Article 37 The Company may, in accordance with laws, administrative regulations, departmental constitution documents and these Articles of Association and subject to the approval of the relevant governing authority of the State, repurchase its issued shares under the following circumstances:
(1) Cancellation of shares for the reduction of its capital;
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(2) Merging with another company that holds shares in the Company;
(3) The Company awarding its employees with shares;
(4) Where the shareholders disagree on the resolutions passed by the shareholders’ general meeting on the merger or division of the Company so much that they request the company to acquire their shares;
(5) Other circumstances permitted by laws and administrative regulations.
Save for the above circumstances, the Company shall not perform any act of repurchase of its own shares otherwise.
Article 38 The Company may, with the approval of the relevant State governing authority for repurchasing its shares, conduct the repurchase in one of the following ways:
(1) Making a pro rata general offer of repurchase to all its shareholders;
(2) Repurchase through public dealing on a stock exchange;
(3) Repurchase by an off-market agreement outside a stock exchange.
Article 39 Where the Company repurchases its shares by an off-market agreement outside a stock exchange, the prior sanction of shareholders shall be obtained in accordance with these Articles of Association. The Company may release or vary a contract so entered into by the Company or waive its rights thereunder with the prior approval of shareholders obtained in the same manner.
A contract to repurchase shares referred to in the preceding paragraph includes but not limited to an agreement to become obliged to repurchase or acquire the right to repurchase shares of the Company.
A contract for the Company to repurchase its shares or any rights thereunder is not assignable.
Article 40 Where the Company repurchases its own shares due to reasons as set out in clauses (1) to (3) of Article 37, it shall obtain the prior approval of the shareholders by a resolution at a shareholders’ general meeting. After the Company repurchases its shares pursuant to Article 37, the shares in respect of the circumstances described in clause (1) shall be cancelled within ten days from the day of purchase; and those in respect of the circumstances described in clauses (2) and (4) shall be transferred or cancelled within six months. The Company shall deduct the carrying amount of the shares cancelled from its share capital, and shall process registration of changing in registered capital with the original registrar.
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The maximum number of shares repurchased by the Company pursuant to clause (3) of Article 37 shall not exceed 5% of its total issued shares; and repurchase shall be fund out of the profit after tax of the Company; the shares purchased shall be transferred to the employees within one year.
Article 41 Unless the Company is in the course of liquidation, it must comply with the following provisions in relation to repurchase of its issued shares:
(1) Where the Company repurchases shares of the Company at par value, payment shall be made out of book surplus distributable profits of the Company or out of proceeds of a fresh issue of shares made for that purpose;
(2) Where the Company repurchases shares of the Company at a premium to its par value, payment up to the par value may be made out of the book surplus distributable profits of the Company or out of the proceeds of a fresh issue of shares made for that purpose. Payment of the portion in excess of the par value shall be effected as follows:
