HAITONG SECURITIES CO., LTD. 海通證券股份有限公司 Annual Report 2020 年度報告2020 年度報告 Annual Report 2020 CONTENTS Section I DEFINITIONS AND MATERIAL RISK WARNINGS 3 Section II COMPANY PROFILE AND KEY FINANCIAL INDICATORS 7 Section III SUMMARY OF THE COMPANY’S BUSINESS 25 Section IV REPORT OF THE BOARD OF DIRECTORS 33 Section V SIGNIFICANT EVENTS 85 Section VI CHANGES IN ORDINARY SHARES AND PARTICULARS ABOUT SHAREHOLDERS 123 Section VII PREFERENCE SHARES 136 Section VIII DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES 137 Section IX CORPORATE GOVERNANCE 191 Section X CORPORATE BONDS 229 Section XI FINANCIAL REPORT 240 Section XII DOCUMENTS AVAILABLE FOR INSPECTION 241 Section XIII INFORMATION DISCLOSURES OF SECURITIES COMPANY 242 2 HAITONG SECURITIES CO., LTD. | Annual Report 2020 (H Share) IMPORTANT NOTICE The Board, the Supervisory Committee, Directors, Supervisors and senior management of the Company warrant the truthfulness, accuracy and completeness of contents of this annual report (the “Report”) and that there is no false representation, misleading statement contained herein or material omission from this Report, for which they will assume joint and several liabilities. This Report was considered and approved at the 15th meeting of the seventh session of the Board. All the Directors of the Company attended the Board meeting. None of the Directors or Supervisors has made any objection to this Report. PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership) and PricewaterhouseCoopers have audited the annual financial reports of the Company prepared in accordance with PRC GAAP and IFRS respectively, and issued a standard and unqualified audit report of the Company. All financial data in this Report are denominated in RMB unless otherwise indicated. Mr. Zhou Jie, Chairman of the Company, Mr. Zhang Xinjun, the Chief Financial Officer, and Mr. Ma Zhong, the head of the accounting department warrant the truthfulness, accuracy and completeness of the financial report contained in the Report. The Board considered the profit distribution proposal or proposal on transfer of capital reserve funds into share capital for the Reporting Period, which are as follows: On the basis of the total share capital of A Shares and H Shares of 13,064,200,000 shares as at 31 December 2020, the Company distributed cash dividends of RMB2.50 (inclusive of tax) for every 10 shares to holders of A Shares and H Shares registered on the equity registration date, with total cash dividends amounting to RMB3,266,050,000.00. After this cash dividend distribution, the retained profit of the parent company of RMB22,853,648,623.49 was carried forward to the next year. Forward-looking statements, including future plans and development strategies, may be included in this report. All statements contained herein other than statements of historical fact are, or may be deemed to be, forward-looking statements. Neither the Company nor any of its subsidiaries undertakes any obligation to publicly update or revise any forward-looking statement as a result of new data. Forward-looking statements, including future plans and development strategies contained in this Report do not constitute any commitment of the Company to investors. Investors should be reminded of the risks of investments and not place undue reliance on forward-looking statements. No appropriation of funds on a non-operating basis by the Company’s controlling shareholders or their respective related parties has occurred during the Reporting Period. The Company did not provide external guarantees in violation of the stipulated decision-making procedures during the Reporting Period. HAITONG SECURITIES CO., LTD. | Annual Report 2020 (H Share) 3 SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS I. DEFINITIONS In this Report, unless the context otherwise requires, the following terms and expressions have the meanings set forth below: “A Share(s)” domestic shares of the Company, with a nominal value of RMB1.00 each, which are listed and traded on the Shanghai Stock Exchange “Articles of Association” or the articles of association of Haitong Securities “Articles” “Board” the board of Directors of Haitong Securities “Code” the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 to the Hong Kong Listing Rules “Company” or “Haitong Haitong Securities Co., Ltd. Securities” “Company Law” the Company Law of the People’s Republic of China “CSRC” the China Securities Regulatory Commission “CSRC Shanghai Bureau” Shanghai Regulatory Bureau of the China Securities Regulatory Commission “Director” the director(s) of Haitong Securities “ETF” exchange traded fund “EUR” the official currency of the Eurozone “FICC” fixed-income instruments, currencies, and commodities “Fullgoal Fund” Fullgoal Fund Management Co., Ltd. (富國基金管理有限公司) “Group” the Company and its subsidiaries “Gui’an UT” Gui’an UT Financial Leasing (Shanghai) Co., Ltd. (貴安恒信融資租賃 （上海）有限公司) “H Share(s)” ordinary shares of the Company with a nominal value of RMB1.00 each, which are subscribed for and traded in HK dollars and are listed on the Hong Kong Stock Exchange “Haitong Bank” Haitong Bank, S.A. “Haitong Capital” Haitong Capital Investment Co., Ltd. (海通開元投資有限公司) 4 HAITONG SECURITIES CO., LTD. | Annual Report 2020 (H Share) SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS “Haitong Futures” Haitong Futures Co., Ltd. (海通期貨股份有限公司) “Haitong Innovation Haitong Innovation Securities Investment Co., Ltd. (海通創新證券投 Securities” 資有限公司) “Haitong International” Haitong International Securities Group Limited (海通國際證券集團有 限公司), listed on the Hong Kong Stock Exchange, stock code: 665 “Haitong International Haitong International Holdings Limited (海通國際控股有限公司) Holdings” “Haitong Resource” Shanghai Haitong Resource Management Co., Ltd. (上海海通資源管 理有限公司) “Haitong UT” Haitong Unitrust International Financial Leasing Co., Ltd. (海通 恒信國際融資租賃股份有限公司), listed on the Hong Kong Stock Exchange, stock code: 1905 “Haitong UT Capital” Haitong UT Capital Group Co., Limited (海通恒信金融集團有限公司) “Haitong UT Holdings” Haitong UT Holdings Limited (海通恒信融資租賃控股有限公司) “Haitong-Fortis PE” Haitong-Fortis Private Equity Fund Management Co., Ltd. (海富產業 投資基金管理有限公司) “HFT Investment” HFT Investment Management Co., Ltd. (海富通基金管理有限公司) “HK$”, “HKD” or “HK dollars” the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “HT Asset Management” Shanghai Haitong Securities Asset Management Company Limited (上海海通證券資產管理有限公司) “IPO” initial public offering “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Hong Kong Listing Rules HAITONG SECURITIES CO., LTD. | Annual Report 2020 (H Share) 5 SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS “NAFMII” National Association of Financial Market Institutional Investors “NEEQ” National Equities Exchange and Quotations (全國中小企業股份轉讓 系統) “NSSF” the National Council for Social Security Fund of the PRC “PRC” the People’s Republic of China, and for the purposes of this Report only, excluding Hong Kong, Macau Special Administrative Region and Taiwan “QDII” Qualified Domestic Institutional Investor “QFII” Qualified Foreign Institutional Investor “Reporting Period” from 1 January 2020 to 31 December 2020 “RMB” or “Renminbi” the lawful currency of the PRC “RQFII” Renminbi Qualified Foreign Institutional Investor “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time “Shanghai Guosheng Group” Shanghai Guosheng (Group) Co., Ltd. (上海國盛（集團）有限公司) “Shanghai Weitai Properties” Shanghai Weitai Properties Management Co., Ltd. (上海惟泰置業管 理有限公司) “Shanghai Zechun” Shanghai Zechun Investment & Development Co. Ltd. (上海澤春投資 發展有限公司) “SSE” the Shanghai Stock Exchange “Supervisor” the supervisor(s) of Haitong Securities “Supervisory Committee” the supervisory committee of Haitong Securities “SZSE” the Shenzhen Stock Exchange “US$”, “USD” or “U.S. the lawful currency of the United States of America dollars” “WIND” Wind Information Co., Ltd. “WOFE” Wholly Owned Foreign Enterprises 6 HAITONG SECURITIES CO., LTD. | Annual Report 2020 (H Share) SECTION I DEFINITIONS AND MATERIAL RISK WARNINGS II. MATERIAL RISK WARNINGS The business of the Group is highly dependent on the overall economic and market conditions in jurisdictions where it operates. Our results of operations may be materially affected by various factors, such as macro-economic environment, cyclical fluctuations of the industry, development stages of the market, behaviours of the investors and the international economic conditions. The Group is exposed to major risks in its business operations, including policy risks, whereby the operations of securities firms in general may be subject to material adverse effect caused by national macro-control measures, and changes of laws, regulations, regulatory policies or trading rules applicable to securities industry; international operations risks, whereby its businesses operations in foreign countries may be affected by changes in economic, political and social conditions in such countries or regions; compliance risks, whereby the securities firms may be subject to legal liabilities or regulatory penalties, disciplinary actions, or incur property loss or reputation damage due to failure to