Stock Abbreviation: CIB Stock Code: 601166 No: 2009-24
Industrial Bank Co., Ltd
Announcement Regarding the Disposal of Settled-assets &
Related Party Transaction
The Industrial Bank Co., Ltd (the Company) and all members of the Board of Directors hereby warrant that the information contained in this announcement is true, accurate and complete, and assume joint and several liabilities for any false representation, misleading statement or material omission.
Important Notes:
(1) Details of transaction: The 18th meeting of the 6th Board of Directors of the Company approved the Proposal on the Disposal of Settled-assets of Industrial Securities, and agreed to transfer 120,640,000 settled-assets shares in the Industrial Securities Co., Ltd. to the Fujian Provincial Department of Finance at the price of RMB 6.67 per share.
(2) Vote Withdrawal: This is a related party transaction, therefore, the related party directors Mr. Gao Jianping and Mr. Liao Shizhong withdrew from the vote on said related party transaction.
(3) Influence of related party transaction: This related party transaction has no material influence on the normal operations and financial standing of the Company.
I. Overview of the Related Party Transaction
Pursuant to the rules and regulations of the Company Law, the Administrative Measures for the Related Party Transactions between Commercial Banks and their Insiders or Shareholders and the Articles of Association of the Company, if the credit line of the aforementioned related party transaction is between 1-10% of the Company’s net capital at the end of previous quarter, said transaction should be deemed as a major related party transaction, and should be reviewed for its rationality and impartiality by the Auditing and Related Party Transaction Control Commission before being submitted to the Board of Directors for approval.
On October 28, 2009, the 9th meeting of the 6th Auditing and Related Party Transaction Control Commission of the Board of Directors agreed to submit the aforementioned transaction proposal to the Board of Directors for review and discussion. On October 30, the 18th meeting of the 6th Board of Directors reviewed and approved said related party transaction.
II. Introduction to the Related Party
The Fujian Provincial Department of Finance is the largest shareholder of the Company, holding a stake of 20.80%. It is a related party of the Company. The Fujian Provincial Department of Finance is a government organ institution. Its legal representative is Chen Xiaoping and its legal address is No.5, Zhongshan Road, Fuzhou, China.
III. Basic information on the Subject of the Related Transaction
1. Industrial Securities Co., Ltd. is a national innovative securities company approved by the China Securities Regulatory Commission. Its business scope covers proprietary business and agency services in the trade of securities, securities underwriting and listing promotion, securities investment consultation, entrusted asset management, online securities commission business and initiating and establishing securities investment funds. Registered in Fuzhou, Fujian Province, it has a registered capital of RMB 1.937 billion. Its legal representative is Lan Rong. Principal shareholders include the Fujian Provincial Department of Finance, Fujian Investment Enterprises Group Company and the Shanghai Shenxin (Group) Co., Ltd.
Following development and growth over a number of years, the company has developed from a local securities broker into a national comprehensive securities company. At present, it has 24 securities sales departments and 11 securities services departments around the country, as well as 2 subsidiary companies in which it is the controlling shareholder, namely, AEGON-Industrial Fund Management Co., Ltd, and Industrial Futures Co., Ltd.
2. The equity of Industrial Securities involved in this transaction was acquired by the Company through a judicial judgment for the repayment of debt, wherein: the Fuzhou Branch acquired 54,800,000 shares from Shenlong series enterprises in September 2005 for debt payment; Fuzhou Branch acquired 2 million shares from Fujian Tianzheng Shashi Development Co., Ltd in March 2006; Xiamen Branch acquired 36 million shares from Xiamen Temao Co., Ltd in June 2006. The total number of said settled-asset stocks was 92.8 million shares. After bonus dividend implementation by the Industrial Securities Co., Ltd over a number of years, the total number of shares presently held is 120.64 million shares.
IV. Main content of the related transaction and pricing policy
1. Transaction parties:
Assigner: Fuzhou Branch and Xiamen Branch of the Industrial Bank
Assignee: Fujian Provincial Department of Finance
2. Transfer price and pricing policy:
The transfer price under the equity transfer agreement is RMB 6.67 per share in accordance with the evaluation report on the stocks of Industrial Securities made by the Fujian Lianhe Zhonghe Assets Assessment Co., Ltd and Xiamen Junda Assets Assessment Co., Ltd (reference date of evaluation is September 30, where the price evaluated by Fujian Lianhe Zhonghe Assets Assessment Co., Ltd is RMB 6.64 per share and the price evaluated by Xiamen Junda Assets Assessment Co., Ltd is RMB 6.67 per share) as well as in reference to the market price inquiry scope.
V. Purpose of the related party transaction and its influence on the listed company
According to Article 42 of the Law of the People's Republic of China on Commercial Banks, fixed assets or stocks obtained by a commercial bank in the course of exercising mortgage and pledge rights must be disposed of within two years as of the date they were obtained. According to this regulation, this related party transaction is a lawful action taken by the Company to dispose of settled assets, and will have no significant influence on the normal operation and financial standing of the Company.
VI. Opinion of the independent directors
Mr. Wang Guogang, Mr. Ba Shusong, Mr. Deng Liping, Mr. Xu Bin and Mr. Lim Peng Khoon, independent directors of the Company, expressed the following independent opinion on the related party transaction:
1. Fairness: Said related party transaction is priced in line with the principles of compensation of equal value and fair pricing. There has been no breach of the principles of openness, equality and fairness, nor has there been any behavior infringing the interests of the Company or its small and medium shareholders.
2. Procedure: On October 28, 2009, the 9th meeting of the 6th Auditing and Related Party Transaction Control Commission of the Board of Directors agreed to submit the above related party transaction proposal to the Board of Directors for review. On October 30, the 18th meeting of the 6th Board of Directors reviewed and approved the above related party transaction. The procedure for review and approval of the above major related party transaction complied with applicable laws, rules and regulations as well as the Articles of Association of the Company.
VII. List of files for reference
1. Resolution of the Auditing and Related Party Transaction Control Commission of the Board of Directors
2. Resolution of the Board of Directors
3. Independent opinion signed and confirmed by independent directors
Board of Directors
Industrial Bank Co., Ltd.
October 31, 2009