the president ofthe Company, secretary to the board ofd i r e c t o r s a nd d e t e rm i n e t h e i rremunerations; and to appoint ord ismiss , wi th re fe rence to thenomination by the president, the vicepresidents, chief accountant and, chiefpilot and other senior officers anddetermine their remunerations;

(12) to formulate the basic managementstructure of the Company;

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(13) to manage matters relating to thedisclosure of information by theCompany;

(14) to make recommendations to theshareholders’ general meetings on theappo in tmen t o r change of theaccounting firm which performs theaudit work for the Company;

(15) to hear from the Company’s presidentreports on work performed and toinspect the work of the president;

(16) to formulate proposals for anyamendment of the Company’s Articlesof Association; and

(17) to exercise any other powers conferredby the shareholders in general meetingsand these Articles of Associations.

Resolutions by the board of directors onmatters referred to in the preceding paragraphmay be passed by the affirmative vote ofmore than half of the directors (amongstwhich resolution on matters referred to insub-paragraph (8) shall require the affirmativevote of more than two-thirds of the directorspresent at the board meeting) with theexception of resolutions on matters referredto in sub-paragraphs (6), (7) and (16) whichshall require the affirmative vote of more thantwo-thirds of all the directors.

(13) to manage matters relating to thedisclosure of information by theCompany;

(14) to make recommendations to theshareholders’ general meetings on theappo in tmen t o r change of theaccounting firm which performs theaudit work for the Company;

(15) to hear from the Company’s presidentreports on work performed and toinspect the work of the president;

(16) to formulate proposals for anyamendment of the Company’s Articlesof Association; and

(17) to exercise any other powers conferredby the shareholders in general meetingsand these Articles of Associations.

Resolutions by the board of directors onmatters referred to in the preceding paragraphmay be passed by the affirmative vote ofmore than half of the directors (amongstwhich resolution on matters referred to insub-paragraph (8) shall require the affirmativevote of more than two-thirds of the directorspresent at the board meeting) with theexception of resolutions on matters referredto in sub-paragraphs (6), (7) and (16) whichshall require the affirmative vote of more thantwo-thirds of all the directors.

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If any director is connected with theenterprises that are involved in the mattersto be resolved by the board meetings, he shallnot exercise his voting rights for such matters,nor shall he exercise voting rights on behalfof other directors. Such board meetings shallbe convened by a majority of the directorspresent thereat who are not connected.Resolutions made by the board meetingsshall be passed by a majority of thedirectors that are not connected. Theaforementioned matters that must be passedby two-thirds or more of the directors shall bepassed by votes of two-thirds or more of thedirectors that are not connected. If the numberof non-connected directors attending theboard meetings falls short of three, suchma t t e r s sha l l be submi t t ed to theshareholders’ general meeting of theCompany for approval.

Resolutions made by the board of directors onthe Company’s connected transactions shallcome into effect only after they are signed bythe independent directors.

If any director is connected with theenterprises that are involved in the mattersto be resolved by the board meetings, he shallnot exercise his voting rights for such matters,nor shall he exercise voting rights on behalfof other directors. Such board meetings shallbe convened by a majority of the directorspresent thereat who are not connected.Resolutions made by the board meetingsshall be passed by a majority of thedirectors that are not connected. Theaforementioned matters that must be passedby two-thirds or more of the directors shall bepassed by votes of two-thirds or more of thedirectors that are not connected. If the numberof non-connected directors attending theboard meetings falls short of three, suchma t t e r s sha l l be submi t t ed to theshareholders’ general meeting of theCompany for approval.

Resolutions made by the board of directors onthe Company’s connected transactions shallcome into effect only after they are signed bythe independent directors.

10 Article 111. Upon authorization by the boardof directors, the Chairman may exercise partof the functions and powers of the board ofdirectors when the board of directors is not insession. Particulars of the authorization of theboard of directors shall be clear and specific.

Article 111. Upon authorization by the boardof directors, the Chairman may exercise partof the functions and powers of the board ofdirectors when the board of directors is not insession. Particulars of the authorization of theboard of directors shall be clear and specific.Issues involving material interests of theCompany shall be subject to collectivedecision by the board of directors.

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11 Article 116. Meetings of the board ofdirectors shall be held at least twice everyyear and shall be convened by the Chairmanof the board of directors. All directors andsupervisors shall be notified of the meetingfourteen days beforehand. The notice of theboard meetings shall contain:

(1) date, venue and duration of the meeting;

(2) reasons and matters for discussion;

(3) date of issuance of the notice.

Extraordinary general meeting shall beconvened by the Chairman within ten daysof the occurrence of any of the followingevents and shall not be subject to theabovementioned period of notice:

(1) where shareholders representing morethan 10% of the voting rights propose todo so;

(2) where the chairman of the board ofdirectors deems it necessary;

(3) where one-third or more of the directorsjointly propose to do so;

(4) where one half or more of theindependent directors jointly proposeto do so;

(5) where the supervisory committeeproposes to do so;

(6) where the president proposes to do so.

Article 116. Meetings of the board ofdirectors shall be held at least twice everyyear and shall be convened by the Chairmanof the board of directors. All directors andsupervisors shall be notified of the meetingfourteen days beforehand. The notice of theboard meetings shall contain:

(1) date, venue and duration of the meeting;

(2) reasons and matters for discussion;

(3) date of issuance of the notice.

Extraordinary general meeting shall beconvened by the Chairman within ten daysof the occurrence of any of the followingevents and shall not be subject to theabovementioned period of notice:

(1) where shareholders representing morethan 10% of the voting rights propose todo so;

(2) where the chairman of the board ofdirectors deems it necessary;

(3) where one-third or more of the directorsjointly propose to do so;

(4) where one half or more of theindependent directors jointly proposeto do so;

(5) where the supervisory committeeproposes to do so;

(6) where the president proposes to do so;

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The meetings of the board of directors shallbe conducted in Chinese and where necessary,may have an interpreter to provide Chineseand English translation during the meetings.

(7) where the securities regulatory authorityrequires to do so; and

(8) where other circumstances specified inthe Articles of Association of theCompany occur.

The meetings of the board of directors shallbe conducted in Chinese and where necessary,may have an interpreter to provide Chineseand English translation during the meetings.

CHAPTER 13: PRESIDENT CHAPTER 13: PRESIDENT

12 Article 139. The president shall beaccountable to the board of directors andshall exercise the following functions andpowers:

(1) to be in charge of the Company’sproduction, operation and managementand to organize the implementation ofthe resolutions of the board of directors;

(2) to organize the implementation of theCompany’s annual business plan andinvestment proposal;

(3) subject to applicable laws and theseArticles of Association, to decide ontransactions, which are related to theCompany’s main business, and thevalue of which shall not exceed certainamount, or certain proportion of theCompany’s latest audited net assets (thesaid amount and proportion to bedetermined by the shareholders’meeting);

Article 139. The president shall beaccountable to the board of directors andshall exercise the following functions andpowers:

(1) to be in charge of the Company’sproduction, operation and managementand to organize the implementation ofthe resolutions of the board of directors;

(2) to organize the implementation of theCompany’s annual business plan andinvestment proposal;

(3) subject to applicable laws and theseArticles of Association, to decide ontransactions, which are related to theCompany’s main business, and thevalue of which shall not exceed certainamount, or certain proportion of theCompany’s latest audited net assets (thesaid amount and proportion to bedetermined by the shareholders’meeting);

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(4) to sign contracts and agreements onbehalf of the Company and sign anddispatch day-to-day administrativedocuments;

(5) to draft plans for the establishment ofthe Company’s internal managementstructure, and where necessary, makep l ans fo r gene ra l i n s t i t u t i ona ladjustment;

(6) t o d r a f t t h e Company ’ s ba s i cmanagement system;

(7) to formulate basic rules and regulationsfor the Company;

(8) to propose the appointment or dismissalof the vice presidents, chief accountantand chief pilot of the Company;

(9) to appoint or dismiss managementpersonnel other than those required tobe appointed or dismissed by the boardof directors;

(10) to propose to convene an extraordinarymeeting of the board of directors;

(11) other powers conferred by the Articlesof Association and the board ofdirectors.

(4) to sign contracts and agreements onbehalf of the Company in accordancewith the authorization granted by theboard of directors or the legalrepresentative; and sign and dispatchday-to-day administrative documents;

(5) to draft plans for the establishment ofthe Company’s internal managementstructure, and where necessary, makep l ans fo r gene ra l i n s t i t u t i ona ladjustment;

(6) t o d r a f t t h e Company ’ s ba s i cmanagement system;

(7) to formulate basic rules and regulationsfor the Company;

(8) to propose the appointment or dismissalof the vice presidents, chief accountantand chief pilot of the Company;

(9) to appoint or dismiss managementpersonnel other than those required tobe appointed or dismissed by the boardof directors;

(10) to propose to convene an extraordinarymeeting of the board of directors;

(11) other powers conferred by the Articlesof Association and the board ofdirectors.

13 Article 141. In performing their duties andpowers, the president, vice presidents, chiefaccountant and chief pilot shall act honestlyand diligently in accordance with laws,administrative regulations and the Articles ofAssociation.

Article 141. In performing their duties andpowers, the president, vice presidents, chiefaccountant and, chief pilot and other seniorofficers shall act honestly and diligently inaccordance with laws, administrativeregulations and the Articles of Association.

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CHAPTER 15: THE QUALIFICATIONSAND DUTIES OF THE DIRECTORS,SUPERVISORS, PRESIDENT, VICEPRESIDENTS AND OTHER SENIOROFFICERS OF THE COMPANY

CHAPTER 15: THE QUALIFICATIONSAND DUTIES OF THE DIRECTORS,SUPERVISORS, PRESIDENT, VICEPRESIDENTS AND OTHER SENIOROFFICERS OF THE COMPANY

14 Article 156. A person may not serve as adirector, supervisor, president, vice presidentsor any other senior officers of the Company ifany of the following circumstances apply:

(1) a person who does not have or who haslimited capacity for civil conduct;

(2) a person who has been sentenced forcorruption, bribery, infringement ofproperty or misappropriat ion ofproperty or other crimes which disruptthe social economic order, where lessthan five years have elapsed since thesentence was served, or a person whohas been deprived of his political rightsand not more than five years haveelapsed since the sentence was served;

(3) a person who is a former director,factory manager or manager of acompany or enterprise which has beendissolved or put into liquidation andwho was personally liable for thewinding up of such company orenterprise, where less than three yearshave elapsed since the date ofcompletion of the insolvent liquidationof the company or enterprise;

Article 156. A person may not serve as adirector, supervisor, president, vice presidentsor any other senior officers of the Company ifany of the following circumstances apply:

(1) a person who does not have or who haslimited capacity for civil conduct;

(2) a person who has been sentenced forcorruption, bribery, infringement ofproperty or misappropriat ion ofproperty or other crimes which disruptthe social economic order, where lessthan five years have elapsed since thesentence was served, or a person whohas been deprived of his political rightsand not more than five years haveelapsed since the sentence was served;

(3) a person who is a former director,factory manager or manager of acompany or enterprise which has beendissolved or put into liquidation andwho was personally liable for thewinding up of such company orenterprise, where less than three yearshave elapsed since the date ofcompletion of the insolvent liquidationof the company or enterprise;

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(4) a person who is a former legalrepresentative of a company orenterprise the business licence ofwhich was revoked due to violation oflaw and who are personally liabletherefor, where less than three yearshave elapsed since the date of therevocation of the business licence;

(5) a person who has a relatively largeamount of debts which have becomeoverdue;

(6) a person who is currently underinvestigation by judicial organs forviolation of criminal law;

(7) a person who, according to laws andadministrative regulations, cannot act asa leader of an enterprise;

(8) a person other than a natural person;

(9) a person who has been convicted by thecompetent authority for violation ofrelevant securities regulations and suchconviction involves a finding that suchperson has acted fraudulently ordishonestly, where less than five yearshave elapsed since the date of suchconviction;

(10) a person who has been confirmed by theauthority in charge of securities of theState Council as being prohibited fromparticipating in the market or have notbeen released from such prohibition;

(11) other contents as provided for by thelaws, administrative regulations ordepartmental rules.

(4) a person who is a former legalrepresentative of a company orenterprise the business licence ofwhich was revoked due to violation oflaw and who are personally liabletherefor, where less than three yearshave elapsed since the date of therevocation of the business licence;

(5) a person who has a relatively largeamount of debts which have becomeoverdue;

(6) a person who is currently underinvestigation by judicial organs forviolation of criminal law;

(7) a person who, according to laws and,a dm i n i s t r a t i v e r e g u l a t i o n s o rdepartmental rules, cannot act as aleader of an enterprise;

(8) a person other than a natural person;

(9) a person who has been convicted by thecompetent authority for violation ofrelevant securities regulations and suchconviction involves a finding that suchperson has acted fraudulently ordishonestly, where less than five yearshave elapsed since the date of suchconviction;

(10) a person who has been confirmed by theauthority in charge of securities of theState Council as being prohibited fromparticipating in the market or have notbeen released from such prohibition;

(11) other contents as provided for by thelaws, administrative regulations ordepartmental rules.

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If any of the above circumstances occurs onthe part of a director during his term ofoffice, the board of directors shall, startingfrom the date on which they are awarethereof, forthwith cease the performance ofduties by the relevant director and propose toremove such director at the shareholders’general meeting. If any of the abovecircumstances occurs on the part of thepresident during his term of office, theboard of directors shall, starting from thedate on which they are aware thereof,forthwith cease the performance of duties bythe relevant president and convene a boardmeeting to dismiss such president. If any ofthe above circumstances occurs on the part ofa supervisor during his term of office, thesupervisory committee shall, starting from thedate on which it is aware thereof, forthwithcease the performance of duties by therelevant supervisor and propose to removesuch supervisor at the shareholders’ generalmeeting or the employee representatives’meeting.

If any of the above circumstances occurs onthe part of a director during his term ofoffice, the board of directors shall, startingfrom the date on which they are awarethereof, forthwith cease the performance ofduties by the relevant director and propose toremove such director at the shareholders’general meeting. If any of the abovecircumstances occurs on the part of thepresident during his term of office, theboard of directors shall, starting from thedate on which they are aware thereof,forthwith cease the performance of duties bythe relevant president and convene a boardmeeting to dismiss such president. If any ofthe above circumstances occurs on the part ofa supervisor during his term of office, thesupervisory committee shall, starting from thedate on which it is aware thereof, forthwithcease the performance of duties by therelevant supervisor and propose to removesuch supervisor at the shareholders’ generalmeeting or the employee representatives’meeting.

15 Article 160. Each of the Company’sdirectors, supervisors, president, vicepresidents and other senior officers owes aduty, in the exercise of his powers or in thedischarge of his duties, to exercise the care,diligence and skill that a reasonably prudentperson would exercise in comparablecircumstances, including but not limited tothe standards of the professional ethnics andcode of conduct formulated by the Company.

Article 160. Each of the Company’sdirectors, supervisors, president, vicepresidents and other senior officers owes aduty, in the exercise of his powers or in thedischarge of his duties, to exercise the care,diligence and skill that a reasonably prudentperson would exercise in comparablecircumstances, including but not limited tocompliance with the standards of theprofessional ethnics and code of conductformulated by the Company.

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CHAPTER 16: FINANCIAL ANDACCOUNTING SYSTEMS, PROFITDISTRIBUTION AND AUDIT

CHAPTER 16: FINANCIAL ANDACCOUNTING SYSTEMS, PROFITDISTRIBUTION AND AUDIT

16 Article 192. Specific dividends distributionpolicy of the Company:

(1) The form of dividends distribution:

The Company may distribute dividendsin cash, shares or a combination of cashand shares or other methods permittedby the laws, administrative regulations,departmental rules and the regulatoryrules of the jurisdictions in which theshares of the Company are listed.

Article 192. Specific dividends distributionpolicy of the Company:

(1) The form of dividends distribution:

The Company may distribute dividendsin cash, shares or a combination of cashand shares or other methods permittedby the laws, administrative regulations,departmental rules and the regulatoryrules of the jurisdictions in which theshares of the Company are listed.

The board of directors of the Companyshall have comprehensive considerationof the factors, including its industrycharacteristics, development stage,operation mode, profitability level andwhether there is any significantexpenditure payment arrangement,make the differentiated cash bonuspolicy according to the proceduresp r e s c r i b ed by the Ar t i c l e s o fA s s o c i a t i o n , a nd i d e n t i f y t h eproportion of the cash bonus in theprofit distribution in the current year,with proportion in compliance with ther e l e v an t s t i p u l a t i o n s o f l aws ,administrative regulations, normativedocumentation and stock exchanges.

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(2) Specific conditions and proportions fordistributing cash dividends by theCompany:

Save as special circumstances, thedividends shall be distributed in cashby the Company provided that thedistributable profits (i.e. the balance ofprofit after tax, after making up for thelosses and making contributions to thecommon reserve fund in accordancewith the provisions of these Articles ofAssociation as well as deductingotherwise approved by the relevantnational departments) realized for thecurrent year in the financial statement ofthe parent company prepared inaccordance with applicable domesticand overseas accounting standards andregulations are positive, and the cashdividends to be distributed each yearshall not be less than 15% of theapplicable distributable profits.

The applicable distributable profits shallbe the lower of the distributable profitsin the financial statements of the parentcompany prepared by the Company inaccordance with applicable domesticand overseas accounting standards andregulations.

Special circumstances refer to thec i rcumstances under which theaggregate capital expenditures withinthe next twelve months reach orexceed 40% of the latest audited netvalue of the Company.

(2) Specific conditions and, proportions andintervals for distributing cash dividendsby the Company:

Save as special circumstances, thedividends shall be distributed in cashby the Company provided that thedistributable profits (i.e. the balance ofprofit after tax, after making up for thelosses and making contributions to thecommon reserve fund in accordancewith the provisions of these Articles ofAssociation as well as deductingotherwise approved by the relevantnational departments) realized for thecurrent year in the financial statement ofthe parent company prepared inaccordance with applicable domesticand overseas accounting standards andregulations are positive, and the cashdividends to be distributed each yearshall not be less than 15% of theapplicable distributable profits.

The applicable distributable profits shallbe the lower of the distributable profitsin the financial statements of the parentcompany prepared by the Company inaccordance with applicable domesticand overseas accounting standards andregulations.

Special circumstances refer to thec i rcumstances under which theaggregate capital expenditures withinthe next twelve months reach orexceed 40% of the latest audited netvalue of the Company the board ofdirectors considers that cash dividendd i s t r ibu t ion may in f luence theCompany’s continuing operation andlong-term development.

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When the aforesaid conditions of cashdistribution are met, cash dividendsshall be distributed once a year. Theboard of directors of the Company canpropose an interim dividend distributionaccording to the Company’s status ofprofitability and capital needs.

(3) Specific conditions under which theCompany may issue shares in lieu ofdividends:

Where the Company is in a soundoperating condition, and the board ofdirectors considers that the Company’sstock price does not reflect theCompany’s scale of capital, andissuing shares in lieu of dividends willbe in the interests of all shareholders ofthe Company as a whole, a proposal forthe issuance of shares in lieu ofdividends may be proposed uponfulfillment of the above conditionsconcerning cash dividends.

(3) Specific conditions under which theCompany may issue shares in lieu ofdividends:

Where the Company is in a soundoperating condition, and the board ofdirectors considers that the Company’sstock price does not reflect theCompany’s scale of capital, andissuing shares in lieu of dividends willbe in the interests of all shareholders ofthe Company as a whole, a proposal forthe issuance of shares in lieu ofdividends may be proposed uponfulfillment of the above conditionsconcerning cash dividends.

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17 Article 194. Procedures for considering andapproving the dividend distribution proposalof the Company:

(1) The dividends distribution plan of theCompany shall be drawn up by themanagement of the Company andsubmitted to the board of directors andthe supervisory committee of theCompany for consideration. The boardof directors shall thoroughly discuss therationality of the dividends distributionplan and the independent Directors shallexplicitly express their opinions. Aspecial resolution formulated by theboard of directors shall be submittedto the Shareholders’ general meeting forconsideration.

Article 194. Procedures for considering andapproving the dividend distribution proposalof the Company:

(1) The dividends distribution plan of theCompany shall be drawn up by themanagement of the Company andsubmitted to the board of directors andthe supervisory committee of theCompany for consideration. The boardof directors shall thoroughly discuss therationality of the dividends distributionplan and the independent Directors shallexplicitly express their opinions. Aspecial resolution formulated by theboard of directors shall be submittedto the Shareholders’ general meeting forconsideration. The board of directorswill also fully listen to the opinions ofminority Shareholders.

(2) Where the Company does not distributecash dividends under the specialcircumstances as prescribed in theforegoing Article 192, the board ofdirectors shall explain the specificreasons for not distributing cashdividends, the exact purpose for theretained profit and the estimatedinvestment return. Such explanation,along with the opinions expressed bythe independent directors, shall besubmitted to the shareholders’ generalmeeting for consideration and bedisclosed on the designated media ofthe Company.

(2) When formulating specific plan fordistribution of cash dividends by theCompany, the board of directors shallstudy and identify with caution thetiming, conditions and minimumproportion, conditions for adjustmentand requirements for decision-makingprocedures involved in implementingthe distribution of cash dividends, etc.Independent Directors shall explicitlyexpress thei r opinions thereon.Independent Directors may collectopinions from minority shareholdersfor putting forward a profit distributionproposal which can be directlysubmitted to the board of directors forconsideration.

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(3) Where the Company does not distributecash dividends under the specialcircumstances as prescribed in theforegoing Article 192, the board ofdirectors shall explain the specificreasons for not distributing cashdividends, the exact purpose for theretained profit and the estimatedinvestment return. Such explanation,along with the opinions expressed bythe independent directors, shall besubmitted to the shareholders’ generalmeeting for consideration and bedisclosed on the designated media ofthe Company.

Subject to Article 63 and subparagraph (17)of the first paragraph of Article 110 of theseArticles of Association, the board of directorsmay decide to distribute interim or specialdividends.

Subject to Article 63 and subparagraph (17)of the first paragraph of Article 110 of theseArticles of Association, the board of directorsmay decide to distribute interim or specialdividends.

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(Stock Code: 00753) · On 27 July 2015, CNAHC entered into the Share Subscription Agreement with...

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Transcript of (Stock Code: 00753) · On 27 July 2015, CNAHC entered into the Share Subscription Agreement with...