Core Points - Nanhua Futures Co., Ltd. has revised its Articles of Association and related systems applicable after the issuance and listing of H shares in response to regulatory requirements and company needs [1][2][3] - The revisions include changes to the definitions of shareholder meetings, legal representatives, and the responsibilities of directors and senior management [1][2][3] - The company aims to ensure compliance with both domestic and Hong Kong regulations while protecting the rights of shareholders, creditors, and clients [1][2][3] Summary of Articles of Association Revisions - The term "shareholders' meeting" has been changed to "shareholders' assembly" to align with the new regulations [1] - The legal representative of the company will now be elected by the board of directors, and the responsibilities of the legal representative have been clarified [1][2] - The company will bear civil liability for actions taken by the legal representative in the course of their duties, with provisions for recourse against the representative in cases of fault [1][2] - The company’s assets will be divided into equal shares, and shareholders will be liable only to the extent of their subscribed shares [1][2] - The company’s shares will be issued in registered form, ensuring equal rights for all shareholders of the same class [1][2] - The company’s capital structure and the issuance of shares will adhere to principles of openness, fairness, and justice [1][2] - The company will not provide financial assistance for the acquisition of its shares, except under specific conditions approved by the board [1][2] - The company’s operational scope includes futures brokerage, financial futures brokerage, investment consulting, asset management, and securities investment fund distribution [1][2]

General Provisions - The company aims to protect the legal rights of shareholders, employees, creditors, and clients, and to regulate its organization and behavior according to relevant laws and regulations [2][4] - The company is established as a joint-stock company in accordance with the Company Law and is registered in Zhejiang Province with a unified social credit code [2][3] - The company was approved by the China Securities Regulatory Commission (CSRC) to issue 70 million shares to the public and was listed on the Shanghai Stock Exchange on August 30, 2019 [2][3] Company Structure - The registered capital of the company is RMB 610.065893 million [3] - The company is a permanent joint-stock company, and the board of directors elects the legal representative [3][4] - The legal representative is responsible for civil activities conducted in the company's name, and the company bears the legal consequences of these activities [3][4] Business Objectives and Scope - The company's business objectives include meeting diverse needs, enhancing customer satisfaction, promoting innovation, and increasing company value [5] - The business scope includes commodity futures brokerage, financial futures brokerage, futures investment consulting, asset management, and securities investment fund distribution [5] Shares - The company's shares are issued in the form of stocks, with all shares being ordinary shares [7][8] - The total number of issued shares is 610.065893 million, with a nominal value of RMB 1 per share [7][8] - The company prohibits financial assistance for acquiring its shares, except for employee stock ownership plans [9] Shareholder Rights and Responsibilities - Shareholders have rights to dividends, voting, supervision, and access to company documents [13][14] - Shareholders must comply with laws and the company's articles of association, and they are liable for their subscribed shares [39][40] - Major shareholders must notify the company of significant changes affecting their shares within two trading days [19][20] Shareholder Meetings - The company holds annual and temporary shareholder meetings, with specific procedures for calling and conducting these meetings [47][48] - Shareholder meetings require a quorum and decisions are made based on majority or supermajority votes depending on the type of resolution [79][81] - The company must provide legal opinions on the validity of the meeting procedures and decisions [49]

Core Viewpoint - The credit rating agency, China Chengxin International, has assigned a stable AAA rating to Shanxi Securities, highlighting its strong shareholder strength, regional competitive advantages, and comprehensive financial service capabilities [3][4][6]. Financial Overview - As of June 2024, Shanxi Securities reported total assets of 775.90 billion, with shareholder equity at 181.53 billion and net capital at 121.67 billion [7][9]. - The company's operating income for 2022 was 41.61 billion, with a net profit of 5.67 billion, reflecting a decline from the previous year [7][19]. - The average return on equity was 3.29% in 2023, indicating a decrease from 4.62% in 2021 [8][9]. Business Performance - The wealth management segment saw a revenue decline of 6.02% in 2023, attributed to decreased market activity and lower fee rates [21][30]. - The securities brokerage business remains a core revenue source, with 101 branches, including 55 in Shanxi and 46 outside, covering major cities [22][23]. - The financing and securities lending business maintained a balance of 63.82 billion by the end of 2023, although interest income from this segment saw a slight decline [24][25]. Industry Context - The Chinese securities industry is experiencing intensified competition due to accelerated market reforms and the opening up of the financial sector [16][18]. - The introduction of policies such as the comprehensive registration system and the pilot program for individual pensions is expected to create broader development opportunities for securities firms [15][16]. - Shanxi Securities is positioned to benefit from these reforms, with a focus on diversifying its business structure and enhancing its comprehensive service capabilities [19][30]. Risk Factors - The company faces challenges from increasing competition, market volatility affecting profitability, and compliance issues stemming from regulatory penalties [4][7][26]. - The administrative penalties against its subsidiary, Zhongde Securities, have raised concerns about compliance and risk management practices [26][27]. Future Outlook - The credit rating agency anticipates that Shanxi Securities' credit level will remain stable over the next 12 to 18 months, with no upward rating triggers identified [5][6]. - The company is expected to continue focusing on enhancing its operational capabilities and expanding its market presence amid a competitive landscape [19][30].