Shandong Molong Petroleum Machinery : ARTICLES OF ASSOCIATION...

Shandong Molong Petroleum Machinery Company Limited

(A Sino-foreign joint stock limited company incorporated in the People's Republic of China with limited liability)

ARTICLES OF ASSOCIATION

Approval in Extraordinary General Meeting on March 20th, 2004 Revised in Extraordinary General Meeting on September 28th, 2004 (1st Revision)

Revised in Extraordinary General Meeting and Class Shareholders' Meeting on February 14th, 2005 (2nd

Revision)

Revised in Extraordinary General Meeting and Class Shareholders' Meeting on December 5th, 2006 (3rd

Revision)

Revised in Annual General Meeting on May 25th, 2007 (4th Revision) Revised in Annual General Meeting on May 5th, 2008 (5th Revision) Revised in Annual General Meeting on January 8th, 2009 (6th Revision) Revised in Annual General Meeting on May 25th, 2012 (7th Revision) Revised in Extraordinary General Meeting on December 21st, 2018 (8th Revision)

(This Charter are draw up according to "Company Law of the People's Republic of China", "Securities Law of the People's Republic of China", "General Provisions for Articles of Association of Companies to be Listed Overseas" ("General Provisions"), (CSRC Overseas Letter [1995] No. 1), "Comments for Further Promoting Standardized Operation and Deepening Reform of Overseas Listed Companies" ("Comments"), "Main Board Listing Rules of The Stock Exchange of Hongkong Ltd" ("Hongkong Listing Rules"), "Guidelines for the Articles of Association of Listed Companies" (Revised in 2006) issued by CSRC and "The Decision on Certain Rules for the Modification of Cash Bonus Distribution of Listed Companies".

CONTENTS
Chapter 1	General Provisions ………………………………………………………… .3
Chapter 2	Purpose and Scope of Business .................................................................... 5
Chapter 3	Shares and Registered Capital ...................................................................... 5
Chapter 4	Capital Reduction and Repurchase of Shares ............................................. 10
Chapter 5	Financial Assistance for Purchase of Shares ............................................ 12
Chapter 6	Share Certificates and Register of Shareholders ........................................ 13
Chapter 7	Rights and Obligations of Shareholders ..................................................... 16
Chapter 8	General Meeting of Shareholders ............................................................... 20
Chapter 9	Special Procedures for Voting by Class Shareholders ................................ 34
Chapter 10	Board of Directors ...................................................................................... 37
Chapter 11	Secretary to the Board of Directors .......................................................... 44
Chapter 12	General Manager and Other Senior Management ...................................... 45
Chapter 13	Supervisory Committee .............................................................................. 46
Chapter 14	Qualifications and Obligations of Directors, Supervisors, General Manager、
Deputy General Manager and Other Senior Management ………………… 49
Chapter 15	Financial Accounting System and Profit Distribution ................................ 54
Chapter 16	Appointment Accounting Firm ................................................................... 60
Chapter 17	Insurance .................................................................................................... 62
Chapter 18	Labour and Personnel Management System ............................................... 62
Chapter 19	Trade Union Organization .......................................................................... 63
Chapter 20	Merger and Division of the Company ........................................................ 63
Chapter 21	Dissolution and Liquidation of the Company ............................................. 64
Chapter 22	Procedures for Amendment of the Company's Articles of Association…… 66
Chapter 23	Settlement of Disputes ................................................................................ 67
Chapter 24	Notification ................................................................................................. 67
Chapter 25	Supplementary Articles .............................................................................. 68
2

Chapter 1 General Provisions

Article 1

Shandong Molong Petroleum Machinery Co., Ltd (the "Company") is a foreign investment joint stock limited company established in accordance with "The Company Law of the People's Republic of China" ("Company Law"), "The Securities Law of the People's Republic of China", "Special Provisions of the State Council Concerning the Floatation and Listing Abroad of Stocks by Joint Stock Limited Companies" ("Special Provisions") and other related laws and administrative regulations.

Mandatory Provision 1

Approved by the document "Reply for Agreeing to Set Up Shandong Molong Petroleum Machinery Co., Ltd.," (LTGH [2001] No.53) issued by Shandong Economic System Reform Office of The People's Republic of China, the Company was established by promotion on 27 December 2001 and registered with Shandong Provincial Administration of Industry and Commerce on 30 December 2001, and obtained the business license of enterprise legal person, the registration number is: 3700001807083.

The promotors of the Company are:

Zhang En Rong

ID number: 37072319400109397X

Address：No. 99 Beihai Road, Shouguang City Development Zone, Shandong Province

Lin Fu Long

ID number: 370723195211184196

Address：Hostel of Shandong Molong Petroleum Machinery Co., Ltd.

Zhamg Yun San

ID number: 370723196201203976

Address：No. 99 Beihai Road, Shouguang City Development Zone, Shandong Province

Xie Xin Cang

ID number: 610303196202211612

Address：Hostel of Shandong Molong Petroleum Machinery Co., Ltd.

Liu Yun Long

ID number: 370723690505399

Address：Shuangjingkou Village, Shangkou County, Shouguang City, Shandong Province

Cui Huan You

ID number: 370723490214397

Address：Shaoliuying Village, Shangkou County, Shouguang City, Shandong Province

Liang Yong Qiang

ID number: 142729680626151

Address：Liyuanxiying Village, Kuiwen District, Weifang City, Shandong Province

Shengli Oilfiled Kaiyuan Oil Development Co., Ltd.

Legal representative: Chen Jian Xiong

Legal address: No. 113, Huanghezhong Road, Dongying District, Dongying City, Shandong Province.

Alloy Material Factory of Gansu Industrial University

Legal representative: Geng Xiang Zhong

Legal address: No. 85 Langongping, Qilihe Area, Lanzhou City, Gansu Province

Article 2

Company registered name (in English)：Shandong Molong Petroleum Machinery Company Limited

Mandatory

(in Chinese) 山东墨龙石油机械股份有限公司

Provision 2

Article 3

Company Address: No. 999 Wensheng Street, Shouguang City, Shandong Province TEL: [phone]

Mandatory Provision 3

Fax: [phone] Postal Code: 262700

Article 4

The legal representative of the Company is the Chairman of the Company.

Mandatory Provision 4

Article 5

The Company is a joint stock limited company which has perpetual existence.

Mandatory Provision 5

Article 6

These Articles of Association shall take effect from the date of passing by the Company's general meeting and upon approval of the competent department of the State, and shall replace in its entirety the original articles of association registered with the Administration of Industry and Commerce.

Mandatory Provision 6

From the date on which these Articles of Association come into effect, these Articles of Association shall constitute a legally binding document regulating the Company's organization and activities, and the rights and obligations between the Company and each shareholder and among the shareholders inter se.

Article 7

These Articles of Association are binding on the Company and its shareholders, directors, supervisors, general manager, deputy general managers and other senior officers of the Company; all of whom are entitled, according to these Articles of Association, to make suggestions in respect of rights concerning the affairs of the Company.

Mandatory Provision 7

A shareholder may take action against the Company pursuant to these Articles of Association and vice versa. A shareholder may also take action against another shareholder; and shareholders and the Company may take action against the directors, supervisors, general manager, deputy general managers and other senior officers of the Company pursuant to these Articles of Association

The actions referred to in the preceding paragraph include court proceedings and arbitration proceedings.

The other senior officers mentioned above are Board Secretary of the Company and head of the finance department. The general manager, deputy general managers and other senior management all are senior officers.

Articles of Listed

Companies Guideline 11

Article 8

The Company may invest in other limited liability companies or joint stock limited companies, and is liable for an invested company up to the amount of capital it contributes to the invested company. However, the Company shall not become shareholder of any profitmaking organization with unlimited liability.

Mandatory Provision 8

Article 9

The Company is an independent corporate legal person with all its actions governed by the laws and regulations of China and the place where its overseas listed foreign invested shares are listed and the legal rights of its shareholders shall be protected. All capital of the Company are divided into shares of equal value. The shareholders are liable for the Company up to the amount of shares they subscribed and all the Company's assets are made liable for its debts.

Subject to compliance with PRC laws and administrative regulations, the Company shall have the right to raise funds or to obtain loans. Funding for the Company shall include, but not limited to, issue of corporate bonds, charge or pledge the ownership or right of use of part or all of the Company's assets and other rights as permitted under the PRC laws and administrative regulations, and under all circumstances provide guarantee in various kinds for the debts of any third parties (including but not limited to the Company's subsidiaries or associates), provided that in exercising the above rights, the rights of any class shareholders shall not be prejudiced or deprived.

Chapter 2 Purpose and Scope of Business

Article 10

The Company's objectives are: to make full use of joint-stock form of economic organizations of all promotors, contribute to the national economic construction, and reward all shareholders with rich return on investment.

Mandatory Provision 9

Article 11

The business scope of the Company shall cover the items as approved by the Company registration authority.

Mandatory Provision 10

The Company's main business scope includes: pump, sucker rod, oil pumping machine, oil machinery, textile machinery manufacturing, sales; petroleum machinery and relevant product development; commodity information services (excluding intermediary).

According to the domestic and international market trends, domestic business development needs and development ability and business performance of the Company, upon approval by the shareholders' meeting and relevant government authorities, the investment policy and business scope and methods can be adjusted as appropriate, and the Company may set up branches and offices both domestically and abroad as well as in Hong Kong, Macao and Taiwan (whether wholly-owned or not).

Chapter 3 Shares and Registered Capital

Article 12

The Company shall create ordinary shares at any time, and if required, other types of shares may be created upon approval by the company examination and approval authority as authorized by the State Council.

Mandatory Provision 11

Article 13

The Company's shares are in the form of share certificates.

Article 14

Articles of Listed Companies Guideline 14

The issue of shares by the Company shall adhere to the principles of openness, fairness and equitable. Every share of the same class shall rank pari passu to every other share of the same class.

Articles of Listed Companies Guideline 15

Shares of the same class issued at the same time shall have the same terms and price. The same amount of money is payable by a unit or an individual subscribing the share.