1. automotive and vehicles
2. cars
3. convertible

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager,
solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Bank of Communications Co., Ltd., you should at once hand this circular together with the
accompanying proxy form and the reply slip to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the
sale or transfer was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make
no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance
upon the whole or any part of the contents of this circular.
This circular is for the sole purpose of the extraordinary general meeting of Bank of Communications Co., Ltd. and does not constitute an invitation or
offer to acquire, purchase or subscribe for any securities.
Distribution of this circular into jurisdictions other than Hong Kong may be restricted by law. Persons into whose possession this circular comes should
inform themselves of and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of
any such jurisdiction.
Neither this circular nor any copy thereof may be released into or distributed in the United States or any other jurisdiction where such release or
distribution might be unlawful. The Offshore Preference Shares and the H Shares issuable upon conversion of the Offshore Preference Shares have not
been and will not be registered under the U.S. Securities Act of 1933 (the “U.S. Securities Act”) or the securities laws of any State of the United States or
other jurisdiction, and the Offshore Preference Shares may not be offered or sold within the United States, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act and applicable State or local securities laws. There is no intention to
register any portion of any securities described herein in the United States or to conduct a public offering of securities in the United States.
App1B.1
R13.28(1)
R13.51A
(1) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
(2) PROPOSAL IN RESPECT OF THE GENERAL MANDATE TO ISSUE SHARES
(3) PROPOSED ISSUANCE OF DOMESTIC PREFERENCE SHARES
(4) PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES
(5) PROPOSAL IN RESPECT OF DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES AND THE REMEDIAL MEASURES TO BE ADOPTED
(6) PROPOSAL IN RESPECT OF THE AMENDMENTS TO
THE CAPITAL MANAGEMENT PLAN FOR THE YEARS 2012-2015
(7) PROPOSAL IN RESPECT OF THE FORMULATION OF
THE SHAREHOLDER RETURN PLAN FOR THE YEARS 2015-2017
(8) AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2014
(9) PROFIT DISTRIBUTION PLAN FOR THE YEAR ENDED 31 DECEMBER 2014
AND
NOTICE OF EGM
A notice convening the EGM to be held at Wyndham Grand Plaza Royale Oriental Shanghai Hotel, No. 2288 Pudong Avenue, Pudong New District,
Shanghai, PRC at 1:30 p.m., on Monday, 18 May 2015 is set out on pages 65 to 71 of this circular.
If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying proxy form in accordance with the
instructions printed thereon. For holders of H Shares, the proxy form should be returned to Computershare Hong Kong Investor Services Limited, the H
Share Registrar and transfer office of the Bank in Hong Kong, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, by hand or
by post as soon as practicable and in any event not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof.
Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof should
you so wish, but in such event, the instrument appointing a proxy shall be deemed to be revoked.
If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to Computershare Hong Kong Investor
Services Limited or to the Bank’s Board of Directors’ Office on or before 5:00 p.m., Tuesday, 28 April 2015.
The English and Chinese versions of this circular and the accompanying proxy form and reply slip are available on the Bank’s website at
www.bankcomm.com and the HKExnews website of the Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk. You may download or access
the aforesaid documents by clicking “Investor Relations” on the homepage of the Bank’s website or browsing through the HKExnews website of the Hong
Kong Exchanges and Clearing Limited. If there are any inconsistences between the Chinese version and the English version of this circular, the Chinese
version shall prevail.
31 March 2015
CONTENTS
Page
DEFINITIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LETTER FROM THE BOARD
1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION . . . . . . . .
3
PROPOSAL IN RESPECT OF THE GENERAL MANDATE
TO ISSUE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
PROPOSED ISSUANCE OF DOMESTIC PREFERENCE SHARES . . . . . . . . . . .
5
PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES . . . . . . . . . . .
6
PROPOSAL IN RESPECT OF DILUTION OF CURRENT RETURNS BY
ISSUANCE OF PREFERENCE SHARES AND THE REMEDIAL MEASURES
TO BE ADOPTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
PROPOSAL IN RESPECT OF THE AMENDMENTS TO THE CAPITAL
MANAGEMENT PLAN FOR THE YEARS 2012-2015 . . . . . . . . . . . . . . . . . . . .
8
PROPOSAL IN RESPECT OF THE FORMULATION OF THE SHAREHOLDER
RETURN PLAN FOR THE YEARS 2015-2017 . . . . . . . . . . . . . . . . . . . . . . . . .
9
AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2014 . . . . . . .
10
PROFIT DISTRIBUTION PLAN FOR THE YEAR
ENDED 31 DECEMBER 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX I
APPENDIX II
APPENDIX III
APPENDIX IV
APPENDIX V
APPENDIX VI
APPENDIX VII
1
5
5
6
7
8
8
9
9
9
9
10
10
PROPOSED AMENDMENTS TO
THE ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . .
12
PROPOSAL IN RESPECT OF THE GENERAL MANDATE
TO ISSUE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES . . . . . . . . . . . . . . . . . . . . . . . . .
32
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES . . . . . . . . . . . . . . . . . . . . . . . . .
43
DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES OF BANK OF COMMUNICATIONS CO., LTD.
AND THE REMEDIAL MEASURES TO BE ADOPTED . . . . . . . . . . . .
54
CAPITAL MANAGEMENT PLAN FOR THE YEARS 2015-2017 OF
BANK OF COMMUNICATIONS CO., LTD. . . . . . . . . . . . . . . . . . . . . .
57
SHAREHOLDER RETURN PLAN FOR THE YEARS 2015-2017 OF
BANK OF COMMUNICATIONS CO., LTD. . . . . . . . . . . . . . . . . . . . . .
62
NOTICE OF EGM
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- i -
65
DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions have the following
meanings:
“A Share(s)”
PRC-listed domestic ordinary share(s) of par value of RMB1.00
each in the registered capital of the Bank
“Administrative Measures”
the Trial Administrative Measures on Preference Shares issued by
the CSRC on 21 March 2014
“Articles”
the articles of association of the Bank from time to time
“Bank”
Bank of Communications Co., Ltd. (交通銀行股份有限公司), a
joint stock limited company incorporated under the laws of the
PRC, the A Shares and H Shares of which are listed on the
Shanghai Stock Exchange and the Hong Kong Stock Exchange,
respectively
“Board”
the board of Directors of the Bank
“Capital Management Rules”
the Measures on Capital Management of Commercial Banks (Trial)
issued by the CBRC on 7 June 2012 and became effective on 1
January 2013
“CBRC”
the China Banking Regulatory Commission of the People’s
Republic of China
“CSRC”
the China Securities Regulatory Commission of the People’s
Republic of China
“Directors”
the directors of the Bank
“Domestic Preference Shares”
the preference shares of an aggregate amount of not more than
RMB45 billion, proposed to be issued by the Bank in the PRC
pursuant to the plan for non-public issuance of the Domestic
Preference Shares as set out in Appendix III to this circular
“Domestic Preference Shareholders”
holders of Domestic Preference Shares
“EGM”
the 2015 first extraordinary general meeting of the Bank to be held
on 18 May 2015 to consider and approve, among other things, the
issuance of Preference Shares and the General Mandate
- 1 -
DEFINITIONS
“General Mandate”
the general mandate proposed to be granted to the Board at the
EGM to exercise the powers of the Bank to authorise, allot, issue
and deal with, inter alia, the newly issued A Shares, H Shares and
preference shares pursuant to the Proposal in respect of the General
Mandate to Issue Shares as set out in Appendix II to this circular
“H Share(s)”
overseas listed foreign ordinary share(s) of par value of RMB1.00
each in the registered capital of the Bank
“H Share Registrar”
Computershare Hong Kong Investor Services Limited
“HKD”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Hong Kong Listing Rules”
the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended, supplemented or
otherwise modified from time to time
“Hong Kong Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Joint Guidance Opinion”
the Guidance Opinion on Issuance of Preference Shares by
Commercial Banks for Supplementing Tier-1 Capital jointly
issued by the CBRC and the CSRC on 3 April 2014
“Latest Practicable Date”
26 March 2015, being the latest practicable date prior to the
printing of this circular for ascertaining certain information
contained herein
“Offshore Preference Shares”
the preference shares of an aggregate amount of not more than
RMB15 billion or its equivalent, proposed to be issued by the Bank
in the offshore market pursuant to the plan for non-public issuance
of Offshore Preference Shares as set out in Appendix IV to this
circular
“Offshore Preference Shareholders”
holders of Offshore Preference Shares
“Ordinary Shares”
A Shares and H Shares
“PRC”
the People’s Republic of China, and for the purposes of this circular
only, excluding Hong Kong, the Macau Special Administrative
Region and Taiwan
“Preference Shareholders”
holders of Preference Shares
“Preference Shares”
Offshore Preference Shares and Domestic Preference Shares
- 2 -
DEFINITIONS
“RMB”
Renminbi, the lawful currency of the PRC
“Shareholders”
holders of Ordinary Shares
“State Council Guidance Opinion”
the Guidance Opinion on the Launch of Preference Shares Pilot
Scheme issued by the State Council on 30 November 2013
“%”
per cent.
Unless otherwise stated, all the numerical figures are rounded to two decimal places.
- 3 -
LETTER FROM THE BOARD
App1B.1
R13.28(1)
R13.51A
Executive Directors:
Mr. Niu Ximing
Mr. Peng Chun
Ms. Yu Yali
Registered Office:
188 Yin Cheng Zhong Lu
Pudong New District
Shanghai
PRC
Non-executive Directors:
Mr. Hu Huating
Mr. Wang Taiyin
Mr. Liu Changshun
Mr. Wong Tung Shun, Peter
Mr. Ma Qiang
Mr. Lei Jun
Ms. Zhang Yuxia
Place of Business in Hong Kong:
20 Pedder Street
Central
Hong Kong
Independent Non-executive Directors:
Mr. Peter Hugh Nolan
Mr. Chen Zhiwu
Mr. Choi Yiu-kwan
Mr. Yu Yongshun
Ms. Li Jian
Mr. Liu Li
31 March 2015
To the Shareholders
Dear Sir or Madam,
(1) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
(2) PROPOSAL IN RESPECT OF THE GENERAL MANDATE TO ISSUE SHARES
(3) PROPOSED ISSUANCE OF DOMESTIC PREFERENCE SHARES
(4) PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES
(5) PROPOSAL IN RESPECT OF DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES AND THE REMEDIAL MEASURES TO BE ADOPTED
(6) PROPOSAL IN RESPECT OF THE AMENDMENTS TO
THE CAPITAL MANAGEMENT PLAN FOR THE YEARS 2012-2015
(7) PROPOSAL IN RESPECT OF THE FORMULATION OF
THE SHAREHOLDER RETURN PLAN FOR THE YEARS 2015-2017
(8) AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2014
(9) PROFIT DISTRIBUTION PLAN FOR THE YEAR ENDED 31 DECEMBER 2014
AND
NOTICE OF EGM
- 4 -
R2.14
LETTER FROM THE BOARD
1.
INTRODUCTION
Reference is made to the announcement of the Bank dated 26 March 2015 in relation to, among other
things, the General Mandate and the proposed issuance of Preference Shares.
The Board announced on 26 March 2015 that it resolved to propose a non-public issuance of the
Preference Shares, pursuant to which the Bank will issue Domestic Preference Shares with an aggregate
amount of no more than RMB45 billion and Offshore Preference Shares with an aggregate amount of no
more than RMB15 billion or its equivalent.
At the EGM, special resolutions will be proposed to approve the proposals in relation to: (1) the
proposed amendments to the Articles; (2) the General Mandate; (3) the proposed issuance of Domestic
Preference Shares; and (4) the proposed issuance of Offshore Preference Shares, and ordinary resolutions
will be proposed to approve the proposals in relation to: (1) the dilution of current returns by issuance of
Preference Shares and the remedial measures to be adopted; (2) the proposed amendments to the Capital
Management Plan for the Years 2012-2015; (3) the Shareholder Return Plan for the Years 2015-2017; (4)
the audited accounts for the year ended 31 December 2014; and (5) the profit distribution plan for the year
ended 31 December 2014.
The purpose of this circular is to provide you with information regarding the proposals to be
considered at the EGM and to set out the notice of the EGM.
2.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
In accordance with the State Council Guidance Opinion, the Administrative Measures, the Guidelines
on the Listed Company Articles of Association (as amended in 2014) and other applicable laws and
regulations, and taking into account the actual situation of the Bank, the Bank has proposed certain
amendments to the current Articles. The proposed amendments mainly include, among others, the rights and
obligations of preference shareholders, voting right restrictions and restoration, conversion and redemption
of preference shares, dividend rates and distribution of dividends, and distribution of profits and residual
assets. Details of the proposed amendments to the Articles are set out in Appendix I to this circular.
The Board resolved on 26 March 2015 to propose to make these proposed amendments. The Board
also proposed that the Shareholders’ general meeting authorise the Board to delegate authority to the
Chairman to make relevant revisions to the amendments to the Articles as he deems necessary and
appropriate during the application for approval of the amendments to the Articles and in accordance with the
requirements of the relevant regulatory authorities and the stock exchanges.
The relevant proposal in relation to the amendments to the Articles will be put forward at the EGM
for Shareholders’ consideration and approval by way of a special resolution, and shall also be subject to the
approval by the relevant PRC government authorities before coming into effect.
- 5 -
LETTER FROM THE BOARD
3.
PROPOSAL IN RESPECT OF THE GENERAL MANDATE TO ISSUE SHARES
On 26 March 2015, the Board resolved to submit to the Shareholders for their consideration and
approval a special resolution in respect of the grant of the General Mandate to the Board, pursuant to which,
the Board may, among other things, exercise all powers of the Bank to issue shares, in particular, to
separately or concurrently authorise, allot, issue and deal with the newly issued A Shares and H Shares,
preference shares and options (including warrants, convertible bonds, preference shares that can be
convertible into A Shares or H Shares and any other securities carrying rights of subscription for or
conversion into A Shares or H Shares), provided that the respective aggregate amounts of A Shares and H
Shares, preference shares and options authorised, allotted, issued and dealt with shall not exceed 20% of the
respective amounts of existing A Shares and H Shares as at the date of the passing of the General Mandate
by the Shareholders’ general meeting. Details of the Proposal in respect of the General Mandate to Issue
Shares are set out in Appendix II to this circular.
As at the Latest Practicable Date, the Bank has 39,250,864,015 A Shares and 35,011,862,630 H
Shares in issue. Assuming that the number of issued A Shares and issued H Shares remain as stated above
on the date the proposed special resolution regarding the General Mandate is passed at the EGM, a
maximum of 7,850,172,803 A Shares and 7,002,372,526 H Shares may be issued under the General
Mandate.
Pursuant to relevant PRC laws and regulations, if the Bank issues the Preference Shares under the
General Mandate, such issuance is subject to a separate Shareholders’ approval even if the General Mandate
has been approved at the EGM. Such approval is also being sought at the EGM as further described in
paragraphs 4 and 5 below.
The General Mandate shall become effective immediately upon the passing of the special resolution
in respect of the General Mandate and will continue to be in force until the earliest of: (i) the conclusion of
the next annual general meeting of the Bank; (ii) the expiration of the 12-month period from the date of
passing of the special resolution in relation to the General Mandate; and (iii) the date on which the General
Mandate is revoked or varied by a special resolution of Shareholders in a Shareholders’ general meeting.
The validity period of the other resolutions relating to the proposed issuance of Preference Shares will
remain effective for 36 months from the date when they are approved by the EGM. If the proposed issuance
of Preference Shares as described in paragraphs 4 and 5 below is not completed before the expiry of the
validity period of the General Mandate, the Bank may seek Shareholders’ approval to renew the General
Mandate or for specific authorisation (if appropriate) to proceed further with the issuance of Preference
Shares.
The Board intends to propose a special resolution in the upcoming annual general meeting of the
Bank to refresh the General Mandate to ensure that the General Mandate shall remain valid and is capable
and sufficient to cover the issuance of Preference Shares in the event that the completion of the proposed
issuance of Preference Shares has not taken place prior to conclusion of the upcoming annual general
meeting, which is expected to be held in June 2015.
- 6 -
R13.28(12)
LETTER FROM THE BOARD
In order to smoothly implement the issuance of shares, it is proposed that the Shareholders’ general
meeting authorise the Board to (subject to its obtaining of the General Mandate) further delegate the General
Mandate to the Chairman, the President, the Executive Vice President (or the Chief Finance Officer) and the
Company Secretary to, jointly or individually, deal with all matters in respect of the issuance of shares
unless otherwise provided in laws and regulations.
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of special resolution to the Shareholders for their consideration and approval the proposal in respect of the
General Mandate at the EGM.
4.
PROPOSED ISSUANCE OF DOMESTIC PREFERENCE SHARES
In order to enhance overall competitiveness, to continuously drive transformation of the business and
to enhance the capacity for sustainable development and risk resistance, the Bank proposes to conduct a nonpublic issuance of domestic and offshore preference shares with an aggregate size of not more than 600
million Preference Shares to raise proceeds not exceeding RMB60 billion or its equivalent to replenish the
Bank’s Additional Tier-1 Capital, among which, the Domestic Preference Shares proposed to be issued in
the domestic market will not be more than RMB45 billion.
R13.28(6)
R13.28(3)
In accordance with the relevant provisions of the State Council Guidance Opinion, the Administrative
Measures, the Joint Guidance Opinion and other laws, regulations and regulatory documents and following
the Bank’s self-assessment, the Bank considers that it has satisfied the requirements for non-public issuance
of Domestic Preference Shares.
The issuance of Domestic Preference Shares will be conducted by way of a non-public issuance and
the Domestic Preference Shares shall be issued in a single or multiple series in accordance with the relevant
procedures after being approved by regulatory authorities such as the CBRC and the CSRC. The Domestic
Preference Shares will be transferred on the Shanghai Stock Exchange. The Bank shall have the right to
mandatorily convert all or part of the Domestic Preference Shares into A Shares on the occurrence of certain
prescribed events. In the case of partial conversion, the value of Domestic Preference Shares to be converted
shall be determined in the same proportion.
It is contemplated that the Domestic Preference Shares will be issued under the General Mandate.
Details of the plan for non-public issuance of the Domestic Preference Shares are set out in Appendix III to
this circular.
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of special resolution to the Shareholders for their consideration and approval the proposal in respect of the
proposed issuance of Domestic Preference Shares at the EGM. Upon approval by the EGM, the Bank shall
also obtain the approval of the CBRC and the CSRC.
R13.28(11)
Shareholders and potential investors should be aware that the proposed issuance of Domestic
Preference Shares is subject to all necessary approvals being obtained and various factors including market
conditions, and therefore the proposed issuance of Domestic Preference Shares may or may not proceed.
R13.28(14)
- 7 -
LETTER FROM THE BOARD
5.
PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES
In order to enhance overall competitiveness, to continuously drive transformation of the business and
to enhance the capacity for sustainable development and risk resistance, the Bank proposes to conduct a nonpublic issuance of domestic and offshore preference shares with an aggregate size of not more than 600
million Preference Shares to raise proceeds not exceeding RMB60 billion or its equivalent to replenish the
Bank’s Additional Tier-1 Capital, among which, the Offshore Preference Shares proposed to be issued in the
offshore market will not be more than RMB15 billion or its equivalent.
R13.28(6)
R13.28(3)
In accordance with the relevant provisions of the State Council Guidance Opinion, the Administrative
Measures, the Joint Guidance Opinion and other laws, regulations and regulatory documents and following
the Bank’s self-assessment, the Bank considers that it has satisfied the requirements for non-public issuance
of Offshore Preference Shares.
The issuance of Offshore Preference Shares will be conducted by way of a private placement in
accordance with the relevant rules on issuance and the Offshore Preference Shares shall be issued in a single
or multiple series in accordance with the relevant procedures after being approved by regulatory authorities.
The listing and trading arrangements for the Offshore Preference Shares will be set out in the issuance
documents. The Bank shall have the right to mandatorily convert all or part of the Offshore Preference
Shares into H Shares on the occurrence of certain prescribed events. In the case of partial conversion, the
value of Offshore Preference Shares to be converted shall be determined in the same proportion.
It is contemplated that the Offshore Preference Shares will be issued under the General Mandate.
Details of the plan for non-public issuance of the Offshore Preference Shares are set out in Appendix IV to
this circular.
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of special resolution to the Shareholders for their consideration and approval the proposal in respect of the
proposed issuance of Offshore Preference Shares at the EGM. Upon approval by the Shareholders’ general
meeting, the Bank shall also obtain the approval of the CBRC and the CSRC.
R13.28(11)
Shareholders and potential investors should be aware that the proposed issuance of Offshore
Preference Shares is subject to all necessary approvals being obtained and various factors including market
conditions, and therefore the proposed issuance of Offshore Preference Shares may or may not proceed.
R13.28(14)
6.
PROPOSAL IN RESPECT OF DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES AND THE REMEDIAL MEASURES TO BE ADOPTED
In accordance with the requirements under the Opinions of the General Office of State Council on
Further Strengthening the Protection of Legitimate Rights and Interests of Minority Investors in Capital
Market, the Bank has analysed the potential impact on the rights and interests and the current returns of the
Shareholders by the proposed issuance of Preference Shares and, with reference to the actual situation of the
Bank, formulated the Dilution of Current Returns by Issuance of Preference Shares of Bank of
Communications Co., Ltd. and the Remedial Measures to be Adopted, as set out in Appendix V to this
circular.
- 8 -
LETTER FROM THE BOARD
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of ordinary resolution to the Shareholders for their consideration and approval the Dilution of Current
Returns by Issuance of Preference Shares and the Remedial Measures to be Adopted of Bank of
Communications Co., Ltd. at the EGM.
7.
PROPOSAL IN RESPECT OF THE AMENDMENTS TO THE CAPITAL MANAGEMENT
PLAN FOR THE YEARS 2012-2015
To maintain a better capital adequacy level in response to the rapid changes of macroeconomic
environment and the increasingly stringent regulatory requirements, and in light of the Bank’s operation
strategy and business development plan, on 26 March 2015, the Board considered and approved to formulate
the Capital Management Plan for the Years 2015-2017, which amends and replaces the expiring Capital
Management Plan for the Years 2012-2015. The Board also resolved to submit by way of ordinary
resolution to the Shareholders for their consideration the Capital Management Plan for the Years 2015-2017
of Bank of Communications Co., Ltd. at the EGM. Details of the Capital Management Plan for the Years
2015-2017 of Bank of Communications Co., Ltd. is set out in Appendix VI to this circular.
8.
PROPOSAL IN RESPECT OF THE FORMULATION OF THE SHAREHOLDER RETURN
PLAN FOR THE YEARS 2015-2017
With a view to further increasing the level of shareholder return, and improving and implementing the
policy on cash dividends, the Bank has formulated the Shareholder Return Plan for the Years 2015-2017 in
accordance with the Circular on Further Implementation of Relevant Matters on Payment of Cash Dividends
by Listed Companies, the Regulatory Guidance to Listed Companies No. 3 – Cash Dividend Payments by
Listed Companies and other laws and regulations, as well as relevant regulatory requirements. Details of the
Shareholder Return Plan for the Years 2015-2017 of Bank of Communications Co., Ltd. are set out in
Appendix VII to this circular.
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of ordinary resolution to the Shareholders for their consideration and approval the Shareholder Return Plan
for the Years of 2015-2017 of Bank of Communications Co., Ltd. at the EGM.
9.
AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2014
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of ordinary resolution to the Shareholders for their consideration and approval the audited accounts of the
Bank for the year ended 31 December 2014 at the EGM.
10.
PROFIT DISTRIBUTION PLAN FOR THE YEAR ENDED 31 DECEMBER 2014
On 26 March 2015, the Board considered and approved this proposal and resolved to submit by way
of ordinary resolution to the Shareholders for their consideration and approval the profit distribution plan of
the Bank for the year ended 31 December 2014 at the EGM.
- 9 -
LETTER FROM THE BOARD
The Board has recommended a final cash dividend for the year ended 31 December 2014 of
RMB0.27 (before tax) per share (the “Final Dividend”). If the declaration and payment of the Final
Dividend is approved at the EGM, it is expected to be distributed on Friday, 10 July 2015 to the
shareholders whose names appear on the register of members of H Shares on Wednesday, 27 May 2015, and
distributed on Wednesday, 3 June to the shareholders whose names appear on the register of members of A
Shares of the Bank on Tuesday, 2 June 2015.
The register of members of H Shares will be closed from Friday, 22 May 2015 to Wednesday, 27
May 2015 (both days inclusive), during which time no transfer of the H Shares will be registered. In order to
be qualified for receiving the Final Dividend, all the transfer documents of holders of the H Shares must be
lodged with the H Share Registrar of the Bank, Computershare Hong Kong Investor Services Limited at
Rooms 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong at or before
4:30 p.m., Thursday, 21 May 2015.
11.
EGM
A notice convening the EGM to be held at Wyndham Grand Plaza Royale Oriental Shanghai Hotel,
No. 2288 Pudong Avenue, Pudong New District, Shanghai, PRC at 1:30 p.m., on Monday, 18 May 2015 is
set out on pages 65 to 71 of this circular.
If you intend to appoint a proxy to attend the EGM, you are required to complete and return the
accompanying proxy form in accordance with the instructions printed thereon. For holders of H Shares, the
proxy form should be returned to Computershare Hong Kong Investor Services Limited, the H Share
Registrar and transfer office of the Bank in Hong Kong, at 17M Floor, Hopewell Centre, 183 Queen’s Road
East, Wan Chai, Hong Kong, by hand or by post as soon as practicable and in any event not less than 24
hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and
return of the proxy form will not preclude you from attending and voting in person at the EGM or at any
adjourned meeting thereof should you so wish, but in such event, the instrument appointing a proxy shall be
deemed to be revoked.
If you intend to attend the EGM in person or by proxy, you are required to complete and return the
reply slip to Computershare Hong Kong Investor Services Limited or to the Bank’s Board of Directors’
Office on or before 5:00 p.m., Tuesday, 28 April 2015.
12.
RECOMMENDATION
The Directors consider that the proposals in relation to (1) the proposed amendments to the Articles;
(2) the General Mandate; (3) the proposed issuance of Domestic Preference Shares; (4) the proposed
issuance of Offshore Preference Shares; (5) the dilution of current returns by issuance of Preference Shares
and the remedial measures to be adopted; (6) the proposed amendments to the Capital Management Plan for
the Years 2012-2015; (7) the Shareholder Return Plan for the Years 2015-2017; (8) the audited accounts for
the year ended 31 December 2014; and (9) the profit distribution plan for the year ended 31 December 2014
are in the best interest of the Bank and the Shareholders as a whole. Accordingly, the Directors recommend
the Shareholders to vote in favour of the relevant proposed resolutions.
- 10 -
LETTER FROM THE BOARD
To the best of the knowledge of the Bank, none of the Shareholders has a material interest in any
transaction or arrangement under the above proposals and therefore no Shareholder is required to abstain
from voting on the resolutions approving the above proposals.
The Shareholders and potential investors should be aware that the proposed issuance of
Preference Shares is subject to certain conditions being satisfied, and consequently the proposed
issuance of Preference Shares may or may not proceed. Accordingly, they are advised to exercise
caution when dealing in the securities of the Bank.
Yours faithfully,
By order of the board of
Bank of Communications Co., Ltd.
Du Jianglong
Company Secretary
- 11 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
1.
Article 6 The entire capital of the Bank is
divided into shares of equal par value.
Shareholder liabilities to the Bank shall be
limited to their respective subscription for
shares in the Bank whereas the Bank’s
liabilities shall be limited to the total
amount of its assets.
Article 6 The entire capital of the Bank is divided
into shares of equal par value. Shareholder
liabilities to the Bank shall be limited to their
respective subscription for shares in the Bank
whereas the Bank’s liabilities shall be limited to
the total amount of its assets.
2.
Article 14 The Bank shall have ordinary
shares at all times; according to its needs
and upon the approval by the vetting
authority authorized by the State Council,
the Bank may create other classes of shares.
Article 14 The Bank shall have ordinary shares at
all times; according to its needs and upon the
approval by the vetting authority authorized by the
State Council, the Bank may create preference
shares and other classes of shares.
In these Articles of Association, preference shares
refer to the other classes of shares governed
separately under the Company Law as compared
to the ordinary shares governed by the general
provisions. Preference shareholders shall
participate in the distribution of profits and
residual assets of the Bank in priority to ordinary
shareholders, but their rights in respect of
participating in decision making and management
of the Bank (such as voting rights) are restricted.
Unless otherwise specified, references in Chapters
3 to 21 of these Articles of Association to share(s)
and share certificate(s) shall refer to ordinary
share(s) and ordinary share certificate(s) and
references to shareholders in Chapter 3 to
Chapter 21 of these Articles of Association shall
refer to ordinary shareholders. Special matters
relating to preference shares are set out separately
in Chapter 22 of these Articles of Association.
- 12 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
3.
Original Article
Amended Article
Article 19 ...
Article 19 ...
The equity structure of the Bank shall be:
74,262,726,645 ordinary shares, of which
19,702,693,828 shares shall be held by
promoter Ministry of Finance, PRC;
663,941,711 shares by promoter China
FAW Group Corporation; 23,438,228,475
shares by holders of other domestic-held
shares and 30,457,862,631 by other H
Shares shareholders.
The equity structure of the Bank’s ordinary shares
shall be: 74,262,726,645 ordinary shares, of which
19,702,693,828 shares shall be held by promoter
Ministry of Finance, PRC; 663,941,711 shares by
promoter China FAW Group Corporation;
23,438,228,475 shares by holders of other
domestic-held shares and 30,457,862,631 by other
H Shares shareholders.
...
...
4.
5.
Article 44 ...
Article 44 ...
(3)
(3)
the register of shareholders which is
kept at other place(s) as the Board of
Directors deems necessary for the
listing of the shares of the Bank.
the register of shareholders which is kept at
other place(s) as the Board of Directors
deems necessary for the listing of the shares
(including preference shares) of the Bank.
Article 50 ...
Article 50 ...
The application for the issuance of
replacement certificates by shareholders
who lost their share certificates shall be
made in accordance with Article 144 of the
Company Law.
The application for the issuance of replacement
certificates by shareholders who lost their share
certificates shall be made in accordance with
Article 144 the relevant provision of the
Company Law.
...
...
- 13 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
6.
Article 64 The shareholders’ general
meeting is the governing body of the Bank
and shall exercise the following powers:
Article 64 The shareholders’ general meeting is the
governing body of the Bank and shall exercise the
following powers:
(1)
to determine the business policies and
investment plans of the Bank;
...
(2)
to elect and replace the Directors and
Supervisors (other than those who are
staff representatives) and to determine
the remuneration of the relevant
Directors and Supervisors;
(3)
to examine and to approve the report
of the Board of Directors;
(4)
to examine and to approve the report
of the Board of Supervisors;
(5)
to examine and to approve the annual
financial budgets and final accounts of
the Bank;
(6)
to examine and to approve the plans
for profit distribution and making up
of losses of the Bank;
(7)
to arrive at the resolution on the
increase or reduction in the registered
capital of the Bank;
(8)
to arrive at the resolution on the
issuance of debentures by the Bank;
(9)
to arrive at the resolution on matters
like merger, division, dissolution,
liquidation or change in the form of
the Bank;
(10) to amend these Articles of Association;
- 14 -
APPENDIX I
No.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
(11) to arrive at the resolution on the
appointment, dismissal or discontinuance
of appointment of the accounting firm of
the Bank;
(12) to examine any motion put forward by
shareholders representing more than
3% of the Bank’s total voting shares;
(13) to examine and approve or authorize
Board of Directors to approve the
matters of the establishment of a
legal entity by the Bank, substantial
equity investment, substantial
investment on bonds, substantial asset
purchasing, substantial asset disposal,
substantial asset write off, substantial
mortgage of assets and the provision of
other guarantee unrelated to
commercial banking business;
(14) to examine and approve the matter in
relation to altering the purpose of
raised capital;
(15) to consider share incentive schemes;
(16) to arrive at resolution on other matters
in the shareholders’ general meeting in
accordance with the requirement of the
pertinent laws, the administrative
regulations and these Articles of
Association.
(16) to determine the issuance of preference
shares; to determine or authorize the Board
of Directors to determine matters relating to
preference shares issued by the Bank,
including but not limited to redemption,
conversion and dividends distribution;
(17) to arrive at resolution on other matters in the
shareholders’ general meeting in accordance
with the requirement of the pertinent laws,
the administrative regulations and these
Articles of Association.
...
- 15 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
The matters within the scope of
shareholders’ general meeting shall be
examined and determined by shareholders’
general meeting. In necessary, reasonable
and legal cases, these matters can be
determined by the Board of Directors
according to the authorization of
shareholders’ general meeting. The
contents of authorization shall be specific
and concrete. For the matters of
authorization belonging to that shall be
approved by ordinary resolution of
shareholders’ general meeting stipulated in
this Chapter, majority of voting power of
shareholders (including shareholder’s
agents) are required; if the matters of
authorization belonging to that shall be
approved by special resolution of
shareholders’ general meeting stipulated in
this Chapter, 2/3 of voting power of
shareholders (including shareholder’s
agents) are required.
7.
Article 78 ...
Article 78 ...
The Bank may provide assistance to
shareholders in their participation of
shareholders’ general meeting by all
necessary means including the provision of
on line voting and other modern information
technology provided the legality and validity
of the shareholders’ general meetings can be
assured.
The Bank may provide assistance to shareholders
in their participation in shareholders’ general
meeting by all necessary means including and by
giving priority to the provision of on line voting
and other modern information technology provided
the legality and validity of the shareholders’
general meetings can be assured.
...
...
- 16 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
8.
Article 85 A shareholder (including his
proxy) may exercise voting rights at the
shareholders’ general meeting according to
the number of shares which carry the right
to vote held by him and each share shall
have one vote. Nevertheless, the Bank’s
shares held by the Bank neither have the
right to vote nor will be counted into the
total number of the voting shares attending
the shareholders’ general meeting.
Article 85 A shareholder (including his proxy) may
exercise voting rights at the shareholders’ general
meeting according to the number of shares which
carry the right to vote held by him and each share
shall have one vote. Nevertheless, the Bank’s
shares held by the Bank neither have the right to
vote nor will be counted into the total number of
the voting shares attending the shareholders’
general meeting.
The Board of Directors, independent
Directors and shareholders who satisfy the
relevant qualifications may canvass the
shareholders for votes.
The votes casted by minority investors shall be
separately counted when material matters affecting
the interests of minority investors are being
considered at the shareholders’ general meeting.
The results of such separate vote counting shall be
disclosed publicly in a timely manner.
The Board of Directors, independent Directors and
shareholders who satisfy the relevant qualifications
may publicly canvass the shareholders for votes.
Where shareholders are canvassed for votes,
information such as the specific voting intention
shall be fully disclosed to the shareholders. It is
prohibited to canvass shareholders for votes with
compensation in a covertly or overtly manner. The
Bank shall not impose restrictions on the minimum
shareholding percentage for canvassing
shareholders’ for votes.
- 17 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
9.
Article 143 Independent Directors shall give
independent views which are fair and
objective on the matters discussed by the
Board of Directors. Upon expressing
opinions, Independent Directors shall keep
in view the following:
Article 143 Independent Directors shall give
independent views which are fair and objective
on the matters discussed by the Board of Directors.
Upon expressing opinions, Independent Directors
shall keep in view the following:
...
(1)
major related transactions;
(2)
plans for profit distribution;
(3)
the nomination, appointment and
removal of the Directors;
(4)
the appointment and dismissal of
members of the Senior Management;
(5)
remuneration of the Directors and
Senior Management;
(6)
matters which may lead to material
loss of the Bank;
(7)
matters which may harm the interest of
depositors or minority shareholders;
(8)
other matters as provided by the laws,
regulations or regulatory rules.
The opinions of Independent Directors on
the decision of the Bank shall be recorded in
the minutes of meeting of the Board of
Directors.
(8)
the effect of the issuance of preference shares
on the rights and interests of every class of
shareholders;
(9)
other matters as provided by the laws,
regulations or regulatory rules.
...
- 18 -
APPENDIX I
No.
10.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 215 ...
Article 215 ...
If serving Directors experience
circumstances stated in Article 147 of the
Company Law and are banned from the
market by the China Securities Regulatory
Commission, the Board of Directors of the
Bank shall cause such Directors to cease
performing duties from the date they are
informed of such circumstances and shall
propose a replacement according to relevant
procedures at the shareholders’ general
meeting.
If serving Directors experience circumstances
stated in Article 147 of the Company Law which
prohibit them from acting as directors and are
banned from the market by the China Securities
Regulatory Commission, the Board of Directors of
the Bank shall cause such Directors to cease
performing duties from the date they are
informed of such circumstances and shall propose
a replacement according to relevant procedures at
the shareholders’ general meeting.
If serving Supervisors experience
circumstances stated in Article 147 of the
Company Law and are banned from the
market by the China Securities Regulatory
Commission, the Board of Supervisors of
the Bank shall cause such Supervisors to
cease performing duties from the date they
are informed of such circumstances and
shall propose a replacement according to
relevant procedures at the shareholders’
general meeting.
If serving Senior Executives experience
circumstances stated in Article 147 of the
Company Law and are banned from the
market by the China Securities Regulatory
Commission, the Board of Directors of the
Bank shall cause such Presidents to cease
performing duties from the date they are
informed of such circumstances and shall
propose a replacement according to relevant
procedures at the shareholders’ general
meeting.
If serving Supervisors experience circumstances
stated in Article 147 of the Company Law which
prohibit them from acting as supervisors and are
banned from the market by the China Securities
Regulatory Commission, the Board of Supervisors
of the Bank shall cause such Supervisors to cease
performing duties from the date they are informed
of such circumstances and shall propose a
replacement according to relevant procedures at
the shareholders’ general meeting.
If serving Senior Executives experience
circumstances stated in Article 147 of the
Company Law which prohibit them from acting
as senior executives and are banned from the
market by the China Securities Regulatory
Commission, the Board of Directors of the Bank
shall cause such Presidents to cease performing
duties from the date they are informed of such
circumstances and shall propose a replacement
according to relevant procedures at the
shareholders’ general meeting.
- 19 -
APPENDIX I
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
No.
Original Article
Amended Article
11.
Article 239 The profits of the Bank after
payment of enterprise income tax shall be
distributed in the following order of priority:
Article 239 The profits of the Bank after payment
of enterprise income tax shall be distributed in the
following order of priority:
(1)
making up losses of previous years;
(1)
making up losses of previous years;
(2)
allocation 10 percent to the statutory
surplus reserve;
(2)
allocation 10 percent to the statutory surplus
reserve;
(3)
allocation to the statutory general
reserve;
(3)
allocation to the statutory general reserve;
(4)
payment of dividends on preference shares;
(4)
allocation to the discretionary surplus;
(5)
allocation to the discretionary surplus
(5)
payment of dividends to shareholders.
(6)
payment of dividends on ordinary shares to
shareholders.
The Bank needs not allocate further amount
if the accumulated amount of the statutory
reserve is over 50% of the registered capital.
The shareholders’ general meeting shall
decide whether allocation to the
discretionary reserve shall be made after
making allocations to the statutory reserve
and the statutory general reserve.
The Bank needs not allocate further amount if the
accumulated amount of the statutory reserve is over
50% of the registered capital. The shareholders’
general meeting shall decide whether allocation to
the discretionary reserve shall be made after
making allocations to the statutory reserve, and
the statutory general reserve and payment of
dividends on preference shares.
- 20 -
APPENDIX I
No.
12.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 242 ...
Article 242 ...
The profit distribution of the Bank should
focus on the reasonable return on investment
for investors, and the profit distribution
policy should maintain continuity and
stability. Unless under special
circumstances, the Bank shall distribute
dividends mainly in the form of cash if it
records profit in the year and the
accumulated undistributed profits are
positive, and the total profit distributed in
the form of cash dividends for the last three
years shall not be less than 30% of the
average annual distributable profits of the
Bank for the last three years. The special
circumstances shall include: (i) the Bank’s
capital adequacy level does not meet the
requirements of the regulatory authorities
including the banking regulatory authority
of the State Council; (ii) the regulatory
authorities including the banking regulatory
authority of the State Council take
regulatory measures to restrict profit
distribution of the banks; (iii) other
circumstances that are not suitable for
profit distribution as provided by the laws,
regulations and regulatory documents.
The profit distribution of the Bank should focus on
the reasonable return on investment for investors,
and the profit distribution policy should maintain
continuity and stability. Unless under special
circumstances, the Bank shall distribute dividends
mainly in the form of cash if it records profit in the
year and the accumulated undistributed profits are
positive, and the total profit distributed in the form
of cash dividends for the last three years shall not
be less than 30% of the average annual
distributable profits of the Bank for the last three
years and the profits distributed in the form of cash
each year shall not be less than 10% of the net
profit attributable to shareholders of the Bank as
according to the Group for that accounting year.
The special circumstances shall include: (i) the
Bank’s capital adequacy level does not meet the
requirements of the regulatory authorities including
the banking regulatory authority of the State
Council; (ii) the regulatory authorities including
the banking regulatory authority of the State
Council take regulatory measures to restrict profit
distribution of the banks; (iii) other circumstances
that are not suitable for profit distribution as
provided by the laws, regulations and regulatory
documents.
...
...
(There are no such provisions in the existing
articles of association, so the serial number
of provisions thereafter shall be changed
accordingly)
Chapter 22 Special Provisions on Preference
Shares
- 21 -
APPENDIX I
No.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
13.
Article 279 Unless otherwise specified in laws,
administrative regulations, department rules,
regulations of the securities regulatory authority
in the place where the shares of the Bank are listed
and this Chapter, the rights and obligations of
preference shareholders and management of
preference shares shall be governed by the
provisions related to ordinary shares in these
Articles of Association.
14.
Article 280 The number of preference shares issued
by the Bank shall not exceed 50% of the total
number of ordinary shares of the Bank, and the
capital raised from the issue shall not be more than
50% of the net assets of the Bank prior to the
relevant issuance (excluding the preference shares
that have been redeemed or converted).
15.
Article 281 In accordance with relevant rules on
regulatory capital for commercial banks, the Bank
may formulate terms governing the mandatory
conversion of the preference shares into ordinary
shares, namely, upon the occurrence of certain
trigger events, the Bank shall convert the
preference shares into ordinary shares in
accordance with the conversion price and
conversion amount as determined at the time of
issuance of the preference shares. In circumstances
when the preference shares are mandatorily
converted into ordinary shares, the Bank shall
report such conversion to banking regulatory
authorities under the State Council for review and
approval.
- 22 -
APPENDIX I
No.
16.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 282 The preference shares issued by the
Bank shall not have any put option, and the
preference shareholders shall have no right to
require the Bank to redeem preference shares.
Subject to the approval of the banking regulatory
authorities under the State Council and upon
compliance with the relevant requirements, the
Bank has the right to redeem all or part of the
preference shares after the fifth year following the
date of the relevant issuance. The redemption
period of the preference shares commences on
such date as agreed upon at the time of issuance of
the preference shares and ends on the date of
redemption or conversion of all the preference
shares.
The exercise by the Bank of the right to redeem the
preference shares shall be subject to the following
conditions:
(1)
the Bank shall use capital instruments of the
same or superior quality to the preference
shares to replace the preference shares to be
redeemed and such replacement shall only be
made at a time at which the Bank has a
sustainable income generating capability; or
(2)
the capital position of the Bank immediately
after redemption of the preference shares will
remain significantly higher than the
regulatory capital requirements prescribed by
the banking regulatory authorities under the
State Council.
The redemption price of the domestic preference
shares will be an amount equal to the par value
plus the amount of dividend declared but unpaid
for the current period.
The redemption price of the offshore preference
shares will be an amount equal to the issue price
plus the amount of dividend declared but unpaid
for the current period.
- 23 -
APPENDIX I
No.
17.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 283 Preference shareholders of the Bank
shall enjoy the following rights:
(1)
to payment of dividends in priority to
ordinary shareholders;
(2)
to distribution of residual assets of the Bank
on liquidation in priority to those of ordinary
shareholders;
(3)
upon the occurrence of the circumstances
provided in Article 285, to attend and vote at
shareholders’ general meetings;
(4)
upon the occurrence of the circumstances
provided in Article 286, to have its voting
rights restored in accordance with the
requirements of that Article;
(5)
to make proposals or inquiries in relation to
the business operations and activities of the
Bank;
(6)
to inspect the Bank’s Articles of Association,
register of shareholders, record of
bondholders, minutes of shareholders’
general meetings, resolutions of meetings of
the Board of Directors, resolutions of
meetings of the Board of Supervisors and
financial reports; and
(7)
other rights conferred to preference
shareholders by laws, administrative
regulations, department rules and these
Articles of Association.
- 24 -
APPENDIX I
No.
18.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 284 Only votes of ordinary shares and votes
of preference shares with restored voting rights
shall be counted when calculating the proportion
and number of shares held by shareholders in the
event of the following:
(1)
a request by shareholders to convene an
extraordinary general meeting of
shareholders;
(2)
a request by shareholders to convene and
preside over a general meeting of
shareholders;
(3)
a request by shareholders to submit a
proposal or an interim proposal to a general
meeting of shareholders;
(4)
a request by shareholders to nominate the
directors and supervisors who are not staff
representatives of the Bank;
(5)
identifying controlling shareholder(s)
according to the relevant provisions of these
Articles of Association;
(6)
identifying person(s) restricted from serving
as independent directors of the Bank
according to the related provisions of these
Articles of Association;
(7)
identifying the ten largest shareholders of the
Bank and the number of shares held by them
in accordance with the Securities Law;
(8)
identifying the shareholder(s) holding 5% or
more of the shares of the Bank, in accordance
with the Securities Law;
(9)
other circumstances provided under laws,
administrative regulations, department
regulations and these Articles of Association.
- 25 -
APPENDIX I
No.
19.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 285 The preference shares do not entitle
their holders to attend or vote at any shareholders’
general meeting other than in the following
circumstances:
(1)
amendments to these Articles of Association
which relate to preference shares;
(2)
reduction of the registered capital of the Bank
by more than 10% on a single or aggregate
basis;
(3)
merger, division, dissolution or change of
corporate form of the Bank;
(4)
issuance of preference shares;
(5)
other events specified by laws, administrative
regulations, department regulations and these
Articles of Association.
On the occurrence of any of the above matters, the
Bank shall notify preference shareholders of the
shareholders’ general meeting and follow the
notice procedures to ordinary shareholders as
provided under these Articles of Association. The
preference shareholders are entitled to vote at a
separate class meeting with respect to the above
matters and each preference share shall have one
vote (preference shares held by the Bank do not
entitle the Bank to vote).
Resolutions relating to the above matters shall be
approved by more than two thirds of the votes held
by ordinary shareholders present at the meeting
(including preference shareholders with restored
voting rights) and by more than two thirds of votes
held by preference shareholders (excluding
preference shareholders with restored voting
rights restored).
- 26 -
APPENDIX I
No.
20.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Article 286 In the event that the Bank fails to pay
the agreed dividend to preference shareholders for
three accounting years in aggregate or two
consecutive accounting years, the preference
shareholders will have the right to attend and
vote at the shareholders’ general meetings as if
they are ordinary shareholders from the day
immediately after the shareholders’ general
meeting resolves that the Bank will not pay the
agreed dividend for the current dividend period.
For preference shares with non-cumulative
dividends, the voting rights of the preference
shareholders will remain restored until the Bank
pays the current period dividend in full.
The formula for calculating the voting rights of the
preference shareholders is as follows:
The formula for calculating the voting rights of the
domestic preference shares whose voting rights
have been restored is as follows:
Q=V/P, any fractional voting right will be rounded
down to the nearest whole number.
Where: “Q” denotes the A share voting rights
restored from the domestic preference shares held
by each domestic preference shareholder; “V”
denotes the aggregate par value of the domestic
preference shares with restored voting rights held
by each domestic preference shareholder;
conversion price “P” denotes the average trading
price of A shares of the Bank for the 20 trading
days preceding the date of the passing of the Board
of Directors’ resolution in respect of the plan for
issuance of domestic preference shares.
The formula for calculating the voting rights of the
offshore preference shares whose voting rights
have been restored is as follows:
Q*=V*/P* x conversion exchange rate, with any
fractional restored voting right rounded down to
the nearest whole number.
- 27 -
APPENDIX I
No.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
Where: “Q*” denotes the H share voting rights
restored from the offshore preference shares held
by each offshore preference shareholder; “V*”
denotes the aggregate value of the offshore
preference shares with restored voting rights held
by each offshore preference shareholder;
conversion price “P*” denotes the average trading
price of H shares of the Bank for the 20 trading
days preceding the date of the passing of the Board
of Directors’ resolution in respect of the plan for
issuance of offshore preference shares; and the
“conversion exchange rate” refers to the cross rate
between Hong Kong dollars and the currency in
which the offshore preference shares are
denominated based on the Renminbi central parity
rate published by the China Foreign Exchange
Trading System on the trading date immediately
preceding the date of the passing of the Board of
Directors’ resolution in respect of the plan for
issuance of offshore preference shares.
The method of adjustment of conversion price “P”
and “P*” shall be determined in accordance with
the agreement at the time of the issuance of
preference shares.
21.
Article 287 The dividend rate for the issued and
outstanding preference shares of the Bank consists
of the benchmark rate and the fixed spread. The
dividend rate may be adjusted at different intervals.
During any adjusted dividend rate period,
dividends on the preference shares will be paid at
the same agreed dividend rate and the benchmark
rate will be readjusted at specified intervals
thereafter.
Preference shareholders shall rank in priority to the
ordinary shareholders in terms of the Bank’s
distribution of profits and the preference shares
shall be entitled to the dividend rate and
distribution of profits in accordance with the
agreed terms. Dividends to the preference
shareholders shall be payable in cash.
- 28 -
APPENDIX I
No.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Original Article
Amended Article
After distribution of dividends at the prescribed
dividend rate, the preference shareholders shall not
be entitled to any distribution of residual profits of
the Bank together with the ordinary shareholders.
In accordance with the relevant rules on regulatory
capital of commercial banks, the Bank shall have
the right to cancel dividends in whole or in part
and this will not constitute an event of default. Any
amount of dividends not paid in full by the Bank to
the preference shareholders will not be
accumulated to the following dividend period.
22.
Article 288 In the event of liquidation of the Bank
as a result of dissolution, bankruptcy or other
reasons, the remaining assets of the Bank after
liquidation in accordance with laws, administrative
regulations, departmental rules and paragraph (1)
to (5) under Article 272 shall be distributed first to
the preference shareholders. Preference
shareholders shall be entitled to an amount equal
to the total value of the then issued and outstanding
preference shares plus any declared but unpaid
dividends for the current period. If there are
insufficient residual assets, the distribution shall
be made on a pro rata basis to the domestic
preference shareholders and offshore preference
shareholders.
- 29 -
APPENDIX II
PROPOSAL IN RESPECT OF THE
GENERAL MANDATE TO ISSUE SHARES
The Proposal in respect of the General Mandate to Issue Shares is written in Chinese, with no official
English translation. The English translation is provided solely for reference only. In case of any discrepancy
between the two versions, the Chinese version shall prevail. The full version of the Proposal in respect of
the General Mandate to Issue Shares is as follows:
PROPOSAL IN RESPECT OF THE GENERAL MANDATE TO ISSUE SHARES
Pursuant to relevant laws and regulations, the Hong Kong Listing Rules and the relevant provisions of
the Articles, it is proposed that the Shareholders’ general meeting grant a general mandate to the Board to
issue Shares (as defined below), in particular, to separately or concurrently authorise, allot, issue and deal
with the newly issued A Shares and H Shares, preference shares and options (including warrants, convertible
bonds, preference shares that can be convertible into A Shares or H Shares and any other securities carrying
rights of subscription for or conversion into A Shares or H Shares), provided that the respective aggregate
amounts of A Shares and H Shares, preference shares and options authorised, allotted, issued and dealt with
shall not exceed 20% of the respective amounts of existing A Shares and H Shares as at the date of the
passing of the General Mandate by the Shareholders’ general meeting. Details of the proposal are set out
below:
1.
2.
subject to the conditions set out in paragraph (2) below, the Board be and is hereby generally
and unconditionally given approval to, during the Relevant Period (as defined below),
(1)
exercise all powers of the Bank to separately or concurrently authorise, allot, issue and
deal with the newly issued A Shares, H Shares and preference shares of the Bank
(collectively, the “Shares”); and
(2)
enter into or grant offers, agreements and options (including warrants, convertible
bonds, preference shares that can be convertible into A Shares or H Shares and any
other securities carrying rights of subscription for or conversion into A Shares or H
Shares) which may require A Shares or H Shares to be allotted and issued during or
after the expiry of the Relevant Period, and to authorise, allot, issue and deal with the A
Shares and H Shares that are required to be allotted and issued under such offers,
agreements and options;
the respective aggregate amounts of A Shares, H Shares and preference shares (calculated
based on the number of A Shares or H Shares to be fully converted from preference shares at
the mandatory conversion price) authorised, allotted, issued and dealt with by the Board, and
offers, agreements and options (including warrants, convertible bonds and any other securities
carrying rights of subscription for or conversion into A Shares or H Shares), in each case,
calculated based on the number of A Shares or H Shares to be issued or fully converted from
such securities, entered into or granted by the Board, in accordance with the approvals granted
under paragraph 1 above shall not exceed 20% of the respective amounts of existing A Shares
and H Shares as at the date of the passing of this special resolution;
- 30 -
APPENDIX II
3.
PROPOSAL IN RESPECT OF THE
GENERAL MANDATE TO ISSUE SHARES
for the purpose of this special resolution,
“Relevant Period” means the period from the date of passing this special resolution until the
earliest of:
4.
(1)
the conclusion of the next annual general meeting of the Bank; or
(2)
the expiration of the 12-month period from the date of passing of this special resolution;
or
(3)
the date on which the authority granted to the Board set out in this special resolution is
revoked or varied by a special resolution of the Shareholders in a Shareholders’ general
meeting;
the Board be and is hereby authorised to deal with matters relating to the change in the
registered capital of the Bank to reflect the number of Shares to be issued by the Bank
pursuant to this special resolution, to make such appropriate and necessary amendments to the
provisions of the Articles relating to the shareholding structure after the issuance of Shares and
the registered capital (if applicable) as they think fit and necessary, to fulfil relevant approval,
registration and filing procedures pursuant to domestic and foreign legal requirements and to
take any other action and complete any formality required to effect the issuance of Shares
pursuant to this special resolution.
In order to smoothly implement the issuance of Shares, it is proposed that the Shareholders’
general meeting authorise the Board to (subject to its obtaining of the above authority) further
delegate the authority to the Chairman, the President, the Executive Vice President (or the
Chief Finance Officer) and the Company Secretary to, jointly or individually, deal with all
matters in respect of the issuance of Shares unless otherwise provided in laws and regulations.
- 31 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
The Plan for Non-public Issuance of Domestic Preference Shares is written in Chinese, with no
official English translation. The English translation is provided solely for reference only. In case of any
discrepancy between the two versions, the Chinese version shall prevail. The full version of the Plan For
Non-public Issuance of Domestic Preference Shares is as follows:
PLAN FOR NON-PUBLIC ISSUANCE OF DOMESTIC PREFERENCE SHARES
BY BANK OF COMMUNICATIONS CO., LTD.
1.
Type of preference shares to be issued
The type of Domestic Preference Shares to be issued will be preference shares that meet the
requirements under the relevant provisions of the State Council Guidance Opinion, the Administrative
Measures, the Capital Management Rules, the Joint Guidance Opinion and such other provisions.
2.
Number of preference shares to be issued and issue size
The aggregate number of Domestic Preference Shares to be issued will not exceed 450 million, with
an aggregate amount of the Domestic Preference Shares to be issued not exceeding RMB45 billion. The
actual issue size is to be determined by the Board within the above scope, in accordance with the
authorisation at a Shareholders’ general meeting.
3.
Method of issuance
The issuance of Domestic Preference Shares will be conducted by way of a non-public issuance and
the Domestic Preference Shares shall be issued in a single or multiple series in accordance with the relevant
procedures after being approved by regulatory authorities such as the CBRC and the CSRC. In the case of
the Domestic Preference Shares issued in multiple series, other than the dividend coupon rates, the terms of
such Preference Shares shall be the same. If the Preference Shares are to be issued in multiple series, no
separate approval shall be required to be obtained from existing Preference Shareholders for each such
issuance.
4.
Par value and issue price
The par value of the Domestic Preference Shares will be RMB100 per Domestic Preference Share.
The Domestic Preference Shares will be issued at par value.
5.
Maturity
The Domestic Preference Shares will have no maturity.
6.
Target investors
The Domestic Preference Shares will be offered to not more than 200 qualified investors who have
met the qualification requirements under the Administrative Measures, and the Preference Shares with the
same terms will be offered to not more than 200 investors in aggregate. All target investors shall subscribe
- 32 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
the Domestic Preference Shares in cash. The target investors will be determined by the Board in accordance
with the relevant regulations of the CSRC and listing rules in the domestic market and the authorisation at
the Shareholders’ general meeting.
7.
Lock-up period
There will be no lock-up period for the Domestic Preference Shares.
8.
Terms of distribution of dividends
(1)
Principles for determining the dividend coupon rate
The proposed dividend coupon rate for the Domestic Preference Shares may be adjusted at
different intervals. During any adjusted dividend rate period, dividends on the Domestic
Preference Shares will be paid at the same agreed dividend rate and will be readjusted at
specified intervals thereafter. The dividend coupon rate at the time of issuance shall be
determined by the Board through price inquiry or in such other manners as approved by the
regulatory authorities with reference to factors at the time of the issuance, including market
conditions, the actual circumstances of the Bank and investor requirements, in accordance with
the authorisation at the Shareholders’ general meeting. The dividend coupon rate will not be
higher than the mean of the weighted average return on equity of the Bank for the last two
financial years1.
The dividend coupon rate consists of the benchmark rate and the fixed spread. The fixed
spread will be determined by deducting the benchmark rate at the time of issuance from the
dividend coupon rate at the time of issuance and will remain unchanged once determined. At
the readjustment date, the dividend rate for the new adjusted dividend rate period in the future
will be determined, and will equal to the sum of the benchmark rate as at the readjustment date
and the fixed spread as determined at the time of issuance.
(2)
Conditions to distribution of dividends
(i)
If the Bank has distributable after-tax profit2 after making up for previous years’ losses,
contributing to the statutory reserve and general reserve, the Bank may pay dividends to
the Preference Shareholders, provided that the capital adequacy ratio of the Bank meets
regulatory requirements. The Domestic Preference Shares issued by the Bank shall rank
pari passu with the Offshore Preference Shares in terms of dividend distribution and
1
As determined in accordance with the Rules for Preparation of Information Disclosure by Companies Offering
Securities to the Public No. 9 – Calculation and Disclosure of Return on Equity and Earnings Per Share (as amended in
2010), and calculated based on the return attributable to the Ordinary Shareholders of the Bank.
2
Distributable after-tax profit is the undistributed profit as shown in the financial statements of the parent company
prepared in accordance with Chinese Accounting Standards or International Financial Reporting Standards, whichever
amount is lower.
- 33 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
both shall rank in priority to the Ordinary Shares. Distribution of dividends will not be
affected by the rating of the Bank and will not be adjusted as a result of any change to
such rating.
(3)
(ii)
In order to meet the regulatory requirements for the eligibility criteria for Additional
Tier-1 Capital Instruments, the Bank shall have the right to cancel dividend payments
on the Preference Shares in whole or in part at its discretion and this will not constitute
an event of default. The Bank, at its discretion, may use any dividend so cancelled to
repay other debts that are due. The cancellation of any dividend payment to the
Preference Shareholders will only constitute a restriction on the payment of dividend to
the ordinary shareholders and will not constitute any other restrictions on the Bank. Any
declaration and payment of all of the dividends on the Preference Shares by the Bank
will be determined by the Board in accordance with the authorisation at the
Shareholders’ general meeting. Any cancellation of all or part of the dividends on the
Preference Shares shall be subject to the consideration and approval by the
Shareholders’ general meeting. Any cancellation by the Bank of any dividends on the
Preference Shares shall be notified to investors at least ten working days prior to the
dividend payment date.
(iii)
If the Bank cancels all or part of the distribution of dividends on the Preference Shares,
the Bank shall not distribute any profits to the ordinary shareholders from the next day
following the resolution being approved at the Shareholders’ general meeting until the
resumption of payment of dividends in full3.
Method of dividend payment
Dividends on the Domestic Preference Shares shall be payable in cash. Dividends on the
Domestic Preference Shares shall be paid annually, and will accrue from the payment due date
for issuance of the relevant series of Domestic Preference Shares. Taxes payable on the
dividend income of the Domestic Preference Shareholders shall be borne by such Domestic
Preference Shareholders in accordance with relevant laws and regulations.
(4)
Dividend accumulation
The dividends on the Domestic Preference Shares will be non-cumulative (i.e. in the event of
any cancellation by the Bank of all or part of the dividends on the Preference Shares, any
amount of dividends not paid to the Preference Shareholders in full in the current period will
not be accumulated to the following dividend periods).
3
Resumption of payment of dividends in full means that the Bank decides to resume payment of dividends in full to the
Preference Shareholders. However, as the Domestic Preference Shares have adopted a non-cumulative dividend, the
Bank will not pay any dividends which have been cancelled in previous years.
- 34 -
APPENDIX III
(5)
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
Distribution of residual profits
After distribution of dividends at the prescribed dividend rate, the Domestic Preference
Shareholders shall not be entitled to any distribution of residual profits of the Bank together
with the ordinary shareholders.
9.
Terms of mandatory conversion
(1)
(2)
Mandatory conversion trigger events
(i)
Upon the occurrence of an Additional Tier-1 Capital Trigger Event (i.e. the Core Tier-1
Capital Adequacy Ratio of the Bank falling to 5.125% or below), the Bank shall have
the right to convert, without the approval of the Preference Shareholders, all or part of
the Domestic Preference Shares then issued and outstanding into A Shares based on the
aggregate par value of such Domestic Preference Shares in order to restore the Core
Tier-1 Capital Adequacy Ratio of the Bank to above 5.125%. In case of partial
conversion, the Domestic Preference Shares shall be converted ratably and on the same
conditions. Upon conversion of the Domestic Preference Shares into A Shares, such A
Shares will not be converted back to preference shares in any event.
(ii)
Upon the occurrence of a Tier-2 Capital Trigger Event, the Bank shall have the right to
convert, without the approval of the Preference Shareholders, all of the Domestic
Preference Shares then issued and outstanding into A Shares based on the aggregate par
value of such Domestic Preference Shares. Upon conversion of the Domestic Preference
Shares into A Shares, such A Shares will not be converted back to preference shares in
any event. A Tier-2 Capital Trigger Event means the earlier of the following events (a)
the CBRC having concluded that without a conversion or write-off of the Bank’s
capital, the Bank would become non-viable, and (b) the relevant authorities having
concluded that without a public sector injection of capital or equivalent support, the
Bank would become non-viable.
Determination of mandatory conversion price
The initial mandatory conversion price of the Domestic Preference Shares will equal to the
average trading price of the A Shares for the 20 trading days preceding the date of the passing
of the Board resolution in respect of the plan for issuance of the Domestic Preference Shares
(i.e. RMB6.25 per share).
(3)
Principles for determining the ratio and number for mandatory conversion
Upon the occurrence of a trigger event, the Board will, in accordance with the approval of the
CBRC and the authorisation at the Shareholders’ general meeting, confirm the aggregate par
value of the Preference Shares for mandatory conversion and implement mandatory conversion
- 35 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
of the Preference Shares then issued and outstanding in whole or in part, and the formula for
determining the number of shares to be converted shall be: Q = V/P. Any fractional share will
be dealt with by the Bank in accordance with relevant regulatory rules.
Where: “Q” denotes the number of A Shares that shall be converted from the Domestic
Preference Shares held by each Preference Shareholder; “V” denotes the aggregate par value of
Domestic Preference Shares held by each Domestic Preference Shareholder that is subject to
mandatory conversion; and “P” denotes the mandatory conversion price for the Domestic
Preference Shares.
Upon the occurrence of a trigger event, the Domestic Preference Shares then issued and
outstanding will be converted into corresponding number of A Shares based on the above
formula in whole or in part on a ratable basis.
(4)
Mandatory conversion period
The period for mandatory conversion of the Domestic Preference Shares commences on the
first trading day immediately following the completion date of issuance of the Domestic
Preference Shares and ends on the date of redemption or conversion of all the Domestic
Preference Shares.
(5)
Method of adjustments of the mandatory conversion price
In the event that the Bank, among other things, distributes bonus shares, makes capitalisation
issues, issues new shares at a price lower than the market price (excluding any increase in the
share capital as a result of conversion of certain financial instruments issued by the Bank that
are convertible into Ordinary Shares), makes any rights issues after the date the Board
approves the plan for issuance of Domestic Preference Shares, the Bank will adjust the
mandatory conversion price to reflect the above events on a cumulative basis and in the order
of the occurrence of such events. The distribution of cash dividends to the ordinary
shareholders will not result in any adjustment to the mandatory conversion price. The
mandatory conversion price will be adjusted based on the following:
Bonus issuance or capitalisation issue: P1 = P0 x 1/(1 + n);
Issuance of new Ordinary Shares at a price lower than the market price or by way of a rights
issue: P1 = P0 x (N + Q x (A/M))/(N + Q);
Where, “P0” denotes the effective mandatory conversion price before adjustment; “n” denotes
the bonus issuance ratio or capitalisation issue ratio; “N” denotes the aggregate number of
Ordinary Shares before such issuance or rights issue; “Q” denotes the number of new Ordinary
Shares issued as a result of such issuance or rights issue; “A” denotes the price for such
issuance or rights issue; “M” denotes the closing price of Ordinary Shares on the trading date
- 36 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
immediately preceding the date of announcement of issuance or rights issue (i.e. announcement
containing the effective and irrevocable terms of such issuance or rights issue); and “P1”
denotes the effective mandatory conversion price after adjustment.
In the event that the rights and interests of the Domestic Preference Shareholders may be
affected by any redemption of the Ordinary Shares by, or merger or division of, the Bank or
any other circumstance which causes changes in the Bank’s share class, number of shares and/
or shareholders’ equity, the Bank shall have the right to adjust the mandatory conversion price
based on the actual circumstances and in accordance with the principles of fairness, justice and
equity as well as to fully protect and balance the rights and interests of the Preference
Shareholders and the ordinary shareholders. The adjustment mechanism for the mandatory
conversion price in those circumstances will be determined in accordance with the relevant
regulations.
(6)
Entitlement to dividends on Ordinary Shares in the year of mandatory conversion
The A Shares to be issued as a result of the mandatory conversion of the Domestic Preference
Shares will rank pari passu with the existing issued A Shares, and all ordinary shareholders
whose names appear on the register of members of the Bank on the record date for dividend
entitlement (including the holders of A Shares as a result of the mandatory conversion of the
Domestic Preference Shares) shall be entitled to receive the dividend for the current dividend
period.
10.
Terms of conditional redemption
(1)
Redemption right
The Bank shall have the right to redeem the Domestic Preference Shares subject to obtaining
the approval of the CBRC. The Domestic Preference Shareholders do not have the right to
require the Bank to redeem the Domestic Preference Shares and should not have any
expectation that the Domestic Preference Shares will be redeemed. The Domestic Preference
Shares will not contain any term allowing investors to put back the Domestic Preference
Shares and the Domestic Preference Shareholders shall not have any right to require the Bank
to repurchase the Domestic Preference Shares held by them.
(2)
Redemption conditions and period
From the fifth year following the date of issuance of the Domestic Preference Shares, the Bank
shall have the right to redeem all or part of the Domestic Preference Shares on the annual
dividend payment date for the Domestic Preference Shares. The redemption period ends on the
conversion or redemption of all the Domestic Preference Shares. The specific arrangements for
any redemption shall be finally determined by the Board in accordance with the authorisation
at the Shareholders’ general meeting.
- 37 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
The exercise by the Bank of its right to redeem the Domestic Preference Shares shall be
subject to the fulfilment of the following conditions:
(3)
(i)
the Bank shall use capital instruments of the same or superior quality to the Domestic
Preference Shares to replace the Domestic Preference Shares to be redeemed and such
replacement shall only be made at a time at which the Bank has a sustainable income
generating capability; or
(ii)
the capital position of the Bank immediately after redemption of the Domestic
Preference Shares will remain significantly higher than the regulatory capital
requirements prescribed by the CBRC.
Redemption price and basis for determining the redemption price
The redemption price of the Domestic Preference Shares will be an amount equal to the par
value plus the amount of dividend declared but unpaid for the current period.
11.
Restrictions on voting rights
Under normal circumstances, Preference Shareholders are not entitled to convene, attend or vote at
any Shareholders’ general meetings of the Bank. If any of the following matters occurs, the Domestic
Preference Shareholders will be entitled to attend Shareholders’ general meetings and vote at a separate
class. Under such circumstance, each Domestic Preference Share will be entitled to one vote, but the
Preference Shares held by the Bank do not entitle the Bank to vote:
(1)
amendments to the Articles that relate to preference shares;
(2)
reduction of the registered capital of the Bank by more than 10% on a single or aggregate
basis;
(3)
merger, division, dissolution or change of corporate form of the Bank;
(4)
issuance of Preference Shares by the Bank; and
(5)
other events specified in the laws, administrative rules and departmental regulations and the
Articles.
Resolutions relating to the above matters shall be approved by more than two thirds of the votes held
by the ordinary shareholders present at the meeting (including Preference Shareholders with restored voting
rights) and by more than two thirds of the votes held by the Preference Shareholders present at the meeting
(excluding Preference Shareholders with restored voting rights).
- 38 -
APPENDIX III
12.
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
Restoration of voting rights
(1)
Terms of restoration of voting rights
Following the issuance of the Preference Shares by the Bank and so long as such Preference
Shares remain outstanding, if the Bank fails to pay the agreed dividend to the Preference
Shareholders for three financial years in aggregate or two consecutive financial years, the
Preference Shareholders will have the right to attend and vote at the Shareholders’ general
meetings as if they are ordinary shareholders from the day immediately after the Shareholders’
general meeting resolves that the Bank will not pay the agreed dividend for the current
dividend period, and each Preference Share will be entitled to the voting rights provided in the
Articles. The formula for calculating the voting rights as of the Domestic Preference Shares
with restored voting rights is as follows:
Q = V/P, with any fractional restored voting right rounded down to the nearest whole number.
Where: “Q” denotes the A Share voting rights restored from the Domestic Preference Shares
held by each Domestic Preference Shareholder; “V” denotes the par value of the Domestic
Preference Shares with restored voting rights held by each Domestic Preference Shareholder;
conversion price “P” denotes the average trading price of A Shares for the 20 trading days
preceding the date of the passing of the Board resolution in respect of the plan for issuance of
the Domestic Preference Shares (i.e. RMB6.25 per share) and the adjustment method of “P”
shall be consistent with the adjustment method of the mandatory conversion price under
Section 9 (Terms of mandatory conversion).
(2)
Cancellation of restoration of voting rights
After such restoration of the voting rights, upon the full payment of the dividend on the
Domestic Preference Shares for the current dividend period, the voting rights granted to the
Domestic Preference Shares in accordance with the provisions for restoration of voting rights
shall be cancelled from the date of full payment of such dividend.
13.
Order of distribution on liquidation and procedures for liquidation
In accordance with the Articles, the remaining assets of the Bank after payment of liquidation
expenses, payment of wages due to staff and workers, social insurance expenses and statutory compensation,
payment of the principal and interest of individual deposits, payment of taxes due and settlement of other
indebtedness, respectively, shall be distributed to the Preference Shareholders in priority. The Domestic
Preference Shareholders will be entitled to an amount on liquidation equal to the aggregate par value of the
Domestic Preference Shares then issued and outstanding plus any declared but unpaid dividends for the
current period. If there are insufficient residual assets, the distribution will be made on a pro rata basis to the
Offshore Preference Shareholders and the Domestic Preference Shareholders.
- 39 -
APPENDIX III
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
The remaining assets of the Bank after settlement in accordance with the provisions aforesaid shall be
distributed to the ordinary shareholders of the Bank in accordance with the shareholding percentages of the
shares held by them.
14.
Rating
The rating of the Domestic Preference Shares will be determined with reference to the market
conditions and in accordance with the relevant PRC laws and regulations.
15.
Security
No security will be provided for the Domestic Preference Shares.
16.
Use of proceeds
The aggregate proceeds from the issuance of the Domestic Preference Shares will not be more than
RMB45 billion and, after deduction of the expenses relating to the issuance, will be used to replenish the
Bank’s Additional Tier-1 Capital.
17.
Transfer
The Domestic Preference Shares upon its issuance will be transferred on the trading platform as
designated by the Shanghai Stock Exchange and the investors’ suitability criteria for the trading or transfer
shall comply the relevant rules of the CSRC.
18.
Validity period of the resolution for the issuance of Domestic Preference Shares
The resolution for the issuance of Domestic Preference Shares will be valid for 36 months from the
date on which the resolution is approved at the Shareholders’ general meeting. Separate issuance of
Domestic Preference Shares and Offshore Preference Shares, within the framework under the plans for
issuance of Preference Shares as resolved at the Shareholders’ general meeting and during the validity
period of such resolutions, will not require further approval by the then issued and outstanding preference
shareholders.
19.
Relationship between offshore and domestic issuances
The issuance of Domestic Preference Shares and issuance of Offshore Preference Shares are
independent from each other and are not conditional upon each other.
- 40 -
APPENDIX III
20.
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
Matters relating to Authorisation
(1)
Matters authorised in connection with the issuance
To ensure the successful implementation of the issuance of Domestic Preference Shares, it is
proposed that the Shareholders’ general meeting authorise the Board to exercise full power to
deal with all matters in connection with the issuance of the Domestic Preference Shares within
the validity period of the resolution in respect of the issuance of the Domestic Preference
Shares, including but not limited to those set out below:
(i)
to formulate and implement the final plan for the issuance of the Domestic Preference
Shares, including but not limited to the determination of the specific number of shares
to be issued and the issuance size, the method for determining the dividend coupon rate
and specific dividend rate, the timing of issuance, arrangements in relation to issuance
in one or more series, the target investors, the rating arrangements, special account for
the issuance proceeds and other matters in relation to the issuance plan;
(ii)
to produce, amend, execute and file the application materials relating to the issuance,
quotation, transfer, and the documents relating to the issuance, quotation and transfer, of
the Domestic Preference Shares and to deal with related matters;
(iii)
to amend, execute, implement, submit and publish all contracts, agreements and
documents (including but not limited to sponsor and underwriting agreements,
agreements relating to the issuance proceeds, subscription agreements entered into
with investors, announcements, circulars and other disclosure documents) in relation to
the issuance of the Domestic Preference Shares;
(iv)
to make appropriate amendments, adjustments and supplements to the plan for issuance
of the Domestic Preference Shares in accordance with the views of the regulatory
authorities and the actual circumstances of the Bank to the extent permitted by laws and
regulations; and
(v)
to deal with other matters relating to the issuance of the Domestic Preference Shares.
It is proposed that the Shareholders’ general meeting authorise the Board to (subject to its
obtaining of the above authority) further delegate the authority to the Chairman, the President,
the Executive Vice President (or the Chief Finance Officer) and the Company Secretary to,
jointly or individually, exercise the above authority unless otherwise provided in laws and
regulations.
- 41 -
APPENDIX III
(2)
PLAN FOR NON-PUBLIC ISSUANCE OF
DOMESTIC PREFERENCE SHARES
Matters authorised in connection with Preference Shares that remain outstanding
So long as the Domestic Preference Shares remain outstanding, it is proposed that the
Shareholders’ general meeting authorise the Board to exercise full power to deal with matters
under the framework and principles as considered and resolved at the Shareholders’ general
meeting in relation to the following matters:
(i)
to declare and pay all dividends to the Preference Shareholders pursuant to issuance
plan (but cancellation of all or part of the dividends payable to the Preference
Shareholders will still require approval at a Shareholders’ general meeting);
(ii)
to decide on matters relating to redemption of the Domestic Preference Shares during
the redemption period with reference to market conditions and other factors, and to deal
with all matters relating to redemption as approved by the CBRC and other regulatory
authorities; and
(iii)
to deal with all matters relating to conversion of the Domestic Preference Shares during
the conversion period upon occurrence of any trigger event for mandatory conversion of
the Domestic Preference Shares, including but not limited to, determining the timing of
conversion, conversion ratio and the implementation procedures of the conversion,
amending the relevant provisions in the Articles, dealing with regulatory approvals,
registering with the administration for industry and commerce for the change in
registered capital of the Bank as well as other matters.
- 42 -
APPENDIX IV
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
The Plan for Non-public Issuance of Offshore Preference Shares is written in Chinese, with no
official English translation. The English translation is provided solely for reference only. In case of any
discrepancy between the two versions, the Chinese version shall prevail. The full version of the Plan for
Non-public Issuance of Offshore Preference Shares is as follows:
PLAN FOR NON-PUBLIC ISSUANCE OF OFFSHORE PREFERENCE SHARES
BY BANK OF COMMUNICATIONS CO., LTD.
1.
Type of preference shares to be issued
The type of Offshore Preference Shares to be issued will be preference shares that meet the
requirements of the laws, regulations and regulatory documents of the PRC and overseas.
2.
Number of preference shares to be issued and issue size
The aggregate number of Offshore Preference Shares to be issued will not exceed 150 million, with
an aggregate amount of the Offshore Preference Shares to be issued not exceeding RMB15 billion or its
equivalent. The actual issue size is to be determined by the Board within the above scope, in accordance
with the authorisation at a Shareholders’ general meeting.
3.
Method of issuance
The issuance of Offshore Preference Shares will be conducted by way of a private placement in
accordance with the relevant rules on issuance and the Offshore Preference Shares shall be issued in a single
or multiple series in accordance with the relevant procedures after being approved by regulatory authorities.
If the Preference Shares are to be issued in multiple series, no separate approval shall be required to be
obtained from existing Preference Shareholders for each such issuance.
4.
Par value and issue price
The par value of the Offshore Preference Shares will be RMB100 per Offshore Preference Share. The
Offshore Preference Shares will be issued at or above par value. The actual currency and issue price will be
determined by the Board before the issuance with reference to market conditions and in accordance with
relevant laws, regulations and market practice, in accordance with the authorisation at the Shareholders’
general meeting.
5.
Maturity
The Offshore Preference Shares will have no maturity.
6.
Target investors
The Offshore Preference Shares will be offered to qualified overseas investors in accordance with
relevant rules on issuance. All target investors shall subscribe to the Offshore Preference Shares in cash.
- 43 -
APPENDIX IV
7.
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Lock-up period
There will be no lock-up period for the Offshore Preference Shares.
8.
Terms of distribution of dividends
(1)
Principles for determining the dividend rate
The proposed dividend rate for the Offshore Preference Shares (such dividend rate will be
calculated based off the issue price of the Offshore Preference Shares, similarly construed
hereinafter) may be adjusted at different intervals. During any adjusted dividend rate period,
dividends on the Offshore Preference Shares will be paid at the same agreed dividend rate and
will be readjusted at specified intervals thereafter. The dividend rate at the time of issuance
shall be determined by the Board through market pricing with reference to factors at the time
of the issuance, including market conditions, the actual circumstances of the Bank and investor
requirements, in accordance with the authorisation at the Shareholders’ general meeting. The
dividend rate will not be higher than the mean of the weighted average return on equity of the
Bank for the last two financial years1.
The dividend rate consists of the benchmark rate and the fixed spread. The fixed spread will be
determined by deducting the benchmark rate at the time of issuance from the dividend rate at
the time of issuance and will remain unchanged once determined. At the readjustment date, the
dividend rate for the new adjusted dividend rate period in the future will be determined, and
will equal to the sum of the benchmark rate as at the readjustment date and the fixed spread as
determined at the time of issuance.
(2)
Conditions to distribution of dividends
(i)
If the Bank has distributable after-tax profit2 after making up for previous years’ losses,
contributing to the statutory reserve and general reserve, the Bank may pay dividends to
the Preference Shareholders, provided that the capital adequacy ratio of the Bank meets
regulatory requirements. The Offshore Preference Shares issued by the Bank shall rank
pari passu with the Domestic Preference Shares in terms of dividend distribution and
both shall rank in priority to the Ordinary Shares. Distribution of dividends will not be
affected by the rating of the Bank and will not be adjusted as a result of any change to
such rating.
1
As determined in accordance with the Rules for Preparation of Information Disclosure by Companies Offering
Securities to the Public No. 9 – Calculation and Disclosure of Return on Equity and Earnings Per Share (as amended in
2010), and calculated based on the return attributable to the Ordinary Shareholders of the Bank.
2
Distributable after-tax profit is the undistributed profit as shown in the financial statements of the parent company
prepared in accordance with Chinese Accounting Standards or International Financial Reporting Standards, whichever
amount is lower.
- 44 -
APPENDIX IV
(3)
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
(ii)
In order to meet the regulatory requirements for the eligibility criteria for Additional
Tier-1 Capital Instruments, the Bank shall have the right to cancel dividend payments
on the Preference Shares in whole or in part at its discretion and this will not constitute
an event of default. The Bank, at its discretion, may use any dividend so cancelled to
repay other debts that are due. The cancellation of any dividend payment to the
Preference Shareholders will only constitute a restriction on the payment of dividend to
the ordinary shareholders and will not constitute any other restrictions on the Bank. Any
declaration and payment of all of the dividends on the Preference Shares by the Bank
will be determined by the Board in accordance with the authorisation at the
Shareholders’ general meeting. Any cancellation of all or part of the dividends on the
Preference Shares shall be subject to the consideration and approval by the
Shareholders’ general meeting. Any cancellation by the Bank of any dividends on the
Preference Shares shall be notified to investors at least ten working days prior to the
dividend payment date.
(iii)
If the Bank cancels all or part of the distribution of dividends on the Preference Shares,
the Bank shall not distribute any profits to the ordinary shareholders from the next day
following the resolution being approved at the Shareholders’ general meeting until the
resumption of payment of dividends in full3.
Method of dividend payment
Dividends on the Offshore Preference Shares shall be payable in cash. The dividend bearing
principal amount of the Offshore Preference Shares shall be the aggregate value of the relevant
series of Offshore Preference Shares then issued and outstanding (i.e. the product of the issue
price of the Offshore Preference Shares and the number of shares under the relevant series of
Offshore Preference Shares then issued and outstanding, similarly construed hereinafter).
Dividends on the Offshore Preference Shares shall be paid annually, and will accrue from the
payment due date for issuance of the relevant series of Preference Shares.
(4)
Dividend accumulation
The dividends on the Offshore Preference Shares will be non-cumulative (i.e. in the event of
any cancellation by the Bank of all or part of the dividends on the Preference Shares, any
amount of dividends not paid to the Offshore Preference Shareholders in full in the current
period will not be accumulated to the following dividend periods).
3
Resumption of payment of dividends in full means that the Bank decides to resume payment of dividends in full to the
Preference Shareholders. However, as the Offshore Preference Shares have adopted a non-cumulative dividend, the
Bank will not pay any dividends which have been cancelled in previous years.
- 45 -
APPENDIX IV
(5)
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Distribution of residual profits
After distribution of dividends at the prescribed dividend rate, the Offshore Preference
Shareholders shall not be entitled to any distribution of residual profits of the Bank together
with the ordinary shareholders.
9.
Terms of mandatory conversion
(1)
(2)
Mandatory conversion trigger events
(i)
Upon the occurrence of an Additional Tier-1 Capital Trigger Event (i.e. the Core Tier-1
Capital Adequacy Ratio of the Bank falling to 5.125% or below), the Bank shall have
the right to convert, without the approval of the Preference Shareholders, all or part of
the Offshore Preference Shares then issued and outstanding into H Shares based on the
aggregate amount of such Offshore Preference Shares in order to restore the Core Tier-1
Capital Adequacy Ratio of the Bank to above 5.125%. In case of partial conversion, the
Offshore Preference Shares shall be converted ratably and on the same conditions. Upon
conversion of the Offshore Preference Shares into H Shares, such H Shares will not be
converted back to preference shares in any event.
(ii)
Upon the occurrence of a Tier-2 Capital Trigger Event, the Bank shall have the right to
convert, without the approval of the Preference Shareholders, all of the Offshore
Preference Shares then issued and outstanding into H Shares based on the aggregate
amount of such Offshore Preference Shares. Upon conversion of the Offshore
Preference Shares into H Shares, such H Shares will not be converted back to
preference shares in any event. A Tier-2 Capital Trigger Event means the earlier of the
following events (a) the CBRC having concluded that without a conversion or write-off
of the Bank’s capital, the Bank would become non-viable, and (b) the relevant
authorities having concluded that without a public sector injection of capital or
equivalent support, the Bank would become non-viable.
Determination of mandatory conversion price
The initial mandatory conversion price of the Offshore Preference Shares will be equal to the
average trading price of the H Shares for the 20 trading days preceding the date of the passing
of the Board resolution in respect of the plan for issuance of Offshore Preference Shares (i.e.
HKD6.51 per share).
(3)
Principles for determining the ratio and number for mandatory conversion
Upon the occurrence of a trigger event, the Board will, in accordance with the approval of the
CBRC and the authorisation at the Shareholders’ general meeting, confirm the aggregate
amount of the Preference Shares for mandatory conversion and implement mandatory
conversion of the Preference Shares then issued and outstanding in whole or in part, and the
formula for determining the number of shares to be converted shall be: Q = V/P x conversion
- 46 -
APPENDIX IV
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
exchange rate. Any fractional share will be dealt with by the Bank in accordance with relevant
regulatory rules. Where: “Q” denotes the number of H Shares that shall be converted from the
Offshore Preference Shares held by each Preference Shareholder; “V” denotes the value of the
Offshore Preference Shares held by each Offshore Preference Shareholder that is subject to
mandatory conversion; “P” denotes the mandatory conversion price for the Offshore Preference
Shares; and the “conversion exchange rate” refers to the cross rate between HKD and the
currency in which the Offshore Preference Shares are denominated based on the RMB central
parity rate published by the China Foreign Exchange Trading System on the trading date
immediately preceding the date of the passing of the Board resolution in respect of the plan for
issuance of Offshore Preference Shares.
Upon the occurrence of a trigger event, the Offshore Preference Shares then issued and
outstanding will be converted into corresponding number of H Shares based on the above
formula in whole or in part on a ratable basis.
(4)
Mandatory conversion period
The period for mandatory conversion of the Offshore Preference Shares commences on the
first trading day immediately following the completion date of issuance of the Offshore
Preference Shares and ends on the date of redemption or conversion of all the Offshore
Preference Shares.
(5)
Method of adjustments of the mandatory conversion price
In the event that the Bank, among other things, distributes bonus shares, makes capitalisation
issues, issues new shares at a price lower than the market price (excluding any increase in the
share capital as a result of conversion of certain financial instruments issued by the Bank that
are convertible into Ordinary Shares), makes any rights issues after the date the Board
approves the plan for issuance of Offshore Preference Shares, the Bank will adjust the
mandatory conversion price to reflect the above events on a cumulative basis and in the order
of the occurrence of such events. The distribution of cash dividends to the ordinary
shareholders will not result in any adjustment to the mandatory conversion price. The
mandatory conversion price will be adjusted based on the following:
Bonus issuance or capitalisation issue: P1 = P0 x 1/(1 + n);
Issuance of new Ordinary Shares at a price lower than the market price or by way of a rights
issue: P1 = P0 x (N + Q x (A/M))/(N + Q);
Where, “P0” denotes the effective mandatory conversion price before adjustment; “n” denotes
the bonus issuance ratio or capitalisation issue ratio; “N” denotes the aggregate number of
Ordinary Shares before such issuance or rights issue; “Q” denotes the number of new Ordinary
Shares issued as a result of such issuance or rights issue; “A” denotes the price for such
issuance or rights issue; “M” denotes the closing price of Ordinary Shares on the trading date
- 47 -
APPENDIX IV
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
immediately preceding the date of announcement of issuance or rights issue (i.e. announcement
containing the effective and irrevocable terms of such issuance or rights issue); and “P1”
denotes the effective mandatory conversion price after adjustment.
In the event that the rights and interests of the Offshore Preference Shareholders may be
affected by any redemption of the Ordinary Shares by, or merger or division of, the Bank or
any other circumstance which causes changes in the Bank’s share class, number of shares and/
or shareholders’ equity, the Bank shall have the right to adjust the mandatory conversion price
based on the actual circumstances and in accordance with the principles of fairness, justice and
equity as well as to fully protect and balance the rights and interests of the Preference
Shareholders and the ordinary shareholders. The adjustment mechanism for the mandatory
conversion price in those circumstances will be determined in accordance with the relevant
regulations.
(6)
Entitlement to dividends on Ordinary Shares in the year of mandatory conversion
The H Shares to be issued as a result of the mandatory conversion of the Offshore Preference
Shares will rank pari passu with the existing issued H Shares, and all ordinary shareholders
whose names appear on the register of members of the Bank on the record date for dividend
entitlement (including the holders of H Shares as a result of the mandatory conversion of the
Offshore Preference Shares) shall be entitled to receive the dividend for the current dividend
period.
10.
Terms of conditional redemption
(1)
Redemption right
The Bank shall have the right to redeem the Offshore Preference Shares subject to obtaining
the approval of the CBRC. The Offshore Preference Shareholders do not have the right to
require the Bank to redeem the Offshore Preference Shares and should not have any
expectation that the Offshore Preference Shares will be redeemed. The Offshore Preference
Shares will not contain any term allowing investors to put back the Offshore Preference Shares
and the Offshore Preference Shareholders shall not have any right to require the Bank to
repurchase the Offshore Preference Shares held by them.
(2)
Redemption conditions and period
From the fifth year following the date of issuance of the Offshore Preference Shares, the Bank
shall have the right to redeem all or part of the Offshore Preference Shares on the annual
dividend payment date for the Offshore Preference Shares. The redemption period ends on the
conversion or redemption of all the Offshore Preference Shares. The specific arrangements for
any redemption shall be finally determined by the Board in accordance with the authorisation
at the Shareholders’ general meeting.
- 48 -
APPENDIX IV
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
The exercise by the Bank of its right to redeem the Offshore Preference Shares shall be subject
to the fulfilment of the following conditions:
(3)
(i)
the Bank shall use capital instruments of the same or superior quality to the Offshore
Preference Shares to replace the Offshore Preference Shares to be redeemed and such
replacement shall only be made at a time at which the Bank has a sustainable income
generating capability; or
(ii)
the capital position of the Bank immediately after redemption of the Offshore
Preference Shares will remain significantly higher than the regulatory capital
requirements prescribed by the CBRC.
Redemption price and basis for determining the redemption price
The redemption price of the Offshore Preference Shares will be an amount equal to the issue
price plus the amount of dividend declared but unpaid for the current period.
11.
Restrictions on voting rights
Under normal circumstances, Preference Shareholders are not entitled to convene, attend or vote at
any Shareholders’ general meetings of the Bank. If any of the following matters occurs, the Offshore
Preference Shareholders will be entitled to attend Shareholders’ general meetings and vote at a separate
class. Under such circumstance, each Offshore Preference Share will be entitled to one vote, but the
Preference Shares held by the Bank do not entitle the Bank to vote:
(1)
amendments to the Articles that relate to preference shares;
(2)
reduction of the registered capital of the Bank by more than 10% on a single or aggregate
basis;
(3)
merger, division, dissolution or change of corporate form of the Bank;
(4)
issuance of Preference Shares by the Bank; and
(5)
other events specified in the laws, administrative rules and departmental regulations and the
Articles.
Resolutions relating to the above matters shall be approved by more than two thirds of the votes held
by the ordinary shareholders present at the meeting (including Preference Shareholders with restored voting
rights) and by more than two thirds of the votes held by the Preference Shareholders present at the meeting
(excluding Preference Shareholders with restored voting rights).
- 49 -
APPENDIX IV
12.
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Restoration of voting rights
(1)
Terms of restoration of voting rights
Following the issuance of the Preference Shares by the Bank and so long as such Preference
Shares remain outstanding, if the Bank fails to pay the agreed dividend to the Preference
Shareholders for three financial years in aggregate or two consecutive financial years, the
Preference Shareholders will have the right to attend and vote at the Shareholders’ general
meetings as if they are ordinary shareholders from the day immediately after the Shareholders’
general meeting resolves that the Bank will not pay the agreed dividend for the current
dividend period, and each Preference Share will be entitled to the voting rights as provided in
the Articles. The formula for calculating the voting rights of the Offshore Preference Shares
with restored voting rights is as follows:
Q = V/P x conversion exchange rate, with any fractional restored voting right rounded down to
the nearest whole number.
Where: “Q” denotes the H Share voting rights restored from the Offshore Preference Shares
held by each Offshore Preference Shareholder; “V” denotes the aggregate value of the
Offshore Preference Shares with restored voting rights held by each Offshore Preference
Shareholder; conversion price “P” denotes the average trading price of H Shares for the 20
trading days preceding the date of the passing of the Board resolution in respect of the plan for
issuance of Offshore Preference Shares (i.e. HKD6.51 per share) and the adjustment method of
“P” shall be consistent with the adjustment method of the mandatory conversion price under
Section 9 (Terms of mandatory conversion); and the “conversion exchange rate” refers to the
cross rate between HKD and the currency in which the Offshore Preference Shares are
denominated based on the RMB central parity rate published by the China Foreign Exchange
Trading System on the trading date immediately preceding the date of the passing of the Board
resolution in respect of the plan for issuance of Offshore Preference Shares.
(2)
Cancellation of restoration of voting rights
After such restoration of the voting rights, upon the full payment of the dividend on the
Offshore Preference Shares for the current dividend period, the voting rights granted to the
Offshore Preference Shares in accordance with the provisions for restoration of voting rights
shall be cancelled from the date of full payment of such dividend.
13.
Order of distribution on liquidation and procedures for liquidation
In accordance with the Articles, the remaining assets of the Bank after payment of liquidation
expenses, payment of wages due to staff and workers, social insurance expenses and statutory compensation,
payment of the principal and interest of individual deposits, payment of taxes due and settlement of other
indebtedness, respectively, shall be distributed to the Preference Shareholders in priority. The Offshore
Preference Shareholders will be entitled to an amount on liquidation equal to the aggregate value of the
- 50 -
APPENDIX IV
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Offshore Preference Shares then issued and outstanding plus any declared but unpaid dividends for the
current period. If there are insufficient residual assets, the distribution will be made on a pro rata basis to the
Offshore Preference Shareholders and the Domestic Preference Shareholders.
The remaining assets of the Bank after settlement in accordance with the provisions aforesaid shall be
distributed to the ordinary shareholders of the Bank in accordance with the shareholding percentages of the
shares held by them.
14.
Rating
The rating of the Offshore Preference Shares will be determined with reference to the market
conditions and in accordance with the relevant laws and regulations.
15.
Security
No security will be provided for the Offshore Preference Shares.
16.
Use of proceeds
The aggregate proceeds from the issuance of the Offshore Preference Shares will not be more than
RMB15 billion or its equivalent and, after deduction of the expenses relating to the issuance, will be used to
replenish the Bank’s Additional Tier-1 Capital in accordance with relevant regulations.
17.
Listing and trading arrangements
The listing and trading arrangements for the Offshore Preference Shares will be set out in the
issuance documents.
18.
Validity period of the resolution for the issuance of Offshore Preference Shares
The resolution for the issuance of Offshore Preference Shares will be valid for 36 months from the
date on which the resolution is approved at the Shareholders’ general meeting. Separate issuances of
Offshore Preference Shares and Domestic Preference Shares, within the framework under the plans for
issuance of Preference Shares as resolved at the Shareholders’ general meeting and during the validity
period of such resolutions, will not require further approval by the then issued and outstanding preference
shareholders.
19.
Relationship between offshore and domestic issuances
The issuance of Offshore Preference Shares and issuance of Domestic Preference Shares are
independent from each other and are not conditional upon each other.
- 51 -
APPENDIX IV
20.
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Matters relating to Authorisation
(1)
Matters authorised in connection with the issuance
To ensure the successful implementation of the issuance of Offshore Preference Shares, it is
proposed that the Shareholders’ general meeting authorise the Board to exercise full power to
deal with all matters in connection with the issuance of the Offshore Preference Shares within
the validity period of the resolution in respect of the issuance of the Offshore Preference
Shares, including but not limited to those set out below:
(i)
to formulate and implement the final issuance plan for the issuance of the Offshore
Preference Shares, including but not limited to the determination of the specific number
of shares to be issued and the issuance size, the denomination currency and issue price,
the method for determining the dividend rate and specific dividend rate, the tax
arrangements in relation to any dividend payment, the timing of issuance, the
arrangements in relation to issuance in one or more series, the target investors, the
rating arrangements, special account for the issuance proceeds and other matters in
relation to the issuance plan;
(ii)
to produce, amend, execute and file the application materials relating to the issuance,
listing and trading, and the documents relating to the issuance, listing and trading, of the
Offshore Preference Shares and to deal with related matters;
(iii)
to amend, execute, implement, submit and publish all contracts, agreements and
documents (including but not limited to sponsor and underwriting agreements,
agreements relating to the issuance proceeds, subscription agreements entered into
with investors, announcements, circulars and other disclosure documents) in relation to
the issuance of the Offshore Preference Shares;
(iv)
to make appropriate amendments, adjustments and supplements to the issuance plan of
the Offshore Preference Shares in accordance with the views of the regulatory
authorities and the actual circumstances of the Bank to the extent permitted by laws and
regulations; and
(v)
to deal with other matters relating to the issuance of the Offshore Preference Shares.
It is proposed that the Shareholders’ general meeting authorise the Board to (subject to its
obtaining of the above authority) further delegate the authority to the Chairman, the President,
the Executive Vice President (or the Chief Finance Officer) and the Company Secretary to,
jointly or individually, exercise the above authority unless otherwise provided in laws and
regulations.
- 52 -
APPENDIX IV
(2)
PLAN FOR NON-PUBLIC ISSUANCE OF
OFFSHORE PREFERENCE SHARES
Matters authorised in connection with Preference Shares that remain outstanding
So long as the Offshore Preference Shares remain outstanding, it is proposed that the
Shareholders’ general meeting authorise the Board to exercise full power to deal with matters
under the framework and principles as considered and resolved at the Shareholders’ general
meeting in relation to the following matters:
(i)
to declare and pay all dividends to the Preference Shareholders pursuant to issuance
plan (but cancellation of all or part of the dividends payable to the Preference
Shareholders will still require approval at a Shareholders’ general meeting);
(ii)
to decide on matters relating to redemption of the Offshore Preference Shares during the
redemption period with reference to market conditions and other factors, and to deal
with all matters relating to redemption as approved by the CBRC and other regulatory
authorities; and
(iii)
to deal with all matters relating to conversion of the Offshore Preference Shares during
the conversion period upon occurrence of any trigger event for mandatory conversion of
the Offshore Preference Shares, including but not limited to, determining the timing of
conversion, conversion ratio and the implementation procedures of the conversion,
amending the relevant provisions in the Articles, dealing with regulatory approvals,
registering with the administration for industry and commerce for the change in
registered capital of the Bank as well as other matters.
- 53 -
APPENDIX V
DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES OF BANK OF COMMUNICATIONS
CO., LTD. AND THE REMEDIAL MEASURES TO BE ADOPTED
The Dilution of Current Returns by Issuance of Preference Shares of Bank of Communications Co.,
Ltd. and the Remedial Measures to be Adopted is written in Chinese, with no official English translation.
The English translation is provided solely for reference only. In case of any discrepancy between the two
versions, the Chinese version shall prevail. The full version of the Dilution of Current Returns by Issuance
of Preference Shares of Bank of Communications Co., Ltd. and the Remedial Measures to be Adopted is as
follows:
DILUTION OF CURRENT RETURNS BY ISSUANCE OF PREFERENCE SHARES
OF BANK OF COMMUNICATIONS CO., LTD. AND
THE REMEDIAL MEASURES TO BE ADOPTED
In accordance with the Opinions of the General Office of the State Council on Further Strengthening
the Protection of Legitimate Rights and Interests of Minority Investors in Capital Market and the Standards
for the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No.
33 – Proposal on the Offering of Preference Shares and Offering Report and other regulations, in case of
dilution of current returns by re-financing, listed companies should undertake to adopt and actually adopt the
concrete measures to remedy returns. The Bank has analysed the potential impacts on the rights and interests
and the current returns of the Shareholders by the proposed issuance of Domestic Preference Shares and
Offshore Preference Shares and, with reference to the actual situation of the Bank, proposed relevant
concrete measures to remedy returns.
1.
Analysis on Dilution of Current Returns by the Issuance of Preference Shares
For the purpose of satisfying the higher regulatory requirements on capital under the Capital
Management Rules, enhancing the capability of the Bank in sustainable development and serving real
economy and promoting steady growth of Shareholders’ returns, the Bank intends to supplement its
Additional Tier-1 Capital by issuing Domestic Preference Shares and Offshore Preference Shares in a total
amount of no more than RMB60 billion or its equivalent. As Preference Shareholders take priority over
ordinary shareholders in profit distribution based on the agreed dividend rate, expenditures on the Preference
Shares dividends will dilute the after-tax net profit of the Bank attributable to ordinary shareholders to a
certain extent irrespective of the financial return of proceeds raised by issuance of Preference Shares.
In accordance with the Accounting Standards for Enterprises No.34 – Earnings Per Share, the
Standards for the Contents and Formats of Information Disclosure by Companies Offering Securities to the
Public No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share (amended in
2010), the Provisions on the Distinction between Financial Liability and Equity Instruments and the
Relevant Accounting Treatment and other relevant rules, when calculating the returns on net assets and basic
earnings per share, indicators such as net profits and net assets shall be calculated based on the
corresponding data attributed to ordinary shareholders, i.e. the numerator of the calculation formula shall be
the net profits attributable to ordinary shareholders (i.e. the net profit realised in the year and attributable to
the owners of the parent company deducting the dividends of the preference shares declared to be paid in the
period). Therefore, if no consideration is given to the benefits arising out of the business development
- 54 -
APPENDIX V
DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES OF BANK OF COMMUNICATIONS
CO., LTD. AND THE REMEDIAL MEASURES TO BE ADOPTED
supported by the raised proceeds at all, the issuance of Preference Shares will dilute the current returns on
Ordinary Shares of the Bank to a certain extent, which would be reflected as the decline in the return on net
assets and the basic earnings per share after the issuance of Preference Shares under static conditions.
However, after the proceeds raised are in place, the Bank will effectively allocate capital resources to
achieve a reasonable level of capital returns. If, after supplementing its capital, the Bank uses the proceeds
effectively and in a timely manner in supporting its various main operating businesses, benefits will be
generated directly. Meanwhile, as the preference share is the Additional Tier-1 Capital, leveraging effects so
generated will further support the business development of the Bank, increase the level of operating income
and net profits of the Bank and have positive impact on the return on net assets of ordinary shareholders of
the Bank and the earnings per share attributable to ordinary shareholders if the Bank maintains its current
efficiency in capital management.
2.
Measures of Returns Remedial to be Adopted
Considering the dilution impact of the current returns on Ordinary Shares by the issuance of
Preference Shares, for the purpose of implementing the Opinions of the General Office of the State Council
on Further Strengthening the Protection of Legitimate Rights and Interests of Minority Investors in Capital
Market, protecting interests of ordinary shareholders of the Bank and optimising the investment returns
mechanism of the Bank, the Bank undertakes to adopt various measures to ensure the effective use of
proceeds and prevention of the risks of dilution of current returns as well as to improve return capability in
the future. The details of the measures are as follows:
(1)
Strengthening proceeds management and taking full advantage of proceeds
The Bank will strengthen management on the proceeds raised through the issuance of
Preference Shares, regulate the use of proceeds, further improve efficiency in the use of
proceeds, achieve a reasonable level of capital returns and positive impact on return on net
assets, earnings per share and other financial indicators, effectively remedy the dilution of the
current returns on Ordinary Shares by the issuance of Preference Shares and further promote
the Bank’s sustainability.
(2)
Perfecting the capital constraint mechanism and promoting capital allocation efficiency
The Bank has always been adhering to the capital constraint concept, duly implementing
capital constraint throughout the entire process of managing its business operation, and fully
exerting the role of capital constraint in the transformation of the mode of development and
performance growth. Meanwhile, it continues optimising the structure of risk asset and
improves the efficiency of capital allocation and the level of return on capital steadily.
- 55 -
APPENDIX V
(3)
DILUTION OF CURRENT RETURNS BY ISSUANCE OF
PREFERENCE SHARES OF BANK OF COMMUNICATIONS
CO., LTD. AND THE REMEDIAL MEASURES TO BE ADOPTED
Optimising asset structure and promoting the transformation of the mode of business
development
The Bank will continue optimising the asset structure, and will promote the continual
optimisation and adjustment of the business structure and client structure by making use of
capital management as a tool. With respect to the mode of business development, the Bank
will encourage the stable development of business with low capital consumption, continue
promoting the optimisation of its income structure, and accelerate the promotion of the
transformation of profit mode.
(4)
Paying attention to Shareholders’ returns and implementing sustainable and steady profit
distribution policies
Regarding profit distribution, the Bank will pay more attention to Shareholders’ reasonable
returns on investment and continuously distribute cash dividends to Shareholders. The Board
of Directors shall draft a profit distribution plan based on Shareholders’ opinions and
suggestions in order to attach importance to and protect legitimate rights and interests of
minority investors and finally submit the profit distribution plan to the Shareholders’ general
meeting for approval. The Bank will continue to keep the continuity and stability of profit
distribution policies and persist in creating long-term value for its Shareholders.
- 56 -
APPENDIX VI
CAPITAL MANAGEMENT PLAN FOR THE YEARS
2015-2017 OF BANK OF COMMUNICATIONS CO., LTD.
The Capital Management Plan for the Years 2015-2017 of Bank of Communications Co., Ltd. is
written in Chinese, with no official English translation. The English translation is provided solely for
reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. The
full version of the Capital Management Plan for the Years 2015-2017 of Bank of Communications Co., Ltd.
is as follows:
CAPITAL MANAGEMENT PLAN FOR THE YEARS 2015-2017 OF
BANK OF COMMUNICATIONS CO., LTD.
For the purpose of further strengthening capital management, maintaining a sound capital adequacy
ratio level and effectively supporting the sustainable and healthy business development of the Bank, the
Bank’s capital management plan for the years 2015-2017 is hereby formulated in accordance with the
relevant regulatory requirements and future development strategy and business plan of the Bank.
1.
Guidelines for Capital Management Plan
Guidelines for the Bank’s capital management planning are: to adhere to the strategic target of
“becoming a first-class public bank group focusing on wealth management services through
internationalisation and provision of integrated services”, to support business development by having
sufficient capital, to meet the capital requirement through a reasonable replenishment mechanism, to ensure
sustainable growth with a stable shareholding structure, to increase shareholder returns with a scientific
capital structure, and to promote the coordinated development of the business scale, quality and efficiency
throughout the Bank.
2.
Basis for Drafting the Capital Management Plan
In accordance with the Capital Management Rules issued by the CBRC and other relevant rules, the
Bank took the following factors into full account when drafting its capital management plan:
(1)
Meeting the more stringent external regulatory requirements
The basic objective for drafting this capital management plan is to meet capital regulatory
requirements. Commercial banks are exposed to greater risks caused by the international
financial crisis and changes in the domestic economic and financial conditions. More stringent
requirements have been imposed on commercial banks for their capital adequacy, capital
structures and risk management capability as a result of the continuous financial reform in
China and standardising financial regulations. The Bank will, by reference to the Basel III
Accord and the CBRC’s regulatory requirements, formulate a reasonable target on capital
adequacy ratio, scientific capital replenishment plan and effective capital management
initiatives to satisfy the more stringent capital regulatory requirements.
- 57 -
APPENDIX VI
(2)
CAPITAL MANAGEMENT PLAN FOR THE YEARS
2015-2017 OF BANK OF COMMUNICATIONS CO., LTD.
Meeting the inherent requirements for supporting strategic transformation and business
development
The Bank needs adequate capital to support its business development, strategic transformation
and integrated operation. The Bank must continuously optimise its business structure, reduce
capital consumption, and increase returns on capital through scientific and reasonable planning.
Meanwhile, the Bank will lay a solid capital foundation through the capital replenishment
mechanism in order to cope with market challenges with sufficient capital reserves and
stronger development capability.
3.
Main Objectives of the Capital Management Plan
Taking into account the capital management profile of our domestic and foreign peers as well as the
Bank’s strategic development needs, the main objectives of the Bank’s capital management plan are as
follows:
(1)
Moderate capital adequacy ratio
By reference to the capital adequacy level of our main domestic and foreign peers and taking
into consideration the Bank’s capital needs for business development, strategic transformation
and integrated operation over the next few years, the target for the capital adequacy ratios of
the Bank are as follows: the core Tier-1 Capital adequacy ratio, the Tier-1 Capital adequacy
ratio and the capital adequacy ratio shall be no less than 8.5%, 9.5% and 11.5%, respectively.
(2)
Scientific and reasonable capital replenishment mechanism
The Bank will continue improving its capital replenishment mechanism which mainly relies on
internal growth and is supplemented by external financing, and continue improving the
replenishment capability of internal capital through continuously enhancing profitability and
risk compensation capability.
(3)
Ever-optimising capital structure
The Bank will, according to regulatory requirements, continue optimising its capital structure
and at the same time maintain the stability of its capital structure in light of the market
condition, reduce financing costs, and improve its risk-resistance capability.
(4)
Persistent and stable shareholding structure
The Bank will maintain the basic stability of its shareholding structure and the controlling
position of state-owned shares, avoid excessive dilution to substantial shareholders’ equity, and
safeguard the interests of all its shareholders.
- 58 -
APPENDIX VI
(5)
CAPITAL MANAGEMENT PLAN FOR THE YEARS
2015-2017 OF BANK OF COMMUNICATIONS CO., LTD.
Continuously enhancing the efficiency of capital management
The Bank will make full and efficient use of capital leverage to support business development,
to enhance capital discipline, to speed up its business transformation and development, to
deepen its integrated operation and to enhance the efficiency of capital allocation.
4.
Capital Replenishment Plan
Over the period between 2015 and 2017, the Bank will further improve its capital replenishment
mechanism which mainly relies on the accumulation of internal capital and is supplemented by external
financing. Meanwhile, the Bank will replenish its capital and optimise its capital structure in order to build a
scientific and reasonable capital structure.
(1)
Replenishing internal capital
The Bank will strengthen its operational management and promote its operating results to
improve its ability to replenish capital through internal accumulation.
(i)
Continuous enhancement of profitability
The continuous improvement of profitability is a key to accumulation of internal capital,
and strong profitability is a pre-condition of profit retention. Therefore, in the future, the
Bank will further accelerate its business development, optimise the business structure
and income structure, effectively control the increase in cost expenditure and boost the
profitability to ensure the sustainable growth of internal capital.
(ii)
Reasonably determining the dividend ratio
The Bank will implement reasonable profit distribution policy and reasonably determine
cash dividend ratio while strengthening its profitability. In order to guarantee the
maximisation of shareholders’ interest, it will also enhance capital accumulation
appropriately to meet the need for replenishing capital and to promote its long-term and
sustainable development.
(iii)
Making sufficient provisions
The Bank will constantly strengthen its risk management, to maintain the favourable
development of asset quality and control its non-performing asset ratio; meanwhile, the
Bank will make full provisions to improve its risk resistance capability and further
replenish its capital.
- 59 -
APPENDIX VI
(2)
CAPITAL MANAGEMENT PLAN FOR THE YEARS
2015-2017 OF BANK OF COMMUNICATIONS CO., LTD.
Replenishing external capital
In addition to replenishing external capital, the Bank plans to replenish its capital through the
following external measures in order to achieve the capital planning objective between 2015 to
2017: (1) to replenish core Tier-1 capital in due time through making opportunistic choices on
appropriate equity financing; (2) to proactively study the replenishment of Additional Tier-1
Capital and Tier-2 Capital by offering preference shares or other capital instruments which
comply with the Capital Management Rules as well as Tier-2 Capital bonds; and (3) to
reasonably choose other innovative financings to replenish capital in accordance with the
regulatory requirements and the market condition in order to form a diversified capital
replenishment mechanism and to reduce the financing cost and improve financing structures
while further increasing the capital adequacy level.
5.
Capital Management Measures
(1)
Strengthening capital planning management and ensuring the stability of capital adequacy
The Bank will conduct regular evaluation in respect of its capital plans, and will make
dynamic adjustment to the capital plans in a timely manner in light of the macro-environment,
regulatory requirements, market conditions and business development etc., so as to ensure that
its capital level matches the future business development and risk profile.
(2)
Improving the capital discipline mechanism and improve the capital utilisation efficiency
In order to improve the capital discipline mechanism, to optimise the capital allocation and to
promote the steady, coordinated and sustainable business development, the Bank will make full
and efficient use of capital leverage to speed up its business transformation. First, the Bank
will further strengthen its effort in adjusting the business structure. Once the increase rate of
asset scale is reasonably determined, the Bank will constantly optimise its capital structure in
terms of business line structure, product structure, sector structure, geographical structure and
client structure through portfolio management, transform the extensional development model
for scale expansion and vigorously develop capital-conserving business. Second, the Bank will
optimise its evaluation and incentive mechanism and fully implement economical capital
management. The Bank will continuously optimise and improve the economical allocation of
capital and evaluation mechanism, procure the business divisions and institutions at all levels
to adjust their business structure and client structure, realise disciplined growth of risk assets
by economical capital, so as to achieve the reasonable match between capital and risk levels
and improve the capital utilisation efficiency.
(3)
Strengthening assessment and monitoring of capital adequacy ratio and promoting the level
of capital management
The Bank will further improve and deepen its internal assessment of capital adequacy, and
monitor and evaluate the main risks the Bank is exposed to and the impact on the capital
adequacy ratio through risk evaluation, stress test and other key measures, so as to increase the
- 60 -
APPENDIX VI
CAPITAL MANAGEMENT PLAN FOR THE YEARS
2015-2017 OF BANK OF COMMUNICATIONS CO., LTD.
prospect and foreseeability of the operation and management of the whole Bank. Meanwhile,
the Bank will strengthen the forecast and monitoring of the capital adequacy ratio so as to
ensure that the capital adequacy ratio continuously complies with the regulatory requirements;
and will strengthen the management of the consolidated financial statements and ensure that
the business development of affiliated companies is in line with the strategic targets of the
whole Bank by including affiliated companies into the economic capital management system of
the whole Bank.
(4)
Strengthening comprehensive risk management and improving the risk identification
capability
The Bank will, through establishing a comprehensive risk management system, improve its risk
management and assessment capability. The Bank will further improve the risk measurement
techniques, comprehensively measure the capital corresponding to the credit risk, market risks,
operating risks, etc. It will also strengthen the evaluation, measurement, and monitoring of
various risks to ensure that its capital level matches the risks it is exposed to as well as its risk
management capability.
(5)
Establishing contingency mechanism for capital replenishment
In the event of material deterioration of external operational environment or other adverse
circumstances, the Bank may activate its contingency capital replenishment plan to restore the
capital adequacy ratio by increasing available capital and reducing capital consumption. The
main measures to increase available capital include: restrictions on dividend pay-out, write-off
or conversion of qualified capital instruments, emergency capital injection, etc.; main measures
to reduce capital consumption include: emergency sale of assets, suspension of expansion of
business outlets or suspension of provision of loans, restriction on the development of business
which consumes high level of capital, sale of investment portfolios, non-core assets or credit
portfolios, asset securitisation and other effective measures.
- 61 -
APPENDIX VII
SHAREHOLDER RETURN PLAN FOR THE YEARS
2015–2017 OF BANK OF COMMUNICATIONS CO., LTD.
The Shareholder Return Plan for the Years 2015-2017 of Bank of Communications Co., Ltd. is
written in Chinese, with no official English translation. The English translation is provided solely for
reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. The
full version of the Shareholder Return Plan for the Years 2015-2017 of Bank of Communications Co., Ltd. is
as follows:
SHAREHOLDER RETURN PLAN FOR THE YEARS 2015-2017 OF
BANK OF COMMUNICATIONS CO., LTD.
With a view to further increasing the level of shareholder return, and improving and implementing the
policy on cash dividends, the Bank has formulated the Shareholder Return Plan for the Years of 2015-2017
(the “Plan”) in accordance with the Circular on Further Implementation of Relevant Matters on Payment of
Cash Dividends by Listed Companies, the Regulatory Guidance to Listed Companies No. 3 – Cash Dividend
Payments by Listed Companies and other laws and regulations, as well as relevant regulatory requirements.
1.
Basic Principles
The Plan is formulated in accordance with the following principles: complying with the relevant laws
and regulations, regulatory requirements and the provisions of the Bank’s articles of association relating to
profit distribution, ensuring the continuity and stability of the Bank’s profit distribution policy, attaching
importance to reasonable investment returns for investors, and taking into account the Bank’s long-term
interests, the interests of all shareholders as a whole and the Bank’s sustainable development, and giving
priority to profit distribution in the form of cash dividend payment.
2.
Shareholder Return Plan for the Years 2015-2017
(1)
To implement a proactive profit distribution policy to maintain the continuity and stability in
the cash dividend policy and ensure the authenticity of information disclosure on cash
dividends.
(2)
The Bank may distribute dividends by using cash, shares or a combination of cash and shares,
among which the distribution of profits in the form of cash dividend payment shall take
priority.
(3)
Unless under the following special circumstances, the Bank shall distribute dividends in the
form of cash if it records profits in the year and the accumulated undistributed profits are
positive. The profit distributed by the Bank in the form of cash per annum will not be less than
10% of the net profit attributable to ordinary shareholders of the parent company in that
accounting year:
(i)
the Bank’s capital adequacy level is lower than the requirements of the regulatory
authorities including CBRC;
(ii)
the regulatory authorities including CBRC take regulatory measures to restrict profit
distribution of the Bank;
- 62 -
APPENDIX VII
(4)
3.
SHAREHOLDER RETURN PLAN FOR THE YEARS
2015–2017 OF BANK OF COMMUNICATIONS CO., LTD.
(iii)
other circumstances that are not suitable for profit distribution as provided by the laws,
regulations and regulatory documents;
(iv)
force majeure events such as war and natural disaster which have a significant impact
on the business operation of the Bank.
When the Bank is in a sound operating condition, and the Board considers that the share price
of the Bank does not match its scale of share capital and that distributing dividend in the form
of shares will be in the interests of all shareholders of the Bank as a whole, the Bank may
propose dividend distribution plan in the form of shares upon fulfilment of the above
conditions on distribution of cash dividends.
Decision-Making and Monitoring Mechanism in Respect of the Formulation, Implementation
and Adjustment of the Plan
(1)
In accordance with the relevant laws, regulations, regulatory requirements, articles of
association of the Bank and in light of the actual circumstances of the Bank, the Board of
Directors will formulate the Plan after taking into full consideration the opinions of
Shareholders (minority Shareholders in particular), independent directors and supervisory
board. Once it is considered and approved by the Board of Directors, the Plan shall be
submitted to the Shareholders’ general meeting for consideration, approval and
implementation.
(2)
In the event of force majeure such as war, natural disaster and etc., material change in the
regulatory policies, change in the external business environment that causes significant impact
on the operation of the Bank, or major change in the operational status of the Bank, the Bank
can make adjustments to the Plan.
(3)
If, due to the special circumstances set out above, the cash dividend ratio of the Bank fails to
reach the ratio as set out in the articles of association of the Bank, the Board of Directors shall
make explanations on the reasons for such failure in the proposal of Shareholders’ general
meeting. Where the Bank, due to the special circumstances set out above, fails to distribute
dividends in cash, the Board of Directors shall make special explanations on the specific
reasons for such failure, the exact usage of the retained profits of the Bank, the estimated
investment earnings and other relevant issues, submit such explanations to the Shareholders’
general meeting for consideration and approval after the expression of opinions by the
independent directors, and disclose the same in the information disclosure media designated by
the Bank.
(4)
The Bank shall encourage minority investors and institutional investors to actively participate
in the decision-making process on issues relating to profit distribution. Before the
Shareholders’ general meeting of the Bank considers the specific plan on cash dividend, the
Bank shall actively communicate with Shareholders (minority shareholders in particular)
through various channels, and fully attend to the opinions and demands of minority
shareholders, and respond timely to the concerns of minority shareholders.
- 63 -
APPENDIX VII
4.
SHAREHOLDER RETURN PLAN FOR THE YEARS
2015–2017 OF BANK OF COMMUNICATIONS CO., LTD.
Effectiveness of the Plan
The shareholder return set out in the Plan refers to the Ordinary Shareholder return, while the
Preference Shareholder return will be implemented in accordance with the articles of association of the Bank
and the plan for issuance of Preference Shares. Any matters not covered in the Plan shall be governed by the
relevant laws and regulations, regulatory documents and relevant provisions of the articles of association of
the Bank. The Board of Directors shall be responsible for the interpretation of the Plan. The Plan shall
become effective as of the date of approval at the Shareholders’ general meeting of the Bank.
- 64 -
NOTICE OF EGM
NOTICE OF THE 2015 FIRST EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2015 first extraordinary general meeting (“EGM”) of Bank
of Communications Co., Ltd. (the “Bank”) will be held at 1:30 p.m. on Monday, 18 May 2015 at Wyndham
Grand Plaza Royale Oriental Shanghai Hotel, No. 2288 Pudong Avenue, Pudong New District, Shanghai, the
People’s Republic of China for the purpose of considering and passing the following resolutions.
SPECIAL RESOLUTIONS
1.
To consider and approve the amendments to the articles of association of the Bank (the
“Articles”) as set out in Appendix I to the circular of the Bank dated 31 March 2015; and to
authorise the Board to delegate authority to the Chairman to make relevant revisions to the
amendments to the Articles as he deems necessary and appropriate during the application for
approval of the amendments to the Articles and in accordance with the requirements of the
relevant regulatory authorities and the stock exchanges.
2.
To consider and approve the proposal in respect of the general mandate to issue shares:
“THAT:
(1)
subject to the conditions set out in paragraph (2) below, the Board of Directors of the
Bank (the “Board”) be and is hereby generally and unconditionally given approval to,
during the Relevant Period (as defined below),
(i)
exercise all powers of the Bank to separately or concurrently authorise, allot,
issue and deal with the newly issued A shares, H shares and preference shares of
the Bank (collectively, the “Shares”); and
(ii)
enter into or grant offers, agreements and options (including warrants, convertible
bonds, preference shares that can be convertible into A shares or H shares and
any other securities carrying rights of subscription for or conversion into A
Shares or H Shares) which may require A Shares or H Shares to be allotted and
issued during or after the expiry of the Relevant Period, and to authorise, allot,
issue and deal with the A Shares and H Shares that are required to be allotted and
issued under such offers, agreements and options;
- 65 -
NOTICE OF EGM
(2)
the respective aggregate amounts of A shares, H shares and preference shares
(calculated based on the number of A shares or H shares to be fully converted from
preference shares at the mandatory conversion price) authorised, allotted, issued and
dealt with by the Board, and offers, agreements and options (including warrants,
convertible bonds and any other securities carrying rights of subscription for or
conversion into A Shares or H Shares), in each case, calculated based on the number of
A shares or H shares to be issued or fully converted from such securities, entered into or
granted by the Board, in accordance with the approvals granted under paragraph (1)
above shall not exceed 20% of the respective amounts of existing A shares and H shares
as at the date of the passing of this special resolution;
(3)
for the purpose of this special resolution,
“Relevant Period” means the period from the date of passing this special resolution
until the earliest of:
(4)
(i)
the conclusion of the next annual general meeting of the Bank; or
(ii)
the expiration of the 12-month period from the date of passing of this special
resolution; or
(iii)
the date on which the authority granted to the Board set out in this special
resolution is revoked or varied by a special resolution of the shareholders in a
shareholders’ general meeting;
the Board be and is hereby authorised to deal with matters relating to the change in the
registered capital of the Bank to reflect the number of Shares to be issued by the Bank
pursuant to this special resolution, to make such appropriate and necessary amendments
to the provisions of the Articles relating to the shareholding structure after the issuance
of Shares and the registered capital (if applicable) as they think fit and necessary, to
fulfil relevant approval, registration and filing procedures pursuant to domestic and
foreign legal requirements and to take any other action and complete any formality
required to effect the issuance of Shares pursuant to this special resolution.
In order to smoothly implement the issuance of shares, it is proposed that the
Shareholders’ general meeting authorise the Board to (subject to its obtaining of the
above authority) further delegate the authority to the Chairman, the President, the
Executive Vice President (or the Chief Finance Officer) and the Company Secretary to,
jointly or individually, deal with all matters in respect of the issuance of Shares unless
otherwise provided in laws and regulations.”
- 66 -
NOTICE OF EGM
3.
To consider and approve the proposed issuance of domestic preference shares, relevant details
of which are set out in the circular of the Bank dated 31 March 2015:
“THAT each of the following items in respect of the proposal in respect of the non-public
issuance of domestic preference shares as set out in Appendix III to the circular of the Bank
dated 31 March 2015 be and is hereby considered and individually approved, and be
implemented subject to approvals of relevant applications having been granted by the relevant
governmental authorities in the PRC:
(1)
Type of preference shares to be issued
(2)
Number of preference shares to be issued and issue size
(3)
Method of issuance
(4)
Par value and issue price
(5)
Maturity
(6)
Target investors
(7)
Lock-up period
(8)
Terms of distribution of dividends
(9)
Terms of mandatory conversion
(10)
Terms of conditional redemption
(11)
Restrictions on voting rights
(12)
Restoration of voting rights
(13)
Order of distribution on liquidation and procedures for liquidation
(14)
Rating
(15)
Security
(16)
Use of proceeds
(17)
Transfer
(18)
Validity period of the resolution for the issuance of domestic preference shares
(19)
Relationship between offshore and domestic issuances
- 67 -
NOTICE OF EGM
(20)
4.
Matters relating to authorisation”
To consider and approve the proposed issuance of offshore preference shares:
“THAT each of the following items in respect of the proposal in respect of the non-public
issuance of offshore preference shares as set out in Appendix IV to the circular of the Bank
dated 31 March 2015 be and is hereby considered and individually approved, and be
implemented subject to approvals of relevant applications having been granted by the relevant
governmental authorities in the PRC:
(1)
Type of preference shares to be issued
(2)
Number of preference shares to be issued and issue size
(3)
Method of issuance
(4)
Par value and issue price
(5)
Maturity
(6)
Target investors
(7)
Lock-up period
(8)
Terms of distribution of dividends
(9)
Terms of mandatory conversion
(10)
Terms of conditional redemption
(11)
Restrictions on voting rights
(12)
Restoration of voting rights
(13)
Order of distribution on liquidation and procedures for liquidation
(14)
Rating
(15)
Security
(16)
Use of proceeds
(17)
Listing and trading arrangements
(18)
Validity period of the resolution for the issuance of offshore preference shares
- 68 -
NOTICE OF EGM
(19)
Relationship between offshore and domestic issuances
(20)
Matters relating to authorisation”
ORDINARY RESOLUTIONS
5.
To consider and approve the Dilution of Current Returns by Issuance of Preference Shares of
Bank of Communications Co., Ltd. and the Remedial Measures to be Adopted as set out in
Appendix V to the circular of the Bank dated 31 March 2015.
6.
To consider and approve the Capital Management Plan for the Years 2015-2017 of Bank of
Communications Co., Ltd. as set out in Appendix VI to the circular of the Bank dated 31
March 2015, which amends and replaces the expiring Capital Management Plan for the Years
2012-2015.
7.
To consider and approve the Shareholder Return Plan for the Years 2015-2017 of Bank of
Communications Co., Ltd. as set out in Appendix VII to the circular of the Bank dated 31
March 2015.
8.
To consider and approve the audited accounts of the Bank for the year ended 31 December
2014.
9.
To consider and approve the profit distribution plan of the Bank for the year ended 31
December 2014.
By order of the board of
Bank of Communications Co., Ltd.
Du Jianglong
Company Secretary
Shanghai, the PRC
31 March 2015
Notes:
1.
Circular
Details of the above proposals and resolutions to be considered at the EGM are set out in the circular of the Bank dated
31 March 2015, including, among others, information regarding the proposal in respect of the general mandate to issue
shares and the proposed issuance of preference shares.
2.
Closure of register of members and eligibility for attending the EGM
To determine the list of shareholders who have the right to attend the EGM on 18 May 2015, the register of members of
H shares will be closed from Saturday, 18 April 2015 to Monday, 18 May 2015 (both days inclusive) during which
period, no transfer of shares will be effected. Holders of H Shares whose names appear on the register of members of
the Bank at the close of business on Friday, 17 April 2015 and holders of A Shares who are registered on the record
date are entitled to attend the EGM.
- 69 -
NOTICE OF EGM
Holders of H shares who wish to attend the EGM but have not registered the transfer documents are required to deposit
the transfer document together with the relevant share certificates at the H Share Registrar of the Bank, Computershare
Hong Kong Investor Services Limited, at Rooms 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan
Chai, Hong Kong at or before 4:30 p.m., Friday, 17 April 2015.
The Board has recommended a final cash dividend for the year ended 31 December 2014 of RMB0.27 (before tax) per
share (the “Final Dividend”). If the declaration and payment of the Final Dividend is approved at the EGM, it is
expected to be distributed on Friday, 10 July 2015 to the shareholders whose names appear on the register of members
of H Shares on Wednesday, 27 May 2015, and distributed on Wednesday, 3 June to the shareholders whose names
appear on the register of members of A Shares of the Bank on Tuesday, 2 June 2015.
The register of members of H Shares will be closed from Friday, 22 May 2015 to Wednesday, 27 May 2015 (both days
inclusive), during which time no transfer of the H Shares will be registered. In order to be qualified for receiving the
Final Dividend, all the transfer documents of holders of the H Shares must be lodged with the H Share Registrar of the
Bank, Computershare Hong Kong Investor Services Limited at Rooms 1712-16, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wan Chai, Hong Kong at or before 4:30 p.m., Thursday, 21 May 2015.
3.
Proxy
Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote in their stead.
A proxy need not be a shareholder of the Bank.
The instrument appointing a proxy must be in writing under the hand of a shareholder or his attorney duly authorised in
writing. If the shareholder is a corporate body, the proxy form must be either executed under its common seal or under
the hand of its directors(s) or duly authorised attorney(s). If the proxy form is signed by an attorney of the shareholder,
the power of attorney authorising that attorney to sign or other authorisation document must be notarised.
To be valid, the proxy form together with the power of attorney or other authorisation document (if any) must be
deposited at the H Share Registrar of the Bank by hand or by post not less than 24 hours before the time fixed for
holding the EGM or any adjournment thereof (as the case may be). The H Share Registrar of the Bank is
Computershare Hong Kong Investor Services Limited, whose address is at 17M Floor, Hopewell Centre, 183 Queen’s
Road East, Wan Chai, Hong Kong. Completion and return of the proxy form will not preclude a shareholder from
attending and voting in person at the EGM if he/she so wishes, but in such event the instrument appointing a proxy
shall be deemed to be revoked.
4.
Reply slip
Shareholders who intend to attend the EGM in person or by proxy should return the reply slip by hand, by post or by
fax to the Bank’s Board of Directors’ Office or Computershare Hong Kong Investor Services Limited on or before 5:00
p.m., Tuesday, 28 April 2015. The Bank’s Board of Directors’ Office is located at 188 Yin Cheng Zhong Lu, Pudong
New District, Shanghai, PRC (Tel: (86 21) 5876 6688, Fax: (86 21) 5879 8398, Postal code: 200120). The contact
persons are Mr. Yang and Ms. Yu. The address of Computershare Hong Kong Investor Services Limited is at 17M
Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (Tel: (852) 2862 8555, Fax: (852) 2865 0990).
5.
Method of Voting at the EGM
According to Rule 13.39(4) of the Hong Kong Listing Rules, any vote of shareholders at a general meeting must be
taken by way of poll. Accordingly, the chairman of the EGM will demand a poll in relation to the proposed resolutions
at the EGM.
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NOTICE OF EGM
6.
Other issues
The EGM is expected to last for half a day. Shareholders (in person or by proxy) attending the EGM are responsible for
their own transportation and accommodation expenses. Shareholders or their proxies attending the EGM shall produce
their identification documents and the authorisation documents mentioned above. A photocopy of such identification
documents and authorisation documents should also be provided. For photocopies of documents for an individual
shareholder, the photocopies shall be signed by the individual. For photocopies of documents for a corporate
shareholder, the photocopies shall be stamped with the corporate’s company chop.
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