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EXHIBIT 1.1
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IMPORTANT
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IF YOU ARE IN 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 China Mobile (Hong Kong)
Limited, you should at once hand this circular, together with the accompanying
form of proxy, to the purchaser or other transferee or to the bank, stockbroker
or other agent through whom the sale was effected for transmission to the
purchaser or transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this circular.
[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
CONNECTED TRANSACTIONS
Independent Financial Adviser to the
Independent Board Committee
[LOGO]
A letter from the Independent Board Committee of China Mobile (Hong Kong)
Limited is set out on page 17 of this circular. A letter from N M Rothschild &
Sons (Hong Kong) Limited containing its advice to the Independent Board
Committee is set out on pages 18 to 26 of this circular.
A notice dated 14 May 2001 convening an Extraordinary General Meeting of the
Company to be held in the Conference Room, 5th Floor, Island Shangri-La, Xxxxxxx
Xxxxx, Xxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxx Xxxx on 12 June 2001 at 11:30 a.m. (or
as soon thereafter as the annual general meeting of the Company to be convened
at 11:00 a.m. at the same place and date shall have been concluded or
adjourned), is set out at the end of this circular. Whether or not you are able
to attend the meeting, you are requested to complete and return the enclosed
form of proxy in accordance with the instructions printed thereon as soon as
practicable and in any event at least 36 hours before the time appointed for
holding the meeting. Completion and return of the form of proxy shall not
preclude you from attending and voting in person at the meeting or at any
adjourned meeting should you so wish.
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CONTENTS
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Pages
DEFINITIONS ........................................................... 1
LETTER FROM THE BOARD ................................................. 5
Introduction ........................................................ 5
Connected Transactions .............................................. 5
Extraordinary General Meeting ....................................... 16
Recommendation of the Independent Board Committee ................... 16
Additional information .............................................. 16
LETTER FROM THE INDEPENDENT BOARD COMMITTEE ........................... 17
LETTER FROM ROTHSCHILD ................................................ 18
APPENDIX --- GENERAL INFORMATION ...................................... 27
NOTICE OF THE EXTRAORDINARY GENERAL MEETING ........................... 30
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DEFINITIONS
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In this circular, unless the context otherwise requires, the following
expressions having the meanings:
"Aspire Holdings" Aspire Holdings Limited, a company
incorporated in the Cayman Islands and a non
wholly-owned subsidiary of the Company
"Associates" as defined in the Listing Rules
"Beijing Mobile" Beijing Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Board" the board of directors of the Company
"China Mobile (Shenzhen)" China Mobile (Shenzhen) Limited, a wholly
foreign-owned enterprise established under
the laws of the PRC and a wholly-owned
subsidiary of the Company
"CMBVI" China Mobile Hong Kong (BVI) Limited, a
company incorporated in the British Virgin
Islands and the immediate controlling
shareholder of the Company
"CMCC" China Mobile Communications Corporation, a
state-owned company established under the
laws of the PRC
"CMHKG" China Mobile (Hong Kong) Group Limited, an
indirect controlling shareholder of the
Company
"Companies Ordinance" the Companies Ordinance (Chapter 32 of the
Laws of Hong Kong)
"Company" China Mobile (Hong Kong) Limited, a company
incorporated in Hong Kong whose shares are
listed on the Stock Exchange and whose
American depositary shares are listed on the
New York Stock Exchange
"Connected Transactions" the Existing Connected Transactions and the
new arrangements entered into by the Group
in 2001 as described under "Connected
Transactions --- Prepaid Services" and
"Connected Transactions --- Platform
Development" on pages 11 to 12 of this
circular
"CTC" China Telecommunications Corporation, a
state-owned company established under the
laws of the PRC
"Directors" the directors of the Company
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DEFINITIONS
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"Existing Connected Transactions" the existing continuing connected
transactions entered into between the
Company and its Operating Subsidiaries on
the one hand, and CMCC and its subsidiaries
on the other, for which waivers from strict
compliance with the relevant disclosure and
shareholders' approval requirements of
Chapter 14 of the Listing Rules were
previously granted by the Stock Exchange,
which transactions are described under
"Connected Transactions --- Existing
Connected transactions" on pages 6 to 10 of
this circular, namely transactions in
relation to interconnection arrangement,
roaming arrangement, spectrum fees, sharing
of inter-provincial transmission line
leasing fees, collection services and sales
arrangements, property leasing and
management services, construction and
related services, equipment maintenance and
related services and transmission tower
production, sales and other services and
antenna maintenance services
"Extraordinary General Meeting" the extraordinary general meeting of the
Company to be convened on 12 June 2001,
notice of which is set out at the end of
this circular, or any adjournment thereof
"Fujian Mobile" Fujian Mobile Communication Company Limited,
a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Group" the Company and its subsidiaries
"Guangdong Mobile" Guangdong Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Guangxi Mobile" Guangxi Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Hainan Mobile" Hainan Mobile Communication Company Limited,
a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Hebei Mobile" Hebei Mobile Communication Company Limited,
a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Henan Mobile" Henan Mobile Communication Company Limited,
a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Hong Kong" Hong Kong Special Administrative Region of
the PRC
"HK$" Hong Kong dollars, the lawful currency of
Hong Kong
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DEFINITIONS
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"Independent Board Committee" the committee of Directors, consisting of
Xxxxxx Xx Xxxx Xxxxxx and Lo Ka Shui, being
the independent non-executive Directors,
formed to advise the Independent
Shareholders in respect of the terms of the
Connected Transactions
"Independent Shareholders" Shareholders other than CMBVI and its
Associates
"Jiangsu Mobile" Jiangsu Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Latest Practicable Date" 7 May 2001, being the latest practicable
date prior to the printing of this circular
for ascertaining certain information
contained herein
"Liaoning Mobile" Liaoning Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Listing Rules" the Rules Governing the Listing of
Securities on the Stock Exchange
"Mainland China" the PRC (excluding Hong Kong, Macau and
Taiwan)
"MII" the Ministry of Information Industry of the
PRC
"MISC Platform" the standardised nation-wide China Mobile
platform for wireless data which will be
made available to each of the provincial
mobile telecommunications subsidiaries of
the Company and CMCC
"Operating Subsidiaries" Guangdong Mobile, Zhejiang Mobile, Jiangsu
Mobile, Fujian Mobile, Henan Mobile, Hainan
Mobile, Beijing Mobile, Shanghai Mobile,
Tianjin Mobile, Hebei Mobile, Liaoning
Mobile, Shandong Mobile and Guangxi Mobile
"PRC" The People's Republic of China
"RMB" Renminbi, the lawful currency of the PRC
"Rothschild" or "N M Rothschild N M Rothschild & Sons (Hong Kong) Limited,
& Sons" an investment adviser registered under the
Securities Ordinance (Chapter 333 of the
Laws of Hong Kong) and the independent
financial adviser to the Independent Board
Committee in respect of the terms of the
Connected Transactions
"SDI Ordinance" the Securities (Disclosure of Interests)
Ordinance (Chapter 396 of the laws of Hong
Kong)
"Shandong Mobile" Shandong Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
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DEFINITIONS
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"Shanghai Mobile" Shanghai Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Share(s)" ordinary share(s) of HK$0.10 each in the
capital of the Company
"Shareholders" shareholders of the Company
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Tianjin Mobile" Tianjin Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
"Zhejiang Mobile" Zhejiang Mobile Communication Company
Limited, a wholly foreign-owned enterprise
established under the laws of the PRC and a
wholly-owned subsidiary of the Company
For your convenience, this circular contains translations between Renminbi
amounts and Hong Kong dollars at RMB1.06 = HK$1.00. The translations are not
representations that the Renminbi dollar amount could actually be converted into
Hong Kong dollars at that rate, or at all.
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LETTER FROM THE BOARD
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[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
Executive Directors:
Wang Xiaochu (Chairman)
Li Zhenqun
Ding Donghua
Li Xxxx
Xx Long
He Xxxx
Xxx Ping
Yuan Jianguo
Xxx Xxxxxx
Independent Non-Executive Directors:
Xxxxxx Xx Xxxx Xxxxxx
Xxxxx Xxxx
Lo Ka Shui
Registered Office:
00xx Xxxxx
Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
14 May 2001
To the Shareholders
Dear Sir or Madam,
CONNECTED TRANSACTIONS
INTRODUCTION
On 11 May 2001, the Company announced that the Company and its Operating
Subsidiaries on the one hand, and CMCC and its subsidiaries on the other, have
in the past entered into a number of transactions of a recurrent nature which
constitute connected transactions of the Company under the Listing Rules. The
Stock Exchange has previously granted waivers to the Company, subject to certain
conditions, from strict compliance with the relevant disclosure and
shareholders' approval requirements of the Listing Rules in relation to these
Existing Connected Transactions. The Existing Connected Transactions have
previously been approved by the independent shareholders of the Company and the
waivers previously granted by the Stock Exchange will expire on 31 December
2001. The Group also entered into certain new connected transactions in 2001 and
these new transactions are described under "Connected Transactions --- Prepaid
Services" and "Connected Transactions --- Platform Development" below.
Connected Transactions
As the Connected Transactions are expected to occur on a regular and
continuous basis in the ordinary and usual course of business, the Company has
made an application to the Stock Exchange and the Stock Exchange has granted new
waivers in respect of the Connected Transactions from
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compliance with the normal disclosure and shareholders' approval requirements
under Chapter 14 of the Listing Rules. For the Existing Connected Transactions,
the previous waiver will expire on 31 December 2001 and the new waiver will be
effective from 1 January 2002 to 31 December 2004. For the transactions
described under "Connected Transactions --- Prepaid Services" and "Connected
Transactions --- Platform Development", the new waiver will be effective for
three financial years of the Company ending 31 December 2003.
The Connected Transactions will be conditional upon, inter alia, the
approval of the Independent Shareholders at the Extraordinary General Meeting at
which CMBVI (and its Associates) being a connected person of the Company, will
abstain from voting its shares on the ordinary resolution to approve the
Connected Transactions.
The Independent Board Committee, comprising Xxxxxx Xx Xxxx Xxxxxx and Lo Ka
Shui, has been formed to consider the terms of the Connected Transactions and to
advise the Independent Shareholders as to whether such terms are fair and
reasonable so far as the Independent Shareholders are concerned. Rothschild has
been appointed as the independent financial adviser to the Independent Board
Committee and a copy of its letter of advice is set out on pages 18 to 26 of
this circular. The recommendation of the Independent Board Committee to the
Independent Shareholders is set out on page 17 of this circular.
The purpose of this circular is to provide you with further information in
relation to the Connected Transactions and to seek your approval of the ordinary
resolution set out in the notice of the Extraordinary General Meeting at the end
of this circular.
A. Existing Connected Transactions
a. Existing Connected Transactions where no upper limits are imposed
1. Interconnection Arrangement
The networks of each of the Operating Subsidiaries interconnect
with the cellular networks of CMCC in other regions.
The Inter-provincial Interconnection and Domestic and
International Roaming Settlement Agreement was entered into in May
2000 between the Company and CMCC (as supplemented by a supplemental
agreement entered into in September 2000) (the "ROAMING AGREEMENT").
The Roaming Agreement applies to all the Operating Subsidiaries, and
is valid from 1 April 1999 to 31 March 2001 and will be automatically
renewed on an annual basis unless either party notifies the other of
its intention to terminate in writing at least three months prior to
the expiration of the term. The Roaming Agreement had been
automatically renewed, and the current term will expire on 31 March
2002.
Under the Roaming Agreement:
- with regard to inter-provincial roaming, when the roaming
subscriber places a call from a roaming location, the operator of
the visited network receives all long distance call charges, if
any; and when the roaming subscriber receives a call at a roaming
location, the network operator with whom the subscriber is
registered retains all long distance call charges, if any;
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LETTER FROM THE BOARD
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- international long distance calling charges incurred by an
international cellular subscriber making an international long
distance call while roaming in the areas in mainland China where
the Group operates are collected by CMCC and are credited to the
Group. The Group will make the necessary settlement with the
relevant telecommunications operators in mainland China. CMCC
also collects a 15% handling charge on such international long
distance calling charges from the international mobile
communications operators and shares such handling charge equally
with the Group; and
- when the Group's subscribers roam internationally, the Group will
collect the international long distance calling charges, if any,
together with a 15% handling charge from its subscribers and will
pay the international long distance calling charges together with
half of the handling charge collected to CMCC, which will make
the necessary settlement with the international mobile
communications operators concerned.
The long distance charges applicable to roaming are those
chargeable at the place where the long distance call is made. When
long distance charges cannot be distinguished from basic roaming
calling charges (discussed in more details under "Roaming Arrangement"
below), such long distance charges are grouped under roaming calling
charges.
2. Roaming Arrangement
Each of the Operating Subsidiaries offers domestic and international
roaming services to its subscribers.
Under the Roaming Agreement:
- with regard to inter-provincial roaming, 80% of the basic roaming
calling charge payable by a roaming subscriber will be credited to the
visited network operator, and the remaining 20% will be retained by
the roaming subscriber's home network operator;
- with regard to international roaming, roaming calling charges incurred
by an international cellular subscriber making or receiving a call
while roaming in the areas in mainland China where the Group operates
are collected and credited to the Group by CMCC, and the Group will
make the necessary settlement with the relevant telecommunications
operators in mainland China. CMCC also collects a 15% handling charge
on the roaming calling charges from the international mobile
communications operators and shares such handling charge equally with
the Group; and
- when subscribers of the Group roam internationally, the Group will
collect the roaming calling charges together with a 15% handling
charge from its subscribers and will pay the roaming calling charges
together with half of the handling charge collected to CMCC, which
will make the necessary settlement with the international mobile
communications operators concerned.
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With respect to international roaming (that is, a mainland Chinese
mobile phone subscriber roaming in Hong Kong, Macau, Taiwan or foreign
countries or an international cellular subscriber roaming in mainland
China), the roaming calling charges and the calculation of the charges are
determined according to the terms agreed between CTC or CMCC and the
relevant international cellular operators.
In addition, pursuant to the Roaming Agreement, CMCC provides
inter-provincial and international roaming clearing and settlement
services, including related data transmission services, to the Group. The
Group pays to CMCC a roaming call record processing fee of RMB0.02 for each
inter-provincial roaming call record processed and RMB0.30 for each
international roaming call record processed.
3. Spectrum Fees
The MII and the Ministry of Finance jointly determine the standardised
spectrum fees payable to MII by all mobile communications operators in
Mainland China, including the Group. Based on this standardised fee scale,
CMCC determines the allocation of spectrum usage fees to be paid by each
mobile communications operator under its control and the aggregate sum
payable to the MII. In October 1999, the Company entered into an agreement
with CMCC (as supplemented by a supplemental agreement entered into in
September 2000) to obtain exclusive rights for its Operating Subsidiaries
to use the frequency spectrum and telephone numbers allocated to them in
the respective areas in which they operate. Under the agreement, the fees
payable by CMCC to the MII for the use of the 800/900 MHz and the 1800 MHz
frequency band currently under the management of CMCC will be shared
between the Group and CMCC's operating subsidiaries. 60% of the fees will
be shared on the basis of the number of base stations at the end of the
previous year and 40% of the fees will be shared on the basis of the
bandwidth of the spectrum used. This agreement is valid for an initial term
of one year from 8 October 1999 to 7 October 2000 and will be automatically
renewed on an annual basis unless either party notifies the other of its
intention to terminate at least three months prior to the expiration of the
term. This agreement had been automatically renewed, and the current term
will expire on 7 October 2001.
4. Sharing of Inter-Provincial Transmission Line Leasing Fees
In May 2000, the Company entered into an agreement with CMCC (as
supplemented by a supplemental agreement entered into in September 2000) in
relation to the leasing of inter-provincial transmission lines. This
agreement is effective from 1 April 1999 to 31 March 2001 and will be
automatically renewed on an annual basis unless either party notifies the
other of its intention to terminate in writing at least three months prior
to the expiration of the term. This agreement had been automatically
renewed, and the current term will expire on 31 March 2002. The
inter-provincial transmission line leasing fees payable by the Group will
be equal to the amount actually payable by CMCC to CTC, which amount is
determined based on the standard leasing fee after adjusting for the
discount to which the Group is entitled, and on the basis that the cellular
network operators at both ends of the transmission lines will share the
inter-provincial transmission line leasing fees equally. The standard
leasing fees are laid down by the relevant tariff regulatory authorities
and are applicable to other mobile communications operators in mainland
China.
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b. EXISTING CONNECTED TRANSACTIONS WHERE NEW UPPER LIMIT IS IMPOSED OR
UPPER LIMITS IMPOSED PURSUANT TO PREVIOUS WAIVERS GRANTED BY THE STOCK
EXCHANGE HAVE CHANGED UNDER THE NEW WAIVER
1. Collection Services and Sales Arrangements
Henan Mobile entered into an agreement with a subsidiary of CMCC
in August 1999 in respect of the provision by the CMCC subsidiary of
certain payment collection services to Henan Mobile. The collection
service charges payable by Henan Mobile amount to 1% of collections.
In addition, Henan Mobile also entered into a sales service
agreement with a subsidiary of CMCC in August 1999 pursuant to which
the CMCC subsidiary has agreed to market through its outlets Henan
Mobile's cellular services. The maximum sales service charges of
RMB250 per cellular service subscriber are based on commercial
negotiation on an arm's length basis by reference to the prevailing
market rates.
2. Property Leasing and Management Services
Each of the Operating Subsidiaries (other than Guangdong Mobile,
Zhejiang Mobile and Jiangsu Mobile) leases (and some of those
Operating Subsidiaries also sub-lease) from subsidiaries of CMCC
various properties for use as its business premises and offices,
retail outlets, warehouses, and for locating equipment. In relation to
leased properties, the rental payments are determined with reference
to market rates. In relation to properties sub-leased to the Operating
Subsidiaries by such CMCC subsidiaries (which were in turn leased to
such CMCC subsidiaries by third parties), the rental is equal to the
rental payable to such third parties and such CMCC subsidiaries do not
make any gains as the intermediate lessor. Some of such subsidiaries
of CMCC also provide property management services in relation to the
properties leased or sub-leased. Property management fees are
determined with reference to market rates. Beijing Mobile also leases
certain properties and provides property management services to a
subsidiary of CMCC according to terms similar to those set out above.
The lease agreements were entered into in September 1999 (in respect
of Fujian Mobile, Henan Mobile and Hainan Mobile) and in August and
September 2000 (in respect of Beijing Mobile, Shanghai Mobile, Tianjin
Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and Guangxi
Mobile).
The above property lease agreements provide for the framework
within which properties are leased or sub-leased to the relevant
lessees and, depending on the requirements of the relevant lessees
from time to time, the relevant lessees may increase or decrease the
number of properties leased or sub-leased. As a result, the number of
properties and, therefore, the aggregate area leased or sub-leased to
and the aggregate rentals payable by, the relevant lessees may vary
from time to time.
Chesterton Xxxxx Limited, an independent valuer, has previously
confirmed that the rentals payable under such leases and sub-leases
were not more than market rates within each respective geographical
area as at the relevant dates of such leases and the corresponding
head leases, and that all other terms of such leases and sub-leases
are not onerous or unusual.
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c. EXISTING CONNECTED TRANSACTIONS WHERE UPPER LIMITS IMPOSED
PURSUANT TO PREVIOUS WAIVERS GRANTED BY THE STOCK EXCHANGE REMAIN
UNCHANGED
1. Construction and Related Services
In September 2000, Beijing Mobile, Shanghai Mobile, Liaoning
Mobile and Shandong Mobile entered into agreements with certain
subsidiaries of CMCC under which such subsidiaries provide services
such as construction, design, equipment installation, testing and/or
maintenance services and/or act as general contractors in relation to
construction and other projects of these Operating Subsidiaries. Such
agreements are for terms of between 6 months and 16 months, each such
term being automatically renewed on an annual basis unless either
party (in the case of Shandong Mobile, Shanghai Mobile and Beijing
Mobile) or Liaoning Mobile (in the case of Liaoning Mobile) notifies
the other of its intention to terminate in writing at least three
months prior to the expiration of the term. Beijing Mobile had also
previously entered into other agreements with subsidiaries of CMCC for
the provision of certain construction and related services in
connection with specific projects. The charges payable for services
rendered under such agreements are determined according to standards
laid down by the relevant government departments and/or by reference
to market rates.
2. Equipment Maintenance and Related Services
In September 2000, Beijing Mobile, Shanghai Mobile and Liaoning
Mobile entered into agreements with certain subsidiaries of CMCC under
which such subsidiaries provide equipment maintenance and related
services to such Operating Subsidiaries. Such agreements are for terms
of between 6 months and 15 months, each such term being automatically
renewed on an annual basis unless either party (in the case of Beijing
Mobile) or Shanghai Mobile or Liaoning Mobile (in the case of Shanghai
Mobile and Liaoning Mobile, respectively) notifies the other of its
intention to terminate in writing at least three months prior to the
expiration of the term. Beijing Mobile had also previously entered
into another agreement with a subsidiary of CMCC for the provision of
certain equipment maintenance and related services in respect of the
maintenance of base stations. The charges payable for services
rendered under such agreements are determined according to standards
laid down by the relevant government departments and/or by reference
to market rates.
3. Transmission Tower Production, Sales and Other Services and
Antenna Maintenance Services
In August 2000, Hebei Mobile entered into an agreement with a
subsidiary of CMCC under which such subsidiary provides transmission
tower design, production, installation and maintenance services and
antenna maintenance services to Hebei Mobile, and sells transmission
towers and spare parts to Hebei Mobile. The initial term of this
agreement is for one year from 1 August 2000 to 31 July 2001. This
agreement will be automatically renewed on an annual basis unless
either party notifies the other of its intention to terminate in
writing at least three months prior to the expiration of the term. The
price of such transmission towers and spare parts and the charges
payable for services rendered under the agreement are determined
according to standards laid down by relevant government departments
and/or by reference to market rates.
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B. PREPAID SERVICES
Each of the Operating Subsidiaries offer prepaid services. Some of such
prepaid services, primarily the "Shenzhouxing" service, allow subscribers to add
value to their SIM cards. The prepaid subscribers can make and receive local and
domestic and international long distance calls and most of those subscribers
also enjoy nationwide domestic roaming services. The prepaid subscribers may add
value to their cards by purchasing value-adding cards from any of the Group's
network operators or CMCC's network operators. On 11 May 2001, the Company
entered into an agreement (the "Prepaid Services Agreement") with CMCC regarding
the sharing and settlement of revenue when prepaid subscribers purchase
value-adding cards issued by network operators other than their home network
operators. Under the terms of the Prepaid Services Agreement, the network
operator in the location which issues the value-adding card remits 95% of the
face value of the value-adding card to the subscriber's home network operator
and keeps the remaining 5% of the face value as a handling charge. Hence, if the
Group's subscribers purchase value-adding cards issued by CMCC's network
operators, CMCC's network operators will be entitled to 5% of the face value as
the handling charge. Conversely, if CMCC's subscribers purchase value-adding
cards issued by the Group's network operators, the Group will be entitled to 5%
of the face value as the handling charge.
The Prepaid Services Agreement is subject to the approval of the
independent shareholders of the Company and if approved, will take retrospective
effect from 21 April 2001, the day in April when the monthly billing cycle
commences. This is based on arm's length negotiations between the Company and
CMCC, which commenced in April. The Prepaid Services Agreement, if approved,
will replace an existing agreement between the Company and CMCC whereby the
network operator in the location which issues the value-adding card remits 85%
of the face value of the value-adding card to the subscriber's home network
operator and keeps the remaining 15% of the face value as a handling charge. The
Directors are of the view that the amendment to the existing arrangement will
not have any material impact on the financials of the Group and will result in a
fairer allocation of revenue from value-adding cards between network operators
in line with the operating costs incurred by these operators. The Stock Exchange
has previously granted a waiver in respect of this existing agreement, which
originally was to expire on 31 December 2001. As the Company and CMCC entered
into the Prepaid Services Agreement which is a new arrangement, the Company has
applied to the Stock Exchange and the Stock Exchange has granted a new waiver.
Accordingly, immediately upon the new waiver taking effect, the previous waiver
will lapse.
The arrangement for the sharing and settlement of interconnection and
roaming revenue in relation to prepaid services is the same as the arrangement
in relation to contract subscribers.
C. Platform Development
Aspire Holdings is a non-wholly owned subsidiary of the Company. Aspire
Holdings entered into a Platform Development Master Agreement with each of the
Company and CMCC on 10 January 2001. Details of these agreements were disclosed
by the Company in compliance with the requirements of the Listing Rules in an
announcement dated 10 January 2001. Pursuant to the two Platform Development
Master Agreements, Aspire Holdings (or its subsidiaries) will provide the same
scope of technology platform development and maintenance services to the
Company, CMCC and their respective mobile telecommunications subsidiaries in
various provinces, municipalities and autonomous regions in mainland China.
These services include system and gateway integration services, hardware,
software and system development (including development of applications),
technical support and major overhaul services for the MISC Platform.
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According to the Platform Development Master Agreements, each of the
Company and CMCC will pay Aspire Holdings equipment charges, systems integration
fees, software licensing fees, technical support fees and/or major overhaul
charges, which will be determined according to standards laid down by the
relevant governmental departments and/or by reference to market rates.
As at the Latest Practicable Date, Aspire Holdings has commenced the
provision of services pursuant to the Platform Development Master Agreements but
no charges or fees have been paid by either the Company or CMCC to Aspire
Holdings.
UNDERTAKING PROVIDED BY CMCC
CMCC, through CMHKG (a company in which CMCC has 100% economic interest),
owns the entire issued share capital of CMBVI. CMBVI, in turn, is the immediate
parent company of the Company holding approximately 75.6% of the issued share
capital of the Company. CMCC has, in August 2000, undertaken in writing that, to
the extent within CMCC's control, the Group will be treated equally with other
cellular mobile communications operators in respect of all approvals,
transactions and arrangements between the Group and CMCC and other cellular
mobile communications entities controlled by CMCC. As most of the Group's
Connected Transactions are with CMCC and its subsidiaries, the undertaking from
CMCC would apply to the Connected Transactions described above.
WAIVER OBTAINED FROM STOCK EXCHANGE
As a result of the Company's relationship with CMBVI and CMCC, the
Connected Transactions described above constitute connected transactions of the
Company that are subject to the normal shareholders' approval and disclosure
requirements under Chapter 14 of the Listing Rules. As the Connected
Transactions are expected to occur on a regular and continuous basis in the
ordinary and usual course of business, the Company has made an application to
the Stock Exchange and the Stock Exchange has granted new waivers in respect of
the Existing Connected Transactions and the new connected transactions described
under "Connected Transactions --- Prepaid Services" and "Connected Transactions
--- Platform Development" above from compliance with the normal shareholders'
approval and disclosure requirements related to connected transactions under the
Listing Rules, subject to certain conditions as set out under "Conditions of the
Waiver" below. For the Existing Connected Transactions, the previous waiver will
expire on 31 December 2001 and the new waiver will be effective from 1 January
2002 to 31 December 2004. For the transactions described under "Connected
Transactions --- Prepaid Services" and "Connected Transactions --- Platform
Development", the new waiver will be effective for three financial years of the
Company ending 31 December 2003.
CONDITIONS OF THE WAIVER
The waiver granted by the Stock Exchange to the Company in relation to the
Connected Transactions is subject to the conditions set out under (a) to (g)
below.
(a) arm's length basis: The Connected Transactions as well as the
respective agreements governing such Connected Transactions shall be:
(i) entered into by the Group in the ordinary and usual course of its
business on terms that are fair and reasonable so far as the
independent shareholders of the Company are concerned; and
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(ii) on normal commercial terms and in accordance with the terms of
the agreements governing such Connected Transactions.
(b) disclosure: The Company shall disclose in its annual report details of
the Connected Transactions as required by Rules 14.25(1)(A) to (D) of
the Listing Rules.
(c) independent non-executive directors' review: The independent
non-executive directors of the Company shall review annually the
Connected Transactions and confirm, in the Company's annual report and
accounts for the year in question, that such Connected Transactions
have been conducted in the manner as stated in paragraph (a) above and
within the upper limits set out in paragraph (g) below.
(d) auditors' review: The auditors of the Company shall review annually
the Connected Transactions and shall provide the directors of the
Company with a letter. Details of such letter shall be set forth in
the Company's annual accounts, stating that the Connected
Transactions:
(i) received the approval of the board of directors;
(ii) are in accordance with the pricing policy as stated in the
Company's annual report;
(iii) have been conducted in the manner as stated in paragraph (a)(ii)
above; and
(iv) the upper limits as set out in paragraph (g) below have not been
exceeded.
The letter of the auditors is to be addressed to the directors of the
Company and a copy of which is to be provided to the Stock Exchange.
Where for whatever reason, the auditors decline to accept the
engagement or are unable to provide that letter, the directors of the
Company shall contact the Stock Exchange immediately.
(e) shareholders' approval: Independent shareholders of the Company shall
have voted in favour of an ordinary resolution to approve the
Connected Transactions and the upper limits set out in paragraph (g)
below at the Company's extraordinary general meeting to be held on 12
June 2001, immediately following the Company's annual general meeting.
(f) Undertaking: For the purpose of the above review by the auditors of
the Company, CMCC has previously undertaken to the Company that it
will provide the Company's auditors with access to its and its
associates' accounting records.
(g) upper limits: Connected Transactions of the following types shall not
exceed the upper limits set out below in the relevant financial year
of the Group:
(i) payments by the Group to subsidiaries of CMCC for collection
service charges in any financial year shall not exceed 0.1% of
the Group's consolidated turnover in that financial year and
payment by the Group to subsidiaries of CMCC for sales service
charges in any financial year shall not exceed 0.3% of the
Group's consolidated turnover of the relevant financial year;
(ii) payments by the Group to subsidiaries of CMCC for rental and
property management fees in any financial year shall not exceed
0.56% of the Group's consolidated turnover of the relevant
financial year;
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(iii) payments by the Group to subsidiaries of the CMCC for
construction and related services in any financial year shall not
exceed 0.25% of the Group's consolidated turnover of the relevant
financial year;
(iv) payments by the Group to subsidiaries of CMCC for equipment
maintenance and related services in any financial year shall not
exceed 0.05% of the Group's consolidated turnover of the relevant
financial year;
(v) payments by Hebei Mobile to the relevant subsidiary of CMCC for
purchase of transmission towers and transmission tower-related
services and antenna maintenance services in any financial year
shall not exceed 0.06% of the Group's consolidated turnover of
the relevant financial year;
(vi) handling charges received by the Group from subsidiaries of CMCC
in respect of prepaid services in any financial year shall not
exceed 2% of the Group's consolidated turnover in that financial
year and handling charges paid by the Group to subsidiaries of
CMCC in respect of prepaid services in any financial year shall
not exceed 2% of the Group's consolidated turnover of the
relevant financial year; and
(vii) payments by each of the Company and CMCC to Aspire Holdings in
respect of equipment charges, systems integration fees, software
licensing fees, technical support fees and/or major overhaul
charges for the MISC Platform in any financial year shall not
exceed 3% of the Group's consolidated net tangible assets of the
relevant financial year.
SETTING OF THE UPPER LIMITS
For the transactions described in the paragraphs headed "Interconnection
Arrangement", "Roaming Arrangement", "Spectrum Fees" and "Sharing of
Inter-Provincial Transmission Line Leasing Fees" on pages 6 to 8 of this
circular, no upper limits are proposed as the revenue received and the payments
made by the Group in respect of these transactions are dependent upon the
relevant standard tariff or policies determined by the relevant regulatory
authorities in China, and the Company is not in a position to fix upper limits
for these transactions. In addition, these transactions are unlike the
transactions described under "Construction and Related Services", "Equipment
Maintenance and Related Services" and "Transmission Tower Production, Sales and
Other Services and Antenna Maintenance Services" where the business activities
involved are more matured and developed and current market rates are available
to form a reasonable basis for determining upper limits. Details of the fees or
charges which are regulated are stated below:
(i) Transactions described under the paragraphs headed "Interconnection
Arrangement" and "Roaming Arrangement" are governed by the Roaming
Agreement which provides for the sharing of long distance calling
charges among network operators and the sharing of roaming calling
charges and handling charges between the Group and CMCC. Long distance
calling charges, roaming calling charges and handling charges are
regulated tariffs which apply nationally.
(ii) The MII and Ministry of Finance jointly determine the standardised
spectrum fees payable to MII by all mobile communications operators in
mainland China.
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(iii) Transmission line leasing fees are laid down by the relevant tariff
regulatory authorities and are applicable to all mobile communications
operators in mainland China, including the Group.
For the transactions described under "Construction and Related Services",
"Equipment Maintenance and Related Services" and "Transmission Tower Production,
Sales and Other Services and Antenna Maintenance Services" on page 10 of this
circular, the nature of the transactions and the terms of the agreements
governing these transactions remain the same as when the agreements were first
entered into. Hence, the upper limits set out above are the same as those under
the waivers previously granted by the Stock Exchange. Also, as these
transactions are mainly involved in business activities (for example,
construction and maintenance services) which are more developed and matured, the
respective current market rates of these transactions form a reasonable basis
for determining the upper limits. Therefore, upper limits are imposed on these
transactions even though certain charges levied under these transactions are
regulated by the relevant regulatory authorities.
For the transactions described under "Collection Services and Sales
Arrangements" on page 9 of this circular, no upper limits were imposed in
respect of the waiver previously granted by the Stock Exchange. As the
collection service charges payable by Henan Mobile is fixed at 1% of collections
and the maximum sales charge is fixed at RMB250 per cellular service
subscribers, the Directors are of the view that it is reasonable to impose upper
limits of 0.1% and 0.3% of the Group's consolidated turnover in respect of
collection service charges and sales service charges, respectively. The
Directors estimate that such charges will increase year on year as a result of
the growth of the subscriber base of Henan Mobile and having taken into account
the huge increase in such charges from 1999 to 2000, the Directors believe that
these upper limits are reasonable and sufficient to accommodate such growth.
For the transactions described under "Property Leasing and Management
Services" on page 9 of this circular, the upper limits previously imposed were
0.34% of the Group's consolidated turnover in any financial year (in respect of
transactions entered into by Fujian Mobile, Henan Mobile and Hainan Mobile) and
RMB85,000,000 (in respect of transactions entered into by Beijing Mobile,
Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile
and Guangxi Mobile). As all of these transactions relate to property rental and
property management, it is easier for the Company to monitor the consideration
passed under these transactions by setting one upper limit with reference to the
Group's turnover on a consolidated basis. This upper limit of 0.56% of the
Group's consolidated turnover was calculated on the basis of the pro-forma
combined rental and property management fee for the year 2000 and assuming an
aggregate increase of about 20% in market rental over a three-year period.
For the transactions described under the paragraph headed "Connected
Transactions --- Platform Development" on pages 11 to 12 of this circular, the
upper limit of 3% of the Group's consolidated net tangible assets is determined
based on the Directors' reasonable estimates of the annual maximum levels of the
services to be provided by Aspire Holdings to each of the Company and CMCC.
The Stock Exchange has also indicated that if any of the values of the
Connected Transactions exceed the relevant upper limits or if any of the terms
of the agreements related to the Connected Transactions, or the nature of the
Connected Transactions is altered (unless as provided for under the terms of the
relevant agreement) or if the Group enters into any new agreements with
connected persons in the future, the Company will need to comply fully with all
the relevant provisions of Chapter 14 of the Listing Rules dealing with
connected transactions.
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EXTRAORDINARY GENERAL MEETING
A notice of the Extraordinary General Meeting to be held in the Conference
Room, 5th Floor, Island Shangri-La, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx Xxxx, Xxxxxxx,
Xxxx Xxxx on 12 June 2001 at 11:30 a.m. (or as soon thereafter as the annual
general meeting of the Company to be convened at 11:00 a.m. at the same place
and date shall have been concluded or adjourned) is set out at the end of this
circular. An ordinary resolution will be proposed to approve the Connected
Transactions.
In accordance with the Listing Rules, CMBVI, the controlling shareholder of
the Company which is beneficially interested in approximately 75.6% of the
issued share capital of the Company as at the Latest Practicable Date, and its
Associates, will abstain from voting on the ordinary resolution to approve the
Connected Transactions at the Extraordinary General Meeting.
A form of proxy for use at the Extraordinary General Meeting is enclosed.
Whether or not Shareholders are able to attend the Extraordinary General
Meeting, they are requested to complete and return the enclosed form of proxy to
the Company's registered office at 00xx Xxxxx, Xxx Xxxxxx, 00 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx, as soon as practicable and in any event at least 36 hours
before the time appointed for holding the Extraordinary General Meeting.
Completion and return of the form of proxy will not preclude Shareholders from
attending and voting in person at the Extraordinary General Meeting should they
so wish.
RECOMMENDATION OF THE INDEPENDENT BOARD COMMITTEE
Rothschild has been appointed as the independent financial adviser to
advise the Independent Board Committee in respect of the terms of the Connected
Transactions.
The Independent Board Committee, having taken into account the advice of
Rothschild, considers the terms of the Connected Transactions as a whole to be
fair and reasonable so far as the Independent Shareholders are concerned.
Accordingly, the Independent Board Committee recommends that the Independent
Shareholders should vote in favour of the ordinary resolution to approve the
Connected Transactions (together with the relevant upper limits) at the
Extraordinary General Meeting. The letter from Rothschild containing its advice
and recommendation and the principal factors and reasons taken into account in
arriving at its recommendation is set out on pages 18 to 26 of this circular.
ADDITIONAL INFORMATION
Your attention is drawn to the letter of the Independent Board Committee
set out on page 17 of this circular, the letter set out on pages 18 to 26 of
this circular from Rothschild, the independent financial adviser to the
Independent Board Committee in respect of the Connected Transactions, and to the
information set out in the appendix to this circular.
By Order of the Board
China Mobile (Hong Kong) Limited
Wang Xiaochu
Chairman
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[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
14 May 2001
To the Independent Shareholders
Dear Sir or Madam,
CONNECTED TRANSACTIONS
We refer to the circular dated 14 May 2001 (the "Circular") issued by the
Company to its Shareholders of which this letter forms part. The terms defined
in the Circular shall have the same meanings when used in this letter, unless
the context otherwise requires.
On 11 May 2001, the Board announced that the Company has made an
application to the Stock Exchange and the Stock Exchange has granted a new
waiver from compliance with the normal disclosure and shareholders' approval
requirements under the Listing Rules in connection with the Connected
Transactions as summarised in the Letter from the Board set out on pages 5 to 16
of the Circular. The Stock Exchange has previously granted such waivers in
respect of the Existing Connected Transactions.
The Independent Board Committee was formed on 11 April 2001 to make a
recommendation to the Independent Shareholders as to whether, in its view, the
terms of the Connected Transactions are fair and reasonable so far as the
Independent Shareholders are concerned. Rothschild has been appointed as
independent financial adviser to advise the Independent Board Committee as to
whether the terms of the Connected Transactions as a whole are fair and
reasonable so far as the Independent Shareholders are concerned.
The terms of the Connected Transactions are summarised in the Letter from
the Board set out on pages 5 to 16 of the Circular.
As your Independent Board Committee, we have discussed with the management
of the Company the reasons for entering into the Connected Transactions and the
basis upon which their terms have been determined. We have also considered the
key factors taken into account by Rothschild in arriving at its opinion
regarding the Connected Transactions as set out in its advice letter on pages 18
to 26 of the Circular, which we urge you to read carefully.
THE INDEPENDENT BOARD COMMITTEE CONCURS WITH THE VIEWS OF ROTHSCHILD AND
CONSIDERS THAT THE TERMS OF THE CONNECTED TRANSACTIONS AS A WHOLE ARE FAIR AND
REASONABLE SO FAR AS THE INDEPENDENT SHAREHOLDERS ARE CONCERNED. ACCORDINGLY,
THE INDEPENDENT BOARD COMMITTEE RECOMMENDS THE INDEPENDENT SHAREHOLDERS TO VOTE
IN FAVOUR OF THE ORDINARY RESOLUTION SET OUT IN THE NOTICE OF THE EXTRAORDINARY
GENERAL MEETING AT THE END OF THE CIRCULAR.
Yours faithfully
Xxxxxx Xx Xxxx Xxxxxx
Lo Ka Shui
Independent Board Committee
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[LOGO]
00xx Xxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx Xxxx
14 May 2001
To the Independent Board Committee of
China Mobile (Hong Kong) Limited
Dear Sirs,
CONNECTED TRANSACTIONS
We refer to our engagement to advise the Independent Board Committee with
respect to the Connected Transactions, details of which are contained in the
circular dated 14 May 2001 to the Shareholders (the "Circular") of which this
letter forms a part. Rothschild has been retained as the independent financial
adviser by the Company to advise the Independent Board Committee as to whether
or not the terms of the Connected Transactions as a whole are fair and
reasonable so far as the Independent Shareholders are concerned.
The terms used in this letter shall have the same meanings as defined
elsewhere in the Circular unless the context otherwise requires.
The Group had entered into a number of agreements in the past and the
transactions under such agreements are of a recurrent nature which constitute
connected transactions for the Company under the Listing Rules. The Independent
Shareholders had previously approved these agreements (the "Existing
Agreements"), save for the agreements as set out in the section headed "(d) New
Connected Transactions under the New Agreements" below (the "New Agreements").
The Company had also previously applied for waivers from strict compliance with
the normal disclosure and shareholders' approval requirements of the Listing
Rules in relation to the Existing Agreements and these existing waivers have
been granted by the Stock Exchange. The existing waivers will remain effective
until 31 December 2001. As the Company expects that the connected transactions
under the Existing Agreements and the New Agreements will continue to be
conducted regularly and on an ongoing basis in the Company's ordinary and usual
course of business, the Company has applied to the Stock Exchange for a new
waiver in respect of the Existing Agreements and the New Agreements (altogether
the "Agreements") from strict compliance with the normal disclosure and
shareholders' approval requirements under the Listing Rules (the "New Waiver").
The Stock Exchange has granted the New Waiver, subject to the conditions as set
out under the section headed "Conditions of the Waiver" in the "Letter from the
Board". The new waiver in relation to the Existing Agreements will be effective
from 1 January 2002 and will be valid until 31 December 2004. The new waiver in
relation to the transactions as set out in the section headed "(i) Prepaid
services" on page 23 of the Circular and the transactions as set out in the
section headed "(ii) Platform development" on page 24 of the Circular will be
effective for the three financial years of the Company ending 31 December 2003.
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In formulating our recommendation, we have relied on the information and
facts supplied to us by the Company and have assumed that any representations
made to us are true, accurate and complete. We have also assumed that all
information, representations and opinions contained or referred to in the
Circular are fair and reasonable and accordingly, we have relied on them. In
addition, we have not considered any taxation or regulatory consequences of any
of the transactions referred to in this letter so far as the Company or its
Operating Subsidiaries are concerned.
We have been advised by the Directors that no material facts have been
omitted and we are not aware of any facts or circumstances which would render
the information provided and the representations made to us untrue, inaccurate
or misleading. The Directors have collectively and individually accepted full
responsibility for the accuracy of the information contained in the Circular and
have confirmed, having made all reasonable enquiries, that to the best of their
knowledge and belief there are no other facts the omission of which would make
any statement in the Circular misleading. We consider that we have reviewed
sufficient information to reach an informed view and to justify relying on the
accuracy of the information contained in the Circular to provide a reasonable
basis for our advice. We have not, however, conducted any independent in-depth
investigation into the business and affairs of the Group.
PRINCIPAL FACTORS AND REASONS
In arriving at our opinion, we have taken into consideration the following
principal factors and reasons:
1. Nature of the Connected Transactions
The Agreements had been entered into between the Company (or its
subsidiaries) and CMCC (or its subsidiaries) in the Company's ordinary and
usual course of business, and the transactions under the Agreements
constitute connected transactions for the Company under the Listing Rules.
These on-going connected transactions include interconnection arrangements,
roaming arrangements, spectrum fees, sharing of inter-provincial
transmission line leasing fees, collection services and sales arrangements,
property leasing and management services, construction and related
services, equipment maintenance and related services, transmission tower
production, sales and other services and antenna maintenance services,
prepaid services and platform development.
As noted in the "Letter from the Board", the services under the
Connected Transactions are charged either in accordance with the
tariffs/standards set by the relevant Chinese regulatory authorities and/or
based on market rates and/or determined after arm's length negotiations
between the parties involved and based on normal commercial terms. As also
noted in the "Letter from the Board", to the extent within CMCC's control,
CMCC has, in August 2000, undertaken in writing that, the Group will be
treated equally with other cellular mobile communications operators in
respect of all approvals, transactions and arrangements between the Group
and CMCC and other cellular mobile communications operators controlled by
CMCC. As most of the Group's Connected Transactions are with CMCC and its
subsidiaries, the undertaking from CMCC would apply to the Connected
Transactions as described above. This formed an important basis for the
Group in entering into the Agreements. Although the Existing Agreements had
been approved by the Independent Shareholders previously, such approval
from the Independent Shareholders is required again for the purpose of
fulfilling the corresponding condition as required by the Stock Exchange
regarding the granting of the New Waiver. Moreover, the approval of the New
Agreements is also required to facilitate the Company in the obtaining of
the New Waiver.
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DESCRIPTION OF THE CONNECTED TRANSACTIONS
We set out below a summary of each of the Connected Transactions.
(a) Types of Connected Transactions under the Existing Agreements which
had been approved by the Independent Shareholders previously and no
upper limits have been imposed under both the existing waivers granted
by the Stock Exchange and the New Waiver:
(i) Interconnection arrangements
The Roaming Agreement was entered into after arm's length
negotiations between the parties involved and after taking into
account the guidelines laid down by the relevant tariff regulatory
authorities which provides for, inter alia, (a) the sharing of long
distance calling charges, if any, in respect of inter-provincial
roaming, (b) settlement arrangements of international long distance
calling charges incurred by international cellular subscribers making
international long distance calls while roaming in the areas in
Mainland China where the Group operates, and (c) settlement
arrangements of international long distance calling charges, if any,
when the Group's cellular subscribers roam internationally. This
agreement applies to all the Operating Subsidiaries with an initial
effective period up to 31 March 2001. The Roaming Agreement provides
for automatic renewal on an annual basis unless either party notifies
the other of its intention of termination. The Roaming Agreement has
been automatically renewed and the current terms will expire on 31
March 2002.
(ii) Roaming arrangements
As explained above, the Roaming Agreement also provides for other
arrangements including the sharing of roaming calling charges in
respect of inter-provincial roaming and international roaming, roaming
call record processing fee payable by the Group to CMCC regarding the
provision of inter-provincial and international roaming clearing and
settlement services by CMCC. These existing arrangements were arrived
at after arm's length negotiations between the parties involved,
having considered the guidelines laid down by the relevant tariff
regulatory authorities.
(iii) Spectrum fees
Under the agreement between the Group and CMCC, the Company has
the exclusive right to use the frequency spectrum and telephone
numbers allocated to the Company in the areas that it operates. It
also provides the mechanism for the sharing of the spectrum usage fees
between the Operating Subsidiaries and CMCC's other operating
subsidiaries which is based on the standardised fee scale jointly
determined by the MII and the Ministry of Finance. This agreement has
an initial effective period of one year which was expired on 7 October
2000 and would be automatically renewed on an annual basis unless
either party notifies the other of its intention of termination. This
agreement has been automatically renewed and the current terms will
expire on 7 October 2001.
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(iv) Sharing of inter-provincial transmission line leasing fees
Under the existing inter-provincial transmission leased line
agreement with CMCC, the Group leases from CTC, via CMCC,
inter-provincial transmission lines which link the Group's mobile
switching centres together and with other mobile switching centres of
CMCC. The rental payable by the Group is determined on the basis that
the cellular network operators at both ends of the transmission lines
will share the transmission leasing fees equally, and will be equal to
the actual amount payable by CMCC to CTC, which is determined based on
the standard leasing fee stipulated by the relevant authorities after
adjusting for the discount entitlement of the Group. This agreement
has an initial effective period of two years which was expired on 31
March 2001 and would be automatically renewed on an annual basis
unless either party notifies the other of its intention of
termination. This agreement has been automatically renewed and the
current terms will expire on 31 March 2002.
(b) Types of Connected Transactions under the Existing Agreements which
had been approved by the Independent Shareholders with waivers being
granted by the Stock Exchange previously but new or revised upper
limits will be imposed under the New Waiver:
(i) Collection services and sales arrangements
An agreement was entered into between Henan Mobile and a
subsidiary of CMCC in August 1999 pursuant to which the subsidiary of
CMCC agreed to provide certain payment collection services to Henan
Mobile. In addition, a sales service agreement was also entered into
between Henan Mobile and a subsidiary of CMCC pursuant to which the
subsidiary of CMCC agreed to market Henan Mobile's cellular services
through its outlets. These agreements were entered into between the
parties involved after arm's length negotiations and were based on
normal commercial terms, having considered prevailing market rates. It
should also be noted that upper limits on payments by the Group to
subsidiaries of CMCC for collection service charges and sales service
charges will be imposed under the New Waiver which will be equivalent
to 0.1% and 0.3% of the Group's consolidated turnover in any financial
year respectively (note: there is no upper limit under the existing
waivers granted by the Stock Exchange).
(ii) Property leasing and management services
Each of the Operating Subsidiaries (other than Guangdong Mobile,
Zhejiang Mobile and Jiangsu Mobile) leases, and some of them also
sub-lease, from other subsidiaries of CMCC various properties for use
as its business premises and offices, retail outlets, warehouses and
for locating equipment. The respective rental payments by the
Operating Subsidiaries are either determined with reference to market
rates or are equal to the actual rental payable by such CMCC's
subsidiaries. In addition, some of the relevant subsidiaries of CMCC
also provide property management services in relation to the leased or
sub-leased properties to the aforesaid Operating Subsidiaries and such
property management fees are also determined with reference to market
rates. Beijing
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Mobile also leases certain properties and provides property management
services to a subsidiary of CMCC according to terms similar to those
set out above. As noted in the "Letter from the Board", Chesterton
Xxxxx, an independent valuer, has previously confirmed that the
rentals payable under such leases and sub-leases are not more than
market rates within each respective geographical area as at the
relevant dates of such leases and the relevant head leases, and that
all other terms of such leases and sub-leases are not onerous or
unusual. The existing waivers granted by the Stock Exchange provide
for upper limits on the payments to subsidiaries of CMCC for any
financial year which shall not exceed 0.34% of the Group's
consolidated turnover (in respect of transactions entered into by
Fujian Mobile, Henan Mobile and Hainan Mobile) and RMB85 million (in
respect of transactions entered into by Beijing Mobile, Shanghai
Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile
and Guangxi Mobile) respectively. It should be noted that the upper
limit will be revised to 0.56% of the Group's consolidated turnover
for any financial year, in aggregate, under the New Waiver.
(c) Types of Connected Transactions under the Existing Agreements which
had been approved by the Independent Shareholders with waivers being
granted by the Stock Exchange previously and upper limits under the
New Waiver remain unchanged:
(i) Construction and related services
These agreements were entered into between Beijing Mobile,
Shanghai Mobile, Liaoning Mobile, Shandong Mobile and certain
subsidiaries of CMCC regarding provisions of construction, design,
equipment installation, testing and/or maintenance services and/or to
act as general contractors in relation to construction and other
projects of such Operating Subsidiaries. These agreements were entered
into after arm's length negotiations between the respective Operating
Subsidiaries and the subsidiaries of CMCC in September 2000 with
initial effective periods ranging between six and 16 months. Each of
them would be automatically renewed on an annual basis unless either
party (in the case of Shandong Mobile, Shanghai Mobile and Beijing
Mobile) or Liaoning Mobile (in the case of Liaoning Mobile) notifies
the other of its intention of termination. The agreements with initial
effective periods expired have been renewed automatically for another
one-year period. Beijing Mobile had also previously entered into other
agreements with subsidiaries of CMCC for the provision of certain
construction and related services in connection with specific
projects. The charges payable for services rendered under such
agreements are determined according to the standards laid down by the
relevant governmental departments and/or by reference to market rates.
The existing waivers granted by the Stock Exchange provide for an
upper limit on payments by the Group to subsidiaries of CMCC for
construction and related services in any financial year which shall
not exceed 0.25% of the Group's consolidated turnover in that
financial year.
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(ii) Equipment maintenance and related services
These agreements were entered into between Beijing Mobile,
Shanghai Mobile and Liaoning Mobile and certain subsidiaries of CMCC
in relation to the provision of equipment maintenance and related
services to such Operating Subsidiaries. These agreements were entered
into after arm's length negotiations between the parties involved in
September 2000 with initial effective periods ranging between six and
15 months. Each of them would be automatically renewed on an annual
basis unless either party (in the case of Beijing Mobile) or Shanghai
Mobile or Liaoning Mobile (in the case of Shanghai Mobile and Liaoning
Mobile respectively) notifies the other of its intention of
termination. The agreements with initial effective periods expired
have been renewed automatically for another one-year period. Beijing
Mobile had also previously entered into another agreement with a
subsidiary of CMCC for the provision of certain equipment maintenance
and related services in respect of the maintenance of base stations.
The charges payable for services rendered under such agreements are
determined based on standards laid down by the relevant governmental
departments and/or by reference to market rates. The existing waivers
granted by the Stock Exchange provide for an upper limit on payments
by the Group to subsidiaries of CMCC for equipment maintenance and
related services in any financial year which shall not exceed 0.05% of
the Group's consolidated turnover in that financial year.
(iii) Transmission tower production, sales and other services and
antenna maintenance services
Hebei Mobile entered into an agreement with a subsidiary of CMCC
in relation to (a) the provision of transmission tower design,
production, installation and maintenance services; (b) the provision
of antenna maintenance services; and (c) the sale of transmission
towers and spare parts to Hebei Mobile. The agreement will expire on
31 July 2001 and will be automatically renewed on an annual basis
unless either party notifies the other of its intention of
termination. The price of which such transmission towers and spare
parts and the charges payable for services rendered under such
agreement are determined based on standards laid down by the relevant
governmental departments and/of by reference to market rates. The
existing waivers granted by the Stock Exchange provide for an upper
limit on payments by Hebei Mobile to the relevant subsidiary of CMCC
for the purchase of transmission towers and related services, and
antenna maintenance services in any financial year which shall not
exceed 0.06% of the Group's consolidated turnover in that financial
year.
(d) New Connected Transactions under the New Agreements:
(i) Prepaid services
Each of the Operating Subsidiaries offers prepaid services,
and under some of such prepaid services, subscribers are allowed
to add value to their SIM cards by purchasing value-adding cards
from any of the Group's network operators or CMCC's other network
operators. The Company entered into an agreement with CMCC on 11
May 2001 to amend the existing arrangements in
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LETTER FROM ROTHSCHILD
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relation to the sharing and settlement of revenue when prepaid
subscribers purchase value-adding cards issued by network
operators other than their home network operators. This agreement
was entered into after arm's length negotiations between the
Company and CMCC and was based on normal commercial terms. Under
this agreement, the network operator in the location which issues
the value-adding card will remit 95% of the face value of the
value-adding card to the subscriber's home network operator, and
will keep the remaining 5% of the face value as a handling
charge. Hence, if the Group's subscribers purchase value-adding
cards issued by CMCC's network operators, CMCC's network
operators will be entitled to 5% of the face value as the
handling charge. Conversely, if CMCC's subscribers purchase
value-adding cards issued by the Group's network operators, the
Group will be entitled to 5% of the face value as the handling
charge. As also noted from the "Letter from the Board", the
Directors are of the view that the amendments to the existing
arrangements will not have any material impact on the financials
of the Group. On the above basis, we are of the view that the
sharing and settlement of revenue arrangements under this new
agreement to be fair and reasonable so far as the Independent
Shareholders are concerned.
This agreement is subject to the approval by the Independent
Shareholders at the Extraordinary General Meeting, and if
approved, would take retrospective effect from 21 April 2001.
This agreement, if approved, will replace an existing agreement
between the Company and CMCC in respect of the existing
arrangements for prepaid services, details of which are set out
in the "Letter from the Board". The Stock Exchange has previously
granted a waiver in respect of the existing arrangements, which
originally was to expire on 31 December 2001. As the Company and
CMCC entered into this new agreement, the Company has applied to
the Stock Exchange and the Stock Exchange has granted the New
Waiver which will be effective for the three financial years of
the Company ending 31 December 2003. It should be noted that the
New Waiver for this agreement provide for an upper limit in
respect of handling charges received by the Group from
subsidiaries of CMCC for prepaid services in any financial year
which shall not exceed 2% of the Group's consolidated turnover in
that financial year and handling charges paid by the Group to
subsidiaries of CMCC in respect of prepaid services in any
financial year shall not exceed 2% of the Group's consolidated
turnover of that financial year.
(ii) Platform development
Two Platform Development Master Agreements have been entered
into between (i) Aspire Holdings and the Company; and (ii) Aspire
Holdings and CMCC on 10 January 2001, pursuant to which Aspire
Holdings (or its subsidiaries) will provide the same scope of
technology platform development and maintenance services to the
Company, CMCC and their respective mobile telecommunications
subsidiaries in various provinces, municipalities and autonomous
regions in Mainland China. The services include system and
gateway integration services, hardware, software and system
development (including development of applications), technical
support and major overhaul services for the MISC Platform.
Accordingly, each of the Company and CMCC will pay Aspire
Holdings equipment charges, systems integration fees, software
licensing fees, technical support fees and/or major overhaul
charges, which will
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LETTER FROM ROTHSCHILD
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be determined according to standards laid down by the relevant
governmental departments and/or by reference to market rates. As
such, we are of the view that the Connected Transactions under
the Platform Development Master Agreements are fair and
reasonable so far as the Independent Shareholders are concerned.
It should be noted that an upper limit for the payments by each
of the Company and CMCC to Aspire Holdings in respect of the
charges for these services will be imposed under the New Waiver
which shall not exceed 3% of the Group's consolidated net
tangible assets of the relevant financial year.
Conclusion
On the basis that: (a) the Agreements were entered into by
the Group in the ordinary and usual course of its business; (b)
the terms and charges of the Connected Transactions were
determined either in accordance with the tariffs/standards set by
the relevant Chinese regulatory authorities and/or by reference
to market rates and/or determined after arm's length negotiations
between the parties involved and based on normal commercial terms
and in accordance with the terms of the agreements governing such
Connected Transactions; (c) in view of the aforesaid equal
treatment undertaking given by CMCC; and (d) all of the Existing
Agreements had previously been approved by the Independent
Shareholders between 1999 and 2000, we are of the view that the
terms of the Connected Transactions as a whole are fair and
reasonable so far as the Independent Shareholders are concerned.
2. The New Waiver
As noted in the "Letter from the Board", the Directors expect that the
Connected Transactions will continue to be conducted regularly and on an
ongoing basis in the Company's ordinary and usual course of business.
Accordingly, the Directors consider that full compliance of the normal
disclosure and shareholders' approval requirements under the Listing Rules
in respect of these Connected Transactions would be impracticable and would
not be in the interest of the Group. As such, the Company has applied for
the New Waiver, and the Stock Exchange has granted the New Waiver subject
to, inter alia, the Independent Shareholders' approval of the Connected
Transactions at the Extraordinary General Meeting.
We note that no upper limits have been imposed on certain Connected
Transactions whilst some of them have upper limits imposed and/or revised
under the New Waiver (please refer to the detailed classifications of
different types of Connected Transactions as set out in the section headed
"1. Nature of the Connected Transactions" on pages 19 to 25 of the
Circular). We have discussed with the management of the Company regarding
the basis of setting the respective upper limits for these Connected
Transactions (including a review of the historical figures of these
transactions provided by the Company), as well as the reasons for the
changes of the upper limits for some of these Connected Transactions and
the reasons for not imposing upper limit on certain Connected Transactions,
details of which are set out in the section headed "Setting of the Upper
Limits" in the "Letter from the Board". In particular, we note that the
major reason for not imposing an upper limit for the transactions as set
out under the sections headed "Interconnection arrangements", "Roaming
arrangements", "Spectrum fees" and "Sharing of inter-provincial
transmission line leasing fees" is that the tariffs and charges under these
transactions are dependent upon the relevant standard tariffs and policies
determined by the relevant regulatory authorities in China, and we concur
with the Board's view that the Company is not in a position to fix upper
limits for these transactions. In addition, we concur with the Board's view
that these transactions are unlike the transactions described under
"Construction
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LETTER FROM ROTHSCHILD
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and related services", "Equipment maintenance and related services" and
"Transmission tower production, sales and other services and antenna
maintenance services" where the business activities involved are more
matured and developed and current market rates are available to form a
reasonable basis for determining upper limits. We also consider that the
respective upper limits imposed on the Connected Transactions under the New
Waiver to be fair and reasonable so far as the Independent Shareholders are
concerned.
It should also be noted that under the terms of the New Waiver, the
Company will still be required to comply with certain requirements, inter
alia, the disclosure of details of the Connected Transactions in the
Company's annual report as well as the reviews by the independent
non-executive directors and auditors of the Company. On such basis, we
believe that the interests of the Independent Shareholders will be properly
safeguarded under the terms of the New Waiver.
RECOMMENDATION
Having considered the above principal factors and reasons and the terms of
the Connected Transactions, we consider the terms of the Connected Transactions
as a whole to be fair and reasonable and that the application for the New Waiver
(with the imposition of the respective upper limits) to be in the interest of
the Group so far as the Independent Shareholders are concerned. Accordingly, we
advise the Independent Board Committee to recommend the Independent Shareholders
to vote in favour of the ordinary resolution to approve the Connected
Transactions at the Extraordinary General Meeting.
Yours very truly,
For and on behalf of
N M ROTHSCHILD & SONS (HONG KONG) LIMITED
XXXXXX XXXX
Director
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APPENDIX GENERAL INFORMATION
--------------------------------------------------------------------------------
1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing
Rules for the purpose of giving information with regard to the Company. The
Directors collectively and individually accept full responsibility for the
accuracy of the information contained in this circular and confirm, having made
all reasonable enquiries, that to the best of their knowledge and belief there
are no other facts the omission of which would make any statement herein
misleading.
2. DISCLOSURE OF INTERESTS
(i) As at the Latest Practicable Date, Xx. Xxxx Xiaochu had a personal
interest in 500 American depositary shares (representing 2,500
ordinary shares) in the Company, Xx. Xx Zhenqun had a personal
interest in 100 American depositary shares (representing 500 ordinary
shares) in the Company, and Xx. Xxxx Donghua had a personal interest
in 500 American depositary shares (representing 2,500 ordinary shares)
in the Company.
(ii) As at the Latest Practicable Date, options excisable for an aggregate
of 14,494,000 shares had been granted to the following Directors under
the Company's share option scheme:
DIRECTORS NUMBER OF SHARES
COVERED BY OPTIONS
Wang Xiaochu 4,100,000
Ding Donghua 3,400,000
Li Gang 1,180,000
Xu Long 1,170,000
He Ning 1,166,000
Liu Ping 1,162,000
Yuan Jianguo 1,160,000
Xxx Xxxxxx 1,156,000
The options granted to different Directors are exercisable within different
periods, commencing from 9 March 1998 to 7 October 2007.
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors had or was deemed to have any interests in the share capital of the
Company or any of its associated corporations (within the meaning of the SDI
Ordinance) which were required to be notified to the Company and the Stock
Exchange pursuant to section 28 of the SDI Ordinance (including interests which
they are deemed or taken to have under section 31 of, or part 1 of the Schedule
to, the SDI Ordinance) or which are required, pursuant to section 29 of the SDI
Ordinance to be entered in the register referred to therein or which are
required, pursuant to the Model Code for Securities Transactions by Directors of
Listed Companies, to be notified to the Company and the Stock Exchange.
Save as disclosed herein, none of the Directors is materially interested in
any contract or arrangement subsisting at the date hereof which is significant
to the business of the Group taken as a whole.
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APPENDIX GENERAL INFORMATION
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Since 31 December 2000, the date to which the latest published audited
financial statements of the Company were prepared, none of the Directors nor any
experts named in paragraph 6 of this Appendix has any direct or indirect
material interest in any assets which have been acquired or disposed of by or
leased to any member of the Group, or are proposed to be acquired or disposed of
by or leased to any member of the Group.
3. SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as is known to the Directors, the
following persons were, directly or indirectly, interested in 10% or more of the
issued share capital carrying rights to vote at general meetings of any member
of the Group:
Percentage of
No. of Shares Shares held
CMCC 14,062,602,396 75.6%
CMHKG 14,062,602,396 75.6%
CMBVI 14,062,602,396 75.6%
Note: Because of the fact that CMCC and CMHKG directly or indirectly control
one-third or more of the voting rights in the shareholders' meetings of
CMBVI, in accordance with the SDI Ordinance, the interests of CMBVI are
deemed to be, and have therefore been included in, the interests of CMCC
and CMHKG.
Save as disclosed above, there is no person known to the Directors who, as
at the Latest Practicable Date, was, directly or indirectly, interested in 10%
or more of the nominal value of the issued share capital of any member of the
Group.
4. SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors had entered, or
proposed to enter, into any service contracts with the Company or any member of
the Group (excluding contracts expiring or determinable by the employer within
one year without payment of compensation (other than statutory compensation)).
5. MATERIAL ADVERSE CHANGE
The Directors are not aware of any material adverse change in the financial
or trading position of the Group since 31 December 2000, being the date of the
latest published audited consolidated accounts of the Company.
6. CONSENT AND QUALIFICATION OF EXPERT
Rothschild is an investment adviser registered under the Securities
Ordinance (Chapter 333 of the Laws of Hong Kong). Rothschild has given and has
not withdrawn its written consent to the issue of this circular with the
inclusion of its advice letter in respect of the Connected Transactions, and
references to its name in the form and context in which they appear.
Rothschild is not beneficially interested in the share capital of any
member of the Group and it does not have any right, whether legally enforceable
or not, to subscribe for or to nominate persons to subscribe for securities in
any member of the Group.
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APPENDIX GENERAL INFORMATION
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7. MISCELLANEOUS
(a) The company secretary of the Company is Yung Shun Xxx, Xxxxx (FCCA
(UK), FHKSA, CPA (Australia)).
(b) The registered office and head office of the Company is at 60th Floor,
The Center, 99 Queen's Road Central, Hong Kong.
(c) The English text of this circular and form of proxy shall prevail over
the Chinese text.
8. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at
Linklaters, 00xx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxxx Xxxx during normal
business hours on any business day from the date of this circular until 12 June
2001:
(a) all contracts referred to under the paragraph headed "Connected
Transactions" under the section "Letter from the Board" which is set
out on pages 5 to 16 of this circular;
(b) the written consent of Rothschild referred to in paragraph 6 of this
appendix; and
(c) the advice letter from Rothschild dated 14 May 2001, the text of which
is set out on pages 18 to 26 of this circular.
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NOTICE OF THE EXTRAORDINARY GENERAL MEETING
--------------------------------------------------------------------------------
[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the
shareholders of China Mobile (Hong Kong) Limited (the "Company") will be held at
11:30 a.m. (or as soon thereafter as the annual general meeting of the Company
to be convened at 11:00 a.m. at the same place and date shall have been
concluded or adjourned) on 12 June 2001 in the Conference Room, 5th Floor,
Island Shangri-La, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxx Xxxx for the
purpose of considering and, if thought fit, passing with or without
modifications the following resolutions:
ORDINARY RESOLUTION
1. "THAT the Connected Transactions as described in the paragraph headed
"Connected Transactions" under the section "Letter from the Board" in
the circular to shareholders dated 14 May 2001, which the Company
expects to occur on a regular and continuous basis in the ordinary and
usual course of business of the Company and its subsidiaries, together
with the relevant upper limits are hereby approved and the directors
of the Company are hereby authorised to do all further acts and things
and execute such further documents and take all such steps which in
their opinion may be necessary, desirable or expedient to implement
and/or give effect to the terms of the Connected Transactions."
By Order of the Board
Yung Shun Xxx, Xxxxx
Company Secretary
Hong Kong, 14 May 2001
Notes:
1. A member entitled to attend and vote at the Extraordinary General Meeting
is entitled to appoint one or more proxies to attend and, on a poll, vote
in his stead. A proxy need not be a member of the Company.
2. In order to be valid, a form of proxy together with any power of attorney
or other authority, if any, under which it is signed, or a notarially
certified copy of such power or authority, must be deposited at the
Company's registered office at 00xx Xxxxx, Xxx Xxxxxx, 00 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx at least 36 hours before the time appointed for holding
the Extraordinary General Meeting. Completion and return of the form of
proxy shall not preclude you from attending and voting in person at the
meeting or at any adjourned meeting should you so wish.
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[LOGO]
CHINA MOBILE (HONG KONG) LIMITED
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
FORM OF PROXY FOR THE EXTRAORDINARY GENERAL MEETING
TO BE HELD ON 12 JUNE 0000
X/Xx (Note 1)________________________________________________________________of
____________________________________ being the registered holder(s) of
__________________ Shares (Note 2) of HK$0.10 each in the share capital of the
above-named Company HEREBY APPOINT THE CHAIRMAN OF THE EXTRAORDINARY GENERAL
MEETING (Note 3) or ___________________________________________ of
_______________________________________________ as my/our proxy to attend and
act for me/us at the Extraordinary General Meeting (and any adjournment thereof)
of the said Company to be held at the Conference Room, 5th Floor, Island
Shangri-La, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxx Xxxx on 12 June
2001 at 11:30 a.m. (or as soon thereafter as the annual general meeting of the
said Company to be convened at 11:00 a.m. at the same place and date shall have
been concluded or adjourned) for the purposes of considering and, if thought
fit, passing with or without modifications the Resolution as set out in the
Notice of Extraordinary General Meeting and at such Meeting (and at any
adjournment thereof) to vote for me/us and in my/our name(s) in respect of the
Resolution as indicated below (Note 4).
ORDINARY RESOLUTION FOR AGAINST
(Note 4) (Note 4)
1. Ordinary Resolution No. 1
Dated this ________day of____________, 2001 Signed (Note 5)______________
Notes:
1. Full name(s) and address(es) to be inserted in BLOCK CAPITALS.
2. Please insert the number of shares registered in your name(s) to which this
proxy relates. If no number is inserted, this form of proxy will be deemed
to relate to all the shares in the Company registered in your name(s).
3. If any proxy other than the Chairman is preferred, strike out the words
"THE CHAIRMAN OF THE EXTRAORDINARY GENERAL MEETING" and insert the name and
address of the proxy desired in the space provided. A member may appoint
one or more proxies to attend and vote in his stead. ANY ALTERATION MADE TO
THIS FORM OF PROXY MUST BE INITIALLED BY THE PERSON WHO SIGNS IT.
4. IMPORTANT: IF YOU WISH TO VOTE FOR THE RESOLUTION, TICK THE APPROPRIATE BOX
MARKED "FOR". IF YOU WISH TO VOTE AGAINST THE RESOLUTION, TICK THE
APPROPRIATE BOX MARKED "AGAINST". Failure to complete any or all the boxes
will entitle your proxy to cast his votes at his discretion. Your proxy
will also be entitled to vote at his discretion on any resolution properly
put to the Extraordinary General Meeting other than those referred to in
the Notice of Extraordinary General Meeting.
5. This form of proxy must be signed by you or your attorney duly authorised
in writing or, in the case of a corporation, must be either executed under
its common seal or under the hand of an officer or attorney or other person
duly authorised to sign the same.
6. In the case of joint holders of any shares, any one of such joint holders
may vote at the Extraordinary General Meeting, either personally or by
proxy, in respect of such shares as if he were solely entitled thereto.
However, if more than one of such joint holders is present at the
Extraordinary General Meeting, either personally or by proxy, the vote of
the joint holder whose name stands first in the Register of Members and who
tenders a vote, whether in person or by proxy, will be accepted to the
exclusion of the votes of the other joint holder(s).
7. To be valid, this form of proxy together with the power of attorney (if
any) or other authority under which it is signed (if any) or a notarially
certified copy thereof, must be deposited at the registered office of the
Company at 00xx Xxxxx, Xxx Xxxxxx, 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx not
less than 36 hours before the time for holding the Extraordinary General
Meeting or any adjournment thereof (as the case may be).
8. The proxy need not be a member of the Company but must attend the
Extraordinary General Meeting in person to represent you.
9. Completion and delivery of the form of proxy will not preclude you from
attending and voting at the Extraordinary General Meeting if you so wish.
In such event, the instrument appointing a proxy shall be deemed to be
revoked.
