Securities Name: Industrial Bank Securities Code: 601166 No.: T 2014-35
Industrial Bank Co., Ltd.
Announcement on the Associated Transactions with the Hongkong and Shanghai Banking Corporation Limited
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 August 29, 2014, the 7th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to the Hongkong and Shanghai Banking Corporation Limited, agreeing to grant the Hongkong and Shanghai Banking Corporation Limited (hereinafter referred to as “HSBC”) a limit of associated transactions of RMB 5.5 billion, with a granting period of 1 year.
ii. Issue Concerning Withdrawal from Voting: This transaction is an associated transaction, so Mr. Feng Xiaozhong, the associated director, withdrew from voting.
iii. Influence of associated transactions: The above associated transaction is regular business of the Company within the scope of normal business, so they have no significant adverse 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 7th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to the Hongkong and Shanghai Banking Corporation Limited, agreeing to grant HSBC a limit of associated transactions of RMB 5.5 billion, including the internal basic credit line of RMB 2.5 billion and the limit of non-credit associated transactions with an annual trading amount not exceeding RMB 3 billion, with a granting period of 1 year.
The above limit of transactions simultaneously takes up the limit of associated transactions that the Board of Directors of the Company approved to grant Hang Seng Bank (see the announcement of the Company on associated transactions on June 7, 2014 for details). In other words, the total of limits of associated transactions that the Company grants HSBC and Hang Seng Bank respectively will not exceed the limit of associated transactions granted by the Board of Directors to Hang Seng Bank. Specifically, the internal basic credit line will not exceed RMB 3 billion, and the limit of non-credit associated transactions RMB 5 billion.
II. Introduction of the Associated Parties
i. Basic information of the associated parties
The Hongkong and Shanghai Banking Corporation Limited is a founding member of HSBC Holdings PLC and its flagship in the Asia-Pacific Region, as well as the largest bank incorporated locally and one of the three note-issuing banks in Hong Kong. As one of the largest banks in Hong Kong, HSBC is a major market maker of monetary market tools, debt tools, foreign exchange tools and interest rate tools in Hong Kong and other regions, has a big share in the foreign exchange market and provides a broad variety of trading businesses.
ii. Association with the listed company
Hang Seng Bank is an associated legal person of the Company, holding 10.87% of total shares of the Company. With 62.14% of the shares of Hang Seng Bank, HSBC is the largest controlling shareholder of Hang Seng Bank.
III. Main Contents and Pricing Policies of Associated Transaction
i. Main contents of associated transaction
The Company grants HSBC a limit of associated transactions of RMB 5.5 billion, which specifically consists of an internal basic credit line of RMB 2.5 billion, under which the business types include various credit businesses for which the Company bears the credit risks of the credit receiver (excluding business of repurchase-based credit asset transfer), and a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 3 billion, which can be used for non-credit businesses for asset transfer and service provision, including bond transaction and gold leasing, and the granting period is 1 year. The above limit of transactions simultaneously takes up the limit of associated transactions that the Board of Directors of the Company has approved to grant Hang Seng Bank.
ii. Pricing policies
As a reasonable transaction in the normal business operation of the Company, the above associated transaction, following the general business principles, is conducted under the conditions not preferable to those for similar transactions with non-associated parties, and the interest rate and the price level of other business type are not above the average market level of the same industry in the same period.
IV. Purpose of Associated Transaction and Influence of the Associated Transaction on the Listed Company
For the above associated transactions, the Company will handle them according to the general business terms applicable to daily businesses or terms not preferable to those applicable to independent third parties. The trading terms should be fair and reasonable, tallying with 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. 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. Li Ruoshan, Mr. Zhou Qinye, Mr. Paul M. Theil, Mr. Zhu Qing and Mr. Liu Shiping expressed the following independent comments 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 August 28, 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 7th session of the 8th Board of Directors of the Company deliberated and approved the above associated transactions on August 29. The decision-making procedure is in compliance with relevant regulatory requirements and relevant provisions 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.
August 30, 2014