JIANGLING MOTORS CORPORATION, LTD. Share's code： | 000550 | Share's Name： | Jiangling Motors | No.： | 2014-052 |
200550 | Jiangling B |
Jiangling Motors Corporation, Ltd.
Public Announcement on Routine Related Party Transactions
Note: Jiangling Motors Corporation, Ltd. and its Board members undertake that the information disclosed herein is truthful, accurate and complete and does not contain false statements, misrepresentations or major omissions.
The third session of the eighth Board of Directors of Jiangling Motors Corporation, Ltd. (hereinafter referred to as "JMC" or the "Company") approved the VE83 Transit Extension, Application for Increasing the Deposit Limit in JMCG Finance Company (hereinafter referred to as "JMCGF"), Service Agreement with JMCGF, and routine related party transaction framework proposal on December 12, 2014.Nine Directors shall attend this Board meeting and seven directors were present. Director Manto Wong did not attend this meeting, and he authorized Vice Chairman John Lawler to represent him at this meeting; Independent Director Wang Kun did not attend this meeting, and she authorized Independent Director Lu Song to represent her at this meeting. Relevant items of the related party transactions are as follows.
I. VE83 Transit Extension Approval
1. Brief Introduction
The third session of the eighth Board of Directors of JMC approved the Fifth Amendment to the Joint Development Agreementbetween Ford Motor Company (hereinafter referred to as "Ford") and JMC, and authorized Ms. Xiong Chunying on behalf of the Company to sign the aforesaid agreement with Ford.
Whereas Ford, representing 32% of the outstanding shares of the Company, is the second largest shareholder of the Company, the transaction herein constitutes a related party transaction. When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting and all the other directors agreed with this proposal.
2. Brief Summary of Related Party
Please refer to Chapter III in this announcement for brief summary of Ford.
3. Main Contents of the Fifth Amendment to the Joint Development Agreement
The Joint Development Agreement refers to an agreement, signed by Ford and JMC in 1995, in which Ford and JMC shall develop jointly a new generation commercial vehicle i.e. VE83 Transit under the territory of P.R.C. Main Contents of the Amendment Agreement are as follows
i. The Parties hereby agree an extension of the Joint Development Agreement to any of the following dates that comes first: (1) Nation wide in China execution of Stage V; (2) launch of J09; and (3) December 31, 2016.
ii. JMC shall pay to Ford or any other party designated by Ford a Technical Development Fee of 2 million United States dollars (US$2,000,000) for what is contemplated in this Amendment Agreement.
4. Pricing Policy of the Related Party Transaction
Pricing of the transaction is based on contracted price.
5. Purpose and Impact of the Related Party Transaction on the Company
This transaction can extend VE83 Transit lifecycle and then promote the Company's sales volume and profit.
6. The total amount of the related party transactions taken place with Ford from January 1, 2014 to November 30, 2014 is about RMB 760 million.
II. Application for Increasing the Deposit Limit in JMCG Finance Company (hereinafter referred to as "JMCGF") and Service Contract with JMCGF
1. Brief Introduction
The Board of Directors approved JMC shall apply the same cash management policy to JMCGF as other banks and adjust the consolidated deposit limit in JMCGF at the end of each month to the lower of the following: 1) 25% of JMCGF absorbing deposit in prior year end, or 2) 12% of JMC's consolidated total cash reserve; the Board of Directors approved to cancel the limit of revenue settlement through JMCGF not exceeding 80% of JMC total revenue.
The Board of Directors approved the JMCG Finance Company Risk Assessment Report, Risk Management Plan; approved the Service Agreement with JMCGF, and authorized Mr. Dennis Leu on behalf of the Company to sign the aforesaid agreement with JMCGF.
Whereas the Company's Director also holds the post of Chairman of controlling shareholder of JMCGF, Jiangling Motor Company (Group) (hereinafter referred to as "JMCG"), the transaction herein constitutes a related party transaction. When voting on the aforesaid proposals, Director Wang Xigao and Director Qiu Tiangao withdrew from the voting and all the other directors agreed with these proposal.
JMCG will undertake unconditionally joint and several liabilities for guarantee responsibility concerning the debts, obligations and responsibilities of JMCGF to JMC generated from the related party transaction.
2. Brief Summary of Related Party
JMCGF, established in December 1993, is a subsidiary of JMCG and a non-banking financial institution with the approval of the People's Bank of China to provide financial services to JMCG's affiliates.
Please refer to Chapter III in this announcement for other information of JMCGF.
3. Main Contents of Service Agreement
i. Finance service scope
Including but not limited to deposits, loans, settlement, notes, auto finance business, financial advisory services.
ii. Finance service standard
All services quality provided by JMCGF shall not be worse than any other banking institution, if JMCGF has to provide the same service to the third party at the same time, JMC should be given priority to enjoy the service guaranteed. And JMCGF should constantly improve the quality of service under any possible condition.
iii. Finance service charge
Related financial services pricing shall follow the relevant financial regulations of the state, within the scope of the fair price, both parties should strictly abide by the market principle, deposit interest rate is not lower than the same period rates provided by commercial banks, loan rates not higher than the same period rate provided by commercial banks, JMCGF bank charge rate is not higher than commercial banks.
iv. JMCGF Statement and guarantee
At the end of every month, JMC' deposit balance in JMCGF should not be over 25% of JMCGF previous year absorbing deposit. If JMCGF month end absorbing deposit is less than previous year balance, JMCGF should inform JMC in time to ensure that JMC monthly deposit balance in JMCGF is not over 25% of JMCGF absorbing deposit.
4. Purpose and Impact of the Related Party Transaction on the Company
i. The increase of JMC revenue settlement balance in JMCGF will help JMCGF provide more credit support to JMC's dealers to promote the increase of the Company's sales volume;
ii. The unconditionally joint and several liabilities undertaken by JMCG for the related party transaction reduce the funding risk.
5. The total amount of the related party transactions taken place with JMCGF from January 1, 2014 to November 30, 2014 is about RMB 10,747 million.
6. The originals of JMCGF Risk Assessment Report, JMC Deposit Business with JMCGF Risk Management Plan, and the Financial Service Agreement Between JMCGF and JMC were published on the website: http://www.cninfo.com.cn.
III. Routine Related Party Transaction Framework Proposal
i. Brief Introduction
The third session of the eighth Board of Directors of JMC approved the routine related party transaction framework proposal on December 12, 2014.
The framework proposal covered all the related parties with JMC, where total annual transaction with each of them is projected to be over RMB 45 million. These related parties were clarified as Type A and Type B. Type A means the related parties with JMC, where total annual transactions with each of them is projected to be over RMB 450 million, and Type B means the related parties with JMC, where total annual transactions with each of them is projected to be between RMB 45 million and RMB 450 million. The Board of Directors approved the routine framework proposal for type A related party transactions and authorized the Execute Committee to finalize detailed contracts with individual related parties and to submit them to the Shareholders' Meeting for approval. The Board of Directors approved the routine framework proposal for type B related party transactions and authorized the Execute Committee to sign detailed contracts with individual related parties.
When voting on the proposal, Director John Lawler, Director Manto Wong and Director Yuan-Ching Chen withdrew from the voting on the related party transactions associated with Ford and its affiliates; Director Wang Xigao and Director Qiu Tiangao withdrew from the voting on the related party transactions associated with JMCG and its affiliates; Director Wang Xigao, Director Qiu Tiangao and Director Wang Kun withdrew from the voting on the related party transactions associated with Jiangling Motor Holdings Co., Ltd. and its affiliates; all the other directors agreed with this proposal
ii. Brief Summary of Related Parties
Jiangling Motor Holdings Co., Ltd. ("JHC"), representing 41.03% of the total outstanding shares of JMC, is JMC's largest shareholder. Ford, representing 32% of the total outstanding shares of JMC, is the second largest shareholder. The Company's Director also takes the post of Chairman of JMCG. As a result, JHC and its, directly or indirectly, controlled enterprises, Ford and its, directly or indirectly, controlled enterprises, and JMCG and its, directly or indirectly, controlled enterprises are defined as JMC's related parties. Brief summary of each of the related parties involved in the framework proposal is as follows:
1. JMCG Finance Company (hereinafter referred to as "JMCGF")
Address: No. 111, Supu Road, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Zhu Yi
Registered Capital: RMB 500 million
Registered Time: 1993
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG holds 87.45% equity of Finance Company and others hold 12.55%.
Business Scope: primarily providing financial services to JMCG and its affiliates, Including credit, account clearing and deposit, etc
2. JMCG Import and Export Co., Ltd. (hereinafter referred to as "JMIE")
Registered Address: No.319,Yinbin Centre Avenue, Nanchang city , JiangxiProvince, P.R.C.
Legal Representative: Xia Yingjie
Registered Capital: RMB 23,529.3 thousand
Registered Time: April 1993
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG holds 38.25% equity of JMIE and others hold 61.75%.
Business Scope: import and export business of all kinds of goods and technology; Intermediary trade; Logistics and packing etc
Headquarter Address: Detroit, U.S.A.
Chairman: William Clay Ford, Jr.
Capital: US$ 40 million
Registered Time: 1903
EnterpriseType: Corporation
Business Scope: design, manufacturing, assembly and sales of cars, trucks, parts and components, financing, leasing of vehicles and equipment, and insurance business.
4. Jiangxi Jiangling Chassis Company (hereinafter referred to as "Chassis Company")
Registered Address: No. 5, Southern Huangcheng Road, Fuzhou City, JiangxiProvince, P.R.C.
Legal Representative: Huang Pinghui
Registered Capital: RMB 60.91 million
Registered Time: November 2004
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG holds 97.11%% equity of Chassis Company and others hold 2.89%.
Business Scope: manufacturing and sales of vehicle chassis and components and other mechanical products, and sales of vehicle (excluding sedan)
5. JMCG Interior Trim Factory (hereinafter referred as "Interior Trim Factory")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Zhou Yazhuo
Registered Capital: RMB 49.33 million
Registered Time: 1978
EnterpriseType: State owned
Ownership Structure: JMCG holds 100% equity of Interior Trim Factory
Business Scope: manufacturing of metal body cab and seat assembly, whole-sales and retail of metal components, machinery parts.
6. NanchangBao-jiang Steel Processing & Distribution Co., Ltd. (hereinafter referred to as "Bao-jiang Company")
Registered Address: Auto Avenue, Xiaolan Economic Development Zone, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Hu Hong
Registered Capital: RMB 74.8 million
Registered Time: November 2006
EnterpriseType: Limited Liability Company
Ownership Structure: Shanghai Baoshan Steel Co., Ltd. holds 51% equity of Bao-jiang Company and JMCG holds 49%.
Business Scope: processing, selling, distribution and storage of steel.
7. GETRAG (Jiangxi) Transmission Company (hereinafter referred to as "GJT")
Registered Address: Nanchang, China
Chairman: Tobias Hagenmeyer
Registered Capital: Euro 51 million
Registered Time: September 2006
Ownership Structure: GETRAG Asia Pacific (Ford holds 16.67% its equity.) holds 67% equity of GJT, and JMCG holds the remaining 33%.
Business Scope: manufacture and distribution of transmissions for passenger cars and light trucks and components for motorbikes and cars/trucks.
8. Jiangling-Lear Interior Trim Factory
Registered Address: No. 417, Yingbin Avenue, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Peter Kit-chi Pan
Registered Capital: US$ 10,215 thousand
Registered Time: May 2007
EnterpriseType: Joint Venture
Ownership Structure: Interim Trim Factory and Lear Corporation China Ltd. hold 50% equity of Jiangling-Lear Interior Trim Factory respectively.
Business Scope: designing, manufacturing and sales of seats, foam for automobiles, modification and derivative vehicles.
9. Jiangxi Specialty Vehicles Jiangling Motors Group Co., Ltd. (hereinafter referred to as "Specialty Vehicles Company")
Registered Address: Xiaolan Industry District, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Wu Xiaolin
Registered Capital: RMB 38.99 million
Registered Time: July 2004
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG holds 34% equity of Modification Company and other hold 66%.
Business Scope: manufacturing and sales of automotive components and modified vehicles
10. Nanchang JMCG Lianchen Auto Component Co. (hereinafter referred to as "JMCG Liancheng")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Wu Yong
Registered Capital: USD 10 million
Registered Time: October 2005
EnterpriseType: Joint Venture
Ownership Structure: JMCG holds 52% equity of JMCG Liancheng and others hold 48%.
Business Scope: design, development and manufacturing of automobile die, jig, steel stamping, and the plastic parts.
11. Nanchang Jiangling Huaxiang Auto Components Company(hereinafter referred to as "Jiangling Huaxiang")
Registered Address: Changnan Industry District, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Lin Fuqing
Registered Capital: RMB 40 million
Registered Time: January 2003
EnterpriseType: Corporation
Ownership Structure: JMCG and Ningbo Huaxiang Electronic Co., Ltd. hold 50% equity of Jiangling Huaxiang respectively.
Business Scope: manufacturing and sales of stamping parts and auto components.
12. Halla Visteon Air-conditioning (Nanchang) Co., Ltd.(hereinafter referred to as "Visteon Nanchang")
Registered Address: Hong Kong, P.R.C.
Legal Representative: Robert C. pallash
Registered Capital: US$ 5.6 million
Registered Time: March 1996
EnterpriseType: Joint Venture
Ownership Structure: JMC holds 19.15% equity of Visteon Nanchang, and Hana Air-conditioning Co. holds the other 80.85%.
Business Scope: Auto wiring, the development, manufacturing, sales and after sales service of electronic parts
13. Nanchang Unistar Electric & Electronics Co., Ltd. (hereinafter referred to as "Unistar Electric")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Pan Xiaolin
Registered Capital: RMB 30 million
Registered Time: September 13, 2012
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG and Nantong Youxing Wiriing Co., Ltd hold 50% equity of Unistar Electric respectively.
Business Scope: manufacturing of automobile, engine, chassis and automotive components; sales of self-produced products, and related after-sales services.
14.Nanchang JMCG Shishun Logistic Co., Ltd. (hereinafter referred to as "Shishun Company")
Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Zhang Weiling
Registered Capital: RMB 2 million
Registered Time: February 2009
EnterpriseType: Limited Liability Company
Ownership Structure: Jiangxi JMCG Industrial Company holds 51% equity of Shishun Company, other hold 49% equity.
Business Scope: car rental, automotive spare parts warehouse, cargo transportation.
15. JMCG
Registered Address: No. 509, Northern Yingbin Avenue, Nanchang City, JiangxiProvince, P.R.C.
Legal Representative: Qiu Tiangao
Registered Capital: RMB 1.5 billion
Registered Time: July 1991
EnterpriseType: State owned
Ownership Structure: Nanchang Municipal Government holds 100% equity of JMCG
Business Scope: manufacturing of automobiles, engines, chassis, derivative vehicle products and automotive components, automotive quality test, sales of self-produced products, as well as related after-sale service.
16. Jiangxi Jiangling Material Utilization Co., Ltd. (hereinafter referred to as "Material Utilization Co.")
Registered Address: Jiangling Xinye Zone, Qingyunpu District, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Tao Xuechun
Registered Capital: RMB 8 million
Registered Time: December 1997
Enterprise Type: Limited Liability Company
Ownership Structure: JMCG holds 100% equity of Material Utilization Co.
Business Scope: manufacturing and sales of automotive components, waste management and recycling.
17. Nanchang JMCG Tianran Auto Component Co. (hereinafter referred to as "JMCG Tianren")
Registered Address: Nanchang City, Jiangxi Province, P.R.C
Legal Representative: Lu Zeyong
Registered Capital: RMB 46.15 million
Registered Time: April 2006
EnterpriseType: Limited Liability Company
Ownership: JMCG holds 37.9% equity of JMCG Tianren., and JHC holds the remaining 62.1%.
Business Scope:manufacturing and sales of auto stamping, welding parts and other auto parts (excluding engine)
18. Nanchang Lianda Mechanical Co., Ltd (hereinafter referred to as "Lianda Mechanical")
Registered Address: Nanchang City, Jiangxi Province, P.R.C
Legal Representative: Min Hua
Registered Capital: RMB 11 million
Registered Time: April 2010
EnterpriseType: Limited Liability Company
Ownership: Jiangxi JMCG Industrial Co. holds 26% equity of Nanchang Lianda Mechanical Co., Ltd., Jiangling Metal Casting Co. holds 25% and Nanchang Shiding Investment Co., Ltd. holds the remaining 49%.
Business Scope:R&D, manufacturing and sales of automotive components and metal components
19. JMCG Jingma Motors Co., Ltd.(hereinafter referred to as "JMCG Jingma")
Registered Address: Nanchang City, Jiangxi Province, P.R.C
Legal Representative: Qiu Tiangao
Registered Capital: RMB 200 million
Registered Time: February 1979
EnterpriseType: Limited Liability Company
Ownership: JMCG holds 75% equity of JMCG Jingma, individuals hold the remaining 25%.
Business Scope:Production of automobile, special vehicle, engine, chassis transmission and parts. Maintaining, product sales, development auto products, estate management, foreign trade and material export.
20. Nanchang Fujiya Exhausting Control Technical Co., Ltd. (hereinafter referred to as "Fujiya Company")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Wan Jianrong
Registered Capital: US$ 8 million
Registered Time: April 2012
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG holds 49% equity of Fujiya Company, and Fujiya (China) Investment Co., Ltd holds 51%.
Business Scope: Development, production and sales of automobile exhausting system.
21. Nanchang Yinlun Heat-exchange Co., Ltd. (hereinafter referred to as "Yinlun Company")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Xu Xiaomin
Registered Capital: RMB 40 million
Registered Time: April 2013
EnterpriseType: Limited Liability Company
Ownership Structure: JMCG and Zhejiang Yinlun Mechanic Co., Ltd. hold 50% equity of Yinlun Company respectively.
Business Scope: Development, production and sales of automobile heat exchange system
22. Jiangxi JMCG Aowei Auto Component Co. (hereinafter referred to as "JMCG Aowei")
Registered Address: Nanchang City, Jiangxi Province, P.R.C
Legal Representative: Wan Ming
Registered Capital: RMB 9 million
Registered Time: December 2008
EnterpriseType: Limited Liability Company
Ownership: JMCG Interim Trim Factory holds 40% equity of JMCG Aowei, and its senior management holds the remaining 60%.
Business Scope:manufacturing and sales of automotive components
23. Jiangxi JMCG Industrial Company (hereinafter referred to as "Industrial Company")
Address: No. 509, Northern Yingbin Avenue, Nanchang City, JiangxiProvince, P.R.C.
Legal Representative: Wu Tao
Registered Capital: RMB 46.14 million
Registered Time: May 1992
EnterpriseType: State owned
Ownership Structure: JMCG holds 100% equity of Industrial Company
Business Scope: manufacturing and sales of automotive components, dress, battery cell charging, hotel, catering.
24.Jiangling Material Company (hereinafter referred to as "Material Company")
Registered Address: BaojiaGarden, Jinggangshan Avenue, Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Hu Changjin
Registered Capital: RMB 1.1 million
Registered Time: January 2003
Enterprise Type: Limited Liability Company
Ownership Structure: JMCG holds 72.38% equity of Material Company, and individuals hold 27.62% equity.
Business Scope: metal, hardware, electronics, construction material, fuel (Self owned gas station) for production vehicle gas filling within JMCG; auto parts, motorcycle parts, general machinery and parts, agriculture machinery parts
25. Jiangxi Jiangling Non-ferrous Metal Die-casting Co., Ltd. (hereinafter referred to as "Jiangling Non-ferrous")
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Chen Huajun
Registered Capital: RMB 20 million
Registered Time: January 2006
Enterprise Type: Limited Liability Company
Ownership Structure: JMCG holds 51% equity of Material Company, and other individuals hold 49% equity.
Business Scope: Manufacturing and sales of Die-casting part
iii. Basic Information of Related Party Transaction
Types and content of the related party transactions between JMC and the above-mentioned related parties are mainly for purchases and sales of goods & services.
iv. Main Content of Routine Related Party Transaction Framework Proposal
In the following-described pricing principle, market price means it is based on the market price of similar products, and contracted price means that for unique products or services unable or difficult to obtain comparable market data, the prices are determined through the process of supplier quote, cost assessment and negotiations.
1. Type A transactions are as follows:
Unit: RMB million
No. | Related Party | Transaction Content | Pricing Principle | Settlement method | 2014 Amount (Estimate) | 2015 Amount (Forecast) |
1 | JMCGF | Deposit interest | Banking interest | 4 | 7 | |
Guarantees | 5 | 5 | ||||
Settlement | 11,868 | 19,899 | ||||
2 | JMIE | Sales of goods for export | Contracted price | 40% of prepayment and the remains paid during 30 days after delivery | 1,473 | 1,716 |
3 | Ford and its subsidiaries | Purchase of goods/labor service | Contracted price | D/P | 429 | 1035 |
Management personnel expenses | Quarterly | 59 | 72 | |||
Technical service and technology Development | Quarterly | 661 | 814 | |||
4 | Chassis Company | Purchase of goods/ | 60 days after delivery and invoicing | 784 | 905 | |
Sales of goods | Monthly Netting off payment of purchased goods | 37 | 51 | |||
5 | Interior Trim Factory | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 682 | 784 |
Sales of goods/labor service | Monthly Netting off payment of purchased goods Prepayment | 78 | 95 | |||
6 | Bao-jiang Company | Purchase of goods | Contracted price | Prepayment | 657 | 816 |
7 | GJT | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 649 | 748 |
8 | Jiangling-Lear Interior Trim Factory | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 515 | 594 |
Sales of goods | Monthly Netting off payment of purchased goods | 16 | 17 | |||
9 | Special Vehicles Company | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 231 | 270 |
Sales of goods | Monthly Netting off payment of purchased goods | 181 | 194 |
The above-mentioned related party transaction will be submitted to the Shareholders' Meeting for approval. The related shareholders who have interests in the related transaction will withdraw from voting on the proposal at the Shareholders' Meeting.
2. Type B transactions are as follows:
Unit: RMB million
No. | Related Party | Transaction Content | Pricing Principle | Settlement method | 2014 Amount (Estimate) | 2015 Amount (Forecast) |
1 | JMCG Liancheng | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 293 | 338 |
Sales of goods | 60 days after invoicing | 45 | 49 | |||
2 | Jiangling Huaxiang | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 281 | 325 |
3 | Visteon Nanchang | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 270 | 314 |
4 | Unistar Electric | Purchase of goods | Contracted price | 30 days after delivery and invoicing | 253 | 291 |
5 | Shishun Company | Labor service | Contracted price | D/P | 200 | 222 |
6 | JMCG | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 101 | 116 |
7 | Material Utilization Co. | Labor service | Contracted price | Pay on delivery | 19 | 19 |
Sales of goods | Market price | Monthly | 11 | 13 | ||
8 | JMCG Tianran | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 91 | 94 |
9 | Lianda Mechanical Co. | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 83 | 95 |
Sales of goods | Monthly Netting off payment of purchased goods | 67 | 77 | |||
10 | Jiangling Jingma | Sales of goods | Contracted price | 30 days after invoicing | 1 | 1 |
11 | Fujiya | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 55 | 63 |
12 | Yinlun Company | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 0.5 | 63 |
13 | JMCG Aowei | Purchase of goods/labor service | Contracted price | 60 days after delivery and invoicing | 52 | 60 |
Sales of goods | Prepayment | 40 | 46 | |||
14 | Industrial Company | Labor service | Contracted price | D/P | 2 | 2 |
Sales of goods | 30 days after invoicing | 27 | 37 | |||
15 | Material Company | Purchase of goods | Contracted price | Pay on delivery | 8 | 10 |
16 | Jiangling Non-ferrous | Purchase of goods | Contracted price | 60 days after delivery and invoicing | 41 | 47 |
v. Purpose of Related Party Transactions and Its Impact on JMC
All the above-mentioned related party transactions are regular and recurring transactions between JMC and the related parties, and they are necessary for JMC to maintain its daily operation. The goods purchased from the related parties are mainly unique parts for JMC products.
The transactions between JMC and the related parties follow the principles of Fairness, Openness and Justice. All the transactions meet the requirements of relevant laws and regulations, which do not damage the benefit of the Company and shareholders.
IV. Opinions from Independent Directors
Independent Directors Wang Xu, Lu Song and Wang Kun expressed their opinions on the above-mentioned related party transactions as follows:
1. We have been informed of the meeting agenda prior to the meeting;
2. We have known the Fifth Amendment to the Joint Development Agreement between Ford Motor Company and JMCand believe that the technology development fee paid to Ford is reasonable according to the Agreement;
3. We have known the related party transaction with JMCG Finance Company, and believe that it is reasonable that JMC increases the deposit limit in JMCG Finance Company in line with the Company's sales expansion and cancel the limit of revenue settled through JMCG Finance Company in proportion of JMC total revenue. The Risk Management Plan on JMC's Deposit in JMCG Finance Company formulated by the Company can pervert effectively, control and resolve funding risk in time, ensure the funding safety and protect the interests of medium and small shareholders and the Company. It ensures the funding risk lowest that JMCG will undertake unconditionally joint and several liabilities for guarantee responsibility concerning the debts, obligations and responsibilities of JMCG Finance Company to JMC generated from the related transaction;
4. We have known the routine related party transactions of the Company, and believe that the routine related party transaction framework proposal is necessary for the Company's daily operation and reasonable, and voting procedures of the proposal complies with the relevant requirements of the laws & regulations.
VII. Documents for Reference
1. Resolutions of the Third Session of the Eighth Board of Directors of JMC;
2. Opinions from Independent Directors on the relevant issues at the third session of the Eighth Board of Directors;
3. JMCGF Risk Assessment Report by JMC;
4. JMC Deposit Business with JMCGF Risk Management Plan;
5. Financial Service Agreement Between JMCGF and JMC.
Board of Directors
Jiangling Motors Corporation, Ltd.
December 16, 2014
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