JIANGLING MOTORS CORPORATION, LTD. Share's code： | 000550 | Share's Name： | Jiangling Motors | No.： | 2015-030 |
200550 | Jiangling B |
Jiangling Motors Corporation, Ltd.
Public Announcement on the 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 fifth session of the eighth Board of Directors of Jiangling Motors Corporation, Ltd. (hereinafter referred to as 'JMC' or the 'Company') approved the J17 Engine Engineering Services Agreement amongFord Otomotiv Sanayi A.S., the Company and JMC Heavy Duty Vehicle Corporation, Ltd. ('JMCH') and the Stamping Parts Cooperation Agreement with Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd.on June 25, 2015. Nine Directors shall attend this Board meeting and seven directors were present. Director Wang Kun did not attend this meeting, and he authorized Director Qiu Tiangao to represent him at this meeting; Independent Director Wang Xu 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. J17 Engine Engineering Services Agreement
1. Brief Introduction
The Board of Directors approved the J17 Engine Engineering Services Agreement amongFord Otomotiv Sanayi A.S., the Company and JMC Heavy Duty Vehicle Corporation, Ltd. ('JMCH'), and authorized Executive Vice President Xiong Chunying and JMCH General Manager Liao Zanping to sign this Agreement on behalf of the Company and JMCH respectively.
Whereas Ford Motor Company ('Ford'), representing 32%of the outstanding shares of the Company, is the second largest shareholder of the Company, and Ford Otosan is a corporation controlled by Ford and Koç Holding, 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. The Independent Directors of the Company, Ms. Wang Xu, Mr. Lu Song, Ms. Wang Kun, agreed this proposal.
J17 Engine is an engine to be introduced by JMC from Ford Otosan.
2. Brief Summary of Related Party
Company Name: Ford Otomotiv Sanayi A.S.
Registered Address: Istanbul of Turkey
Chairman: Yıldırım Ali KOÇ
Registered Capital: 350,910,000 Turkish Lira (TL)
Enterprise Type: Foreign Corporation
Ownership Structure: Ford holds 41% equity of Ford Otosan, Koc Holding holds 41% and the public shareholders hold 18%.
Business Scope: production and sales of auto & components
The latest audited financial indexes:
Unit: Turkish Lira (TL)
2014 | |
Revenue | 11,924,836,507 |
Net profit | 594,856,111 |
December 31, 2014 | |
Total assets | 7,235,392,795 |
Total equity | 2,754,181,696 |
3. Main Contents of the J17 Engine Engineering Services Agreement
i. The scope of the Agreement: Ford Otosan shall provide the Service and technical assistance on the terms and conditions of this Agreement through its facilities, personnel, vendors and other resources located outside of China.
ii. Ford Otosan's obligations: Ford Otosan shall provide the Service, and deliver the Deliverables to JMC in accordance with this Agreement, and shall allocate the resources agreed in the Project Plan and the SSRs (if any). Co-operate with JMC in all matters relating to the Service and appoint Ford Otosan's Manager in relation to each project, who shall manage matters relating to that project. Provide JMC Input Materials, Deliverables and disclose other necessary information in order to carry out each project, in a timely manner, and ensure that it is reasonably accurate in all material respects.
iii. Term and Termination: This Agreement shall enter into effect as of the signing date first written above and shall expire as of February 28, 2018.
iv. Fees: JMC will pay approximate EUR 10 million for engineering services to Ford Otosan as of this Agreement termination.
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 ensure J17 engine launch in JMCH smoothly.
6. The total amount of the related party transaction taken place with Ford Otosan from January 1, 2015 to May 31, 2015 is about RMB 5.89 million.
II. Stamping Parts Cooperation Agreement
1. Brief Introduction
The Board of Directors approved the Stamping Parts Cooperation Agreement with Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd., and authorized President Yuan-Ching Chen to sign this Agreement on behalf of the Company.
Whereas the Company's Director Qiu Tiangao also holds the post of Chairman of Jiangling Motor Company (Group) ('JMCG'), and Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd. is a wholly-owned subsidiary of JMCG, the transaction herein constitutes a related party transaction. When voting on the proposal, Director Wang Xigao and Director Qiu Tiangao withdrew from the voting and all the other directors agreed with this proposal. The Independent Directors of the Company, Ms. Wang Xu, Mr. Lu Song, Ms. Wang Kun, agreed this proposal.
2. Brief Summary of Related Party
Company Name: Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd.
Registered Address: Nanchang City, Jiangxi Province, P.R.C.
Legal Representative: Zhou Yazhuo
Registered Capital: RMB 21 million
Enterprise Type: Liabilities Company
Ownership Structure: JMCG holds 100% equity of Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd.
Business Scope: Stamping parts production and sales, design, manufacturing, and sales of special vehicle
The latest audited financial indexes:
Unit: RMB million
2014 | |
Revenue | 1,304 |
Net profit | 84 |
December 31, 2014 | |
Total assets | 778 |
Total equity | 518 |
3. Main Contents of Stamping Parts Cooperation Agreement
i. Cooperative Principle
The scope of this cooperation agreement is JMC stamping outsourcing parts, mainly composed of parts with stamping equipment 500T but non-mass production or die design inapplicable to JMC equipment or welding sub-assembly supply
ii. Price Setting and Adjustment
Pricing principle of stamping sub component / surface treatment / welding cost etc. will adopt the optimal cost based on the latest JMC pricing model. Pricing model will be reviewed and approved by JMC EC yearly.
iii. Term
The Agreement shall be effective after signature by both parties and valid for three years. Prior to the validity expiration, the validity of this Agreement will turn to automatic renewal for three years if the parties have no objection
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 support JMC capacity plan, mitigate the purchasing/logistics cost and quality risk, centralize stamping parts sourcing to get competitive quality and prices.
6. The total amount of the related party transaction taken place with Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd.from January 1, 2015 to May 31, 2015 is about RMB 165 million.
IV. Opinions from Independent Directors
Independent Directors, Ms. Wang Xu, Mr. Lu Song and Ms. Wang Kun, expressed their opinions on the related party transactions at this meeting as follows:
1. We have been informed of the meeting agenda prior to the meeting;
2. We have known details of the J17 Engine ESAand believe by careful review that the engineering services provided by Ford Otosan are necessary and the pricing is reasonable;
3. We have known details of the Stamping Parts Cooperation Agreementand believe by careful review that the business with Jiangxi Jiangling Special-Purpose Vehicle Co, Ltd complies with general commercial principle, and the Company can obtain the stamping parts of competitive quality and prices.
VII. Documents for Reference
1. Resolutions of the Fifth Session of the Eighth Board of Directors of JMC;
2. Opinions from Independent Directors on the relevant issues at the fifth session of the Eighth Board of Directors.
Board of Directors
Jiangling Motors Corporation, Ltd.
June 27, 2015
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