CHINA ZHESHANG BANK CO., LTD. * (A joint-stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2016)

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1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in China Zheshang Bank Co., Ltd., you should at once hand this circular and the accompanying proxy form and reply slip to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities. Distribution of this circular into jurisdictions other than Hong Kong may be restricted by law. Persons into whose possession this circular comes should inform themselves of and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this circular nor any copy thereof may be released into or distributed in the United States or any other jurisdiction where such release or distribution might be unlawful. The Offshore Preference Shares and the H Shares issuable upon conversion of the Offshore Preference Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the U.S. Securities Act ) or the securities laws of any State of the United States or other jurisdiction, and the Offshore Preference Shares may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable State or local securities laws. There is no intention to register any portion of any securities described herein in the United States or to conduct a public offering of securities in the United States. CHINA ZHESHANG BANK CO., LTD. * (A joint-stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2016) PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION PROPOSED APPOINTMENT OF DIRECTOR PROPOSED APPOINTMENT OF SUPERVISOR PROPOSED GENERAL MANDATE FOR THE ISSUE OF H SHARES NOTICE OF 2016 FIRST EXTRAORDINARY GENERAL MEETING AND NOTICE OF 2016 FIRST CLASS MEETING FOR H SHAREHOLDERS The Extraordinary General Meeting of the Bank will be held at Lakeview Hotel, No. 2 West Huancheng Road, Hangzhou, Zhejiang, the PRC on Monday, October 17, 2016 at 2:30 p.m.. The 2016 First Class Meeting for Domestic Shareholders will be held at the later of 4:00 p.m. on the same day or immediately after the conclusion of the Extraordinary General Meeting, while the 2016 First Class Meeting for H Shareholders will be held at the later of 5:30 p.m. on the same day or immediately after the conclusion of the 2016 First Class Meeting for Domestic Shareholders. The notice of the Extraordinary General Meeting and the notice of the 2016 First Class Meeting for H Shareholders are set out on pages 51 to 56 of this circular. The notice of the 2016 First Class Meeting for Domestic Shareholders will be published by the Bank separately. Whether or not you are able to attend the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders, you are advised to read the notice of the Extraordinary General Meeting and the notice of the 2016 First Class Meeting for H Shareholders and to complete and return the enclosed proxy form in accordance with the instructions printed thereon. For holders of Domestic Shares, the proxy form should be returned to the Bank s Office of the Board, and for holders of H Shares, the proxy form should be returned to the Bank s H Share Registrar, Computershare Hong Kong Investor Services Limited in person or by post as soon as possible but in any event not less than 24 hours before the time stipulated for convening the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders or any adjourned meeting thereof. Completion and return of the proxy form will not preclude you from attending and voting at the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders or at any adjourned meeting if you so wish. If you intend to attend the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders in person or by proxy, you are required to complete and return the reply slip to the Bank s Office of the Board or to Computershare Hong Kong Investor Services Limited on or before Tuesday, September 27, * China Zheshang Bank Co., Ltd. is not an authorized institution within the meaning of the Banking Ordinance (Chapter 155 of Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorized to carry on banking and/or deposit-taking business in Hong Kong. September 1, 2016

2 CONTENTS Page DEFINITIONS... 1 LETTER FROM THE BOARD... 4 APPENDIX I OFFSHORE PREFERENCE SHARES ISSUANCE PLAN APPENDIX II PROPOSAL ON AUTHORISATION MATTERS APPENDIX III AMENDMENTS TO ARTICLES OF ASSOCIATION NOTICE OF 2016 FIRST EXTRAORDINARY GENERAL MEETING NOTICE OF 2016 FIRST CLASS MEETING FOR H SHAREHOLDERS i

3 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the following meanings: 2016 First Class Meeting for Domestic Shareholders the 2016 first class meeting for Domestic Shareholders of the Bank to be held at Lakeview Hotel, No. 2 West Huancheng Road, Hangzhou, Zhejiang, the PRC, at the later of 4:00 p.m. or immediately after the conclusion of the EGM on Monday, October 17, First Class Meeting for H Shareholders Additional Tier 1 Capital Administrative Measures Articles of Association Bank Board or Board of Directors the 2016 first class meeting for H Shareholders of the Bank to be held at Lakeview Hotel, No. 2 West Huancheng Road, Hangzhou, Zhejiang, the PRC, at the later of 5:30 p.m. or immediately after the conclusion of the 2016 First Class Meeting for Domestic Shareholders on Monday, October 17, 2016 has the meaning given to it in the Capital Management Rules the Trial Administrative Measures on Preference Shares ( 優先股試點管理辦法 ) issued by the CSRC on March 21, 2014 the articles of association of the Bank, as amended, supplemented or otherwise modified from time to time China Zheshang Bank Co., Ltd. ( 浙商銀行股份有限公司 ), a sino-foreign joint venture incorporated in the PRC on April 16, 1993 in accordance with the PRC laws, and reorganized to a joint-stock company with approval of the CBRC on June 30, 2004 and the H Shares of which are listed on the Stock Exchange (Stock Code: 2016) the board of directors of the Bank Capital Management Rules the Rules Governing Capital Management of Commercial Banks (Provisional) ( 商業銀行資本管理辦法 ( 試行 )) issued by the CBRC on June 7, 2012, which became effective on January 1, 2013 CBRC China Banking Regulatory Commission ( 中國銀行業監督管理委員會 ) Class Meetings Company Law Relevant class meetings to be held on October 17, 2016, being the date of the EGM, or any adjourned meetings at which (i) Domestic Shareholders and (ii) H Shareholders will consider and approve the issuance of Offshore Preference Shares and the Proposal on Authorisation Matters respectively the Company Law of the PRC ( 中華人民共和國公司法 ), as promulgated and adopted by the Standing Committee of the Eighth National People s Congress on December 29, 1993 and effective on July 1, 1994, as amended, supplemented or otherwise modified from time to time CSRC China Securities Regulatory Commission ( 中國證券監督管理委員會 ) Director(s) the director(s) of the Bank 1

4 DEFINITIONS Domestic Shares Domestic Shareholder(s) EGM or Extraordinary General Meeting ordinary shares issued by our Bank, with a nominal value of RMB1.00 each, which are subscribed for or credited as paid in full in RMB holders of Domestic Shares the 2016 first extraordinary general meeting or any adjourned meeting of the Bank to be held at Lakeview Hotel, No. 2 West Huancheng Road, Hangzhou, Zhejiang, the PRC on Monday, October 17, 2016 at 2:30 p.m.. H Share Registrar Computershare Hong Kong Investor Services Limited H Shares overseas listed foreign shares of RMB1.00 each in the share capital of the Bank, which are listed on the Stock Exchange and traded in Hong Kong dollars H Shareholder(s) or holder(s) of H Shares HK$ Hong Kong Joint Guidance Opinion Latest Practicable Date Listing Rules Offshore Preference Shares Issuance Plan Offshore Preference Shares Offshore Preference Shareholder(s) PRC Proposal on Authorisation Matters RMB holder(s) of H Shares Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC the Guidance Opinion on Issuance of Preference Shares by Commercial Banks for Replenishing Tier 1 Capital ( 關於商業銀行發行優先股補充一級資本的指導意見 ) jointly issued by the CBRC and the CSRC on April 3, 2014 August 23, 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time the Plan for Non-public Issuance of Offshore Preference Shares by China Zheshang Bank Co., Ltd. the preference shares of an aggregate value of not more than RMB15 billion or its equivalent, proposed to be issued by the Bank in the offshore market pursuant to the Offshore Preference Shares Issuance Plan as set out in Appendix I to this circular holder(s) of Offshore Preference Shares the People s Republic of China, excluding, for the purposes of this circular only, Hong Kong, Macau Special Administrative Region of the People s Republic of China and Taiwan the Proposal on Authorisation to the Board and its Authorised Persons to Handle All Matters Relating to the Issuance of Offshore Preference Shares Renminbi, the lawful currency of the PRC 2

5 DEFINITIONS Share(s) Shareholder(s) State Council Guidance Opinion Stock Exchange Supervisor(s) Supervisory Committee Domestic Shares and H Shares holder(s) of Shares the Guidance Opinion on the Launch of Preference Shares Pilot Scheme ( 國務院關於開展優先股試點的指導意見 ) issued by the State Council of the PRC on November 30, 2013 The Stock Exchange of Hong Kong Limited supervisor(s) of the Bank the supervisory committee of the Bank % per cent. 3

6 LETTER FROM THE BOARD CHINA ZHESHANG BANK CO., LTD. * (A joint-stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2016) Executive Directors Mr. SHEN Renkang Mr. LIU Xiaochun Ms. ZHANG Luyun Mr. XU Renyan Non-executive Directors Mr. WANG Mingde Ms. WANG Yibing Ms. SHEN Xiaojun Ms. GAO Qinhong Mr. HU Tiangao Ms. LOU Ting Registered Office: No. 288, Qingchun Road Hangzhou Zhejiang PRC Principal place of business in Hong Kong: 18/F Tesbury Center 28 Queen s Road East Wanchai Hong Kong Independent Non-executive Directors Mr. JIN Xuejun Mr. TONG Benli Mr. YUAN Fang Mr. DAI Deming Mr. LIU Pak Wai Mr. ZHENG Jindu September 1, 2016 To the Shareholders Dear Sir or Madam, PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION PROPOSED APPOINTMENT OF DIRECTOR PROPOSED APPOINTMENT OF SUPERVISOR PROPOSED GENERAL MANDATE FOR THE ISSUE OF H SHARES NOTICE OF 2016 FIRST EXTRAORDINARY GENERAL MEETING AND NOTICE OF 2016 FIRST CLASS MEETING FOR H SHAREHOLDERS * China Zheshang Bank Co., Ltd. is not an authorized institution within the meaning of the Banking Ordinance (Chapter 155 of Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorized to carry on banking and/or deposit-taking business in Hong Kong. 4

7 LETTER FROM THE BOARD 1. INTRODUCTION The purpose of this circular is to provide you with the notice of the Extraordinary General Meeting and the notice of the 2016 First Class Meeting for H Shareholders, and to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders. 2. PROPOSED ISSUANCE OF OFFSHORE PREFERENCE SHARES In order to improve the capital structure of the Bank, to provide funding support for the effective implementation of the Bank s strategies and to further enhance the comprehensive competitiveness and sustainable development of the Bank, the Bank proposes to conduct a non-public issuance of no more than 150,000,000 Offshore Preference Shares to raise proceeds not exceeding RMB15 billion or its equivalent to replenish the Additional Tier 1 Capital of the Bank. As at June 30, 2016, the core tier 1 capital adequacy ratio of the Bank is 10.16%. In accordance with the relevant provisions under the State Council Guidance Opinion, the Capital Management Rules, the Joint Guidance Opinion, the Listing Rules and other relevant laws, regulations and regulatory documents, and with reference to the Administrative Measures, the Bank formulated the relevant plan for non-public issuance of Offshore Preference Shares. The issuance of Offshore Preference Shares will be conducted by way of a private placement in accordance with the relevant rules on issuance and the Offshore Preference Shares will be issued in a single or multiple series in accordance with the relevant procedures after being approved by regulatory authorities. To the best of the Bank s knowledge, information and belief, each of the placees for the Offshore Preference Shares (and its respective ultimate beneficial owners) are not expected to be connected persons (as defined in the Listing Rules) of the Bank. If the Offshore Preference Shares will be issued to any connected persons of the Bank, the Bank will comply with the reporting, announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules. The listing/ trading arrangements for the Offshore Preference Shares will be set out in the issuance documents. There will be no lock-up period for the Offshore Preference Shares. The Bank shall have the right to mandatorily convert all or part of the Offshore Preference Shares into H Shares on the occurrence of certain prescribed events. In the case of a partial conversion, the Offshore Preference Shares then issued and outstanding will be converted into corresponding number of H Shares on a pro-rata basis. The initial mandatory conversion price of the Offshore Preference Shares will be equal to the net asset value per Share disclosed in the Bank s 2015 annual report as at the end of 2015 (being RMB3.42) and denominated in Hong Kong dollars, which shall be converted with reference to the central parity rate of RMB to Hong Kong dollars used by the interbank foreign exchange market as published by the China Foreign Exchange Trade System on the trading day prior to the announcement date of the Board resolution on the Offshore Preference Shares Issuance Plan (i.e. August 18, 2016), being RMB to HK$1.00 (rounded up to the nearest 2 decimal places). Based on the above formulation, the initial mandatory conversion price of the Offshore Preference Shares will be HK$4.01. On the trading day prior to the announcement date of the Board resolution on the Offshore Preference Shares Issuance Plan (i.e. August 18, 2016), the closing price of H Shares is HK$3.84 and the initial conversion price represents a premium of 4.43% to such price. The average closing price of H Shares in the five consecutive trading days immediately prior to the trading day prior to the announcement date of the Board resolution on the Offshore Preference Shares Issuance Plan (i.e. August 18, 2016) is HK$3.85 and the initial conversion price represents a premium of 4.16% to such price. The closing price of H Shares on the Latest Practicable Date is HK$3.94 and the initial conversion price represents a premium of 1.78% to such price. 5

8 LETTER FROM THE BOARD Assuming an issue size equivalent to RMB15 billion of Offshore Preference Shares were issued and all the Offshore Preference Shares were subject to conversion, on the basis of the above initial mandatory conversion price, the number of H Shares may be issued upon conversion of the Offshore Preference Shares would not exceed 4,385,964,912 H Shares (inclusive). As at the Latest Practicable Date, there were 3,795,000,000 H Shares in issue. Assuming that the number of issued H Shares remains as stated above on the date the proposed special resolution regarding the Offshore Preference Shares Issuance Plan is passed at the EGM, the maximum number of H Shares may be issued represents (i) % of the total number of H Shares in issue of the Bank, (ii) 53.61% of the enlarged H share capital of the Bank, and (iii) 24.42% of the current total issued share capital of the Bank. For illustrative purposes only, the table below sets forth the impact on the Bank s share capital structure if all the Offshore Preference Shares under the proposed issuance were converted into H Shares pursuant to the conversion: As at the Latest Practicable Date Percentage of Shares share capital After issuance of the Offshore Preference Shares 1 After conversion of all the Offshore Preference Shares Percentage of Shares share capital Share Capital Shares Percentage of share capital Domestic Share 14,164,696, % 14,164,696, % 14,164,696, % H Share 3,795,000, % 3,795,000, % 8,180,964, % Total 17,959,696, % 17,959,696, % 22,345,661, % Based on the public information available to the Bank and on the basis that all the Offshore Preference Shares will be held by persons independent from the Bank and connected persons of the Bank, the percentage of share capital held by the public is (i) 21.13% as at the Latest Practicable Date, (ii) 21.13% after the issuance of the Offshore Preference Shares, and (iii) 36.61% after the conversion of all the Offshore Preference Shares into H Shares subject to other changes in the Shares, the Shareholders or the capital of the Bank. Please refer to Appendix I to this circular for details on the Offshore Preference Shares Issuance Plan. Please refer to Appendix II to this circular for details on the Proposal on Authorisation Matters. On August 19, 2016, the Board considered and approved the Offshore Preference Share Issuance Plan. The Offshore Preference Shares Issuance Plan will be subject to the approval of the Shareholders at the EGM, the approval of the Domestic Shareholders at the 2016 First Class Meeting for Domestic Shareholders and the approval of the H Shareholders at the 2016 First Class Meeting for H Shareholders, in each case, as a special resolution. At the same time the Proposal on Authorisation Matters will be proposed to the EGM, the 2016 First Class Meeting for Domestic Shareholders and 2016 First Class Meeting for H Shareholders to authorise the Board, and the Board will then delegate the authority to the Chairman, the President and the Secretary to the Board of the Bank, in accordance with the principles for the issuance of Offshore Preference Shares approved at the Shareholders general meeting, to individually or jointly exercise the full power to deal with the matters relating to the issuance of Offshore Preference Shares within the validity period of the authorisation for the issuance of Offshore Preference Shares. Upon approval by the Shareholders at the Class Meetings and at the EGM, the proposed issuance of Offshore Preference Shares is also subject to approval by or filing with competent regulatory authorities (namely, the approval of the CBRC, the approval of the CSRC and the filing with the National Development and Reform Commission) and compliance with the Listing Rules. 1 If there is no trigger event for conversion, the issuance of the Offshore Preference Shares will not affect the ordinary share capital of the Bank. 6

9 LETTER FROM THE BOARD The validity period of the Offshore Preference Shares Issuance Plan will be 36 months from the date at which it is approved at the Shareholders general meeting. The authorisation in respect of the issuance of Offshore Preference Shares will remain valid during the 12 months following the passing of the Proposal on Authorisation Matters at the Shareholders general meeting. If the proposed issuance of Offshore Preference Shares as described above is not completed before the expiration of the validity period of such authorisation, then such authorisation will lapse, but the Board has the right to seek approval at the Shareholders general meeting to extend or renew the validity period of such authorisation. Shareholders and potential investors shall be aware that the proposed issuance of Offshore Preference Shares is subject to all necessary approvals being obtained and various other factors including market conditions, and therefore the proposed issuance of Offshore Preference Shares may or may not proceed. 3. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION Reference is made to the announcement of the Bank in relation to the proposed amendments to the Articles of Association dated August 19, The Board approved the amendments (the Proposed Amendments ) to the Articles of Association at the meeting of the Board held on August 19, In connection with the Bank s proposal to conduct a non-public issuance of Offshore Preference Shares, in accordance with relevant provisions of the State Council Guidance Opinion, the Joint Guidance Opinion, the Listing Rules and other relevant laws, regulations and regulatory documents, with reference to the Administrative Measures, and taking into account the Offshore Preference Shares Issuance Plan and market practice, the Bank has proposed relevant amendments to the Articles of Association. The Proposed Amendments mainly specify, among others, the rights and obligations of the preference shareholders, restrictions and restoration of voting rights, conversion and redemption of preference shares and distribution of profits and residual assets. For a comparative table of the Proposed Amendments, please refer to Appendix III to this circular. The proposal on the amendments to the Articles of Association is hereby submitted as a special resolution to the EGM for consideration and approval, and it is submitted to authorise the Board, and the Board will then delegate the authority to the Chairman, the President and the Secretary to the Board of the Bank, to individually or jointly make appropriate amendments to the Articles of Association based on the comments of the relevant regulatory authorities and stock exchange, and handle the formalities in relation to the approval and filing of such Proposed Amendments. The Proposed Amendments, upon approval by the Shareholders general meeting, are subject to approval by the CBRC. The Proposed Amendments will become effective on the date when the issuance of the first tranche of the Offshore Preference Shares is completed. 4. PROPOSED APPOINTMENT OF DIRECTOR Pursuant to the Company Law and the Articles of Association, the Board proposed the appointment of Mr. Zhu Weiming as a non-executive Director of the Bank. The proposed appointment of Mr. Zhu Weiming as a non-executive Director of the Bank is subject to the approval by the Shareholders by way of ordinary resolution at the EGM and the ratification of his eligibility by the CBRC. 7

10 LETTER FROM THE BOARD Biographical details of Mr. Zhu Weiming are set out below: Mr. Zhu Weiming, aged 47. From August 1991 to November 1993, he was trained at the production preparation department of Jiaxing Power Plant; from November 1993 to February 2001, he worked as a full-time engineer at the operation department of Jiaxing Power Plant; from February 2001 to September 2010, he worked as director assistant, vice director and director of the second phase production preparation department, vice director and director of the general manager service department respectively at Jiaxing Power Generation Co., Ltd.; from September 2010 to October 2014, he served as vice general manger and secretary of the board for Zhejiang Southeast Electric Power Company Limited; from March 2014 to March 2016, he also held the position of vice general manager at Zhoushan Marine Comprehensive Development and Investment Co., Ltd.; from October 2014 to August 2015, he held the position of vice director of the investment and development department at Zhejiang Marine Development & Investment Group Co., Ltd.; from August 2015 to January 2016, he held the position of vice director of the investment and development department at Zhejiang Provincial Seaport Investment & Operation Group Co., Ltd.; from January 2016 to March 2016, he served as vice director (in charge) of the finance and asset management department at Zhejiang Provincial Seaport Investment & Operation Group Co., Ltd.; from March 2016 till now, he has been the director of the finance and asset management department at Zhejiang Provincial Seaport Investment & Operation Group Co., Ltd.. Mr. Zhu Weiming graduated from Zhejiang University majoring in Business Administration in March 2013 and obtained a MBA degree. Subject to the approval at the EGM and the ratification of his eligibility by the CBRC, Mr. Zhu Weiming will enter into a service contract with the Bank. Mr. Zhu Weiming s term of office will take effect from the date of the approval by the Shareholders at the EGM and the ratification of his eligibility by the CBRC and until the expiration of the term of the fourth session of the Board. Pursuant to such proposed service contract, Mr. Zhu Weiming will not receive remuneration from the Bank. Save as disclosed above, Mr. Zhu Weiming has not held any other positions in the Bank or any directorship in other listed companies in the past three years. Save as disclosed above, Mr. Zhu Weiming has no relationship with any Directors, Supervisors, senior management or substantial or controlling Shareholders (as defined in the Listing Rules) of the Bank. As at the date of this circular, Mr. Zhu Weiming does not have any interest in the shares of the Bank within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules, and the Bank is not aware of any other matters that need to be brought to attention of the Shareholders. 5. PROPOSED APPOINTMENT OF SUPERVISOR Pursuant to the Company Law and the Articles of Association, the Supervisory Committee proposed the appointment of Mr. He Xudong as a shareholder representative Supervisor of the Bank. The proposed appointment of Mr. He Xudong as a shareholder representative Supervisor of the Bank is subject to the approval by the Shareholders by way of ordinary resolution at the EGM. 8

11 LETTER FROM THE BOARD Biographical details of Mr. He Xudong are set out below: Mr. He Xudong, aged 38. From August 1999 to November 2000, he worked for the operation department of Hangzhou Wangjiang Cogeneration Co., Ltd.; from November 2000 to September 2001, he worked for the project management department of Zhejiang Province Power Development Company; from September 2001 to July 2003, he worked for the engineering management department of Zhejiang Province Power Development Company; from July 2003 to February 2012, he worked for the asset operation department of Zhejiang Provincial Energy Group Co., Ltd.. From February 2012 to November 2013, Mr. He served as the head of asset management department of Coal and Transportation Subsidiary of Zhejiang Provincial Energy Group Co., Ltd.; from November 2013 to December 2014, he served as the head of general office of Coal and Transportation Subsidiary of Zhejiang Provincial Energy Group Co., Ltd.. Since December 2014, he has been the deputy head of the asset operation department of Zhejiang Provincial Energy Group Co., Ltd.. Mr. He Xudong graduated from Northeast Dianli University majoring in thermal engineering in July 1999 and obtained a bachelor s degree in Engineering. Subject to the approval at the EGM, Mr. He Xudong will enter into a service contract with the Bank. Mr. He Xudong s term of office will take effect from the date of the approval by the Shareholders at the EGM and until the expiration of the term of the current session of the Supervisory Committee. Pursuant to such proposed service contract, Mr. He Xudong will not receive remuneration from the Bank. Save as disclosed above, Mr. He Xudong has not held any other positions in the Bank or any directorship in other listed companies in the past three years. Save as disclosed above, Mr. He Xudong has no relationship with any Directors, Supervisors, senior management or substantial or controlling Shareholders (as defined in the Listing Rules) of the Bank. As at the date of this circular, Mr. He Xudong does not have any interest in the shares of the Bank within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules, and the Bank is not aware of any other matters that need to be brought to attention of the Shareholders. 6. PROPOSED GENERAL MANDATE FOR THE ISSUE OF H SHARES In order to keep the capital adequacy ratio remaining constantly at the required level, and to meet the capital requirements of the Bank for its continuous business development, in accordance with the applicable PRC laws and regulations, the Listing Rules and the Articles of Association and upon the review and approval by the Board, the general mandate for the issue of H Shares by the Bank and the relevant authorizations to the Board are now proposed at the EGM for Shareholders approval. Details of the general mandate are set out below: (A) Specific plans on the general mandate to issue H Shares (1) Subject to the conditions set out in (2) below, the Board is hereby generally and unconditionally authorized to issue, allot and deal with H Shares, and to make or grant offers, agreements or options which would or might require H Shares to be issued, allotted and dealt with, during the Relevant Period (as defined below). 9

12 LETTER FROM THE BOARD (2) The number of H Shares proposed to be allotted, issued, and dealt with by the Board shall not exceed 20% of the H Shares issued by the Bank as at the date on which this resolution is passed at the EGM. (3) For the purposes of this resolution: Relevant Period means the period from the date on which this special resolution is passed at the EGM until the earliest of: (a) the conclusion of the next annual general meeting of the Bank following the date of passing of this resolution; or (b) the expiration of twelve months following the date of passing of this resolution; or (c) the date on which the authority granted to the Board under this resolution is revoked or varied by a special resolution of the Shareholder at a general meeting. (4) The Board is hereby authorized to determine the details of the issuance plan, including but not limited to: (a) the class and number of H Shares proposed to be issued; (b) the pricing basis and/or the offer price (including the price range); (c) the date of opening and closing of the issuance; (d) the specific use of the proceeds raised; (e) the recommendation, agreement and share options to be made or granted for the exercise of the said power; (f) other necessary matters to be included in the detailed issuance plan in compliance with the relevant laws, regulations, the Listing Rules and the Articles of Association. (5) The Board is hereby authorized to implement the issuance plan and deal with the matters related to an increase in the registered capital of the Bank so as to reflect the H Shares authorized to be issued by the Bank under this matter, and to make such amendments as it deems appropriate and necessary to the provisions related to the issuance of H Shares and the increase in the registered capital in the Articles of Association, and to adopt and complete any other actions and procedures that are necessary for the implementation of the issuance plan and the completion of the increase in the registered capital of the Bank. When exercising the authorizations set out above, the Board will comply with the relevant requirements for issuance under general mandate under the Listing Rules and the applicable PRC laws and regulations. (B) Matters relevant to the general mandate In order to improve the efficiency of decision-making, reduce internal approval procedures and grasp market opportunities, in respect of the general mandate to issue H Shares, it is proposed to the EGM to approve the authorization of the Board and specific persons authorized by the Board to deal with the matters in connection with the general mandate to issue H Shares. (C) Other matters To avoid any doubt, the terms Shares under this resolution only refer to H Shares and do not include Domestic Shares and/or preference Shares. 10

13 LETTER FROM THE BOARD 7. THE EXTRAORDINARY GENERAL MEETING AND THE 2016 FIRST CLASS MEETING FOR H SHAREHOLDERS A form of proxy and the reply slip for use at the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders are also enclosed herewith. If you intend to appoint a proxy to attend the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders, you are required to complete and return the proxy form in accordance with the instructions printed thereon as soon as possible. For holders of Domestic Shares, the proxy form should be returned to the Bank s Office of the Board, and for the holders of H Shares, the proxy form should be returned to the Bank s H Share Registrar, Computershare Hong Kong Investor Services Limited in person or by post as soon as possible but in any event not less than 24 hours before the time stipulated for convening the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders or any adjourned meeting thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders or at any adjourned meeting thereof if you so wish. If you intend to attend the Extraordinary General Meeting and/or the 2016 First Class Meeting for H Shareholders in person or by proxy, you are required to complete and return the reply slip to the Bank s Office of the Board or Computershare Hong Kong Investor Services Limited on or before Tuesday, September 27, The address of the Bank s Office of the Board is No. 288, Qingchun Road, Hangzhou, Zhejiang, the PRC. The address of the Bank s H Share Registrar, Computershare Hong Kong Investor Services Limited, is 17M Floor, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong. 8. VOTING BY POLL According to the Listing Rules, each of the resolutions to be proposed at the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders will be voted on by poll. Results of the poll voting will be published on the Bank s website at and the website of the Stock Exchange at after the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders. 9. RECOMMENDATION The Board considers that all resolutions to be proposed at the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders are in the interests of the Bank and its Shareholders as a whole. Accordingly, the Board recommends that the Shareholders vote in favour of all the resolutions to be proposed at the Extraordinary General Meeting and the 2016 First Class Meeting for H Shareholders. Hangzhou, the PRC By order of the Board China Zheshang Bank Co., Ltd. Shen Renkang Chairman 11

14 APPENDIX II PROPOSAL ON AUTHORISATION MATTERS The Proposal on Authorisation Matters is written in Chinese, with no official English translation. The English translation is provided solely for reference. In case of any discrepancy between the two versions, the Chinese version shall prevail. The full version of the Proposal on Authorisation Matters is as follows: PROPOSAL ON AUTHORISATION TO THE BOARD AND ITS AUTHORISED PERSONS TO HANDLE ALL MATTERS RELATING TO THE ISSUANCE OF OFFSHORE PREFERENCE SHARES 1 Matters authorised in connection with the issuance of Offshore Preference Shares To ensure the successful implementation of the issuance of Offshore Preference Shares, it is proposed that the Shareholders general meeting authorise the Board, and the Board will then delegate the authority to the Chairman, the President and the Secretary to the Board of the Bank, in accordance with the principles for the issuance of Offshore Preference Shares approved at the Shareholders general meeting, to individually or jointly exercise the full power to deal with the matters relating to the issuance of Offshore Preference Shares within the validity period of the authorisation for the issuance of Offshore Preference Shares, including but not limited to those set out below: (1) to formulate and implement the final Offshore Preference Share issuance plan, including but not limited to: (i) to determine the number of series and the respective issue number and issue size of each series of the Offshore Preference Shares within the approved total issue number and issue size; (ii) to determine the method for determining the dividend rate and the specific dividend rate and adjusted dividend rate period of the Offshore Preference Shares; (iii) to determine whether the Offshore Preference Shares will be issued at or above par value, the issue price of the Offshore Preference Shares, the subscription currency, and the specific commencement date of the redemption period, redemption conditions and the issuance method of the Offshore Preference Shares, according to market conditions prior to the issuance of Offshore Preference Shares; (iv) to determine the timing of issuance, the arrangements relating to issuance in multiple series, the transfer arrangements, target investors of the Offshore Preference Shares and the number of Offshore Preference Shares to be allocated to each target investor according to approval from regulatory authorities, market conditions and the principles for the issuance of Offshore Preference Shares which has been approved at the Shareholders general meeting; and (v) to determine other matters in relation to the issuance plan of Offshore Preference Shares (including but not limited to rating arrangements, dedicated account for the proceeds, the tax arrangements in relation to any dividend payment, procedures for subscription and the listing of the Offshore Preference Shares) and to make necessary adjustments to the issuance plan of Offshore Preference Shares according to the latest regulatory requirements or opinions of regulatory authorities (which, as used herein, include suspension and termination), except those matters that require a separate vote at a Shareholders general meeting according to the relevant laws and regulations and the Articles of Association. 12

15 APPENDIX II PROPOSAL ON AUTHORISATION MATTERS (2) if there are any new regulations by the State on preference shares, any new policies by relevant regulatory authorities on preference shares or any changes to market conditions occurring prior to the issuance of Offshore Preference Shares, to excise full power to amend the issuance plan of Offshore Preference Shares accordingly to reflect such changes, except for those amendments that require a separate vote at the Shareholders general meeting according to relevant laws, regulations and the Articles of Association; (3) to produce, amend, execute, implement and file the application materials relating to the issuance, trading and transfer of the Offshore Preference Shares, the documents relating to the issuance and transfer of the Offshore Preference Shares and other documents (such as offering circular, issuance circular and/or prospectus, as applicable) of the Offshore Preference Shares, to deal with related matters, such as approval, registration, filing, authorisation and consent by relevant regulatory authorities and to conduct all acts relating to the issuance or transfer of the Offshore Preference Shares that are deemed necessary, proper or appropriate by such authorised person(s), in each case, according to the requirements of relevant domestic and offshore governmental bodies and regulatory authorities (including the Stock Exchange); (4) to draft, amend, execute, implement, submit and publish all contracts, agreements and other documents (including but not limited to sponsor and underwriting agreements, agreements relating to the issuance proceeds, subscription agreements entered into with investors, announcements, circulars and other disclosure documents) in relation to the issuance and transfer of the Offshore Preference Shares; (5) to make appropriate and necessary amendments, adjustments and supplements to the issuance plan and terms of the Offshore Preference Shares according to the opinions of the relevant regulatory authorities (including, among others, the Stock Exchange, the CBRC and the CSRC) and the actual circumstances of the Bank to the extent permitted by laws and regulations; (6) to amend those provisions in the Articles of Association relating to the issuance of Offshore Preference Shares, to deal with regulatory approvals, to handle the formalities in relation to the approval and filing of the amendments to the Articles of Association, and to register with the administration for industry and commerce and other competent governmental bodies for the change of registration as well as other matters, in each case, according to the opinions of the relevant regulatory authorities, the result of the issuance of Offshore Preference Shares and the actual situation of the Bank; and (7) to deal with other matters relating to the issuance of Offshore Preference Shares. The authorisation in respect of the issuance of Offshore Preference Shares shall remain valid during the 12 months following the passing of the resolution at the Shareholders general meeting. If the issuance of Offshore Preference Shares is not completed before the expiration of the validity period of such authorisation, then such authorisation will lapse, but the Board has the right to seek approval at a Shareholders general meeting to extend or renew the validity period of such authorisation. 13

16 APPENDIX II PROPOSAL ON AUTHORISATION MATTERS 2 Matters authorised in connection with Offshore Preference Shares that remain outstanding So long as the Offshore Preference Shares remain outstanding, it is proposed that the Shareholders general meeting authorises the Board, which could be delegated in accordance with laws and regulations, to exercise the full power to deal with the following matters in accordance with laws and regulations, the Articles of Association, relevant regulatory rules and the principles for the issuance of Offshore Preference Shares as considered and resolved at the Shareholders general meeting: (1) to deal with all matters relating to conversion of the Offshore Preference Shares during the conversion period upon occurrence of any trigger event for mandatory conversion of the Offshore Preference Shares, including but not limited to, determining the timing of conversion, conversion ratio and implementing the procedures for conversion, issuing the corresponding H Shares, amending the relevant provisions in the Articles of Association, dealing with regulatory approvals, handling the formalities in relation to the approval and filing of the amendments to the Articles of Association, and registering with the administration for industry and commerce and other competent governmental bodies for the change of registration as well as other matters; (2) to decide on matters relating to redemption of the Offshore Preference Shares during the redemption period with reference to market conditions and other factors, and to deal with all matters relating to redemption as approved by China banking regulatory authority and other regulatory authorities; and (3) to determine and deal with matters in relation to dividend payment to Offshore Preference Shareholders in accordance with the requirements of the issuance terms. However, cancellation in whole or in part of the Offshore Preference Share dividends shall still require the approval of the Shareholders general meeting. 14

17 APPENDIX I OFFSHORE PREFERENCE SHARES ISSUANCE PLAN The Offshore Preference Shares Issuance Plan is written in Chinese, with no official English translation. The English translation is provided solely for reference. In case of any discrepancy between the two versions, the Chinese version shall prevail. The full version of the Offshore Preference Shares Issuance Plan is as follows: PLAN FOR NON-PUBLIC ISSUANCE OF OFFSHORE PREFERENCE SHARES BY CHINA ZHESHANG BANK CO., LTD. 1 Type of preference shares to be issued The type of securities to be issued will be offshore preference shares that comply with the requirements of the laws, regulations and regulatory documents of the PRC and overseas. 2 Number of Offshore Preference Shares to be issued and issue size The aggregate number of Offshore Preference Shares to be issued will not exceed 150,000,000, with an aggregate value to be issued not exceeding RMB15 billion or its equivalent. The actual issue size is to be determined by the Board within the above limit, in accordance with the authorisation given by the Shareholders general meeting. 3 Par value and issue price The par value of the Offshore Preference Shares will be RMB100 per Offshore Preference Share. The Offshore Preference Shares will be issued at or above the par value. The actual currency and issue price will be determined by the Board prior to issuance with reference to market conditions and in accordance with relevant laws, regulations and market practice and the authorisation given by the Shareholders general meeting. 4 Maturity The Offshore Preference Shares will not have any maturity date. 5 Method of issuance and target investors The issuance of Offshore Preference Shares will be conducted by way of a private placement in accordance with the relevant rules on issuance and the Offshore Preference Shares will, after being approved by regulatory authorities, be issued in a single or multiple series in accordance with the relevant procedures. If the Offshore Preference Shares are to be issued in multiple series, no separate approval shall be required to be obtained from existing preference shareholders for each such issuance. Each series of Offshore Preference Shares will be offered to no more than 200 qualified offshore investors who comply with the requirements under relevant regulatory rules and other laws and regulations. All target investors shall subscribe the Offshore Preference Shares in cash. 6 Lock-up period There will be no lock-up period for the Offshore Preference Shares. 15

18 APPENDIX I OFFSHORE PREFERENCE SHARES ISSUANCE PLAN 7 Terms of distribution of dividends (1) Principles for determining the dividend rate The proposed dividend rate for the Offshore Preference Shares (as used herein, such dividend rate will be calculated by reference to the issue price of the Offshore Preference Shares) may be adjusted at different intervals. The dividend rate at the time of issuance shall be determined by the Board by way of market pricing, in accordance with the authorisation given by the Shareholders general meeting together with other factors including relevant laws and regulations, market conditions at the time of issuance, investor demand and the actual circumstances of the Bank. In any adjusted dividend rate period, dividends on the Offshore Preference Shares will be paid at the same prescribed dividend rate and will reset at specified intervals thereafter. The dividend rate consists of the benchmark rate and the fixed spread. The fixed spread will be determined by deducting the benchmark rate at the time of issuance from the dividend rate at the time of issuance and will remain unchanged once determined. On the reset date, the new dividend rate for the next adjusted dividend rate period will be determined, and will be equal to the sum of the benchmark rate as at the reset date and the fixed spread as determined at the time of issuance. The dividend rate will not be higher than the mean of the weighted average return on equity of the Bank for the last two financial years before issuance 1. (2) Conditions to distribution of dividends (i) If the Bank has distributable after-tax profit 2 after making up for previous years losses and contributing to the statutory reserve and general reserve, the Bank may pay dividends to the Offshore Preference Shareholders in accordance with the Articles of Association, provided that the capital adequacy ratio of the Bank meets regulatory requirements. The Offshore Preference Shareholders shall rank in priority to the ordinary shares in terms of dividend distribution. Distribution of dividends will not be affected by the rating of the Bank and will not be adjusted as a result of any change to such rating. (ii) In order to meet the regulatory requirements for the eligibility criteria for Additional Tier 1 Capital instruments, the Bank shall have the right to cancel dividend payments on the Offshore Preference Shares in whole or in part at its discretion and this will not constitute an event of default. The Bank, at its discretion, may use any dividend so cancelled to repay other debts that are due. The cancellation of any dividend payment to the Offshore Preference Shareholders will only constitute a restriction on the payment of dividend to the ordinary shareholders and will not constitute any other restrictions on the Bank. Any declaration and payment of all of the dividends on the Offshore Preference Shares by the Bank will be determined by the Board in accordance with the authorisation given by the Shareholders general meeting. Any cancellation of all or part of the dividends on the Offshore Preference Shares shall be subject to the consideration and approval by the Shareholders general meeting. Any cancellation by the Bank of any dividends on the Offshore Preference Shares shall be notified to investors at least ten working days prior to the dividend payment date. 1 2 As determined in accordance with the Rules for Preparation of Information Disclosure by Companies Offering Securities to the Public No. 9 Calculation and Disclosure of Return on Equity and Earnings Per Share (as amended in 2010), and calculated based on the return attributable to the ordinary shareholders of the Bank. Distributable after-tax profit is the undistributed profit as shown in the financial statements of the parent company prepared in accordance with Chinese Accounting Standards or International Financial Reporting Standards, whichever amount is lower. 16