proposed appointment of directors and supervisors

53 Pages·2017·1.04 MB·English

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your
stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other
professional adviser.
If you have sold or transferred all your shares in Chongqing Iron & Steel Company Limited, you should at once
hand this circular and the accompanying proxy forms and reply slips to the purchaser or transferee or to the bank,
stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or
transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility
for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of
this circular.
(1) PROPOSED APPOINTMENT OF DIRECTORS AND SUPERVISORS
(2) PROPOSED ADOPTION OF EMPLOYEE SHARE OWNERSHIP PLAN
(3) ENGAGEMENT OF THE FINANCIAL AND
INTERNAL CONTROL AUDITOR
(4) AMENDMENTS TO THE RULES OF PROCEDURES FOR
THE BOARD
(5) AMENDMENTS TO THE RULES OF PROCEDURES FOR
THE SUPERVISORY COMMITTEE
(6) REMUNERATION SCHEME FOR THE EIGHTH SESSION OF
THE BOARD AND THE SUPERVISORY COMMITTEE
AND
(7) NOTICE OF 2017 ANNUAL GENERAL MEETING
A letter from the Board is set out from pages 1 to 18 of this circular.
A notice convening the AGM to be held at 2:00 p.m. on Tuesday, 15 May 2018 at the Chongqing Iron & Steel
Conference Centre, No. 1 of Gangcheng Avenue, Economic & Technological Development Zone, Changshou District,
Chongqing, the PRC, is set out on pages 46 to 49 of this circular. A form of proxy for use at the AGM is enclosed with
this circular. If you intend to attend the AGM, please complete and return the enclosed reply slip in accordance with
the instructions printed thereon as soon as possible and in any event by no later than 4:00 p.m. on 25 April 2018.
Shareholders are advised to read the notice. Whether or not you are able to attend the AGM in person, you are
requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and
return it to the Company’s registered office (in the case of proxy form by holders of domestic shares) at Management
Building, No. 1 of Gangcheng Avenue, Economic & Technological Development Zone, Changshou District,
Chongqing, the PRC (Postal Code: 401258) or at the Company’s H share registrar and transfer office, Hong Kong
Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible
and in any event not later than 24 hours before the time appointed for such meeting. Completion and return of the
form of proxy shall not preclude you from attending and voting in person at the AGM, or any adjournment thereof, if
you so wish.
25 April 2018
CONTENT
Page
DEFINITIONS ..... .. ....... .......... ........ ....... ........................ ii
LETTER FROM THE BOARD .. ... ........... ...... ......... ................... 1
APPENDIX I — THE CANDIDATES OF DIRECTORS AND SUPERVISORS
AND THEIR INFORMATION....................... ..... ...... 19
APPENDIX II — DRAFT OF EMPLOYEE SHARE OWNERSHIP PLAN . ......... ..... 24
NOTICE OF 2017 ANNUAL GENERAL MEETING .... ........ ..................... 46
– i –
DEFINITIONS
In this circular, the following expressions have the following meanings, unless the context requires
otherwise:
“A Share(s)” the domestic share(s) in the ordinary share capital of the Company
with a nominal value of RMB1.00 each, which are listed on the
Shanghai Stock Exchange
“AGM” the 2017 annual general meeting (or any adjournment thereof) of the
Company to be convened at the Chongqing Iron & Steel Conference
Centre, No. 1 of Gangcheng Avenue, Economic & Technological
Development Zone, Changshou District, Chongqing, the PRC, at 2:00
p.m. on Tuesday, 15 May 2018, for purpose of considering and, if
thought fit, approving, among other things, the resolutions in relation
to the proposed appointment of Directors and Supervisors, the
proposed adoption of Employee Share Ownership Plan, engagement
of the financial and internal control auditor, amendments to the rules
of procedures for the Board, amendments to the rules of procedures
for the Supervisory Committee and remuneration scheme for the
eighth session of the Board and the Supervisory Committee
“Articles of Association” the articles of association of the Company
“Board” the board of Directors
“Company” Chongqing Iron & Steel Company Limited, a company incorporated
in PRC with limited liability and the shares of which are listed on
Stock Exchange
“Director(s)” the director(s) of the Company
“Employee Share Ownership Plan” the employee share ownership plan to be proposed and adopted by
or “Plan” the Company at the general meeting, pursuant to which, specific
employees are rewarded shares by the Company in accordance with
the terms of the employee share ownership plan
“H Share(s)” the foreign invested share(s) in the Company’s share capital, with
a nominal value of RMB1.00 each, which are listed on the Stock
Exchange
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
– ii –
DEFINITIONS
“Latest Practicable Date” 20 April 2018
“Listing Rules” the Rules Governing the Listing of securities on the Stock Exchange
“PRC” the People’s Republic of China
“RMB” Renminbi, the lawful currency of the PRC
“Shareholders” holders of shares of the Company
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Supervisor(s)” the supervisor(s) of the Company
“Supervisory Committee” The Supervisory Committee of the Company
– iii –
LETTER FROM THE BOARD
Executive Directors: Registered office:
Mr. Li Yongxiang Management Building
Mr. Tu De Ling No. 1 of Gangcheng Avenue
Mr. Zhang Shuogong Economic & Technological
Development Zone
Non-executive Directors: Changshou District
Mr. Zhou Zhuping Chongqing
Mr. Zheng Jie the PRC
(Postal Code: 401258)
Independent Non-executive Directors:
Mr. Hwang Yuhchang
Mr. Xu Yixiang
Mr. Xin Qingquan
Mr. Wong Chunwa
25 April 2018
To the Shareholders
Dear Sir or Madam,
(1) PROPOSED APPOINTMENT OF DIRECTORS AND SUPERVISORS
(2) PROPOSED ADOPTION OF EMPLOYEE SHARE OWNERSHIP PLAN
(3) ENGAGEMENT OF THE FINANCIAL AND
INTERNAL CONTROL AUDITOR
(4) AMENDMENTS TO THE RULES OF PROCEDURES FOR
THE BOARD
(5) AMENDMENTS TO THE RULES OF PROCEDURES FOR
THE SUPERVISORY COMMITTEE
(6) REMUNERATION SCHEME FOR THE EIGHTH SESSION OF
THE BOARD AND THE SUPERVISORY COMMITTEE
AND
(7) NOTICE OF 2017 ANNUAL GENERAL MEETING
– 1 –
LETTER FROM THE BOARD
I. INTRODUCTION
Reference is made to (i) the announcement of the Company dated 28 February 2018 in relation to
the proposed appointment of Directors and Supervisors and (ii) the announcements dated 22 March
2018 in relation to the proposed adoption of Employee Share Ownership Plan and engagement of
accounting firm, respectively.
The purpose of this circular is to provide you information about the resolutions to be proposed
at the AGM and to give you the notice of the AGM. The resolutions to be proposed at the AGM
are in relation to the proposed appointment of Directors and Supervisors of the Company, the
proposed adoption of Employee Share Ownership Plan, engagement of the financial and internal
control auditor, amendments to the rules of procedures for the Board, amendments to the rules of
procedures for the Supervisory Committee and remuneration scheme for the eighth session of the
Board and the Supervisory Committee.
II. PROPOSED APPOINTMENT OF DIRECTORS AND SUPERVISORS
The Board of the Company announces that as the term of office of existing Directors and
Supervisors of the Company is about to expire, Mr. Zhou Zhuping, Mr. Zheng Jie, Mr. Li
Yongxiang, Mr. Tu Deling, and Mr. Zhang Shuogong are nominated as candidates for Directors
of the eighth session of the Board of the Company; and Mr. Xu Yixiang, Mr. Xin Qingquan, Mr.
Wong Chunwa and Mr. Zheng Yuchun are nominated as candidates for independent non-executive
Directors for the eighth session of the Board of the Company. Mr. Xiao Yuxin, Mr. Lu Junyong
and Mr. Yin Dong are nominated as candidates for shareholder representative Supervisors of the
eighth session of the Company’s Supervisory Committee. The nomination of Director candidates
was considered and approved at the Board meeting held on 27 February 2018, and the nomination
of Supervisor candidates was considered and approved at the Supervisory Committee meeting held
on 27 February 2018. The Director candidates and Supervisor candidates shall be submitted to the
AGM of the Company for consideration and approval.
The biographical details of the above-named Director and Supervisor candidates are set out in
appendix I to this circular.
– 2 –
LETTER FROM THE BOARD
III. PROPOSED ADOPTION OF EMPLOYEE SHARE OWNERSHIP PLAN
The Board is pleased to announce that, in order to establish and improve the mechanism in which
employees and shareholders share both benefits and risks, enhance employees’ cohesion and the
Company’s competitiveness, maintain a close relationship with core employees, coordinate the
interests of management team, core personnel and shareholders, and promote the Company’s long-
term stable development and enhancement of shareholders’ value, the Company has prepared
the draft of Employee Share Ownership Plan in accordance with relevant laws, administrative
regulations, rules and normative documents of the PRC including the Company Law, Securities
Law and Guiding Opinions as well as the Articles of Association.
The Employee Share Ownership Plan would only involve A Shares of the Company.
The management committee
The Company will manage the Employee Share Ownership Plan itself through the management
committee. The management committee will be elected by the holders’ meeting, which will be
authorised to manage the Employee Share Ownership Plan.
The “power of shareholder” that the management committee will possess include voting rights,
dividend right and option for allotment. Before the management committee exercises voting rights
on behalf of the holders, the management committee will first convene a holders’ meeting and let
the holders vote on the relevant resolutions. The management committee will then exercise the
voting rights in accordance with laws, regulations and the requirements under the Employee Share
Ownership Plan, as well as the authorisation of the holders. The holders under the Employee Share
Ownership Plan shall have voting rights according to their respective share of entitlement under
the Plan. The management committee can only exercise the holders’ shareholder right with their
authorisation and indication of intention. The vote of holders will either be “for”, “against” or
“abstain” at the holders’ meeting, and the attendees of meeting shall choose one among them. If the
holders have not decided on the vote or have casted two votes for the same resolution, such holders
will be regarded as having abstained from voting. If any resolution is passed by more than half of
the interest held by the holders attending the holders’ meeting (or two third of the interest according
to the relevant requirements), the management committee will, based on the voting results and
authorisation at the holders’ meeting, attend general meetings of the Company and cast a “for”,
“against” or “abstain” vote accordingly. As to the dividend right, the management committee will
hold the dividend distributed by the Company to the Shareholders on behalf of the holders, which
will then be distributed to the holders according to their respective share when the management
committee disposes of the shares held under the Plan.
Once the details regarding the management committee are confirmed, the Company shall assess
whether the management committee shall be treated as a connected person under Chapter 14A of
the Listing Rules and shall comply with all applicable requirements (including the requirement to
abstain from voting in resolutions involving connected transaction) as appropriate. The Company
shall also ensure compliance with the public float requirements under the Listing Rules.
– 3 –
LETTER FROM THE BOARD
Management of the shares during the term of the Plan
After the end of each of the year 2018, 2019 and 2020, the Board would determine the total amount
of bonus fund, which is a certain percentage of the annual profit before tax, vested to holders in the
form of share of interests in the Employee Share Ownership Plan and the share of entitlement of
each holder will be fixed based on his or her performance and contribution, whereas the bonus of
the executive directors and senior management is decided by the Board, and the rest by the senior
management. After the Board has decided the total amount of bonus fund vested to holders in the
form of share of interests in the Employee Share Ownership Plan, the management committee
would complete the acquisition of the shares of the Company in the secondary market within 6
months. The management committee will acquire shares of the Company from secondary market
and make the relevant disclosure according to the applicable rules and regulations. To ensure that
the acquisition of shares would be conducted in a fair and open manner, the management committee
would not acquire shares during the period which is restricted or prohibited under the applicable
laws and regulations including the Listing Rules and the Shanghai listing rules.
The term of each phase of the Employee Share Ownership Plan shall be no more than 24 months
after the registration of the underlying shares under the securities account maintained at China
Securities Depository and Clearing Co., Ltd in the name of the Employee Share Ownership Plan.
When the term of the Plan expires or is terminated earlier, the management committee shall be
authorized by the holders to deduct the relevant taxes, complete clearance and make distribution to
the holders according to their share of entitlement within 30 days.
After the Board has decided the total amount of bonus fund vested to holders in the form of share of
interests in the Employee Share Ownership Plan, the management committee would be authorized
by the holders’ meeting to complete the acquisition of the shares of the Company in the secondary
market within 6 months. Within the lock-up period of 12 months, the holders shall not request the
distribution of entitlement under the Employee Share Ownership Plan. The management committee
will be responsible for convening holders’ meeting, supervising the daily management of the Plan
on behalf of all the employee holders, exercising the right of shareholders of the Company on
behalf of all the employee holders, signing related contracts with other parties for the Plan etc.
during the period. After the end of the lock-up period, the management committee will dispose of
the shares of the Company, and distribute the returns and monetary assets to the holders on behalf
of the Employee Share Ownership Plan.
Vesting conditions
There are not performance targets or vesting conditions that must be achieved before the grant of
the shares to the holders. The source of fund of the Employee Share Ownership Plan is the annual
results attributable to the relevant employees and the specific amount of bonus fund vested to
holders in the form of share of interests in the Employee Share Ownership Plan will be determined
by the Board.
– 4 –
LETTER FROM THE BOARD
Nevertheless, the Employee Share Ownership Plan is subject to a designated term. Before the expiry
of the term and the distribution of the interests to the holders, if the holders (i) resign, (ii) refuse to
renew the service contracts upon the expiry, (iii) are dismissed by the Company or its subsidiaries
due to breach of laws and regulations, or (iv) are demoted or degraded due to gross negligence or
failing to meet the standard of performance, the qualification of the holders of joining the Employee
Share Ownership Plan may be affected and thus their interests in the Plan.
Clearance
Upon the expiration or early termination of the Employee Share Ownership Plan, the holders will
get distribution of money from disposing the shares by the management committee according to
their share of entitlement in the Plan.
After the lock-up period, the management committee will dispose of all the shares of the Company
held under the Plan. After the relevant taxes are deducted according to the applicable laws, the
holders will only get distribution of return and monetary assets from disposal of shares by the
management committee, but not the shares themselves.
The Plan is a discretionary employee share ownership plan and involves no issue of new shares or
granting of option for any new securities of the Company, thus does not constitute a share option
scheme as defined by Chapter 17 of the Listing Rules.
The Board proposed adopting the Plan and resolved to submit the Plan at the forthcoming AGM for
shareholders’ approval and for authorizing the Board to deal with related matters of the Plan.
The draft of the Employee Share Ownership Plan is set out in Appendix II to this circular.
– 5 –
LETTER FROM THE BOARD
IV. ENGAGEMENT OF THE FINANCIAL AND INTERNAL CONTROL AUDITOR
At the fifteenth meeting of the seventh session of the Board convened on 20 March 2018 by the
Company, the Proposal in Relation to Engagement of Financial and Internal Control Auditor for the
Year 2018 was considered and approved. The relevant matters are set out as follows:
(I) Selection and Engagement of Financial and Internal Control Auditor for the Year 2018
As considered and approved at the 2016 AGM and the ninth meeting of the seventh session
of the Board of the Company, the Company engaged Pan-China Certified Public Accountants
LLP (Special General Partnership) as the financial and internal control auditor for the year
2017 for a term of one year. In February 2018, Pan-China Certified Public Accountants LLP
(Special General Partnership) completed all audits for the Company for the year 2017 and its
term of office will also expire on the date of the 2017 AGM of the Company. Therefore, the
Company is required to select and engage the financial and internal control auditor for the
year 2018.
(II) Procedures for Selection and Engagement of Accounting Firm
1. The audit committee of the Board of the Company organized the selection and
engagement of the financial and internal control auditor for the year 2018 in
accordance with relevant laws and regulations as well as the Articles of Association,
the Work Regulations of the Audit Committee of the Board of Directors and the
Rules on Selection and Assessment System of Annual Auditors. After comprehensive
examination and evaluation of the qualifications, practice quality, integrity, quotation
of audit fee and other information of a number of auditors, the audit committee of the
Board is of the view that Ernst & Young Hua Ming LLP (“Ernst & Young”) with
the qualifications of auditing in relation to securities and futures related businesses
and years of rich experience in and professional service capacity for providing audit
services to A share and H share listed companies, is able to satisfy the Company’s
requirements on annual financial and internal control audit and provides a reasonable
quotation on audit fee. Therefore, it is proposed to engage Ernst & Young as the
Company’s financial and internal control auditor for the year 2018 for a term ending
on the date of the 2018 AGM of the Company, and the proposal has been presented to
the Board of the Company for consideration.
– 6 –