Jiangling Motors Corporation, Ltd.
Proposal on Year 2019 Amendment to the Articles of Association
In view of the need for the Corporation to develop its import and export business of vehicles and parts, and in accordance with the revised Company Law of PRC promulgated and come into effect as of October 26, 2018 and the revised Code of Corporate Governance for Listed Companies in China issued by China Securities Regulatory Commission as of September 30, 2018 as well as the related requirements of laws, rules and regulatory documents, Jiangling Motors Co., Ltd. (hereinafter referred to as‘JMC’ or‘theCorporation’) intends to amend accordingly the Articles of Association of JMC by taking into account of the actual situation. The details of these amendments are as follows:
1. The following term shall be inserted immediately following Article 11 in the Articles of Association and constituted as Article 12 thereof. The sequence number of the other articles in the Articles of Association shall be adjusted accordingly.
Article 12
In the Corporation, an organization of the Communist Party of China shall be established to carry out the activities of the party in accordance with the charter of the Communist Party of China. The Corporation shall provide the necessary conditions for the activities of the party organization.
2. The Article 13 in the Articles of Association of JMC is amended as follows:
The original Article 13 is shown as follows:
Article 13
Subject to the verification and approval by the registration authority of the Corporation, the scope of the main business of the Corporation shall include: production and sale of motor vehicles, derivative, vehicle assembly such as engines, chassis, and other parts and components of motor vehicles, performing related after-sales services; engagement in wholesale and retail of E-series branded import vehicles as a brand dealer authorized by Ford Motor (China) Ltd.; used vehicle business; provision of enterprise management and consulting services related to vehicle production and sale.
The Company may, based on its own development needs and capabilities, the approval of the competent governmental authorities, adjust its business scope and operation and set up branches and offices within and outside China, as well as in Hong Kong and Macao.
The amended Article 13 is restated and constituted as Article 14 thereof and shown as follows:
Article 14
Subject to the verification and approval by the registration authority of the Corporation, the scope of the main business of the Corporation shall include: production and sale of motor vehicles, derivative, vehicle assembly such as engines, chassis, and other parts and components of motor vehicles, performing related after-sales services; engagement in wholesale and retail of E-series branded import vehicles as a brand dealer authorized by Ford Motor (China) Ltd.; import and export of vehicles and parts; used vehicle business; provision of enterprise management and consulting services related to vehicle production and sale.
The Company may, based on its own development needs and capabilities, the approval of the competent governmental authorities, adjust its business scope and operation and set up branches and offices within and outside China, as well as in Hong Kong and Macao.
3. The Article 27 in the Articles of Association of JMC is amended as follows:
Article 27
Under any of the following circumstances, the Corporation may by-back its shares in accordance with the provisions of laws, administrative regulations, departmental rules and these Articles of Association:
(i) When the Corporation wants to reduce its registered capital;
(ii) When the Corporation merges into or consolidates with other companies which hold its shares;
(iii) When the Corporation wants to award its employees with shares; and
(iv) When any shareholder requests the Corporation to purchase his shares because this shareholder raises objections to theCorporation’s resolution on merger or division made at ashareholders’ meeting.
Except under the circumstances described above, the Corporation shall not purchase or sell its own shares.
The amended Article 27 is restated and constituted as Article 28 thereof and shown as follows:
Article 27
Under any of the following circumstances, the Corporation may by-back its shares in
accordance with the provisions of laws, administrative regulations, departmental rules and these Articles of Association:
(i) When the Corporation wants to reduce its registered capital;
(ii) When the Corporation merges into or consolidates with other companies which hold its shares;
(iii) When the Corporation wants to use shares for employee stock ownership plans or equity incentives schemes;
(iv) When any shareholder requests the Corporation to purchase his shares because this shareholder raises objections to theCorporation’s resolution on merger or division made at ashareholders’ meeting;
(v) When the Corporation wants to use shares for the conversion of corporate bonds issued by the Corporation that can be converted into stocks;
(vi) When it is necessary for the Corporation to maintain the Corporation's value and shareholders' rights.
Except under the circumstances described above, the Corporation shall not purchase or sell its own shares.
4. The Article 29 in the Articles of Association of JMC is amended as follows:
Article 29
Where the Corporation needs to purchase its own shares for any of the reasons as mentioned in Items (1) through (3) of Article 27 hereof, it shall be subject to a resolution of theshareholders’ meeting. After the Corporation purchases its own shares according to Article 27, it shall, under the circumstance as mentioned in Item (1), write them off within ten days after the purchase; while under the circumstance as mentioned either in Item (2) or (4), shall transfer them or write them off within six months.
The shares purchased by the Corporation according to Item (3) of Article 27 shall not exceed5% of the total outstanding shares of the Corporation. The funds used for the share purchase shall be paid from theCorporation’s profits after tax. The shares purchased by the Corporation shall be transferred to the employees within one year.
The amended Article 29 is restated and constituted as Article 30 thereof and shown as follows:
Article 30
Where the Corporation purchases its own shares for the circumstances as specified in Items (I) to (II) of Article 28 hereof, it shall be subject to a resolution of theshareholders’ meeting. Where the Corporation purchases its own shares for the
circumstances as specified in Item (III), Item (V) and Item (VI) of Article 28 hereof, it may be subject to a resolution of the Board of Directors at the meeting of the Board of Directors present by more than two-thirds of the Directors.
Where the Corporation purchases its own shares in accordance with Article 28 hereof, shares shall be cancelled within 10 days of the date of purchase if the circumstances fall under Item (I), or transferred or cancelled within six months if the circumstances fall under Item (II) or (IV), or transferred within three years per the purpose disclosed in accordance with the laws or cancelled before the expiration of the three-year period if not transferred per the disclosed purposes where the circumstance fall under Item (V), or cancelled before the expiration if not transferred within three years in accordance with the laws where the circumstance fall under Item (VI). The total shares held by the Corporation shall not exceed10% of the total outstanding shares of the Corporation if the circumstance fall under Item (III), Item (V) and Item (VI).
Where the Corporation purchases its own shares, it shall perform its information disclosure obligations in accordance with the provisions of the Securities Law of the People's Republic of China. Where the Corporation purchases its own shares for any of the circumstances as specified in Item (III), Item (V) or Item (VI) of Article 28 hereof, the purchase shall be conducted through open and centralized trading.
5. The Article 74 in the Articles of Association of JMC is amended as follows:
The original Article 74 is shown as follows:
Article 74
The Corporation shall formulate the rules of the procedures for theshareholders’ meetings, which shall stipulate the procedures of convening and voting of theshareholders’ meeting in detail, including notice, register, consideration of proposals, voting, counting ballot, declaration of the voting results, making resolutions of the meeting, record of the meeting and signature, and announcement etc., as well as principle of authorization of theshareholder’s meeting for the Board of Directors, of which contents shall be clear and detailed.Shareholders’ meeting rules shall be incorporated as an attachment of the Articles of Association, which shall be subject to the draft of the Board of Directors and approval of theshareholders’ meeting.
The amended Article 74 is restated and constituted as Article 75 thereof and shown as follows:
Article 75
The Corporation shall formulate the rules of the procedures for theshareholders’ meetings, which shall stipulate the procedures of convening and voting of the
shareholders’ meeting in detail, including notice, register, consideration of proposals, voting, counting ballot, declaration of the voting results, making resolutions of the meeting, record of the meeting and signature, and announcement etc., as well as principle of authorization of theshareholder’s meeting for the Board of Directors, of which contents shall be clear and detailed. Theshareholders’ meeting shall not delegate the Board of Directors any authority, which is mandatorily required by the law to be exercised by theshareholders’ meeting.Shareholders’ meeting rules shall be incorporated as an attachment of the Articles of Association, which shall be subject to the draft of the Board of Directors and approval of theshareholders’ meeting.
6. The Article 125 in the Articles of Association of JMC is amended as follows:
The original Article 125 is shown as follows:
Article 125
The Board of Directors shall exercise the following powers:
(i) to convene theshareholders’ meeting and to report its work to theshareholders’ meeting;
(ii) to implement resolutions of theshareholders’ meeting;
(iii) to decide on the business plans and investment proposals of the Corporation;
(iv) to prepare the annual budget and final settlement of accounts of the Corporation; (v) to prepare the plans for profit distribution and plans for covering losses of the Corporation;
(vi) to prepare plans for the increase and reduction of the registered capital and the issuance of bonds of the Corporation and other plans concerning securities and listing;
(vii) to draft plans for major acquisitions and by-back of the shares of the Corporation and the merger, separation, dissolution and change of corporation form thereof;
(viii) to decide on outside investments, purchase or sales of assets, mortgage of assets, guarantee for external parties, trust investments and related party transactions of the Corporation to the extent authorized by theshareholders’ meeting;
(ix) to determine the internal management structure of the Corporation;
(x) to appoint and remove the President and the Secretary of the Board of Directors
of the Corporation, to appoint and remove the Executive Vice Presidents, Vice Presidents and Chief Financial Officer on the basis of nominations of the President, and to decide on their remunerations, awards and punishments;
(xi) to formulate the basic management rules of the Corporation;
(xii) to prepare proposals for amendments to these Articles of Association of the Corporation;
(xiii) to control matters regarding information disclosure of the Corporation;
(xiv) to submit to the shareholders general meeting proposals for the appointment or replacement of the accounting firm that audits for the Corporation;
(xv) to listen to the work report of the President of the Corporation and to inspect his work; and
(xvi) other powers granted by the laws, administrative regulations, departmental rules and these Articles of Association of the Corporation.
The amended Article 125 is restated and constituted as Article 126 thereof and shown as follows:
Article 126
The Board of Directors shall exercise the following powers:
(i) to convene theshareholders’ meeting and to report its work to theshareholders’ meeting;
(ii) to implement resolutions of theshareholders’ meeting;
(iii) to decide on the business plans and investment proposals of the Corporation;
(iv) to prepare the annual budget and final settlement of accounts of the Corporation; (v) to prepare the plans for profit distribution and plans for covering losses of the Corporation;
(vi) to prepare plans for the increase and reduction of the registered capital and the issuance of bonds of the Corporation and other plans concerning securities and listing;
(vii) to draft plans for major acquisitions and by-back of the shares of the Corporation
and the merger, separation, dissolution and change of corporation form thereof;
(viii) to decide on outside investments, purchase or sales of assets, mortgage of assets, guarantee for external parties, trust investments, related party transactions and purchase of the shares of the Corporation to the extent authorized by theshareholders’ meeting;
(ix) to determine the internal management structure of the Corporation;
(x) to appoint and remove the President and the Secretary of the Board of Directors of the Corporation, to appoint and remove the Executive Vice Presidents, Vice Presidents and Chief Financial Officer on the basis of nominations of the President, and to decide on their remunerations, awards and punishments;
(xi) to formulate the basic management rules of the Corporation;
(xii) to prepare proposals for amendments to these Articles of Association of the Corporation;
(xiii) to control matters regarding information disclosure of the Corporation;
(xiv) to submit to the shareholders general meeting proposals for the appointment or replacement of the accounting firm that audits for the Corporation;
(xv) to listen to the work report of the President of the Corporation and to inspect his work; and
(xvi) other powers granted by the laws, administrative regulations, departmental rules and these Articles of Association of the Corporation.
7. The Article 136 in the Articles of Association of JMC is amended as follows:
The original Article 136 is shown as follows:
Article 136
The quorum of a meeting of the Board of Directors shall be more than two-thirds of the Directors. Resolutions of the Board of Directors shall be passed by more than half of all the Directors, provided that, unless a greater majority is required by law, the following decisions of the Board of Directors shall require the affirmative vote of more than two-thirds of the Directors:
(i) the convening of theshareholders’ meetings , the approval of the notice of theshareholders’ meetings and the report of the Board of Directors on its work to
theshareholders’ meetings ;
(ii) the implementation of resolutions of theshareholders’ meetings ;
(iii) the preparation and decision of financial budgets, business plans including production and distribution plans, borrowing and investment plans and final accounts of the Corporation, and any exceptions or deviations of such budgets, plans and accounts;
(iv) the formulation of theCorporation’s profit distribution plan and the plan for recovery of its losses;
(v) the formulation of proposals for increases or reductions of theCorporation’s registered capital and the issuance of corporate bonds, stock, share warrants, share options, Corporation guarantees and any other securities or security interests;
(vi) the preparation and approval of plans for the merger, separation and dissolution of the Corporation;
(vii) the preparation and approval of the putting in place of theCorporation’s internal management structure and systems and any changes of such structure or systems;
(viii) the appointment and dismissal of theCorporation’s President , Executive Vice Presidents and other Senior Management Personnel of the Corporation, and their remunerations;
(ix) the purchase, sale, transfer or lease of any capital machinery and equipment whose value exceeds RMB 10 million;
(x) the purchase, sale, licensing or transfer of any technology by the Corporation or the addition of any new product other than “New Generation Vehicles” developed in cooperation with the Strategic Investor who owns30% of the total outstanding shares of the Corporation;
(xi) decisions on the bonus, the welfare, and the reserve and development funds, and the use or expenditure of such funds, including the capitalization of any reserve funds other than those required by the laws of thePeople’s Republic of China;
(xii) decisions regarding the purchase, sale or lease of any real property whose value exceeds RMB 10 million, including the acquisition of land use rights, and the construction of any facilities thereon;
(xiii) employment of any independent financial auditor;
(xiv) conclusion or early termination of contracts with related companies or engaging in transactions with related companies;
(xv) any decision regarding any significant matter not in the ordinary course of business;
(xvi) any other matters which the Chairman and the Vice-Chairman reasonably determine important.
Resolutions of an interim meeting of the Board of Directors may be made in form of paper meeting by facsimile and signed by the Directors attending the meeting provided that theDirectors’ opportunities to fully express their opinions shall be ensured.
If the Board of Directors adopts the paper meeting form for a resolution, the passing date of the resolution shall be the date on which the board Secretary receives the signature page of the last Director amongst the number of the Directors that is required for approving the resolution.
The amended Article 136 is restated and constituted as Article 137 thereof and shown as follows:
Article 137
The quorum of a meeting of the Board of Directors shall be more than two-thirds of the Directors. Resolutions of the Board of Directors shall be passed by more than half of all the Directors, provided that, unless a greater majority is required by law, the following decisions of the Board of Directors shall require the affirmative vote of more than two-thirds of the Directors:
(i) the convening of theshareholders’ meetings , the approval of the notice of theshareholders’ meetings and the report of the Board of Directors on its work to theshareholders’ meetings ;
(ii) the implementation of resolutions of theshareholders’ meetings ;
(iii) the preparation and decision of financial budgets, business plans including production and distribution plans, borrowing and investment plans and final accounts of the Corporation, and any exceptions or deviations of such budgets, plans and accounts;
(iv) the formulation of theCorporation’s profit distribution plan and the plan for recovery of its losses;
(v) the formulation of proposals for increases or reductions of theCorporation’s registered capital and the issuance of corporate bonds, stock, share warrants, share options, Corporation guarantees and any other securities or security interests;
(vi) the plan of the Corporation purchasing its own shares for the circumstances as specified in Item (III), Item (V) and Item (VI) of Article 28 hereof;
(vii) the preparation and approval of plans for the merger, separation and dissolution of the Corporation;
(viii) the preparation and approval of the putting in place of theCorporation’s internal management structure and systems and any changes of such structure or systems;
(ix) the appointment and dismissal of theCorporation’s President , Executive Vice Presidents and other Senior Management Personnel of the Corporation, and their remunerations;
(x) the purchase, sale, transfer or lease of any capital machinery and equipment whose value exceeds RMB 10 million;
(xi) the purchase, sale, licensing or transfer of any technology by the Corporation or the addition of any new product other than “New Generation Vehicles” developed in cooperation with the Strategic Investor who owns30% of the total outstanding shares of the Corporation;
(xii) decisions on the bonus, the welfare, and the reserve and development funds, and the use or expenditure of such funds, including the capitalization of any reserve funds other than those required by the laws of thePeople’s Republic of China;
(xiii) decisions regarding the purchase, sale or lease of any real property whose value exceeds RMB 10 million, including the acquisition of land use rights, and the construction of any facilities thereon;
(xiv) employment of any independent financial auditor;
(xv) conclusion or early termination of contracts with related companies or engaging in transactions with related companies;
(xvi) any decision regarding any significant matter not in the ordinary course of business;
(xvii) any other matters which the Chairman and the Vice-Chairman reasonably determine important.
Resolutions of an interim meeting of the Board of Directors may be made in form of paper meeting by facsimile and signed by the Directors attending the meeting provided that theDirectors’ opportunities to fully express their opinions shall be ensured.
If the Board of Directors adopts the paper meeting form for a resolution, the passing date of the resolution shall be the date on which the board Secretary receives the signature page of the last Director amongst the number of the Directors that is required for approving the resolution.
8. The Article 138 in the Articles of Association of JMC is amended as follows:
The original Article 138 is shown as follows:
Article 138
The Directors shall attend meetings of the Board of Directors in person. Where a Director is unable to attend such meeting for any reason, he may appoint in writing another Director to attend such meeting on his behalf.
The letter of authorization shall specify the name of the proxy, the matters authorized, the scope and valid period of such authorization and shall be signed or sealed by the authorizer.
A Director who attends a meeting on behalf of another Director shall exercise the rights of such Director within the scope of authorization. If a Director who is unable to attend a meeting of the Board of Directors fails to authorize a proxy to attend such meeting on his behalf, he shall be deemed to have waived his rights to vote at such meeting.
The amended Article 138 is restated and constituted as Article 139 thereof and shown as follows:
Article 139
The Directors shall attend meetings of the Board of Directors in person. Where a Director is unable to attend such meeting for any reason, he may appoint in writing another Director to attend such meeting on his behalf. An Independent Director shall
not appoint a Non-Independent Director to attend on his behalf.
The letter of authorization shall specify the name of the proxy, the matters authorized, the scope and valid period of such authorization and shall be signed or sealed by the authorizer.
A Director who attends a meeting on behalf of another Director shall exercise the rights of such Director within the scope of authorization. If a Director who is unable to attend a meeting of the Board of Directors fails to authorize a proxy to attend such meeting on his behalf, he shall be deemed to have waived his rights to vote at such meeting.