NEWS RELEASE
July 22, 1999
PUBLIC STATEMENT
in respect of
Mr. Guo Dai Yi, Mr. Dong Rong Hua,
Mr. Jiang Tao, Mr. Zeng Chao Bi,
Mr. Zhu Jian Pai, Mr. Wu Zhong Fu,
Mr. Ng Siu Fai, Mr. Li Cheng Pu,
Mr. Liu Xiu Ying, Mr. Huang You He,
Mr. Wang Zu Qin, Mr. Su Quan Lin
(collectively, the "Relevant Parties")
and Chongqing Iron & Steel Company Limited
As a disciplinary hearing held on March 16, 1999 and subsequently at a disciplinary (review) hearing held on June 15, 1999, the Listing Committee of the Exchange conducted a hearing into the conduct of Chongqing Iron & Steel Company Limited and the Relevant Parties, including, Mr. Guo Dai Yi, Mr. Dong Rong Hua, Mr. Jiang Tao, Mr. Zeng Chao Bi, Mr. Zhu Jian Pai (the "Executive Directors"), Mr. Wu Zhong Fu, Mr. Ng Siu Fai, (the "Non-Executive Directors"), Mr. Li Cheng Pu, Mr. Liu Xiu Ying, Mr. Huang You He, Mr. Wang Zu Qin, and Mr. Su Quan Lin (the "Supervisors").
These hearings considered the sale and purchase of raw materials by the Company from and to a connected person, Import and Export Company, a wholly owned subsidiary of the Company's parent company pursuant to a processing agreement dated February 16, 1997 instead of an agency agreement dated September 29, 1997, which was disclosed in the Company's prospectus dated October 6, 1997, after listing of the Company on the Exchange on October 17, 1997 until December 31, 1997.
The Company and the Relevant Parties admitted breaches of the connected transaction rules under Chapter 14 of the Exchange Listing Rules.
The Listing Committee found that by virtue of the said breaches of the Exchange Listing Rules, each of the Relevant Parties has breached his Declaration and Undertaking with regard to Directors and Supervisors, as the case may be, whereby each of them undertook to comply to the best of his ability with the Exchange Listing Rules from time to time in force, and to use his best endeavours to procure that the Company of which he is a director or supervisor, as the case may be, would so comply. The Listing Committee further finds that the Company had not been operating in accordance with the Agency Agreement as disclosed in the Prospectus during the Relevant Period.
The Listing Committee also believes that the Company and the Relevant Parties did not act in a timely manner in disclosing the Connected Transactions to the Exchange, the shareholders and the investing public as required by Paragraph 2 of the Listing Agreement.
The Company and the Relevant Parties are hereby publicly criticised by the Listing Committee for:
(a) the Company's breach of the connected transaction rules as provided for in Chapter 14 of the Exchange Listing Rules, in particular, Rule 14.25(1) and Rule 14.26(1) thereof;
(b) the Relevant Parties' breach of their Undertakings as contained in Appendix 5 (Forms H & I) to the Exchange Listing Rules, in that each of the Executive and Non-Executive Directors and Supervisors has failed to comply to the best of his ability with the Exchange Listing Rules from time to time in force and to use his best endeavours to procure that the Company would so comply; and
(c) the Company's and the Relevant Parties' breach of Paragraph 2 of the Listing Agreement.
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Corporate Communications Department
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