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(A joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 0042)
Litigation Announcement
On 24 February 2009, China Great Wall Asset Management Corp. Shenyang Office (“Great Wall”) brought a lawsuit to Liaoning Higher People’s Court (“Liaoning Higher Court”) against Shenyang High-voltage Switchgear Limited ("Shenyang High-voltage") for the overdue liabilities of Great Wall with a total of RMB 351,750,000. The Company received from Liaoning Higher Court an indictment and additional defendant application of Great Wall on 11 August 2009. According to the indictment and additional defendant application, Great Wall indicted the Company as an additional defendant, and claimed it to bear the joint liability. Now, the Company makes a disclosure in relation to the litigation in accordance with the provision of Article 13.09 in the Listing Rule.
The Outline of the Litigation On 24 February 2009, Great Wall brought a lawsuit to Liaoning Higher Court against Shenyang HighVoltage for the overdue liabilities of Great Wall, requesting the court to Liaoning Higher Court against Shenyang High-voltage for the overdue liabilities of Great Wall, requesting the court to order Shenyang High-voltage to repay the liabilities including the principal of RMB 351,750,000 and its interest. On 11 August 2009, the Company received from Liaoning Higher Court an indictment and additional defendant application. According to the indictment and additional defendant application, on 18 May 2009, Great Wall brought an additional lawsuit to Liaoning Higher Court against the Company, claiming the Company to bear the joint liability.
The General Information of the Litigation (I) The Parties of the Litigation Plaintiff: China Great Wall Asset Management Corp. Shenyang Office Defendant: Shenyang High-voltage Switchgear Limited In addition, additional defendants of the following respondents: The 2nd defendant: New Northeast Electric (Shenyang) High-voltage Switchgear Co., Ltd The 3rd defendant: New Northeast Electric (Shenyang) High-voltage Isolator Switchgear Co., Ltd The 4th defendant: Shenyang Beifu Machinery Manufacturing Co., Ltd The 5th defendant: Shenyang Suntime Storage and Logistics Company Limited The 6th defendant: Northeast Electric Development Co., Ltd The 7th defendant: Xinfeng Power Investment Co., Ltd The 8th defendant: Shenyang Wanli Motor Vehicle Leasing Co., Ltd The 9th defendant: Shenyang Chengan Electric Equipment Group Co., Ltd The 10th defendant: Shenyang Xinwei Logistics Co., Ltd The 11th defendant: New Northeast Electric Group Co., Ltd The 12th defendant: New Northeast Electric Investment Co., Ltd The 13th defendant: Shenyang Dejia Trading Co., Ltd (Note: Among the above defendants, New Northeast Electric Investment is a controlling shareholder of the Company, and other companies are third parties independent of and not connected with the Company and its Connected Persons.)
(II) The Cause of the Dispute Great Wall brought a lawsuit against Shenyang High-voltage for the fact that Shenyang Highvoltage entered into a loan contract with a subordinate financial institution of the Industrial and Commercial Bank of China Liaoning Branch (the Bank) during the period between 1986 and 2003, and so far it has not paid the due loan principal of RMB 351,750,000 because of its inability to pay it. On 15 July 2005, the Bank entered into a Debt Assignment Agreement with Great Wall, under which all of the debt assets were assigned to the plaintiff who was entitled to claim the debt. In the indictment and additional defendant application, Great Wall claimed the Company to be an additional defendant and to bear the joint liabilities with other defendants because the Company carried out a share transfer transaction with Shenyang High-voltage at an unreasonable consideration in 2004, causing the flight of assets and the serious violation of interests of Shenyang High-voltage. (III) The Claim related to the Company 1. Claim the above respondents to be the additional defendants of the litigation according to law; 2. Claim the above respondents to bear the joint liabilities for the principal and interest of Great Wall due from the defendant Shenyang High-voltage Switchgear Limited; 3. Claim the above respondents to jointly bear all costs of the litigation. Impact of the Litigation on the Company’s Current Profits Since 15 March 2004, the Company has not held any share of Shenyang High-voltage, a former whollyowned subsidiary of the Company. (Please refer to the temporary announcement dated 13 June 2003, the 2003 Annual Report dated 8 April 2004, and the 2004 Interim Report for details. ) Among the above defendants, New Northeast Electric Investment Co., Ltd is a controlling shareholder of the Company, and other companies are third parties independent of and not connected with the Company and its Connected Persons. According to the legal advice of Liaoning Wang, Wu, Yang and Ma Law Office, Chinese legal adviser of the Company, Great Wall's claim against the Company to bear joint liability has no facts and legal basis. The Company’s judgment of the case: on the basis of the economic ties between the Company and Shenyang High-voltage as well as the legal advice of the lawyer, the Company shall not become a defendant of the Shenyang High-voltage litigation, and shall not be liable for the compensation , and the litigation will not have an impact on the Company’s financial situation and its current profits..
The Company has employed the lawyer to respond to the lawsuit actively and propose to make a further clarification announcement upon the court’s correct judgment of the case facts. The Company reserves the right to sue the plaintiff for its adverse effect on the Company’s market reputation. If there is any new progress about the case, the Company will timely perform its announcement obligation. The Company has not had any other undisclosed litigations or arbitrations . Documents for Reference 1. Civil written order of China Great Wall Asset Management Corp. Shenyang Office 2. Application for adding a defendant and changing the claim Shareholders of the Company and public investors are advised to exercise extreme caution when dealing in the shares of the Company.
By order of the Board Su Weiguo Chairman
Shenyang, the People’s Republic of China 12 August, 2009 As at the date of the Statement, the Board of Directors comprises of five executive directors, namely Mr. Su Weiguo, Mr. Wang Shouguan, Mr. Bi Jianzhong, Mr. Liu Qingmin, and Mr. Du Kai; and five independent nonexecutive directors, namely Mr. Wu Qicheng, Mr. Lin Wenbin, Mr. Xiang Yongchun, Ms. Liang Jie and Mr. Liu Hongguang.