The company had planned to invest RMB 40 mln of its own funds to jointly establish a small loan company with 9 to 17 other non-related parties. Subsequently, the company would have held a 20% stake in the new company making it the largest shareholder. The other investors would have likely have invested between RMB 10 mln and RMB 20 mln in the new company.

Pertinent proposals were approved at the 14th Meeting of the 3rd Board of Directors on 10 Sept 2008. However, the application for the investment had to be submitted to the People’s Government of Linan City, which would have then formulated a written declaration and applied to the Finance Bureau of the Hangzhou Municipal People’s Government (FOHMPG), following which the FOHMPG would have submitted it to the Zhejiang Finance Bureau (ZFO) for examination and approval. Only if the application was approved by the ZFO, could the company have proceed with registration procedures and obtain the necessary industrial and commercial business licenses for the new affiliate.

However, the investment in the establishment of the small loan company bore certain financial risks, and the relevant application was rejected by certain government authorities.

Board of Directors
11 Sept 2008


Source: Securities Times

Date: 11 Sept 2008

CN01/RL/JL/BT/KM