AIR CHINA LIMITED THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to any aspect of this circular, you should consult a 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 of Air China Limited, you should at once hand this circular, the form of proxy and the notice of attendance to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 00753)
CONTINUING CONNECTED TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
A letter from the Board is set out on pages 3 to 7 of this circular.
A notice convening the EGM to be held at The Phoenix Room, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC at 2 : 30 p.m. on 18 December 2014 is set out on pages I-1 to I-2 of this circular. Whether or not you are able to attend and/or vote at the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for convening the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you
from attending and voting in person at the EGM or any adjournment should you so wish.
31 October 2014
CONTENTS
Page
DEFINITIONS .... ....... ........ ....... ....... ........ ....... ........ ....... ....... 1
LETTER FROM THE BOARD
I. Introduction ..... ........ ....... ....... ........ ....... ........ ....... ....... 3
II. Continuing Connected Transaction ...... ........ ....... ........ ....... ....... 4
III. EGM .... ....... ........ ....... ....... ........ ....... ........ ....... ....... 6
IV. Recommendation ........ ....... ....... ........ ....... ........ ....... ....... 6
V. General Information ..... ....... ....... ........ ....... ........ ....... ....... 6
APPENDIX I - NOTICE OF EXTRAORDINARY GENERAL MEETING .... ....... I-1
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DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions have the following meanings:
''2004 Trademark Licence
Agreement''
the trademark licensing agreement entered into between the
Company and CNAHC on 1 November 2004
''Board'' the board of directors of the Company
''CNACG'' China National Aviation Corporation (Group) Limited, a company incorporated under the laws of Hong Kong, which was a wholly-owned subsidiary of CNAHC and a substantial shareholder of the Company as at the Latest Practicable Date
''CNAHC'' China National Aviation Holding Company, a company with limited liability incorporated under the laws of the PRC, which was a substantial shareholder of the Company as at the Latest Practicable Date
''CNAHC Group'' CNAHC and its controlled companies and, for the purpose of this circular, excluding the Group
''Company'' Air China Limited, a company incorporated in the PRC, whose H shares are listed on the Hong Kong Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue, and whose A shares are listed on the Shanghai Stock Exchange
''Director(s)'' the director(s) of the Company
''EGM'' the extraordinary general meeting of the Company to be held to seek Independent Shareholders' approval for the Transaction as set forth in this circular
''Framework Agreement'' the framework agreement, dated 28 October 2014, entered into between the Company and CNAHC in respect of the Transaction
''Group'' the Company and its subsidiaries
''Hong Kong Listing Rules'' The Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
''Hong Kong Stock Exchange'' The Stock Exchange of Hong Kong Limited
''Independent Shareholders'' the shareholders of the Company excluding CNAHC and
CNACG
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DEFINITIONS
''Latest Practicable Date'' 29 October 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
''PRC'' The People's Republic of China, excluding, for the purpose of this circular only, Hong Kong, Macau and Taiwan
''Prospectus'' The prospectus of the Company dated 3 December 2004 relating to the global offering of the Company's H shares and the listing of the Company's H shares on the main board of the Hong Kong Stock Exchange
''Shanghai Listing Rules'' the Rules Governing the Trading of Stocks on the Shanghai
Stock Exchange
''Shareholders'' the shareholders of the Company
''Transaction'' the continuing connected transaction contemplated under the Framework Agreement between the Company and CNAHC in relation to the granting by the Company to CNAHC Group of a non-exclusive licence for the use of 83 registered trademarks of the Company for a term of three years from 1 January 2015
to 31 December 2017
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LETTER FROM THE BOARD
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 00753)
Directors:
Non-executive Directors:
Mr. Cai Jianjiang
Ms. Wang Yinxiang Mr. Cao Jianxiong Mr. Feng Gang
Mr. John Robert Slosar
Mr. Ian Sai Cheung Shiu
Executive Directors:
Mr. Song Zhiyong
Mr. Fan Cheng
Independent non-executive Directors:
Mr. Fu Yang
Mr. Yang Yuzhong
Mr. Pan Xiaojiang
Mr. Simon To Chi Keung
Registered office:
Blue Sky Mansion
28 Tianzhu Road
Airport Industrial Zone
Shunyi District
Beijing, PRC
Principal place of business in Hong Kong:
5th Floor, CNAC House
12 Tung Fai Road
Hong Kong International Airport
Hong Kong
31 October 2014
To the Shareholders
Dear Sir or Madam,
CONTINUING CONNECTED TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
I. INTRODUCTION
It is proposed that at the EGM to be held on Thursday, 18 December 2014, the notice of which is set out on pages I-1 to I-2 of this circular, a resolution will be proposed to approve the
proposed Transaction.
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LETTER FROM THE BOARD
II. CONTINUING CONNECTED TRANSACTION
1. Introduction
Reference is made to the Prospectus. As disclosed in the Prospectus, pursuant to the
2004 Trademark Licence Agreement, the Company granted CNAHC and its controlled companies a non-exclusive licence for the use of certain Company's trademarks in connection with their business operations on a royalty-free basis. The non-exclusive licence is for a term of ten years expiring on 31 December 2014 and is subject to renewal through mutual consent. The 2004 Trademark Licence Agreement was entered into on normal commercial terms and fell below the de minimis threshold under Chapter 14A of the Hong Kong Listing Rules and thus was exempt from the disclosure and independent shareholders' approval requirements.
On 28 October 2014, the Company entered into the Framework Agreement with CNAHC (for itself and on behalf of its controlled companies, excluding the Group), pursuant to which, the Company granted CNAHC Group a non-exclusive licence for the use of a total of 83 registered trademarks of the Company for a term of three years from 1 January 2015 to 31
December 2017. The Company will seek Independent Shareholders' approval for the transaction contemplated under the Framework Agreement.
2. Parties and Connection of the Parties
The Company's principal business activity is air passenger, air cargo and airline-related services. As at the Latest Practicable Date, CNAHC directly owned 41.48% of the total issued shares of the Company, and indirectly held 11.89% of the total issued shares of the Company through CNACG. Accordingly, CNAHC is a substantial shareholder of the Company and therefore CNAHC and its associates are connected person of the Company under the Hong Kong Listing Rules.
CNAHC is a state-owned company incorporated in the PRC with a registered capital of RMB10,027,830,000. Its registered address is Air China Plaza, 36 Xiaoyun Road, Chaoyang District, Beijing, the PRC and its legal representative is Mr. Cai Jianjiang. It is primarily engaged in managing its state-owned assets and its equity interest in investees, charter of aircrafts and maintenance of aviation equipment.
3. Continuing Connected Transaction
Description of the Framework Agreement
On 28 October 2014, the Company entered into the Framework Agreement with CNAHC (for itself and on behalf of its controlled companies, excluding the Group), pursuant to which, the Company granted CNAHC Group a non-exclusive licence for the use of a total of 83 registered trademarks of the Company. CNAHC Group undertook to
use such licensed trademarks subject to the terms of the non-competition agreement
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LETTER FROM THE BOARD
between CNAHC and the Company dated 20 November 2004, details of which were disclosed in the Prospectus, and to ensure the quality of the services using the licensed trademarks in order to maintain their reputation.
The initial term of the Framework Agreement is three years from 1 January 2015 to
31 December 2017, which is renewable by agreement between the parties for successive terms of three years upon its expiry.
The granting of the non-exclusive licence under the Framework Agreement is made on a royalty-free basis at nil consideration.
Pricing of and reasons for the Transaction
The licensed trademarks had been contributed by CNAHC to the Company as its intangible assets upon its incorporation at nil consideration. As the trademarks are related to the daily business of CNAHC Group, the Company licensed certain trademarks to CNAHC Group at nil consideration for its use in its ordinary course of business as a reciprocal arrangement pursuant to the 2004 Trademark Licence Agreement. Given that it is necessary for CNAHC Group to continue using such trademarks for its future business and that CNAHC Group has duly performed its obligations under the 2004 Trademark Licence Agreement without causing any detriment to the awareness and reputation of the Company's brands, the Company considers that it shall enter into a new framework agreement to renew the above reciprocal arrangement that was entered into upon the incorporation of the Company.
In light of the above, the Framework Agreement is regarded as a renewal of the non-exclusive licence granted under the 2004 Trademark Licence Agreement and thus is also made on a royalty-free basis at nil consideration.
As the Company's principal business, revenue and profit are not reliant on the performance of the Framework Agreement, the Framework Agreement will not have an impact on the independence of the Company, nor have a material effect on the Company's operations.
4. Hong Kong Listing Rules Implications
The Transaction contemplated under the Framework Agreement between the Company and CNAHC constitutes a continuing connected transaction for the Company under the Hong Kong Listing Rules. As the Transaction is on normal commercial terms or better and on a royalty-free basis, it falls within the de minimis threshold as stipulated under Rule 14A.76(1) of the Hong Kong Listing Rules and therefore is fully exempt from shareholders' approval, annual review and all disclosure requirements under Chapter 14A of the Hong Kong Listing
Rules.
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LETTER FROM THE BOARD
5. PRC Law Implications
Pursuant to the Shanghai Listing Rules, the Transaction constitutes a connected transaction for the Company and is subject to the Independent Shareholders' approval at the EGM.
III. EGM
The Company will convene the EGM at The Phoenix Room, 29/F, Air China Building, 36
Xiaoyun Road, Chaoyang District, Beijing, PRC at 2 : 30 p.m. on 18 December 2014. In accordance with the Hong Kong Listing Rules, a notice of the EGM, a form of proxy and an attendance notice will be dispatched to the Shareholders on Friday, 31 October 2014. The notice of the EGM is reproduced on pages I-1 to I-2 of this circular.
Whether or not you intend to attend the EGM, you are requested to complete and return the form of proxy in accordance with the instruction printed thereon. If you intend to attend the EGM, you are required to complete and return the notice of attendance to the Company's H share registrar on or before Friday, 28 November 2014.
Completion and return of the form(s) of proxy will not preclude you from attending and voting in person at the meetings or at any adjournment should you so wish and completion and return of the notice of attendance do not affect the right of a shareholder to attend the respective meeting.
Pursuant to the Shanghai Listing Rules, any connected Shareholder (as defined in the Shanghai Listing Rules) of the Company is required to abstain from voting on the relevant resolution at the EGM. Accordingly, CNAHC, which entered into the Framework Agreement with the Company, and CNACG are required to abstain from voting on the resolution in respect of the Transaction.
IV. RECOMMENDATION
The Board (including the independent non-executive directors of the Company) considers that the continuing connected transaction mentioned in Part II of this circular is on normal commercial terms or better. The terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
The Board recommends that Shareholders vote to approve the Transaction at the EGM.
V. GENERAL INFORMATION
The Company will close its register of members and suspend the registration of transfer of shares from Wednesday, 19 November 2014 to Thursday, 18 December 2014 (both days inclusive) in order to determine the shareholders list of the Company who will be entitled to attend and vote
at the EGM.
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LETTER FROM THE BOARD
Shareholders whose names appear on the register of members of the Company on the close of business of Tuesday, 18 November 2014 may attend the EGM after completing the registration procedures. In order to qualify for attendance at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H share registrar, Computershare Hong Kong Investor Services Limited, by 4 : 30 p.m. on Tuesday, 18
November 2014.
Shareholders who intend to attend the EGM have to deliver the notice of attendance to the Company's H share registrar, Computershare Hong Kong Investor Services Limited in person or by post or fax on or before Friday, 28 November 2014.
By order of the Board
Air China Limited
Cai Jianjiang
Chairman
Beijing, the PRC
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APPENDIX I NOTICE OF EXTRAORDINARY GENERAL MEETING
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 00753)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (''EGM'') of Air China
Limited (the ''Company''), which will be held at The Phoenix Room, 29/F, Air China Building, 36
Xiaoyun Road, Chaoyang District, Beijing, PRC at 2 : 30 p.m. on 18 December 2014, will consider and, if thought fit, pass the following ordinary resolution:
Ordinary Resolution
To consider and approve the entry into of the trademark licensing framework agreement between the Company and China National Aviation Holding Company dated 28 October 2014 and the transaction contemplated thereunder.
By order of the Board
Air China Limited
Cai Jianjiang
Chairman
Beijing, the PRC, 31 October 2014
As at the date of this notice, the directors of the Company are Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr. Song Zhiyong, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Yang Yuzhong*, Mr. Pan Xiaojiang* and Mr. Simon To Chi Keung*.
* Independent non-executive director of the Company
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APPENDIX I NOTICE OF EXTRAORDINARY GENERAL MEETING
Notes:
(1) Closure of register of members and eligibility for attending and voting at the EGM
Holders of H Shares of the Company are advised that the register of members of the Company will close from Wednesday, 19 November 2014 to Thursday, 18 December 2014 (both days inclusive), during which time no transfer of H Shares of the Company will be effected and registered. In order to qualify for attendance and voting at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H Share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716,
17/F., Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, by 4 : 30 p.m. on Tuesday, 18 November
2014.
Shareholders of the Company whose names appear on the register of members of the Company on the close of business on Tuesday, 18 November 2014 are entitled to attend and vote at the EGM.
(2) Notice of attendance
H Share shareholders who intend to attend the EGM should complete and lodge the accompanying notice of attendance and return it to the Company's H Share registrar on or before Friday, 28 November 2014. The notice of attendance may be delivered by hand, by post or by fax to the Company's H Share registrar. Completion and return of the notice of attendance do not affect the right of a shareholder to attend and vote at the EGM. However, the failure to return the notice of attendance may result in an adjournment of the EGM, if the number of shares carrying the right to vote represented by the shareholders proposing to attend the EGM by the notice of attendance does not reach more than half of the total number of shares of the Company carrying the right to vote at the EGM.
(3) Proxy
Every shareholder who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his/her behalf at the EGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointor or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be deposited at the Company's H Share registrar for holders of H Shares not less than 24 hours before the time specified for the holding of the EGM. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company's H Share registrar.
(4) Other businesses
(i) The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be responsible for their own traveling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services Limited is:
17M Floor
Hopewell Centre
183 Queen's Road East
Wanchai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990
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