Securities Abbreviation: Industrial Bank Securities Code: 601166 No.: T 2014-21
Industrial Bank Co., Ltd.
Announcement on the Associated
Transaction with China National Tobacco
Corporation
The Company and all the members of the Board of Directors warrant the truthfulness, accuracy and completeness of the announcement and will bear the joint and several liabilities for any false record, misleading statement or major omission in the announcement.
Important content notes:
i. Transaction Contents:
On June 6, 2014, the 6th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to China National Tobacco Corporation, agreeing to grant China National Tobacco Corporation and its subsidiaries (hereinafter referred to as “China Tobacco associated corporations”) an internal basic credit line of RMB 8.5 billion, and grant China Tobacco associated corporations a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 457 million, and the granting period is 3 years.
ii. Issue Concerning Withdrawal from Voting: This transaction is an associated transaction, so Mr. Zhang Yuxia, the associated director of IB, withdrew from voting.
iii. Influence of associated transactions: The above associated transactions are regular business of the Company within the scope of normal business, so they have no significant influence on the business activities and financial situation of the Company and will not affect the independence of the Company.
I. Overview of this Associated Transaction
The 6th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to China National Tobacco Corporation, agreeing to grant China Tobacco associated corporations an internal basic credit line of RMB 8.5 billion, for various short-term, medium-term and long-term businesses, and grant China Tobacco associated corporations a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 457 million, for the transaction types regarding businesses of asset transfer and service provision including property lease, purchase of self-use real estate and integrated services. The granting period is 3 years.
II. Introduction of the Associated Parties
i. Basic information of the associated parties
China National Tobacco Corporation is a SOE established and registered in Beijing in 1982 with the approval of the State Council. With the registered capital of RMB 57 billion, the business scope of the Corporation covers production, operation, import and export of franchised tobacco products, and its legal representative is Ling Chengxing.
ii. Association with the listed company
The China National Tobacco Corporation, Fujian Tobacco Haisheng Investment Management Co., Ltd., and China Tobacco Hunan Investment Management Co., Ltd. hold 6.73% shares of the total capital stock of the Company after the non-public offering, and they are associated corporations of the Company. Specifically, Fujian Tobacco Haisheng Investment Co., Ltd. and China Tobacco Hunan Investment Management Co., Ltd. are both subsidiaries of China National Tobacco Corporation.
III. Main Contents and Pricing Policies of Associated Transaction
i. Main contents of associated transaction
The Company grants China Tobacco associated corporations an internal basic credit line of RMB 8.5 billion, for various short-term, medium-term and long-term businesses, and grants China Tobacco associated corporations a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 457 million, for the transaction types regarding businesses of asset transfer and service provision including property lease, purchase of self-use real estate and integrated services. The granting period is 3 years.
ii. Pricing policies
The pricing of associated transactions between the Company and China Tobacco associated corporations is based on the prices of non-associated transactions with independent third parties. For credit associated transactions, the interest rate is not below the average level of the credit market in the same period, nor superior to the interest rate offered by other banks and guaranteeing method required by other banks. The non-credit associated transactions are carried out under conditions not preferable to those for similar transactions with non-associated parties, and the price level is not below the average market level of the same industry in the same period.
In terms of existing transactions, the trading amount only accounts for a small proportion in the total amount of similar transactions. The settlement method is identical to that for non-associated transactions with independent third parties while the method and time of payment for such transactions are determined according to business practices.
IV. Purpose of Associated Transaction and Influence of the Associated Transaction on the Listed Company
The relevant businesses carried out between the Company and China Tobacco associated incorporations are favorable for promoting further cooperation between the two sides. For the above associated transactions, the Company will conclude them according to the general business terms applicable to day-to-day businesses or terms not preferable to those applicable to independent third parties. The trading terms should be fair and reasonable, tallying with the interests of the Company and all shareholders, the requirements of relevant regulations set down by the regulatory authorities, and relevant provisions of the Company’s internal rules. Under no condition, they may impair the interests of the Company as well as small- and medium-sized shareholders, and have unfavorable influence on the current and future financial situation of the Company or the independence of the Company.
V. Opinions of Independent Directors
Independent Directors of the Company, including Mr. Deng Ruilin, Mr. Li Ruoshan, Mr. Zhang Jie, Mr. Zhou Qinye and Mr. Paul M. Theil, expressed the following independent opinions on the matter of associated transaction:
1. In the aspect of fairness, as a regular business of the Company within the scope of normal business operation, the above associated transaction is priced under the conditions not preferable to those for similar transactions with non-associated parties, with fair and reasonable trading terms. Conforming to the requirements of relevant regulations set down by the regulatory authorities, relevant provisions of the Company’s internal rules, and the interests of the Company and all shareholders, it may, under no condition, impair the interests of the Company as well as small- and medium-sized shareholders, and have unfavorable influence on the current and future financial situation of the Company or the independence of the Company.
2. In the aspect of procedure, on June 5, 2014, the Audit and Associated Transactions Control Committee of the 8th Board of Directors of the Company held a meeting, agreeing, after deliberation, to submit the above proposal on associated transactions to the Board of Directors for deliberation. The 6th session of the 8th Board of Directors of the Company deliberated and approved the above associated transactions on June 6. The decision-making procedure is in compliance with relevant regulatory requirements and relevant provisions of the Articles of Incorporation.
VI. Catalog of Documents for Reference
1. Resolution of the Audit and Associated Transactions Control Committee of the Board of Directors;
2. Resolution of the Board of Directors;
3. Independent Opinions signed and confirmed by independent directors.
It is hereby to announce as foregoing.
Board of Directors of Industrial Bank Co., Ltd.
June 6, 2014