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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    12(g) OF THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008.ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company reportFor the transition period
    from          to   Commission file number:
    001-33107
  CANADIAN SOLAR INC.
 (Exact name of Registrant as
    specified in its charter)
  N/A
  (Translation of
    Registrants name into English)
  Canada
  (Jurisdiction of incorporation
    or organization)
  199 Lushan Road
 Suzhou New District
 Suzhou, Jiangsu 215129
 Peoples Republic of
    China
 (Address of principal executive
    offices)
  Arthur Chien, Chief Financial
    Officer
 675 Cochrane Drive
 East Tower, 6th Floor
 Markham, Ontario L3R
    0B8
 Canada
 Tel: (1-905)
    530-2334
 Fax: (1-905)
    530-2001
 (Name, Telephone,
    E-mail
    and/or Facsimile number and Address of Company Contact
    Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon shares with no par value

The NASDAQ Stock Market LLC
    (The NASDAQ Global Market)   Securities registered or to be
    registered pursuant to Section 12(g) of the Act:
    None (Title of
    Class)
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the
    Act:
 None
 (Title of Class)
      o þ
  o þ
  þ o
  Regulation S-T o o
  Rule 12b-2
 Large
    accelerated filer
    o
    Accelerated filer
    þ
    Non-accelerated filer
    o  þ  o o
  o o
  Rule 12b-2 o þ
    o o




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##### 





TABLE OF
    CONTENTS
   
 PageIntroduction


1Part I


3Item 1.


Identity of Directors, Senior Management and
    Advisers


3Item 2.


Offer Statistics and Expected Timetable


3Item 3.


Key Information


3Item 4.


Information on the Company


25Item 4A.


Unresolved Staff Comments


41Item 5.


Operating and Financial Review and Prospects


41Item 6.


Directors, Senior Management and Employees


64Item 7.


Major Shareholders and Related Party
    Transactions


76Item 8.


Financial Information


79Item 9.


The Offer and Listing


81Item 10.


Additional Information


82Item 11.


Quantitative and Qualitative Disclosures About
    Market Risk


88Item 12.


Description of Securities Other than Equity
    Securities


89Part II


89Item 13.


Defaults, Dividend Arrearages and
    Delinquencies


89Item 14.


Material Modifications to the Rights of Security
    Holders and Use of Proceeds


89Item 15.


Controls and Procedures


90Item 16A.


Audit Committee Financial Expert


92Item 16B.


Code of Ethics


92Item 16C.


Principal Accounting Fees and Services


92Item 16D.


Exemptions from the Listing Standards for Audit
    Committees


92Item 16E.


Purchases of Equity Securities By the Issuer and
    Affiliated Purchasers


92Item 16F.


Change in Registrants Certifying
    Accountant


93Item 16G.


Corporate Governance


93Part III


93Item 17.


Financial Statements


93Item 18.


Financial Statements


93Item 19.


Exhibits


93EX-4.1EX-4.2EX-4.3EX-4.4EX-4.5EX-4.6EX-8.1EX-12.1EX-12.2EX-13.1EX-13.2EX-23.1




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INTRODUCTION  Form 20-F
  
    CSI, we, us, our
    company and our are to Canadian Solar Inc.,
    its predecessor entities and its consolidated subsidiaries;
    $, US$ and
    U.S. dollars are to the legal currency of the
    United States;
    RMB and Renminbi are to the legal
    currency of China;
    C$ and Canadian $ are to the legal
    currency of Canada;
     and Euro are to the legal
    currency of the European Union; and
    China and the PRC are to the
    Peoples Republic of China, excluding, for the purposes of
    this annual report on
    Form 20-F
    only, Taiwan and the special administrative regions of Hong Kong
    and Macau.  Form 20-F
  Form 20-F
  FORWARD-LOOKING
    INFORMATION
  Form 20-F
  
    our expectations regarding the worldwide demand for electricity
    and the market for solar power;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for the
    deployment of solar power;
    our beliefs regarding the future shortage or availability of the
    supply of high-purity silicon;
    our beliefs regarding the acceleration of adoption of solar
    power technologies and the continued growth in the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy;
    our beliefs and expectations regarding the use of upgraded
    metallurgical grade silicon materials (UMgSi) and solar power
    products made of this material; 1




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
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our beliefs regarding our securing adequate silicon and solar
    cell requirements to support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive arena in the
    solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers.   2




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PART I  Item 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS    Item 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    Item 3.
    KEY
    INFORMATION  A.
    Selected
    Financial Data  Selected
    Consolidated Financial and Operating Data
  Form 20-F. Form 20-F.
      Years Ended December 31,2004


2005


2006


2007


2008(In thousands of US$, except share and per share data, and
    operating data and percentages)Statement of operations data:Net revenues

$
9,685


$
18,324


$
68,212


$
302,798


$
705,006Net income (loss)

$
1,457


$
3,804


$
(9,430
)

$
(210
)

$
(9,388
)Earnings (loss) per share, basic and diluted

$
0.09


$
0.25


$
(0.50
)

$
(0.01
)

$
(0.30
)Shares used in computation, basic and diluted


15,427,995



15,427,995



18,986,498



27,283,305



31,566,503Other financial data:Gross margin


33.2
%


38.8
%


18.1
%


7.8
%


10.1
%Operating margin


19.0
%


28.5
%


1.6
%


(0.6
)%


3.4
%Net margin


15.0
%


20.8
%


(13.8
)%


(0.1
)%


(1.3
)%Selected operating data:Products sold (in MW) Standard solar modules


1.8



3.4



14.7



83.4



166.5 Specialty solar modules and products


0.4



0.7



0.2







Total


2.2



4.1



14.9



83.4



166.5Average selling price (in $ per watt) Standard solar modules

$
3.62


$
3.92


$
3.97


$
3.75


$
4.23   3




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As of December 31,2004


2005


2006


2007


2008(In thousands of US$, except share data)Balance Sheet Data:Total assets

$
6,145


$
27,430


$
129,634


$
284,503


$
570,731Net assets

$
2,961


$
6,967


$
112,904


$
126,266


$
332,161Long-term debt

$



$



$



$
17,866


$
45,357Convertible notes

$



$
3,387


$



$
75,000


$
1,000Capital
    stock(1)

$
211


$
211


$
97,302


$
97,454


$
294,707Number of shares
    outstanding(2)


15,427,995



15,427,995



27,270,000



27,320,389
(2)


35,686,313
(2)     (1)
    
    Excluding long-term debt and convertible notes.(2)
    
    Excluding 566,190 and 58,250 restricted shares, which were
    subject to restrictions on voting and dividend rights and
    transferability, as of December 31, 2007 and 2008
    respectively.  Exchange
    Rate Information
  Form 20-F Form 20-F
    Noon Buying RatePeriodPeriod

End


Average(1)


Low


High2004


8.2765



8.2768



8.2774



8.27642005


8.0702



8.1826



8.2765



8.07022006


7.8041



7.9579



8.0702



7.80412007


7.2946



7.5806



7.8127



7.29462008


6.8225



6.9193



7.2946



6.7800December


6.8225



6.8539



6.8842



6.82252009January


6.8392



6.8360



6.8403



6.8225February


6.8395



6.8363



6.8470



6.8241March


6.8329



6.8360



6.8438



6.8240April


6.8180



6.8304



6.8361



6.8180May


6.8278



6.8235



6.8326



6.8176June (through June 1)


6.8270



6.8270



6.8270



6.8270     (1)
    
    Annual averages are calculated from month-end rates. Monthly
    averages are calculated using the average of the daily rates
    during the relevant period. 4




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B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors  Risks
    Related to Our Company and Our Industry
  As
    polysilicon supply increases, the corresponding oversupply of
    solar cells and panels may cause substantial downward pressure
    on the prices of such products, resulting in lower revenues and
    earnings.
      The
    execution of our growth strategy is dependent upon the continued
    availability of third-party financing arrangements for our
    customers, which is affected by general economic conditions.
    Tight credit markets could depress demand for solar products,
    hamper our expansion and materially affect our results of
    operations.
    Revision,
    reduction or elimination of government subsidies and economic
    incentives for solar power could cause demand for our products
    and our revenues, profits and margins to decline.
   5




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Advance
    payments to our polysilicon and silicon wafer suppliers and
    credit term sales offered to some of our customers expose us to
    the credit risks of such suppliers and customers and may
    increase our costs and expenses, which could in turn have a
    material adverse effect on our liquidity.
  and/or and/or
  Our
    ability to adjust our raw materials costs may be limited as a
    result of our entering into long-term supply agreements with
    many of our polysilicon and wafer suppliers, and our cost of
    revenues and profitability could be materially and adversely
    affected if we fail to adjust such costs in a timely
    manner.
    The
    impact of seasonal variations in demand linked to construction
    cycles and weather conditions may impact our results of
    operation.
   6




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Because
    the markets in which we compete are highly competitive and many
    of our competitors have greater resources than us, we may not be
    able to compete successfully and we may lose or be unable to
    gain market share.
      25-year
 7




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Evaluating
    our business and prospects may be difficult because of our
    limited operating history.
    Our
    quarterly operating results may fluctuate from period to period
    in the future.
    
    the average selling prices of our solar modules and products;
    the availability and pricing of raw materials, particularly
    high-purity silicon and UMgSi silicon;
    the availability, pricing and timeliness of delivery of solar
    cells and wafers from our suppliers and toll manufacturers;
    the rate and cost at which we are able to expand our internal
    manufacturing capacity to meet customer demand and the
    timeliness and success of these expansion efforts;
    the impact of seasonal variations in demand linked to
    construction cycles and weather conditions, with purchases of
    solar products tending to decrease during the winter months in
    our key markets, such as Germany, due to adverse weather
    conditions that can complicate the installation of solar power
    systems;
    timing, availability and changes in government incentive
    programs and regulations, particularly in our key and target
    markets;
    unpredictable volume and timing of customer orders, some of
    which are not fixed by contract but vary on a purchase order
    basis;
    the loss of one or more key customers or the significant
    reduction or postponement of orders from these customers;
    availability of financing for on-grid and off-grid solar power
    applications;
    unplanned additional expenses such as manufacturing failures,
    defects or downtime;
    acquisition and investment related costs;
    geopolitical turmoil within any of the countries in which we
    operate or sell products;
    foreign currency fluctuations, particularly in the Euro,
    U.S. dollar and RMB;
    our ability to establish and expand customer relationships;
    changes in our manufacturing costs;
    changes in the relative sales mix of our products;
    our ability to successfully develop, introduce and sell new or
    enhanced solar modules and products in a timely manner, and the
    amount and timing of related research and development costs;
    the timing of new product or technology announcements or
    introductions by our competitors and other developments in the
    competitive environment; and
    increases or decreases in electricity rates due to changes in
    fossil fuel prices or other factors. 8




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Existing
    regulations and policies and changes to these regulations and
    policies may present technical, regulatory and economic barriers
    to the purchase and use of solar power products, which may
    significantly reduce demand for our products.
      If solar
    power technology is not suitable for widespread adoption, or
    sufficient demand for solar power products does not develop or
    takes longer to develop than we anticipate, our revenues may not
    continue to increase or may even decline, and we may be unable
    to sustain our profitability.
    
    cost-effectiveness, performance and reliability of solar power
    products compared to conventional and other renewable energy
    sources and products;
    availability of government subsidies and incentives to support
    the development of the solar power industry; 9




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
    success of other alternative energy generation technologies,
    such as wind power, hydroelectric power, geothermal and biomass;
    fluctuations in economic and market conditions that affect the
    viability of conventional and other renewable energy sources,
    such as increases or decreases in the prices of oil and other
    fossil fuels;
    capital expenditures by end users of solar power products, which
    tend to decrease when the economy slows down;
    deregulation of the electric power industry and broader energy
    industry; and
    changes in seasonal demands for our products.    We may be
    unable to procure adequate sources of needed capital due to
    market conditions beyond our control, which may adversely impact
    our ability to grow our business.
    
    our future financial condition, results of operations and cash
    flows;
    general market conditions for financing activities by
    manufacturers of photovoltaic and related products; and
    economic, political and other conditions in the PRC and
    elsewhere.    Our
    dependence on a limited number of solar wafer, solar cell and
    silicon raw material suppliers, and the limited number of
    suppliers for other components, such as silver and aluminum
    paste, solar module backsheet, ethylene vinyl acetate (EVA)
    encapsulation sheet, high-transparent tempered glasses, junction
    boxes and connectors, could prevent us from timely delivering
    our products to our customers in the required quantities, which
    could result in order cancellations and decrease in
    revenues.
   10




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Our
    dependence on a limited number of customers and our lack of
    long-term customer contracts may cause significant fluctuations
    or declines in our revenues.
    
    reduction, delay or cancellation of orders from one or more of
    our significant customers;
    loss of one or more of our significant customers and our failure
    to identify additional or replacement customers;
    failure of any of our significant customers to make timely
    payment for our products; and
    financial problems or even insolvencies of one or more of our
    significant customers.    Cancellation
    of customer product orders may make us unable to recoup any
    prepayments made to suppliers.
    We may
    not be able to manage our expansion of operations
    effectively.
   11




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Technological
    changes in the solar power industry could render our products
    uncompetitive or obsolete, which could reduce our market share
    and cause our revenues and profit to decline.
    We have
    begun to develop and expand the use of UMgSi as a component of
    our solar products. We cannot assure you that these efforts will
    continue to yield successful results.
   12




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We have
    limited experience in the high value-added building integrated
    photovoltaic (BIPV) market and we may be unable to manage the
    growth of our BIPV business or successfully operate in the BIPV
    market.
    We face
    risks associated with the marketing, distribution and sale of
    our PV products internationally, and if we are unable to
    effectively manage these risks, they could impair our ability to
    expand our business abroad.
    
    difficulties staffing and managing overseas operations;
    fluctuations in foreign currency exchange rates;
    increased costs associated with maintaining the ability to
    understand local markets and trends, as well as developing and
    maintaining an effective marketing and distributing presence in
    various countries;
    providing customer service and support in these markets;
    our ability to manage our sales channels effectively as we
    expand beyond distributors to include direct sales to systems
    integrators, end users and installers;
    difficulties and costs relating to compliance with the different
    commercial, legal and regulatory requirements of the overseas
    markets in which we offer our products;
    failure to develop appropriate risk management and internal
    control structures tailored to overseas operations;
    inability to obtain, maintain or enforce intellectual property
    rights;
    unanticipated changes in prevailing economic conditions and
    regulatory requirements; and
    trade barriers such as export requirements, tariffs, taxes and
    other restrictions and expenses, which could increase the prices
    of our products and make us less competitive in some countries.    Our
    future success depends partly on our ability to significantly
    expand our internal solar components manufacturing capacity,
    which exposes us to a number of risks and
    uncertainties.
    
    the need to raise significant additional funds to purchase raw
    materials and to build additional manufacturing facilities,
    which we may be unable to obtain on commercially viable terms or
    at all; 13




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
    delays and cost overruns as a result of a number of factors,
    many of which are beyond our control, including delays in
    equipment delivery by vendors;
    delays or denial of required approvals by relevant government
    authorities;
    diversion of significant management attention and other
    resources; and
    failure to execute our expansion plan effectively.    Our
    business depends substantially on the continuing efforts of our
    executive officers, and our business may be severely disrupted
    if we lose their services.
    Problems
    with product quality or product performance, including defects
    in our products, could damage our reputation, or result in a
    decrease in customers and revenue, unexpected expenses and loss
    of market share.
     14




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Since we
    cannot test our products for the duration of our standard
    warranty periods, we may be subject to unexpected warranty
    expense.
  10-year 25-year
  Our
    future growth depends in part on our ability to make strategic
    acquisitions and investments and to establish and maintain
    strategic relationships, and our failure to do so could have a
    material adverse effect on our market penetration and revenue
    growth.
      We may
    not continue to be successful in developing and maintaining a
    cost-effective solar cell manufacturing capability.
   15




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We may
    experience difficulty in developing our internal production
    capabilities for ingots and wafers and, if developed, in
    achieving acceptable yields and product performance as a result
    of manufacturing problems.
        We may
    fail to successfully bring to market our new specialty solar
    modules and products, which may prevent us from achieving
    increased sales, margins and market share.
    Failure
    to protect our intellectual property rights in connection with
    new specialty solar modules and products may undermine our
    competitive position.
   16




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We may be
    exposed to infringement, misappropriation or other claims by
    third parties, which, if determined adversely to us, could cause
    us to pay significant damage awards.
    No. 500-05 071241-028)
  We rely
    on dividends paid by our subsidiaries for our cash
    needs.
   17




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If we are
    unable to attract, train and retain technical personnel, our
    business may be materially and adversely affected.
    Fluctuations
    in exchange rates could adversely affect our business, including
    our financial condition and results of operations.
        Product
    liability claims against us could result in adverse publicity
    and potentially significant monetary damages.
   18




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Our
    founder, Dr. Shawn Qu, has substantial influence over our
    company and his interests may not be aligned with the interests
    of our other shareholders.
    Compliance
    with environmental regulations can be expensive, and
    noncompliance with these regulations may result in adverse
    publicity and potentially significant monetary damages, fines,
    suspension or even termination of our business
    operations.
      We may
    not be successful in establishing our brand names among all
    consumers in important markets and the products we sell under
    our brand name may compete with the products we manufacture on
    an original equipment manufacturer, or OEM, basis for our
    customers.
   19




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If we
    grant employee share options, restricted shares or other
    share-based compensation in the future, our net income could be
    adversely affected.
    If we
    fail to maintain an effective system of internal control over
    financial reporting, we may not be able to accurately report our
    financial results or prevent fraud.
    Risks
    Related to Doing Business in China
  Uncertainties
    with respect to the Chinese legal system could have a material
    adverse effect on us.
   20




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We may
    face penalties for failing to comply with certain PRC legal
    requirements.
          The
    enforcement of the new labor contract law and increases in labor
    costs in the PRC may adversely affect our business and our
    profitability.
   21




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Our
    subsidiaries will lose certain tax benefits over the next
    several years and we expect to pay additional PRC taxes as a
    result, which could have a material adverse impact on our
    financial condition and results of operations.
      There are
    significant uncertainties on our tax liabilities regarding our
    income under the new Enterprise Income Tax Law of the
    PRC.
    Dividends
    payable by us to our foreign investors and gains on the sale of
    our common shares may become subject to PRC enterprise income
    tax liabilities.
    Restrictions
    on currency exchange may limit our ability to receive and use
    our revenues effectively.
   22




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We face
    risks related to health epidemics and other outbreaks.
    Risks
    Related to Our Common Shares
  The
    market price for our common shares may be volatile.
    
    announcements of technological or competitive developments;
    regulatory developments in our target markets affecting us, our
    customers or our competitors;
    actual or anticipated fluctuations in our quarterly operating
    results;
    changes in financial estimates by securities research analysts;
    changes in the economic performance or market valuations of
    other solar power companies;
    addition or departure of our executive officers and key research
    personnel;
    announcements regarding patent litigation or the issuance of
    patents to us or our competitors;
    fluctuations in the exchange rates between the U.S. dollar,
    the Euro and RMB;
    release or expiry of
    lock-up or
    other transfer restrictions on our outstanding common
    shares; and
    sales or perceived sales of additional common shares.   23




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Substantial
    future sales of our common shares in the public market, or the
    perception that such sales could occur, could cause the price of
    our common shares to decline.
    Your
    right to participate in any future rights offerings may be
    limited, which may cause dilution to your holdings.
    Our
    articles of continuance contain anti-takeover provisions that
    could adversely affect the rights of holders of our common
    shares.
    
    Our board of directors has the authority, without approval by
    the shareholders, to issue an unlimited number of preferred
    shares in one or more series. Our board of directors may
    establish the number of shares to be included in each such
    series and may fix the designations, preferences, powers and
    other rights of the shares of a series of preferred shares.
    Our board of directors is entitled to fix and may change the
    number of directors within the minimum and maximum number of
    directors provided for in our articles. Our board of directors
    may appoint one or more additional directors to hold office for
    a term expiring no later than the close of the next annual
    meeting of shareholders, subject to the limitation that the
    total number of directors so appointed may not exceed one-third
    of the number of directors elected at the previous annual
    meeting of shareholders.  You may
    have difficulty enforcing judgments obtained against
    us.
   24




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We may be
    classified as a passive foreign investment company, which could
    result in adverse U.S. federal income tax consequences to U.S.
    holders of our common shares.
  non-U.S. corporation
  We incur
    increased costs as a result of being a public company.
    Item 4.
    INFORMATION
    ON THE COMPANY  A.
    History
    and Development of the Company      
    CSI Solartronics (Changshu) Co., Ltd., or CSI Solartronics,
    incorporated in November 2001, which has operations located in
    Changshu, China, where we manufacture primarily specialty solar
    modules and products;
    CSI Solar Manufacture Inc., or CSI Manufacturing, incorporated
    in January 2005, which has operations in Suzhou, China, where we
    manufacture primarily standard solar modules;
    CSI Solar Technologies Inc., or CSI Technologies, incorporated
    in August 2003, which has operations located in Changshu, China,
    where we conduct solar module product development;
    CSI Central Solar Power Co., Ltd., or CSI Luoyang, incorporated
    in February 2006, which has operations located in Luoyang,
    China, where we manufacture solar modules, ingots and wafers;
    CSI Cells Co., Ltd., or CSI Cells, incorporated in June 2006,
    which has operations located in Suzhou, China, where we
    manufacture solar cells; 25




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
    Changshu CSI Advanced Solar Inc., or CSI Advanced, incorporated
    in August 2006, which has operations located in Changshu, China,
    where we manufacture solar modules;
    CSI Solar Power Inc., or CSI Power, incorporated in April 2008
    and located in Changshu, China, where we intend to manufacture
    solar modules once construction of the plant is
    complete; and
    Canadian Solar (USA) Inc. (formerly doing business as CSI Solar
    Inc.), which was incorporated in Delaware in June 2007, through
    which we carry out marketing and sales efforts in the United
    States.    530-2334 530-2001.
    B.
    Business
    Overview  Overview
         26




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##### Table of Contents



e-Modules, e-Modules e-Module e-Modules
        Our
    Products
    Standard
    Solar Modules
    Specialty
    Solar Modules and Products
    
    customized solar modules, and
    complete specialty products.   27




---



##### Table of Contents



Solar
    Cells
     28




---



##### Table of Contents



Solar
    Power Development Projects
          Supply
    Chain Management
   29




---



##### Table of Contents



Silicon
    Raw Materials
        Silicon
    Reclamation Program
    Toll
    Manufacturing Arrangements
    Solar Wafers.
  Solar Cells.
  UMgSi Cells.
  Solar
    Module Manufacturing
   30




---



##### Table of Contents



(1)
    
    Laser cutting is only necessary for smaller-sized modules.          Quality
    Control and Certifications
   31




---



##### Table of Contents



Markets
    and Customers
      
    Germany.  The renewable energy laws in Germany
    require electricity transmission grid operators to connect
    various renewable energy sources to their electricity
    transmission grids and to purchase all electricity generated by
    such sources at guaranteed feed-in tariffs. Additional
    regulatory support measures include investment cost subsidies,
    low-interest loans and tax relief to end users of renewable
    energy.    
    Spain.  According to Solarbuzz, the Spanish
    market grew by 285% to reach 2,463 MW in 2008, surpassing
    Germany as the worlds largest market. In Spain, the actual
    feed-in tariff for solar power energy is fully guaranteed for
    25 years and guaranteed at 80% thereafter. The feed-in
    tariff for applications less than 100 kWh was 0.4404 per
    kWh for the first 25 years of system operation, and
    0.3523 per kWh thereafter, for systems installed up until
    September 2008. Current feed-in tariffs are between 0.340
    and 0.307 per watt, depending on system size and type.
    Spain was our second largest market after Germany as measured by
    net revenue generated in 2008 but is not expected to remain in
    this position in 2009.
    Italy.  According to Solarbuzz, the Italian
    solar market grew by 169% to reach 242 MW at the end of
    2008. Current feed-in tariff rates for systems range from
    0.353 per kWh for larger ground mounted systems to
    0.49 per kWh for smaller BIPV systems. The Italian market
    saw an enormous boost in large installations in 2007 and 2008,
    according to Solarbuzz, a trend which is expected to continue in
    2009.
    United States.  There are currently more than
    10 states in the U.S. that offer significant
    incentives, with California offering the most preferential ones.
    In January 2006, the California Public Utilities Commission
    enacted the California Solar Initiative, a $2.9 billion
    program that subsidizes solar power systems by $2.80 per watt.
    Due to excessive demand, this subsidy has been reduced to $2.50
    per watt. Combined with federal 32




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##### Table of Contents



tax credits for solar power usage, the subsidy may account for
    as much as 50% of the cost of a solar power system. The program
    will last from 2007 to 2016 and is expected to dramatically
    increase the use of solar power for on-grid applications in
    California. The program is capped. Incentives in the other US
    states include state renewable energy credits, capital
    subsidies, and in some places such as Vermont, feed-in tariffs.
    Many states and various federal departments are also subject to
    renewable energy portfolio (RPS) standards that mandate minimum
    percentages of renewable energy production by utilities.
    Finally, the US federal government passed several renewable
    energy provisions in the stimulus package, including a 30%
    investment tax credit, accelerated 5 year system
    depreciation and expansion of Department of Energy loan
    guarantees. These provisions were further expanded in 2009 to
    include a cash grant in lieu of the investment tax credit and
    were uncapped with respect to both system size (the previous
    maximum rebate was $2,000) and organization to allow larger
    organizations such as utilities to take advantage of the tax
    credit or cash in-lieu grant for large scale projects. Currently
    the constrained appetite for tax equity will limit the
    effectiveness of some of these provisions such as accelerated
    depreciation.  
    China.  Chinas Renewable Energy Law was
    passed in February 28, 2005 and went into effect on
    January 1, 2006. The Renewable Energy Law authorizes the
    relevant authorities to set favorable prices for the purchase of
    on-grid solar power  generated electricity and
    provides other financial incentives for the development of
    renewable energy projects. In January 2006, Chinas
    National Development and Reform Commission further promulgated
    two implementation rules for the Renewable Energy Law. In
    addition, on April 1, 2008, the PRC Energy Conservation Law
    came into effect. Among other objectives, this law encourages
    the utilization and installation of solar power facilities in
    buildings for energy-efficiency purposes.        
    Canada.  In November of 2006, Canadas
    largest province, Ontario, introduced a program of subsidies for
    renewable energy projects, including solar energy projects.
    Under that program, a fixed price of C$0.42 per kWh was offered
    for solar power transferred to the electrical grid. That program
    is to be replaced with a program of feed-in tariffs. The
    proposed price for solar power, under the feed-in tariff
    program, ranges from C$0.443 to C$0.80 per kWh depending on the
    system size and type. Contracts under the new program are
    expected to be for terms of 20 years.
    South Korea.  According to SolarBuzz, the South
    Korean market grew from 50 MW in 2007 to 276 MW in
    2008. The South Korean government has established a number of
    initiatives to enhance self-sufficiency in energy supplies and
    invest in renewable energy systems. Under the Public Institution
    Renewable Obligation Law created in 2004, the government has
    mandated that newly built public facilities exceeding
    3,000 square meters invest at least 5% of their
    construction expenses in renewable energy systems. The current
    feed-in 33




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##### Table of Contents



tariff rate for systems ranges from 428 to 646 won per kWh
    depending on system size, while the system limit of 3 MW
    was removed and the national cap was increased from 100 to
    500 MW. In late April, the Korean government announced a
    plan to execute the remaining of the
    feed-in-tariff
    program in three years and allocate 50 MW for installations
    and connections in 2009.  
    Japan.  According to Solarbuzz, the Japanese
    market remained flat in 2008 at 230 MW, exhibiting no
    growth. The Japanese government has a long-term energy goal to
    install 4.82GW of PV by 2010, and is a signatory to the Kyoto
    Protocol, requiring it to reduce greenhouse gas emissions by 6%
    from the 1990 baseline level by 2012. Japan currently funds a
    number of key programs supporting domestic PV installations and
    has announced a plan to begin installing PV on federal buildings
    through 2012. It is unlikely Japan will reach its renewable
    energy (including solar) targets, so Japan is considering
    increasing its incentives for PV installations.  Sales
    and Marketing
  Standard
    Solar Modules
      
    Sales contracts.  In late 2007, we began to
    enter into annual sales
    and/or
    distribution agreements with most of our customers. We deliver
    standard solar modules according to a pre-agreed monthly
    schedule. We typically require full payment of the contract
    price by letters of credit or telex money transfers prior to
    shipping. In certain circumstances, we provide short-term credit
    sales ranging from 21 to 45 days. To some customers, we
    provide medium-term credit sales from 60 to 120 days. We
    actively use credit insurance coverage for credit sales.
    OEM/tolling manufacturing arrangements.  Under
    these arrangements, we either purchase or obtain on a
    consignment basis silicon wafers and cells from customers, and
    then sell solar module products back to the same customers, who
    then sell those products under their own brands. In addition, we
    have been using our own solar cells or cells purchased by us to
    make modules for a limited number of strategic partners, with
    the finished solar module products branded with their labels.  Specialty
    Solar Modules and Products
    Solar
    Power Development Projects
   34




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Customer
    Support and Service
  two-to-five-year 10-year 25-year
  Competition
    
    customer relationships and distribution channels;
    brand name and reputation;
    power efficiency and performance;
    price;
    supply chain management;
    manufacturing efficiency; and
    aesthetic appearance of solar module products.    Insurance
   35




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Environmental
    Matters
          Government
    Regulation
    Renewable
    Energy Law and Other Government Directives
     36




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##### Table of Contents



Environmental
    Regulations
      Restriction
    on Foreign Businesses
   37




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Income
    and VAT Taxes
           38




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Foreign
    Currency Exchange
    
    the Foreign Currency Administration Rules (1996), as
    amended; and
    the Settlement, Sale and Payment of Foreign Exchange
    Administration Rules (1996), or the Settlement Rules.    and/or
  Dividend
    Distribution
    
    Wholly Foreign Owned Enterprise Law (1986), as amended; and
    Wholly Foreign Owned Enterprise Law Implementation Rules (1990),
    as amended.   39




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##### Table of Contents



C.
    Organizational
    Structure    
    D.
    Property,
    Plant and Equipment    
    CSI Manufacturing rents 22,908 square meters for
    manufacturing facilities in Suzhou in the Suzhou Export
    Processing Zone, including 14,238 square meters in Building
    A6 and 8,670 square meters in Building B10, under two
    leases effective from October 1, 2007 to September 30,
    2010. We have the right to renew the leases with six
    months prior written notice if the terms we offer are not
    less favorable than terms offered by other prospective tenants.
    CSI Technologies rents 2,000 square meters for
    manufacturing facilities and offices from CSI Advanced under a
    lease effective from December 1, 2008 to November 30,
    2009.
    CSI Advanced rents approximately 13,889 square meters for
    manufacturing facilities in Changshu under a lease effective
    from June 1, 2008 to May 31, 2009.
    CSI Solartronics rents 1,955 square meters for
    manufacturing facilities in Suzhou under a lease effective from
    December 12, 2008 to December 11, 2009.
    CSI Luoyang holds the land use rights certificate for a piece of
    land in Luoyang of approximately 35,345 square meters in
    size (Phase I), on which we have constructed a manufacturing
    facility for module manufacturing and an office building. The
    floor area of all workshops and office buildings in Phase I is
    approximately 6,761 square meters, with the housing
    ownership certificate granted in June 2008. In 2008, CSI Luoyang
    obtained the land use rights for an additional adjacent piece of
    land totaling approximately 79,685 square meters (Phase
    II), on which we are currently constructing wafer manufacturing
    facilities. The floor area for Phase II is
    30,071 square meters, with the housing ownership
    certificate anticipated after successful testing upon its full
    completion.
    CSI Cells holds the land use rights certificate for a piece of
    land in Suzhou of approximately 65,661 square meters in
    size. We completed the construction of our first solar cell
    manufacturing facilities in the first quarter of 2007. The Phase
    I manufacturing facility has a 14,093 square meter workshop
    and office building. Phase II cell manufacturing facilities
    with 28,917 square meters of workshops will be completed in
    2009, with the housing ownership certificate anticipated upon
    passing the inspection required by law.
    CSI Advanced holds the land use rights certificate for a piece
    of land in Changshu of approximately 40,000 square meters
    in size, on which we have built a module manufacturing facility
    of approximately 40




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##### Table of Contents



23,479 square meters. Production in this facility began in
    April 2008. The land use rights certificate of CSI Advanced
    involves a total land area of 40,000 square meters.  
    CSI Power holds the land use rights certificate for a piece of
    land in Changshu of 180,000 square meters, on which we
    built two module manufacturing facilities, three warehouses, and
    some other buildings of approximately 62,093 square meters.
    Production in this facility began in August 2008 and the central
    warehouse construction will be completed in late 2009. The land
    use rights certificate of CSI Power Phase I involves a total
    land area of 78,320 square meters. CSI Powers further
    expansion of Phase II and III manufacturing facilities
    is still under design and planning stage for future needs.    Item 4A.
    UNRESOLVED
    STAFF COMMENTS    Item 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS  You should read the following discussion and analysis of our
    financial condition and results of operations in conjunction
    with our consolidated financial statements and the related notes
    included elsewhere in this annual report on
    Form 20-F.
    This discussion may contain forward-looking statements based
    upon current expectations that involve risks and uncertainties.
    Our actual results may differ materially from those anticipated
    in these forward-looking statements as a result of various
    factors, including those set forth under Item 3. Key
    Information  D. Risk Factors or in other parts
    of this annual report on
    Form 20-F.
  A.
    Operating
    Results    
    government subsidies and availability of financing for solar
    projects;
    industry and seasonal demand;
    product pricing;
    price of solar cells and wafers and silicon raw
    materials; and
    foreign exchange.  Government
    Subsidies and Availability of Financing for Solar
    Projects
     41




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Industry
    and Seasonal Demand
      Product
    Pricing
    year-to-year
 42




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##### Table of Contents



Price
    of Solar Cells and Wafers and Silicon Raw
    Materials
    ingot-to-wafer wafer-to-cell
      Foreign
    Exchange
   43




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##### Table of Contents



Overview
    of Financial Results
    Net
    Revenues
  wafer-to-module cell-to-module and/or
    Years Ended December 31,2006


2007


2008Total Net





Total Net





Total NetRegion

Revenues


%


Revenues


%


Revenues


%(In thousands of US$, except for percentages)Europe

$
51,981



76.2


$
286,588



94.7


$
631,147



89.5Asia


14,200
(1)


20.8



13,605



4.5



41,571



5.9America


2,031



3.0



2,605



0.8



32,288



4.6Total net revenues

$
68,212



100


$
302,798



100


$
705,006



100     (1)
    
    $8.3 million of this amount was generated from a one-time
    silicon materials sale that took place in the fourth quarter of
    2006.  Cost of
    Revenues
    
    solar grade silicon materials;
    solar wafers;
    materials used in solar cell production, such as metallic pastes;
    solar cells;
    other materials for the production of solar modules such as
    glass, aluminum frames, EVA and polymer backsheets; 44




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
    production labor, including salaries and benefits for
    manufacturing personnel;
    warranty costs;
    overhead, including utilities, production equipment maintenance,
    share-based compensation expenses for options granted to
    employees in our manufacturing department and other support
    expenses associated with the manufacture of our PV products;
    depreciation and amortization of manufacturing equipment and
    facilities, which have increased due to capacity expansion and
    which are expected to increase as we continue to expand our
    manufacturing capabilities and to construct additional
    facilities; and
    inventory write-downs.  e-Modules
    10-year 25-year
    Gross
    Profit/Gross Margin
     45




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##### Table of Contents



lower-than-anticipated
  ingot-to-wafer wafer-to-cell
  Operating
    Expenses
    Selling
    Expenses
    General
    and Administrative Expenses
    Research
    and Development Expenses
   46




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##### Table of Contents



Share-based
    Compensation Expenses
        Years Ended December 31,2006


2007


2008(In thousands of US$, except for percentages)Share-based compensation expenses included in:Cost of revenues

$
169



2.8
%

$
274



3.0
%

$
350



3.8
%Selling expenses


1,945



31.7



2,287



25.1



1,060



11.7General and administrative expenses


3,942



64.1



6,277



69.0



7,306



80.3Research and development expenses


89



1.4



264



2.9



386



4.2Total share-based compensation expenses

$
6,145



100.0
%

$
9,102



100.0
%

$
9,102



100.0
%     Interest
    Expenses
   47




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##### Table of Contents



Gain on
    Foreign Currency Derivative Assets
    Debt
    Conversion Inducement Expenses
    Foreign
    Exchange Gain (Loss)
    Income
    Tax Expense
       48




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Critical
    Accounting Policies
      Revenue
    Recognition
     49




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##### Table of Contents



Warranty
    Cost
  10-year 25-year
  Impairment
    of Long-lived Assets
    Allowance
    for Doubtful Accounts
    Inventories
       50




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##### Table of Contents



work-in-process
    Fair
    value of derivative and financial instruments
            Income
    Taxes
    Accounting for
    Uncertainty in Income Taxes Accounting for Income Taxes
 51




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##### Table of Contents



Share-based
    compensation
  Share-Based
    Payment
  Recently
    Issued Accounting Pronouncements:
  Business
    Combination
  Accounting for Assets Acquired and
    Liabilities Assumed in a Business Combination That Arise from
    Contingencies
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
 52




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##### Table of Contents



FAS 157-2, Effective Date of FASB Statement No. 157 FSP 157-2. FSP 157-2 FSP 157-2,
  FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active FSP 157-3. FSP 157-3 FSP 157-3 FSP 157-3
  FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly (FSP 157-4). FSP 157-4 FSP 157-4
  Disclosures About Derivative Instruments and Hedging
    Activities
  FAS 142-3, Determining the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 FSP 142-3 FSP 142-3
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1 14-1 14-1
  No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is
    Indexed to an Entitys Own Stock (EITF 07-5). EITF 07-5
 53




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##### Table of Contents



07-5
  FAS 115-2 124-2, Recognition and Presentation of Other-Than-Temporary
    Impairments FAS 115-2 FAS 124-2). FAS 115-2 FAS 124-2
  Results
    of Operations
    Years Ended December 31,2006


2007


2008(In thousands of US$, except percentages)Net revenues

$
68,212



100
%

$
302,798



100
%

$
705,006



100
%Cost of revenues


55,872



81.9



279,022



92.1



633,998



89.9Gross profit


12,340



18.1



23,776



7.9



71,008



10.1Operating expensesSelling expenses


2,909



4.3



7,531



2.5



10,608



1.5General and  administrative expenses


7,923



11.6



17,204



5.7



34,510



4.9Research and development expenses


398



0.6



998



0.3



1,825



0.3Total operating expenses


11,230



16.5



25,733



8.5



46,943



6.7Income (loss) from operations


1,110



1.6



(1,957
)


(0.7
)


24,065



3.4Other income (expenses)






















Interest expenses


(2,194
)


(3.2
)


(2,367
)


(0.8
)


(11,266
)


(1.6
)Interest income


363



0.5



562



0.2



3,531



0.5Loss on change in fair value of derivatives  related to
    convertible notes


(8,187
)


(12.0
)














Gain on foreign currency derivative assets


















14,455



2.0Debt conversion inducement expenses


















(10,170
)


(1.4
)Foreign exchange gain (loss)


(481
)


(0.7
)


2,689



0.9



(20,087
)


(2.8
)Other net


391



0.6



679



0.2







Income (loss) before taxes


(8,998
)


(13.2
)


(394
)


(0.2
)


528



0.1Income tax benefit (expense)


(432
)


(0.6
)


184



0.1



(9,916
)


(1.4
)Net income (loss)

$
(9,430
)


(13.8
)

$
(210
)


(0.1
)

$
(9,388
)


(1.3
)   Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Net Revenues.
   54




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##### Table of Contents



Cost of Revenues.
  Gross Profit.
  Operating Expenses.
  Selling Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
  Interest Expenses.
  Gain On Foreign Currency Derivative Assets.
  Debt Conversion Inducement Expenses
 55




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##### Table of Contents



Foreign Exchange Gain (Loss).
  Income Tax Benefit (Expense).
  Net Loss.
  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Net Revenues.
    Cost of Revenues.
  Gross Profit.
  Operating Expenses.
  Selling Expenses.
 56




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##### Table of Contents



free-on-board
  General and Administrative Expenses.
  Research and Development Expenses.
  Interest Expenses.
  Foreign Exchange Gain (Loss
  Income Tax Benefit (Expense).
  Net Loss.
  B.
    Liquidity
    and Capital Resources  Cash
    Flows and Working Capital
     57




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##### Table of Contents



58




---



##### Table of Contents



Years Ended December 312006


2007


2008(In thousands of US$)Net cash provided by (used in) operating activities

$
(46,276
)

$
(80,224
)

$
3,193Net cash used in investing activities


(7,770
)


(42,483
)


(125,762
)Net cash provided by financing activities


88,307



124,828



201,356Net increase (decrease) in cash and cash equivalents


34,631



(3,244
)


77,994Cash and cash equivalents at the beginning of the year


6,280



40,911



37,667Cash and cash equivalents at the end of the year

$
40,911


$
37,667


$
115,661   Operating
    Activities
    Investing
    Activities
    Financing
    Activities
     59




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Capital
    Expenditures
    Restricted
    Net Assets
    C.
    Research
    and Development  state-of-the-art
    
    developing new methods and equipment for analysis and quality
    control of incoming materials (such as polysilicon/solar grade
    UMgSi silicon, wafers and cells);
    developing new technologies in ingot growth, wafer cutting, cell
    processing and module manufacturing that make use of low-cost
    alternative silicon materials such as solar grade silicon;
    improving the conversion efficiency of solar cells and
    developing new cell structures and technologies for high
    conversion efficiency;
    improving manufacturing yield and reliability of solar modules
    and reducing manufacturing costs;
    testing, data tracking and analysis for module performance and
    reliability;
    designing and developing more efficient specialty solar modules
    and products to meet customer requirements; and
    silicon reclamation technologies which allow the manufacturing
    of solar cells using low-cost silicon feedstock.   60




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##### Table of Contents



e-Modules,
  Solar module manufacturing technologies. state-of-the-art
  Product development of specialty solar modules and
    products.
  Power system integration and solar application
    products.
  Silicon reclamation technologies.
  D.
    Trend
    Information  Form 20-F,
  E.
    Off-balance
    Sheet Arrangements   61




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##### Table of Contents



F.
    Tabular
    Disclosure of Contractual Obligations  Contractual
    Obligations and Commercial Commitments
    Payment Due by PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands of US$)Short-term debt obligations

$
110,665


$
110,665


$



$



$
Interest related to short-term
    debt(1)


2,366



2,366











Operating lease obligations


1,647



930



562



60



95Purchase
    obligations(2)


4,613,134



352,049



1,393,142



1,513,056



1,354,887Convertible
    notes(3)


1,540



60



120



120



1,240Other long-term
    borrowing(4)


45,357







45,357







Interest related to long-term
    debt(5)


6,025



3,279



2,746







Total

$
4,780,734


$
469,349


$
1,441,927


$
1,513,236


$
1,356,222     (1)
    
    Interest rates range from 2.63% to 7.47% per annum for
    short-term debt.(2)
    
    Includes commitments to purchase production equipment in the
    amount of $55.7 million and commitments to purchase solar
    cells and silicon raw materials in the amount of
    $4,557.4 million.(3)
    
    Assumes redemption of $1.0 million aggregate principal
    amount of 6.0% convertible senior notes due December 15,
    2017. Assumes none of the convertible senior notes have been
    converted into ordinary shares. The holders of our convertible
    senior notes may require us to repurchase the convertible senior
    notes as early as December 2012. This figure also includes
    interest payable totaling $540,000 until December 5, 2017.(4)
    
    The other long-term borrowing mainly consists of the following
    items: (i) commercial loans with Chinas Bank of
    Communication  these loans total $14.6 million,
    are secured and cover a
    two-and-a-half-year
    expansion plan (funds are available at various stages and with
    different terms and rates); and (ii) commercial loans with
    Bank of China  these loans total $29.3 million,
    are secured and cover a three-year expansion plan (funds are
    available at various stages and with different terms and rates).(5)
    
    Interest rates range from 7.29% to 7.56% per annum for long-term
    borrowings.      G.
    Safe
    Harbor  Form 20-F
 62




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Form 20-F
    
    our expectations regarding the worldwide demand for electricity
    and the market for solar power;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for the
    deployment of solar power;
    our beliefs regarding the future shortage or availability of the
    supply of high-purity silicon;
    our beliefs regarding the acceleration of adoption of solar
    power technologies and the continued growth in the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy;
    our beliefs and expectations regarding the use of UMgSi and
    solar power products made of this material;
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our beliefs regarding our securing adequate silicon and solar
    cell requirements to support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive arena in the
    solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers.  Form 20-F
 63




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##### Table of Contents



Form 20-F Form 20-F.
  Item 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES  A.
    Directors
    and Senior Management  Form 20-F.
  Name

Age

Position/TitleShawn (Xiaohua) Qu


45


Chairman of the Board, President and 
    Chief Executive OfficerArthur Chien


48


Director and Chief Financial OfficerRobert McDermott


67


Lead Independent DirectorLars-Eric Johansson


62


Independent DirectorMichael G. Potter


42


Independent DirectorTai Seng Png


46


Vice President, Business IntegrationCharlotte Xi Klein


53


Vice President, Finance and Compliance OfficerBencheng Li


66


Vice President of Business Development (China)Yan Zhuang


45


Vice President, Sales and MarketingGregory Spanoudakis


51


President, European SalesXiaohu Wang


53


Vice President, Ingot and Wafer Operations   Directors
  Dr. Shawn (Xiaohua) Qu tm
  Mr. Arthur Chien
 64




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##### Table of Contents



Mr. Robert McDermott
  Mr. Lars-Eric Johansson
  Mr. Michael G. Potter
  Executive
    Officers
  Mr. Tai Seng Png
  Ms. Charlotte Xi Klein
 65




---



##### Table of Contents



Mr. Bencheng Li Sino-American
  Mr. Yan Zhuang
  Mr. Gregory Spanoudakis
  Mr. Xiaohu Wang
  Duties
    of Directors
   66




---



##### Table of Contents




    convening shareholders annual general meetings and
    reporting its work to shareholders at such meetings;
    declaring dividends and authorizing other distributions to
    shareholders;
    appointing officers and determining the term of office of
    officers;
    exercising the borrowing powers of our company and mortgaging
    the property of our company; and
    approving the issuance of shares.  B.
    Compensation
    of Directors and Executive Officers  Cash
    Remuneration
    Share-based
    Remuneration
  2006 Share
    Incentive Plan
   67




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##### Table of Contents



Options
    CommonSharesUnderlying


ExerciseOptions


Price


Date of

Date ofName

Granted


(US$/share)


Grant

ExpirationDirectors:Shawn (Xiaohua) Qu


20,000



3.18


March 12, 2009

March 11, 2019Arthur Chien


46,600
(1)


4.29


August 8, 2006

August 7, 201623,300
(2)


9.88


July 1, 2007

June 30, 201746,600



7.36


September 24, 2007

September 23, 201720,000



3.18


March 12, 2009

March 11, 2019Robert McDermott


46,600
(2)


15.00
(3)

August 8, 2006

August 7, 201623,300
(2)


9.88


July 1, 2007

June 30, 201723,300
(2)


41.75
(4)

June 26, 2008

June 25, 2018Lars-Eric Johansson


46,600
(2)


15.00
(3)

August 8, 2006

August 7, 201623,300
(2)


9.88


July 1, 2007

June 30, 201723,300
(2)


41.75
(4)

June 26, 2008

June 25, 2018Michael G. Potter


23,300
(2)


7.36


September 24, 2007

September 23, 201723,300
(2)


41.75
(4)

June 26, 2008

June 25, 2018Directors as a group


389,500Executive Officers:Yan Zhuang


23,300
(2)


7.36


September 24, 2007

September 23, 201723,300
(2)


41.75
(4)

June 26, 2008

June 25, 2018Gregory Spanoudakis


116,500



2.12


May 30, 2006

May 29, 201620,000



3.18


March 12, 2009

March 11, 2019Tai Seng Png


80,000



7.36


September 24, 2007

September 23, 201720,000



3.18


March 12, 2009

March 11, 2019Xiaohu Wang


89,705



2.12


May 30, 2006

May 29, 201612,000



3.18


March 12, 2009

March 11, 2019Robert
    Patterson(5)


64,075



2.12


May 30, 2006

May 29, 201612,000



3.18


March 12, 2009

March 11, 2019Bencheng Li


64,075



2.12


May 30, 2006

May 29, 201612,000



3.18


March 12, 2009

March 11, 2019Charlotte Klein


11,652
(6)


7.36


September 24, 2007

September 23, 201746,600



12.10


March 1, 2007

February 28, 201712,000



3.18


March 12, 2009

March 11, 2019Executive Officers as a group


607,207Other Individuals:Six individuals as a group


456,680



2.12


May 30, 2006

May 29, 2016One individual


2,330
(7)


4.29


May 30, 2006

May 29, 2016 68




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##### Table of Contents



CommonSharesUnderlying


ExerciseOptions


Price


Date of

Date ofName

Granted


(US$/share)


Grant

ExpirationTwenty-eight individuals as a group


126,170



4.29


May 30, 2006

May 29, 2016Two individuals as a group


51,260



4.29


June 30, 2006

June 29, 2016One individual


64,075



4.29


July 17, 2006

July 16, 2016Hanbing
    Zhang(8)


46,600



4.29


July 28, 2006

July 27, 2016One individual


58,250



12.00
(9)

August 8, 2006

August 7, 2016Three individuals as a group


11,650



12.00
(9)

August 31, 2006

August 30, 2016Three individuals as a group


40,290



12.10


March 1, 2007

February 28, 2017Two individuals as a group


11,650
(2)


15.00
(3)

April 13, 2007

April 12, 2017Five individuals as a group


52,280



8.21


August 17, 2007

August 16, 2017Seven individuals as a group


27,556
(6)


7.36


September 24, 2007

September 23, 2017Eleven individuals as a group


90,145



7.36


September 24, 2007

September 23, 2017Six individuals as a group


36,136



19.55


February 28, 2008

February 27, 2018One individual


10,000



19.40


March 3, 2008

March 2, 2018Two individuals as a group


18,000



20.67


March 31, 2008

March 30, 2018One individual


30,000



46.28


June 26, 2008

June 25, 2018Four individuals as a group


30,000



27.88


August 7, 2008

August 6, 2018Seventy-two individuals as a group


306,800



3.18


March 12, 2009

March 11, 2019Hanbing
    Zhang(8)


6,000



3.18


March 12, 2009

March 11, 2019One individual


20,000



5.26


March 30, 2009

March 29, 2009Other individuals as a group


1,495,872     (1)
    
    Vest in two equal installments, the first upon the date of grant
    and the second upon the first year anniversary of the grant date
    so long as the director remains in service.(2)
    
    All vest immediately upon the date of grant.(3)
    
    The initial public offering price of the common shares.(4)
    
    Exercise price equal to the average of the trading prices of the
    common shares for the 20 trading days preceding the date of
    grant.(5)
    
    Mr. Patterson was an executive officer as of April 30,
    2009.(6)
    
    Vest one year after the grant date.(7)
    
    Also vest on accelerated termination.(8)
    
    The wife of Dr. Qu, our founder, chairman, president and
    chief executive officer.(9)
    
    80% of the initial public offering price of the common shares.   69




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##### Table of Contents



Restricted
    Shares
    RestrictedSharesName

Granted


Date of Grant


Date of ExpirationExecutive Officers:Gregory Spanoudakis


233,000



May 30, 2006



May 29, 2016Bencheng Li


23,300



May 30, 2006



May 29, 2016Xiaohu Wang


18,640



May 30, 2006



May 29, 2016Robert
    Patterson(1)


11,650



May 30, 2006



May 29, 2016Executive Officers as a group


286,590Other Individuals:Eight individuals as a group


44,270



May 30, 2006



May 29, 2016One individual


2,330
(2)


May 30, 2006



May 29, 2016One individual


116,500
(3)


June 30, 2006



June 29, 2016Hanbing
    Zhang(4)


116,500
(5)


July 28, 2006



July 27, 2016Other Individuals as a group


279,600     (1)
    
    Mr. Patterson was an executive officer as of April 30,
    2009.(2)
    
    Also vest on accelerated termination.(3)
    
    Vest over a two-year period from the date of grant.(4)
    
    The wife of Dr. Qu, our founder, chairman, president and
    chief executive officer.(5)
    
    Vest over a four-year period from the date of grant.    Types of Awards.
  
    options to purchase our common shares; and
    restricted shares, which are non-transferable common shares
    without voting or dividend rights, subject to forfeiture upon
    termination of a grantees employment or service.  Plan Administration.
  Award Agreement.
  Eligibility.
  Acceleration of Awards upon Corporate
    Transactions.
 70




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##### Table of Contents



Exercise Price and Term of Awards.
    Vesting Schedule.
  Indemnification
    of Directors and Officers
    C.
    Board
    Practices    Terms
    of Directors and Executive Officers
    Committees
    of the Board of Directors
    Audit
    Committee
   71




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##### Table of Contents




    selecting our independent auditors and pre-approving all
    auditing and non-auditing services permitted to be performed by
    our independent auditors;
    reviewing with our independent auditors any audit problems or
    difficulties and managements response;
    reviewing and approving all proposed related-party transactions,
    as defined in Item 404 of
    Regulation S-K
    under the Securities Act;
    discussing the annual audited financial statements with
    management and our independent auditors;
    reviewing major issues as to the adequacy of our internal
    controls and any special audit steps adopted in light of
    material control deficiencies;
    annually reviewing and reassessing the adequacy of our audit
    committee charter;
    such other matters that are specifically delegated to our audit
    committee by our board of directors from time to time;
    meeting separately and periodically with management and our
    internal and independent auditors; and
    reporting regularly to the full board of directors.    Compensation
    Committee
    
    reviewing and approving the compensation arrangements for our
    executive officers and directors;
    reviewing and approving corporate goals and objectives relevant
    to the compensation of our chief executive officer, evaluating
    the performance of our chief executive officer in light of those
    goals and objectives, and setting the compensation level of our
    chief executive officer based on this evaluation; and
    overseeing and periodically reviewing the operation of our
    employee benefits plans, including bonus, incentive
    compensation, stock option, pension and welfare plans.    Nominating
    and Corporate Governance Committee
   72




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##### Table of Contents




    identifying and recommending to the board nominees for election
    or re-election to the board, or for appointment to fill any
    vacancy;
    reviewing annually with the board the current composition of the
    board in light of the characteristics of independence, age,
    skills, experience and availability of service to us;
    identifying and recommending to the board the directors to serve
    as members of the boards committees;
    advising the board periodically with respect to significant
    developments in the law and practice of corporate governance as
    well as our compliance with applicable laws and regulations, and
    making recommendations to the board on all matters of corporate
    governance and on any corrective action to be taken; and
    monitoring compliance with our code of business conduct and
    ethics, including reviewing the adequacy and effectiveness of
    our procedures to ensure proper compliance.    Interested
    Transactions
    Remuneration
    and Borrowing
    Qualification
    Employment
    Agreements
     73




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##### Table of Contents



and/or
    Directors
    Agreements
    D.
    Employees    As of December 31, 2008Number of Employees


Percentage of TotalManufacturing


2,742



89.7General and administrative


251



8.2Research and development


36



1.2Sales and marketing


29



0.9Total


3,058



100
%    74




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##### Table of Contents



E.
    Share
    Ownership    
    each of our directors and executive officers; and
    each person known to us to own beneficially more than 5% of our
    common shares.      Shares Beneficially
    Owned(1)Directors and Executive
    Officers(2):

Number


%Shawn (Xiaohua) Qu


13,530,000



37.9
%Arthur
    Chien(3)


71,550



*Robert
    McDermott(4)


69,900



*Lars-Eric
    Johansson(5)


68,200



*Michael G.
    Potter(6)


46,600



*Yan
    Zhuang(7)


23,300



*Robert
    Patterson(8)


16,018



*Gregory
    Spanoudakis(9)


320,375



*Bencheng
    Li(10)


16,018



*Charlotte Xi
    Klein(11)


23,302



*Tai Seng
    Png(12)


20,000



*Xiaohu
    Wang(13)


22,426



*All directors and executive officers as a group


14,227,689



39.9
%Principal Shareholders:Columbia Wanger Asset Management,
    L.P.(14)


1,800,100



5.0
%     *
    
    Less than 1%.(1)
    
    Beneficial ownership is determined in accordance with
    Rule 13d-3
    of the General Rules and Regulations under the Securities
    Exchange Act of 1934, as amended, and includes voting or
    investment power with respect to the securities.(2)
    
    The business address of our directors and executive officers is
    199 Lushan Road, Suzhou New District, Suzhou, Jiangsu 215129,
    Peoples Republic of China. Unless otherwise stated below,
    all shares beneficially owned by directors and officers
    represent common shares issuable upon exercise of options held.(3)
    
    Includes 71,550 common shares issuable upon exercise of options
    held by Mr. Chien.(4)
    
    Includes 69,900 common shares issuable upon exercise of options
    held by Mr. McDermott.(5)
    
    Includes 68,200 common shares issuable upon exercise of options
    held by Mr. Johansson.(6)
    
    Includes 46,600 common shares issuable upon exercise of options
    held by Mr. Potter.(7)
    
    Includes 23,300 common shares issuable upon exercise of options
    held by Mr. Zhuang. 75




---



##### Table of Contents



(8)
    
    Includes 16,018 common shares issuable upon exercise of options
    held by Mr. Patterson. Mr. Patterson was an executive
    officer as of April 30, 2009.(9)
    
    Includes 87,375 common shares issuable upon exercise of options
    held by Mr. Spanoudakis.(10)
    
    Includes 16,018 common shares issuable upon exercise of options
    held by Mr. Li.(11)
    
    Includes 23,302 common shares issuable upon exercise of options
    held by Ms. Klein.(12)
    
    Includes 20,000 common shares issuable upon exercise of options
    held by Mr. Png.(13)
    
    Includes 22,426 common shares issuable upon exercise of options
    held by Mr. Wang.(14)
    
    Includes 1,800,100 common shares held by Columbia Wanger Asset
    Management, L.P. The principal business address of Columbia
    Wanger is 227 West Monroe Street, Suite 3000, Chicago,
    IL 60606.  Form 20-F.
  Item 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  A.
    Major
    Shareholders    B.
    Related
    Party Transactions    Issuance,
    Sale and Conversion of Convertible Notes
      Conversion
    of Convertible Notes and Put Option Agreement
   76




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##### Table of Contents



Retained
    Earnings
    Investment
    Agreement
      Registration
    Rights Agreements with HSBC, JAFCO and ATS
    Demand Registration Rights. Form F-3 S-3
  Form F-3
    Registration Rights. Form F-3 S-3, Form F-3 S-3
 77




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##### Table of Contents



Piggyback Registration Rights. Form F-4, S-4 S-8, Form F-3
  Expenses of Registration. Form F-3
    Termination of Registration Rights
    Agreements. Form 20-F.
  Consultancy
    Agreements
    Shareholder
    Loans
    Guarantees
    and Share Pledges
           78




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##### Table of Contents



two-and-a-half-year three-year
        Employment
    Agreements
    Equity
    Incentive Plan
    C.
    Interests
    of Experts and Counsel    Item 8.
    FINANCIAL
    INFORMATION  A.
    Consolidated
    Statements and Other Financial Information    Legal
    and Administrative Proceedings
  No. 500-05 071241-028)
 79




---



##### Table of Contents



Dividend
    Policy
      B.
    Significant
    Changes     80




---



##### Table of Contents



Item 9.
    THE
    OFFER AND LISTING  A.
    Offering
    and Listing Details    Trading PriceHigh


LowUS$


US$Annual Highs and Lows2006 (from November 9, 2006)


16.73



9.432007


31.44



6.502008


51.80



3.11Quarterly Highs and LowsFirst Quarter 2007


14.36



8.72Second Quarter 2007


13.88



8.78Third Quarter 2007


11.70



6.50Fourth Quarter 2007


31.44



8.67First Quarter 2008


31.10



14.74Second Quarter 2008


51.80



21.15Third Quarter 2008


39.22



16.74Fourth Quarter 2008


21.34



3.11First Quarter 2009


7.49



3.00Monthly Highs and Lows2008December


6.95



4.152009January


7.49



4.16February


5.85



3.50March


6.47



3.00April


7.49



5.44May


13.25



6.50June (through June 4)


15.65



12.00   B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution   81




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##### Table of Contents



F.
    Expenses
    of the Issue    Item 10.
    ADDITIONAL
    INFORMATION  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association  No. 333-138144),
  C.
    Material
    Contracts  Form 20-F.
  D.
    Exchange
    Controls    E.
    Taxation  Material
    Canadian Federal Tax Considerations
  General
    Form 20-F. Form 20-F.
 82




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##### Table of Contents



TAX MATTERS ARE VERY COMPLICATED AND THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF COMMON
    SHARES WILL DEPEND ON THE SHAREHOLDERS PARTICULAR
    SITUATION. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE
    ANALYSIS OF OR DESCRIPTION OF ALL POTENTIAL CANADIAN FEDERAL TAX
    CONSEQUENCES, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS
    OR TAX ADVICE DIRECTED AT ANY PARTICULAR HOLDER OR PROSPECTIVE
    PURCHASER OF COMMON SHARES. ACCORDINGLY, HOLDERS OR PROSPECTIVE
    PURCHASERS OF COMMON SHARES SHOULD CONSULT THEIR OWN TAX
    ADVISORS FOR ADVICE WITH RESPECT TO THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF AN INVESTMENT IN COMMON SHARES BASED ON THEIR
    PARTICULAR CIRCUMSTANCES.
  Dividends
    Disposition
    of Our Common Shares
  60-month
    United
    States Federal Income Taxation
   83




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##### Table of Contents




    banks;
    certain financial institutions;
    regulated investment companies;
    real estate investment trusts;
    insurance companies;
    broker dealers;
    U.S. expatriates;
    traders that elect to mark to market;
    tax-exempt entities;
    persons liable for alternative minimum tax;
    persons holding a common share as part of a straddle, hedging,
    constructive sale, conversion or integrated transaction;
    persons that actually or constructively own 10% or more of our
    voting stock;
    persons who acquired common shares pursuant to the exercise of
    any employee share option or otherwise as compensation; or
    persons holding common shares through partnerships or other
    pass-through entities for U.S. federal income tax purposes.  U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS
    ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO
    THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL
    AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
    AND DISPOSITION OF COMMON SHARES.
    
    an individual who is a citizen or resident of the United States;
    a corporation (or other entity taxable as a corporation)
    organized under the laws of the United States, any State or the
    District of Columbia;
    an estate whose income is subject to U.S. federal income
    taxation regardless of its source; or
    a trust that (1) is subject to the supervision of a court
    within the United States and the control of one or more
    U.S. persons or (2) has a valid election in effect
    under applicable U.S. Treasury regulations to be treated as
    a U.S. person.    Dividends
    and Other Distributions on the Common Shares
   84




---



##### Table of Contents



Dispositions
    of Common Shares
     85




---



##### Table of Contents



Passive
    Foreign Investment Company
  non-U.S. corporation
  
    at least 75% of its gross income is passive income, or
    at least 50% of the value of its assets (based on an average of
    the quarterly values of the assets during a taxable year) is
    attributable to assets that produce or are held for the
    production of passive income (the asset test).    non-U.S. subsidiaries
    
    the excess distribution or gain will be allocated ratably over
    the U.S. Holders holding period for the common shares,
    the amount allocated to the current taxable year, and any
    taxable year prior to the first taxable year in which we became
    a PFIC, will be treated as ordinary income, and
    the amount allocated to each other year will be subject to the
    highest tax rate in effect for that year and the interest charge
    generally applicable to underpayments of tax will be imposed on
    the resulting tax attributable to each such year.     86




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##### Table of Contents



non-U.S. corporation
      Information
    Reporting and Backup Withholding
  Form W-9.
    F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts   87




---



##### Table of Contents



H.
    Documents
    on Display  Form F-1, 333-138144).
  Form 20-F 1-800-SEC-0330.
      I.
    Subsidiary
    Information    Item 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Exchange Risk
       88




---



##### Table of Contents



Interest
    Rate Risk
    Item 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES   PART II  Item 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    Item 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS    
    the registration statement on
    Form F-3
    (File number:
    333-149497)
    for our registration of convertible senior notes, initially sold
    in a private transaction on December 10, 2007, which
    registration statement was declared effective by the SEC on
    March 27, 2008; and
    the automatic shelf registration statement on
    Form F-3
    (File number:
    333-152325),
    which automatically became effective upon filing on
    July 14, 2008.           89




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##### Table of Contents




    See Item 10. Additional Information for a
    description of the rights of securities holders, which remain
    unchanged.  Item 15.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rule 13a-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
         90




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##### Table of Contents



Attestation
    Report of the Independent Registered Public Accounting
    Firm
  
  Internal Control  Integrated Framework
        Internal Control  Integrated Framework
    Deloitte
    Touche Tohmatsu CPA Ltd
    91




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##### Table of Contents



Changes
    in Internal Controls
    Item 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT  Form 20-F.
  Item 16B.
    CODE
    OF ETHICS  Form 20-F,
 Item 16C.  PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    For the Years Ended December 31,2006


2007


2008Audit
    fees(1)

$
334,857


$
1,350,000


$
1,360,000Audit-related
    fees(2)





$
378,224


$
565,862Tax fees










All other fees










     (1)
    
    Audit fees means the aggregate fees billed for
    professional services rendered by our principal auditors for the
    audit of our annual financial statements.(2)
    
    Audit-related fees represents aggregate fees billed
    for professional services rendered by our principal auditors for
    assurance and related services. In 2007, these mainly consisted
    of the review of financial statements and offering documents in
    connection with our offering of 6.0% Convertible Senior
    Notes due 2017. In 2008, these mainly consisted of the review of
    financial statements and offering documents in connection with
    our follow-on public offering of common shares in July 2008.  de minimus
  Item 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES    Item 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS   92




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##### Table of Contents



Item16F.
    CHANGE
    IN REGISTRANTS CERTIFYING
    ACCOUNTANT    Item16G.
    CORPORATE
    GOVERNANCE   PART III  Item 17.
    FINANCIAL
    STATEMENTS    Item 18.
    FINANCIAL
    STATEMENTS    Item 19.
    EXHIBITS  ExhibitNumber

Description of Document1
.1

Amended Articles of Continuance (incorporated by reference to
    Exhibit 3.2 from our F-1 registration statement (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)2
.1

Form of Equity Underwriting Agreement (incorporated by reference
    to Exhibit 1.1 from our
    Form 6-K
    (File
    No. 001-33107),
    initially filed with the SEC on July 17, 2008)4
.1*

Form of amended Director Indemnity Agreement4
.2*

English translation of Supplementary Agreement between CSI Cells
    Co., Ltd. and Jiangxi LDK Solar Hi-Tech Co., Ltd. dated
    February 14, 2009, supplementing the original Wafer Supply
    Agreement dated October 17, 20074
.3*

English translation of Supplementary Agreement between Jiangsu
    Zhongneng Polysilicon Technology Development Co., Ltd., CSI
    Cells Co., Ltd., Changshu CSI Advanced Solar Inc. and CSI
    Central Solar Power Co., Ltd., dated May 22, 2009,
    supplementing the original Polysilicon Supply Contract dated
    August 20, 2008 and the original Solar Wafer Supply
    Contract dated August 20, 20084
.4*

Sales Contract between Canadian Solar Inc. and Solpower GmbH
    dated September 1, 20084
.5*

Sales Contract between Canadian Solar Inc. and Iliotec Solar
    GmbH dated October 2, 20084
.6*

Sales Contract between Canadian Solar Inc. and Iliotec
    International GmbH dated October 2, 20088
.1*

List of Subsidiaries11
.1

Code of Business Conduct (incorporated by reference to
    Exhibit 99.1 from our F-1 registration statement (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)12
.1*

CEO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2*

CFO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1*

CEO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200213
.2*

CFO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200223
.1*

Consent of Deloitte Touche Tohmatsu CPA Ltd.     *
    
    Filed with this annual report on
    Form 20-F
    
    Confidential treatment is being requested with respect to
    portions of these exhibits and such confidential treatment
    portions have been deleted and replaced with ****
    and filed separately with the Securities and Exchange Commission
    pursuant to Rule 24b-2 under the Exchange Act. 93




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##### Table of Contents



SIGNATURES
  Form 20-F
    By:
    /s/  Shawn
    (Xiaohua) Qu   Title:
    Chairman, President and    94




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2007 and 2008


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2006, 2007 and 2008


F-4Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for the Years Ended
    December 31, 2006, 2007 and 2008


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2006, 2007 and 2008


F-6Notes to the Consolidated Financial Statements


F-8Schedule I


F-35  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             Internal Control  Integrated Framework
  Deloitte
    Touche Tohmatsu CPA Ltd
    F-2




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2007


2008$


$ASSETSCurrent assets:Cash and cash equivalents


37,667,120



115,660,921Restricted cash


1,625,555



20,621,749Accounts receivable, net of allowance for doubtful accounts of
    $376,178 and $5,605,983 on December 31, 2007 and 2008,
    respectively


58,637,304



51,611,312Inventories


70,920,927



92,682,547Value added tax recoverable


12,246,989



15,899,703Advances to suppliers


28,744,670



24,654,392Foreign currency derivative assets






6,974,064Prepaid expenses and other current assets


10,057,777



10,918,581Total current assets


219,900,342



339,023,269Property, plant and equipment, net


51,486,258



165,541,885Deferred tax assets


3,965,886



6,997,918Advances to suppliers


4,102,711



43,087,142Prepaid land use right


1,616,011



12,782,147Investment






3,000,000Other non-current assets


3,431,321



299,038TOTAL ASSETS


284,502,529



570,731,399LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings


40,373,932



110,664,813Accounts payable


8,250,826



29,957,188Amounts due to related parties


208,718



93,641Other payables


6,153,217



24,043,309Advances from customers


1,962,024



3,570,883Other current liabilities


2,264,499



4,332,229Total current liabilities


59,213,216



172,662,063Accrued warranty costs


3,878,755



10,846,719Convertible notes


75,000,000



1,000,000Long-term borrowings


17,866,203



45,357,340Liability for uncertain tax positions


2,278,482



8,703,830TOTAL LIABILITIES


158,236,656



238,569,952Commitments and contingencies (Note 14)Stockholders equity:Common shares  no par value: unlimited authorized
    shares, 27,320,389 and 35,744,563 shares issued and
    outstanding at December 31, 2007 and 2008, respectively


97,454,214



294,707,048Additional paid-in capital


26,435,689



35,537,691Accumulated deficit


(3,604,572
)


(12,992,818
)Accumulated other comprehensive income


5,980,542



14,909,526Total stockholders equity


126,265,873



332,161,447TOTAL LIABILITIES AND STOCKHOLDERS EQUITY


284,502,529



570,731,399    F-3




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2006


2007


2008$


$


$Net revenues


68,212,256



302,797,671



705,006,356Cost of revenues


55,871,959



279,022,155



633,998,620Gross profit


12,340,297



23,775,516



71,007,736Operating expenses:Selling expenses


2,908,675



7,530,970



10,607,562General and administrative expenses


7,923,923



17,203,761



34,510,263Research and development expenses


397,859



997,832



1,824,753Total operating expenses


11,230,457



25,732,563



46,942,578Income (Loss) from operations


1,109,840



(1,957,047
)


24,065,158Other income (expenses):Interest expense


(2,193,551
)


(2,367,131
)


(11,265,576
)Interest income


362,528



562,006



3,530,957Loss on change in fair value of derivatives related to
    convertible notes


(8,186,500
)






Gain on foreign currency derivative assets










14,454,814Debt conversion inducement expense










(10,170,118
)Foreign exchange gain (loss)


(481,019
)


2,688,448



(20,087,375
)Other  net


390,832



679,070



Income (Loss) before income taxes


(8,997,870
)


(394,654
)


527,860Income tax benefit (expense)


(431,994
)


184,978



(9,916,106
)Net loss


(9,429,864
)


(209,676
)


(9,388,246
)Loss per share  basic and diluted

$
(0.50
)

$
(0.01
)

$
(0.30
)Shares used in computation  basic and diluted


18,986,498



27,283,305



31,566,503    F-4




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE
 INCOME
    (LOSS)
  Retained


AccumulatedAdditional


Earnings


Other


Total


TotalCommon


Paid-in


(Accumulated


Comprehensive


Stockholders


ComprehensiveShares


Capital


Deficit)


Income


Equity


Income/(Loss)Number


$


$


$


$


$


$Balance at December 31, 2005


15,427,995



210,843







6,647,167



109,070



6,967,080Share-based compensation










6,144,879











6,144,879Conversion of convertible notes


5,542,005



10,162,215















10,162,215De-recognition of conversion option derivative liability










10,928,031











10,928,031Issuance of ordinary shares, net of issuance cost


6,300,000



83,323,942















83,323,942Deferred tax on issuance cost of ordinary shares






3,605,391















3,605,391Forgiveness of payable to shareholders










260,987











260,987Net loss














(9,429,864
)






(9,429,864
)


(9,429,864
)Foreign currency translation adjustment


















941,194



941,194



941,194Balance at December 31, 2006


27,270,000



97,302,391



17,333,897



(2,782,697
)


1,050,264



112,903,855



(8,488,670
)Adjustment for adoption of FIN 48














(612,199
)






(612,199
)Share-based compensation










9,101,792











9,101,792Exercise of stock options


50,389



151,823















151,823Net loss














(209,676
)






(209,676
)


(209,676
)Foreign currency translation adjustment


















4,930,278



4,930,278



4,930,278Balance at December 31, 2007


27,320,389



97,454,214



26,435,689



(3,604,572
)


5,980,542



126,265,873



4,720,602Share-based compensation










9,102,002











9,102,002Conversion of convertible notes


3,966,841



82,103,558















82,103,558Issuance of ordinary shares, net of issuance cost


3,500,000



110,659,864















110,659,864Deferred tax on issuance costs of ordinary shares






2,552,082















2,552,082Other


566,190



















Exercise of stock options


391,143



1,937,330















1,937,330Net loss














(9,388,246
)






(9,388,246
)


(9,388,246
)Foreign currency translation adjustment


















8,928,984



8,928,984



8,928,984Balance at December 31, 2008


35,744,563



294,707,048



35,537,691



(12,992,818
)


14,909,526



332,161,447



(459,262
)    F-5




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2006


2007


2008$


$


$Operating activities:Net loss


(9,429,864
)


(209,676
)


(9,388,246
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


201,715



1,627,116



9,282,276Loss on disposal of property, plant and equipment


11,072



23,806



5,126,852Allowance for doubtful debts


62,318



456,570



7,445,028Write down of inventories


274,947



482,544



23,784,578Loss on change in fair value of derivatives related to
    convertible notes


8,186,500







Amortization of discount on debt


706,320



55,861



243,729Unrealized gain on foreign currency derivative assets










(6,629,291
)Share-based compensation


6,144,879



9,101,792



9,102,002Debt conversion inducement expense










10,170,118Changes in operating assets and liabilities:Inventories


(27,812,410
)


(27,099,561
)


(39,994,140
)Accounts receivable


(14,836,433
)


(37,675,531
)


2,126,297Value added tax recoverable


(1,396,221
)


(9,479,472
)


(2,671,677
)Advances to suppliers


(8,479,625
)


(16,796,871
)


(33,572,770
)Prepaid expenses and other current assets


(1,861,085
)


(4,847,423
)


783,021Accounts payable


2,361,064



719,126



19,685,549Other payables


672,320



2,986,846



2,369,498Advances from customers


324,890



(1,822,752
)


1,367,209Amounts due to related parties


(282,528
)


60,082



(119,706
)Accrued warranty costs


530,826



2,979,414



6,893,681Other current liabilities


(868,923
)


906,584



1,893,489Prepaid land use right


(1,080,232
)


(429,637
)


(10,508,489
)Liability for uncertain tax positions






1,666,283



6,425,348Deferred taxes


294,296



(2,929,089
)


(621,658
)Net cash provided by (used in) operating activities


(46,276,174
)


(80,223,988
)


3,192,698Investing activities:Increase in restricted cash


(686,214
)


(695,893
)


(17,950,833
)Purchase of investment










(3,000,000
)Purchase of property, plant and equipment


(7,113,912
)


(42,006,616
)


(104,817,010
)Proceeds from disposal of property, plant and equipment


30,157



220,009



6,322Net cash used in investing activities


(7,769,969
)


(42,482,500
)


(125,761,521
) F-6




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##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
  Years Ended December 31,2006


2007


2008$


$


$Financing activities:Proceeds from short-term borrowings


25,333,379



92,090,998



234,096,606Repayment of short-term borrowings


(23,429,420
)


(56,157,679
)


(169,919,741
)Proceeds from long-term borrowings






16,712,795



24,964,230Proceeds from issuance of convertible notes


3,650,000



75,000,000



Issuance cost paid on convertible notes


(571,315
)


(2,970,138
)


(381,900
)Proceeds from issuance of common shares, net of issuance costs


83,323,942







110,659,864Proceeds from exercise of stock options






151,823



1,937,330Net cash provided by financing activities


88,306,586



124,827,799



201,356,389Effect of exchange rate changes


370,521



(5,364,950
)


(793,765
)Net increase (decrease) in cash and cash equivalents


34,630,964



(3,243,639
)


77,993,801Cash and cash equivalents at the beginning of the year


6,279,795



40,910,759



37,667,120Cash and cash equivalents at the end of the year


40,910,759



37,667,120



115,660,921Supplemental disclosure of cash flow information:Interest paid


(1,471,498
)


(823,040
)


(11,103,634
)Income taxes paid


(1,340,014
)


(177,790
)


(2,683,014
)Supplemental schedule of non-cash activities:Issuance cost included in other payables






(381,496
)


Property, plant and equipment cost included in other payables


41,657



(1,712,773
)


(17,339,148
)Conversion of convertible notes to ordinary shares


10,162,215







82,103,963    F-7




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
 (In U.S. dollars)
  1.
    ORGANIZATION
    AND PRINCIPAL ACTIVITIES      Date of

Place of

Percentage ofSubsidiary

Incorporation

Incorporation

OwnershipCSI Solartronics (Changshu) Co., Ltd.

November 23, 2001

PRC


100
%CSI Solar Technologies Inc.

August 8, 2003

PRC


100
%CSI Solar Manufacture Inc.

January 7, 2005

PRC


100
%CSI Central Solar Power Co., Ltd.

February 24, 2006

PRC


100
%Changshu CSI Advanced Solar Inc.

August 1, 2006

PRC


100
%CSI Cells Co., Ltd.

August 23, 2006

PRC


100
%Canadian Solar (USA) Inc.

June 8, 2007

USA


100
%CSI Solar Power Inc.

April 28, 2008

PRC


100
%   2.
    SUMMARY
    OF PRINCIPAL ACCOUNTING POLICIES  (a)
    Basis
    of presentation    (b)
    Basis
    of Consolidation    (c)
    Use of
    estimates    (d)
    Cash
    and cash equivalents   F-8




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (e)
    Advances
    to suppliers      At December 31,


At December 31,2007


2008$


$Supplier A

$
9,541,574


$
25,583,405Supplier B






15,997,973Supplier C


4,102,711



12,528,000Supplier D


*



9,027,574Supplier E


8,324,889



     *
    
    Less than 10%  (f)
    Inventories      work-in-process
 F-9




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (g)
    Property,
    plant and equipment  Capitalization of Interest Costs
    Buildings

20 yearsLeasehold improvements

Over the shorter of the lease term or their estimated useful
    livesMachinery

5-10 yearsFurniture, fixtures and equipment

5 yearsMotor vehicles

5 years     (h)
    Prepaid
    land use right    (i)
    Investment    other-than-temporary. other-than-temporary.
  (j)
    Impairment
    of long-lived assets   F-10




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (k)
    Income
    taxes        (l)
    Revenue
    recognition        (m)
    Cost
    of revenues   F-11




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (n)
    Research
    and development    (o)
    Advertising
    expenses    (p)
    Warranty
    cost  10-year 25-year
  (q)
    Foreign
    currency translation      (r)
    Foreign
    currency risk   F-12




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (s)
    Concentration
    of credit risk      (t)
    Fair
    value of derivatives and financial instruments          (u)
    Earnings
    per Share    (v)
    Share-based
    compensation   F-13




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (w)
    Reclassifications    (x)
    Recently
    issued accounting pronouncements  Business
    Combination
  Accounting for Assets
    Acquired and Liabilities Assumed in a Business Combination That
    Arise from Contingencies
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  FAS 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2). FSP 157-2 FSP 157-2,
  FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active (FSP 157-3). FSP 157-3
 F-14




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FSP 157-3 FSP 157-3
  FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly (FSP 157-4). FSP 157-4 FSP 157-4
  Disclosures About Derivative Instruments and Hedging
    Activities
  FAS 142-3, Determining the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 FSP 142-3 FSP 142-3
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1 14-1 14-1
  No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is
    Indexed to an Entitys Own Stock (EITF 07-5). EITF 07-5 fixed-for-fixed, 07-5
 F-15




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##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  FAS 115-2 124-2, Recognition and Presentation of
    Other-Than-Temporary
    Impairments FAS 115-2 FAS 124-2). other-than-temporary other-than-temporary other-than-temporary FAS 115-2 FAS 124-2
  3.
    ALLOWANCE
    FOR DOUBTFUL RECEIVABLES      At December 31,


At December 31,2007


2008$


$Beginning of the year






376,178Allowances made during the year


456,570



5,218,944Accounts written-off against allowances


(83,954
)


(19,000
)Foreign exchange effect


3,562



29,861Closing balance


376,178



5,605,983     At December 31,


At December 31,2007


2008$


$Beginning of the year






Allowances made during the year






2,226,084Foreign exchange effect






115,601Closing balance






2,341,685   4.
    INVENTORIES    At December 31,


At December 31,2007


2008$


$Raw materials


39,184,973



46,121,994Work-in-process


21,082,544



17,220,906Finished goods


10,653,410



29,339,64770,920,927



92,682,547    F-16




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    At December 31,


At December 31,2007


2008$


$Buildings


2,313,884



23,854,814Leasehold improvements


475,654



1,674,838Machinery


24,572,316



72,017,929Furniture, fixtures and equipment


1,723,984



5,569,500Motor vehicles


311,831



1,055,12329,397,669



104,172,204Less: Accumulated depreciation


(2,060,207
)


(11,888,864
)27,337,462



92,283,340Construction in process


24,148,796



73,258,545Property, plant and equipment, net


51,486,258



165,541,885     6.
    FAIR
    VALUE MEASUREMENT  Fair Value Measurements FSP 157-2.
    
    Level 1  Valuation techniques in which
    all significant inputs are unadjusted quoted prices from active
    markets for assets or liabilities that are identical to the
    assets or liabilities being measured.
    Level 2  Valuation techniques in which
    significant inputs include quoted prices from active markets for
    assets or liabilities that are similar to the assets or
    liabilities being measured
    and/or
    quoted prices for assets or liabilities that are identical or
    similar to the assets or liabilities being measured from markets
    that are not active. Also, model-derived valuations in which all
    significant inputs and significant value drivers are observable
    in active markets are Level 2 valuation techniques.
    Level 3  Valuation techniques in which
    one or more significant inputs or significant value drivers are
    unobservable. Unobservable inputs are valuation technique inputs
    that reflect the Companys own assumptions about the
    assumptions that market participants would use in pricing an
    asset or liability. F-17




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Fair Value Measurements at Reporting Date UsingQuoted PricesTotal Fair


in Active


SignificantValue and


Markets for


Other


SignificantCarrying


Identical


Observable


UnobservableValue on the


Assets


Inputs


InputsBalance Sheet


(Level 1)


(Level 2)


(Level 3)Assets:Foreign exchange option contracts

$
6,136,044


$



$
6,136,044


$
Foreign exchange forward contracts

$
838,020


$



$
838,020


$
Total Assets

$
6,974,064






$
6,974,064



   7.
    BANK
    BORROWING  At December 31,


At December 31,2007


2008$


$Bank borrowings


58,240,135



156,022,153Analysis as:Short-term


40,373,932



110,664,813Long-term


17,866,203



45,357,340Total


58,240,135



156,022,153     a)
    Short-term     F-18




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      b)
    Long-term         F-19




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009

$
5,852,5602010


29,262,8002011


16,094,5402012


2013 and after


Total


51,209,900Less: future principal repayment related to long-term loan,
    current portion


(5,852,560
)Future principal repayment related to long-term loan

$
45,357,340   c)
    Interest
    expense  Years Ended December 312006


2007


2008$


$


$Interest capitalized






46,617



1,188,135Interest expense


2,193,551



2,367,131



11,265,576Total interest incurred


2,193,551



2,413,748



12,453,711   8.
    ACCRUED
    WARRANTY COSTS    At December 31,


At December 31,2007


2008$


$Beginning balance


874,673



3,878,755Warranty provision


3,015,715



6,978,411Warranty costs incurred


(11,633
)


(10,447
)Ending balance


3,878,755



10,846,719   9.
    CONVERTIBLE
    NOTES  2005
    Convertible Note Subscription Agreement
      Maturity date.
  Interest.
   F-20




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Withholding taxes.
  Dividends.
  Conversion.
    Redemption.
  Liquidation preference.
  Pledge of shares.
   F-21




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          12-month
    12-month
    Interest
   F-22




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Taxes
  Conversion
  Share split
              2007
    Convertible Note Subscription Agreement
      Maturity date.
  Interest.
  Conversion.
 F-23




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Redemption.
        10.
    RESTRICTED
    NET ASSETS       F-24




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    INCOME
    TAXES    Years Ended December 31,2006


2007


2008$


$


$Income (Loss) before Income TaxCanada


(15,218,572
)


(2,628,043
)


(32,968,698
)Other


6,220,702



2,233,389



33,496,558(8,997,870
)


(394,654
)


527,860Current TaxCanada


(115,061
)


569,396



9,268,794Other


363,719



471,220



2,837,939248,658



1,040,616



12,106,733Deferred TaxCanada


263,309



(263,279
)


834,187Other


(79,973
)


(962,315
)


(3,024,814
)183,336



(1,225,594
)


(2,190,627
)Total Income Tax ProvisionCanada


148,248



306,117



10,102,981Other


283,746



(491,095
)


(186,875
)431,994



(184,978
)


9,916,106          F-25




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Company

Tax Rate under the old FEIT law

Tax holiday under the old EIT Law

Transitional Tax rate under the new EIT LawCSI Solartronics (Changshu) Co., Ltd.

27% (24% state tax + 3% local tax)

2-year exemption ended December 31, 2003 + 3 year half
    reduction ended December 31, 2006; 12% for 2007 due to the
    technology advanced enterprise status

15% (obtained New High Technology status under the
    new EIT law in 2008)CSI Solar Manufacture Inc.

18% (15% state tax + 3% local tax)

2-year exemption ended December 31, 2006 + 3 year half
    reduction ended December 31, 2009

12.5% (half reduction on 25%) for 2008 and 2009 and 25% for 2010
    and afterCSI Cells Co., Ltd.

27% (24% state tax + 3% local tax)

2-year exemption ended December 31, 2008 + 3 year half
    reduction ended December 31, 2011

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)CSI Central Solar Power Co., Ltd.

33% (30% state tax + 3% local tax)

2-year exemption ended December 31, 2008 + 3 year half
    reduction ended December 31, 2011

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)Changshu CSI Advanced Solar Inc.

27% (24% state tax + 3% local tax)

2- year exemption ended December 31, 2009 + 3 year half
    reduction ended December 31, 2011

Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
    (half reduction on 25%)  F-26




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              At December 31,


At December 31,2007


2008$


$Beginning balance


612,199



2,278,482Gross increases  additions for tax positions and the
    additional interest and penalties taken for the year


1,666,283



6,425,348Ending balance


2,278,482



8,703,830  F-27




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At December 31,


At December 31,2007


2008$


$Deferred tax assets:Issuance costs


2,439,086



3,584,143Accrued warranty costs


1,260,517



3,448,387Inventory write-down


247,982



2,138,259Foreign tax credit


1,048,175



1,064,301Net loss carried forward


1,123,320



Others


663,447



893,387Total deferred tax assets


6,782,527



11,128,477Analysis as:Current


2,816,641



4,130,559Non-current


3,965,886



6,997,9186,782,527



11,128,477     Years Ended December 31,2006


2007


2008$


$


$Combined federal and provincial income tax rate


36
%


36
%


34
%Taxable income (loss) not included in pre-tax income (loss)


(5
)%


701
%


1,540
%Expenses not deductible for tax purpose


(55
)%


(1,126
)%


1,037
%Tax exemption and tax relief granted to the Company


16
%


341
%


(1,000
)%Effect of different tax rate of subsidiary operation in other
    jurisdiction


7
%


132
%


(708
)%FIN 48 liability






(144
)%


1,495
%Change of tax rates in the following years


(2
)%


65
%


(644
)%Exchange gain (loss)


(2
)%


42
%


125
%(5
)%


47
%


1,879
%     Years Ended December 31,2006


2007


2008$


$


$The aggregate dollar effect


1,429,352



1,345,726



5,281,258Per share effect  basic and diluted


0.08



0.05



0.17  F-28




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    EARNINGS
    PER SHARE    Years Ended December 31,2006


2007


2008$


$


$Loss available to common stockholder  basic and
    diluted

$
(9,429,864
)

$
(209,676
)


(9,388,246
)Weighted average number of common shares  basic and
    diluted


18,986,498



27,283,305



31,566,503Basic and diluted loss per share

$
(0.50
)

$
(0.01
)

$
(0.30
)     13.
    RELATED
    PARTY BALANCES AND TRANSACTIONS  Related
    party balances:
      Related
    party transactions:
      14.
    COMMITMENTS
    AND CONTINGENCIES  a)
    Operating
    lease commitments   F-29




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31

$2009


930,0122010


514,7082011


47,4622012


29,8842013 and after


124,516Total


1,646,582   b)
    Property,
    plant and equipment purchase commitments    c)
    Supply
    purchase commitments          Twelve Months Ending December 31:2009

$
296,344,5772010


627,281,0282011


765,861,4642012


774,894,8412013


738,161,388Thereafter


1,354,886,978Total

$
4,557,430,276  F-30




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    SEGMENT
    INFORMATION      Years Ended December 31,2006


2007


2008$


$


$Europe: Germany


38,787,860



206,740,573



438,101,658 Spain


7,825,860



64,628,868



188,133,256 Others


5,367,063



15,218,476



4,912,021Europe Total


51,980,783



286,587,917



631,146,935Asia: China


14,091,562



6,608,046



25,356,557 Others


109,061



6,996,651



16,214,174Asia Total


14,200,623



13,604,697



41,570,731America


2,030,850



2,605,057



32,288,690Total net revenues


68,212,256



302,797,671



705,006,356     16.
    MAJOR
    CUSTOMERS    Years Ended December 312006


2007


2008$


$


$Company A


*



60,119,666



103,620,514Company B


*



43,540,156



88,628,315Company C


*



60,361,058



76,660,435Company D






63,926,118



*Company E


9,737,337



*



*Company F


6,893,121



*



Company G


9,189,588







     *
    
    Less than 10%    17.
    EMPLOYEE
    BENEFIT PLANS   F-31




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      18.
    SHARE
    OPTIONS      Options
    to Employees
       F-32




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006

2007

2008Risk free rate

5.27%~5.72%

5.31%~6.15%

5.14%~5.95%Average expected exercise term

6.13 years

n/a

n/aVolatility ratio

66%~69%

79%~81%

78%~79%Dividend yield





Annual exit rate

n/a

6%

8%Suboptimal exercise factor

n/a

3.27

3.27~3.70     WeightedWeighted


AverageAverage


RemainingNumber


Exercise


Contract


Aggregateof Options


Price


Terms


Intrinsic Value$





$Options outstanding at January 1, 2008


1,630,395



5.55Granted


217,336



34.00Exercised


(391,143
)


4.95Cancelled or Forfeited


(87,715
)


4.18Options outstanding at December 31, 2008


1,368,873



10.33



8 years



2,285,886Options vested or expected to vest at December 31, 2008


1,298,614



10.41



8 years



2,150,374Options exercisable at December 31, 2008


568,900



12.61



8 years



737,372     Options
    and Restricted shares to Non-employees
    Restricted
    shares to Employees
   F-33




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted AverageNumber of


Grant-DateShares


Fair Value$Unvested at January 1, 2008


311,055



15.83Granted






Vested


(252,805
)


16.22Cancelled or Forfeited


Unvested at December 31, 2008


58,250



14.12     19.
    SUBSEQUENT
    EVENTS     F-34




---



##### Table of Contents



Additional
    Information  Financial Statements
    Schedule 1



Canadian
    Solar Inc.



Schedule I has been provided pursuant to the requirements
    of
    Rule 12-04(a)
    and 4-08(e)(3) of
    Regulation S-X,
    which require condensed financial information as to financial
    position, changes in financial position and results of
    operations of a parent company as of the same dates and for the
    same periods for which audited consolidated financial statements
    have been presented as the restricted net assets of Canadian
    Solar Inc.s consolidated and unconsolidated subsidiaries
    not available for distribution to Canadian Solar Inc. as of
    December 31, 2007 and 2008 of $82,408,533 and $178,287,562
    , respectively, exceeded the 25% threshold.



These financial statements have been prepared in conformity with
    accounting principles generally accepted in the United States.

F-35




---



##### Table of Contents



Financial
    Information of Parent Company
 Balance
    Sheets
  December 31,2007


2008$


$ASSETSCurrent assets:Cash and cash equivalents


22,411,660



13,289,610Accounts receivable, net of allowance for doubtful accounts of
    $204,382 and $5,062,312 at December 31, 2007 and 2008,
    respectively


59,990,021



46,682,715Inventories


895,472



3,257,231Advances to suppliers


3,359,795



1,005,903Amounts due from related parties


43,250,443



83,496,732Deferred tax assets


2,226,879



1,396,854Prepaid expenses and other current assets


848,270



624,118Total current assets


132,982,540



149,753,163Advances to suppliers


4,102,711



12,528,000Investment in subsidiaries


94,130,246



229,598,581Deferred tax assets


3,609,116



5,512,202Other non-current assets


3,295,775



3,057,175TOTAL ASSETS


238,120,388



400,449,121LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable


2,536,003



124,742Amounts due to related parties


22,671,919



44,986,636Other current liabilities


5,946,606



3,981,007Total current liabilities


31,154,528



49,092,385Accrued warranty costs


3,421,505



9,491,459Convertible notes


75,000,000



1,000,000Liability for uncertain tax positions


2,278,482



8,703,830TOTAL LIABILITIES


111,854,515



68,287,674Stockholders equity:Common shares  no par value: unlimited authorized
    Shares, 27,320,389 shares issued and outstanding, as of
    December 31, 2007; 35,744,563 shares issued and
    outstanding, as of December 31, 2008


97,454,214



294,707,048Additional paid-in capital


26,435,689



35,537,691Accumulated deficit


(3,604,572
)


(12,992,818
)Accumulated other comprehensive income


5,980,542



14,909,526Total stockholders equity


126,265,873



332,161,447TOTAL LIABILITIES AND STOCKHOLDERS EQUITY


238,120,388



400,449,121  F-36




---



##### Table of Contents



Financial
    Information of Parent Company
    Statements of Operations
  Years Ended December 312006


2007


2008$


$


$Net revenues


77,427,512



323,884,241



624,574,503Cost of revenues


74,844,151



313,554,507



624,628,119Gross profit (loss)


2,583,361



10,329,734



(53,616
)Operating expenses:Selling expenses


2,510,642



3,382,165



4,455,132General and administrative expenses


5,903,722



12,504,867



19,553,100Research and development expenses


76,084



405,784



622,383Total operating expenses


8,490,448



16,292,816



24,630,615Loss from operations


(5,907,087
)


(5,963,082
)


(24,684,231
)Other income (expenses):Interest expense


(1,598,415
)


(409,179
)


(3,465,019
)Interest income


304,636



316,175



3,557,683Loss on change in fair value of derivatives related to
    convertible notes


(8,186,500
)






Debt conversion inducement expense










(10,170,118
)Foreign exchange gain (loss)


(165,498
)


2,582,256



1,789,748Other  net


121,529



(140,972
)


Loss before income taxes


(15,431,335
)


(3,614,802
)


(32,971,937
)Income tax expense


(125,606
)


(145,141
)


(10,102,981
)Equity in earnings of subsidiaries


6,127,077



3,550,267



33,686,672Net loss


(9,429,864
)


(209,676
)


(9,388,246
)Loss per share  basic and diluted

$
(0.50
)

$
(0.01
)

$
(0.30
)Shares used in computation  basic and diluted


18,986,498



27,283,305



31,566,503  F-37




---



##### Table of Contents



Financial
    Information of Parent Company
 Statements
    of Cash Flows
  Years Ended December 31,2006


2007


2008$


$


$Operating activities:Net loss


(9,429,864
)


(209,676
)


(9,388,246
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization










757Allowance for doubtful debts


17,445



188,894



4,880,241Loss on change in fair value of derivatives related to
    convertible notes


8,186,500







Amortization of discount on debt


722,053



55,861



243,729Equity in earnings of subsidiaries


(6,127,077
)


(3,550,266
)


(33,686,672
)Share-based compensation


6,144,879



9,101,792



9,102,002Debt conversion inducement expense










10,170,118Changes in operating assets and liabilities:Inventories


(355,654
)


1,519,318



(2,361,759
)Accounts receivable


(402,208
)


(53,876,699
)


8,430,376Amounts due from related parties


(16,984,917
)


(16,306,266
)


(40,246,289
)Advances to suppliers


(2,469,789
)


(1,742,545
)


(6,074,708
)Other current assets


(316,269
)


214,999



224,152Accounts payable


(2,888,641
)


2,026,184



(2,411,261
)Advances from customers


(1,607,870
)


1,198,017



(1,483,914
)Amounts due to related parties


(1,786,340
)


16,392,265



22,314,717Accrued warranty costs


275,746



2,817,725



6,069,954Other current liabilities


247,719



597,410



(100,189
)Liability for uncertain tax positions






1,666,283



6,425,348Deferred taxes


168,049



(959,255
)


2,429,153Net cash used in operating activities


(26,606,238
)


(40,865,959
)


(25,462,491
)Investing activities:Investment in subsidiaries


(46,800,000
)


(20,460,000
)


(93,600,000
)Purchase of equity investment










(3,000,000
)Purchases of property, plant and equipment










(22,174
)Net cash used in investing activities


(46,800,000
)


(20,460,000
)


(96,622,174
)Financing activities:Proceeds from short-term borrowings










30,000,000Repayment of short-term borrowings


(1,300,000
)






(30,000,000
)Proceeds from issuance of convertible notes


3,650,000



75,000,000



Issuance cost paid on convertible notes


(571,315
)


(2,970,138
)


(381,900
)Proceeds from issuance of common shares, net off issuance costs


83,323,942







110,659,864Proceeds from exercise of stock options






151,823



1,937,330Net cash provided by financing activities


85,102,627



72,181,685



112,215,294Effect of exchange rate changes


121,661



(4,789,309
)


747,321Net increase in cash and cash equivalents


11,818,050



6,066,417



(9,122,050
)Cash and cash equivalents at the beginning of the year


4,527,193



16,345,243



22,411,660Cash and cash equivalents at the end of the year


16,345,243



22,411,660



13,289,610Supplemental disclosure of cash flow information:Interest paid


(876,362
)


(58,814
)


(2,601,581
)Income taxes paid






(98,681
)


Supplemental schedule of non-cash activities:Issuance cost included in other payable






(381,496
)


Conversion of convertible notes to ordinary shares


10,162,215







82,103,963  F-38