THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR · PDF fileIn this circular, unless the context otherwise requires, the following expressions have the following meanings: “A Shares”

If you are in any doubt as to any aspect of this circular, or as to the action to be taken, you should consult yourstockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or otherprofessional advisor.

If you have sold or transferred all your shares in China Coal Energy Company Limited, you should at once handthis circular, together with the enclosed proxy form, to the purchaser or the transferee or to the bank, stockbrokeror other agent through whom the sale was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes norepresentation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss

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

*

(A joint stock company incorporated in the People’s Republic of China with limited liability)(Stock Code: 1898)

(1) PROPOSED A SHARE ISSUE(2) PROPOSED AMENDMENTS TO THE ARTICLES AND

CERTAIN RULES AND PROCEDURES(3) PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES

It is important to note that the purpose of distributing this circular is to provide Shareholders withinformation on, among other matters, the proposed issue of A Shares by the Company, so that Shareholdersmay make an informed decision on voting in respect of certain resolutions to be tabled at the EGM. Thiscircular does not constitute, or form part of, an offer or invitation, or solicitation or inducement of an offer,to subscribe for or purchase any of the A Shares or other securities of the Company, nor is this circularcalculated to invite offers for any Shares or other securities of the Company.

A notice convening the EGM to be held at 1st Floor, No.1, Huangsidajie, Chaoyang District, Beijing, the People’sRepublic of China on 7 September 2007 at 9: 00 a.m. is set out in this circular.

If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanyingproxy form in accordance with the instructions printed thereon. For holder of H Shares, the proxy form shouldbe returned to Hong Kong Registrars Limited and for holder of Domestic Shares, the proxy form should bereturned to the Secretariat of the Board of Directors of the Company or by post not less than 24 hours before thetime appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the proxy formwill not preclude you from attending and voting in person at the EGM or at any adjourned meeting should youso wish.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip tothe Secretariat of the Board of Directors of the Company on or before 18 August 2007.

* For identification purpose only

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

23 July 2007

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Proposed A Share Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Proposed Amendments to the Articles and Certain Rules and Procedures . . . . . . . . . . . . 8

Proposed Establishment of New Rules and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . 8

The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Procedures for Demanding Poll by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Appendix I — Proposed Applicable Articles of Association (Draft)

After Issue and Listing of A Shares . . . . . . . . . . . . . . . . . . . . . . . . 16

Appendix II — Proposed Rules of Procedures for Shareholders’ General Meeting . 44

Appendix III — Proposed Rules of Procedures for the Meetings of Board

of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Appendix IV — Proposed Rules of Procedures for Supervisory Committee . . . . . . . 101

Appendix V — Proposed Report of Feasibility Analysis on the Use of Proceeds

from the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Appendix VI — Proposed System of Independent Director’s Work . . . . . . . . . . . . . . 117

Appendix VII — Proposed Administrative Measures on the Application of Funds

Raised by the Issue of A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

Appendix VIII — Proposed Administrative Measures on Connected Transactions . . . . 133

Appendix IX — Proposed Administrative System of Security in Favour of

External Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

CONTENTS

— i —

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

following meanings:

“A Shares” the ordinary shares subscribed for in RMB, which are

proposed to be issued by the Company to the individuals,

entities and other institutions according to the PRC laws and

regulations and other regulatory requirements that the

Company is required to comply with, and to be listed on the

Shanghai Stock Exchange

“A Share Issue’’ the proposed issue of no more than 1,525,333,400 A Shares by

the Company to the individuals, entities and other institutions

according to the PRC laws and regulations and other

regulatory requirements that the Company is required to

comply with, by way of public offering of new shares, which

are proposed to be listed on the Shanghai Stock Exchange

“Articles” the articles of association of the Company, as amended from

time to time

“Board” the board of Directors of the Company

“Company’’ (China Coal Energy Company

Limited*), a joint stock limited company duly incorporated in

the PRC with limited liability and the H Shares of which are

listed on the main board of Hong Kong Stock Exchange under

the stock code 1898

“Company Law” the Company Law of the People’s Republic of China (as

amended from time to time)

“connected person” has the same meaning ascribed to it in the Hong Kong Listing

Rules

“CSRC’’ China Securities Regulatory Commission ( )

“Directors” the directors of the Company

“Domestic Shares’’ the ordinary shares issued by the Company, with a nominal value of

RMB1.00 each, which are subscribed for or credited as fully paid in

RMB

“EGM” the extraordinary general meeting of the Company to be held on 7

September 2007 to approve, inter alia, the A Share Issue

“H Shares” overseas listed foreign shares of RMB1.00 each in the share capital

of the Company which are listed on the Hong Kong Stock Exchange

and traded in Hong Kong dollars

DEFINITIONS

— 1 —

“HK dollars’’ the lawful currency of the Hong Kong Special Administrative Region

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

“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange

of Hong Kong Limited

“PRC’’ or ‘‘China” the People’s Republic of China, excluding, for the purpose of this

circular only, Hong KongSpecial Administrative Region, Macau

Special Administrative Region and Taiwan

‘RMB’’ or ‘‘Renminbi’’ the lawful currency of the PRC

“Shareholders’’ holders of Domestic Shares and/or H Shares

“Shares” Domestic Shares and/or H Shares

* For identification purpose only

DEFINITIONS

— 2 —

*

(A joint stock company incorporated in the People’s Republic of China with limited liability)(Stock Code: 1898)

Executive Directors:Jing Tianliang

Yang Lieke

Peng Yi

Non-executive Directors:Zhang Baoshan

Independent non-executive Directors:Gao Shangquan

Zhang Ke

Peng Ruchuan

Wu Rongkang

Li Yanmeng

Registered Office:No.1, Huangsidajie,

Chaoyang District

Beijing 100011

The People’s Republic of China

Principal place of business in Hong Kong:Room 2608, 26th Floor

Office Tower

Convention Plaza

1 Harbour Road

Wanchai

Hong Kong

23 July 2007

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED A SHARE ISSUE(2) PROPOSED AMENDMENTS TO THE ARTICLES AND

CERTAIN RULES AND PROCEDURES(3) PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES

A. INTRODUCTION

On 14 July 2007, the Board announced that the Company will apply to the relevant regulatory

authorities for the allotment and issue of no more than 1,525,333,400 A Shares to qualified strategic

investors, qualified inquirers and domestic natural persons, legal persons and other investors holding

accounts with the Shanghai Stock Exchange (except those who are prohibited by PRC laws,

regulations, rules and state policies), by way of public offering of new A Shares. Such A Shares are

proposed to be listed on the Shanghai Stock Exchange. The A Share Issue is subject to (i) approval

from Shareholders at the EGM and (ii) approvals from the relevant approval authorities.

LETTER FROM THE BOARD

— 3 —

The Company intends to use the net proceeds from the A Share Issue for investing in and

developing major coal related projects, details of which are set out below in this letter and Appendix

V to this circular.

In order to comply with the relevant requirements applicable to PRC listed issuers, the Board

also proposes to make certain amendments to the Articles and to adopt certain rules and procedures,

details of which are set out in Appendix I to IV and VI to IX to this circular.

The purpose of this circular is to give you details of, among other things, the proposed A Share

Issue, amendments to the Articles and certain rules and procedures and establishment of new

rules and procedures.

B. PROPOSED A SHARE ISSUE

1. General

At the Board meeting held on 14 July 2007, it was resolved that the Company will apply to the

relevant regulatory authorities for the allotment and issue of no more than 1,525,333,400 A Shares to

qualified strategic investors, qualified inquirers and domestic natural persons, legal persons and other

investors holding accounts with the Shanghai Stock Exchange (except those who are prohibited by

PRC laws, regulations, rules and state policies), by way of public offering of new A Shares. Such A

Shares are proposed to be listed on the Shanghai Stock Exchange. It is expected that such investors

will not include connected persons of the Company. If any such investors includes connected persons

of the Company, the Company will take steps to comply with the relevant connected transaction

requirements under the Listing Rules. At present, the H Shares of the Company are listed on the main

board of the Hong Kong Stock Exchange. There will be no exercise of over-allotment option in respect

of the A Share Issue.

The proposed A Share Issue and the listing application are subject to (i) approval from

Shareholders at the EGM to be held on 7 September 2007; and (ii) approvals from the CSRC, the

Shanghai Stock Exchange and other relevant approval authorities.

2. Structure of the A Share Issue

The structure of the proposed A Share Issue is set out below:

Type of securities to be issued: A Shares

Number of A Shares: No more than 1,525,333,400 A Shares. The final number of A

Shares to be issued shall be determined by the Board as

authorized by the Shareholders at the EGM after taking into

account market conditions and the approval from the relevant

regulatory authorities.

Nominal value: RMB1.00 each


— 4 —

Rights attached to A Shares: The A Shares to be issued are listed Domestic Shares and,

except as otherwise provided for in the relevant laws,

administrative regulations, departmental rules and other

regulatory documents and the Articles, holders of such A

Shares will be entitled to the same rights as the existing

Shareholders of Domestic Shares and H Shares in all respects.

The distributable profit of the Company before the A Share

Issue (after deducting the 2007 interim profit distribution)

will be distributed to all new Shareholders under the A Share

Issue and the existing Shareholders in proportion to their

shareholding. Such profit distribution plan may be adjusted

by the Board, subject to the Shareholders’ approval and the

audit of the relevant financial information, taking into

consideration the progress of the proposed A Share Issue. In

any event, the commencement date in respect of the profit

distribution plan cannot be earlier than 1 July 2007.

Target subscribers: Qualified strategic investors, qualified inquirers and domestic

natural persons, legal persons and other investors holding

accounts with the Shanghai Stock Exchange (except those

who are prohibited by PRC laws, regulations, rules and state

policies).

Methods of issue: The proposed A Share Issue shall be conducted via a

combination of placement through private placement

arrangement with potential strategic investors, offline

offering to investors subject to market consultation and

placement through online subscription at the issue price, or

other method as approved by the CSRC.

Basis for determining the issue

price:

The issue price range will be determined based on price

consultations with participants in the price consultation

process. The issue price will be determined based on the

cumulative bidding price consultations and market conditions

(or by other means of determining the issue price recognised

by the CSRC).

As required by the relevant PRC regulations, including the

Administrative Measures on the Offering and Underwriting of

Securities issued by the CSRC, the price consultation will be

undertaken with not less than 50 qualified price enquiry

participants recognised by the Securities Association of

China. Pursuant to the relevant PRC regulations, the issue

price shall not be lower than the net asset value (excluding

minority interest per Share) according to the then latest

audited financial statements of the Company.


— 5 —

The issue price and the amount to be raised from the A Share

Issue cannot be ascertained as at the date of this

announcement nor at the time when the circular is despatched

to Shareholders because the market consultation can only be

conducted after all the requisite approvals have been

obtained. The Company will make the requisite

announcement once the issue price is confirmed.

Use of proceeds: Subject to approval by the relevant regulatory authorities, the

net proceeds from the A Share Issue, after deducting relating

expenses, will be used for the investment in and development

of:

• Erdos Project and ancillary engineering facilities with

an annual production capacity of 25 million tons of coal,

4.2 million tons of methanol and 3 million tons of

dimethylether;

• Heilongjiang Project and ancillary engineering facilities

with an annual production capacity of 10 million tons of

coal, 1.8 million tons of methanol and 0.6 million tons

of alkene;

• Phase II of China Coal and Coke Xuyang Limited

Engineering Project with a total annual production

capacity of 2 million tons of coke;

• Shanxi Lingshi Project with an annual production

capacity of 0.3 million tons of methanol produced from

coke oven gas; and

• China Coal Shuozhou Great Power Project with a

capacity of 2�135 MW of coal gangue generated

electricity.

The remaining proceeds will be applied to supplement

working capital for general corporate purpose, and/or

acquisitions of core business related assets.

3. Shareholders’ approval and other approvals

At the annual general meeting of the Company held on 15 June 2007, the Shareholders granted,

by way of a special resolution, a general mandate to the Board to separately or concurrently issue, allot

and deal with additional Domestic Shares and H Shares in the Company not exceeding 20% of each

of its existing Domestic Shares and H Shares of the Company in issue as at the date of the special

resolution. To date, the Company has not issued any Shares under the above general mandate.


— 6 —

The Company’s PRC counsel, Beijing Jia Yuan Law Firm, confirms that the A Share Issue is

subject to approval by Shareholders by way of special resolutions at the EGM as stipulated by the rules

of the CSRC and the Articles. The EGM, as required under the relevant rules of the CSRC, will be held

on 7 September 2007 to consider and, if thought fit, approve the A Share Issue and to authorize the

Board to determine and deal with at its discretion, matters relating to the A Share Issue (including but

not limited to the specific timing of the issue, number of A Shares to be issued, target subscribers,

method of issue, issue price, offering structure and other matters relating to the A Share Issue and the

listing of A Shares). It should be noted that the A Share Issue, upon approval by Shareholders by way

of special resolutions at the EGM, is still subject to approvals by the CSRC and other relevant

regulatory authorities, if necessary. In addition, the approval by the Shanghai Stock Exchange as to

the listing of and dealings in the A Shares on the Shanghai Stock Exchange is also required. The

approval in respect of the A Share Issue, if obtained from Shareholders at the EGM, shall be effective

for a period of 12 months from the date on which such approval is obtained.

4. Reasons for and benefits of the A Share Issue

The Company believes that the A Share Issue will establish a new financing platform for the

Company, provide the Company with funds required for its ongoing business development, in

particular, the major coal related projects, and help improve its competitiveness and profit return to

Shareholders. Details of the projects are set out in Appendix V to this circular. The Directors believe

that the A Share Issue will benefit the Company and the Shareholders as a whole in the long term.

5. Effect of the A Share Issue on the Company’s shareholding structures

Set out below is the shareholding structure of the Company as at the date of this circular and

immediately upon completion of the A Share Issue assuming that an aggregate of 1,525,333,400 A

Shares will be issued under the A Share Issue and no other changes to the share capital of the

Company. However, Shareholders should be cautioned that the final offer size of the A Share Issueis subject to (i) approval from Shareholders at the EGM; and (ii) approvals from the CSRC andother relevant approval authorities and will be dependent on the prevailing conditions of thePRC securities market at the time when the A Share Issue takes place by way of marketconsultation.

As at the date ofthis announcement

Immediately afterCompletion of the

A Share Issue

Number of Shares % Number of Shares %

(1) Domestic Shares 7,626,667,000 65 9,152,000,400 69.03

- Existing Domestic Shares 7,626,667,000 65 7,626,667,000 57.52

- A Shares 0 0 1,525,333,400 11.51

(2) H Shares 4,106,663,000 35 4,106,663,000 30.97

(3) Total Number of Shares 11,733,330,000 100 13,258,663,400 100


— 7 —

C. PROPOSED AMENDMENTS TO THE ARTICLES AND CERTAIN RULES ANDPROCEDURES

In light of the A Share Issue and pursuant to the statutory requirements of the applicable PRC

laws and regulations, certain amendments are proposed to be made to the Articles, details of which

are set out in Appendix I to IV to this circular.

To accommodate the A Share Issue, the Company will, when proceeding with the A Share Issue,

make certain amendments to the Articles in compliance with all relevant and applicable PRC legal and

regulatory requirements. Such amendments are proposed in accordance with laws and regulations

prescribed by the relevant PRC authorities including CSRC, stipulating provisions mandatory or

recommended for inclusion in articles of association of A share listed companies. The proposed

amended Articles, subject to Shareholders’ approval at EGM, will be adopted for use by the Company

upon successful completion of the A Share Issue with the exception of nomination committee which

will come into effect immediately after the approval of EGM.

The proposed amendments deal with matters relating to a number of areas, including, among

others, (i) establishment of a nomination committee; (ii) alteration of the Company’s registered capital

and shareholding structure; (iii) regulations on the proceedings of general meetings; and (iv)

regulations on the rights and obligations of shareholders, Directors, supervisors and managers. In

addition, amendments are also proposed to be made to the Rules and Procedures for Shareholders’

Meeting and Rules and Procedures for Board Meeting, which became effective upon Shareholders’

approval at the annual general meeting of the Company held on 15 June 2007.

Further details of the proposed amendments are set out in Appendix I, II, III and IV to this

circular.

D. PROPOSED ESTABLISHMENT OF NEW RULES AND PROCEDURES

In addition to the amendments described above, and in accordance with the rules of the CSRC

governing issuance of A Shares, the Board has proposed to establish, subject to Shareholders’

approval, various new rules and procedures, with a view to further regulating the internal control of

the Company. These rules and procedures include, among others, (i) system of independent Director’s

work; (ii) administrative measures on the application of funds raised by the issue of A Shares; (iii)

administrative measures on connected transaction; and (iv) administrative system of security in favour

of external parties. Full text of each rules and procedures are set out in Appendix VI, VII, VIII and

IX to this circular.

E. THE EGM

Special resolutions to approve, among other matters, the proposed A Share Issue, the

amendments to the articles and certain rules and procedures will be proposed at the EGM. Ordinary

resolutions to approve the establishment of new rules and procedures will also be proposed at the

EGM.

No Shareholder is required to abstain from voting in connection with the matters to be resolved

at the EGM.


— 8 —

If you intend to appoint a proxy to attend the EGM, you are required to complete and return the

accompanying proxy form in accordance with the instructions printed thereon. For holder of H Shares,

the proxy form should be returned to Hong Kong Registrars Limited and for holder of Domestic

Shares, the proxy form should be returned to the Secretariat of the Board of the Directors of the

Company in person or by post not less than 24 hours before the time appointed for holding the EGM

or any adjourned meeting thereof. Completion and return of the proxy form will not preclude you from

attending and voting in person at the EGM or at any adjourned meeting should you so wish.

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

the reply slip to the Secretariat of the Board of the Directors of the Company on or before 18 August

2007.

F. PROCEDURES FOR DEMANDING POLL BY SHAREHOLDERS

Pursuant to the Articles, a resolution at a Shareholders’ general meeting shall be decided on a

show of hands unless a poll is (before or after the show of hands) demanded:

(1) by the chairman of the meeting;

(2) by at least two Shareholders present in person or by proxy for the time being entitled to vote

at the meeting; or

(3) by any Shareholder or Shareholders (including proxy) holding individually or holding in

aggregate of 10% or more of the Shares carry the right to vote at the meeting.

Unless a poll is demanded, the chairman of the meeting will announce the results of the passing

of a resolution according to the show of hands, which will be recorded in the minutes of the meeting

and treated as conclusive evidence without the need to prove the number or the proportion of votes

for or against the resolution passed.

G. RECOMMENDATION

The Directors consider that the A Share Issue, the proposed amendments to the Articles and

existing rules and procedures and the proposed establishment of new rules and procedures, are in the

best interests of the Company and its Shareholders as a whole in the long term.

Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions,

which will be proposed at the EGM.

Yours faithfully,

By Order of the Board

China Coal Energy Company LimitedJing Tianliang

Chairman of the Board, Executive Director


— 9 —

*

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

(Stock Code: 1898)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“EGM’’) of the

shareholders of China Coal Energy Company Limited (the ‘‘Company’’) will be held at 1st Floor,

No.1, Huangsidajie, Chaoyang District, Beijing, the People’s Republic of China at 9: 00 a.m. on 7

September 2007 for the purpose of considering and, if deemed appropriate, passing, with or without

modification, the following resolutions. Unless otherwise indicated, capitalized terms used herein

shall have the same meaning as those defined in the circular of the Company dated 23 July 2007 (the

‘‘Circular’’):

SPECIAL RESOLUTIONS

1. “THAT conditional upon the obtaining of approvals from the CSRC and other relevant regulatory

authorities, the allotment and issue of A Shares by the Company in the PRC by way of public

offering of new A Shares and the following terms and conditions of the A Share Issue be and are

hereby approved:

(1) Class of shares: A Shares;

(2) Nominal value: RMB 1.00 each;

(3) Total number of shares to be issued: No more than 1,525,333,400 A Shares. The final

number of A Shares to be issued shall be determined by the Board pursuant to the

authorization granted under this resolution after taking into account the PRC’s securities

market conditions and the approval from the relevant regulatory authorities.

(4) Target subscribers: Qualified strategic investors, qualified inquirers and domestic natural

persons, legal persons and other investors holding accounts with the Shanghai Stock

Exchange (except those who are prohibited by PRC laws, regulations, rules and state

policies);

(5) Method of issue: The proposed A Share Issue shall be conducted via a combination of

placement through private placement arrangement with potential strategic investors, offline

offering to investors subject to market consultation and placement through online

subscription at the issue price, or other method as approved by CSRC;

NOTICE OF EXTRAORDINARY GENERAL MEETING

— 10 —

(6) Basis for determining the issue price: The issue price range will be determined based on

price consultations with participants in the price consultation process. The issue price will

be determined based on the cumulative bidding price consultations and market conditions

(or by other means of determining the issue price recognised by the CSRC);

(7) Place of listing: Shanghai Stock Exchange;

(8) Use of proceeds: Subject to approval by the relevant regulatory authorities, the net proceeds

from the A Share Issue, after deducting relating expenses, will be used for the investment

in and development of:

• Erdos Project and ancillary engineering facilities with an annual production capacity

of 25 million tons of coal, 4.2 million tons of methanol and 3 million tons of

dimethylether;

• Heilongjiang Project and ancillary engineering facilities with an annual production

capacity of 10 million tons of coal, 1.8 million tons of methanol and 0.6 million tons

of alkene;

• Phase II of China Coal and Coke Xuyang Limited Engineering Project with a total

annual production capacity of 2 million tons of coke;

• Shanxi Lingshi Project with an annual production capacity of 0.3 million tons of

methanol produced from coke oven gas; and

• China Coal Shuozhou Great Power Project with a capacity of 2�135 MW of coal

gangue generated electricity.

The remaining proceeds will be applied to supplement working capital for general corporate

purpose, and/or acquisitions of core business related assets;

(9) Distribution plan for the accumulated profit before the issue: The distributable profit of the

Company before the A Share Issue (after deducting the 2007 interim profit distribution) will

be distributed to all new Shareholders under the A Share Issue and the existing Shareholders

in proportion to their shareholding. Such profit distribution plan may be adjusted by the

Board, subject to the Shareholders’ approval and the audit of the relevant financial

information, taking into consideration the progress of the proposed A Share Issue. In any

event, the commencement date in respect of the profit distribution plan cannot be earlier

than 1 July 2007.

(10) Validity period of this resolution: This resolution shall be effective for a period of 12

months from the date of the passing of this resolution.”

2. “THAT the Board shall be and is authorized to determine and deal with at its discretion and with

full authority, the matters in relation to the A Share Issue (including but not limited to the

specific timing of issue, number of A Shares to be issued, offering mechanism, pricing


— 11 —

mechanism, issue price, target subscribers and the number and proportion of A Shares to be

issued to each subscriber); in addition, the Board shall be and is authorized to at its discretion

and with full authority sign or execute all necessary documents (including but not limited to the

preliminary prospectus, the prospectus, underwriting agreement, listing agreement and any

related announcement), effect and carry out necessary formalities (including but not limited to

procedures for listing of the A Shares on Shanghai Stock Exchange), and take all other necessary

actions in connection with the A Share Issue (including but not limited to making adjustments,

which have been covered in the above special resolution 1 for the proceeds from the A Share

Issue, on the basis of approvals obtained prior to the issue and allotment of A Shares), as well

as to handle all registration requirements in relation to changes in the registered capital of the

Company following the completion of the A Share Issue.”

3. “THAT subject to the passing of the above special resolution 1, the proposed amendment of the

Articles of Association for the establishment of a nomination committee be and are hereby

approved and shall come into immediate effect.”

4. “THAT subject to the passing of the above special resolution 1 and conditional upon the

completion of the A Share Issue, the proposed amendments to the Articles of Association as set

out in Appendix I to the Circular be and are hereby approved and the Board be and is hereby

authorised to make further amendments which in its opinion may be necessary, desirable and

expedient in accordance with the mandatory requirements of the applicable laws and regulations,

and as the government authorities of the PRC may require, and to apply for approvals from the

relevant government authorities after completion of the A Share Issue.”

The amended Articles of Association referred to in this special resolution 4 (other than the

resolution in respect of the establishment of the nomination committee) will come into effect

upon the listing of the A Shares on the Shanghai Stock Exchange.


completion of the A Share Issue, the proposed rules of procedures for Shareholders’ general

meeting as set out in Appendix II to the Circular be and are hereby approved and adopted as part

of the Articles of Association and shall come into effect upon the effectiveness of the

amendments to the Articles of Association covered in above special resolution 4.”


completion of the A Share Issue, the proposed rules of procedures for the meetings of the board

of Directors as set out in Appendix III to the Circular be and are hereby approved and adopted

as part of the Articles of Association and shall come into effect upon the effectiveness of the

amendments to the Articles of Association covered in above special resolution 4.”


completion of the A Share Issue, the proposed rules of procedures for supervisory committee as

set out in Appendix IV to the Circular be and are hereby approved and shall come into effect upon

the effectiveness of the amendments to the Articles of Association covered in above special

resolution 4.”


— 12 —

ORDINARY RESOLUTIONS

8. “THAT subject to the passing of the above special resolution 1, the proposed report of feasibility

analysis on the use of proceeds from the offering as set out in Appendix V to the Circular be and

are hereby approved and shall come into immediate effect.”

9. “THAT subject to the passing of the above special resolution 1, the proposed system of

independent director’s work as set out in Appendix VI to the Circular be and are hereby approved

and shall come into immediate effect.”

10. “THAT subject to the passing of the above special resolution 1, the proposed administrative

measures on the application of funds raised by the issue of A Shares as set out in Appendix VII

to the Circular be and are hereby approved and shall come into effect upon the completion of the

A Share Issue covered in the above special resolution 1.”


measures on connected transactions as set out in Appendix VIII to the Circular be and are hereby

approved and shall come into immediate effect.”


system of security in favour external parties as set out in Appendix IX to the Circular be and are

hereby approved and shall come into immediate effect.”

Yours faithfully,

By Order of the Board

China Coal Energy Company LimitedJing Tianliang

Chairman of the Board, Executive Director

Beijing, the PRC, 23 July 2007


— 13 —

Notes:

1. Corporate governance documents

Details of (a) Rules of Procedures of the Shareholders’ General Meeting; (b) Rules of Procedures for Meetings of the

Board of Directors; and (c) Rules of Procedures for Supervisory Committee are set out in Appendix II to IV respectively to the

Circular and are also available for inspection on the website of The Stock Exchange of Hong Kong Limited

(http://www.hkex.com.hk) and the Company’s website (http://www.chinacoalenergy.com).

2. The proposed A Share Issue and the Company’s proposed plan in relation to the use of proceeds from the A

Share Issue

Shareholders are reminded to read carefully details of the proposed A Share Issue as well as the relevant content of the

proposal made by the Company in relation to the use of proceeds from the A Share Issue as contained in the announcement dated

14 July 2007 and the circular despatched to the Shareholders together with this notice of EGM.

3. Amendments to Articles

Details of the proposed amendments are set out in Appendix I to the Circular to be despatched to the Shareholders and

are also available for inspection on the website of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk) and

the Company’s website (http://www.chinacoalenergy.com).

4. Closure of register of members and eligibility for attending the EGM

Holders of H Shares of the Company are advised that the register of members of the Company will close from 8 August

2007 to 7 September 2007 (both days inclusive), during which time no transfer of H Shares of the Company will be effected

and registered. In order to qualify for attendance at the EGM, instruments of transfer accompanied by share certificates and

other appropriate documents must be lodged with the Company’s H share registrar, Computershare Hong Kong Investor Services

Limited by 4:30 p.m. on 7 August 2007.

Shareholders of the Company whose names appear on the register of member of the Company at the close of business

on 7 September 2007 are entitled to attend the EGM.

5. Notice of attendance

Shareholders who intend to attend the EGM should complete and lodge the accompanying notice of attendance and return

it to, for holders of H Shares, the Company’s H share registrar, or for holders of Domestic Shares and Non-H Foreign Shares,

the Company’s Board Secretariat, on or before 18 August 2007. The notice of attendance may be delivered by hand, by post

or by fax to the Company’s H share registrar, or to the address of the Company’s Board Secretariat (as may be applicable).

Completion and return of the notice of attendance do not affect the right of a Shareholder to attend the EGM. However, a failure

to return the notice of attendance may result in an adjournment of the EGM, if the number of shares carrying the right to vote

represented by the shareholders proposing to attend the EGM by the notice of attendance does not reach more than half of the

total number of shares of the Company carrying the right to vote at the EGM.


— 14 —

6. Proxy

Every Shareholder who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether

or not they are members of the Company, to attend and vote on his behalf at the EGM.

A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointer or his attorney

duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person’s seal

or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at

the Company’s H share registrar for holders of H Shares or at the address of the Company’s Board Secretariat for holders of

Domestic Shares and Non-H Foreign Shares not less than 24 hours before the time appointed for the holding of the EGM. If

the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document

of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of

authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company’s H share

registrar or the address of the Company’s Board Secretariat (as may be applicable).

7. Other businesses

(i) The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be

responsible for their own travelling and accommodation expenses.

(ii) The address of Computershare Hong Kong Investor Services Limited is:

Room 1712-1716

Hopewell Centre

183 Queen’s Road East

Wanchai

Hong Kong

Tel: (852) 2862 8555

Fax: (852) 2865 0990

(iii) The address of the Company’s Board Secretariat is:

Secretariat of the Board of Directors of China Coal Energy Company Limited

No. 1 Huangsidajie, Chaoyang District

Beijing, 100011, PRC

Tel: (8610) 8225 6482, 8225 6481

Fax: (8610) 8225 6479


— 15 —

The Company has now only issued H Shares, and is planning initial public offering and listing

of RMB common shares (A Shares). As required by China Securities Regulatory Commission (CSRC),

the Company shall formulate applicable Articles of Association after listing pursuant to Company Law

of the People’s Republic of China, Securities Law of the People’s Republic of China, Guide to Articles

of Association of Listed Companies, Standards for the Governance of Listed Companies, Rules for

General Meetings of Listed Companies, Guidance Opinions Regarding the Establishment of the System

of Independent Directors, Provisions on Strengthening the Protection of the Rights and Interests of the

General Public Shareholders, Notice on the Standardization of the External Guarantees for Listed

Companies and other relevant regulations and regulatory documents.

Compared with the existing Articles of Association, the added clauses are all provisions

concerning companies listing A Shares in China, including regulations of information disclosure,

announcement, and listing transactions. Some clauses of the Draft Articles of Association, such as the

total equity of the Company and the share registrar, can only be finalized after issue and listing of A

Shares of the Company. Amendments to the Articles of Association shall take effect from the date of

listing of A Shares of the Company upon approval by Shareholders’ general meeting.

Specific amendments are set out as follows. The change in the numbering of chapters, articles,

clauses and paragraphs will not be explained separately, and the amended clauses will be set out one

by one.

1. Article 1 of the existing Articles of Association

“These Articles of Association are formulated pursuant to Company Law of the People’s Republic

of China (“Company Law”), Securities Law of the People’s Republic of China (“Securities Law”),

Special Regulations on Overseas Offerings and Listing of Shares by Joint Stock Limited Companies

(“Special Regulations”), Mandatory Provisions for the Articles of Association of Companies to be

Listed Overseas (“Mandatory Provisions”), Letter of Opinions on Supplementary Amendment to

Articles of Association of Companies to be Listed in Hong Kong (“Letter of Opinions”) and other

relevant regulations, in order to protect the legitimate rights and interests of the Company and

shareholders and creditors thereof and regulate the organization and behavior of the Company.”

is changed to:

“These Articles of Association are formulated pursuant to Company Law of the People’s Republic

of China (“Company Law”), Securities Law of the People’s Republic of China (“Securities Law”),

Special Regulations on Overseas Offerings and Listing of Shares by Joint Stock Limited Companies

(“Special Regulations”), Mandatory Provisions for the Articles of Association of Companies to be

Listed Overseas (“Mandatory Provisions”), Letter of Opinions on Supplementary Amendment to

Articles of Association of Companies to be Listed in Hong Kong (“Letter of Opinions”), Guide to

Articles of Association of Listed Companies (amended in 2006) (“Guide to Articles of Association”),

Notice of China Securities Regulatory Commission and China Banking Regulatory Commission on the

Standardization of the External Guarantee for Listed Companies (“Notice on External Guarantee”)

and other relevant regulations, in order to protect the legitimate rights and interests of the Company

and shareholders and creditors thereof and regulate the organization and behavior of the Company.”

APPENDIX I PROPOSED APPLICABLE ARTICLES OF ASSOCIATION(AS AMENDED) AFTER ISSUE AND LISTING OF A SHARES

— 16 —

2. Add Article 3:

“Upon approval by CSRC on the date of [●], the Company issued the initial public offering of

[●] RMB common shares to the public and listed the same with Shanghai Stock Exchange on the date

of [●].”

3. Paragraph 1 of Article 7 of the existing Articles of Association:

“Upon adoption by special resolution on the general meeting of the Company and approval of the

relevant authority of the state, these Articles of Association shall take effect as from the date of listing

of the Company and shall replace the Articles of Association formerly registered with the industrial

and commercial administration authority.”

is changed to:

“Upon adoption by special resolution on the general meeting of the Company and approval of the

relevant authority of the state, these Articles of Association shall take effect as from the date of initial

public offering and listing of RMB common shares of the Company and shall replace the Articles of

Association formerly registered with the industrial and commercial administration authority.”


“The shareholders of the Company may pursue actions against the Company pursuant to the

Articles of Association; the Company may pursue actions against its shareholders pursuant to the

Articles of Association; the shareholders may pursue actions against other shareholders pursuant to the

Articles of Association; the shareholders of the Company may pursue actions against the Company’s

directors, supervisors, president (manager) and other senior executives of the Company pursuant to the

Articles of Association.”

is changed to:

“The shareholders of the Company may pursue actions against the Company, other shareholders,

the Company’s directors, supervisors, president (manager) and other senior executives of the Company

pursuant to the Articles of Association. The Company may pursue actions against its shareholders,

directors, supervisors, president (manager) and other senior executives pursuant to the Articles of

Association.”

5. Add Article 16:

“The Company shall issue shares in an open, fair and just manner, and each share of the same

category shall have the same right.

All shares of the same category issued at the same time shall be issued under the same conditions

and at the same price; any entity or individual shall pay the same price for each share.”


— 17 —

6. Add Article 20:

“After issuing of domestically listed RMB common shares, the total number of shares of the

Company is [●], and the structure of the capital stock is [●] RMB common shares and [●] overseas

listed foreign shares.”

7. Add Article 22:

“The domestic shares issued by the Company shall be kept at China Securities Depository and

Clearing Corporation Limited, and foreign shares listed in Hong Kong shall primarily be put under

custody of HKSCC Nominees Limited.”


“The Company may increase capital as follows:

(I) offer of new shares to non-given investors;

(II) placement of new shares among given investors and/or existing shareholders;

(III) issuing new shares to existing shareholders;

(IV) converting common reserve fund into share capital; or

(V) Other means stipulated by laws and administrative regulations or approved by the securities

authority under the State Council.”

is changed to:

“The Company may increase capital as follows:

(I) public offering;

(II) Non-public offering;

(III) issuing bonus shares to existing shareholders;

(IV) converting common reserve fund into share capital; and

(V) Other means stipulated by laws and administrative regulations or approved by the CSRC.”


— 18 —

9. Add a clause to Paragraph 2 of Article 27 of the existing Articles of Association:

“(IV)Other means approved by the securities regulatory authority.”

10. Clause (2) of Paragraph 2 of Article 49 of the existing Articles of Association:

“to attend general meetings either in person or by proxy and exercise the voting right.”

is changed to:

“to lawfully require, convene, preside over or attend general meetings either in person or by

proxy and exercise the corresponding voting right.”

11. Add Article 57:

“If any shareholder needs to access the relevant information as set out in the preceding article,

the said shareholder shall provide the Company with written documents bearing evidence of the type

and number of shares held by the said shareholder, and the Company will provide the said information

as required by the said shareholder upon authentication of the said shareholder.”

12. Add Article 58:

“If any resolution of the shareholders’ general meeting or Board of the Directors runs against the

laws and administrative regulations or infringes upon the legitimate right sand interests of the

shareholders, the shareholders shall have the right to request the court to invalidate the said resolution.

If the meeting convening procedure and voting method of the general meeting or Board meeting

run against the laws and administrative regulations or the Articles of Association or if the content of

any resolution runs against the Articles of Association, the shareholders shall have the right to request

the court to cancel the said procedure, method or resolution within 60 days after adoption of the

resolution.”

13. Add Article 59:

“If any director or senior executive violates the laws and administrative regulations or the

Articles of Association in fulfilling their duties, thereby incurring any loss of the Company, the

shareholder(s) separately or jointly holding 1% or more shares of the Company for more than 180 days

continuously shall have the right to submit a written request to the Supervisory Committee to institute

legal proceedings in the court; if the Supervisory Committee violates the laws and administrative

regulations or the Articles of Association in fulfilling its duties, thereby incurring any loss of the

Company, the shareholders shall have the right to submit a written request to the Court for legal

proceedings.

If the Supervisory Committee or Board of Directors refuses to institute legal proceedings after

receipt of the aforesaid written request or does not institute legal proceedings within 30 days after


— 19 —

receipt of the said request, or if the circumstance is urgent or any delay of legal proceedings may incur

irrecoverable damage to the interests of the Company, the shareholders as specified in the preceding

paragraph shall have the right to directly institute legal proceedings in the court in their own names

for the interests of the Company.

If any other person infringes upon the legitimate rights and interests of the Company, thereby

causing any loss of the Company, the shareholders as specified in Paragraph 1 of this Article may

institute legal proceedings in the court pursuant to the preceding two paragraphs.”

14. Add Article 60:

“If any director or senior executive violates the laws and administrative regulations or the

Articles of Association, thereby incurring any loss of the shareholders, the shareholders may institute

legal proceedings in the court.”

15. Add a clause to Paragraph 2 of Article 50 of the existing Articles of Association:

“(V) Shareholders shall not abuse their right to damage the interests of the Company or other

shareholders and shall not abuse the independent status of legal person or shareholders’

limited liability to damage the interests of the creditors of the Company; if any shareholder

abuses shareholder’s right, thereby incurring any loss of the Company or other

shareholders, the said shareholder shall be liable for compensation according to law. If any

shareholder abuses the independent status of legal person or shareholder’s limited liability

or evades debts, thereby damaging the interests of the creditors of the Company, the said

shareholder shall bear joint liability for the Company’s debts.”

16. Add Article 62:

“If any shareholder holding more than 5% voting shares of the Company pledges the said voting

shares, the said shareholder shall submit a written report to the Company on the date on which the said

pledge is executed.”

17. Add a paragraph to Article 51 of the existing Articles of Association:

“The controlling shareholders and effective controllers of the Company shall be honest to the

Company and general public shareholders. The controlling shareholders shall duly exercise

contributors’ rights according to law, shall not damage the legitimate rights and interests of the

Company and general public shareholders by such means as profit distribution, asset reorganization,

external investment, fund appropriation and loan guarantee and shall not abuse its controlling status

to damage the interests of the Company and general public shareholders.”

18. Add two clauses to Clause (XIV) of Paragraph 2 of Article 56 of the existing Articles of

Association, with the existing Clause (XIV) and Clause (XV) changed to Clause (XVII) and

Clause (XVIII) respectively. The two clauses added are:

“(XV) to consider and approve matters relating to the changes in the use of proceeds from share

offerings;


— 20 —

(XVI) to consider share incentives schemes;”

19. Add Article 67:

“The following guarantees to be given by the Company shall be considered and approved by the

shareholders’ general meeting:

(I) Any provision of guarantee, where the total amount of external guarantees provided by the

Company or its subsidiaries exceeds 50% of the latest audited net assets;

(II) provision of guarantee to anyone whose liability-asset ratio exceeds 70%;

(III) provision of a single guarantee whose amount exceeds 10% of the latest audited net assets;

(IV) provision of guarantee to shareholders, effective controllers and their connected parties;

(V) Save as specified in Clauses (I) to (IV), provision of other guarantees involving

“discloseable transactions” as specified in the Listing Rules of SEHK and any of the results

of the five tests is greater than 25%.

External guarantees to be examined and approved on the shareholders’ general meeting shall be

examined and approved by the Board of Directors before submission to the shareholders’ general

meeting. When the shareholders’ general meeting is considering a proposal to provide guarantee for

any shareholder, effective controller or related connected party, the said shareholder or the

shareholders controlled by the said effective controller shall not participate in voting on the said

proposal, and the said proposal shall be subject to adoption by more than half of the voting rights of

other attending Shareholders.

Besides the foregoing, other external guarantees may be examined and approved by the Board of

Directors subject to consideration and approval by over two thirds of the attending directors.”

20. Add Article 70:

“The venue of shareholders’ general meeting of the Company is: domicile of the Company or

other place notified by the convener of the shareholders’ general meeting.

The shareholders’ general meetings shall be held onsite at the venue. The Company may also

provide network or any other means for its shareholders to conveniently participate in general

meetings. Shareholders participating in the general meetings by any aforesaid means shall be deemed

as having attended the meetings.”


— 21 —

21. Add Article 71:

“In convening a shareholders’ general meeting, the Company shall engage a lawyer to provide

legal opinions and publish an announcement on the following issues:

(I) Whether the convening and procedure of the meeting comply with the laws, administrative

regulations and the Articles of Association;

(II) Whether the attendants and convener of the meeting are eligible;

(III) Whether the voting procedures and results of the meeting are valid;

(IV) Legal opinions on other matters upon request by the Company.”

22. Add Article 72:

“An extraordinary general meeting may be held upon proposal by more than half of the

independent directors to the Board. Regarding the proposal of the independent director to convene an

extraordinary general meeting, the Board shall, pursuant to relevant laws, administrative regulations

and the Articles of Association, give a written reply on whether to convene the extraordinary general

meeting within 10 days after receipt of the proposal.

If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such

meeting within 2 days after the resolution is made by the Board. If the Board does not agree to hold

the extraordinary general meeting, it shall give the reasons and make an announcement in respect

thereof. ”

23. Add Article 73:

“The Supervisory Committee shall have the right to propose to the Board to convene an

extraordinary general meeting, and shall put forward its proposal to the Board in a written form. The

Board shall, pursuant to relevant laws, administrative regulations and the Articles of Association, give

a written reply on whether to convene the extraordinary general meeting within 10 days after receipt

of the proposal.

If the Board agrees to convene the extraordinary general meeting, it shall serve a notice of such

meeting within 2 days after the resolution is made by the Board. In the event of any change to the

original proposal set forth in the notice, the consent of the Supervisory Committee is required.

If the Board does not agree to hold the extraordinary general meeting or fails to give a written

reply within 10 days after receipt of the proposal, it shall be deemed as unable to perform or failing

to perform the duty of convening the extraordinary general meeting, and the Supervisory Committee

may convene and preside over the meeting by itself.”


— 22 —

24. Add Article 75:

“Where the Supervisory Committee or shareholders decide to convene a shareholders’ general

meeting by itself/themselves, it/they shall notify the Board in writing and file with the authority

appointed by CSRC office in the location of the Company and the stock exchange.

Prior to the announcement of the resolution of the shareholders’ general meeting, the

shareholding of shareholders who convene the meeting shall not be less than 10%.”

25. Add Article 76:

“With regard to the shareholders’ general meeting convened by the Supervisory Committee or

shareholders on its/their own initiative, the Board and its secretary shall offer cooperation. The Board

shall provide a shareholders’ register as of the shareholding record date. If the Board fails to provide

the shareholders’ register, the convener may apply to the securities registration and clearing authority

or its agency to obtain it upon presentation of the related notice or announcement of the general

meeting. The shareholders’ register obtained by the convener shall not be used for other purposes

except for the shareholders’ general meeting.”

26. Add Article 77:

“The Company shall bear the expenses in relation to the shareholders’ general meeting convened

by the Supervisory Committee or shareholders on its/their own initiative.”

27. Add Article 78:

“The content of a proposal shall be determined by the shareholders’ general meeting, with

definite topics and specific issues for resolution, and shall comply with the relevant provisions of the

laws, administrative regulations and the Articles of Association.”

28. Add three paragraphs to Article 60 of the existing Articles of Association:

“Where the opinions of an independent director are required on the issues to be discussed, such

opinions and reasons thereof shall be disclosed in the notices or supplementary notices of

shareholders’ general meetings served.

“If a shareholders’ general meeting is held over network or other means, the notice of

shareholders’ general meeting shall specify the voting time and voting procedure over network or

other means. The time to start voting at a general meeting held over network or by other means shall

not be earlier than 3:00 PM of the day preceding the date of the onsite general meeting or later than

9:30 AM of the date of the onsite shareholders’ general meeting, and shall not conclude earlier than

3:00 PM of the date of the onsite shareholders’ general meeting.

The interval between equity registration date and the date of the meeting shall not be more than

7 days. The equity registration date shall not be changed once confirmed.”


— 23 —

29. Add Article 86:

“After giving the notice of general meeting, the relevant meeting shall not be postponed or

cancelled and the proposals set out in the notice shall not be cancelled without proper reasons. In the

case of any postponement or cancellation of the meeting, the convener shall make an announcement

and give the reasons therefor at least 2 working days prior to the date on which the meeting is

originally scheduled.”

30. Add Article 87:

“The Board or any other convener shall take necessary measures to ensure the proper order of

the general meeting. The Board or any other convener shall take measures to stop any act disturbing

the general meeting, seeking trouble or infringing upon the legitimate rights and interests of

shareholders, and shall report such act to the relevant authority for investigation and treatment.”

31. Add Article 88:

“All the shareholders registered on the equity registration date or the agents of the said

shareholders shall have the right to attend general meetings and exercise voting rights pursuant to

relevant laws, regulations and the Articles of Association.

The shareholders may attend general meetings and exercise voting rights either in person or by

proxy.”

32. Add Article 89:

“An individual shareholder attending a general meeting in person shall present his/her identity

card or other valid identity certificate or share account card; a proxy attending a general meeting on

behalf of an individual shareholder shall present his/her valid identity card and power of attorney of

the shareholder.

For a legal person as shareholder, its legal representative or a proxy appointed thereby shall

attend the meeting. The legal representative attending the meeting shall present his/her identity card

or valid certificate bearing evidence of his/her qualifications as legal representative; a proxy attending

the meeting on behalf of the legal representative shall present his/her identity card and power of

attorney lawfully issued by the legal representative of the legal person as shareholder.”

33. Add Article 95:

“The attendance register shall be prepared by the Company, which register shall state the names

(or names of the corporations), identification document number and the address of the attendee, the

number of voting shares held or represented, names of the principal (or names of the corporations) and

so on.”


— 24 —

34. Add Article 96:

“In convening a shareholders’ general meeting, the convener and the lawyer appointed by the

Company shall jointly verify the validity of the shareholders’ qualifications based on the shareholders’

register provided by the securities registration and clearing authority, and shall register the names of

the shareholders as well as the amount of their voting shares. The registration for a meeting shall be

completed before the presider announces the number of shareholders and proxies that attend the

meeting and the total amount of their voting shares.”

35. Add Article 99:

“The Company shall formulate rules of procedure for shareholders’ general meetings regulating

the convening and voting procedure of shareholders’ general meetings, including notification,

registration, consideration of proposal, voting, counting of ballots, announcement of voting result,

formation of resolution, meeting minutes and signing thereof and announcement, and the principle for

authorization of the Board on general meetings. The rules of procedure for shareholders’ general

meetings are appendix to the Articles of Association and shall be formulated by the Board and

approved on the shareholders’ general meeting.”

36. Add Article 100:

“The Board and Supervisory Committee shall report their work in the preceding year on the

annual shareholders’ general meeting. Every independent director shall also make his work reports.”


“Directors, supervisors and senior executives shall make explanations in relation to the inquiries

and suggestions made by shareholders on shareholders’ general meetings.”


“The presider shall, prior to voting, declare the number of attending shareholders and their

proxies as well as the total number of their voting shares, and the number of attending shareholders

and their proxies and the total number of their voting shares shall be as recorded in the meeting’s

register.

Minutes of a shareholders’ general meeting shall be kept by the Secretary of the Board. The

minutes of the meeting shall specify:

(I) the number of shareholders and proxies attending the meeting, the total number of voting

shares they represent and the proportion of these shares to the total number of shares of the

Company;

(II) the date and venue of the meeting;


— 25 —

(III) the name of the presider of the meeting and the agenda of the meeting;

(IV) the names of the presider, and the directors, supervisors, secretary of the Board, manager

and other senior executives attending or present at the meeting;

(V) the process of discussion, highlights of the speeches and voting result in respect of each

proposal;

(VI) the inquiries and suggestions of shareholders and the answers or explanations made by the

directors or supervisors;

(VII) the name of the lawyer, counting officer and monitoring officer; and

(VIII) other issues that shall be recorded in the minutes in accordance with opinions of the

shareholders’ general meeting and provisions of the Articles of Association.”


“The convener shall ensure the meeting minutes are true, accurate and complete. The attending

directors, supervisors, secretary to the Board, convener or representative thereof and presider shall

sign the minutes of the meeting. The minutes of the meeting, the signed attendance record of those

shareholders on the spot and the powers of attorney for attendance by proxy, the valid information

relating to the voting over network or by other means shall be kept for at least 10 years.”


“The convener shall ensure the shareholders’ general meeting is held continuously until final

resolutions are arrived at. If the shareholders’ general meeting is terminated or fails to reach any

resolution due to force majeure or for other special reasons, necessary action shall be taken to resume

the general meeting as soon as possible or directly terminate the general meeting and make a

responsive announcement. Meanwhile, the convener shall report to the authority appointed by CSRC

office in the location of the Company and the stock exchange.”


“The Company shall provide convenience for shareholders to attend shareholders’ general

meetings by whatever means including the use of modern IT means such as online voting platform,

provided that the shareholders’ general meeting shall be held legally and validly.”


“Members of staff of the controlling shareholders and effective controllers of the Company who

serve positions other than directors shall not serve as senior executives of the Company.”


— 26 —


“The working rules of the president (manager) shall specify:

(I) the conditions and procedure for holding president’s meetings, and attendants;

(II) duties and division of work of the president and other senior executives;

(III) use of funds and assets of the Company, right to conclude material contracts, and the system

to report to the Board and the Supervisory Committee;

(IV) other matters deemed necessary by the Board.”


“The president (manager) may resign before his term of office expires. The procedure and rules

for resignation of president shall be specified in the labor contract between the president (manager)

and the Company.”


“If the term of office of a supervisor expires but reelection is not made responsively or if any

supervisor resigns during his term of office so that the number of members of the Supervisory

Committee is less than the quorum, the said supervisor shall continue fulfilling the duties as

supervisor pursuant to relevant laws, administrative regulations and the Articles of Association until

a new supervisor is elected.”


“The supervisors shall ensure the information disclosed by the Company is true, accurate and

complete.”


“The supervisors may attend Board meetings and make inquiries or suggestions in relation to the

resolutions of Board meetings.”


“The supervisors shall not abuse their connected relations to damage the interests of the

Company, and shall compensate for any losses caused to the Company.”


“If any supervisor violates the laws and administrative regulations or the Articles of Association

in fulfilling his duties, thereby incurring any loss of the Company, the said supervisor shall be liable

for compensation.”


— 27 —


“The Supervisory Committee shall formulate rules of procedure for Supervisor Committee

meetings specifying the deliberation method and voting procedure of Supervisor Committee meetings,

in order to ensure the work efficiency and proper decision making of the Supervisory Committee. The

rules of procedure for Supervisor Committee meetings specify the convening and voting procedure of

Supervisor Committee meetings, are appendix to the Articles of Association and shall be formulated

by the Supervisory Committee and approved on the general meeting.”


“The minutes of a Supervisory Committee meeting shall specify:

(I) the time, venue and form of the meeting;

(II) sending of the notice of meeting;

(III) convener and presider of the meeting;

(IV) attendance of the meeting;

(V) the proposals considered at the meeting, chief comments and opinions of each supervisor

on relevant issues, and each supervisor’s voting on the proposals;

(VI) the voting method and result for each proposal (the voting result shall set out the respective

numbers of pros, cons and abstentions); and

(VII) other issues that the attending supervisors think should be included into the minutes.

For a meeting held by correspondence, the Audit Department shall sort out the meeting minutes

as per the preceding provision.”


”The attending supervisors shall sign and confirm the meeting minutes. Where the supervisors

disagree over the said minutes, they may attach written remarks when signing the said minutes. Where

necessary, they shall responsively report to the regulatory authority or announce public statements.

If any supervisor neither signs as the preceding paragraph requires nor provides his different

opinions in writing or reports to the regulatory authority or announces public statement, the said

supervisor shall be deemed as agreeing with the minutes of the meeting.”


“Directors and vice chairman of the Board shall be elected at general meetings and each director

or vice chairman shall serve a term of three years, which term is renewable upon re-election when it

expires.


— 28 —

The Chairman of the Board shall be elected or removed by more than half of all the directors,

and the Chairman of the Board shall serve a term of office of three years, and is eligible for

re-election.

A director need not hold shares of the Company.”

is changed to:

“Directors and vice chairman of the Board shall be elected at general meetings and each director

or vice chairman shall serve a term of office of three years. which term is renewable upon re-election

when it expires.

The Chairman shall be elected or removed by more than half of all the directors, and the

Chairman of the Board shall serve a term of office of three years, and is eligible for re-election.

The term of office of a director shall start from the date on which the said director assumes office

to the expiry of the current Board. “If the term of office of a director expires but reelection is not made

responsively, the said director shall continue fulfilling the duties as director pursuant to relevant laws,

administrative regulations and the Articles of Association until a new director is elected.

A director need not hold shares of the Company.”


“If any director fails to attend board meetings in person or by proxy for two consecutive times,

the said director shall be deemed incapable of performing his duties, and the Board shall suggest that

the general meeting dismiss the said director.”


“A director may resign before his term of office expires. In resigning his duties, a director shall

tender a resignation to the Board in writing. The Board will disclose relevant information within 2

days.

“If any director resigns so that the membership of the Board falls short of the quorum, the said

director shall continue fulfilling the duties as director pursuant to relevant laws, administrative

regulations and the Articles of Association until a new director is elected.

Besides the provisions set out in the preceding paragraph, a director’s resignation shall be

effective when his resignation is served to the Board.”


“If resignation of a director takes effect or if his term of office expires, the said director shall

go through all handover formalities with the Board. His loyalty obligation to the Company and

shareholders thereof shall not terminate automatically at the end of his term of office but shall still

be valid within the reasonable period specified in the Articles of Association.”


— 29 —


“Save as specified in the Articles of Association or properly authorized by the Board, no director

shall act on behalf of the Company or the Board in his personal name. If a director acts in his own

name but a third party may reasonably think the said director is acting on behalf of the Company or

the Board, the said director shall make a prior statement of his standpoint and capacity.”


“If any director violates the laws and administrative regulations or the Articles of Association in

fulfilling his duties, thereby incurring any loss of the Company, the said director shall be liable for

compensation.”


“The Company shall establish independent director system. Independent directors are directors

who do not hold any positions in the Company other than as director and do not maintain with the

Company and its substantial shareholders a connection which may possibly hamper their independent

and objective judgments.

An independent director shall serve a term of office of three years and is eligible for reelection

but shall not serve for more than nine years.”

is changed to:

“Independent directors are directors who do not hold any positions in the Company other than

as director, do not maintain with the Company and its substantial shareholders (shareholders

separately or jointly holding more than 5% voting shares of the Company) a connection which may

possibly hamper their independent and objective judgments, and comply with the independence

provision of the rules of the stock exchange with which the Company is listed.

The term of office of independent directors is the same as other directors, and the term is

renewable upon re-election when it expires, but the renewed term shall not exceed six years.”


“An independent director shall meet the following basic conditions:

qualified as independent director of a listed company pursuant to relevant laws, administrative

regulations, the listing rules of the stock exchange with which the Company is listed, and other

regulations;

independent as specified in the listing rules of the stock exchange with which the Company is

listed;


— 30 —

having the basic knowledge about operations of listed companies, and proficient in relevant laws,

administrative regulations and rules;

having more than five years’ experience in legal and economic work or other work required for

fulfilling duties as independent director;

other conditions specified in the Articles of Association.”

is changed to:

“An independent director shall meet the following basic conditions:

qualified as independent director of a listed company pursuant to relevant laws, administrative

regulations, the listing rules of the stock exchange with which the Company is listed, and other

regulations;

independent as specified in the listing rules of the stock exchange with which the Company is

listed;

having the basic knowledge about operations of listed companies, and proficient in relevant laws,

administrative regulations and rules;

having more than 5 years’ experience in legal and economic work or other work required for

fulfilling duties as independent director;

having sufficient time and energy to effectively fulfill duties as independent director;

other conditions specified in the Articles of Association.”


“The following persons shall not serve as independent director:

(I) persons employed by the Company or its subsidiaries and their immediate family members

and major social connections (immediate family members shall include spouse, parents and

sons and daughters and major social connections shall include siblings, parents-in-law,

sons/daughters-in-law, spouses of siblings, siblings of spouse);

(II) natural person shareholders who directly or indirectly hold 1% or more than 1% of the

Company’s shares or who are top ten shareholders of the Company, and their respective

immediate family members;

(III) persons employed by the shareholder entities which directly or indirectly holds 5% or more

than 5% of the Company’s shares or which are top five shareholder entities of the Company

and their respective immediate family members;


— 31 —

(IV) persons who belonged to categories (1) to (3) within the preceding year;

(V) persons who provide financial, legal and consultation services to the Company or its

affiliated companies;

(VI) any other persons specified in the Articles of Association; or

(VII) any other persons specified by CSRC.”


“The membership of the Board shall include at least one third of independent directors. If any

independent director does not meet the condition of independence or is under any other circumstance

disqualifying him as independent director, so that the number of independent directors of the

Supervisory Committee falls short of the quorum as specified in the Articles of Association, the

Company shall supplement independent directors pursuant to relevant regulations. ”


“Independent directors of the Company shall be elected as follows:

(I) An independent director candidate may be nominated by the Board, the Supervisory

Committee, or shareholder(s) separately or jointly holding more than 1% of the shares of

the Company, and shall be elected by a shareholders’ general meeting of the Company;

(II) The party nominating any independent director candidate shall have obtained the nominee’s

consent prior to the nomination, and shall be fully aware of such particulars of the nominee

such as his occupation, academic qualification, title, detailed work experience and

information regarding all his positions held concurrently and be responsible for providing

to the Company his opinions in relation to the nominee’s qualification as an independent

director and independence. The nominee shall make a public announcement stating that

there exists no relation between the Company and him that may affect his independent and

objective judgment;

(III) Before the shareholders’ general meeting is convened for election of independent directors,

the Company shall announce the above in accordance with the relevant requirements.

(IV) If the Company issues RMB common shares and lists them with a domestic stock exchange,

then before the shareholders’ general meeting for the election of independent directors, the

Company shall submit the relevant information of all candidates to the CSRC, the CSRC

office at the location of the Company and the stock exchange with which the Company is

listed. If the Board disputes the particulars pertaining to the nominee, it shall also submit

its written opinions to the relevant authorities.


— 32 —

Any of such nominees objected by CSRC may be treated as a nominee for director instead of

independent director.

When a shareholders’ general meeting is convened to nominate independent directors, the Board

shall make a statement on whether CSRC has any objection to the nominations.”


“Independent directors shall, in addition to fulfilling the aforesaid duties, provide the Board or

shareholders’ general meeting with independent opinions on the following matters:

(I) nomination, appointment and dismissal of directors;

(II) appointment or dismissal of senior executives;

(III) remuneration of directors and senior executives of the Company;

(IV) existing or new transactions totaling more than RMB3,000,000 between the shareholders,

effective controllers and connected enterprises and the Company or loan exceeding 5% of

the latest audited net assets or other financial transaction, and whether the Company has

taken effective measures to collect outstanding receivables;

(V) matters which independent directors deem likely to damage the equity of small and medium

shareholders;

(VI) other issues specified in the Articles of Association.

Independent directors shall express one of the following types of opinions on the aforesaid

issues: agreement; qualified opinion and reason therefor; objection and reason therefor; inability

to express opinion and reason therefor.

If the relevant issue needs to be disclosed, the Company shall disclose the opinions of the

independent directors in the relevant announcement. If the independent directors are of divergent

views and cannot reach a consensus, the Board shall disclose the respective opinions of each of the

independent directors.”

65. Clauses (XVI) and (XVII) of Article 102 of the existing Articles of Association:

“(XVI) to follow the listing rules of the securities regulatory authority and the stock exchange

with which the Company is listed in the disposal (including acquisition, sale and swap) of assets or

connected transactions;

(XVII) to exercise other functions and powers as stipulated by laws, regulations and the listing

rules of the stock exchange with which the Company is listed or conferred by the shareholders’ general

meetings and the Articles of Association.”


— 33 —

is changed to:

“(XVI) to decide on external investment, acquisition and sale of assets, asset disposal, external

guarantees, consigned financial management and connected transactions of the Company within the

range authorized by the shareholders’ general meeting and pursuant to the listing rules of the securities

regulatory authority and the stock exchange with which the Company is listed;

(XVII) to exercise other functions and powers as stipulated by laws, administrative regulations,

department rules, and the listing rules or conferred by the shareholders’ general meetings and the

Articles of Association.”


“The Board shall formulate rules of procedure for Board meetings to ensure execution of

resolutions of the shareholders’ general meeting and enhance the work efficiency and proper decision

making of the Board. The rules of procedure for Board meetings specify the convening and voting

procedure of Board meetings, are appendix to the Articles of Association and shall be formulated by

the Board and approved on the general meeting.”


“The Board shall set up special committees to help the Board fulfill duties as authorized by the

Board. The special committees under the Board are strategic planning committee, audit committee,

remuneration committee, nomination committee, and safety, health and environment protection

committee. The special committees shall be accountable to the Board and consist of directors. In the

Audit Committee and Remuneration Committee, independent directors shall be the majority and shall

act as Chairman, and the Audit Committee shall include at least one accountant as independent

director. Where necessary, the Board may also set up other committees and adjust the existing

committees. The Board shall formulate rules of procedure for respective special committees.”


“The Board shall make explanations to the shareholders’ general meeting in relation to the

nonstandard audit opinions produced by certified public accountants on the financial reports of the

Company.”


“In making decisions on external investment, asset disposal, external guarantees, consigned

financial management and connected transactions, the Board shall establish strict examination and

decision making procedure; and organize relevant experts and professionals to make assessments on

material investment projects.”


— 34 —


“The vice chairman shall assist the Chairman in performing his duties. If the Chairman is unable

or fails to perform his duties, such duties shall be performed by the vice chairman. If the vice chairman

is unable or fails to perform his duties, a director shall be elected jointly by more than half of the

directors to perform such duties.”

71. Clause (III) of Article 107 of the existing Articles of Association

“jointly proposed by more than two (inclusive) independent directors;”

is changed to:

“jointly proposed by half of the independent directors;”


“A written notice of meeting shall include at least the following details:

(I) Time and venue of the meeting;

(II) the form of the meeting;

(III) matters (proposals) to be considered;

(IV) convener and presider of the meeting, proposer of and written proposal for the

extraordinary general meeting;

(V) documents needed for voting of directors;

(VI) requirements for the directors to attend the meeting in person or by proxy;

(VI) coordinator and means of contact.

A verbal notice of meeting shall at least include (I) and (II) above, and explanation for a

provisional meeting of the Board in emergency.”


“After adequate discussion of each proposal, the presider shall submit it to voting by the

attending directors.

Each attendant shall cast one vote, by open ballot or in writing or otherwise.


— 35 —

The voting intent of a director may be pro, con or abstention. Every attending director shall

choose one out of the aforesaid intents. Where any director does not make any option or makes two

or more options, the presider shall require the said director to make an option again, otherwise the said

director shall be deemed as having abstained from voting; any director who has left the meeting

midway without coming back and has not made any option shall be deemed as having abstained from

voting.”


“Saved as specified in the Articles of Association, adoption of or resolution on any proposal shall

be subject to approval of more than half of all the directors of the Company, each of whom has one

voting right. If the pros and cons are the same, the Chairman of the Board shall be entitled to an

additional vote. If the relevant laws, administrative regulations and Articles of Association require

approval by more directors, such provisions shall apply.

Any resolution made by the Board on any guarantee within its range of authority in accordance

with the Articles of Association shall be subject to the approval of more than two thirds of the

attending directors.

If different resolutions conflict with each other in contents and meanings, the resolutions formed

later in time shall prevail.”


“In any of the following circumstances, the directors shall abstain from voting on the relevant

proposals:

(I) The listing rules of the stock exchange with which the company is listed provide for

abstention of the directors from voting;

(II) The directors themselves think they should abstain from voting; and

(III) The directors are connected with the enterprises involved by the proposals and shall

therefore abstain from voting pursuant to the Articles of Association.

If any director abstains from voting, the Board meeting may be held when more than half of the

non-connected directors attend the meeting. The resolution of the Board meeting shall be passed by

more than half of the non-connected directors. If the number of non-connected attending directors is

smaller than 3, the relevant proposal shall not be voted on but shall be submitted to the general

meeting for deliberation.”


“If more than half of the attending directors or more than two independent directors think they

cannot make judgments on relevant issues because, among other things, the relevant proposal is not

clear or specific or the meeting documents are inadequate, they can jointly propose to adjourn the

Board meeting or suspend considering some issues, and the Board shall approve such proposal.


— 36 —

The director proposing suspension of voting shall provide specific requirements for the

conditions to be met for resubmitting the said proposal for deliberation.”


“Archives of Board meetings, including notices of meeting, meeting documents, attendance

book, powers of attorney for proxy directors, meeting recordings, votes, meeting minutes signed by

the attending directors, meeting summaries, records of the resolutions, announcements of the

resolutions, etc., shall be kept by the secretary of the Board.”


“In exercising rights or fulfilling obligations, the directors, supervisors, president (manager) and

other senior executives have the duty to act with due discretion, diligence and skill as a reasonable

discreet person should do in similar circumstances.”

is changed to:

“In exercising rights or fulfilling obligations, the directors, supervisors, president (manager) and

other senior executives have the duty to act with due discretion, diligence and skill as a reasonable

discreet person should do in similar circumstances. Directors, supervisors, president (manager) and

other senior executives shall comply with the laws, administrative regulations and the Articles of

Association and shall fulfill the following obligations with due diligence:

(I) to exercise the rights conferred by the Company with due discretion, care and diligence to

ensure the business operations of the Company comply with state laws, administrative

regulations and economic policies, not beyond the business scope specified in the business

license of the Company;

(II) to treat all shareholders impartially;

(III) to keep informed of the business operations and management of the Company;

(IV) to ensure the information disclosed by the Company is true, accurate and complete in the

range of duties;

(V) to honestly provide the Supervisory Committee with relevant information, and not prevent

the Supervisory Committee or supervisors from exercising their functions and powers; and

(VI) to fulfill other due care obligations stipulated by laws, administrative regulations,

department rules and the Articles of Association.”


— 37 —


“The Company shall prepare financial reports at the end of each fiscal year, which reports shall

be audited by certified public accountants according to law.

The fiscal year of the Company is Gregorian calendar year, i.e. from January 1 to 31 December

every year.”

is changed to:

“The Company shall prepare financial reports at the end of each fiscal year, which reports shall

be audited by certified public accountants according to law.

The fiscal year of the Company is Gregorian calendar year, i.e. from January 1 to 31 December

every year.

The Company shall submit annual financial report to CSRC and the stock exchange within 4

months from the end of each fiscal year, submit semiannual financial report to CSRC and the stock

exchange within 2 months from the end of the first 6 months of each fiscal year, and submit quarterly

financial reports to CSRC and the stock exchange within 1 month from the end of the first 3 months

and 9 months respectively of each fiscal year.”


“The Company shall not establish account books other than the statutory account books.”

is changed to:

“The Company shall not establish account books other than the statutory account books. The

assets of the Company shall not be deposited in any personal account.”


“The Company shall withdraw 10% of the annual profits as the statutory common reserve fund

of the Company. Such withdrawal may be stopped when the statutory common reserve fund of the

Company has accumulated to at least 50% of the registered capital of the Company.

If the statutory common reserve fund is insufficient to make up for the losses of the preceding

year, the profits of the current year shall first be used to make up for the said losses before any

statutory common reserve fund is withdrawn as stated in the preceding paragraph.

After statutory common reserve fund is withdrawn out of the after-tax profits, discretionary

reserve may also be withdrawn out of the same as per a resolution made at a general meeting.


— 38 —

The after-tax profits remaining after makeup of losses and withdrawal of reserves shall be

distributed to the shareholders in proportion to their shareholding unless otherwise specified in the

Articles of Association.

If the general meeting, in violation of the provision in the preceding paragraph, distributes

profits to shareholders before recovering losses and withdrawing statutory common reserve fund, the

profits thus distributed shall be returned to the Company.

The shares of the Company held by companies shall not be subject to profit distribution.”


“Cash dividends and other monies paid by the Company to holders of domestic shares shall be

paid in RMB. Cash dividends and other monies paid by the Company to holders of overseas listed

foreign shares shall be stated and announced in RMB and paid in foreign currency. Foreign currency

needed by the Company to pay cash dividends and other monies to holders of overseas listed foreign

shares and holders of other foreign shares shall be obtained pursuant to state regulations on foreign

exchange.”


“In distributing dividends to shareholders, the Company shall deduct and pay taxes payable by

the shareholders pursuant to Chinese tax laws.”


“The Company shall conduct internal audit and assign full-time auditors to conduct internal audit

and supervision on the revenues/expenditures and economic activities of the Company.”


“The internal audit system and duties of the auditors shall be subject to the approval of the

Board. The auditors shall be accountable to the Board and report his work to the Board.”


“The Company shall appoint qualified independent certified public accountants to audit the

annual financial reports and other financial reports of the Company.”

is changed to:

“The Company shall appoint qualified independent certified public accountants to audit the

annual financial reports and other financial reports of the Company.


— 39 —

The first certified public accountants of the Company may be appointed at the founding meeting

before the first annual general meeting. The term of the said certified public accountants shall end at

conclusion of the first annual general meeting.”


“The certified public accountants appointed by the Company shall have the following rights:

(I) to access the account books, records and vouchers at any time deemed proper , and to ask

directors, the president (manager) or other senior executives to provide relevant documents

and explanations;

(II) to ask the Company to take every reasonable action to obtain documents and explanations

from its subsidiaries needed for the certified public accountants to perform their duties;

(III) to be present as an observer at shareholders’ general meetings, get notice of shareholders’

general meeting or other information relating to shareholders’ general meetings, and deliver

speeches at shareholders’ general meeting in relation to the matters concerning the certified

public accountants.”

is changed to:

“The certified public accountants appointed by the Company shall have the following rights:

(I) to access the account books, records and vouchers at any time deemed proper, and to ask

directors, the president (manager) or other senior executives to provide relevant documents

and explanations;

(II) to ask the Company to take every action possible to obtain documents and explanations

from its subsidiaries needed for the certified public accountants to perform their duties;

(III) to be present as an observer at shareholders’ general meetings, get notice of shareholders’

general meeting or other information relating to shareholders’ general meetings, and deliver

speeches at shareholders’ general meeting in relation to the matters concerning the certified

public accountants.

The Company shall undertake to provide the certified public accountants with true and complete

accounting vouchers, account books, financial reports and other accounting information, and shall not

reject, conceal or misstate any information.”


“The liquidation committee shall dutifully fulfill the liquidation obligation.


— 40 —

The liquidation committee shall not abuse his official powers to accept bribes or other unlawful

income, and not to expropriate the Company’s property.

If any member of the liquidation committee causes any loss to the Company or the creditors with

will or serious negligence, the said member shall be liable for compensation.”


“The Company may amend the Articles of Association pursuant to the laws, administrative

regulations and the Articles of Association.”

is changed to:

“The Company may amend the Articles of Association in any of the following circumstances:

(I) After amendments are made to Company Law or other relevant laws and administrative

regulations, the Articles of Association run counter to the said amendments;

(II) The conditions of the Company have changed, and such change is not covered in the

Articles of Association; and

(III) The shareholders’ general meeting has resolved to amend the Articles of Association.”


“The Board shall amend the Articles of Association as per the resolution passed at the

shareholders’ general meeting to amend the same and the opinions of the regulatory authority.”


“The notice of the Company may be served as follows:

(I) by personal delivery;

(II) by post;

(III) by fax or email;

(IV) by announcement on the website designated by the Company and SEHK in accordance with

the laws, regulations and local listing rules;

(V) by announcement;

(VI) by other means agreed before between the Company and the recipient or approved by the

recipient; and


— 41 —

(VII) by other means approved by the relevant regulatory authority on the listing place or

stipulated in the Articles of Association.

If a notice of the Company is served by announcement, the said notice shall be deemed as

received by the relevant persons once the said notice is announced.

Save as otherwise specified in the context, the “announcement” as mentioned herein, in respect

of the announcement sent to holders of domestic shares or required to be sent in China pursuant to

relevant regulations and the Articles of Association, refers to announcement published on the

newspapers and periodicals in China, which newspapers and periodicals shall be as specified in the

Chinese laws and administrative regulations or by the securities regulatory authority under the State

Council; in respect of the announcement sent to holders of foreign shares or required to be sent in

Hong Kong pursuant to relevant regulations and the Articles of Association, the announcement must

be published on the designated Hong Kong newspapers and periodicals as provided for in the relevant

listing rules.”


“Save as otherwise specified in the Articles of Association, the means of service of notice

specified in the preceding article shall apply to notice of general meeting, Board meeting and

Supervisory Committee meeting held by the Company.”


“If the notice of the Company is sent by personal delivery, the recipient shall affix signature (or

seal) to the Return on Service and the signing date shall be the date of service; if the notice of the

Company is sent by post, fax, email or announcement on the Internet, the sending date shall be the

date of service; if the notice of the Company is sent by announcement, the date of first announcement

shall be the date of service. The relevant announcement shall be published on the designated

newspapers and periodicals.”


“If the local listing rules stipulate that the Company send, post, distribute, announce or otherwise

provide relevant documents of the Company in English and Chinese, if the Company has made

appropriate arrangement to confirm whether the shareholders hope to receive only the English version

or the Chinese version, the Company may (as per the intent stated by the shareholders) send only the

English version or the Chinese version to the related shareholders within the range allowed by the

applicable laws and regulations and pursuant to the applicable laws and regulations. ”

95. Delete Article 199 of the existing Articles of Association


“Issues not covered in the Articles of Association shall be handled pursuant to the laws,

administrative regulations and local listing rules and in line with the actual conditions of the

Company. In the event of any discrepancy between the Articles of Association and the newly issued

laws, administrative regulations or local listing rules, the latter shall prevail.”


— 42 —


“Appendixes to the Articles of Association include Rules of Procedure for General Meetings,

Rules of Procedure for Board Meetings and Rules of Procedure for Supervisory Committee Meetings.”

This English language version is provided for reference purposes only. In the event of anyinconsistency between the English and the Chinese version, the Chinese version shall prevail.


— 43 —

CHAPTER 1 GENERAL PROVISIONS

Article 1 These Rules are formulated in accordance with the laws and regulations governing the

listed companies within and outside China, including Company Law of the People’s Republic of China

(hereinafter referred to as the “Company Law”), Securities Law of the People’s Republic of China

(hereinafter referred to as the “Securities Law”), the Mandatory Provisions in the Articles of

Association of Companies Listed Overseas (hereinafter referred to as the “Mandatory Provisions”),

Rules Governing the Listing of Securities of The Hong Kong Stock Exchange Company Limited

(hereinafter referred to as the “HKSE Listing Rules”), Rules Governing the Listing of Securities of

the Shanghai Stock Exchange (hereinafter referred to as the “SSE Listing Rules”), Code of Corporate

Governance for Listed Companies (hereinafter referred to as the “Code of Corporate Governance”),

the Guidelines for the Articles of Association of Listed Companies, as amended in 2006 (hereinafter

referred to as the “Guidelines for the Articles of Association”), the Rules for the General Assemblies

of Shareholders of Listed Companies (hereinafter referred to as the “Rules for the GeneralAssemblies of Shareholders”), together with the Articles of Association of China Coal Energy

Company Limited (hereinafter referred to as the “Articles of Association”) and Measures for the

Management of Connected Transactions of China Coal Energy Company Limited (hereinafter referred

to as the “Measures for the Management of Connected Transactions”), in order to regularize the

acts of China Coal Energy Company Limited (hereinafter referred to as the “Company”) and to protect

the legal rights and interests of the Company and its shareholders, as well as to ensure the

shareholders’ general meeting to be conducted according to law.

Article 2 The shareholders’ general meeting shall exercise its functions and powers within the

scope stipulated in the Company Law and the Articles of Association.

Article 3 Shareholders’ general meetings can be classified as annual general meetings

(hereinafter referred to as the “AGM”) and extraordinary general meetings. The AGM shall be

convened once every year and shall be arranged to be held within six months after the end of the

preceding accounting year. Meetings other than the AGM shall be treated as extraordinary general

meetings. The extraordinary general meetings shall be convened on an irregular basis. In the event that

an extraordinary general meeting shall be convened under Article 101 of the Company Law, the

extraordinary general meeting shall be convened within two months. The extraordinary general

meetings shall be arranged in sequential order during the year.

If the Company is unable to convene the shareholders’ general meeting within the above time

limit, the Company shall report to the local agencies of CSRC at the place of domicile of the Company

and the stock exchange (hereinafter referred to as the “Stock Exchange”) on which the Company’s

shares are traded and shall explain the reasons and make an announcement.

Article 4 If the Company convenes the shareholders’ general meeting, the Company shall hire

a lawyer to issue legal opinions on the following issues and make an announcement:

(1) whether the convening of the meeting and the convening procedure comply with the law,

administrative regulations, these Rules and the Articles of Association;

APPENDIX II PROPOSED RULES OF PROCEDURES FORSHAREHOLDERS’ GENERAL MEETING

— 44 —

(2) whether the qualifications of persons attending the meeting and the board of directors are

legal and valid;

(3) whether the voting procedure of the meeting and the results of the poll are legal and valid;

(4) legal opinions issued on other related issues at the request of the Company.

Article 5 Shareholders holding different classes of shares shall be referred to as “class

shareholders”. Apart from holders of other classes of shares, holders of domestic shares and overseas

listed foreign shares shall be treated as holders of different classes of shares. In the event that the

Company intends to change or abolish the rights enjoyed by the class shareholders, the said change

or abolishment shall, in accordance with the Articles of Association, be approved by a special

resolution at the shareholders’ general meeting and a class meeting for the class shareholders shall be

convened in connection therewith. No shareholders other than the class shareholders shall be allowed

to attend such class meeting.

Article 6 The Company shall convene the shareholders’ general meeting in strict compliance

with the relevant requirements as provided in the law, administrative regulations, these Rules and the

Articles of Association and shall ensure that shareholders can exercise their rights according to the

law.

The board of directors of the Company shall strictly comply with various requirements as

provided in the Company Law and other laws and regulations in respect of convening the

shareholders’ general meeting and shall undertake their responsibilities earnestly and shall organize

the shareholders’ general meeting diligently and in a timely fashion. All directors of the Company

shall be diligent and responsible and shall fulfill their fiduciary duties for properly convening

shareholders’ general meetings and shall not prevent the shareholders’ general meeting from

exercising its functions and powers according to law. Directors attending such meetings shall

undertake their responsibilities in good faith and ensure that the content of the resolutions shall be

true, accurate and complete. No representation which may easily result in misinterpretation thereof

shall be used.

Article 7 Any shareholder who lawfully holds valid shares in the Company shall have the right

to attend, in person or by proxy, the shareholders’ general meeting and shall enjoy various rights

thereat according to the law, including the right to be informed, the right to speak, the right to question

and the right to vote (except on matters not to be voted under the laws, the HKSE Listing Rules, the

Rules for the General Assemblies of Shareholders and the Articles of Association). Shareholders and

their authorized proxies attending the meeting shall comply with the relevant laws and regulations, the

Articles of Association and these Rules to maintain the order of the meeting conscientiously. The

lawful interests of other shareholders shall not be infringed.

Article 8 The secretary of the board of directors of the Company shall be responsible for carrying

out all preparatory and organization work for convening the shareholders’ general meeting.

Article 9 The shareholders’ general meeting shall be convened by adhering to the principles of

cost-saving and simplicity. No additional benefits shall be granted to the shareholders (or their

authorized proxies) attending such meetings.


— 45 —

CHAPTER 2 FUNCTIONS AND POWERS OF THE SHAREHOLDERS’ GENERAL MEETING

Article 10 The shareholders’ general meeting shall be the power organ of the Company. It shall

exercise the following functions and powers according to law:

(1) to determine the operation plans and investment plans of the Company;

(2) to elect and replace directors who are not representatives of employees, and to determine

matters relating to the remuneration of the directors;

(3) to elect and replace supervisors who are shareholders’ representatives and to determine

matters relating to the remuneration of the supervisors;

(4) to consider and approve the reports of the board of directors;

(5) to consider and approve the reports of the supervisory committee;

(6) to consider and approve the Company’s plans for annual budgets and the final accounts;

(7) to consider and approve the Company’s plans for profit distribution and for making up

losses;

(8) to pass resolutions on the increment or reduction of the Company’s registered capital, and

on the purchase of the Company’s shares;

(9) to pass resolutions on the merger, division, dissolution, liquidation and a change in the

corporate form of the Company;

(10) to pass resolutions on the issue of corporate bonds of the Company;

(11) to pass resolutions on retaining or dismissing or ceasing to continue to retain the accounting

firms;

(12) to amend the Articles of Association;

(13) to consider motions proposed by the shareholders representing more than 3% (inclusive) of

the voting rights of the Company;

(14) to consider and approve the guarantees as provided in Article 67 of the Articles of

Association;

(15) to consider matters in which significant assets purchased or sold by the Company within

one year exceeding 30% of the latest total audited assets of the Company;

(16) to consider and approve matters related to changing the use of the proceeds;


— 46 —

(17) to consider equity incentive schemes;

(18) other matters (other than the above functions and powers) which may be authorized or

entrusted by the shareholders’ general meeting to the board of directors.

The functions and powers of the shareholders’ general meeting as stated in Items (1) to (17)

above cannot be exercised by the board of directors or other institutions or individuals on its behalf

by way of authorization.

The shareholders’ general meeting shall exercise its functions and powers to the extent as

permitted by laws and regulations governing the Company within and outside China and the Articles

of Association. It shall not interfere with shareholders in respect of their own rights.

CHAPTER 3 AUTHORISATION OF THE SHAREHOLDERS’ GENERAL MEETING

Article 11 Matters falling within the power of the shareholders’ general meeting in accordance

with laws, administrative regulations, the Articles of Association and other related rules and

provisions must be examined at such meetings so as to protect the decision making power of the

shareholders of the Company on such matters.

Article 12 In order to enhance the efficiency of the Company’s daily operations, the

shareholders’ general meeting specifies the procedures for the decisions on the Company’s investment

plans, disposal of assets, external guarantees and other significant matters, and grants some of the

powers to the board of directors, which are specified as follows:

(I) Investments

1. To approve the annual investment plans of the Company by the shareholders’ general

meeting.

To authorize the board of directors to make adjustments of not exceeding 15% (inclusive)

to the capital expenditures for the year as approved by the shareholders’ general meeting.

2. Investments in single project exceeding 15% (excluding 15%) of the latest audited net

assets of the Company shall be approved by the shareholders’ general meeting, while the

board of directors shall be authorized for approval of investments in single project not

exceeding 15% (inclusive) of the latest audited net assets of the Company.

3. The Company applies the Company’s assets to make risk investments in industries not

related with the business operations of the Company (including but not limited to bonds,

futures and shares). For investments exceeding 2% (excluding 2%) of the latest audited net

assets of the Company, such investments shall be approved by the shareholders’ general

meeting, while the board of directors shall be authorized for approval of investments of not

exceeding 2% (inclusive) of the latest audited net assets of the Company.


— 47 —

In respect of this item, if any of the above investments involve “notifiable transaction”, under

the HKSE Listing Rules, and any result by conducting five scale testing is larger than or equal

to 25%, then it shall be approved by the shareholders’ general meeting.

(II) Disposal of assets

1. Acquisition and disposal of assets and equity. When conducting a “notifiable transaction”

under the HKSE Listing Rules (including but not limited to the acquisition and disposal of

equity, assets in kind and other rights in assets), the Company shall ascertain whether it

requires approval by the shareholders’ general meeting based on the following five testing

indices (hereinafter the “Five Ratios”) as judgement standards.

(1) Testing of total asset value: Total assets involved in the transaction/Total combined

assets of the listed company (including intangible assets) x 100%

(2) Testing of revenue: Revenue derived from the assets involved in the

transaction/Combined revenue of the listed company x 100%

(3) Testing of consideration to total market capitalization: Total consideration to be

paid/Total market capitalization of the listed company x 100%

(4) Testing of newly issued share capital: Share capital value of the proposed new issue

as consideration of the transaction/Issued share capital value of the listed company x

100%

(5) Testing of profit: Profit involved in the asset transaction/Combined profits of the

listed company x 100%

Based on the results of the scale testing, the relevant transactions can be categorized by the

following standards:

Type of transaction Asset ratioConsideration

ratio Profits ratio Revenue ratioShare capital

ratio

Very substantial acquisitions P≥100% P≥100% P≥100% P≥100% P≥100%

Very substantial disposals P≥75% P≥75% P≥75% P≥75% N/A

Major transaction — acquisitions 25%≤P<100% 25%≤P<100% 25%≤P<100% 25%≤P<100% 25%≤P<100%

Major transaction — disposals 25%≤P<75% 25%≤P<75% 25%≤P<75% 25%≤P<75% N/A

Disclosable transaction 5%≤P<25% 5%≤P<25% 5%≤P<25% 5%≤P<25% 5%≤P<25%

Share transaction P<5% P<5% P<5% P<5% P<5%

Note: P is the percentage result of scale testing.


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For different transactions, approvals are based on the following formula:

Type of transaction

Notification tothe StockExchange

Announcementon newspapers

Issue ofcirculars to

shareholdersApproval byshareholders

Accountantsreport

Very substantial acquisitions Required Required Required Required Required

Very substantial disposals Required Required Required Required Required

Major transaction — acquisitions Required Required Required Required Required

Major transaction — disposals Required Required Required Required Required

Disclosable transaction Required Required Required Not required Not required

Share transaction Required Required Not required Not required1 Not required

Reverse takeover Required Required Required Required Required

Notes: 1. Unless the board of directors of the Company has not obtained a general mandate for the issue of securities

from the shareholders, or the consideration involved in the relevant transaction has exceeded the scope of the

general mandate.

Transactions with the percentage of scale testing smaller than 25% and not belonging to

share transaction are not required to be approved by the shareholders’ general meeting.

Save for the matters requiring for approval upon consideration by the shareholders’ general

meeting under the laws and regulations of the places in which the Company is listed within

and outside China such as the HKSE Listing Rules, the Guidelines for the Articles of

Association and the SSE Listing Rules or the Articles of Association or these Rules of

Procedures, the board of directors are authorized to make approvals on other matters.

2. Disposal of fixed assets. Without prejudice to item (II) in this Article, in the course of

disposing fixed assets, if the total sum of the estimated value of the fixed assets proposed

to be disposed and the value derived from the fixed assets which have been disposed within

four months prior to such disposal proposal exceeds 33% of the fixed assets as shown in

such balance sheet as being considered during the most recent shareholders’ general

meeting, the shareholders’ general meeting shall examine and approve such disposal.

Disposal of fixed assets not exceeding 33% (inclusive) shall be authorized to be approved

by the board of directors.

For the purposes of this item, the term “disposal” of fixed assets excludes the usage of fixed

assets for the provision of guarantee.

3. Assignment and contracting. Without prejudice to item (II) in this Article, in the course of

conducting other business (including but not limited to entering into, changes and

termination of material contracts such as operation on trust, financing on trust, lease

contracting), the amount involved or the aggregate amount within twelve months shall be

used for the calculation of the five ratios in sub-item 1 of item (II) of this Article.

For the purpose of this item, projects with any of the above ratios larger than 5% shall be

approved by the shareholders’ general meeting, while projects with none of the five ratios

exceeding 5% (inclusive) shall be authorized to be approved by the board of directors.


— 49 —

(III) Indebtedness and guarantees

1. Pursuant to the annual investment plan and the related rules as approved by the

shareholders’ general meeting, the board of directors are authorized to approve the amounts

of long and short-term loans for the year.

2. The following external guarantees shall be subject to the approval by the shareholders’

general meeting:

(1) Any guarantee in which the total sum of the external guarantees provided by the

Company and its controlling subsidiaries exceeds 50% of the latest audited net assets;

(2) Guarantees provided for any guaranteed party with a gearing ratio of more than 70%;

(3) Guarantees in which the single guarantee sum exceeds 10% of the latest audited net

assets.

(4) Guarantees provided for shareholders, the actual controller and their respective

connected parties;

(5) Apart from items (1) to (4), if other external guarantees involve “notifiable

transaction” under the HKSE Listing Rules, and the result of any five scale testing

exceeds or equals to 25%, external guarantees that are subject to the approval by the

shareholders’ general meeting shall be considered and approved by the Board of

Directors before they are submitted for approval by the shareholders’ general meeting.

Save for the above mentioned, the board of directors is authorized to approve external guarantees

under other circumstances but it is required that more than two-thirds of the directors attending the

board meeting give their consent and reach a resolution.

External guarantees considered and approved by the board of directors or the shareholders’

general meeting of the Company shall be disclosed in newspapers designated by CSRC for information

disclosure in a timely manner. The information disclosed shall include the resolutions of the board of

directors or the shareholders’ general meeting, the total sum of the guarantees provided by the

Company and its controlling subsidiaries as at the date of information disclosure, the total sum of the

guarantees provided by the Company to its controlling subsidiaries.

The board of directors shall approve guarantees where the guarantee sum does not exceed 10%

of the latest audited net assets of the Company. The Chairman of the board of directors is authorized

to approve and sign external guarantee contracts where the guarantee sum does not exceed 5% of the

latest audited net assets of the Company.

For the purposes of this item, if the above guarantee involves “notifiable transaction” under the

Listing Rules, and the result of any five scale testing exceeds or equals to 25%, it shall be subject to

the approval by the shareholders’ general meeting.


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External guarantees provided by controlling subsidiaries of the Company are executed with

reference to the above requirements. Controlling subsidiaries of the Company shall notify the

Company to perform the obligation of information disclosure after their board of directors or the

shareholders’ general meeting reaches a resolution.

If the Company provides a guarantee in favour of a third party, the guaranteed party shall provide

a counter-guarantee or other necessary risk prevention measures to the Company.

(IV) Connected transactions

Connected transactions and matters requiring to be approved by the shareholders’ general

meeting shall be considered and approved by the shareholders’ general meeting in accordance with the

HKSE Listing Rules, the SSE Listing Rules, the Guidelines for the Articles of Association, the Articles

of Association and the Measures for the Management of Connected Transactions of the Company.

Other transactions and matters shall be approved by the board of directors and carried out in

accordance with the HKSE Listing Rules, the Guidelines for the Articles of Association, the Articles

of Association and the Measures for the Management of Connected Transactions of the Company.

Notwithstanding the mandate granted to the board of directors as stated in items (1) to (4) above,

transactions referred to in items (1) to (4) above shall be submitted for consideration at the

shareholders’ general meeting when they meet the following criteria:

1. The total assets in respect of the transaction (if both the book value and the assessed value

exist, the higher value will be chosen) represent more than 50% of the latest audited total

assets of the listed company;

2. The trading value of the transaction (including the liabilities and expenses incurred)

represents more than 50% of the latest audited net assets of the listed company and the

absolute amount exceeds RMB50 million yuan;

3. The profit generated from the transaction represents more than 50% of the audited net profit

of the listed company in the latest accounting year and the absolute amount exceeds RMB5

million yuan;

4. For the trading subject (such as equity), the underlying income generated from principal

activities in the latest accounting year represents more than 50% of the audited income

generated from principal activities of the listed company in the latest accounting year and

the absolute amount exceeds RMB50 million yuan;

5. For the trading subject (such as equity), the underlying net profit in the latest accounting

year represents more than 50% of the audited net profit of the listed company in the latest

accounting year and the absolute amount exceeds RMB5 million yuan;

If the figures related to the above benchmarks involve negative values, the absolute values

shall be used for calculation.


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Article 13 If necessary, the shareholders’ general meeting may reasonably delegate the board of

directors or the Chairman of the board the power to determine, to the extent permitted by the

shareholders’ general meeting, any specific matters which are relevant to the matters being resolved

but are unable or unnecessary to be determined at the current shareholders’ general meeting.

CHAPTER 4 PROCEDURES TO CONVENE A SHAREHOLDERS’ GENERAL MEETING

Section 1 Proposing, seeking and considering motions

Article 14 Motions put forward in a shareholders’ general meeting shall be specific documents

and relate to the matters which shall be discussed and considered at a shareholders’ general meeting.

Article 15 Motions shall be generally proposed by the board of directors to the shareholders’

general meeting.

Article 16 In the event that more than a half of independent directors propose to convene an

extraordinary general meeting, such directors shall be responsible to propose motions in relation

thereto.

Article 17 In the course of convening an AGM, shareholders individually or jointly holding more

than 3% (inclusive) of the Company’s shares can propose new motions to the board of directors in

writing 10 days before the convening of the shareholders’ general meeting. The Company shall include

matters in the motion which belong to the scope of responsibilities of the shareholders’ general

meeting in the agenda of the current meeting, and shall issue a supplementary notice of the

shareholders’ general meeting within two days after receiving the motions to publish the contents of

the new motions. However, such motion must be delivered to the Company within thirty days from the

issue of the notice of the AGM.

Save as provided in the preceding paragraph, the board of directors shall not amend the motions

stipulated in the notice of the shareholders’ general meeting or add new motions after issuing the

notice.

Motions not covered in the notice of the shareholders’ general meeting or not complying with

Article 13 of these Rules shall not be resolved upon at the shareholders’ general meeting and no

resolution shall be reached.

Motions of the shareholders shall comply with the following conditions:

(I) the contents are not in violation with the requirements under the laws, regulations and the

Articles of Association, and are within the scope of operations of the Company and the

scope of responsibilities of the shareholders’ general meeting;

(II) have specific agenda and actual matters to be resolved;

(III) submitted or delivered to the board of directors in writing.


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Article 18 In the event that the supervisory committee proposes to convene an extraordinary

general meeting, it shall be responsible to propose motions in relation thereto.

Article 19 Before the board of directors issues the notice to convene the shareholders’ general

meeting, the secretary of the board may seek and collect motions from shareholders, supervisors and

independent directors and submit the same to the board of directors for approval before being

considered by the shareholders’ general meeting.

Article 20 The AGM shall at least consider the following motions:

(1) consider the annual report of the board of directors;

(2) consider the annual report of the supervisory committee;

(3) consider and approve the annual plans for financial budgets and for final accounts of the

Company;

(4) consider and approve the operation plans and annual investment plans of the Company

which are to be considered by the shareholders’ general meeting;

(5) consider the audited financial reports of the Company for the preceding year;

(6) consider the Company’s profit distribution plan of the preceding year;

(7) retain, dismiss or cease to continue to retain an accounting firm;

(8) consider and approve the Company’s remuneration and incentive plans for directors and

supervisors.

Article 21 The Board of Directors shall examine and review the new motions proposed at the

AGM in accordance with the following principles:

(1) Relevance. The board of directors shall examine and review the motions proposed by

shareholders. Motions proposed by shareholders that are directly involved with the

Company and do not exceed the powers of the shareholders’ general meeting as stipulated

in the laws, regulations and the Articles of Association shall be submitted to the

shareholders’ general meeting for discussion. For motions which do not comply with the

foregoing requirements, the shareholder raising such motion will be suggested not to

propose for discussion at the shareholders’ general meeting.

(2) Procedures. The board of directors may advise procedural issues relating to proposing

motions by shareholders. In the event that the proposed motions are voted separately or

jointly, it is necessary to obtain consent of the original proposing party in relation thereto;


— 53 —

if the proposing party does not agree with such changes, the Chairman of the shareholders’

general meeting may request the shareholders’ general meeting to determine the procedural

issues and conduct a discussion thereof in accordance with the procedures as determined by

the shareholders’ general meeting.

Article 22 A motion involving any of the following circumstances is deemed to be a change or

abrogation of rights of class shareholders, and the board of directors shall submit the same to a class

meeting for consideration:

(1) to increase or decrease the number of shares of a class, or to increase or decrease the

number of shares of a class having voting rights, distribution rights or other privileges

equal or superior to those of the shares of that class;

(2) to convert all or part of a class of shares into another class, or to convert all or part of

another class of shares into that class of shares, or to grant such conversion right;

(3) to cancel or reduce the rights in respect of accrued dividends or the cumulative dividends

attached to shares of a class;

(4) to reduce or cancel preferential rights of a class of shares to dividends or to distribution of

assets in the event that the Company is liquidated;

(5) to add, cancel or reduce conversion rights, options, voting rights, transfer rights,

pre-emptive rights arising from placement or the right to acquire securities of the Company


(6) to cancel or reduce the rights to obtain payables in specific currencies from the Company


(7) to create a new class of shares with voting rights, distribution rights or other privileges

equal or superior to those of the shares of that class;

(8) to restrict the transfer or ownership rights of a class of shares or impose additional

restrictions thereto;

(9) to grant the right to subscribe for, or convert into, shares of a class of shares or another

class of shares;

(10) to increase the rights and privileges of shares of another class;

(11) to conduct the proposed restructuring of the Company in such a way that may result in the

holders of different classes of shares to assume liability disproportionately;

(12) to amend or abrogate the provisions of Chapter 9, Special Procedures for Voting by a Class

of Shareholders, of the Articles of Association.


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Section 2 Notice and change of meeting

Article 23 The board of directors shall give notice to all shareholders 45 days before the

convening of the AGM or the extraordinary general meeting by way of an announcement, in person

or by prepaid mail.

The notice of the shareholders’ general meeting and the supplementary notice shall fully and

completely disclose the specific contents of all motions and all information or explanations required

for shareholders to make reasonable judgments on the matters to be discussed. If the matters to be

discussed requires opinions from independent directors, the opinions and reasons of independent

directors shall be disclosed simultaneously when the notice of the shareholders’ general meeting or the

supplementary notice is issued.

The notice of the shareholders’ general meeting shall be sent to shareholders (regardless of

whether they have voting rights at the shareholder’s general meeting) by way of an announcement, in

person or by prepaid mail. The addresses of the recipients shall be subject to such addresses as shown

in the register of shareholders.

For holders of domestic shares, the notice of the shareholders’ general meeting may also be made

by way of announcement.

An announcement shall be published in one or more designated newspapers and journals within

a period of 45 to 50 days before the shareholders’ general meeting is convened. Once an announcement

is made, all holders of the domestic shares are deemed to have received the relevant notice of the

shareholders’ general meeting.

In the event that the Company fails to give notice of the shareholders’ general meeting as

scheduled such that the shareholders’ general meeting fails to convene for any reasons within six

months since the end of the preceding accounting year, it shall promptly report the same to the stock

exchange(s) on which the Company’s shares are listed to explain the reasons therefor and make an

announcement relating thereto.

Article 24 The notice of the meeting of the class shareholders shall only be served to such

shareholders who have the right to vote in the meeting of the class shareholders.

Article 25 The notice of the shareholders’ general meeting shall meet the following

requirements:

(1) be made in writing;

(2) specify the venue, date and time for the meeting;

(3) set out matters to be discussed in the meeting;


— 55 —

(4) state the shareholding record date for shareholders who have the right to attend the

shareholders’ general meeting (the time interval between the shareholding record date for

A Share holders and the date of the meeting shall not be more than seven working days. The

shareholding record date shall not be changed once it is confirmed);

(5) provide the shareholders with such information and explanation as necessary for them to

make prudent decisions in connection with the matters to be discussed; this principle

includes that (but is not limited to) where the Company proposes to merge with the other,

repurchase its shares, restructure its share capital or undergo other reorganization, the

specific terms and conditions of the proposed transactions must be provided in detail

together with copies of the contracts related thereto, if any, and the causes and effect of the

same must be properly explained;

(6) If any director, supervisor, president and other senior management have material interests

in the transaction subject to discussion, the nature and extent of the material interests of any

director, supervisor, president and other senior management in the proposed transaction

shall be disclosed and the effect which the proposed transaction will have on them in their

capacity as shareholders insofar as it is different from the effect on interests of other

shareholders of the same class shall also be contained;

(7) If the election of directors, supervisors is to be discussed, the notice of the shareholders’

general meeting shall fully disclose the particulars of the director’s and supervisor’s

candidates and at least shall include the following contents: personal particulars such as

educational background, working experience and part-time jobs; whether they have any

connection with the Company or its controlling shareholder and actual controller; disclose

the number of shares of the Company held; whether they have been subject to penalties by

CSRC and other relevant authorities as well as sanctions by any stock exchange. Apart from

the election of directors, supervisors based on the cumulative voting system, each director’s

or supervisor’s candidate shall be proposed by way of single motions.

(8) contain the full text of any special resolution to be proposed and approved at the meeting;

(9) contain a clear statement that a shareholder who has the right to attend and vote at the

meeting shall have the right to appoint one or more proxies to attend and vote at the meeting

on its behalf and that such proxies need not be shareholders;

(10) state the date and place to serve a proxy form to appoint a proxy to vote at the meeting;

(11) state the name and contact numbers of the contact persons in connection with the meeting.

Article 26 Shareholders and proxies of shareholders who intend to attend the shareholders’

general meeting shall serve a written reply on attending the meeting to the Company 20 days before

the meeting is convened.


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The Company shall calculate the number of voting shares represented by the shareholders and

their proxies who intend to attend the meeting based on the written replies it has received 20 days

before convening the shareholders’ general meeting. In the event that the number of voting shares

represented by the shareholders who intend to attend the meeting is more than one-half of the total

number of the voting shares of the Company, the Company may convene the shareholders’ general

meeting; if not, the Company shall, within 5 days, notify the shareholders again of the matters to be

considered at, and the place and date for, the meeting by way of public announcement. The Company

may convene the shareholders’ general meeting after such an announcement is made.

Article 27 After giving notice of the shareholders’ general meeting, the shareholders’ general

meeting shall not be convened in advance, delayed or cancelled without proper reasons. Motions

covered in the notice of the shareholders’ general meeting shall not be withdrawn. Once the meeting

is delayed or cancelled, the board of directors shall make an announcement at least two working days

before the original date scheduled for convening the meeting and provide reasons and the time for

convening the meeting after it is delayed.

Section 3 Registration of the meeting

Article 28 Shareholders may attend the shareholders’ general meeting in person or appoint a

proxy to attend and vote on their behalf within the scope of authorization. All directors, supervisors,

secretary of the board shall present at such meeting. The president (manager), vice president executive

(deputy manager), the chief financial officer (person in charge of finance) and other senior

management of the Company and other persons being invited by the board of directors may also

present at such meeting.

All shareholders or their proxies registered in the register on the shareholding record date have

the rights to attend the shareholders’ general meeting. The Company and the board of directors shall

not reject them by any reason.

The board of directors shall take necessary steps to ensure the proper order of the shareholders’

general meeting, and shall take steps to prevent any acts of interfering with the shareholders’ general

meeting, causing trouble and infringing the legal interests of shareholders and report to the relevant

authorities in a timely manner for investigation and giving punishment. In order to ensure the

solemnity and proper order of the shareholders’ general meeting, the Company shall have the right to

refuse persons other than those as set out in the preceding paragraph entry into the meeting venue.

Article 29 The board of directors and the lawyer shall jointly verify the validity of the

qualifications of shareholders in accordance with the register of shareholders provided by the

securities registration and settlement institution and shall register the names of shareholders and the

number of voting shares held by them. Before the board of directors announces the number of

shareholders and proxies attending the meeting on site and the total number of voting shares held by

them, registration at the meeting shall be terminated.


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The Company shall be responsible for preparing an attendance register for shareholders’ general

meeting, which shall be signed by the persons who attend the meeting. The attendance register shall

contain the names of the persons and/or the entity(ies) who (or which) attend the meeting, their

identity card numbers, information to confirm the identity of the each of the shareholders (such as the

shareholder’s account number), the number of voting shares they held or represented, the name of the

principal or the name of the entity which acts as the principal and etc.

Article 30 Shareholders shall appoint their proxies in writing. The content of such written proxy

form shall state the following:

(1) name of the proxy authorized by the shareholder;

(2) the number of shares represented by the relevant proxy on behalf of the principal;

(3) whether or not the proxy has the right to vote;

(4) instruction to vote “for”, “against” or “abstention” in respect of each matter on the agenda

of the shareholders’ general meeting;

(5) whether or not the proxy has the right to vote in connection with the ex tempore motions

which may be put on the agenda of the AGM and, if so, specific instructions on how to

exercise such voting right;

(6) the date of signing and the term for such proxy form;

(7) signature (or seal) of the principal or its proxy who is appointed in writing and, where the

principal is a legal person, the official stamp of such legal person or the signature of its

director or its duly appointed agent. The proxy form shall expressly state that the proxy

entrusted by the shareholders may cast vote at its own discretion in the absence of any

specific instruction from the shareholder.

Article 31 The proxy form shall be lodged at the place of domicile or such place as specified in

the notice of convening the meeting at least 24 hours before convening the meeting for which votes

will be cast under the proxy form or 24 hours before the specified voting time. In the event that such

proxy form is caused to be signed under a power of attorney issued by the principal, such power of

attorney or other authorization documents related thereto shall be notarised. The notarised power of

attorney or other authorization documents together with the proxy form shall be lodged at place of

domicile of the Company or other place as specified in the notice of convening the meeting.

Article 32 Shareholders attending the shareholders’ general meeting shall be registered. The

following documents shall be provided respectively for the purposes of shareholders’ registration at

the meeting:


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(1) Natural person shareholders: present their share account cards, identity cards or other valid

documents evidencing their identity, or provide other proofs that enable the Company to

confirm his status as a shareholder; in case of attending the meeting by proxies, such

proxies shall present their identity cards, the proxy forms, and provide documents that

enable the Company to confirm the principal’s status as a shareholder.

(2) Legal person shareholders: in case of attending the meeting by legal representatives, the

legal representatives shall present their share account cards, identity cards and other valid

documents evidencing their identity, or provide other proofs that enable the Company to

confirm their qualification to act as legal representatives; in case of attending the meeting

by proxies, such proxies shall present their identity cards, proxy forms issued by the legal

representatives of the legal person shareholders according to law or notarized copies of the

authorization and resolutions by the board of directors or other decision-making bodies of

the legal person shareholders, and provide documents that enable the Company to confirm

their status as the legal person shareholders.

Article 33 Contents subject to be registered in connection with the shareholders or proxies who

attend the shareholders’ general meeting include:

(1) confirmation of the identities of the shareholders or their proxies;

(2) the requests to speak together with a description of the content of the speeches, if any;

(3) the number of votes which the shareholders or their proxies may exercise in accordance

with the number of shares they held/represented;

(4) new motions, if any.

Article 34 In the event that a shareholder or its proxy requests to speak at the shareholders’

general meeting, it shall, to the fullest extent as possible, register with the Company before convening

the shareholders’ general meeting.

Article 35 In the event of convening an extraordinary general meeting, the Company shall not

accept registration of the new motions and the Chairman of the meeting shall not add such new

motions into the meeting agenda.

Section 4 Convening the meeting

Article 36 Independent directors shall have the right to propose to the board of directors to

convene the extraordinary general meeting. For a motion put forward by independent directors to

request the convening of the extraordinary general meeting, the board of directors shall give written

feedback as regards whether it agrees or disagrees to convene the extraordinary general meeting within

10 days after receiving the motion in accordance with the law, administrative regulations and the

Articles of Association. However, if more than one-half of the independent directors propose to

convene the meeting, the board of directors shall convene the extraordinary general meeting in

accordance with the Articles of Association.


— 59 —

If the board of directors agrees to convene the extraordinary general meeting, it shall give notice

of the shareholders’ general meeting within two days after the resolution of the board of directors is

made. If the board of directors disagrees to convene the extraordinary general meeting, it shall give

reasons and make an announcement.

Article 37 The supervisory committee has the right to propose to the board of directors to

convene the extraordinary general meeting and can sign one or several copies of the written request

with the same format and content to state the subject of the meeting. At the same time, it shall submit

in writing the motions in compliance with the preceding article of these Rules to the board of

directors. The board of directors shall give written feedback as regards whether it agrees or disagrees

to convene the extraordinary general meeting within 10 days after receiving the motion in accordance

with the law, administrative regulations and the Articles of Association.



made. Any change in the original request as stated in the notice shall be approved by the supervisory

committee.

If the board of directors disagrees to convene the extraordinary general meeting, or does not give

any written feedback within 10 days after receiving the motion, the board of directors shall be deemed

as being unable to perform or not performing the duty of convening the shareholders’ general meeting.

The supervisory committee can convene and preside over the meeting on its own.

Article 38 Shareholders individually or jointly holding more than 10% of the shares of the

Company shall have the right to request the board of directors to convene the extraordinary general

meeting and can sign one or several copies of the written request with the same format and content

to state the subject of the meeting and shall at the same time propose to the board of directors in

writing. The board of directors shall give written feedback as regards whether it agrees or disagrees

to convene the extraordinary general meeting within 10 days after receiving the request in accordance

with the law, administrative regulations and the Articles of Association.



made. Any change in the original request as stated in the notice shall be approved by the relevant

shareholders.

If the board of directors disagrees to convene the extraordinary general meeting, or does not give

any feedback within 10 days after receiving the request, shareholders individually or jointly holding

more than 10% of the shares of the Company shall have the right to propose to the supervisory

committee to convene the extraordinary general meeting and shall file a request with the supervisory

committee in writing.

In the event that the board of directors does not convene a shareholders’ general meeting within

30 days after receiving a written request to convene the shareholder’s general meeting made by

shareholder(s) who, individually or jointly, hold more than 10% (inclusive) of the total issued and


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outstanding shares of the Company, the proposing shareholder(s) may convene an extraordinary

general meeting on their own within 4 months after the receipt by the board of directors of such

request. Before the announcement of the resolution of the shareholders’ general meeting, the

shareholding of convening shareholder(s) shall not be less than 10%.

In the event that the proposing shareholder(s) decide to convene such meeting on their own, they

shall inform the board of directors in writing, and thereafter give notice of convening the

extraordinary general meeting. In addition to the general requirements governing the notice of the

shareholders’ general meeting, such notice shall also be subject to the following requirements:

(1) No new item shall be added to the proposed motions. Otherwise, the proposing

shareholder(s) shall resubmit to the board of directors the request to convene the

shareholders’ general meeting;

(2) The meeting shall be convened at the place of domicile of the Company.

If the supervisory committee agrees to convene the extraordinary general meeting, it shall give

notice of the extraordinary general meeting within two days after receiving the request. Any change

in the original request as stated in the notice shall be approved by the relevant shareholders.

If the supervisory committee fails to give notice of the shareholders’ general meeting within the

stipulated deadline, it shall be deemed as not convening and presiding over the shareholders’ general

meeting. Shareholders individually or jointly holding more than 10% of the shares of the Company for

more than 90 days in a row can convene and preside over the meeting on their own.

Article 39 If the supervisory committee or shareholders decides to convene the shareholders’

general meeting on their own, they shall notify the board of directors in writing, and shall register for

the record with the local agencies of CSRC and the stock exchange at the place of domicile of the

Company.

Before the announcement of the resolution of the shareholders’ general meeting, the shareholding

of the proposing shareholder(s) shall not be less than 10%.

When issuing the notice of the shareholders’ general meeting and making an announcement on

the resolution of the shareholders’ general meeting, the supervisory committee and the proposing

shareholder(s) shall submit the relevant supporting documents to the local agencies of CSRC and the

stock exchange at the place of domicile of the Company.

Article 40 For shareholders’ general meetings convened by the Supervisory Committee or

shareholders on their own, the board of directors and the secretary of the board of directors shall offer

cooperation. The board of directors shall provide the register of members as at the shareholding record

date. In the event that the board of directors has not provided the register of members, the convenor


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can apply to the securities registration and settlement institution for the register of members by

submitting the relevant announcement on the notice of the shareholders’ general meeting. The register

of members obtained by the convenor shall not be used for purposes other than convening the


Article 41 For shareholders’ general meetings convened by the Supervisory Committee or

shareholders on their own, the expenses required for the meetings shall be borne by the Company.

Article 42 The Company shall convene the shareholders’ general meeting at the place of

domicile of the Company or at the place stipulated in the Articles of Association.

The shareholders’ general meeting shall set up the meeting place and convene the meeting in the

form of spot meeting. The Company can make use of a safe, economic, convenient network or other

methods to offer convenience to shareholders attending the shareholders’ general meeting.

Shareholders who attend the shareholders’ general meeting through the above methods are deemed as

being present at the meeting.

If the shareholders’ general meeting of the Company makes use of a network or other methods,

it shall state clearly the voting time and the voting procedure for the network or other methods in the

notice of the shareholders’ general meeting.

The time for the commencement of voting through a network or other methods at the

shareholders’ general meeting shall not be earlier than 3:00pm on the day immediately before the

convening of the shareholders’ general meeting on site and shall not be later than 9:30am on the day

the shareholders’ general meeting is convened on site. Its conclusion time shall not be earlier than

3:00pm on the day the shareholders’ general meeting concludes on site.

Article 43 The Chairman of the board of directors shall preside over, and act as Chairman of,

the shareholders’ general meeting; if for any reason the Chairman of the board of directors is unable

or fails to perform his/her duties, the vice chairman of the board of directors shall preside over the

meeting; if for any reason the vice chairman of the board of directors is unable or fails to perform

his/her duties, a director jointly elected by more than half of the directors shall preside over the

meeting.

In the event that both the Chairman and the vice chairman of the board of directors are unable

to attend the meeting and the Chairman has not appointed any other director as Chairman of the

meeting, the board of directors may appoint a director of the Company to be the Chairman of the

meeting; in the event that the board of directors has not appointed the Chairman of the meeting,

shareholders attending the meeting may elect one person among them to become the Chairman of the

meeting; in the event that shareholders are for any reason unable to elect a Chairman, the shareholder

who attends the meeting with the highest number of voting shares (including his proxy) shall then

become the Chairman of the meeting.


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Shareholders’ general meetings convened by the Supervisory Committee on its own shall be

presided over by the Chairman of the Supervisory Committee. In the event that the Chairman of the

Supervisory Committee is unable or fails to perform duties, the meeting can be presided over by other

supervisors designated by the Chairman of the Supervisory Committee on his/her behalf.

Shareholders’ general meetings convened by shareholders on their own shall be presided over by

the representative elected by the convenor. The board of directors and the secretary of the board of

directors shall earnestly perform their duties. Directors and supervisors shall attend the meeting. The

secretary of the board of directors shall attend the meeting and ensure the proper order of the meeting.

The meeting can also be presided over and chaired by the Chairman of the board of directors. If the

Chairman of the board of directors is unable to attend the meeting for some reasons, the vice-chairman

of the board of directors shall act as the Chairman of the meeting. If the Chairman of the board of

directors and the vice-chairman of the board of directors are unable to attend the meeting, and the

Chairman of the board of directors has not designated the Chairman of the meeting, the board of

directors can designate one director of the Company to act as the Chairman of the meeting. If the board

of director has not designated one director to chair the shareholders’ general meeting, the shareholder

who makes the motion shall preside over the meeting.

In the event of convening the shareholders’ general meeting, if the above meeting presider

violates the rules of procedures such that the shareholders’ general meeting cannot proceed, upon

consent of more than half of the shareholders having voting rights attending the shareholders’ general

meeting on site, the shareholders’ general meeting can elect one person to act as the meeting presider

to continue to hold the meeting.

Article 44 After declaring the meeting officially open, the Chairman of the meeting shall first

announce the number of shareholders and proxies attending the meeting and the total number of voting

shares they hold and state whether the number of attendees and the voting right share meet the legal

requirements. Thereafter, he shall read out the agenda as set out in the notice and inquire whether or

not the shareholders attending the meeting have any objection to the voting order for the motions.

In the event that the board of directors or the Chairman of the meeting determines not to put such

motions as proposed by the supervisory committee or the shareholders on the agenda of the AGM, an

explanation or description relating thereto shall be given during such AGM.

At an extraordinary general meeting, no person shall have the right to request consideration of

any new motion which has not been contained in the notice of the shareholders’ general meeting.

Article 45 After the Chairman of the meeting finishes his inquiries on the meeting agenda, he

may start to read the motions or authorise a person to read them out and, when necessary, make an

explanation on the motions in accordance with the following requirements:

(1) in the event that the motion is proposed by the board of directors, the Chairman of the board

of directors or other persons entrusted by him shall make an explanation in relation thereto;


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(2) in the event that the motion is proposed by a legal person shareholder, its legal

representative or a proxy who is lawfully and validly authorized by it shall give an

explanation in relation thereto. If the motion is proposed by an individual shareholder, then

the said person or a proxy who is lawfully and validly authorized by a shareholder shall

give an explanation in relation thereto.

(3) in the event that the motion is proposed by the Supervisory Committee, the person entrusted

by the Supervisory Committee shall give an explanation in relation thereto.

Article 46 Motions which are included on the meeting agenda shall be considered before voting.

Each motion shall be given a reasonable time for discussion during the shareholders’ general meeting.

The Chairman of the meeting shall orally inquire whether shareholders attending the meeting have

finished considering such motions. In the event that the shareholders attending the meeting have no

objection in connection therewith, consideration of the motions shall be deemed completed.

Article 47 A shareholder requesting to speak shall to the fullest extent as possible not interrupt

a person from presenting his report or interrupt other shareholders from making their speech.

Article 48 Shareholders may query the Company during the shareholders’ general meeting. The

Chairman of the meeting shall direct the directors, supervisors or senior management to respond to or

provide explanations or descriptions in connection with queries raised by shareholders, except

questions relating to the commercial secrets of the Company which shall not be disclosed during the


Article 49 At the AGM, the board of directors, and the supervisory committee shall report to the

shareholders’ general meeting as regards their work over the past year. Each independent director shall

also report their work.

Section 5 Voting and resolutions

Article 50 Shareholders’ general meetings shall pass resolutions on specific motions.

Article 51 Matters not covered in the notice of an extraordinary shareholders’ general meeting

shall not be resolved upon at the meeting, In the course of considering the content of the motions as

set out in the notice of extraordinary general meeting, no alteration shall be made to motions relating

to the following issues:

(1) an increase or reduction of the registered capital;

(2) the issuance of corporate bonds;

(3) division, merger, dissolution or liquidation of the Company;

(4) amendments to the Articles of Association;


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(5) plans for profit distribution and for making up losses of the Company;

(6) appointment or removal of the members of the board of directors and supervisory

committee;

(7) changes in the use of proceeds from share offerings;

(8) connected transactions which are subject to being considered during the shareholders’

general meeting;

(9) matters relating to the acquisition or sale of assets which are subject to being considered

during the shareholders’ general meeting;

(10) changing of the accounting firm.

Any change of the above contents of motions shall be deemed to be a new motion, which shall

not be voted at the then shareholders’ general meeting.

The shareholders’ general meeting shall vote on all motions that are put on the agenda

one-by-one. Except for special reasons such as force majeure which lead to suspension of the

shareholders’ general meeting or its failure to reach a resolution, voting of the same shall neither be

put on hold nor be refused for any reason. In the event that different motions are proposed for the same

matters in the AGM, voting on such motions shall be conducted based on the order of the time of

proposing such motions.

Article 52 The Chairman of the meeting is obliged to demand a poll on the motions at the

shareholders’ general meeting by open ballot. Each shareholder or its proxy shall exercise its voting

right on the basis of the number of the voting shares represented. Except for voting on the motions

in accordance with the Article 107 under the Articles, each share shall have the right to one vote.

If pursuant to the requirements under the HKSE Listing Rules, a shareholder (including its

proxy(ies)) shall abstain from voting or may only vote “for” or “against” a resolution, then votes in

violation to the aforesaid requirements shall be invalid.

Article 53 In the election of directors by the shareholders’ general meeting, if there are more

than two candidates, each share held by shareholders (including its proxies) shall have the same voting

rights as the candidates, and they can either concentrate all the votes to elect one person or separate

the votes to elect a number of persons, but shall make explanations on such distribution of the voting

rights.

Article 54 In considering the motions in connection with the election of directors or supervisors

at a shareholders’ general meeting, voting shall be conducted on each of the candidates for director

or supervisor one by one.


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Article 55 Resolutions of the shareholders’ general meeting shall be classified as ordinary

resolutions and special resolutions.

(1) Ordinary resolutions

1. An ordinary resolution at a shareholders’ general meeting shall be passed by votes

representing more than one-half of the voting rights represented by the shareholders

(including proxies authorized by the shareholders) attending the meeting.

2. The following matters shall be resolved by an ordinary resolution at a shareholders’ general

meeting:

(1) working reports of the board of directors and the supervisory committee;

(2) plans for profit distribution and recovery of losses prepared by the board of directors;

(3) matters relating to methods of appointment and removal of the members of the board

of directors and the shareholder representative supervisor and the methods for paying

their remuneration;

(4) the annual budget, final report, balance sheet, profit and loss statements and other

financial statements of the Company;

(5) matters other than those required by law, administrative regulations or the Articles of

Association to be adopted by special resolutions; and

(6) other matters as required under the HKSE Listing Rules, other than those requiring

special resolutions.

(2) Special resolutions

1. A special resolution at a shareholders’ general meeting shall be passed by votes

representing more than two-thirds of the voting rights represented by the shareholders

(including proxies authorized by the shareholders) attending the meeting;

2. The following matters shall be resolved by a special resolution at a shareholders’ general

meeting:

(1) an increase or reduction of the share capital of the Company and the issue of any class

of shares, warrants and other similar securities;

(2) issuance of corporate bonds;

(3) division, merger, dissolution or liquidation of the Company, changing the form of the

Company and material acquisition or disposal;


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(4) amendment to the Articles of Association;

(5) any other matter, being considered at a shareholders’ general meeting by way of an

ordinary resolution, which may have a material impact on the Company and which is

necessary to be adopted by a special resolution; and

(6) other matters requiring to be passed by special resolutions as required by the HKSE

Listing Rules.

Article 56 Affected class shareholders shall have the right to vote on matters involving

sub-paragraphs (2) to (8), (11), (12) of Article 134 hereof, regardless of whether or not they originally

have the right to vote at the class meeting for class shareholders, provided that interested shareholders

shall not have any right to vote at the class meeting for the class shareholders. The term “interested

shareholders” mentioned in the preceding paragraph shall mean:

(1) In the event that the Company repurchases its own shares by way of a general offer to all

shareholders in proportion to their respective shareholdings or through a public dealing on

a stock exchange in accordance with Article 34 of the Articles of Association, “interested

shareholders” mean such controlling shareholders as defined in Article 64 of the Articles

of Association;

(2) In the event that the Company repurchases its own shares by a off-market agreement in

accordance with Article 34 of the Articles of Association, “interested shareholders” mean

the shareholders to whom such agreement relates;

(3) Under the proposed restructuring of a Company, “interested shareholders” mean the

shareholders who assume the liability thereof in a proportion less than that assumed by

other holders of the same class of shares or who have a different interest to other holders

of the same class of shares.

Article 57 A resolution of the class shareholders at a class meeting shall only be passed by votes

representing more than two-thirds of the voting rights represented by the shareholders attending the

class meeting in accordance with the preceding article.

The special procedures for voting by class shareholders shall not apply to the following

circumstances:

(1) where upon approval by a special resolution at a shareholders’ general meeting, the

Company issues, either separately or simultaneously, once every 12 months domestic shares

and overseas-listed foreign-invested shares and the proposed numbers of domestic shares

and overseas listed foreign-invested shares shall not exceed 20% of their respective issued

and outstanding shares;

(2) the plan to issue domestic shares and overseas-listed foreign-invested shares during the

establishment of the Company are completed within fifteen months from the date of

approval by the securities regulatory authority of the State Council;


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(3) Shares held by holders of domestic shares are transferred to overseas investors under the

approval by the securities regulatory authority of the State Council, and are dealt with on

overseas stock exchanges.

Article 58 In the course of considering matters relating to the connected transactions at a

shareholders’ general meeting, the connected shareholders shall abstain from voting. The voting rights

represented by the number of shares of such shareholders shall be excluded from the total number of

valid votes. The voting result of the non-connected shareholders shall be fully disclosed in the

announcement of the resolution of the shareholders’ general meeting.

Shares held by the Company do not have voting rights and this portion of shares shall not be

counted in the total number of voting shares at the shareholders’ general meeting.

Article 59 Shareholders and their proxies shall, as required, carefully complete the ballot papers

and put such ballot papers into a ballot box. Any ballot paper which is left blank or is not duly

completed or the handwriting thereon is found to be illegible or which is not cast shall be deemed to

be an abstention of voting by the shareholder and the votes represented thereon shall not be counted

in the total number of valid votes.

Article 60 Without prejudice to the requirements under the HKSE Listing Rules, before a poll

begins, shareholders attending the meeting shall elect among themselves at least one supervisor and

one shareholders’ representative to act as the counting officers. Votes shall be counted on the spot and

the counting officers shall sign on the statistical information relating thereto.

When the shareholders’ general meeting votes on the motions, the lawyer, the shareholder

representative and the supervisor representative shall be jointly responsible for counting the votes and

scrutinizing balloting.

Shareholders of the Company or its proxies voting through a network or other methods shall have

the right to check their voting results through the corresponding voting system.

For same voting rights, only one of the voting methods, i.e. on site, network or otherwise, can

be chosen. For repeated voting in case of same voting rights, the result of the first voting shall prevail.

Article 61 The time for the conclusion of the shareholders’ general meeting held on site shall not

be earlier than that held through a network or other methods. The Chairman of the meeting shall be

responsible for making an announcement at the meeting on whether or not a resolution is passed by

the shareholders’ general meeting according to the results of the poll counted by the counting officers,

and shall record the same in the minutes.

Before the official announcement of the voting result, the relevant parties such as the Company,

tally clerk, scrutineer, substantial shareholders, network service party involved in on-site voting and

voting through a network and other methods at the shareholders’ general meeting shall have the

obligations to keep confidential the voting result.


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Article 62 If the shareholders’ general meeting passes the resolution on the election of directors

and supervisors, the newly appointed directors and supervisors shall assume office in accordance with

the Articles.

Article 63 If the shareholders’ general meeting passes the motion of distribution of cash dividend

and bonus shares or conversion of the capital surplus reserve into share capital, the Company shall

implement the specific plan within two months following the conclusion of the shareholders’ general

meeting.

Article 64 The resolution of the shareholders’ general meeting of the Company shall be rendered

invalid if it is in violation of the law, administrative regulations.

If the procedure for convening the meeting and the method of the voting of the shareholders’

general meeting are in violation of the law, administrative regulations or the Articles, or the content

of the resolution is in violation of the Articles of Association, shareholders can request the People’s

Court to withdraw the resolution within 60 days from the date of the resolution.

Article 65 The secretary of the board of directors shall be responsible for recording the minutes

of the shareholders’ general meeting. The minutes shall contain the following contents:

(1) the number of shareholders and proxies attending the general meeting, the total number of

voting shares held, and the proportion of such shares in the total number of shares of the

Company;

(2) the date and place of the meeting;

(3) the name of the Chairman of the meeting and the agenda of the meeting;

(4) the names of the Chairman of the meeting and directors, supervisors, secretary of the board

of directors, managers and other senior management attending or present at the meeting;

(5) the consideration process, highlights of speeches and results of the poll in respect of each

motion proposed by the persons who speak at the meeting;

(6) details of the inquiries, opinions and recommendations of the shareholders and the

responses or explanations from the directors and supervisors;

(7) the names of lawyers, vote counters and scrutineers;

(8) other matters which according to the opinions of the shareholdings’ general meeting and the

provisions of the Articles shall be recorded in the minutes.


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Directors, the secretary of the board of directors, the meeting convenor and the meeting presider

attending the meeting shall sign their names on the minutes and ensure that the contents of the minutes

are true, accurate and complete. The minutes shall be kept together with the book of signatures of

shareholders attending the meeting on site, the power of attorney and valid information on voting

through a network and other methods for a term of not less than 10 years.

Section 6 Adjournment of meeting

Article 66 The board of directors of the Company shall ensure that the shareholders’ general

meeting is held continuously within a reasonable working time until reaching the final resolutions.

Article 67 If, in the course of the meeting, disputes arising out of the identity of any shareholder

or the results of the calculation of the votes and so on cannot be resolved on site in such a way that

the order of the meeting is affected and the meeting cannot proceed as usual, the Chairman of the

meeting shall declare an adjournment of the meeting. If the foregoing circumstances cease to exist,

the Chairman of the meeting shall notify the shareholders of the resumption of the meeting as soon

as possible.

Article 68 In the event that the shareholders’ general meeting has been adjourned for more than

one working day due to event of force majeure or other unforeseeable reasons such that the meeting

fails to convene as usual or fails to reach any resolution, the board of directors of the Company is

obliged to take necessary measures to resume the shareholders’ general meeting as soon as possible

or directly terminate the meeting, and at the same time, shall explain to the stock exchange the reasons

and make an announcement in a timely manner.

Section 7 Post-meeting issues and announcement

Article 69 After the shareholders’ general meeting the secretary of the board of directors shall

be responsible for submitting the relevant materials including minutes and resolutions to the relevant

regulatory authorities and making an announcement (if required by law, or HKSE Listing Rules, SSE

Listing Rules, Guidelines for the Articles of Association) in the designated media in accordance with

the relevant laws and regulations and as required by the securities regulatory authority under the State

Council and the stock exchanges upon which the shares of the Company are listed.

Article 70 The number of shareholders or their authorized proxies attending the meeting, the

total number of voting shares held by such shareholders or represented by such proxies and the

proportion thereof to the total number of voting shares of the Company, the voting method, the results

of the polls for every motion and the details regarding the passing of all motions shall be stated clearly

in the announcement of the resolutions of the shareholders’ general meeting. For resolutions of a

motion proposed by a shareholder, the name and the shareholding of the proposing shareholder

together with the contents of the motion shall be specified.

In the event that the board of the directors or the Chairman of the meeting decides not to include

the motion proposed by the supervisory committee or the shareholders into the agenda of the AGM,

the board of directors or the Chairman of the meeting shall explain and specify the reasons during the

AGM. The content of such motion and the statement made by the board of directors shall, together

with the resolutions of the AGM, be announced after the AGM.


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In the event that a motion in connection with the meeting has not been adopted or the resolutions

of the preceding shareholders’ general meeting have been changed at the current shareholders’ general

meeting, the board of directors shall specify the same in the announcement of the resolutions of the

shareholders’ general meeting. The announcement of the resolutions of the shareholders’ general

meeting shall be published in the designated newspapers or on the Company’s website.

Article 71 The secretary of the board of directors shall be responsible for keeping written

materials, including the register of the attendees of the meeting, the proxy forms, statistical

information relating to the voting, minutes, announcement of resolutions and etc.

CHAPTER 5 SUPPLEMENTARY PROVISIONS

Article 72 These rules shall become effective after being adopted by the shareholders’ general

meeting.

Article 73 Any modification to these Rules shall be made by way of amendments proposed by

the board of directors and submitted to the shareholders’ general meeting for approval by way of an

special resolution.

Article 74 The board of directors shall be responsible for the interpretation of these Rules.

Article 75 The terms of “above” and “below” referred to in these Rules shall include the number

concerned while terms of “exceed” and “less than” do not include the number concerned.

Article 76 In the event that any matter not covered herein or these Rules contradict to or are

inconsistent with the provisions and requirements of laws, administrative regulations, other relevant

regulatory documents, HKSE Listing Rules, SSE Listing Rules, Articles of Association and the

relevant regulatory authorities as promulgated from time to time, the provisions and requirements of

such laws, administrative regulations, other relevant regulatory documents, HKSE Listing Rules, SSE

Listing Rules, Articles of Association and the relevant regulatory authorities shall prevail.

Article 77 These rules serve to clarify those matters not covered in the Articles of Association

and increase the efficiency of the procedure for shareholders’ general meeting and are a guiding

document. Any provisions and terms contained in these Rules shall not affect the provisions of the

Articles of Association and shareholders’ rights (whether these are legal rights or rights under the

Articles of Association or any other rights).



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Article 1 These Rules are formulated in accordance with the regulatory rules of the listing

places both in the PRC and overseas, such as the Company Law of the People’s

Republic of China (the “Company Law”), Securities Law of the People’s Republic of

China (the “Securities Law”), Mandatory Provisions for the Articles of Association of

Companies Listed Overseas (“Mandatory Provisions”), Guide to Articles of

Association of Listed Companies (“Guide to Articles of Association”), Standards for

the Governance of Listed Companies (“Standards for Governance”), Rules Governing

the Listing of Securities on the Shanghai Stock Exchange (“SSE Listing Rules”),

Rules Governing the Listing of Securities on The Hong Kong Stock Exchange Limited

(“Stock Exchange Listing Rules”) and other relevant laws and regulations and the

Articles of Association of China Coal Energy Co., Ltd. (the “Articles of Association”)

and the Rules of Procedures for the Shareholders’ General Meeting of China Coal

Energy Co., Ltd., in order to regulate the rules of procedures and decision-making

procedures of China Coal Energy Co., Ltd. (the “Company”), to ensure the Board of

Directors effectively fulfills the duties, and to improve the standardized operations

and scientific decison-making level.

CHAPTER 2 FUNCTIONS, POWERS AND AUTHORIZATION OF THE BOARD

Article 2 The Board shall be responsible to the shareholders’ general meeting and exercise the

following functions and powers:

(I) to be responsible for convening shareholders’ general meetings and report on its

work to the shareholders’ general meeting;

(II) to implement the resolutions passed at the shareholders’ general meeting;

(III) to determine the Company’s business plans and investment plans;

(IV) to formulate the Company’s annual budgets and final accounts;

(V) to formulate the Company’s profit distribution proposals and loss recovery

proposals;

(VI) to formulate the proposals for increase or reduction of the Company’s registered

capital, and proposals for issue of the Company’s bonds;

(VII) to formulate proposals for material acquisitions, repurchase of shares of the

Company, merger, division, dissolution or transformation of the Company;

(VIII) to decide on the establishment of the Company’s internal management bodies;

APPENDIX III PROPOSED RULES OF PROCEDURES FORTHE MEETINGS OF BOARD OF DIRECTORS

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(IX) to appoint or dismiss the Company’s president (general manager), chief financial

officer (chief executive officer) and secretary of the Board; to appoint or dismiss

the Company’s vice president (vice general manager) as nominated by the

president (general manager) and determine their remunerations;

(X) to approve the basic management system of the Company;

(XI) to formulate the proposals for any amendment to the Articles of Association;

(XII) to manage disclosure of information of the Company;

(XIII) to determine the establishment of special committees and designate and dismiss

related persons in charge thereof;

(XIV) to propose to the shareholders’ general meeting to appoint or replace the

accounting firm;

(XV) to listen to the work report of the president (general manager) of the Company

and examine the related work;

(XVI) with the authority granted by the shareholders’ general meeting, to determine the

Company’s external investment, acquisition of sale assets, disposal of assets,

external guarantees, entrusted asset management, and connected transactions,

and handled the same in accordance with the listing rules of the security

regulatory authorities and the stock exchange located in the place that the

company list the stock;

(XVII) to exercise other functions and powers as stipulated by laws, regulations and the

listing rules of the place where the Company is listed or conferred by the general

meetings and the Articles of Association.

Article 3 Preconditions for the Board to fulfill its duties:

The president (general manager) shall provide the Board with necessary information

and data so that the Board can make prompt and prudent decisions.

The Board may require the president (general manager), or through the president

(general manager), require the related departments of the Company to provide

necessary data and explanations for the Board to make decisions.

Independent directors may, if they consider it necessary, appoint an independent

institution to produce independent opinions as a basis for decision making and the

expenses for the independent institution shall be borne by the Company.


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Article 4 The Board shall deliberate and resolve on matters which, in accordance with the

provisions of the laws, administrative regulations, rules of competent departments and

the Articles of Association, require approval by the general meetings as proposed by

the Board. The Board of Director should act strictly under the authorisation of the

Shareholders’ General Meeting and the Articles of Association and it shall not pass

any resolution beyond such authorisation.

The Board shall deliberate provisional proposals proposed by shareholders severally

or jointly holding more than 3% of the Company’s voting shares at annual general

meetings in accordance with Rules of Procedure for Shareholders’ General Meeting,

and decide whether to submit the said proposals to the annual general meetings for

deliberation:

Article 5 To improve the daily operation efficiency of the Company, the Board may specify the

functions and powers concerning the investment plans, asset disposal, external

guarantee, corporate debts, financial policies and organization structure of the

Company and grant the said functions and powers to the Chairman of the Board, other

one or several directors or the president (general manager) in accordance with the

Articles of Association and Rules of Procedure for Shareholders’ General Meeting and

upon authorization of the general meetings.

Article 6 The Board has the right which is not specified by the Articles and these Rules to be

exercised by the shareholders’ general meeting to decide on important matters relating

to the Company’s development strategy, operation management, financial audit and

human resource management.

Article 7 Powers and authorization to decide on investment:

(I) The Board shall be responsible for reviewing the medium/long-term

development plans and annual investment plans of the Company and submit the

same to the general meetings for approval.

(II) The Board may adjust no more than 15% (inclusive) of the annual capital

expenditure amount approved by the general meeting for the year and authorize

the Chairman to adjust no more than 10% (inclusive) of the annual capital

expenditure amount approved by the general meeting.

(III) The Board may examine and approve a single investment project (including but

not limited to exploration and development, fixed assets and external equity

investment) whose amount is no greater than 15% (inclusive) of the latest

audited net asset value of the Company, and authorize the Chairman to examine

and approve a single investment project whose amount is no greater than 10% of

the latest audited net asset value of the Company.


— 74 —

(IV) The Board may examine and approve a single venture investment project

(including but not limited to bonds, futures and stock) which uses the assets of

the Company but is unrelated to the business of the Company and the amount of

which is no greater than 2% (inclusive) of the latest audited net asset value of

the Company, and authorize the Chairman to examine and approve a single

investment project whose amount is no greater than 1% (inclusive) of the latest

audited net asset value of the Company.

(V) Right of selection of new business opportunities and preemptive rights of new

business.

Only independent non-executive directors have the right to vote on decisions

made by the Board concerning avoidance of intra-industry competition,

including selection of new business opportunities and preemptive rights of new

businesses of China National Coal Group Corporation.

(VI) The rights and authorization of the Chairman relating to the aforesaid

investments all cover investments within the scope of main business of the

Company. Investments outside the scope of mainline business of the Company

and exceeding 5% of the annual investment amount of the Company shall be

subject to examination and approval of the Board, while investments not

exceeding 5% of the annual investment of the Company shall be subject to the

approval by the Chairman.

(VII) If the aforesaid investment rights and authorization involve “transactions to be

disclosed” as specified in the Stock Exchange Listing Rules and any of the

results of the five scale tests is greater than 25%, examination and approval of

the shareholders’ general meeting are required.

Article 8 Powers and authorization to decide on asset disposal:

(I) In conducting “transactions to be disclosed” (including but not limited to

purchase and sale of equity, tangible assets and other property rights) as

specified in the Listing Rules, the Company shall calculate the following five

test indices (“the five ratios”) as judgment standards as provided for in the Stock

Exchange Listing Rules:

(1) Total assets test:Total assets involved in transactions

X 100%Total consolidated assets (including

intangible assets) of the listed company


— 75 —

(2) Return test:

Profit from assets involved

in related transactions x 100%

Consolidated profit of the listed company

(3) Consideration-to-total:

market value test:Total consideration to be paid x 100%

Total market value of the listed

company

(4) Newly issued

equity test:

Value of equity to be issued by the listed

company as transaction considerationx 100%

Value of equity already issued

by the listed company

(5) Profit test:Profit from assets involved in transactions

x 100%Consolidated profit of the listed company

Based on the test results, the related transactions can be divided as per the following

standards:

Type of transaction Assets ratio

Consideration

ratio Profit ratio Return ratio Equity ratio

Very substantial acquisition P�100% P�100% P�100% P�100% P�100%

Very substantial disposal P�75% P�75% P�75% P�75% N/A

Major transaction —

acquisition 25%�P<100% 25%�P<100% 25%�P<100% 25%�P<100% 25%�P<100%


disposal 25%�P<75% 25%�P<75% 25%�P<75% 25%�P<75% N/A

Transactions to be disclosed 5%�P<25% 5%�P<25% 5%�P<25% 5%�P<25% 5%�P<25%

Equity transaction P<5% P<5% P<5% P<5% P<5%

Note: P is the resulting percentage of scale tests


— 76 —

Different transactions shall be subject to the examination and approval procedures in

accordance with the Stock Exchange Listing Rules:

Type of transaction Notify SEHK

Announce on

newspapers

Send

circular to

shareholders

Approval by

shareholders

Accountants’

Report

Very substantial acquisition Required Required Required Required Required

Very substantial disposal Required Required Required Required Required


acquisition Required Required Required Required Required


disposal Required Required Required Required Required

Transactions to be disclosed Required Required Required Not required Not required

Equity transaction Required Required Not Required Not required1 Not required

Reverse takeover Required Required Required Required Required

Note 1: Unless the directors of the Company have not obtained the shareholders’ general mandate to issue

securities or the consideration of the related transaction exceeds the range of general

authorization, transactions whose scale test percentage is smaller than 25% and which are no

equity transactions do not require approval by general meetings.

Except for the matters which require the consideration and approval of the

shareholders’ general meeting under the security regulatory provisions of the place

where the company list the stock, such as the listing rules of the Hong Kong Stock

Exchange, the Guidance of the Articles of Association and the listing rules of

Shanghai Stock Exchange, or the Articles of Association or these rules of procedures,

the Board is authorised to examine and approve other matters.

(II) Subject to Clause (I) of this article, the Board shall examine and approve

disposal of fixed assets if the sum of the expected value of the fixed assets to be

disposed of and the value derived from the disposal of fixed assets within 4

months before such proposal of the fixed assets is not greater than 33%

(inclusive) of the value of fixed assets as shown on the balance sheet most

recently considered and approved by the general meeting; or authorize the

Chairman to examine and approve if the percentage is not greater than 10%

(inclusive). Disposals of the fixed assets under this Clause include transfer of

some asset interests, but do not include guarantee provided by pledge of fixed

assets.

(III) In other aspects (including but not limited to conclusion, amendment and

termination of important contracts on operation on consignment, operation on

entrustment, financial management on consignment, contracting and lease), the

five ratios as set out herein shall be calculated based on the value involved or the

value accumulated in 12 months.


— 77 —

Subject to Clause (I) of this article, the Board shall examine and approve

projects whose any of the aforesaid ratios is not greater than 5% (inclusive) or

authorize the Chairman to examine and approve projects whose any of the

aforesaid ratios is no greater than 1%.

(IV) The rights and authorization relating to the aforesaid disposal of investments all

cover disposal of assets within the scope of mainline business of the Company.

Disposal of assets outside the scope of business of the Company and exceeding

5% of the annual investment amount of the Company shall be subject to

examination and approval of the Board and those not exceeding 5% of the annual

investment amount of the company shall be considered and approved by the

Chairman of the Board.

Article 9 Powers and authorization to decide on debts and guarantees:

(I) The Board examines and approves the long-term or short-term loan plan of the

year according to the annual investment plan approved by the general meeting;

authorizes the Chairman to make no more than 20% adjustment of the long-term

or short-term loan plan of the year approved by the Board; authorizes the

Chairman to examine and approve a single loan no more than

RMB1,000,000,000 within the long-term or short-term loan plan of the year

approved by the Board;

(II) The following external guarantees shall be subject to approval by shareholders’

general meeting:

(1) Any external guarantee provided by the Company and its holding

subsidiaries where the total external guarantees provided by the Company

and its holding subsidiaries have exceeded 50% of its latest audited net

assets;

(2) guarantees provided to guaranteed objects with gearing ratios exceeding

70%;

(3) guarantees where single guaranteed amount exceeded 10% of the latest

audited net assets;

(4) guarantees provided to shareholders, actual controllers and their related

parties;

(5) save as items (1) and (4), if the aforesaid guarantee involves “transactions

to be disclosed” as specified in the Stock Exchange Listing Rules and any

of the results of the five scale tests is greater than 25%.


— 78 —

External guarantees subject to approval by the shareholders’ general meeting must be

considered and passed by the Board before submitted for approval to the shareholders’

general meeting. When proposals in respect of guarantees to be provided for

shareholders, actual controllers and their related parties are being considered at the

shareholders’ general meeting, such shareholders or shareholders under the control of

such actual controllers shall abstain from voting. The voting shall be passed by over

half of the voting rights held by other shareholders attending the meeting.

Save as the above, the Board is authorized to consider other external guarantees, but

must be subject to approval and resolved by more than two-thirds of the directors

attending in the Board meeting.

External guarantees considered and approved by the Board or shareholders’ general

meetings must be disclosed on newspapers designated by CSRC in a timely manner.

Contents of disclosures include resolutions of the Board or shareholders’ general

meetings, total external guarantees provided by the Company and its holding

subsidiaries as of the date of information disclosure, total guarantees provided by the

Company to its holding subsidiaries.

In respect of guarantees provided by the Company to others, the guaranteed party shall

provide counter-guaranty to the Company or other necessary risk prevention

measures. Guarantees where the guaranteed amounts are not exceeding 10% of the

Company’s latest audited net assets shall be considered by the Board. The Chairman

of the Board is authorized to consider and sign external guaranty contracts where the

guaranteed amounts are not exceeding 5% of the Company’s latest audited net assets.

For the purpose of this section, if the aforesaid guarantee involves “transactions to be

disclosed” as specified in the Stock Exchange Listing Rules and any of the results of

the five tests is greater than 25%, it shall be subject to approval by the shareholders’

general meeting.

Article 10 If the institutions as determined with the various aforesaid relevant standards for

examining and approving any of the aforesaid investment, asset disposal and external

guarantee include both the Board and the Chairman, submission shall be made to the

highest authority for approval.

Article 11 Powers and authorization to decide on connected transactions:

In accordance with the provisions in the Stock Exchange Listing Rules concerning

connected transactions, only non-continuing connected transactions whose all five

scale test results are smaller than 25% and whose total consideration is less than

HK$10,000,000 shall be decided by the Board. Other non-continuing and continuing

connected transactions shall be subject to approval by independent shareholders.


— 79 —

Independent non-executive directors shall examine the connected transactions of the

Company and its subsidiaries every year in accordance with the Stock Exchange

Listing Rules, Guide to the Articles of Association and SSE Listing Rules. If any

director has any connection (serving as director or senior executive of the other

transaction party, or serving as director or senior executive of a legal person directly

or indirectly controlling the other transaction party or directly or indirectly controlled

by the other transaction party) with the enterprise involved in any matters to be

resolved on at the Board meeting, the said director shall not exercise the right to vote

on the said resolution nor exercise the right to vote on behalf of another director and

shall abstain from voting on the said resolution.

If the aforesaid investment, asset disposal and debt constitute connected transactions,

this article shall apply.

Article 12 Powers and authorization to decide on organization and personnel matters

The Board authorizes the Chairman to decide on the following matters:

(1) internal management setup of the Company;

(2) setting of branches;

(3) appointment or replacement of members of the board of directors and

supervisory committee of any wholly owned subsidiary, and appointment,

replacement or referral of shareholders’ representatives, directors (candidates)

and supervisors (candidates) of the holding subsidiaries and of joint ventures

invested by the Company.

CHAPTER 3 FORMATION AND COMMITTEES OF THE BOARD

Article 13 The Board shall comprise nine directors, including one Chairman, one vice chairman,

and five of which are independent non-executive directors.

Article 14 The Board shall set under it the following special committees: Audit Committee,

Remuneration Committee, Strategic Planning Committee, Nomination Committee and

Safety, Health and Environmental Protection Committee. The special committees shall

study special matters and provide opinions and proposals for the Board to consider in

decision making.

The special committees shall all consist of directors. In the Audit Committee and

Remuneration Committee, independent directors shall be the majority and shall act as

conveners, and the Audit Committee shall include at least one professional accountant

as independent director.


— 80 —

Article 15 The main duties of the Audit Committee are:

(I) to appoint and supervise independent auditors of the Company and approve in

advance all the non-audit services provided by independent auditors;

(II) reviewing the Company’s annual and interim financial statements, earnings

releases, major accounting policies and practices used to prepare financial

statements, alternative treatments of financial information, the effectiveness of

disclosure controls and procedures and important trends and developments in

financial reporting practices and requirements;

(III) to review the internal audit plans and personnel arrangement, the composition,

responsibilities, plans, performance, budget and personnel arrangement of the

internal audit team, and the quality and effectiveness of internal control of the

Company;

(IV) to review the risk assessment and management policies of the Company;

(V) to establish the procedure for handling complaints (about matters relating to

accounting, internal accounting control and audit, potential illegal acts, and

potential dubious accounting or audit matters) against the Company;

(VI) to exercise other functions and powers conferred by the Board.

Article 16 The main duties of the Remuneration Committee are:

(I) to formulate the remuneration plan for the senior executives of the Company,

evaluate the performance of the senior management, and propose to the Board

the annual remuneration, welfare and equity incentive plans for the senior

management;

(II) to propose to the Board the annual remuneration, welfare and equity incentive

plans for directors;

(III) to manage and regularly review the long-term remuneration and bonus plan or

equity incentive plans for directors, employees and senior management, and

make proposals to the Board;

(IV) to consider and approve compensations to executive directors and senior

management in relation to the loss of or termination of their offices or

appointments, so as to ensure the compensations are determined in accordance

with the relevant contract terms. Where it is unable to be determined in

accordance with the contract terms, the compensation shall be fair and

reasonable, without causing excessive burden to the Company;


— 81 —

(V) to consider and approve compensation arrangements involved in dismissal or

removal of directors due to misconduct of such directors, so as to ensure that

such arrangement are determined in accordance with the relevant contract terms.

Where it is unable to be determined in accordance with the contract terms, the

relevant compensation shall be fair and reasonable;

(VI) to ensure that none of the directors or any associates shall determine their own

remunerations;

(VII) to exercise other functions and powers conferred by the Board.

Article 17 The main duties of the Nomination Committee are:

(I) to make proposals to the Board on the scale and composition of the Board basing

on the Company’s operation activities, asset scope and shareholding structure;

(II) to study the standards and procedures selected by the directors and senior

management, and to make proposals to the Board;

(III) to review and make proposals on the candidates of directors and senior

management;

(IV) to assess the independence of independent non-executive directors;

(V) to exercise other functions and powers conferred by the Board.

Article 18 The main duties of the Strategic Planning Committee are:

(I) to study the long-term development strategies and material investment decisions

of the Company and provide proposals;

(II) to study the material plans on investments, financing and capital operations of

the Company that are subject to the approval of the Board and make proposals;

(III) to study the material capital expenditures, investments and asset disposals of the

Company that are subject to the approval of the Board and make proposals;

(IV) to study other significant matters affecting the development of the Company and

make proposals;

(V) to examine the implementation of the aforesaid matters;

(VI) to exercise other functions and powers conferred by the Board.


— 82 —

Article 19 The main duties of the Safety, Health and Environmental Protection Committee are:

(I) to supervise the implementation of the security, health and environmental plans

of the Company, and to supervise the Company’s potential liabilities, changes of

regulations and technological upgrading relating to security, health and

environmental issues;

(II) to make proposals to the Board concerning important issues affecting the health,

security and environmental sectors of the Company;

(III) to make inquiries about serious accidents of operation, property, staff or other

facilities of the Company and the liabilities for such accidents, and to inspect

and supervise handling of the accidents;

(IV) to exercise other functions and powers conferred by the Board.

Article 20 The special committees of the Board shall formulate working rules to specify the

concrete duties of each special committee and the same shall come into effect upon

approval by the Board.

CHAPTER 4 SECRETARY OF THE BOARD

Article 21 The Company shall have a secretary of the Board.

The main duties of the secretary of the Board are to make preparations for

shareholders’ general meetings and Board meetings, keeping of files and shareholders’

information, handling matters relating to information disclosure of the Company, and

keeping the chops of the Board and Board secretariat.

The secretary of the Board shall comply with the laws, administrative regulations,

departmental rules and regulations, the Articles of Association and the relevant

requirements of these Rules.

Article 22 The main duties of the secretary of the Board are:

(I) to be responsible for communication and coordination between the Company and

the related parties, stock exchange and the securities regulatory authority, to

ensure that the Company legally prepare and submit reports and documents as

required by the regulatory authorities;

(II) to be responsible for information disclosure of the Company, to procure the

Company to formulate and implement the information disclosure system and

material information internal reporting system, to procure the Company and the

related parties to fulfill the information disclosure obligation in accordance with

law and to submit regular reports and temporary reports to the stock exchange

in accordance with the relevant regulations;


— 83 —

(III) to coordinate the relationship between the Company and its investors, to handle

visits of the investors, to answer questions raised by the investors, and to provide

the investors with information disclosed by the Company;

(IV) to make preparations for general meetings and Board meetings following the

statutory procedure, and to prepare and submit relevant documents and

information of the meetings;

(V) to attend Board meetings and prepare and sign the minutes of the meetings;

(VI) to be responsible for confidentiality issues relating to information disclosure of

the Company, formulate confidentiality measures, procure the directors,

supervisors, president (general manager) and other senior management and

related informed persons to keep confidential all information before disclosure

thereof, make prompt responsive remedies in the event of divulgence of inside

information and report to the stock exchange;

(VII) to be responsible for keeping shareholders’ register, directors’ register, data

about shareholdings of major shareholders, directors, supervisors, president

(general manager) and other senior management, and documents and minutes of

the shareholders’ general meeting and Board meetings, to ensure the Company

has complete organizational documents and records, and to ensure the persons

with right of access to relevant records and documents of the Company can have

the said records and documents in time;

(VIII)to help directors, supervisors, president (general manager) and other senior

management learn about information disclosure related laws, regulations, rules,

listing rules and other rules of the stock exchange, and the Articles of

Association, and the provisions in the listing agreements concerning their legal

liabilities;

(IX) to procure the Board to exercise functions and powers in accordance with law;

to remind the attending directors where the resolutions to be made by the Board

do not comply with the relevant laws, regulations, rules, listing rules of the stock

exchange, and other provisions or the Articles of Association, and request the

supervisors present at meeting as observers to express their opinions; to record

the opinions of relevant supervisors and persons in the minutes if the Board

insists on making the aforesaid resolutions, and report to the stock exchange;

(X) to fulfill other duties specified in the applicable laws, regulations, rules, listing

rules of the stock exchange, and the Articles of Association.


— 84 —

Article 23 Directors or other senior management (other than the president (general manager) and

chief executive officer (chief financial officer)) may also act as the secretary of the

Board. Accountants of public certified accountants appointed by the Company shall

not concurrently act as the secretary of the Board.

Where a director concurrently acts as the secretary of the Board, and in the event an

action should be done by the director and the secretary of the Board respectively, the

person who is both a director and the secretary of the Board shall not act in dual

capacity.

Article 24 The Company shall formulate the rules of work for the secretary of the Board, which

shall be responsible for information disclosure and investors’ relations. The said rules

shall take effect upon approval of the Board.

The Company shall set up a secretariat as the daily office where the secretary of the

Board fulfills the duties thereof.

CHAPTER 5 PROCEEDINGS OF BOARD MEETINGS

Article 25 Board meetings shall comprise regular meetings and provisional meetings. The Board

shall convene at least four regular meetings every year.

Article 26 Regular meetings shall include the following:

(I) Board meetings approving results reports of the Company:

1. Annual Results Board meetings

Annual Results Board meetings shall be convened within 120 days from the

end of the fiscal year of the Company and shall primarily discuss the annual

reports of the Company and other related matters. Annual Results Board

meetings shall be convened at such a time as to ensure that the annual

reports of the Company will be dispatched to the shareholders before the

deadline specified by the relevant regulations and the Articles of

Association, that the preliminary annual financial results of the Company

will be announced before the deadline specified by the relevant regulations,

and that the annual general meeting will be convened within 180 days from

the end of the fiscal year of the Company.

2. Semi-annual Results Board meetings

Such meetings shall be convened within 60 days from the end of the

previous six months of each fiscal year of the Company and shall primarily

discuss the Company’s semi-annual reports and deal with other relevant

matters.


— 85 —

3. Quarterly Results Board meetings

Such meetings shall be convened in the first month of each of the second

and fourth quarter of the calendar year and shall primarily discuss the

Company’s quarterly reports for the preceding quarters.

(II) Year-end review meetings

Such meetings shall be convened in December of each year or January of the

next year and shall hear and review the president’s (general manager’s) annual

working report for the year and the work arrangements for the following year.

Article 27 In any of the following circumstances, the Chairman of the Board shall issue a notice

to convene an extraordinary meeting within seven days:

(I) jointly proposed by more than one-third of the directors;

(II) proposed by the supervisory committee;

(III) jointly proposed by more than half of the independent directors;

(IV) deemed necessary by the Chairman of the Board;

(V) proposed by shareholders representing more than 10% of the voting rights;

(VI) proposed by the president (general manager);

(VII) requested by the securities regulatory authorities;

(VIII) other circumstances required by the Articles of Association.

Article 28 Board meetings shall in principle be held on site. Where necessary, and subject to full

expression of opinions of directors, and under the approval of the Chairman and the

proposer, Board meetings can be held by way of video, telephone, facsimile or e-mail

voting. Board meetings can also adopt both on site and other methods at the same

time.

Where Board meetings are not held on site, directors who are indicated on the video

to be present, and directors who express their opinions in telephone meetings, and

valid facsimile or e-mail votes received within the required time limit, or confirmation

letters of attendance of directors which are subsequently submitted shall be accounted

in the number of directors who attend the meeting.

Board meetings convened on site and by way of video, telephone, shall be taped

recorded where necessary.


— 86 —

Board meetings convened in the form of videoconference shall be recorded and

videotaped. If any director cannot sign the resolutions of the meeting in real time, the

said director shall give a verbal vote and responsively affix the written signature

thereof. The verbal vote by a director shall have the same effect as the written

signature, provided that there is no discrepancy between the opinions expressed by

such director in completing the written signature and the opinions orally expressed by

him during the meeting.

If, in any emergency circumstance, a Board meeting cannot be held onsite or in the

form of videoconference and the proposals need not be discussed because the matters

to be discussed are highly procedural and case-specific, the meeting can be held by

written proposal, i.e. the proposal is circulated for resolution (as by delivery in

person, fax, express courier and registered airmail), and the signatures of the directors

on the proposal shall be deemed as pros unless otherwise specified on the proposal.

However, matters relating to material connected transactions between shareholders

and effective controllers of the Company, the connected enterprises or directors and

the Company shall, as far as possible, not be processed by circulating them for

approval but must be submitted to special committees for consideration, and the Board

shall hold onsite meetings on such transactions. Independent directors not materially

interested in the said transactions shall attend the related meetings.

CHAPTER 6 RULES OF PROCEDURE FOR BOARD MEETINGS

Article 29 Collection of proposals

The secretary of the Board shall be responsible for collecting draft proposals to be

discussed on Board meetings. The proposals shall be submitted together with

descriptive data at least 15 days before the date of the meeting. Proposals involving

material connected transactions (as determined according to the standards issued from

time to time by the competent regulatory authorities) that must be discussed on Board

meetings or the shareholders’ general meeting according to law shall first be approved

by independent directors. After sorting out the related data, the secretary of the Board

shall set out the time, venue and agenda of Board meetings and submit the same to the

Chairman.

Proposals to be submitted to Board meetings shall relate to:

(I) matters proposed by the directors;

(II) matters proposed by the supervisory committee;

(III) proposals from the special committees of the Board;


— 87 —

(IV) matters proposed by the president (general manager);

(V) matters to be discussed on general meetings convened upon request of the

holding subsidiaries and joint ventures invested by the Company.

Article 30 Submission of proposals

In respect of proposals for regular meetings, the Board secretariat shall fully solicit

opinions of the directors before issue of the notice to convene the regular Board

meeting, and after the initial formation of proposals, to submit to the Chairman for

decision. Prior to the decision by the Chairman, opinions from the manager and other

senior management are deemed to be required.

In respect of proposals for provisional meetings, individuals or institutions proposing

to convene provisional meetings shall submit proposals in writing and signed

(chopped) by the proposer through the Board secretariat or directly to the Chairman.

The written proposal shall set out the following:

(1) name(s) of the proposer(s);

(2) reasons of the proposal or objective reasons as the basis of the proposal;

(3) time or time limit, venue and way of meeting proposed to be convened;

(4) clear and specific proposals;

(5) way of contact of the proposer and date the proposal is served.

Contents of the proposal shall fall within the scope of duties of the Board as required

in the Articles of Association, and should be submitted along with information relating

with the proposal.

Upon receipt of the above written proposal and relevant information, the Board

secretariat shall forward the same to the Chairman on the same day. If the Chairman

considers that the contents of the proposal are not clear, not specific or insufficient,

the proposer may be requested to make amendments or supplements.

Article 31 Convening of meetings

The Chairman shall convene and preside over Board meetings and issue notice of

meeting. If the Chairman is unable to fulfil the duty for special reasons, the meeting

shall be convened and presided by the vice chairman. If the vice chairman fails to

fulfil the duty, a director jointly elected by at least half of the directors shall convene

and preside over the meeting.


— 88 —

After election for new session of the Board by the shareholders’ general meeting, the

director obtaining the majority of votes in the general meeting (if more than one, then

elect one of them) to preside over the meeting, and to elect the Chairman of the new

session of the Board.

Article 32 Notice of meeting

(I) Notice of meeting shall be sent to all the directors, supervisors, president

(general manager), secretary of the Board and other non-voting attendants before

any Board meeting is held. The written notice of meeting shall at least include

the following contents:

(1) Time and venue of the meeting;

(2) Form of the meeting to be held;

(3) Matters (agenda) to be discussed;

(4) Convener of the meeting and the Chairman, proposer of the extraordinary

meeting and its written proposals;

(5) Meeting documents required for voting by directors:

(6) Requests requiring the director to attend the meeting in person or requiring

the director to appoint other directors to attend the meeting as his proxy;

(7) Contact persons and way of contacts.

Oral notice of meeting shall at least include contents in (1) and (2) above, and

explanations for requiring convening provisional meetings at the earliest

possible under emergency.

(II) Board meetings shall be notified in accordance with the following:

When convening regular Board meetings and provisional meetings, the written notice

sealed with the chop of the Board secretariat shall be served at least 10 days and five

days in advance respectively to all directors, supervisors, president (general manager),

the secretary of the Board and other non-voting attendants by hand, facsimile, e-mail,

courier, telex, telegram or other ways. Where delivery is made indirectly, telephone

confirmation shall be followed and corresponding records made.

In the event of emergency requiring convening extraordinary Board meeting at the

earliest possible, notice can be made any time by way of telephone or other oral ways,

but the Chairman shall make explanations in the meeting.


— 89 —

Notice shall be served in Chinese, or attached with a version in English if necessary.

Notice of meeting shall be deemed to have been served to any director who attends the

meeting without raising any objection before or during the meeting that he has not

received the notice of meeting.

(III) Changes in the notice of meeting

If changes in the time, venue of meeting or additions, changes, deletions of proposals

are required to be made after the issue of the written notice of the Board regular

meeting, notice of the changes shall be served three days before the originally

determined date for convening the meeting, explaining the situation and the relevant

contents of the new proposals and related information. If the notice is given less than

three days, the date of meeting shall be correspondingly deferred or can be convened

as scheduled after approval by all the directors attending the meeting.

If changes in the time, venue of meeting or addition, changes, deletions of proposals

are required to be made after the issue of the notice of the provisional Board meeting,

approval from all the directors attending the meeting should be obtained in advance

and making corresponding records.

Article 33 Communication before meetings

From the delivery of notice to the holding of meeting, the secretary of the Board shall

be responsible for contacting all the directors, especially external directors, obtain

their views or suggestions on the proposals to be considered and transfer the said

views or suggestions to those who submit the proposals so that they can improve the

said proposals. The secretary of the Board shall also arrange for providing the

supplemental materials which are required for the directors to make decisions on the

proposals to be considered at the meetings, including the background information

relating to the subject of the resolution and other information which will assist the

directors in decision making.

Where more than 1/4 directors or more than 1/2 external directors deem the documents

relating to a certain proposal as inadequate or the reasoning as unclear, they may

jointly propose to adjourn the Board meeting or suspend discussing some proposals,

and the Board shall adopt such a proposal. Unless such proposals are presented

directly at the Board meeting, the Board secretary shall responsively notify the

directors, supervisors, president (general manager), secretary of the Board and other

non-voting attendants of the written proposals jointly presented by relevant directors

to adjourn the Board meeting or suspend discussing some topics on the meeting.


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Article 34 Attendance on meetings

Directors shall in principle attend Board meetings in person. If any director cannot

attend the meeting in person for any reason, he should review the meeting information

in advance to form a definite opinion, and authorize in writing another director to

attend on his behalf.

The power of attorney shall specify:

(I) the name of the principal and proxy;

(II) summarized opinion of the principal on every proposal;

(III) scope of authorization of the principal and instructions as to his intentions to

vote on the proposals;

(IV) signature of the principal, and date etc.

Any director appointing another director to sign written confirmation opinion in

respect of regular reports on his behalf should make a special authorization in the

power of attorney.

The director acting as the proxy shall submit to the Chairman the power of attorney,

and make explanations on the attendance record book on his appointment to attend the

meeting.

If any independent director fails to attend Board meetings in person for three

consecutive times, the Board shall propose to the shareholders’ general meeting to

replace the said director.

Board meetings shall be attended by over half of the directors. If the relevant directors

refuse to attend or is delinquent to attend, resulting in failure to satisfy the quorum

for convening a meeting, the Chairman and the secretary of the Board shall report to

the regulatory authority promptly.

Supervisors may attend Board meetings as observers. The president (general manager)

and secretary of the Board who are not directors shall attend the Board meetings as

observers. If the Chairman consider it necessary, he may notify other relevant

personnel to attend Board meetings as observers.

Article 35 Appointment of proxy to attend Board meetings and acceptance of such appointment

shall follow the following principles:

(I) When considering connected transactions, unrelated directors shall not appoint

related directors to attend the meeting on his behalf, and the related director

shall not accept the appointment of such unrelated directors;


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(II) Independent directors shall not appoint non-independent directors to attend the

meeting on his behalf, and the non-independent directors shall not accept the

appointment of such independent directors;

(III) A director shall not fully authorize another director to attend the meeting on his

behalf without making explanations on his personal opinions regarding the

proposals and his voting intentions, and the relevant director shall not accept

appointment that are fully or unclearly authorized.

(IV) A director shall not accept the appointment of more than two directors as their

proxies, and directors shall also not appoint directors who have accepted

assignments of two other directors as their proxies.

Article 36 Discussion of proposals

The Chairman shall declare the meeting open at the prescribed time.

After the attending directors have reached an agreement on the agenda, the meeting

shall discuss the proposals one by one as presided over by the Chairman. First the

persons who submit the proposals shall report to the Board or explain the proposals

either in person or by proxy.

In discussing the relevant plans, proposals and reports, the Board may require the

persons in charge of the related departments to attend the Board meeting so that the

Board may listen to his views and put questions to him regarding the relevant

circumstances to make prudent decisions. If any proposal is found unclear or not quite

feasible in the course of consideration, the Board shall require the related departments

to make explanations or the Board may dismiss the proposals or suspend voting on

them.

The Chairman shall request directors attending the Board meeting to express their

definite opinions on the various proposals. The directors shall seriously read the

relevant meeting information, and based on their full understanding, to express their

independent and cautious opinions.

In respect of proposals requiring approval in advance by independent directors, the

Chairman shall prior to the discussion of the relevant proposal, designate an

independent director to read the written approval opinion of independent directors.

If any director hinders the normal progress of the meeting or affects other directors

from making a speech, the Chairman shall stop him in time.

Except for the unanimous agreement of all the directors attending the meeting, Board

meetings shall not vote for proposals not included in the notice of the meeting. The

director acting as the proxy of other directors to attend Board meetings shall not vote

on behalf of other directors on proposals not included in the notice of the meeting.


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Article 37 Independent directors shall provide the Board with independent opinions on the

following matters:

(I) nomination, appointment and dismissal of directors;

(II) appointment or dismissal of president (general manager), vice president (deputy

general manager), chief financial officer and secretary of the Board;

(III) remunerations of directors, president (general manager), vice president (deputy

general manage), chief financial officer and secretary of the Board;

(IV) loans or other fund operations equal to or exceeding the standards for material

connected transactions (as determined according to standards issued from time

to time by the competent regulatory authorities or the stock exchange where the

Company is listed) between the shareholders, actual controllers and connected

enterprises thereof and the Company, which material connected transactions

must be discussed at Board meetings or the shareholders’ general meeting

according to law, and whether the Company shall take effective measures to

recover the outstanding receivables;

(V) matters which independent directors deem likely to damage the interests of small

or medium shareholders.

The independent directors shall express definite opinions on the aforesaid

matters.

1. consent;

2. qualified opinion and reason thereof;

3. objection and reasons thereof;

4. inability to express opinions and reasons thereof.

Article 38 Voting on proposals

After full discussions have been made on every proposal, the Chairman shall in

appropriate time request the directors to vote.

Voting on Board meetings may be conducted by poll and in writing. Each director has

the right of one vote. The voting intentions of the directors are divided into pros, cons

and abstentions. Directors attending the meeting shall choose one of the above

intentions, and if no selections have been made or more than two intentions have been

chosen at the same time, the Chairman shall request the relevant directors to re-elect,

and those refused to re-elect shall be deemed as abstained. Those who leave the

meeting site mid-term without making selections shall be deemed as abstained.


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A director attending the meeting as proxy shall exercise rights within the scope of

authorization. Where a director fails to attend a Board meeting in person and to

appoint a proxy to attend on his behalf, the said director shall be deemed to have

waived his rights to vote at the meeting.

Article 39 Counting of voting results

After completion of voting by directors, the relevant personnel of the Board

secretariat shall collect the votes of the directors in a timely manner, to be counted by

the secretary of the Board under the supervision of one supervisor or independent

director.

If the meeting is convened on site, the Chairman shall announce the result on site.

Under other situations, the Chairman shall request the secretary of the Board to notify

the results of voting to directors before the next working day after the completion of

the required time limit for voting.

Voting made by directors after the announcement of the voting results by the

Chairman or after the end of the required time limit for voting shall not be counted.

Article 40 Abstentions

Under the following circumstances, directors shall abstain from voting on the relevant

resolutions:

(I) Situations where directors are required to abstain under the SSE Listing Rules

and Stock Exchange Listing Rules;

(II) Situations where directors themselves consider should abstain;

(III) Other situations as required by the Articles of Association where directors should

abstain due to their connections with the corporate involved in the proposals of

the meeting.

Where directors abstain from voting, the relevant Board meeting may be convened by

the attendance of more than half of the unrelated directors, and the resolutions formed

are required to be passed by more than half of the unrelated directors. Where the

number of unrelated directors who attend the meeting is less than three, no voting

shall be made on the relevant resolution, and the matter shall be submitted for

consideration by the shareholders’ general meeting.

If any director or its associates (defined by the Stock Exchange Listing Rules) has an

interest in certain contract, transaction, arrangement or other matters requiring

consideration by the Board, the relevant director shall abstain from voting on the

relevant matter in the Board meeting, and shall also not be counted into the quorum


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of the relevant meeting. If no resolution can be reached due to the abstention of the

relevant director, after approval by the securities regulatory authorities, the interested

director can participate in the voting, and be counted into the quorum, but the

Company shall make detailed explanations in the relevant announcement.

Article 41 Formation of resolutions

Save as the abstentions under these Rules, resolutions formed through consideration

by the Board on the proposals must be passed by over half of the number of all the

directors voting for such proposal. If the laws, administrative regulations and the

Articles of Association have special requirements that the formation of resolutions of

the Board should be subject to the approval by more directors, the procedure of Board

meetings shall comply with the said special requirements.

When the Board is making resolution on guarantees within its permitted scope of

authority in accordance with the Articles of Association, in addition to the approval

by more than half of all the directors, shall also be subject to the approval of more

than two-thirds of the directors attending the meeting.

Where contradictions appear in the contents and meanings of different resolutions, the

resolution formed at a later time shall rule. Where there are special requirement of the

listing rules of the stock exchange of the place of listing on the resolution made by

the Board, the procedures of the Board meeting shall comply with such special

requirement.

Voting on Board meetings may be conducted by a show of hands or by poll. Each

director has the right of one vote. If the pros and cons are the same, the Chairman shall

be entitled to an additional vote.

Article 42 Special requirement regarding profit distribution

Where the Board meeting is required to make a resolution on the company’s profit

distribution, the distribution plan intended to be submitted for consideration by the

Board may be first notified to its public registered accountants, and a request may be

made to them to issue a draft audit report (other financial information have been

confirmed other than those involved in the distribution). After the resolution on the

distribution is made, the Board should request the registered public accountants to

issue a formal audit report. The Board shall then make a resolution on other related

matters in the regular report based on the formal audit report of the public registered

accountants.


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Article 43 Handling of proposals not been passed

If a proposal has not been passed, under the situation where no significant changes

have occurred to the relevant conditions and factors, the Board shall within one month

not re-consider proposals with same contents.

Article 44 Suspension of voting

If more than half of the directors who attend the meeting or more than two of theindependent directors shall consider it impossible to make judgment on the relevantmatters because the proposal is not definite, not specific, or the meeting informationis not sufficient or otherwise, the directors may jointly request to adjourn the Boardmeeting or to suspend some of the matters to be considered by the Board meeting,which shall be adopted by the Board.

Directors requesting suspension of voting shall state specific requirements on theconditions to be fulfilled when such proposal is being re-proposed.

Article 45 Liability of the directors for the resolutions of the Board

Any written resolution made by the Board not following the statutory procedure shallnot have legal force as a resolution of the Board even if every director has expressedopinions in different ways. The directors shall be responsible for the resolutionspassed at Board meetings. Any director who votes for a resolution which contravenesthe relevant laws, administrative regulations and the Articles of Association and whichincurs serious losses of the Company shall be directly responsible (including theliability for compensation) the same. A director who votes against the resolution, andwho has been proved as having expressed dissenting opinions on the resolution andsuch opinions are recorded in the minutes of the meeting can be exempt from liability.A director who waives his right to vote or who fails to attend the meeting and doesnot appoint a proxy to act on his behalf shall not be exempt from liability. A directorwho explicitly expresses his objection in the course of discussion but fails to cast acon in the voting shall not be exempt from liability.

Article 46 Resolutions of meetings

In principle, a Board meeting shall resolve on all the matters discussed on the meeting.

A resolution on the Company’s connected transaction shall not be valid until it issigned by all the attending independent directors.

The independent directors’ opinions shall be set out in the resolutions of the Boardmeetings.

Article 47 Minutes of meetings


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The minutes of the Board meeting, which are the formal evidence for the resolutionsof the Board, shall be recorded in detail. The secretary of the Board shall arrange thepersonnel of the Board secretariat to keep proper minutes of Board meetings. Theminutes of a Board meeting shall specify:

(I) the date, venue, names of the convener of the meeting;

(II) the names of the attending directors, the names of directors (proxies) accepting

another director’s appointment to attend the meeting;

(III) the agenda of the meeting;

(IV) summaries of the speeches of the directors;

(V) the voting method and result for each resolution (the voting result shall set out

the numbers of pros, cons and abstentions);

(VI) the directors’ signatures.

In addition to the minutes of meetings, the secretary of the Board may also arrange the

personnel of the Board secretariat to make summaries of the minutes if necessary, and

make individual minute of the resolutions adopted based on the statistics on the voting

results.

Article 48 The secretary of the Board shall organize the recording of minutes at the meeting and

compile the minutes in a serious manner.

Directors who attend the meeting shall sign the minutes of the meeting and minutes

of resolutions on behalf of themselves and the directors who have appointed them as

proxies to attend the meeting as confirmation. The secretary of the Board shall provide

complete copies of the minutes of each Board meeting to the directors as soon as

possible. Directors who disagree with the minutes of the meeting or resolutions, may

give explanation in writing when signing.

Directors who have not signed in confirmation in accordance with the previous

paragraph and have not made explanation in writing, shall be deemed as completely

agreed with the contents in the minutes of the meeting and the minutes of the

resolutions.

The minutes of Board meetings shall be kept properly as important documents of the

Company at the domicile of the Company for at least 10 years. After a director sends

a reasonable notice, the Board shall provide the related minutes for the director to

check at a reasonable time (see A.1.5 of Appendix 14 of the Stock Exchange Listing

Rules).


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CHAPTER 7 INFORMATION DISCLOSURE OF BOARD MEETINGS

Article 49 The Board of the Company shall strictly comply with the requirements of the

regulatory authority of the place of listing and the SSE Listing Rules of Shanghai

Stock Exchange in relation to information disclosure, and shall ensure that matters

considered or resolutions passed at the Board meeting which must be disclosed are

disclosed fully, promptly and accurately. Information relating to material matters must

be reported the soonest possible to the relevant stock exchange in conformity with the

principle of fair information disclosure, shall be disclosed in accordance with the

relevant listing rules, and shall be filed with the relevant regulatory authority (where

appropriate).

Article 50 If a matter which requires the independent opinions of the independent directors must

be disclosed, the Company shall announce such opinions of the independent directors.

If the independent directors hold divergent views and cannot reach any consensus, the

Board shall disclose the respective opinions of each independent director.

Article 51 In respect of relevant contents of Board meetings requiring confidentiality, the

informed persons shall fulfill the obligation of confidentiality, otherwise they shall be

pursued for relevant liability.

CHAPTER 8 MANAGEMENT OF DOCUMENTATION FILES RELATING TO BOARD MEETINGS

Article 52 The secretary of the Board shall arrange to record and maintain the files of Board

meetings, including the notice and information of meetings, attendance record book,

the power of attorney of the Board meeting, tape records of the meetings, voting

tickets, minutes of meetings signed by directors who attend the meetings, minutes of

the meetings, minutes of resolutions, and notice of resolutions.

The preservation period for the files of Board meetings shall be for a period of 10

years.

CHAPTER 9 IMPLEMENTATION OF AND FEEDBACK ON RESOLUTIONS OF BOARD MEETINGS

Article 53 The following matters shall, after examination and approval by Board meetings, be

submitted to general meetings for approval and then executed:

(I) formulation of the Company’s annual budgets and final accounts;

(II) formulation of the Company’s profit distribution scheme and loss recovery

scheme;


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(III) formulation of the plan for increase or reduction of the Company’s registered

capital, the plan for issue of the Company’s bonds and other securities, and the

plan of listing and repurchase of the Company’s shares;

(IV) resolution on the merger, division, dissolution and liquidation of the Company;

(V) formulation of the proposal for any amendment to the Articles of Association;

(VI) proposal to the general meeting to appoint or replace the accounting firm which

audits the Company’s accounts;

(VII) election and replacement of directors who are not the employee representatives

and decision on matters relating to remuneration and equity incentive for the

directors;

(VIII) election and replacement of supervisors who are shareholders’ representatives

and decision on matters relating to the remuneration of supervisors;

(IX) consideration and approval of the reports of the Board;

(X) consideration and approval of the reports of the Supervisory Committee;

Article 54 After resolutions are passed at Board meetings, the president (general manager) shall

implement the resolutions which fall within the scope of the authority of the president

(general manager), or which the Board authorizes the president (general manager) to

handle, and shall report to the Board on the implementation of the resolutions.

Article 55 The Chairman shall have the right to inspect and supervise implementation of the

resolutions of the meetings or authorize the vice chairman or another director to do

the same.

Article 56 On every Board meeting, the president (general manager) shall deliver a written report

to the meeting in relation to the status of implementation of the matters which are to

be implemented according to the resolutions of the previous Board meeting.

Article 57 Under the direction of the Board and the Chairman, the secretary of the Board shall

take the initiative to obtain information in respect of the progress of the

implementation of the resolutions, and shall, on a regular (monthly) basis and in due

time, report to and submit proposals to the Board and the Chairman in relation to the

important issues during implementation.


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Article 58 Where any matter is not covered herein or where these Rules conflict with the laws,

administrative regulations, and other relevant regulatory documents, the latter shall

prevail.

Article 59 The phrases “more than” and “less than” as mentioned in these Rules are inclusive

while “exceeding” is exclusive.

Article 60 Formulation of and amendment to these Rules shall be subject to the unanimous

approval of all the directors of the Company and to the approval of the general

meeting through a special resolution.

Article 61 These Rules shall be subject to the interpretation of the Board.

Article 62 In the event of any discrepancy between these Rules and the Listing Rules of place of

listing, the Company Law and the Articles of Association, the latter shall prevail.



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Article 1 These Rules of Procedures are formulated in accordance with the laws and regulations

such as the Company Law of the People’s Republic of China (hereinafter the

“Company Law”), the Securities Law of the People’s Republic of China (hereinafter

the “Securities Law”), the Mandatory Provisions for the Articles of Association of

Companies to be Listed Overseas (hereinafter the “Mandatory Provisions”), the

Guidelines for Articles of Association of Listed Companies (hereinafter the

“Guidelines for Articles”), the Corporate Governance Standards of Listed Company

(hereinafter the “Governance Standards”), the Rules Governing the Listing of Shares

on Shanghai Stock Exchange (hereinafter the “Listing Rules of Shanghai Stock

Exchange”), etc, and together with the Articles of Association of China Coal Energy

Company Limited (hereinafter the “Articles”), the Rules of Procedures for

Shareholders’ General Meeting of China Coal Energy Company Limited (hereinafter

the “Rules of Procedures for Shareholder’s General Meeting”) for the purpose of

regulating the rules of procedures and voting procedures of China Coal Energy

Company Limited (hereinafter the “Company”), protecting the rights of the

Supervisory Committee of the Company (hereinafter the “Supervisory Committee”)

in its effective performance of supervisory rights, so as to ensure the overall interests

of shareholders and the Company’s development and to improve its corporate

governance structure.

Article 2 The Company shall establish a Supervisory Committee in accordance with law. The

composition of the Supervisory Committee shall be in accordance with the Articles of

Association, and the Supervisory Committee shall exercise its supervision to protect

the interests of shareholders, the interests of the Company and the legal rights and

interests of the staff from being infringed.

Article 3 The Supervisory Committee shall be responsible to the shareholders’ general meeting

and report work progress to the latter. The Supervisory Committee shall supervise,

inspect and make assessments on the financial status of the Company and on the

discharge of duties by directors, the president, vice president, chief financial officer

and the secretary of the Board.

Article 4 The Company shall adopt measures to ensure that Supervisors have the rights to learn

about the Company’s matters and shall provide them with necessary information and

materials in a prompt manner for their effective performance of supervision,

inspection and assessment on the financial status, operation and management of the

Company.

APPENDIX IV PROPOSED RULES OF PROCEDURES FOR SUPERVISORY COMMITTEE

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CHAPTER 2 COMPOSITION OF THE SUPERVISORY COMMITTEE AND ITS EXECUTIVE ARM

Article 5 The Supervisory Committee is comprised of three members, two of whom are

representatives of shareholders and one is the representative of employees of the

Company. The directors, president and other senior management of the Company shall

not act as supervisors concurrently.

Article 6 The supervisor’s term of office is three years, and may be re-elected to serve another

term of office.

Article 7 The Supervisory Committee shall have one chairman. The appointment and removal

of Chairman of the Supervisory Committee shall be approved by over two thirds

(inclusive) of the votes of the supervisors.

Article 8 A supervisor representing shareholders shall be nominated by shareholders in

accordance with the Articles of Association of the Company and the Rules of

Procedure of the General Meeting of Shareholders and elected or removed by more

than half of the voting rights represented by the shareholders attending the

shareholders’ general meeting, whereas a supervisor representing employees shall be

elected and removed democratically by employees of the Company.

Article 9 A supervisor may resign from his office before the expiry of his term. Resignation by

a supervisor shall be made by submitting a written resignation report to the

Supervisory Committee.

Provisions in the Articles of Association of the Company relating to the resignation

of directors shall be applicable to supervisors, including (but not limited to) the

provision that if the resignation of such supervisor shall lead to the number of

supervisors in the Supervisory Committee of the Company to be less than the statutory

minimum number, the resignation report of such supervisor shall take effect only after

the vacancy caused by his resignation has been filled by a succeeding supervisor.

Article 10 For the purpose of streamlining the organisation and enhancing efficiency, the

Supervisory Committee shall not set up its own office, and the meetings and other

daily routines of the Supervisory Committee shall be undertaken by the Auditing

Department of the Company.


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CHAPTER 3 POWERS AND DUTIES OF THE SUPERVISORY COMMITTEE

Article 11 The Supervisory Committee shall be responsible to the shareholders’ general meeting

and have the following powers and duties under the laws:

(I) To review the financial position of the Company;

(II) To supervise the acts of the directors and senior management of the Company in

their performance of company duties and to raise proposals for removal of any

of directors and senior management who has violated the laws, administrative

regulations, the Articles of Association of the Company or resolutions of the

Shareholders’ Meeting;

(III) To instruct directors, president and other senior management to rectify such acts

which are harmful to the interests of the Company;

(IV) To verify the financial information to be submitted by the Board to the

shareholders’ general meeting, such as financial statements, business reports and

profit distribution plans, and in the event of any doubt, may engage, in the

Company’s name, certified public accountants and qualified auditors to assist in

the review of such information;

(v) To propose the convention of extraordinary shareholders’ general meeting and to

convene and preside over the meeting in the failure of the Board to convene and

preside over such meeting;

(VI) To propose proposals to the shareholders’ general meeting;

(VII) To represent the Company in negotiations with, or bring actions against directors

and senior management;

(VIII) Other duties specified in the Articles of Association or authorized by the

shareholders’ general meetings.

The Supervisors may attend meetings of the board of directors as observers.

Article 12 The Chairman of the Supervisory Committee shall have the following powers and

duties:

(I) To convene and preside as chairman at each meetings of the Supervisory

Committee, and to inspect implementation of resolutions of the Supervisory

Committee;

(II) To report to the shareholders’ general meeting on behalf of the Supervisory

Committee;


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(III) In the event that the Supervisory Committee commences legal proceedings

against directors and other senior management pursuant to Article 152 of the

Company Law, the proceedings shall be conducted by the Chairman of the

Supervisory Committee on behalf of the Company.

Where the Chairman of the Supervisory Committee is unable to perform his powers

and duties, the Chairman may designate a supervisor to perform his powers and duties

on his behalf.

Article 13 The Supervisory Committee shall inspect the Company’s financial status at least once

a year, and where necessary may request the Company to make regular reports on the

Company’s operation and financial situation, and may conduct inspections and

interviews at the Company or its subsidiaries so as to fully understand the operation

of the Company. It may also engage law firms, accounting firms or the audit division

of the Company to provide assistance.

Article 14 The Supervisory Committee shall have the right to propose the replacement of any

director to the shareholders’ general meeting or to propose the dismissal of president

or other senior management from the office to the Board of directors after such

proposal is unanimously approved by more than half of supervisors if the director,

president or any other senior management concerned is in breach of laws or is in

material breach of his duties.

Article 15 The records of supervision of the Supervisory Committee on directors, president or

other senior management as well as the results of its financial or other specific

investigations shall be used as an important basis for performance assessment of

directors, president and other senior management.

Article 16 The Supervisory Committee may report directly to securities regulatory authorities

and other related authorities while reporting to the board of directors and the


Article 17 The Supervisory Committee may during exercise of its powers and duties engage

professionals such as lawyers or certified public accountants to provide professional

advice when necessary and the relevant expenses so incurred shall be borne by the

Company.

The expenses reasonably incurred by supervisors in attending Supervisory Committee

meetings shall be borne by the Company. Such expenses shall include the traveling

expenses from the place of domicile of the supervisors to the place of the meeting (if

it is not at the place of domicile of the supervisors), catering and accommodation

expenses during the meeting, rental of the venue and local transportation expenses.


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Article 18 Under the following circumstances where the Board fails to convene an extraordinary

general meeting as scheduled, the Supervisory Committee may resolve to request the

Board to convene an extraordinary general meeting:

(I) the number of directors is less than the quorum or two-thirds of the number as

required under the Articles;

(II) aggregated losses to be compensated by the Company reach one-third of the total

share capital of the Company.

Article 19 The supervision activities carried out by supervisors pursuant to law are protected by

the laws, and shall not be interfered by any units and individuals. The Company shall

provide necessary office conditions and business activity funds for the actions of

supervisors in performing their duties.

Article 20 During the discharge of duties, supervisors are entitled to request any department of

the Company to provide relevant information, and all business departments of the

Company must provide the same as requested, and shall provide other necessary

assistance, and shall not refuse, shift the responsibility of or hinder the provision of

such information.

Article 21 Supervisors shall inspect at least once a year whether the internal control systems of

the Company and its subsidiaries are still effective, and to report to the shareholders

in the annual report for that year. The relevant review shall cover all important aspects

of the control, including financial control, operation control and compliance control

and risk management functions.

Article 22 Supervisors shall discharge their duties and undertake obligations in compliance with

the Articles of Association.

Where a supervisor violates the laws, regulations or the Articles of Association during

the discharge of his duties, causing damages to the Company, he shall undertake the

responsibility to make compensation.

Supervisors shall undertake confidential obligations on the Company’s un-published

information, including trade secrets and financial information they may have acquired

during the discharge of their supervision powers and duties.


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CHAPTER 4 SYSTEM OF THE SUPERVISORY COMMITTEE MEETING

Article 23 Meetings of the Supervisory Committee include regular meetings and extraordinary

meetings. Regular meetings are convened every six months, while extraordinary

meetings are convened by the Chairman of the Supervisory Committee in light of

circumstances.

Article 24 Regular meetings of the Supervisory Committee are: Annual Results Meeting and

Interim Results Meeting. Of these:

(I) the Annual Results Meeting shall be held within 10 days after the conclusion of

the fiscal year of the Company, mainly to consider the Company’s annual report

and to handle other relevant matters;

(II) the Interim Results Meeting shall be held within 10 days after the conclusion of

the first six months of the Company’s fiscal year, mainly to consider the

Company’s interim report and to handle other relevant matters.

Article 25 Under justifiable reasons, a supervisor is entitled to request the Supervisory

Committee to convene an extraordinary meeting, but whether or not to convene such

meeting shall be decided by the Supervisory Committee. However, under any of the

following circumstances, an extraordinary meeting should be convened:

(I) where the Chairman of the Supervisory Committee considers it to be necessary:

(II) under the joint proposal of over two-thirds of the supervisors;

(III) the Company has been or is undergoing material loss of assets, which has

damaged the shareholders’ interests;

(IV) the directors, president, vice president, chief financial officer, secretary of the

Board are in breach of the laws, regulations and the Articles of Association,

seriously damaging the interests of the Company.

In the event the Supervisory Committee is for some reasons unable to convene a

regular meeting as scheduled, an announcement shall be published to explain the

reasons.

Article 26 Each supervisor shall attend the Supervisory Committee meeting in person.

Supervisor who is for some reasons unable to attend the meeting may appoint a proxy

in writing amongst other supervisors to attend the meeting on his behalf. The power

of attorney shall contain the name of the proxy, matters authorized to be dealt with on

the supervisor’s behalf, and the limits and term of such authorization, and shall be

signed by and affixed with a chop of the principal. A supervisor who attends the

meeting on behalf of another supervisor shall exercise such rights and duties within

the scope of authorization.


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Article 27 A Supervisor who fails to attend any Supervisory Committee meeting and has not

appointed a proxy to attend the meeting on his behalf shall be deemed as having failed

to discharge his duties as a supervisor. A supervisor who fails to attend the

Supervisory Committee meetings in person twice consecutively shall be removed in

accordance with the Articles of Association.

A meeting of the Supervisory Committee shall only be held if attended by more than

two-thirds of the supervisors. For those supervisors refusing to attend or are reluctant

to attend so that the minimum requirement for the quorum of the meeting is not

satisfied, the other supervisors shall report to the regulatory authorities in due course.

The secretary to the Board and the securities representative(s) of the Company shall

attend the meeting of the Supervisory Committee as observers.

CHAPTER 5 PROCEDURES OF THE SUPERVISORY COMMITTEE MEETING

Article 28 Agenda at the Supervisory Committee meeting are mainly made based on matters

considered at the Board meeting and matters proposed by the Supervisory Committee

meeting.

Article 29 The Supervisory Committee shall authorize the Auditing Department to collect the

matters considered by the Board and the matters proposed by the Supervisory

Committee, and submit such matters to the Chairman of the Supervisory Committee

promptly. The Chairman has the rights to decide whether or not to submit the same for

consideration by the Supervisory Committee depending on their urgency.

Article 30 The Supervisory Committee meeting shall be convened and presided by the Chairman

of the Supervisory Committee. If the Chairman of the Supervisory Committee is

unable to perform his duties or has failed to perform his duties, the meeting could be

presided by another supervisor designated by the Chairman of the Supervisory

Committee.

A notice of convening the Supervisory Committee should be signed by the Chairman

of Supervisory Committee and the Auditing Department shall be responsible for the

issue of the notice. The notice of convening the meeting shall contain the following:

(I) Time and venue of the meeting;

(II) Matters to be considered (proposed resolutions of the meeting);

(III) The convenor and presider of the meeting, as well as the proposer of the

extraordinary meeting and his/her written proposal;

(IV) The required meeting materials for voting by supervisors;

(V) Request that supervisors shall attend the meeting in person;


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(VI) The contact person and the ways to contact him/her.

The notice of meeting in verbal form shall contain at least items (I) and (II) above,

and the explanation on the need of convening an extraordinary Supervisory Committee

meeting promptly in case of emergency.

To convene regular meetings and extraordinary meetings of the Supervisory

Committee, the Auditing Department shall give written notice affixed with the chop

of the Supervisory Committee to all supervisors by delivery, facsimile, e-mail or other

measures 10 days before the date of a regular meeting or 5 days before that of an

extraordinary meeting. If the notice is not delivered by hand, a telephone confirmation

shall be made and recorded accordingly.

When an extraordinary meeting of the Supervisory Committee is required to be

convened as soon as possible to deal with urgent matters, the notice of meeting shall

be given verbally or by telephone at any time; however an explanation shall be made

by the convener at the meeting.

Article 31 Prior to the issue of the notice of extraordinary Supervisory Committee meeting, the

Auditing Department shall collect proposals of the meeting from all supervisors and

expend at least two days for seeking opinions from the Company’s employees. When

collecting proposals and obtaining opinions, it shall be explained that the main

objective of the Auditing Department is to supervise the compliance and operation of

the Company and the performance of duties of the directors and senior management

personnel rather than to make decision on the Company’s operation and management.

From the issue of the notice to the convening of the meeting, the Auditing Department

of the Company shall organize and arrange communications and contacts with all

supervisors, and obtain the opinions or proposals of the supervisors on the relevant

proposals, so as to improve the relevant proposal.

If over one third of the supervisors consider that a proposal is not supported by

sufficient information or is not demonstrated clearly, they may raise a joint proposal

to consider the proposal at a later time, which the Supervisory Committee shall adopt.

Article 32 When the convening of an extraordinary meeting of Supervisory Committee is

proposed by a supervisor, a written proposal signed by the proposing supervisor shall

be submitted through the Auditing Department or directly to the Chairman of

Supervisory Committee. The written proposal shall contain the following information:

(I) the name of the supervisor proposing the meeting;

(II) the reason for convening the meeting or the objective facts on which the proposal

was based;


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(III) the date/time or period within which the meeting is to be held, venue and method

of the meeting to be convened;

(IV) clear and specific contents of the proposal;

(V) contact information of the proposing supervisor and the date of proposal.

Within 3 days after receipt of a written proposal from a supervisor by the Auditing

Department or by the Chairman of the Supervisory Committee, the Auditing

Department shall give the notice for convening an extraordinary meeting of the


In the event that the Auditing Department is reluctant to give the notice of the

meeting, the proposing supervisor shall promptly report to the regulatory authorities.

Article 33 A meeting of the Supervisory Committee shall be held at a meeting place in the form

of physical meeting. Under urgent circumstances, voting at a meeting of the

Supervisory Committee may be conducted by way of telecommunications provided

that the Chairman of the Supervisory Committee shall explain to the attending

supervisors the urgency in specific detail. When voting by way of

telecommunications, supervisors shall, after confirming their votes by signing a

written opinion on the matter considered and his/her voting intention, fax the same to

the Auditing Department. Supervisors shall not only indicate the voting intention

without stating the written opinion or reason for such voting intention.

For supervisory committee meetings held in the form of physical meeting, the

Chairman of the Supervisory Committee shall announce commencement of the

meeting as scheduled. After the meeting has been officially commenced, supervisors

present at the meeting shall first arrive at a consensus on the agenda of the meeting.

If over one third of the supervisors consider that a proposal is not supported by

sufficient information or is not demonstrated clearly, they may raise a joint proposal

to consider the proposal at a later time, which the chairman of the meeting shall adopt.

After a consensus on the agenda has been reached by the supervisors present at the

meeting, the meeting shall consider the proposals one by one as presided over by the

chairman.

Article 34 When considering the relevant proposals and reports, the Supervisory Committee may

request the directors, president, vice president, chief financial officer, secretary of the

Board, internal and external auditors to attend the meeting as observers to make

necessary explanations on the relevant matters and reply to questions for which the

Supervisory Committee is concerned.

Article 35 When discussing proposals at the Supervisory Committee’s meeting, the Chairman of

the Supervisory Committee shall request the attending supervisors to give a specific


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and clear opinion on each proposal. All the supervisors present at the meeting shall

vote for or against or abstain from voting on each propsoal. Resolutions of the

Supervisory Committee shall be voted on by the supervisors present at the meeting by

way of poll.

Supervisors present at the meeting on behalf of others shall exercise their rights on

behalf of the principal within the scope of authorization.

Supervisor failing to attend any specified Supervisory Committee meeting and appoint

a proxy to attend the meeting on his behalf shall be deemed to have waived his voting

rights in such meeting.

Article 36 The Supervisory Committee meeting shall in general make resolutions on matters to

be considered. Voting at the Supervisory Committee meetings shall be by ballot or by

show of hands. One voting is made for each matter and each supervisor shall have one

vote only. The voting shall be conducted in open ballot and in written form.

The voting intention of a supervisor shall be divided into “for”, “against” or

“abstention”. Each attending supervisor shall indicate his/her voting intention by

choosing one of the above. The Chairman of the Supervisory Committee shall request

each supervisor who fails to choose any of the above or have chosen two or more of

the above to vote again, refusal to do so shall be regarded as having abstained from

voting. Any supervisor who leaves the meeting and does not return and has not voted

by choosing any of the above shall be regarded as having abstained from voting.

To be valid, all resolutions must be agreed by more than two thirds of the votes of all

the supervisors. Where the votes for and against are equal, the Chairman of the

Supervisory Committee shall have the right to cast an additional vote.

Article 37 The Supervisory Committee meeting shall keep detailed minutes of the meeting as a

formal evidence of the resolutions made on matters considered by the Supervisory

Committee. Audio recording of the entire meeting of the Supervisory Committee can

be made if necessary.

The minutes of a physical meeting of the Supervisory Committee shall be duly made

by the personnel of the Auditing Department and shall contain the following:

(I) the session of the meeting, the date, time, venue and manner of convening the

meeting;

(II) details of the notice of the meeting being given;

(III) the convener and the chairman of the meeting;

(IV) attendance at the meeting;


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(V) proposals considered at the meeting, key points and summarized opinion of

supervisors towards the relevant issues and their votes on the proposals;

(VI) method and results of voting on each proposal (stating the number of votes for

and against and abstention); and

(VII) other matters that the attending supervisors consider necessary to be recorded.

The minutes of the Supervisory Committee’s meetings held by telecommunications

shall be prepared by the Auditing Department with reference to the above

requirements.

The Auditing Department of the Company shall designate personnel to seriously

organize the records and collate the matters considered at the meeting. Minutes of

each Supervisory Committee meeting shall be promptly provided for review by all the

supervisors present at the meeting. Supervisors present at the meeting and the person

who has drafted the minutes shall sign the minutes of the meeting. Supervisors have

the right to request to put a note to the minutes to clarify the speech made by him at

the meeting.

Article 38 Notices of and materials for the meeting of the Supervisory Committee, attendance

sheets, audio recording, voting slips, minutes signed and confirmed by the attending

supervisors, and announcements of the resolutions shall be properly kept as the

Company’s important file at the Company’s place of domicile by the Secretary of the

Board for a period of 10 years.

Article 39 Supervisors shall be responsible for any resolutions made by the Supervisory

Committee. If the resolutions of the Supervisory Committee breach any laws,

regulations or the Articles and cause serious damage to the Company, supervisors

responsible for making such resolution shall be liable for compensation, except those

who are proved to have objected and the objections of whom have been recorded in

the minutes.

Article 40 Supervisors and the Supervisory Committee shall not be liable for resolutions of the

Board. However, if the Supervisory Committee considers that the Board resolution is

in violation of the laws, regulations and the Articles or harming the interests of the

Company, the Supervisory Committee may resolve to propose a re-consideration to the

Board.

CHAPTER 6 DISCLOSURE OF INFORMATION OF THE SUPERVISORY COMMITTEE MEETING

Article 41 The Supervisory Committee shall strictly comply with the requirements for disclosure

of information stipulated by relevant regulatory authorities and the stock exchange of

the place where the shares of the Company are listed, and disclose in a timely and

accurate manner the matters discussed and the resolutions passed at the Supervisory

Committee meeting.


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Article 42 All persons who have attended the meeting shall keep in strict confidence all contents

requiring secrecy. Anyone who violates this Article shall bear personal legal liability.

CHAPTER 7 EXECUTION OF THE RESOLUTIONS OF THE SUPERVISORY COMMITTEE MEETING

Article 43 The resolutions of the Supervisory Committee shall be executed by supervisors or

executed under the supervision of supervisors. Material resolutions on supervisory

matters such as resolution to perform an inspection on the financial status of the

Company shall be executed by supervisors, and resolutions recommending any

supervisory matters such as where the actions of directors or the president are harming

the Company’s interests, and a resolution has been made to request for rectification

by the directors or the president, shall be executed under supervision of supervisors.

Article 44 The Supervisory Committee shall set up a record system on the execution of

Supervisory Committee resolutions. The appointed supervisor shall keep records of

the execution of the resolution, and report to the Supervisory Committee of the final

results of execution. The Chairman of the Supervisory Committee shall report at

subsequent meetings the status of implementation of passed resolutions.


Article 45 These Rules shall take effect after the approval by the shareholders’ general meeting.

In these Rules, the terms of “over”, “within” shall mean to be inclusive.

Article 46 The Supervisory Committee shall have the right to interpret these Rules.

Article 47 Any matters uncovered under these Rules or where these Rules are in conflict with the

relevant laws, administrative regulations, other relevant regulatory provisions, the

Articles and the provisions and requirements of the relevant regulatory authorities, the

relevant laws, administrative regulations, other relevant regulatory provisions, the

Articles and the provisions and requirements of the relevant regulatory authorities

shall prevail.

Article 48 These Rules aim to specify matters not set forth in the Articles of Association and to

enhance the efficiency of the Supervisory Committee, and is a guiding document. Any

terms and provisions in these Rules shall not affect the provisions of the Articles of

Association and the rights of shareholders (whether rights under the laws or rights

under the Articles of Association or any other rights).

Article 49 If any content in these Rules of Procedure is inconsistent with the Listing Rules, the

Company Law of the PRC and the Articles, the latter shall prevail.



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In order to further promote sustainable and rapid development, after careful consideration and

intensive study and discussion, China Coal Energy Company Limited (hereinafter referred to as “the

Company”), determines to raise funds by an initial public offering of A shares to develop key projects

and to realize the Company’s strategy for development.

I. Investment summary of the projects

After taking the domestic coal market conditions, stock market conditions, as well as the

financial position of the Company into consideration, the Company plans to issue A shares of no more

than 1,525,333,400 shares, and the raised funds will be used in following projects after deduction of

issuance expenses:

No. Project name

EstimatedTotal amountof investment

(RMB million)

1 Erdos Project with an annual production capacity of 25 million

tons of coal, 4.2 million tons of methanol and 3 million tons of

dimethylether and ancillary engineering facilities (hereinafter

referred to as “the Erdos Project”);

35,000

2 Heilongjiang Project with an annual production capacity of 10

million tons of coal, 1.8 million tons of methanol and 0.6 million

tons of alkene and ancillary engineering facilities (hereinafter

referred to as “the Heilongjiang Project”);

20,000

3 Phase II of China Coal and Coke Xuyang Limited Engineering

Project with a total annual production capacity of 2 million tons of

coke (hereinafter referred to as “the Xuyang Project”);

781

4 Shanxi Lingshi Project with an annual production capacity of 0.3

million tons of methanol produced from coke oven gas (hereinafter

referred to as “the Lingshi Project”); and

917

5 China Coal Shuozhou Great Power Project with a capacity of

2�135 MW of coal gangue generated electricity (hereinafter

referred to as “the Great Project”).

1,409

Note 1: the Erdos Project, the Xuyang Project and the Great Project will be jointly invested by the company and other

companies, while detailed investment will be apportioned according to share ratio.

Note 2: the above projects shall be implemented in the sequence of their serial numbers.

Note 3: the actual amounts of investment of above projects might be adjusted according to requests from relevant

regulatory authorities. When the raised funds of this issuance of shares is collected in full amount, besides

injection of equity capital into above projects which require equity injection and, taking into consideration the

actual total amount of raised funds, funds will also be injected by increase of investment in equity capital in

the subsidiary companies which undertake the project implementation and construction, or by extension of

loans by mandate.

APPENDIX V PROPOSED REPORT OF FEASIBILITY ANALYSIS ONTHE USE OF PROCEEDS FROM THE OFFERING

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Note 4: In case there is surplus from the raised funds, the surplus of the proceeds will be applied to supplement the

working capital for general corporate purpose and or acquisitions of core business related assets. In case of

shortfall, the Company will use its own funds or otherwise through bank loans to make up the shortfall.

II. Investment details of the projects

(I). the Erdos Project

This project is located in the large coal production base in Erdos, Inner Mongolia. Main

facilities to be constructed include coal mines, coal processing plants, production facilities and

transfer pipes for dimethylether, as well as production supporting facilities such as dedicated

railway lines and power plants. The project company is jointly funded and organized by the

Company, China Petroleum & Chemical Corporation (“Sinopec”), Shenergy (Group) Co., Ltd.

(“Shenergy Group”), and Inner Mongolia ManShi Coal Group Corporation (“Manshi Coal

Group”). The share ratios are: The Company 38.75%, Sinopec 38.75%, Shenergy Group 12.5%,

and ManShi Coal Group 10%. Among 25 million tons of coal output after completion of this

project, 10 million tons will be used to produce methanol and dimethylether, and the other 15

million tons will be used to blend with coal produced from Pingshuo mining area of the Company

so as to improve coal quality and increase the added value, which is of great significance for the

Company’s strategic deployment, the increase of volume of raw coal output, the production of

advanced coal chemical products and the Company’s other core competences, as well as

enhancement of domestic market position and corporate image.

The total amount of investment for this project is estimated to be RMB 35 billion, with

construction period of 3 years. Upon completion of the project, it will play the role as a model

project and promote the development of local coal chemical industries, and will also contribute

towards the development of deep-level coal resources in Erdos.

(II). the Heilongjiang Project

The mines of this project are located at Yongqing coal mining area of Jidong County, Jixi

City, Heilongjiang Province. The coal reserve of this mining area is 1.554 billion tons, the coal

category is lignite. The existing external conditions in terms of water and power supplies and

transportation are excellent. The individual projects scheduled for construction are mainly: two

5 million ton/year coal mines in Yongqing coal mining area and auxiliary projects including coal

processing plants, 1.80 million ton/year methanol project, 600,000 ton/year methanol-for-alkene

project, heat-electricity co-generation power plant and Dashitou Reservoir, as well as dedicated

railway line for the mine.

The total amount of investment for this project is estimated to be RMB 20.0 billion, with

construction period of 3 years. This project is compliant with the nation’s strategy of

development of coal chemical industry, and also with the construction program of coal-electricity

base in east Heilongjiang Province, as well as the orientation of the development of the

Company’s core businesses, thus it enjoys superb conditions for construction.


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(III). the Xuyang Project

This project plans to build two 55-hole JNDK55-05F model tamping coke ovens and their

auxiliary production facilities including 8 kms dedicated railway line at the west of Shixiang

Village, Yanjia Town, Xingtai County, where it is to the south of the Phase I of China Coal and

Coke Xuyang Limited Engineering Project. The individual projects scheduled for construction

are mainly production facilities such as workshop for coal preparation, coke plant, coal gas

purification plant and auxiliary facilities. There is ample raw material supply for this project,

while construction conditions including transportation are excellent. The project company is

China Coal and Coke Xuyang Limited, an entity jointly invested by the Company, Xingtai

Xuyang Coking Co., Ltd. and Xingtai Delong Iron & Steel Co., Ltd.. The Company has a share

ratio of 45%.

The total amount of investment of this project is estimated to be RMB0.781 billion, of

which investment in fixed assets is RMB 0.656 billion, investment in working capital is

RMB0.125 billion, with construction period of 2 years.

(IV). the Lingshi Project

This project is to make use of the 424 million normal cubic meters of coke oven gas

generated from the production of 2 million-ton/year coke by China Coal Jiuxin Coking Limited

in Lingshi County of Shanxi Province, producing 300,000 ton/year methanol with the coke oven

gas as raw material. China Coal Jiuxin Coking Limited is a large coking enterprise being a joint

venture of China Coal & Coke Holdings Limited and Lingshi County Jiuxin Coal Processing Co.,

Ltd, with a annual production capacity of of 2 million tons of coke , 20MW/h power generation

by coke oven gas and 424 million normal cubic meters of coke oven gas supplied externally. In

this project, advanced technologies are adopted with integrated use of coke oven gas in

deep-processing for the production of refined methanol products of immense market

potential,which shall be beneficial the sustainable development of the deep-processing coking

industry and the cyclical economy.

The total investment of this project is estimated to be RMB 0.917 billion, with construction

period of 2 years. This project which is expected to bring in superb economic returns, has been

categorized to be the comprehensive resources utilization and environmental protection project

which has been encouraged by the State.

(V). the Great Project

This is a project of integrative using of coal gangue for power generation which is jointly

invested and developed by the Company and Jinxin Smelting Co., Ltd., Pianguan Country,

Shanxi Province. The registered share capital of the project company is RMB 0.425 billion, of

which the Company holds 78%, while Jinxin Smelting Co., Ltd., holds 22%. The project has 2

ultra-highpressure circulating fluidised bed boilers matching 2 air-cooling power units, and

mainly consuming a large amount of coal slime, coal gangue and inferior coals generated by

Pingshuo mining area of the Company. This project has been categorized to be the comprehensive

resources utilization and environmental protection project which has been encouraged by the

State.


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The total investment of this project is estimated to be RMB 1.409 billion, with construction

period of 2 years.

III. Conclusion

All the members of the Company’s Board of Directors have participated in careful, detailed,

rigorous reasoning and discussion on the feasibility and necessity for the use of proceeds raised from

this initial public offering of A shares. The Board has achieved consensus in that investment in

projects to be financed by proceeds of the offering are compliant with nation’s industrial policy and

the Company’s development strategy, where the Company’s orientation for progress and real demands

are embodied. These projects are of great significances for the further improvement of the Company’s

core competence, enhancement of potential for development, strengthening of market competitive

advantages, expansion in point of profit growth and the promotion of the Company’s sustainable and

healthy development.



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Chapter One General Principles

Article 1 To further strengthen the corporate governance structure of China Coal Energy

Company Limited (hereinafter referred to as “the Company”), to promote the

Company’s operation in accordance with relevant regulations, to ensure that

Independent Directors perform their duties, this System is formulated in accordance

with relevant provisions of the Company Law of the People’s Republic of China

(hereinafter referred to as “the Company Law”), the “Guidance Opinions on the

establishment of the system of Independent Directors in Listed Companies”

(hereinafter referred to as “the Guidance Opinions”), the Rules Governing the Listing

of Securities on the Stock Exchange of Hong Kong Limited (hereinafter referred to as

the “Hong Kong Listing Rules”), the Rules Governing the Listing of Securities on the

Shanghai Stock Exchange (hereinafter referred to as the “Shanghai Listing Rules”),

“Standards of Corporate Governance of Listed Companies” and the “Articles of

Association of China Coal Energy Company Limited (hereinafter referred to as the

“Articles of Association of the Company”).

Article 2 Independent directors refer to directors who do not take up any post in the Company

and do not have any relationship with the Company and the Company’s major

shareholder which may prevent them from exercising independent and objective

judgments, and who are recognized by the Stock Exchange of Hong Kong Limited as

independent non-executive directors. At least one of the independent directors shall be

a finance or accounting professional.

Article 3 Provisions on directors contained in the Articles of Association are applicable to

independent directors, except for those provided otherwise in this System.

Chapter Two Qualifications for Independent Directors

Article 4 To become an Independent Director , the following basic qualifications are required:

(1) possess the qualifications for directors of listed company in accordance with

laws, administrative regulations and other relevant regulations of the place of

listing;

(2) possess the independency required by the Guidance Opinions, the Shanghai

Listing Rules and the Hong Kong Listing Rules;

(3) possess basic knowledge on the operation of listed companies, familiar with

relevant laws, rules and administrative regulations;

(4) possess more than five years’ legal, economic or other working experience

required to perform directors’ duties;

(5) ensure the availability of adequate time and energy to perform the duties of

independent director effectively;

APPENDIX VI PROPOSED SYSTEM OF INDEPENDENT DIRECTOR’S WORK

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(6) other qualifications stipulated by the Articles of Association of the Company, the

Shanghai Listing Rules and the Hong Kong Listing Rules.

Article 5 At least one third of the members of the company’s Board of Directors shall be

independent directors, and the number of independent non-executive directors shall

not be less than three, of which at least one must be an accounting professional. The

accounting professional referred to in this article means a professional with senior

title or certified public accountant qualification.

Article 6 In principle, Independent Directors and persons intending to act as Independent

Directors shall, in accordance with the China Securities Regulatory Commission’s

request, participate in training organized by the China Securities Regulatory

Commission and the organizations authorized by the China Securities Regulatory

Commission.

Chapter Three The Independence of Independent Directors

Article 7 Independent Directors must possess independence, complying with the requirement

for independence of Independent Directors in the Guidance Opinions, and the

requirements for independence of Independent Non-Executive Directors in the Hong

Kong Listing Rules, Shanghai Listing Rules, and by the Hong Kong Stock Exchange

and the Shanghai Stock Exchange. The following persons are not allowed to become

Independent Directors:

(1) persons employed by the Company or its affiliated company (excluding

Independent Directors); immediate families; main social relations (immidiate

families refer to spouses, parents, sons and daughters, etc.; main social relations

refer to brothers, sisters, fathers-in-law, mothers-in-law, daughters-in-law,

sons-in-law, spouses of brothers or sisters, brothers or sisters of spouses, etc.);

(2) persons directly or indirectly holding 1% or more than 1% of the shares of the

Company or the company’s top ten natural person shareholders and their

immidiate families;

(3) persons employed by Shareholders holding 5% or more than 5% of the Shares of

the Company or the top five shareholders of the Company as well as those

persons’ immidiate families;

(4) persons who fall in any of the above three situations set forth above during the

most recent year;


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(5) persons who provide financial, legal or consultancy services to the Company or

its affiliated companies;

(6) other persons specified in the Articles of Association

(7) other persons presumed by the China Securities Regulatory Commission, the

Hong Kong Stock Exchange and / or the Hong Kong Listing Rules, and the

Shanghai Listing Rules.

Chapter Four Nomination, Election or Replacement of Independent Directors

Article 8 The Company’s Board of Directors, Supervisory Committee, shareholders alone or

jointly holding more than 1% of the shares of the Company can nominate candidates

for Independent Directors, whose appointment shall be subject to the election and

decision of Shareholders’ General Meetings.

Article 9 The nominators of Independent Directors should obtain the consent of nominees

before the nomination. A nominator should have full knowledge of the occupation,

academic qualification, professional title, detailed working experience, all part-time

jobs of the nominee, as well as express opinions on the nominee’s qualifications and

independence as an independent director. The nominee should also make a public

declaration that there is not any relationship between him or herself and the Company

that affects his or her independent and objective judgment.

The Company’s Board of Directors shall declare the above-mentioned contents before

convening a Shareholders’ General Meeting for the election of Independent Directors.

Article 10 Before convening Shareholders’ General Meetings for the election of Independent

Directors, the Company shall submit relevant information on all the nominees to the

Stock Exchange or the China Securities Regulatory Commission. When there is any

dissent from the Company’s Board of Directors concerning the nominee’s information,

the Board shall submit its written opinion as well.

Nominees dissented by the Stock Exchange is eligible as a candidate for director of

the Company but not eligible as a candidate for Independent Director. During the

election of Independent Directors at a Shareholder’s General Meeting, the Company’s

Board of Directors shall make a statement on whether the Stock Exchange has

expressed dissents on any candidates for independent directorship.

Article 11 The term of office for Independent Directors is the same as that of other directors of

the Company. At the expiration of a term of office, directors can continue in office

provided they are re-elected, provide that the consecutive terms of office shall not

exceed 6 years.


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Article 12 If an Independent Director abstains from attending Board Meetings in person for three

times in succession, the Board of Directors shall propose a replacement of the director

to Shareholders’ General Meeting.

Except for the conditions mentioned above and the situations in which a person shall

not act as director under the Company Law, the office of an Independent Director

cannot be terminated without any reason before expiration. In case of termination of

a Director’s office prior to expiration, it shall be disclosed as a special issue by the

Company. If the Independent Director whose office is terminated before expiration

considers that the reason for termination is not proper, he or she can make a public

declaration.

Article 13 An Independent Director may tender resignation before expiration of the term of

office by submitting a written resignation application to the Board of Directors;

providing an explanation of any conditions which are related to his or her resignation

or which is considered by him/her as necessary to draw the attention of shareholders

and creditors of the Company. The Independent Director should continue performing

his or her duty before obtaining approval from the Board of Directors for his

resignation. An Independent Director shall immediately submit his latest contact to

the Hong Kong Stock Exchange after his resignation.

If the proportion of Independent Directors in the Board of Directors is lower than the

number required by the Guidance Opinions due to the resignation of the Independent

Director, the resignation report of this Independent Director shall only come into

effect when the next Independent Director fill his vacancy.

If the number of Independent Directors falls below the number required by the Hong

Kong Listing Rules and the Shanghai Listing Rules, the Company should notify the

Hong Kong Stock Exchange and Shanghai Stock Exchange, make a public

announcement and appoint Independent Non-Executive Director according to relevant

regulations.

Article 14 If an Independent Director does not meet the independence qualification or there is

other circumstance which render him or her unsuitable to perform the duties of an

Independent Director, so as to result in the number of Independent Directors of the

Company falling below that required by the Guidance Opinions and / or the Hong

Kong Listing Rules, the Company shall make up the numbers of Independent Directors

according to relevant regulations.

If at any time the Company does not comply with stipulations on qualification of

Independent Non-Executive Directors provided in the Hong Kong Listing Rules and

the Shanghai Listing Rule, the Company should notify the Hong Kong Stock Exchange

and Shanghai Stock Exchange, to make a public announcement and appoint

Independent Non-Executive Directors according to relevant regulations.


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Chapter Five Duties and Authority of Independent Directors

Article 15 In order to bring Independent Directors’ functions into full play, besides the duties and

authorities endowed by the Company Law, the Hong Kong Listing Rules, the Shanghai

Listing Rules and other relevant laws and regulations, the Company shall delegate the

following specific authorities to Independent Directors:

(1) Significant connected transactions shall be submitted to the Board of Directors

for discussion after confirmation by Independent Directors. Independent

Directors engage an intermediary to issue an independent financial advisor’s

report as the basis of their judgment.

(2) Make proposals to the Board of Directors for the appointment or dismissal of

accounting firms;

(3) Make proposals to the Board of Directors to hold Shareholders’ Meeting;

(4) Make proposals to hold Board Meetings;

(5) Appoint an external auditor or consultancy firms independently;

(6) collect voting rights from shareholders in public before the convening of

Shareholders’ General Meeting;

(7) other responsibilities stipulated in laws, administrative regulations, rules or the

Articles of Association.

Significant connection transactions, the appointment or dismissal of accounting firms

should be submitted to the Board of Directors for discussion only after they have been

agreed by at least half of the Independent Directors. Before Independent Directors

make proposals to the Board of Directors to hold Shareholders’ General Meeting,

Directors’ Meetings and collect voting rights from shareholders in public before the

convening of Shareholders’ General Meeting, the consent of more than half of the

Independent Directors should be obtained. With the consensus of all Independent

Directors, the Independent Directors can appoint external audit firms and

consultancies to carry out audits and provide consultancy on specific issues, the

Company shall bear all related expenses.

If the above proposals are not adopted or the above authorities cannot be exercised

normally, the company should disclose relevant circumstances.

The proportion of Independent Directors in the Remuneration, Audit and Nomination

Committees set up under the Board of Directors of Company should be more than 1/2.


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Article 16 Independent Directors should perform the above duties and responsibilities as well as

various duties stipulated in Appendix 14A 5.2 of the Hong Kong Listing Rules and

Shanghai Listing Rules. In addition, they should express independent opinions to the

Board of Directors and Shareholders’ General Meeting on the following issues:

1. nomination, appointment and dismissal of directors;

2. appointment or dismissal of senior management;

3. remuneration of directors and senior management of the Company;

4. Any existing or new borrowings or payables and receivables by shareholders,

actual controller or their connected enterprises with an amount exceeding Rmb

3 million or 5% of the lastest audited net assets and whether the Company has

adopted any effective measure to recover the debts;

5. issues which in the opinion of Independent Director may harm the interests of

small or medium shareholders;

6. other issues stipulated in the Articles of Association, the Hong Kong Listing

Rules and Shanghai Listing Rules

Article 17 Independent Directors should express one of the following opinions on the above

issues: consent, qualified opinion and its reason; dissent and its reason, unable to

express an opinion and its hindrance.

Article 18 If the relevant issues are issues required to be disclosed, the Company shall make a

public announcement of Independent Directors’ opinions. If the Independent Directors

have different opinions and cannot reach consensus, the Board of Directors should

disclose opinions of each Independent Director separately.

Article 19 Independent Directors must perform their duties and responsibilities as elaborated in

prospectuses for the issuance of H shares, especially in relation to new business

opportunities and connected transactions.

Chapter VI Obligations of Independent Directors

Article 20 Independent Directors owe the duty of faithfulness and diligence to the Company and

the shareholders as a whole. Independent Directors should perform their

responsibilities according to requirements of relevant laws, rules, the Guidance

Opinions, the Hong Kong Listing Rules, the Shanghai Listing Rules and the Articles

of Association, perform their duties earnestly, protect the interest of the Company as

a whole and, in particular, attention to ensure that legal rights and interests of small

or medium shareholders shall not be harmed. Independent Directors should perform

their obligations independently without being influenced by major shareholders,

actual controller of the Company or other companies or persons that have interest in

the Company.


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Article 21 In principle, an Independent Directors can as act an Independent Director for at most

five listed companies and should make sure that there is enough time and energy to

discharge his duties as an Independent Director effectively.

Article 22 Independent Director should attend Board Meetings on time, understand the business

and operation of the Company, investigate to obtain information for strategic decision

making. Independent Directors should submit annual work reports to the Annual

General Meeting of the Company and explain the performance of their duties.

Independent Directors shall comply with provisions of the Model Code of Appendix

of the Hong Kong Listing Rules and the Shanghai Listing Rules

Chapter VII Protection for Independent Directors in the Performance of Duties

Article 23 The Company should ensure that Independent Director have equal rights to know the

truth which are the same as other Directors. All resolutions of the Board of Directors

shall be notified to Independent Directors in advance by the Company within the time

limit according to the legal requirements and adequate information must be provided.

If an Independent Director considers the information provided is insufficient, he can

require information to be supplemented. When two or more Independent Directors

think that information provided is insufficient or the basis of argument is not clear,

they can submit a joint written request to the Board of Directors to postpone the Board

Meeting or postpone deliberation of the issue. The Board of Directors should adopt

such proposals.

Information provided by the Company to Independent Directors should be kept by the

Company and Independent Directors for at least 5 years.

Article 24 The Company should provide necessary working conditions for Independent Directors

to discharge their duties. The Secretary of the Board of Directors should assist

Independent Directors to discharge their duties, such as providing information or

supplying documents, etc. If any announcement is required to be made in respect of

any independent opinions, proposals and written statements of Independent Directors,

the secretary of the Board of the Company shall promptly so through the matters

relating to the announcement with the stock exchange.

Article 25 When the Independent Directors exercise their rights, the relevant personnel of the

Company shall actively co-operate, and shall not refuse, hinder or conceal any matter,

and shall not interfere in the exercise of directors’ rights.

Article 26 The Company shall pay all expenses for intermediaries engaged by Independent

Directors and other necessary expenses they incur in the exercise of their rights.

Article 27 The Company shall grant Directors an appropriate amount of allowances. Proposals on

the level of allowances shall be prepared by the Board of Directors, approved by a

Shareholders’ General Meeting, and to be disclosed in the Company’s annual report.


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Besides the above-mentioned allowances, the Independent Directors shall not obtain

any additional, undisclosed benefits from the Company, its major Shareholders or any

organization or personnel in which it has an interest.

Article 28 The Company can set up a necessary insurance system for the Independent Directors

to reduce the risk involved in normal performance of duties by Independent Directors.

Chapter Eight Legal Liabilities of Independent Directors

Article 29 The followings are considered as major dereliction of duties by Independent

Directors:

(1) leaking of the Company’s confidential commercial information, resulting in

damage to the Company’s legal interests;

(2) Accepting illicit benefits during the course of performance of duties, or seeking

personal profits by taking advantage of his position as an Independent Director.

(3) Refrain from raising objection to Board Resolutions that, within his knowledge,

violate the laws, administrative regulations or the Company’s Articles of

Association.

(4) Where connected transactions result in major losses to the Company, the

Independent Director has not exercised his veto power.

Article 30 If resolution of Directors’ Meeting violate laws, administrative regulations or the

Articles of Association of the Company resulting in great losses of the Company, and

an Independent Director knows the violation but has not expressed his opposition, or

where an Independent Director engages in illegal acts prohibited by the Company

Law, administrative regulations and regulatory documents, resulting in great losses to

the Company, he/she will be liable for payment of compensation for the losses.

Chapter Nine Supplementary Provisions

Article 31 In case of conflict between this System and the laws and regulations of the place of

listing, performance shall be in accordance with the laws and regulations of the place

of listing.

Article 32 The Board of Directors is responsible for the formulation and interpretation of this

System. Upon approval of the Shareholders’ General Meeting, this System will

become effective on the date of listing of the domestic shares issued by the Company

on the Stock Exchange.


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Article 33 In the event that there is any matter not covered in these detailed working rules,

performance shall be in accordance with relevant provisions of the laws and

regulations of the State, the Hong Kong Listing Rules, the Shanghai Listing Rules and

the Articles of Association of the Company. In case of conflict between provisions of

these detailed working rules and the laws and regulations of the State to be

promulgated in future, any duly and legally amended “Articles of Association of the

Company”, the Shanghai Listing Rules and the Hong Kong Listing Rules, performance

shall be in accordance with the relevant laws and regulations of the State, the

Shanghai Listing Rules and the Hong Kong Listing Rules while immediate

amendments shall be submitted to the Board of the Company for deliberation and the

passing of a resolution.

The Board of Directors —

China Coal Energy Company Limited14th July 2007



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Article 1 To regulate the management and application of funds raised by China Coal Energy

Company Limited (hereinafter referred to as “the Company”), to offer maximum

protection of investors’ interests, this Administrative System is formulated in

accordance with relevant laws, regulations and regulatory documents including the

Company Law of the People’s Republic of China (hereinafter referred to as “the

Company Law”), the Securities Law of the People’s Republic of China (hereinafter

referred to as “the Securities Law”), the Rules Governing the Listing of Securities on

the Shanghai Stock Exchange (hereinafter referred to as the “Shanghai Listing Rules”)

and other relevant laws, regulations and regulatory documents, and in line with the

actual condition of the Company.

Article 2 Raised fund as referred to in these Measures means the raised fund by issuing shares

(including initial public offering, share allotment after listing, and issuance of

additional shares), or by issuing convertible bond, corporate bonds and debentures or

otherwise by means permitted to raise funds from the public for specific use in

accordance with relevant laws, regulations and the Articles of Association by the

Company.

Article 3 When the funds raised is collected, capital verification procedures shall be carried out

timely, during which a capital verification report is prepared by an accounting firm

qualified for securities-related business. The Company’s Board of Directors shall

manage and use the funds raised according to the projections of the funds application

as committed in the prospectus.

Article 4 All raised fund shall only be used in projects committed in the prospectus as publicly

announced. The Company’s Board of Directors shall prepare detailed plans for the

application of funds so as to keep the use of funds regulated, open and transparent.

Article 5 The Company’s Board of Directors shall disclose the application of funds according

to provisions of laws and regulations such as the Company Law, the Securities Law

and Shanghai Listing Rules etc. on a timely basis.

Article 6 The person responsible for violation of the country’s laws, regulations or the Articles

of Association in the application of funds raised which result in loss to the Company

shall be liable for civil compensation.

Article 7 Where the funds raised is invested by a subsidiary or another enterprise controlled by

the Company, that subsidiary or the other enterprise shall implement the provisions of

these Measures by reference.

APPENDIX VII PROPOSED ADMINISTRATIVE MEASURES ON THE APPLICATIONOF FUNDS RAISED BY THE ISSUE OF A SHARES

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Chapter 2: Deposit of funds raised

Article 8 Company should set up specific procedures for depositing raised fund. Raised fund

shall be deposited in a dedicated account determined by the Board of Directors for

centralized management. The number of dedicated accounts for raised fund shall not

be more than the number of projects financed by raised fund, and the fund to be used

in a particular project should be deposited in the same dedicated account.

Article 9 Within 1 month after collecting raised fund, a three-party custody agreement shall be

signed among the Company, the Sponsor and the commercial bank maintaining deposit

accounts of the raised fund, and shall be reported to the Shanghai Stock Exchange

(hereinafter referred to as “SSE”) for records.

In case the agreement is terminated prior to expiry, a new agreement with relevant

parties shall be made within 1 month from the date of termination of the original

agreement, and a report shall be submitted to SSE on a timely basis for record

purposes, followed by announcement to the public.

Article 10 The Company shall urge the commercial bank in the implementation of the agreement.

In case of three successive failures by the commercial bank in providing the sponsor

with statements of account or notice on the withdrawals of large amounts from the

dedicated accounts, or in case of failure to cooperate with the Sponsor in inquiry and

investigation on the dedicated accounts status, the Company shall suggest the Board

of Directors pass a resolution on the termination of the agreement and dedicated

account, and consider replacing it with another dedicated account.

Chapter 3: Use and management of funds raised

Article 11 Raised fund shall be invested in projects strictly in accordance with commitments in

the prospectus regarding investment projects, the amounts and timing of investment.

Raised fund shall be specifically used for dedicated purpose, misappropriation is

prohibited, and effective measures should be taken to prevent investment in projects

with the raised fund to generate illicit profits.

Article 12 The projects invested with the raised fund shall not be used for trading securities or

available-for-sale financial assets, or loans to others or entrusted asset management or

other financial investment. They shall not be invested, directly or indirectly, in

companies with core businesses in the purchase and sale of securities. The Company

shall not make use of the raised fund in pledge, entrust loan or for other investment

purposes in disguised form.


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Article 13 When the Company uses the raised fund in project investment, examination and

approval procedures for the use of funds shall be strictly followed according to the

requirements of the Articles of Association and other normative regulations of the

Company. An application form for the use of funds shall be filled in by the specific

department which will use the funds, and such form shall be jointly signed in approval

by the President (manager), Chief Financial Officer (person in charge of finance) and

Vice President (deputy manager), and approved by Chairman of the Company’s board

before implemented by the finance department.

Article 14 The investment project shall be implemented in accordance with the schedule

committed by the Company’s Board of Directors, while the implementing departments

will work out details of the schedule, to ensure that all the works can be accomplished

according to the schedule. At the end of each fiscal year, the Company shall conduct

a comprehensive review on the progress of investment projects financed by the raised

fund.

Article 15 When the difference between the actual amount of raised fund invested in projects and

the expected amount as previously disclosed when the investment plan was made

exceeds 30%, the Company shall adjust the investment plan in respect of the use of

raised fund, and disclose, in the explanatory note included in the special annual

statement on the use of raised fund, details such as the previous annual investment

plan of raised fund, the current status of actual progress in investment projects,

adjusted annual investment plans, as well as the reasons for changes in investment

plans.

Article 16 When the investment amount under investment projects financed by raised fund is

expected to exceed the budget due to special reasons, an application report for

investment expenditure in excess of budget shall be prepared by the department in

charge of the project, with detailed reasons for the over-budget expenditure, the new

budget plan, and proposals on measures of budget control shall also be submitted.

These will be implemented after discussion at the Company’s work meeting,

submitted to the Board of Directors for examination and approval, and approved by

a Shareholders’ General Meeting.

Article 17 In case of any of the followings in respect of raised fund investment project, the

Company shall assess the feasibility and estimated earnings of projects so as to decide

whether to go on with the implementation of that project, and disclose the progress of

the project in the current periodic report, the reasons of anomalies and the adjusted

funds investment plan (if any):

(1) Critical changes in market environment regarding to the investment project;

(2) The investment project financed by the raised fund has been shelved for more

than one year;


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(3) Delay in the completion of investment financed by the raised fund in the

previous project investment plan, and invested amount is less than 50% of

planned amount;

(4) Anomalies in the other investment projects financed by the raised fund.

Article 18 In case the Company changes the place or time of the investment project financed by

the raised fund, it shall be reviewed and approved by the Company’s Board of

Directors, a report shall be filed within 2 trading days with SSE, and the reasons for

the changes should be announced.

Article 19 If the investment project cannot be completed according to the committed schedule

due to unpredictable objective factors, the Company shall make public disclosure of

the real circumstances, with a detailed statement on the underlying reasons.

Article 20 In order to prevent funds from remaining idle, and to achieve efficiency in the use of

funds, raised fund can be used temporarily as supplement to working capital of the

Company as long as it is permitted by laws, regulations and regulatory documents and

subject to the following conditions:

(1) No change in the purpose of funds raised in disguised form;

(2) No influence upon implementation of investment plan for the raised fund;

(3) Every single cycle of supplementation to working capital cannot be longer than

6 months;

(4) The explicit consent is released by the Sponsor.

The aforementioned temporary use of raised fund as supplement to working capital

must be considered and approved by the Company’s Board of Directors, and shall be

reported within 2 trading days to SSE, with a public announcement. At the end of the

period for the use of supplementary working capital, the Company shall submit a

report within 2 trading days to SSE, with a public announcement.

Article 21 Upon completion of the investment project financed by the raised fund, the Company

is allowed to use a small amount of remaining fund for other purposes if the following

conditions are met:

(1) Independent opinions with explicit consent is received from the independent

directors;


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(2) Audit opinion of “consistent” or “basically consistent” is issued by an

accounting firm in the special audit report on the raised fund;

(3) The opinion of explicit consent is released by the Sponsor.

Chapter 4: Changes in the Project financed by the funds raised

Article 22 If really due to market changes, the Company decides to give up the original

investment project, and intends to change investments of the raised fund, or if

adjustment to the original investment project is considered as reorientation of

investment of the raised fund according to regulations of the China Securities

Regulatory Commission or the Stock Exchange, the matter must be submitted to the

Board of Directors for examination and approval, and then submitted to a

Shareholders’ General Meeting for approval. The Sponsor and its representatives shall

be informed, a report should be submitted to SSE within 2 trading days and a public

announcement should be made, including the following information:

(1) Basic status of the original project and specific reasons for change;

(2) Basic status of the new project, feasibility analysis and risk alerts;

(3) Investment plan of the new project;

(4) Explanations on approvals obtained or to be obtained from relevant authorities

for the new project (if applicable);

(5) Comments from independent directors, the Supervisory Committee and the

Sponsor on the reorientation of investments of raised fund;

(6) Explanations on the fact that changes in investment project financed by the

raised fund are subject to review and approval at Shareholders’ General

Meetings;

(7) Other requirements of SSE.

Article 23 If the Company intends to change the investment project financed by the raised fund

to investment in a joint venture, the necessity of investment in the joint venture shall

be carefully considered on the basis of sufficient understanding of the joint partner,

and the Company shall ensure effective control of the investment project financed by

the raised fund by means of holding shares.

Article 24 For the Company to effectively avoid competition within the industry after acquisition

and to reduce connected transactions, after consideration and discussion by the Board

of Directors and the passing of resolutions at Shareholders’ General Meetings,

investment of funds raised can be reoriented to acquire assets (including equity) from


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the controlling shareholder(s) or the actual controller(s), with timely disclosure of the

reasons for entering into transactions with the controlling shareholders or the actual

controllers, the pricing policy and the basis of pricing for connected transactions, the

impact of the connected transactions on the Company, as well as solutions for relevant

issues.

Chapter 5: Supervision and report on fund raising

Article 25 The finance department of the Company shall keep a full set of accounting records and

ledgers for activities involved in the application of the funds raised, and accounting

settlement shall be carried out in respect of investment projects. Every quarter, the

internal audit department of the Company will examine the safekeeping and use of the

funds raised, as well as the result of using the funds. Audit reports will be submitted

to the President’s (manager) work meetings.

The President (manager) of the Company shall submit a written report to the Board of

Directors at the end of each quarter on the use of raised fund, with a copy to the


Article 26 The Company’s Board of Directors shall prepare a special annual report on the

safekeeping and use of funds raised, and appoint an accounting firm to conduct special

audit on the safekeeping and use of funds raised, and to issue special audit reports.

The special audit report shall contain explicit audit opinions on the actual safekeeping

and use of funds raised during the year, and whether the situation is consistent with

that described by the Board of Directors in their explanatory notes. In case the audit

opinions issued by the accounting firm is “basically inconsistent” or “completely

inconsistent”, the Company’s Board of Directors shall provide an explanation for the

discrepancy, with remedial measures being disclosed in the annual report.

Article 27 The Company’s Board of Directors shall, at both the Annual General Meeting and in

periodic reports (annual report, semi-annual report and quarterly report), inform

investors on the use and approval of the raised fund and progress of relevant projects

on a timely basis.

The secretary to the Board of Directors shall take the lead in drafting the information

disclosure on the application of raised fund, which will be jointly verified and signed

by the finance department.

Article 28 The Independent Directors shall be entitled to check the use of raised fund and, with

consent from over half of the Independent Directors, appoint an accounting firm to

conduct a special audit on the application of funds. The Company shall provide full

cooperation in support of the audit, and pay for the necessary audit fee.


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Article 29 The Sponsor and its designated representatives shall be entitled to supervise the use

of raised fund.

Chapter 6: Supplementary Provisions

Article 30 These Measures shall be implemented on the day on which the Board of Directors

reviews and approves the requisite resolution.

Article 31 In the event of any matters not addressed in these Measures, performance shall be

carried out in accordance with relevant provisions of the country’s laws, regulations

and the Articles of Association of the Company. In case of conflict between provisions

of these Measures and the country’s laws and regulations to be promulgated thereafter

and any duly and legally amended “Articles of Association of the Company”,

performance shall be carried out in accordance with the country’s relevant laws and

regulations and the Articles of Association of the Company, while immediate revision

of these Measures shall be made and submitted to the Company’s Board of Directors

for deliberation and approval.

Article 32 The Board of Directors is responsible for the formulation, revision and interpretation

of these Measures.

Article 33 The right of interpretation of these measures belongs to the Board of Directors of the

Company.

The Board of Directors

China Coal Energy Company Limited

14th July 2007



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Article 1 These measures are formulated in order to regulate the connected transactions of

China Coal Energy Company Limited (hereinafter referred to as “the Company”); to

protect the legal interests of the Company, shareholders, and creditors; and to ensure

the fairness of the decision-making actions of the Company relating to connected

transactions. These Measures are drawn up in accordance with the Company Law of

the People’s Republic of China (hereinafter referred to as “the Company Law”),

Enterprise Accounting Standard — Disclosure of Connected Parties, The Listing

Rules of Shanghai Stock Exchange(hereinafter referred to as “the Shanghai Stock

Exchange Listing Rules”), and the Articles of Association of the Company.

Article 2 The Company shall follow and implement the following principles in the recognition

and handling of relationships with connected persons and connected transactions:

(1) to avoid or reduce connected transactions with connected persons as far as

possible;

(2) must comply with the “factual disclosure” principle regarding connected

transactions that must take place;

(3) must comply with the general commercial principles of “fairness, righteousness,

openness, and valuable consideration” in determining the price of any connected

transaction, and relevant provisions shall be made for that in the form of

agreement.

Article 3 When the Company deals with the connected transactions with connected persons, it

shall not harm the legal rights and interests of the shareholders as a whole, especially

that of the minority shareholders.

Chapter Two The Recognition of Connected Persons and Connected Transactions

Article 4 The standards of connected parties and connected transactions shall be in accordance

with rules laid down by the laws, regulations and listing rules of the stock exchange

where the shares of the Company are listed.

Article 5 Under the leadership of the Secretary to the Board of Directors of the Company, the

Finance Department, Legal Affairs Department and the Board Secretariat, shall jointly

deal with the daily transactions and businesses of the Company. The relevant

responsible persons have the responsibilities and duties to carry out investigation on

the detailed background of counter-parties of transactions, and review the name list of

connected persons in detail to determine in a prudent manner whether transactions

constitute connected transactions, and to update the name list of connected parties at

any time.

APPENDIX VIII PROPOSED ADMINISTRATIVE MEASURES ON CONNECTED TRANSACTIONS

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Article 6 When the Company enters into the following transactions or dealings with connected

parties, they are deemed as connected transactions between connected persons and the

Company, including but are not limited to:

(1) purchase or sales of goods;

(2) purchase or sales of other assets other than goods;

(3) provision and acceptance of services;

(4) guarantee;

(5) provision of funds (credit or equity investments)

(6) leasing;

(7) agency;

(8) transfer of research and development projects;

(9) licensing agreement;

(10) settlement of debts on behalf of the Company or by the Company on behalf of

the other party;

(11) remuneration of key management personnel.

Article 7 When there are different judgments on connected transactions due to provisions of the

laws and regulations, and the listing rules of the stock exchange of the place of listing,

all the relevant principles shall be applied respectively.

Chapter Three The Bringing up, Initial Review and Investigation of Connected Transactions

Article 8 During the course of business operations, when the finance department, the Legal

Affairs Department and the Board Secretariat of the Company come across

transactions between the Company and connected persons confirmed as connected

transactions according to the rules in Chapter Two of these Measures, the relevant

department shall submit a written report on the relevant connected transaction to the

Company’s head office, all relevant departments of the Company’s head office, and

disseminate to all enterprises under the Company.

The written report shall include the following contents:

(1) the names and addresses of the connected parties;

(2) specific details of the relevant connected transaction and the transaction amount;


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(3) the principle on which to determine the price of connected transactions and the

basis of price determination;

(4) other matters that need to be recorded.

Article 9 The Board Secretariat shall be responsible for assisting the Legal Affairs Department

in completing a compliance review of connected transactions, keeping in touch with

legal advisors, regulatory authorities, and stock exchanges, cooperating with legal

advisors to submit various announcements relating to connected transactions to the

regulatory authorities, arranging for the general meeting to examine and approve

matters relating to connected transactions, and arranging for public announcement of

connected transactions which are to be announced to the public.

Article 10 The finance department shall be responsible for designing specialized forms to record

continuing connected transactions and to include them in the monthly financial

express news reporting system, to compile monthly statistics on the amount of

continuing connected transactions of subsidiary enterprises, and to carry out relevant

procedures according to the requirements of these Measures.

Article 11 For non-continuing connected transactions, the Legal Affairs Department shall be

responsible for confirming at any time whether a transaction is a connected

transaction when reviewing commercial contracts of the Company and its subsidiaries.

A contract involving any connected transaction shall not be signed immediately and

shall be notified to the Board Secretariat to complete relevant approval procedures as

required.

Chapter Four Investigation by the Board of Directors of the Company

Article 12 Upon receipt of reports from relevant responsible departments, the Company’s Board

of Directors shall issue a notice to all the Directors to convene a Board Meeting.

Article 13 If the connected transaction is entered into with a Company’s Director or an individual

or other enterprises with which such Director has an interest, when the Company

convenes a Board Meeting to deliberate on the relevant connected transaction, the

convener of the meeting shall remind the relevant connected director to avoid from

taking part in voting for the resolution before the voting takes place. When the

connected director does not take the initiative to make a declaration and abstain from

voting for the resolution, directors who have knowledge of the situation shall request

the connected director to avoid from taking part in voting for the resolution.

Article 14 The Board of Directors shall investigate and discuss the necessity and reasonableness

of relevant connected transactions at the Board Meeting. Directors who attend the

Board Meeting can demand explanation from the management about whether it has

actively sought third parties in the market to enter into transactions to replace

connected transactions. The operational management shall provide explanations to the

Board of Directors on relevant results. When it is confirmed that there is no way to

find a third party to replace the connected transaction, the Board of Directors shall

confirm that the connected transaction is necessary.


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The Board of Directors shall consider the following factors in investigating the

reasonableness of connected transactions:

(1) When the object of a connected transaction is products procured by the

connected person from external sources, investigations must be carried out to

determine if the Company can procure or sell such products independently. When

the Company does not have the procurement or sales channels or when

procurement or sale by the Company itself cannot bring about relevant

preferential treatments; or if the Company, by procuring from or selling to

connected persons, can lower its production, procurement, or sales costs, the

Board of Directors shall confirm that the connected transaction is reasonable.

However, the price of the connected transaction shall be based on the

procurement price of the connected person plus absorption of a reasonable share

of procurement costs. Procurement costs can include transportation, loading and

unloading expenses.

(2) If the object of a connected transaction is products produced by the connected

person himself, then the transaction price for that connected transaction shall be

determined based on the production costs of the connection person plus a

reasonable share of profit.

(3) If the connection transaction concerns with the provision or acceptance of labor

services, agency, leasing, mortgage and guarantee, management, research,

development and licensing, then the Company must obtain or request the

connected person to provide the legal and valid basis for ascertaining transaction

prices so as to form the basis of signing agreements in respect of prices of the

relevant connected transaction.

Article 15 When deliberating on connected transactions, the Board of Directors shall:

(1) gain a detailed understanding of the actual conditions of the object of the

transaction, including its operating condition and earning power; whether any

defect in rights such as mortgage or freeze on the property exists; or whether

legal disputes such as litigation or arbitration exists;

(2) gain a detailed understanding of the credit history of the counter-party, its credit

status and ability to perform etc., and to select counter-party of transaction

prudently;

(3) ascertain the transaction price based on an adequate basis for price fixing;

(4) comply with the Shanghai Stock Exchange Listing Rules and when the Company

considers it necessary, intermediaries can be engaged to carry out audit or

assessment of the object of the transaction.


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The Board of Directors shall not deliberate and make decision on connected

transactions for which the condition of the object is not clear, the transaction price has

not yet been confirmed, or where the conditions of the counter-party to the transaction

is unclear.

Chapter Five Deliberation at Shareholders’ General Meeting

Article 16 When the Board of Directors of the Company examimes relevant connected

transactions and resolves to submit it to Shareholders’ General Meetings for

deliberation, the Board of Directors shall issue notice to convene a Shareholders’

General Meeting pursuant to the time limit and procedures prescribed in the Company

Law and the Company’s Articles of Association.

Connected transactions that are required to be submitted to Shareholders’ General

Meetings for deliberation under the Shanghai Stock Exchange Listing Rules must be

submitted by the Board of Directors to a Shareholders’ General Meeting for

deliberation.

Article 17 Shareholders’ General Meeting shall deliberate and vote on relevant connected

transactions submitted by the Board of Directors. At the time of voting, the Board of

Directors of the Company and the witnessing lawyer shall, before the shareholders

cast their votes, remind the connected shareholder(s) to abstain from voting. The

connected shareholder(s) shall abstain from voting in accordance with the Company

Law and the Articles of Association of the Company, and the voting rights represented

by his/their shareholding shall be excluded from the total number of valid votes. Both

the Independent Directors and Supervisors present at the Meeting shall express fair

opinions on the relevant connected transactions.

Chapter Six The Execution of Connected Transactions

Article 18 After connected transactions have gone through relevant approval procedures, the

Company shall sign a written agreement (or contract) on the relevant connected

transaction with the connected persons, specifying the rights, obligations and legal

responsibilities of both parties.

Article 19 Once the conditions of connected transactions, especially conditions on price and

terms of payment, are confirmed, various departments of the Company shall execute

transactions strictly in compliance with the approved conditions for transaction. The

operational management of the Company shall not change the conditions of

transaction on their own during the course of executing the transaction. If an

agreement or a contract of connected transaction must be terminated or amended due

to changes in production and operating conditions, parties to the contract can sign a

supplementary agreement (or contract) to terminate or amend the original contract.


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Chapter Seven Information Disclosure for Connected Transaction

Article 20 Connected transactions that meet the following standards of the Shanghai Stock

Exchange Listing Rules shall be disclosed on a timely basis:

(1) any connected transaction between the Company and a connected natural person

involving an amount of Rmb 300,000 or more (except where the Company

provides guarantee);

(2) any connected transaction between the Company and a connected legal person

involving an amount of Rmb 3,000,000 or more and representing 0.5% or more

of the absolute value of the latest audited net assets of the Company;

Where the Company provides guarantees for connected parties, such guarantees,

irrespective of the amount involved, shall be disclosed on a timely basis after they are

considered and approved by the Board of Directors.

Article 21 Where provisions of the laws, regulations and listing requirements of a stock

exchange of the place of listing lead to different information disclosure requirements,

such requirements shall be followed.

Chapter Eight Examination and Supervision

Article 22 The Company shall carry out periodic examination of connected transactions and keep

proper records of the examinations.

Article 23 During the course of audit by an accounting firm, the Company shall furnish all

records of connected transactions truthfully, and provide all relevant records of

connected transactions to the independent directors.

Article 24 Directors, supervisors and senior management of the Company have the obligations to

pay close attention to see whether any embezzlement of funds of the Company by any

connected person exists, and whether other problems which infringe the Company’s

interests exist. The independent directors and supervisors of the Company shall have

access to records of money transactions between the Company and connected persons

to see whether there exists any misappropriation or transfer by the controlling

shareholder or its connected persons of the funds, assets or other resources of the

Company, and shall notify the board of directors promptly in case any irregularity is

discovered.

Article 25 If any misappropriation or transfer by any connected person of any funds, assets or

other resources of the Company has caused or may cause losses to the Company, the

board of directors of the Company shall promptly take such protective measures as

litigation or property preservation to prevent or minimize losses.


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Chapter Nine Supplementary Provisions

Article 26 Connected transactions between the Company and subsidiaries, joint venture

companies and associated companies are exempted from submission for the

examination and consideration by the Board of Directors and deliberation by a

Shareholders’ General Meeting as required herein.

Connected transactions between subsidiaries of the Company and other connected

persons are deemed connected transactions between the Company and connected

persons.

Article 27 Besides complying with the regulations contained in these Measures, the Company

must also strictly comply with relevant regulations on connected transactions in the

Listing Rules of Hong Kong Stock Exchange.

Article 28 After being examined and adopted by a shareholders’ general meeting, these Measures

shall become effective from the date on which the Company’s Renminbi-denominated

common shares are listed. These Measures shall be binding on the Company, the board

of directors, directors, the supervisory committee, supervisors, chief executive officer

(manager) and other senior management personnel. The Company shall implement

these Measures before shares of the Company are listed.

Article 29 Matters not addressed in these Measures shall be handled in accordance with relevant

provisions of the country’s laws, regulations and the Articles of Association of the

Company. In case of conflict between provisions of these Measures and the national

laws and regulations to be promulgated from time to time in future and any duly and

legally amended Articles of Association of the Company, the provisions of such laws,

regulations, and the Articles of Association of the Company shall prevail and the

Measures shall be amended promptly and submitted to the general meeting of

shareholders for approval.

Article 30 The Board of Directors is responsible for the formulation, amendment and

interpretation of these Measures.

Article 31 The right of interpretation of these Measures belongs to the Board of Directors.





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Article 1 To strengthen the risk management of China Coal Energy Company Limited

(hereinafter referred to as “the Company”), and regulate the Company’s acts

concerning the issue of securities in favour of external parties, this System is

formulated in accordance with the relevant laws and regulations including the

Company Law of the People’s Republic of China (hereinafter referred to as “the

Company Law”), the Securities Law of the People’s Republic of China (hereinafter

referred to as “the Securities Law”) and the Security Law of the People’s Republic of

China (hereinafter referred to as “the Security Law”. If the secured party is a

connected person as defined in the Rules Governing the Listing of Securities on the

Stock Exchange of Hong Kong Limited (hereinafter referred to as the “Listing

Rules”), it must also comply with the disclosure requirements on financial assistance

as stipulated in Chapter 14A of the Rules Governing the Listing of Securities on the

Stock Exchange of Hong Kong Limited. If a security is provided for an “associated

company” as defined in the Rules Governing the Listing of Securities on the Stock

Exchange of Hong Kong Limited and exceeds a certain amount, then it must comply

with the disclosure requirements of Chapter 13 of the Rules Governing the Listing of

Securities on the Stock Exchange of Hong Kong Limited.

Article 2 In principle, the Company and its subsidiaries are not allowed to provide securities in

favour of external parties in any form, with the exception of security issued in favour

of enterprises with close business relationships. These securities must go through the

relevant procedures as required in this System.

Article 3 Securities issued in favour of external parties must adhere to the general principle of

sufficient reasons.

(1) Securities issued in favour of external parties must bring significant benefits to

the Company, or the Company will certainly suffer great losses if such securities

are not provided. The benefits or losses must obviously be greater than the

relevant losses from the risk involved in the security in favour of external

parties.

(2) There exists a reciprocal security agreement with the guaranteed party, and the

scales of the cross securities are similar;

(3) Strict eradication of the issuance of securities in favour of external parties for

personal relationships.

APPENDIX IX PROPOSED ADMINISTRATIVE SYSTEM OF SECURITYIN FAVOUR OF EXTERNAL PARTIES

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Article 4 Securities issued in favour of external parties referred to in this System mean

securities provided by the Company for enterprises over which the Company does not

exercise control or which, although controlled by the Company, constitute connected

persons of the Company.

Chapter Two Specific Rules

Article 5 The Company and its subsidiaries are not allowed to provide securities in any form to

external parties except in the following circumstances:

A relevant entity provides a security in favour of an enterprise which has close

business relations with it and is suffering difficulties with operating funds in relation

to any borrowing from a financial institution such as a bank. In such case, the entity

must, as preconditions, carry out adequate investigation to gain an understanding of

the creditworthiness, performance ability and financial conditions of the entity which

applies for the security, and whether the application complies with the policy of

providing securities. The application is then submitted for review by the board of

directors or the General Manager’s Office of that entity which forms an opinion or

makes a proposal for approval by the Company or for consideration and approval by

the Shareholders’ General Meeting of the Company.

Before signing a security agreement, the relevant entity must request the guaranteed

party to provide a counter-guarantee and sign a counter-guarantee agreement. The

guaranteed party shall offer corresponding assets as a security and provide and pledge

valid proof of property rights. The value of the security for the counter-guarantee must

be higher than the guaranteed amount. The pledged assets must be valid assets not

subject to repeated pledges. An asset valuation institutions with the relevant

qualifications must be appointed to carry out valuations when necessary.

Entities that have obtained approval to provide securities must not sign long term

security contracts or agreements with a term of more than one year, and must not

provide revolving securities.

The provision of any form of securities for borrowings other than for borrowings from

banking or non-banking financial institutions for external business entities is not

allowed.

The provision of securities for borrowings in any form for non-business entities,

institutions, groups and individuals is not allowed.


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Article 6 Approval authority in respect of securities in favour of external parties.

The following securities in favour of external parties must be reviewed and approved

by the Shareholders’ General Meetings:

(1) any security where the total sum of securities provided by the Company and its

holding subsidiaries exceeds 50% of the latest audited net assets;

(2) securities provided for secured parties with a gearing ratio of more than 70%;

(3) securities where the single guaranteed amount exceeds 10% of the latest audited

net assets;

(4) securities provided for shareholders, the actual controller and its connected

parties;

(5) apart from items (1) to (4), if other securities in favour of external parties

involve “disclosable transactions” as described in the Listing Rules of the Hong

Kong Stock Exchange, and the result of any of the five scale tests is greater than

or equals to 25%.

Securities in favour of external parties requiring approval by the Shareholders’

General Meetings shall be considered and approved by the Board of Directors before

they are submitted for approval at the Shareholders’ General Meetings. When a motion

for providing securities in favour of Shareholders, the actual controller and its

connected parties is considered at the Shareholders’ General Meetings, the

Shareholder(s) or the Shareholder(s) controlled by the actual controller shall abstain

from voting. The resolution shall be passed by more than half of the voting rights held

by other shareholders who attend the Shareholders’ General Meeting.

Except for the above circumstances, the Board of Directors is authorized to review and

approve securities in favour of external parties in other circumstances, but they must

be reviewed and approved by more than two third of the Directors present at the

Directors’ Meeting with a resolution passed.

Securities in favour of external parties approved by the Board of Directors or the

Shareholders’ General Meeting of the Company must be disclosed in a timely manner

in newspapers specified for information disclosure by the China Securities Regulatory

Commission. Information disclosed shall include the resolutions of the Board of

Directors or the Shareholders’ General Meeting, the aggregate amount of securities in

favour of external parties issued by the Company and its holding subsidiaries as at the

date of information disclosure, and the aggregate amount of securities issued by the

Company in favor of its holding subsidiaries.


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Article 7 The principle of counter-guarantee must be adhered to for securities in favour of

external parties. This means that guaranteed parties are required to provide reliable

counter-guarantees, or to provide enforceable mortgages or pledges so that losses

arising from securities can be covered.

Article 8 Securities in favour of external parties must be subject to stringent risk assessment by

the department which proposes the project together with the finance department. Basic

information such as the business licence and the latest audited financial reports etc.

must be obtained from the guaranteed parties, projection of the application of project

funds and project information must be obtained; strict examination on the

creditworthiness and the solvency of the investee must be carried out, with

comprehensive estimation of various risks and a proposal on whether or not to provide

the security.

The Company can appoint external professional institutions to carry out risk

assessment of securities in favour of external parties when necessary, so as to form the

basis for the Board of Directors or the Shareholders’ General Meetings to make

decisions.

Article 9 Securities in favour of external parties must be approved by the Board of Directors or

the Shareholders’ General Meetings, or approved by the Chairman of the Board to the

extent authorized by the Board of Directors and then implemented by the Company.

Other departments or individuals within the Company have no rights to provide

securities to external parties on its behalf.

Article 10 Independent directors of the Company should express their independent opinions

while the Board of Directors is considering securities in favour of external parties. An

accounting firm can be appointed to audit the Company’s cumulative and current

conditions of securities in favour of external parties if necessary. Any irregularity

identified must be reported to the Board of Directors and the supervisory department

promptly, and a public announcement must also be made.

Article 11 Approval authority in respect of securities in favour of external parties

(1) Securities in favour of external parties that exceeds the approval authority of the

Chairman of the Board shall be approved by the Company’s Board of Directors.

The approval authority of the Company’s Board of Directors shall not exceed the

relevant requirements stipulated in the Articles of Association.

(2) Securities in favour of external parties that exceed the approval authority of the

Company’s Board of Directors shall be approved by the Shareholders’ General

Meetings of the Company.


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Article 12 The Company shall manage security contracts and related original documents

properly, process and examine them on a timely basis, conduct regular checks with

relevant institutions such as banks to ensure that the information on file is complete,

accurate and valid. Attention shall be paid to the limitation periods of securities.

During the course of contract management, once any irregular contract which has not

been approved by the Board of Directors or the Shareholders’ General Meeting is

identified, it shall be reported to the Board of Directors or the Supervisory Committee

in n a timely manner.

Article 13 During the effective term of securities in favour of external parties, the relevant

responsible department must keep the matter of relevant securities in favour of

external parties under strict control, collect the latest financial information and audit

reports of the guaranteed parties, conduct regular analyses of the financial conditions

and solvency. Besides, it shall also pay attention to the production operations, assets

and liabilities, securities in favour of external parties, spin-offs, mergers and changes

in legal representatives etc. of the guaranteed parties. It shall also set up relevant

financial files and report to the Board of Directors on a regular basis.

If it is discovered that the operating conditions of the guaranteed parties deteriorate

significantly or major events such as company dissolution or spin-off occur, the

relevant responsible person shall report to the Board of Directors in a timely manner.

The Board of Directors has the obligation to take effective measures to minimize loss.

Article 14 When the debt covered by a security in favour of external parties matures, the

Company shall urge the guaranteed party to duly perform its obligation of repayment.

If the guaranteed party fails to duly perform its obligation of repayment, the Company

shall take necessary remedial measures.

Article 15 The Company shall take effective measures to demand repayment from the debtor and

the party that provides the counter-guarantee after the Company acting as the

guarantor has performed its obligation of repayment on behalf of the debtor within the

limit of the security.

Article 16 Upon maturity of the debt covered by the Company’s security, if there is a need to

renew and continue to provide the security, it shall be treated as a new security in

favour of external parties, and shall undergo security approval procedures again.

Article 17 Holding subsidiaries of the Company shall follow the above procedures to provide

securities in favour of external parties. After the Board of Directors or the

Shareholders’ General Meeting passes a resolution, holding subsidiaries of the

Company shall notify the Company promptly to perform its obligation of information

disclosure.


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Chapter Three Supplementary Articles

Article 18 This system is drawn up by the finance department of the Company and shall take

effect on the day when it is approved by the Board of Directors upon consideration.

Apart from provisions stipulated in this System, the Company must also strictly

adhere to the relevant regulations in the Listing Rules in respect of securities.

Article 19 Matters not addressed in this System shall be handled in accordance with the relevant

requirements of the state’s laws, regulations and regulatory documents such as the

“Articles of Association of the Company”. In the event that this System contravenes

the state’s laws and regulations to be promulgated from time to time in future and the

“Articles of Association of the Company” amended through legal procedures, it shall

be implemented in accordance with the state’s relevant laws and regulations and the

“Articles of Association of the Company”, while immediate revision of the System

shall be submitted to the Company’s Board of Directors for deliberation and the

passing of a resolution.

Article 20 The Board of Directors is responsible for the drawing up, revision and interpretation

of this System.

Article 21 The Board of Directors of the Company has the right to interpret this System.





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Documents

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