THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
HISTORY AND OPERATIONAL REFORM
OUR HISTORY 3rd Sch(1) 3rd Sch(21) 3rd Sch(29) S.342(1)(a)(ii) TA16(i) Our Bank was established and started our banking business on January 22, 1997 in Jinzhou, LR19A.42(57) GL49-13 Liaoning Province, the PRC, as Jinzhou City Cooperative Bank Co., Ltd.* (錦州城市合作銀行股份有 para.3.3(a) and (b) 限公司). According to the Notice of the State Council on Establishing City Cooperative Banks*《國 ( 務院關於組建城市合作銀行的通知》) in September 1995, with approvals of the PBOC and the People’s Government of Jinzhou City, our Bank was promoted and established jointly by 15 legal entities and 851 individuals from 16 urban credit cooperatives* (城市信用社) in Jinzhou (including Jinzhou Urban Credit Union* (錦州市城市信用聯社)), by using net assets of the 16 urban credit cooperatives in Jinzhou. Our then share capital was approximately RMB114.61 million.
In 1998, the PBOC and the SAIC jointly issued a circular requiring all existing city cooperative banks in the PRC that were in operation to be renamed with names ending with “city commercial bank company limited”. Accordingly, we changed our name to Jinzhou City Commercial Bank Co., Ltd.* (錦州市商業銀行股份有限公司) on September 29, 1998.
With the approval of the CBRC, on June 3, 2008, the name of our Bank was further changed to Bank of Jinzhou Co., Ltd. (錦州銀行股份有限公司).
Changes in Our Share Capital and Increase of Shareholders TA16(ii)
Since the establishment of our Bank, in order to ensure our capital sufficiency and support our business development, the share capital of our Bank has increased several times mainly by way of (i) capital contributions made by shareholders; (ii) capitalization of undistributed profits; and (iii) acquisition of credit cooperatives where our shares were used as consideration.
As of the Latest Practicable Date, the share capital of our Bank was RMB4,402,233,866 and our Bank had issued a total of 4,402,233,866 Domestic Shares with a nominal value of RMB1.00 each. The changes in our share capital since our establishment are summarized below:
Year Changes in Share Capital 1998 & 1999.. Our share capital was increased by RMB13,900 from approximately RMB114.61 million to approximately RMB114.63 million following adjustments to the issued shares held by nine individual shareholders.
2002 ...... Our share capital was increased by RMB43 million to approximately RMB157.63 million, through capital contributions by five corporate shareholders.
2004 ...... Our share capital was increased by approximately RMB15.23 million to RMB172.86 million through capitalization of undistributed profits for the year 2003.
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HISTORY AND OPERATIONAL REFORM
Year Changes in Share Capital 2005 ...... Our share capital was increased by approximately RMB9.48 million to approximately RMB182.34 million through the acquisition of 12 urban credit cooperatives with our shares issued as consideration.
Our share capital was further increased by RMB83 million to approximately RMB265.34 million through capital contributions by 11 corporate shareholders and 420 individual shareholders.
Our share capital was further increased by RMB56 million to approximately RMB321.34 million through capital contributions by two corporate shareholders.
Our share capital was further increased by approximately RMB10.81 million to approximately RMB332.15 million through the capitalization of undistributed profits of the year 2004 after deducting the profits distributable to one of our then existing shareholders.
2006 ...... Our share capital was increased by approximately RMB160.18 million to approximately RMB492.33 million through capital contributions by 17 corporate shareholders and 1,648 individual shareholders.
Our share capital was further increased by approximately RMB17.03 million to approximately RMB509.36 million through the capitalization of undistributed profits for the year 2005 after deducting the profits distributable to two of our then existing corporate shareholders. As confirmed in the confirmation letters issued by such two corporate shareholders on 8 August 2006, such two corporate shareholders agreed that the profits distributable to them for the year 2005 should not be capitalized.
2007 ...... Our share capital was increased by approximately RMB233.27 million to approximately RMB742.64 million through capital contributions by Jinzhou Finance Bureau and 17 corporate shareholders.
Our share capital was further increased by RMB10 million to approximately RMB752.64 million through capital contributions by one corporate shareholder.
2008 ...... Our share capital was increased by RMB10 million to approximately RMB762.64 million through capital contributions by one corporate shareholder.
Our share capital was further increased by approximately RMB3.60 million to approximately RMB766.24 million through the capitalization of the undistributed profit distribution to aforementioned two corporate shareholders for the year 2005.
Our share capital was further increased by RMB319.70 million to approximately RMB1,085.93 million through capital contributions by 37 corporate shareholders.
Our share capital was further increased by RMB195.00 million to approximately RMB1,280.93 million through capital contributions by seven corporate shareholders.
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HISTORY AND OPERATIONAL REFORM
Year Changes in Share Capital 2009 ...... Our share capital was increased by RMB909.50 million to approximately RMB2,190.43 million through capital contributions by Jinzhou Finance Bureau and 36 corporate shareholders.
2010 ...... Our share capital was increased by RMB586.80 million to approximately RMB2,777.23 million through capital contributions by 15 corporate shareholders.
Our share capital was further increased by RMB995.00 million to approximately RMB3,772.23 million through capital contributions by 18 corporate shareholders.
2012 ...... Our share capital was further increased by RMB130.00 million to approximately RMB3,902.23 million through capital contributions by two corporate shareholders.
2014 ...... Our share capital was further increased by RMB500 million to approximately RMB4,402.23 million through capital contributions by four corporate shareholders.
BUSINESS MILESTONES 3rd Sch(21) TA16(ii) GL49-13 para.3.3(a) From our establishment on January 22, 1997 to the Latest Practicable Date, we established 12 branches across Beijing, Tianjin, Liaoning Province and Heilongjiang Province, under which we had 168 sub-branches and one special institution (small enterprise financial service centre). Our Bank had four subsidiaries and had established business relationships with 544 agent banks and 15 deposit-taking banks as of the Latest Practicable Date.
Key business milestones of our business development are set out below:
Year Event 1997 ...... We obtained our financial institution license.
1999 ...... We launched our debit card business.
2002 ...... We joined national bank card system and launched our inter-bank card business.
We launched our acceptance bill business.
2004 ...... As of December 31, 2004, the deposit balance of our Bank reached RMB10 billion.
2005 ...... We launched a self-servicing payment business named Jiaofeitong (繳費通).
We launched our foreign exchange business.
2007 ...... We issued subordinated bonds in the aggregate principal amount of RMB500 million with a term of 10 years.
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HISTORY AND OPERATIONAL REFORM
Year Event We obtained approval from the CBRC for the personal insurance agency business.
We obtained approval from the CBRC for the acquisition of Fushun Urban Credit Cooperative* (撫順城市信用社) and Dandong Urban Credit Cooperative* (丹東城市信用社), indicating the beginning of our cross-regional operations.
2008 ...... We expanded our operation beyond Liaoning Province by officially establishing the Tianjin branch.
2009 ...... We launched the operation of the enterprise internet banking system.
2010 ...... Our Harbin branch was officially established.
We obtained approval from the CBRC for the issuance of civil service cards (公務卡) to civil servants.
2011 ...... Our Beijing branch was officially established.
We launched the operation of our internet banking system for individual customers.
We obtained approval from the PBOC for the cross-border RMB settlement business.
2012 ...... We launched the operation of our mobile banking system for individual customers.
We enabled our customers to make quick payment from their debit cards via Alipay.
2013 ...... The balance of our 7777 cards exceeded RMB10 billion and the number of cards issued exceeded 1.3 million as of April 30, 2013.
2014 ...... We issued tier 2 capital bonds in the aggregate principal amount of RMB1.5 billion.
2015 ...... We launched the operation of China domestic foreign currency payment system (CDFCPS).
We obtained qualification from the CSRC for the fund sales business.
We obtained approval from the CBRC for the issuance of credit cards to the general public.
With the approvals from the CBRC and the PBOC, we completed the issuance of asset-backed securities in an aggregate amount of RMB3,122.5 million.
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HISTORY AND OPERATIONAL REFORM
Year Event We obtained approval from Jinzhou Branch of CBRC for the opening of our small enterprise financial service centre.
We obtained approval from CBRC for the preparation of the establishment of Bank of Jinzhou Financial Leasing Co., Ltd.* (錦銀金融租賃有限責任公司), which is expected to be primarily engaged in financial leasing business.
Our Issuance of Bonds TA16(ii)
Issuance of Subordinated Bonds
With the approvals from the CBRC and the PBOC, in December 2007, our Bank issued subordinated bonds in the aggregate principal amount of RMB500 million with a term of 10 years. The annual interest rate for the first five years is fixed at 5.60% and if these bonds were not redeemed at the end of the fifth year, the interest rate would increase by 3 percentage points per annum for the remaining five years with interest payable on an annual basis. In December 2012, these bonds were redeemed in full.
With the approvals from the CBRC and the PBOC, in September 2010, our Bank issued subordinated bonds in the aggregate principal amount of RMB500 million with a term of 10 years. These bonds are redeemable in full or in part at our discretion at the end of the fifth year at the initial interest rate of 5.90% per annum, payable on an annual basis. If these bonds are not redeemed at the end of the fifth year, the interest rate would increase by 3 percentage points per annum for the remaining five years with interest payable on an annual basis. In September 2015, these bonds were redeemed in full.
Issuance of Tier 2 Capital Bonds TA16(ii)
With the approvals from the CBRC and the PBOC, in January 2014, our Bank issued tier 2 capital bonds in the aggregate principal amount of RMB1.50 billion with a term of five plus five years at a fixed interest rate of 7.00% per annum, payable on an annual basis. These bonds are redeemable in full or in part at our discretion at the end of the fifth year upon approval of the relevant regulatory authorities.
Application for Listing of A Shares TA16(ii)
In September 2011, an application was made to the CSRC for the proposed listing of our shares on the Shanghai Stock Exchange (the “Application for Listing of A Shares”). The CSRC officially accepted the Application for Listing of A Shares in October 2011 and issued an acceptance letter therefor. We subsequently updated the application documents in respect of the Application for Listing of A Shares semi-annually. Having considered (i) the number of domestic city commercial banks in the PRC that have been granted permission by the CSRC to list H shares; (ii) the PRC regulatory policies; (iii) foreign capital market conditions; (iv) our future business development plan and (v) our
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HISTORY AND OPERATIONAL REFORM capital requirements, we proposed to issue H shares on the Hong Kong Stock Exchange and we did not update our application documents with the latest financial information in respect of the 8 June 2015 Q2 Application for Listing of A Shares in accordance with the relevant requirements of the CSRC, and our Application for Listing of A Shares was deemed to have been terminated subsequently in July 2014. Our Directors have confirmed our Bank has voluntarily considered not to update our application documents in respect of the Application for Listing of A Shares and the decision was not based on or in connection with the suitability of our listing on the A-share market or the Hong Kong Stock Exchange.
In addition, our Directors have also confirmed that, to their best knowledge, the CSRC had not commenced the substantive review on the Application for Listing of A Shares. We have not received any vetting comment from the CSRC which was based on its review of the Application for Listing of A Shares since we submitted the same. The CSRC issued two enquiry letters to our then sponsor 3 June 2015 Q1 engaged for the Application for Listing of A Shares (the “A Share Listing Sponsor”) on March 26, 2012 (the “2012 Enquiry Letter”) and on January 29, 2013 (the “2013 Enquiry Letter”), respectively. The 2012 Enquiry Letter and the 2013 Enquiry Letter requested the A Share Listing 8 June 2015 Q3(i) Sponsor to investigate and clarify certain matters set out in the two letters received by the CSRC and were not based on the vetting of the Application for Listing of A Shares.
In the 2012 Enquiry Letter, the CSRC made enquiry on, amongst other things, (i) the legality and validity of material loans made by our Bank during the then reporting period in relation to Application for Listing of A Shares; (ii) whether our Bank had advanced loans in violation of the requirements on collateral, resulting in non-performing loans; and (iii) whether our Bank had provided loans to certain state-owned enterprises, enabling such state-owned enterprises to acquire non-performing assets from our Bank with a view to improving the asset quality of our Bank. Subsequent to receipt of the 2012 Enquiry Letter, our A Share Listing Sponsor coordinated with the relevant professional parties involved in the Application for Listing of A Shares to review our Bank’s material corporate loans as at December 31, 2008, 2009, 2010 and 2011. The A Share Listing Sponsor issued a report in relation to its findings and submitted it to the CSRC with relevant legal opinions. As a result of the due diligence conducted by the A Share Listing Sponsor and other professional parties, it was discovered that (i) a number of allegations contained in the 2012 Enquiry Letter were untrue and/or lacked basis; (ii) a very limited number of loans advanced to certain borrowers did not meet the requirements of the relevant PRC authorities; and (iii) a very limited number of security interest to secure certain loans had not been legally created in accordance with the PRC laws and regulations. However, the A Share Listing Sponsor confirmed that none of the above findings would affect our Bank’s suitability for listing on the A-share market. After reviewing the relevant reports prepared by the A Share Listing Sponsor and other professional parties and carrying out other necessary procedures, the Sole Sponsor is of the view that the issues identified in the 2012 Enquiry Letter are not of a “material” nature and would not affect our Bank’s suitability to list on the Hong Kong Stock Exchange. In the 2013 Enquiry 8 June 2015 Q3(i) Letter, the CSRC made inquiry on our litigation with Huaqiao Group, including the reason and progress of such litigation, its potential effect on our proposed A share listing and financial and operational condition and whether the relevant entities or individuals were involved in any administrative penalties or criminal offenses. For further details of our litigation with Huaqiao Group, please see “Business — Legal and Regulatory Matters — Litigation”.
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HISTORY AND OPERATIONAL REFORM
Save as disclosed above, our Directors are of the view that there is nothing that ought to be drawn to the attention of the potential investors in respect of the Application for Listing of A Shares and our 8 June 2015 Q2 listing on the Hong Kong Stock Exchange is not contrary to the securities laws of Hong Kong and the Q3(i) PRC. Based on the above confirmation by our Directors and the due diligence conducted by the Sole Sponsor, the Sole Sponsor is also of the view that, save as disclosed above, there is nothing that ought to be drawn to the attention of the potential investors in respect of the Application for Listing of A Shares.
OUR SHAREHOLDING STRUCTURE A1A29(2)
Shareholding Structure TA16(iii) TA16(v)
During the Track Record Period and up to the Latest Practicable Date, our Bank had no controlling shareholder or major shareholder. As of the Latest Practicable Date, we had 121 corporate shareholders and 2,133 individual shareholders who in aggregate held approximately 98.24% and 1.76% of our total number of shares, respectively, among which, the ownership of 99,995 shares registered under the name of one individual shareholder was unable to be verified and two individual shareholders who in aggregate held 89,875 shares could not be contacted. The top 10 shareholders of our Bank, who are all corporate shareholders, currently hold approximately 39.11% in our Bank’s total share capital in aggregate. As of the Latest Practicable Date, the shareholding of the top 10 shareholders of our Bank ranged from around 5.68% (in the case of the single largest shareholder) to around 2.50% (in the case of the 10th largest shareholder). For further information about our top 10 shareholders and the change of their shareholding, please refer to “Appendix VII — Statutory and General Information — 1. Further Information About Our Bank — B. Our Top 10 Shareholders” to this document.
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Yinchuan Jincheng Jinzhou Finance Tenghua Qingzhou Chengwei Hongtu Rongcheng Beijing Urban Jinzhou Other corporate Other individual Baota(1) International(2) Bureau(3) Plastic(4) Taihe(5) Plastic(6) Investment(7) Huatai(8) Construction(9) Daxing(10) shareholders(11) shareholders(12) 5.68% 4.85% 4.27% 4.09% 4.09% 3.86% 3.41% 3.41% 2.95% 2.50% 59.13% 1.76%
Our Bank(13) ITR N PRTOA REFORM OPERATIONAL AND HISTORY
Jinzhou Branch 99 Sub-branches and 58.29% one special institution Yi County Xianghe(14) Beijing Branch 5 Sub-branches 58.57% Taihe Yimin(15) Tianjin Branch 7 Sub-branches 47.74% Beizhen (16) Shenyang Branch 11 Sub-branches Yimin 48.53% 6 — 166 — Dalian Branch 4 Sub-branches Heishan Jinhang(17)
Harbin Branch 5 Sub-branches
Dandong Branch 18 Sub-branches
Fushun Branch 13 Sub-branches
Chaoyang Branch 2 Sub-branches
Anshan Branch 3 Sub-branches
Fuxin Branch
Liaoyang Branch 1 Sub-branch A1A28(2) (d) and para.3.3(b) GL49-13 THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
HISTORY AND OPERATIONAL REFORM
Notes: GL49-13 para.3.3(d) A1A29(1) (1) Yinchuan Baota Refined Chemical Industry Co., Ltd.* (銀川寶塔精細化工有限公司)(“Yinchuan Baota”) is one of our non state-owned corporate shareholders and our single largest shareholder and is wholly owned by Ningxia Baota Energy Chemical Co., Ltd.* (寧夏寶塔能源化工有限公司). The scope of operation of Yinchuan Baota mainly comprises (but is not limited to) the production and sales of crude oil, heavy oil and solvent oil.
(2) Jincheng International Logistics Group Co., Ltd.* (錦程國際物流集團股份有限公司)(“Jincheng International”) is one of our non state-owned corporate shareholders and is held as to 99.41% and 0.59% by Jinlian Holding Group Co., Ltd.* (錦聯控股集團有限公司) (of which 90% equity interest is held by Mr. LI Dongjun, one of the non-executive Directors of our Bank) and Dalian Jincheng Customs Broker Co., Ltd.* (大連錦程報關行有限公司), respectively. The scope of operation of Jincheng International mainly comprises (but is not limited to) the international transport agency business in relation to the transport of imported and exported goods by sea and by air, canvassion, booking, warehousing, transit, container vanning and devanning.
(3) Jinzhou Finance Bureau is one of our state-owned corporate shareholders.
(4) Liaoning Tenghua Plastic Co., Ltd.* (遼寧騰華塑料有限公司)(“Tenghua Plastic”) is one of our non state-owned corporate shareholders and is held as to 60% and 40% by Liaoyang Tengxing Investment Co., Ltd.* (遼陽騰興投資有限公司) and Liaoyang Huayi Investment Co., Ltd.* (遼陽華億投資有限公司), respectively. The scope of operation of Tenghua Plastic mainly comprises (but is not limited to) the production and sales of various kinds of plastic woven bags, plastic injection products, series membranes and various types of membranes.
(5) Qingzhou Taihe Mines Co., Ltd.* (青州泰和礦業有限公司)(“Qingzhou Taihe”) is one of our non state-owned corporate shareholders and is held as to 75% and 25% by Jiuzhou Taihe International Investment Co., Ltd.* (九州泰和國際投資 有限公司) and Shanghai Fengchao Industrial Development Co., Ltd.* (上海豐潮實業發展有限公司), respectively. The scope of operation of Qingzhou Taihe mainly comprises (but is not limited to) iron ore mining and sales.
(6) Liaoning Chengwei Plastic Profile Co., Ltd.* (遼寧程威塑料型材有限公司)(“Chengwei Plastic”) is one of our non state-owned corporate shareholders and is held as to 60% and 40% by Liaoyang Chengyuan Investment Co., Ltd.* (遼陽程遠投資有限公司) and Liaoyang Weiwang Investment Co., Ltd.* (遼陽威旺投資有限公司), respectively. The scope of operation of Chengwei Plastic mainly comprises (but is not limited to) the production and sales of plastic profiles and products and new building materials.
(7) Shanghai Greenland Hongtu Investment Development Co., Ltd.* (上海綠地弘途投資發展有限公司)(“Hongtu Investment”) is one of our non state-owned corporate shareholders and is held as to 43.02%, 42.64% and 14.34% by Greenland Financial Investment Holdings Co., Ltd.* (綠地金融投資控股集團有限公司), Harvest Capital Management Co., Ltd.* (嘉實資本管理有限公司) and Greenland Holding Group Company Limited* (綠地控股集團有限公司), respectively. The scope of operation of Hongtu Investment mainly comprises (but is not limited to) industrial investment, asset management, investment management and business information consulting.
(8) Rongcheng Huatai Motor Co., Ltd.* (榮成華泰汽車有限公司)(“Rongcheng Huatai”) is one of our non state-owned corporate shareholders and is held as to 90% and 10% by Huatai Motor Group Ltd.* (華泰汽車集團有限公司) and Rongcheng Dongxing Trade Co., Ltd.* (榮成市東興商貿有限公司), respectively. The scope of operation of Rongcheng Huatai mainly comprises (but is not limited to) the manufacture and sales of automobiles under the brands of Huatai Santa Fe, Huatai Terracan and Huatai Yuan Tian* (華泰元田).
(9) Beijing Urban Construction Investment Development Co., Ltd.* (北京城建投資發展股份有限公司)(“Beijing Urban Construction”) is one of our non state-owned corporate shareholders and is listed on the Shanghai Stock Exchange (stock code: 600266). The scope of operation of Beijing Urban Construction mainly comprises (but is not limited to) real estate development, sales of commodity housing, investment and investment management.
(10) Jinzhou Daxing Construction Group Co., Ltd.* (錦州大興建設集團有限公司, formerly known as Jinzhou Daxing Real Estate Development Co., Ltd. (錦州大興房地產開發有限公司)) (“Jinzhou Daxing”) is one of our non state-owned corporate shareholders and is held as to 99.17% and 0.83% by Mr. SUN Wei and Mr. SUN Zhongzhi, respectively. The scope of operation of Jinzhou Daxing mainly comprises (but is not limited to) real estate development (class three) and commodity housing sales.
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HISTORY AND OPERATIONAL REFORM
(11) Other 111 corporate shareholders in aggregate held approximately 59.13% of our issued shares. The shareholding of these corporate shareholders ranges from 0.01% to 2.32%.
(12) 2,133 individual shareholders in aggregate held approximately 1.76% of our issued shares. The shareholding of our individual shareholders ranges from approximately 0.000045431% to 0.008510906%.
(13) As of the Latest Practicable Date, we have 12 branches, 168 sub-branches and one special institution.
(14) Liaoning Yi County Xianghe Village and Township Bank Co., Ltd.* (遼寧義縣祥和村鎮銀行股份有限公司)(“Yi County GL49-13 para.3.3(a) Xianghe”), established and commenced business in November 2010, with registered address at 38-21, Yingbin Road, and (b) TA16(ii) Yizhou Town, Yi County. Its share capital was RMB40.25 million upon establishment and was increased to RMB108.49 million as of the Latest Practicable Date, and was held by our Bank as to 58.29% as of the Latest Practicable Date. For further information about Yi County Xianghe, including details of other shareholders, please refer to the section headed “Appendix VII — Statutory and General Information — 2. Our Subsidiaries, Shareholders of Our Subsidiaries and Changes in the Share Capital of Our Subsidiaries” to this document.
(15) Jinzhou Taihe Yimin Village and Township Bank Co., Ltd.* (錦州太和益民村鎮銀行股份有限公司)(“Taihe Yimin”), established and commenced business in January 2010, with registered address at 29-86, Jixiang Xinjiayuan, Taihe District, Jinzhou City. Its share capital was RMB33.53 million upon establishment and was increased to RMB103.21 million as of the Latest Practicable Date and was held by our Bank as to 58.57% as of the Latest Practicable Date. For further information about Taihe Yimin, including details of other shareholders, please refer to the section headed “Appendix VII — Statutory and General Information — 2. Our Subsidiaries, Shareholders of Our Subsidiaries and Changes in the Share Capital of Our Subsidiaries” to this document.
(16) Jinzhou Beizhen Yimin Village and Township Bank Co., Ltd.* (錦州北鎮益民村鎮銀行股份有限公司) (“BeizhenYimin”), established and commenced business in March 2011, with registered address at 1-4, Building One, Phase I, Furui Jiaxiang Campus, Chengxi Community, Beizhen Sub-district Office, Liaoning Province. Its share capital was RMB52.19 million upon establishment and was increased to RMB103.25 million as of the Latest Practicable Date and was held by our Bank as to 47.74% as of the Latest Practicable Date. According to the acting in concert arrangement between our Bank and other eight shareholders of Beizhen Yimin, Beizhen Yimin was deemed to be controlled by our Bank and was a subsidiary of our Bank from accounting prospective. For further information about Beizhen Yimin, including details of other shareholders and acting in concert arrangement, please refer to the section headed “Appendix VII — Statutory and General Information — 2. Our Subsidiaries, Shareholders of Our Subsidiaries and Changes in the Share Capital of Our Subsidiaries” to this document.
(17) Liaoning Heishan Jinhang Village and Township Bank Co., Ltd.* (遼寧黑山錦行村鎮銀行股份有限公司)(“Heishan Jinhang”), established and commenced business in January 2014, with registered address at House No. 9-14 (Level 1-3), City East, South Side, Diwang Fudi, No. 194, Zhongda Central Road, Heishan Town First Street, Heishan County, Liaoning Province. Its share capital was RMB100.00 million upon establishment and was increased to RMB119 million as of the Latest Practicable Date. Heishan Jinhang was held by our Bank as to 48.53% as of the Latest Practicable Date. According to the acting in concert arrangement between our Bank and other certain shareholders of Heishan Jinhang, Heishan Jinhang was deemed to be controlled by our Bank and was a subsidiary of our Bank from accounting prospective. For further information about Heishan Jinhang, including details of other shareholders, and acting in concert arrangement please refer to the section headed “Appendix VII — Statutory and General Information — 2. Our Subsidiaries, Shareholders of Our Subsidiaries and Changes in the Share Capital of Our Subsidiaries” to this document.
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6 — 169 — [REDACTED]
Notes:
For background information about certain companies shown in the above shareholding structure chart, see corresponding notes of the chart as set out on pages 167-168 in this section. TA16(v) 3.3(b) para GL49-13 Sch(29) 3rd THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
HISTORY AND OPERATIONAL REFORM
OUR ORGANIZATIONAL AND MANAGEMENT STRUCTURE
The following chart sets out our principal organizational and management structure as of the Latest Practicable Date:
General Meeting of Shareholders Strategy Committee
Internal Audit Department Audit Committee Supervising Committee Nomination and Board of Board Remuneration Committee Supervisors
Risk Management Nomination Committee Committee Senior Management(1)
Related-party Transactions Office of the Board of Control Committee Supervisors
Office of the Board
Risk Management President’s Office Three Basis & Three Smalls Committee Business Management Department CPC Matters Department Assets & Liabilities Management Committee Retail Banking Department Integrated Affairs Department Loan Approval Committee International Business Human Resources Department Department Information Technology Risk & Compliance Department Management Committee Capital Transactions Department Remuneration and Legal Affairs Department Performance Management Committee Information Technology E-Banking Department Department Strategy Development Village and Township Department Banking Management Department Financial Management Department Investment Banking & Interbank Department Corporate Business Department Operation Management Credit Management Department Department
Credit Review Department Wealth Management Products Management Department
Note:
(1) For further information of the number and distribution of our branches, sub-branches and special institution, please refer to the chart of our shareholding structure on page 166 in this section.
Establishment of Modernized Corporate Governance Structure
Our Bank has set up a modernized corporate governance structure in accordance with the Articles of Association, applicable PRC laws and regulation and the Listing Rules.
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HISTORY AND OPERATIONAL REFORM
Save for certain reserved matters that require the approval of the shareholders of our Bank as set out in the Articles of Association from time to time (as required under applicable PRC laws and regulations, including, without limitation to, the PRC Company Law and Guidelines for Commercial Banking Company Governance* (商業銀行公司治理指引)), our Bank is primarily managed by the Board.
(a) The process of appointing a Director
According to the relevant provisions in the Articles of Association, other than an independent Director, a Director may be nominated either (i) by shareholders who hold, individually or collectively, 3% or more of the voting rights of our Bank; or (ii) by the existing Board. In addition, other than our existing Board and our existing Board of Supervisors, shareholders who hold, individually or collectively, 1% or more of the voting rights of our Bank are entitled to nominate independent Directors. The nomination and remuneration committee of our Board will review the qualification and condition of each candidate before our Board resolves to submit such candidates for approval in general meeting.
(b) Shareholders’ involvement in the management of our Bank
Given our shareholding structure during the Track Record Period and our current shareholding structure, no single shareholder has been able to procure the passing of shareholders’ resolution regarding the appointment of any Director (regardless whether such Director candidate was nominated by such shareholder) on its own. Conversely, no single shareholder has been able to block any appointment of a nominated candidate on its own. None of the shareholders can control our Board or has the right to appoint any Directors to our Board or any member of the senior management on its own. Therefore, our Board functions independently from the shareholders of our Bank in a manner similar to a “professional board”.
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable Date, no shareholder who was entitled to nominate Directors or independent Directors by reason of its shareholding level in our Bank has exercised its right to nominate any Director to our Board. All Directors were nominated by our Board, the appointments of which were subsequently approved by the shareholders’ meeting of our Bank, in accordance with applicable PRC laws and regulations and the then Articles of Association. Certain Directors also concurrently held/are holding positions in certain shareholders, but the appointments of such Directors did not result from such shareholders’ exercise of their nomination rights. Our Directors confirm that as far as they are aware none of our shareholders has acted in concert or has otherwise entered into any formal or informal arrangement with any other shareholders for the purpose of participation and voting in our Bank’s shareholders’ meetings. The Directors are also not aware of any consensus building process between the shareholders before attending the shareholders’ meetings of our Bank.
Our Board is accountable to the general meeting of our shareholders and is primarily responsible for the important decision making of our Bank, including but not limited to matters related to the business and operational strategies, development goals, business and investment plans, appointment, removal and replacement of senior management and establishment of the internal management regime
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HISTORY AND OPERATIONAL REFORM or bodies of our Bank. There are five special committees established under our Board, including strategy committee, risk management committee, related-party transactions control committee, audit committee and nomination and remuneration committee. Each of the special committees performs specified functions to assist our Board in performing its duties.
Our Board of Supervisors is accountable to the general meeting of our shareholders and is primarily responsible for supervising our compliance with relevant laws and regulations, the performance of the Board and senior management and the financial activities of our Bank. There are two special committees established under the Board of Supervisors, namely the nomination committee and the supervising committee. Each of the special committees performs specified functions to strengthen the independence and the supervisory power of our Board of Supervisors.
Our Bank management is responsible for the daily operation of our Bank and consists of the executive vice president (performing the duties of the president), vice presidents, financial officers, assistants to president, board secretary and head of finance.
Risk Management and Internal Control Reforms of Our Bank
In recent years, our Bank has implemented a series of measures to continually enhance our risk management and improve our internal control, primarily including:
(1) establishing a sound regime for risk management and internal control, and setting comprehensive objectives for risk management and internal control;
(2) implementing unified and standardized policies across our business and operational activities and our products;
(3) formulating basic principles for internal accounting control suitable for our business and operational activities, operating conditions and our staff;
(4) optimizing the risk management and internal control processes by engaging external professional teams; and
(5) bringing the risk management indicators into our appraisal system for operational bodies and employees.
For further details related to risk management and internal control, please refer to the section headed “Risk Management” in this document.
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HISTORY AND OPERATIONAL REFORM
Information Technology Reform
We strive to improve our information technology system through establishing, updating and upgrading our information technology system so as to support the business development of our Bank. Information technology reform measures implemented in recent years in our Bank primarily included:
2009 We established the information technology management committee for providing guidance and management on our information technology tasks to strengthen the decision-making and implementation processes on information technology matters.
2010 The same-city disaster backup center of our Bank commenced operation officially, realized same-city disaster backup of key information systems to ensure the business continuity in the same-city.
2011 Based on the foundation of our corporate internet banking, systems for personal A1A28(5) A1A28(8) internet banking and messaging banking were launched, and the initial electronic channel was established.
2012 We completed the establishment of the off-site disaster backup center in Beijing to further ensure the continuous operation and business continuity of key information systems during occurrence of disasters.
We completed the establishment of the database phase I project and a unified data standardization system, a centralized statement platform and a management cockpit system.
We expanded into the electronic channel business, launched and equipped the communicative internet banking system with more diverse functions and electronic product categories.
2013 We made progress in the establishment of the self-service business system and created more self-service products.
We adjusted the organizational structure of the information technology department, under which the support assurance center, system operation center, information security center, core system development center, management system development center and channel system development center were established, such that we would have a clearer idea of departmental duties, resulting in more efficient operation and reasonable division of labor.
2014 We launched the financial IC card and successfully issued the resident healthcare card to provide more financial services that are closer to the daily life of citizens.
2015 Our Bank established the information security management system and obtained the ISO27001 Information Security Certificate from Det Norske Veritas.
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HISTORY AND OPERATIONAL REFORM
Financial Management Reform
We consider it is of the utmost importance to continue to enhance and improve our financial management system, in order to strengthen the financial management capabilities of our Bank. During the past few years, the financial management reform measures implemented by our Bank primarily included the following:
2002 We introduced the SAP financial management system to initiate systematic analysis on our profitability.
2010 We conducted in-depth research and supervised the management of assets and liabilities of our Bank.
2013 We gradually completed the construction of our financial management systems, including the budget management system, asset and liability management system and performance appraisal system.
Human Resources Reform
We consider it is of the utmost importance to establish and improve the human resources management system. We emphasize on personnel training and career development, and reform measures adopted for these purposes primarily include:
(1) establishment of a sound and comprehensive regime for the human resources management;
(2) establishment of an advanced system for staff recruitment, testing and appraisal;
(3) improving staff training system and creating a career development path for staff by combining management rankings with professional rankings; and
(4) establishment of “Bank of Jinzhou Institute* (錦州銀行學院)” with Bohai University* (渤海大學) in 2013 to provide customized training.
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