History and Corporate Structure
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HISTORY AND CORPORATE STRUCTURE HISTORY OF THE COMPANY Our Company was incorporated on November 8, 2002, pursuant to the approvals by the CSRC and the Henan government with nine promoters, namely Xuji Group, Henan Economic and Technology Development, Henan Construction and Investment, Anyang Iron & Steel Group, Anyang Economic Development, Anyang Trust, Shenhuo Group, Jiaozuo Economic and Technology Development and Hebi Construction and Investment who, at the time of our incorporation, held approximately 40.627%, 35.173%, 9.673%, 9.673%, 1.643%, 1.018%, 0.967%, 0.742% and 0.484% of equity interest in our Company, respectively. At the time of our incorporation, we had a registered capital of RMB1,033,790,000 consisting of 1,033,790,000 Shares with a nominal value of RMB1.00 per Share. Our registered capital increased to RMB2,033,515,700 consisting of 2,033,515,700 Shares with a nominal value of RMB1.00 each in June 2008. See “– Capital Increase and Equity Changes” in this section for further details. Our principal business includes brokerage, investment banking, investment management and proprietary trading businesses. For further details on the principal business of our Group, see “Business.” Our A shares offering was approved by our Shareholders’ meeting on August 30, 2012 and its application was accepted by the CSRC in September 2012. Since October 2012, the CSRC has suspended its review of all A share offering applications in China, which suspension was lifted in January 2014. As of March 16, 2014, there were 703 companies that were wait-listed on their A share offering applications, among which 171 companies were applying for A share listing on the Shanghai Stock Exchange. Of these 171 companies, we ranked 86th. According to the historical review timetable of the CSRC, we estimate that our A share offering application may be reviewed by the CSRC after June 2015. To accommodate our plan on the Listing, we submitted an application to the CSRC to suspend the review of our A share offering application on March 24, 2014 in accordance with the relevant regulatory requirements. Pursuant to the guiding principle of the CSRC released on May 30, 2014, the application made by all A share offering applicants, including those having applied for suspension, will be terminated unless they have complied with the CSRC’s listing documents pre-disclosure requirement by 30 June 2014. As advised by our PRC legal advisor, in order to prevent our A share listing application being terminated by the CSRC, we shall complete the pre-disclosure of our A share listing documents prior to the prescribed date. Upon the Listing, we shall make announcement to disclose any major progress on our A share application in accordance with the Hong Kong Listing Rules and other applicable laws and regulations. Our proposed A share offering will only resume after the completion of the Global Offering. We expect our proposed A share offering to be completed after June 2015, subject to the CSRC’s approval and the then market conditions. OUR BUSINESS MILESTONES 2002 • Obtained the CSRC’s approval for inauguration and License for Securities Business • Completed the registration with Henan Administration for Industry & Commerce, marking our formal incorporation 2003 • Acquired securities business-related assets from Henan Securities Co., Ltd. ᗇՎϞࠢபʮ̡,“Henan Securities”) and the treasury bonds salesیئ) departments of Zhumadian Municipal Finance Bureau, Mengzhou Municipal Finance Bureau and Xuchang Municipal Finance Bureau, respectively – 117 – HISTORY AND CORPORATE STRUCTURE • Obtained the qualifications for entrusted asset management • Obtained the qualifications as a lead underwriter for stocks 2004 • Registered as a sponsor upon approval by the CSRC • Obtained the qualifications as a sales agency for open-ended funds • Obtained the qualifications as a securities dealer for “SSE 50ETF” financial products in China • Obtained the qualifications to conduct online entrusted securities trading • Obtained the qualifications to participate in treasury bond repurchase on the Shanghai Stock Exchange 2005 • Became one of the first securities firms rated “standard” (ᇍᗳᗇ䁜ʮ̡) • Qualified to act as a sponsor for equity division reform of listed companies • Became a price consultation target in the IPO of the SAC and obtained the qualifications to deal in warrants 2007 • Acquired Central China Futures and increased its share capital, and expanded our business scope to include the provisions of commodity futures brokerage and financial futures brokerage services • Obtained the approval for the implementation of the scheme of third-party custody of client’s transaction settlement funds 2008 • Increased our registered capital to RMB2,033,515,700 • Obtained the License of Securities Business in Foreign Currency from the SAFE 2009 • Set up our Shanghai branch office 2010 • Obtained qualifications for the futures IB business • Certified as a chief agency broker on the NEEQ • Obtained approval for our first collective asset management scheme “Yanhuang No. 1” from the CSRC – 118 – HISTORY AND CORPORATE STRUCTURE 2011 • Set up our Beijing and Zhengzhou branch offices 2012 • Obtained the qualifications to conduct margin financing and securities lending business • Obtained the qualifications to conduct securities repurchase business • Obtained approval for our first cash management product “Yanhuang Huili collective asset management scheme” from the CSRC • Obtained the qualifications to conduct dealer-quoted bond repurchase business • Set up our wholly-owned subsidiary, ZDKYVenture Capital, and its subsidiary, ZZKY Venture Capital, and expanded our business scope to include the provision of equity and equity-linked debt investment, and management of private equity investment services • Obtained the certification of the globally recognized standard ISO/IEC20000 for IT service management field 2013 • Obtained the qualifications to conduct agency sales of financial products • Obtained the qualifications to conduct refinancing business • Obtained the qualifications to conduct securities-backed lending business • Obtained the qualifications to conduct agency business of securities pledge registration • Set up Ashmore-CCSC Fund Management with a British investment institution Ashmore Investment Management Limited, and expanded our business scope to include fund formation and distribution as well as management of separately managed accounts • Set up ZZKY Venture Capital Fund • Set up Luoyang and the Sanmenxia branch offices – 119 – HISTORY AND CORPORATE STRUCTURE MAJOR ACQUISITIONS Acquisition of securities business-related assets of Henan Securities Following our incorporation, upon the approvals by the CSRC and the Henan government, we entered into an asset acquisition agreement with Henan Securities on December 31, 2002, pursuant to which we acquired the securities business-related assets of the headquarters buildings, 19 securities branches and 11 securities outlets of Henan Securities, including 31 and 20 trading seats in the Shanghai Stock Exchange and the Shenzhen Stock Exchange, respectively. Based on the value of the acquired assets appraised by qualified valuers, the adjusted consideration was RMB114,953,507.87, which was paid by us in January 2003. The transfer of the relevant securities business-related assets was completed in January 2003. Henan Securities is a securities company established in Henan and was an Independent Third Party at the time of the above acquisition. Acquisition of the treasury bond sales department of Zhumadian Municipal Finance (Bureau (ታ৵ֳ̹ৌ݁҅ In January 2003, we entered into an asset acquisition agreement with Zhumadian Municipal Finance Bureau, pursuant to which we acquired the securities business-related assets of the treasury bond sales department of Zhumadian Municipal Finance Bureau. Based on the value of the acquired assets appraised by qualified valuers, the adjusted consideration was RMB199,113.26, which was paid by us in two installments in November 2003 and January 2004 respectively with the transfer of the securities business-related assets completed. Zhumadian Municipal Finance Bureau is a government body established by the Zhumadian government and is responsible for, among others, the management of the local financial matters. Zhumadian Municipal Finance Bureau was an Independent Third Party at the time of the above acquisition. Acquisition of the treasury bonds sales department of Mengzhou Municipal Finance (Bureau (֗ψ̹ৌ݁҅ In January 2003, we entered into an asset acquisition agreement with Mengzhou Municipal Finance Bureau, pursuant to which we acquired the securities business-related assets of the treasury bonds sales department of Mengzhou Municipal Finance Bureau. Based on the value of the acquired assets appraised by qualified valuers, the adjusted consideration was RMB102,981.01. We settled the adjusted consideration and completed the transfer of the securities business-related assets in February 2003. Mengzhou Municipal Finance Bureau is a government body established by the Mengzhou government and is responsible for, among others, the management of local financial matters. Mengzhou Municipal Finance Bureau was an Independent Third Party at the time of the above acquisition. – 120 – HISTORY AND CORPORATE STRUCTURE Acquisition of the treasury bonds sales department of Xuchang Municipal Finance Bureau (̹ৌ݁҅) In January 2003, we entered into an asset acquisition agreement with Xuchang Municipal Finance Bureau, pursuant to which our Company