UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 20-F | ||
[ ] |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013.
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[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ] |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report. . . . . . . . . . . . . .
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Commission file number: 001-33768 | ||
CNINSURE INC. | ||
(Exact name of Registrant as specified in its charter)
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N/A | ||
(Translation of Registrant’s name into English) | ||
Cayman Islands | ||
(Jurisdiction of incorporation or organization) | ||
22/F, Yinhai Building
No. 299 Yanjiang Zhong Road
Guangzhou, Guangdong 510110
People’s Republic of China
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(Address of principal executive offices) | ||
Peng Ge, Chief Financial Officer
Tel: +86 20 6122-2777
E-mail: gepeng@cninsure.net
Fax: +86 20 6126-2893
22/F, Yinhai Building
No. 299 Yanjiang Zhong Road
Guangzhou, Guangdong 510110
People’s Republic of China
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Title of Each Class
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Name of Each Exchange on Which Registered
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Ordinary shares, par value US$0.001 per share*
American depositary shares, each representing
20 ordinary shares
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The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market)
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* Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American depositary shares, each representing 20 ordinary shares.
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None | ||
(Title of Class) |
None | ||
(Title of Class) |
Large accelerated filer [ ] | Accelerated filer [X] | Non-accelerated filer [ ] |
U.S. GAAP [X] | International Financial Reporting Standards as issued | Other [ ] |
by the International Accounting Standards Board [ ] |
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“we,” “us,” “our company,” “our” or “CNinsure” refer to CNinsure Inc., its subsidiaries and any entity carrying on CNinsure’s current business prior to the restructuring transactions in July 2007, through which CNinsure became the listing vehicle in our initial public offering, and their respective subsidiaries and consolidated affiliated entities;
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“China” or “PRC” refers to the People’s Republic of China, excluding, solely for the purpose of this annual report, Taiwan, Hong Kong and Macau;
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“provinces” of China refers to the 22 provinces, the four municipalities directly administered by the central government (Beijing, Shanghai, Tianjin and Chongqing) and the five autonomous regions (Xinjiang, Tibet, Inner Mongolia, Ningxia and Guangxi);
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“shares” or “ordinary shares” refers to our ordinary shares, par value US$0.001 per share;
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“ADSs” refers to our American depositary shares, each of which represents 20 ordinary shares;
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all references to “RMB” or “Renminbi” are to the legal currency of China, all references to “US$” and “U.S. dollars” are to the legal currency of the United States and all references to “HK$” and “HK dollars” are to the legal currency of the Hong Kong Special Administrative Region; and
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all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.
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our anticipated growth strategies;
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the anticipated growth of our life insurance business;
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the anticipated growth of our e-commerce business;
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our future business development, results of operations and financial condition;
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factors that affect our future revenues and expenses;
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the future growth of the Chinese insurance industry as a whole and the professional insurance intermediary sector in particular;
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trends and competition in the Chinese insurance industry; and
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economic and demographic trends in the PRC.
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Item 1.
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Identity of Directors, Senior Management and Advisers
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Item 2.
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Offer Statistics and Expected Timetable
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Item 3.
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Key Information
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A.
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Selected Financial Data
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For the Year Ended December 31,
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2009
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2010
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2011
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2012
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2013
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RMB
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RMB
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RMB
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RMB
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RMB
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US$
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(in thousands, except shares, per share and per ADS data)
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Consolidated Statement of Income (Loss) Data
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Net revenues:
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Commissions and fees
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1,100,842 | 1,233,297 | 1,510,886 | 1,580,234 | 1,755,545 | 289,995 | ||||||||||||||||||
Other service fees
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761 | 640 | 5,789 | 5,883 | 1,479 | 244 | ||||||||||||||||||
Total net revenues
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1,101,603 | 1,233,937 | 1,516,675 | 1,586,117 | 1,757,024 | 290,239 | ||||||||||||||||||
Operating costs and expenses:
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Commissions and fees
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(549,981 | ) | (541,239 | ) | (796,843 | ) | (1,085,809 | ) | (1,293,372 | ) | (213,650 | ) | ||||||||||||
Selling expenses
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(41,442 | ) | (60,055 | ) | (77,802 | ) | (78,449 | ) | (96,461 | ) | (15,934 | ) | ||||||||||||
General and administrative expenses(1)
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(164,951 | ) | (233,518 | ) | (333,281 | ) | (356,033 | ) | (349,205 | ) | (57,684 | ) | ||||||||||||
Impairment loss on goodwill and intangible assets
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— | (4,600 | ) | (1,057,522 | ) | — | — | — | ||||||||||||||||
Total operating costs and expenses
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(756,374 | ) | (839,412 | ) | (2,265,448 | ) | (1,520,291 | ) | (1,739,038 | ) | (287,268 | ) | ||||||||||||
Income (loss) from operations
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345,229 | 394,525 | (748,773 | ) | 65,826 | 17,986 | 2,971 | |||||||||||||||||
Other income, net:
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Investment income
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18,905 | 41,244 | — | — | 8,886 | 1,468 | ||||||||||||||||||
Interest income
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33,203 | 26,771 | 52,031 | 90,323 | 84,250 | 13,917 | ||||||||||||||||||
Finance cost
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(4 | ) | (5 | ) | — | (2,439 | ) | — | — | |||||||||||||||
Others, net
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1,534 | 351 | 22,436 | 6,742 | (4,601 | ) | (760 | ) | ||||||||||||||||
Changes in fair value of contingent consideration payables
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(5,946 | ) | — | — | — | — | — | |||||||||||||||||
Income (loss) from continuing operations before income taxes and income of affiliates and discontinued operations
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392,921 | 462,886 | (674,306 | ) | 160,452 | 106,521 | 17,596 | |||||||||||||||||
Income tax expense
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(97,309 | ) | (89,125 | ) | (84,030 | ) | (50,373 | ) | (27,158 | ) | (4,486 | ) | ||||||||||||
Share of income of affiliates
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774 | 12,904 | 14,246 | 14,658 | 20,621 | 3,406 | ||||||||||||||||||
Net income (loss) from continuing operations
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296,386 | 386,665 | (744,090 | ) | 124,737 | 99,984 | 16,516 | |||||||||||||||||
Net income (loss) from discontinued operations, net of tax
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(17,372 | ) | 29,665 | 127,553 | — | — | — | |||||||||||||||||
Net income (loss)
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279,014 | 416,330 | (616,537 | ) | 124,737 | 99,984 | 16,516 | |||||||||||||||||
Less: Net (loss) income attributable to the noncontrolling interests
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(21,827 | ) | (5,978 | ) | (317,163 | ) | (5,773 | ) | 4,341 | 717 | ||||||||||||||
Net income (loss) attributable to the Company’s shareholders
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300,841 | 422,308 | (299,374 | ) | 130,510 | 95,643 | 15,799 | |||||||||||||||||
Net income (loss) per share:
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Basic:
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Net income (loss) from continuing operations
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0.33 | 0.41 | (0.43 | ) | 0.13 | 0.10 | 0.02 | |||||||||||||||||
Net income (loss) from discontinued operations
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— | 0.03 | 0.13 | — | — | — | ||||||||||||||||||
Net income (loss)
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0.33 | 0.44 | (0.30 | ) | 0.13 | 0.10 | 0.02 | |||||||||||||||||
Diluted:
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Net income (loss) from continuing operations
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0.32 | 0.40 | (0.43 | ) | 0.13 | 0.10 | 0.02 | |||||||||||||||||
Net income (loss) from discontinued operations
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— | 0.03 | 0.13 | — | — | — | ||||||||||||||||||
Net income (loss)
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0.32 | 0.43 | (0.30 | ) | 0.13 | 0.10 | 0.02 |
For the Year Ended December 31,
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2009
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2010
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2011
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2012
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2013
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RMB
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RMB
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RMB
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RMB
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RMB
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US$
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(in thousands, except shares, per share and per ADS data)
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Net income (loss) per ADS:
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Basic:
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Net income (loss) from continuing operations
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6.61 | 8.20 | (8.51 | ) | 2.60 | 1.92 | 0.32 | |||||||||||||||||
Net income (loss) from discontinued operations
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(0.02 | ) | 0.62 | 2.54 | — | — | — | |||||||||||||||||
Net income (loss)
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6.59 | 8.82 | (5.97 | ) | 2.60 | 1.92 | 0.32 | |||||||||||||||||
Diluted:
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Net income (loss) from continuing operations
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6.50 | 7.93 | (8.51 | ) | 2.60 | 1.91 | 0.32 | |||||||||||||||||
Net income (loss) from discontinued operations
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(0.02 | ) | 0.60 | 2.54 | — | — | — | |||||||||||||||||
Net income (loss)
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6.48 | 8.53 | (5.97 | ) | 2.60 | 1.91 | 0.32 | |||||||||||||||||
Shares used in calculating net income (loss) per share:
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Basic
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912,497,726 | 958,029,717 | 1,002,810,673 | 1,002,308,275 | 998,861,526 | 998,861,526 | ||||||||||||||||||
Diluted
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928,312,312 | 990,318,528 | 1,002,810,673 | 1,005,301,969 | 1,000,570,018 | 1,000,570,018 | ||||||||||||||||||
Dividends declared per share(2)
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0.075 | 0.089 | — | — | — | — |
(1)
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Including share-based compensation expenses of RMB7.6 million, RMB22.2 million, RMB57.0 million, RMB66.9 million and RMB45.3 million (US$7.5 million) for the years ended December 31, 2009, 2010, 2011, 2012 and 2013, respectively;
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(2)
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A dividend of US$0.22 per ADS was declared on May 21, 2009, payable to our shareholders of record as of the close of business on June 26, 2009. A dividend of US$0.26 per ADS was declared on April 23, 2010, payable to our shareholders of record as of the close of business on May 20, 2010.
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As of December 31,
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2009
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2010
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2011
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2012
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2013
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RMB
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RMB
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RMB
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RMB
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RMB
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US$
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(in thousands)
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Consolidated Balance Sheet Data:
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Cash and cash equivalents
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1,457,890 | 1,924,884 | 2,222,160 | 2,525,618 | 2,288,623 | 378,054 | ||||||||||||||||||
Total current assets
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1,727,499 | 2,302,425 | 2,898,414 | 2,993,900 | 3,177,801 | 524,935 | ||||||||||||||||||
Total assets
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2,545,965 | 3,854,456 | 3,280,996 | 3,400,789 | 3,560,730 | 588,190 | ||||||||||||||||||
Total current liabilities
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337,648 | 288,361 | 328,309 | 318,539 | 339,425 | 56,069 | ||||||||||||||||||
Total liabilities
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359,260 | 337,393 | 402,001 | 392,882 | 413,968 | 68,383 | ||||||||||||||||||
Noncontrolling interests
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194,897 | 456,079 | 124,948 | 113,527 | 118,665 | 19,602 | ||||||||||||||||||
Total equity
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2,186,705 | 3,517,063 | 2,878,995 | 3,007,907 | 3,146,762 | 519,807 | ||||||||||||||||||
Total liabilities and shareholders’ equity
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2,545,965 | 3,854,456 | 3,280,996 | 3,400,789 | 3,560,730 | 588,190 |
Noon Buying Rate
(RMB per US$1.00)
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Period
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Period
End
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Average(1)
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Low
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High
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2009
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6.8259 | 6.8295 | 6.8470 | 6.8176 | ||||||||||||
2010
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6.6000 | 6.7603 | 6.8330 | 6.6000 | ||||||||||||
2011
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6.2939 | 6.4475 | 6.6364 | 6.2939 | ||||||||||||
2012
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6.2301 | 6.2990 | 6.3879 | 6.2221 | ||||||||||||
2013
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6.0537 | 6.1412 | 6.2438 | 6.0537 | ||||||||||||
October
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6.0943 | 6.1032 | 6.1209 | 6.0815 | ||||||||||||
November
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6.0922 | 6.0929 | 6.0993 | 6.0903 | ||||||||||||
December
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6.0537 | 6.0738 | 6.0927 | 6.0537 | ||||||||||||
2014
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January
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6.0590 | 6.0509 | 6.0600 | 6.0402 | ||||||||||||
February
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6.1448 | 6.0816 | 6.1448 | 6.0591 | ||||||||||||
March
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6.2164 | 6.1729 | 6.2273 | 6.1183 | ||||||||||||
April (through April 25)
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6.2534
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6.2196
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6.2534
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6.1966
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(1)
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Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevant period.
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B.
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Capitalization and Indebtedness
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C.
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Reasons for the Offer and Use of Proceeds
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D.
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Risk Factors
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the effectiveness of our marketing campaign to build brand recognition among consumers and our ability to attract and retain customers;
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the acceptance of third-party e-commerce platform as an effective channel for underwriters to distribute their insurance products;
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the acceptance of CNpad as an effective tool for sales agents;
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public concerns over security of e-commerce transactions and confidentiality of information;
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increased competition from insurance companies which directly sell insurance products through their own websites, call centers, portal websites which provide insurance product information and links to insurance companies’ websites, and other professional insurance intermediary companies which may launch independent websites in the future;
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further improvement in our information technology system designed to facilitate smoother online transactions; and
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further development and changes in applicable rules and regulations which may increase our operating costs and expenses, impede the execution of our business plan or change the competitive landscape.
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building an integrated e-commerce platform, including CNpad, our mobile integrated sales support system for sales agents, and Baowang, our comparison website for end-customers;
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adjusting the growth strategy of our life insurance business by developing the capability to offer comprehensive financial services and products, expanding market presence in major cities and establishing a professional and high-caliber sales team; and
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improving operational efficiency by simplifying our organizational structure, encouraging the sharing of administrative resources and strengthening cooperation among our various business units.
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our ability to attract and retain elite sales teams to our comprehensive financial services platform;
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new regulatory developments that may impose additional licensing or other requirements on us;
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Chinese consumers becoming more sophisticated and accustomed to purchasing insurance policies online;
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insurance carriers better incorporating technology in order to integrate with our system, as well as their acceptance of third-party e-commerce platforms as an effective product distribution channel;
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our ability to effectively launch marketing campaigns to promote Baowang, our comparison website, and build brand awareness as the market environment becomes more mature; and
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the effectiveness of our ability to promote CNpad, our proprietary mobile integrated sales support system, among sales agents, which should enable us, as first mover, to establish a leading market position in this technology.
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making misrepresentations when marketing or selling insurance or wealth management products to customers;
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hindering insurance applicants from making full and accurate mandatory disclosures or inducing applicants to make misrepresentations;
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hiding or falsifying material information in relation to insurance contracts;
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fabricating or altering insurance contracts without authorization from relevant parties, selling false policies, or providing false documents on behalf of the applicants;
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falsifying insurance agency business or fraudulently returning insurance policies to obtain commissions;
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colluding with applicants, insureds, or beneficiaries to obtain insurance benefits;
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engaging in false claims; or
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otherwise not complying with laws and regulations or our control policies or procedures.
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exercise effective control over Yihe Investment, Xinbao Investment and their subsidiaries;
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have an exclusive option to purchase part of the equity interests in each of Yihe Investment, Xinbao Investment and their subsidiaries when and to the extent permitted by PRC law; and/or
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receive a substantial portion of the economic benefits of Yihe Investment, Xinbao Investment and their subsidiaries in consideration for the services provided by our wholly-owned subsidiaries in China.
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revoking the business and operating licenses of our PRC subsidiaries and consolidated affiliated entities;
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restricting or prohibiting any related-party transactions among our PRC subsidiaries and consolidated affiliated entities;
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imposing fines or other requirements with which we, our PRC subsidiaries or our consolidated affiliated entities may not be able to comply;
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requiring us, our PRC subsidiaries or our consolidated affiliated entities to restructure the relevant ownership structure or operations; or
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restricting or prohibiting us from providing additional funding for our business and operations in China.
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the CSRC had jurisdiction over our offering;
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the CSRC by then had not issued any definitive rule or interpretation concerning whether offerings like our initial public offering were subject to this new procedure; and
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despite the above, given that we had completed our inbound investment before September 8, 2006, the effective date of the M&A Rule, an application was not required under the M&A Rule to be submitted to the CSRC for its approval of the listing and trading of our ADSs on the Nasdaq Global Market, unless we were clearly required to do so by subsequent rules of the CSRC.
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actual or anticipated fluctuations in our quarterly operating results;
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changes in financial estimates by securities research analysts;
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conditions in the Chinese insurance industry;
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changes in the economic performance or market valuations of other insurance intermediaries;
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announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;
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addition or departure of key personnel;
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fluctuations of exchange rates between the RMB and U.S. dollar or other foreign currencies;
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potential litigation or administrative investigations;
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sales of additional ADSs; and
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general economic or political conditions in China and abroad.
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Item 4.
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Information on the Company
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A.
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History and Development of the Company
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B.
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Business Overview
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building a customer-centric integrated e-commerce platform, including Baowang (www.baoxian.com), our insurance comparison website, and CNpad, our proprietary mobile sales support system;
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adjusting the growth strategy of our life insurance business by developing the capability to offer comprehensive financial services and products, expanding market presence in major cities and establishing a professional and high-caliber sales team; and
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improving operational efficiency by simplifying our organizational structure, encouraging the sharing of administrative resources and strengthening cooperation among our various business units.
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Automobile Insurance. Automobile insurance is the largest segment of property and casualty insurance in the PRC in terms of gross written premiums. We distribute both standard automobile insurance policies and supplemental policies, which we refer to as riders. The standard automobile insurance policies we sell generally have a term of one year and cover damages caused to the insured vehicle by collision and other traffic accidents, falling or flying objects, fire, explosion and natural disasters. We also sell standard third-party liability insurance policies, which cover bodily injury and property damage caused by an accident involving an insured vehicle to a person not in the insured vehicle. The riders we distribute cover additional losses, such as liability to passengers, losses arising from vehicle theft and robbery, broken glass and vehicle body scratches.
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Individual Accident Insurance. The individual accident insurance products we distribute generally provide a guaranteed benefit during the coverage period, which usually is one year or a shorter period, in the event of death or disability of the insured as a result of an accident, or a reimbursement of medical expenses to the insured in connection with an accident. These products typically require only a single premium payment for each coverage period. Because most of the individual accident insurance products we distribute are underwritten by property and casualty insurance companies, we classify individual accident insurance products as property and casualty insurance products.
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Travel Insurance. The travel insurance products we distribute are short-term insurance providing guaranteed benefit in the event of death or disability and covering travel-related emergencies and losses, either within one's own country, or internationally. These products typically require only a single premium payment for each coverage period.
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Disability Income Insurance. The disability income insurance products we distribute generally have a term of one year and provide supplementary income before the insured can get back to their regular employment or for a specified period in the event of illness or disability. These products typically require only a single premium payment for each coverage period. Because most of the disability income insurance products we distribute are underwritten by property and casualty insurance companies, we classify them as property and casualty insurance products.
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Commercial Property Insurance. The commercial property insurance products we distribute include basic, comprehensive and all risk policies. Basic commercial property insurance policies generally cover damage to the insured property caused by fire, explosion and thunder and lightning. Comprehensive commercial property insurance policies generally cover damage to the insured property caused by fire, explosion and certain natural disasters. All risk commercial property insurance policies cover all causes of damage to the insured property not specifically excluded from the policies.
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Homeowner Insurance. The homeowner insurance products we distribute primarily cover the damage to the insured house, furniture and household electrical appliance caused by a number of standard risks such as fire, flood and explosion.
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Cargo Insurance. The cargo insurance products we distribute cover damage to or loss of goods in transit by sea, land or air.
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Hull Insurance. The hull insurance products we distribute cover vessels against losses, liabilities and expenses caused by natural calamities, negligence of crew members and marine accidents, as well as collision liability.
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Liability Insurance. The liability insurance products we distribute are primarily product liability, employer’s liability, public liability and professional liability insurance products. These products generally cover losses to third parties due to the misconduct or negligence of the insured party, but exclude losses due to fraud or the willful misconduct of the insured party.
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Construction and Erection Insurance. The construction and erection insurance products we distribute cover property damages and personal injury losses caused by natural disasters and accidents in connection with construction and erection projects in China and abroad.
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Credit Insurance. The credit insurance products we distribute are primarily trade credit insurance, which protects the account receivables of business entities from loss due to credit risk, and consumer credit insurance, which enables the borrower to ensure the repayment of a personal consumption loan in the event of the borrower’s death, illness or disability, unemployment or other circumstances that may prevent him or her from earning income to service the debt.
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Extended Warranty Insurance. The extended warranty insurance products we distribute provide coverage for expenses associated with any repair or replacement of the sold items, such as an electrical appliance or auto vehicle, after the manufacturer's warranty has expired.
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Bank Account Crime Insurance. The bank account crime insurance products we distribute provide for the recovery of funds stolen from bank accounts.
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Individual Whole Life Insurance. The individual whole life insurance products we distribute provide insurance for the insured person’s entire life in exchange for the periodic payment of fixed premiums over a pre-determined period, generally ranging from five to 20 years, or until the insured reaches a certain age. The face amount of the policy or, for some policies, the face amount plus accumulated interests is paid upon the death of the insured.
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Individual Term Life Insurance. The individual term life insurance products we distribute provide insurance for the insured for a specified time period or until the attainment of a certain age, in return for the periodic payment of fixed premiums over a pre-determined period, generally ranging from five to 20 years. Term life insurance policies generally expire without value if the insured survives the coverage period.
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Individual Endowment Life Insurance. The individual endowment products we distribute generally provide insurance coverage for the insured for a specified time period and maturity benefits if the insured reaches a specified age, and provide to a beneficiary designated by the insured guaranteed benefits upon the death of the insured within the coverage period. In return, the insured makes periodic payment of premiums over a pre-determined period, generally ranging from five to 25 years.
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·
|
Individual Education Annuity. The individual annuity products we distribute are primarily education related products. They provide annual benefit payments after the insured attains a certain age, or for a fixed time period, and provide a lump payment at the end of the coverage period. In addition, the beneficiary designated in the annuity contract will receive guaranteed benefits upon the death of the insured during the coverage period. In return, the purchaser of the annuity products makes periodic payment of premiums during a pre-determined accumulation period.
|
·
|
Universal Insurance. We distribute certain universal insurance products that provide not only insurance coverage but also a minimum guaranteed return on the amount the insured puts into an individual investment account. In return, the insured makes periodic payment of premiums over a pre-determined period, generally ranging from five to 25 years.
|
·
|
Participating Insurance. The participating insurance products we distribute not only provide insurance coverage but also pay dividends generated from the profits of the insurance company providing the policy. The dividends are typically paid out on an annual basis over the life of the policy. In return, the insured makes periodic payment of premiums over a pre-determined period, generally ranging from five to 25 years.
|
·
|
Individual Health Insurance. The individual health insurance products we distribute primarily consist of catastrophic health insurance products, which provide guaranteed benefits for specified serious illnesses and medicare insurance, which provides conditional reimbursement for medical expenses during the coverage period. In return, the insured makes periodic payment of premiums over a pre-determined period.
|
·
|
Group Life Insurance. We distribute several group life insurance products, including group health insurance. These group products generally have a policy period of one year and require a single premium payment.
|
·
|
Pre-underwriting Survey. Before an insurance policy is sold, we conduct a survey of the item to be insured to assess its current value and help our clients determine the insurable value and the amount to be insured. We also help our clients assess the underwriting risk with respect to the item to be insured through surveys, appraisals and analysis.
|
·
|
Claims Adjusting. When an accident involving the insured subject matter has occurred, we conduct an onsite survey to determine the cause of the accident and assess damage. We then determine the extent of the loss to the insured subject matter and prepare and submit a report to the insurance company summarizing our preliminary findings. Upon final conclusion of the case, we prepare and submit a detailed report to the insurance company setting forth details of the accident, cause of the loss, details of the loss, adjustment and determination of loss, an indemnity proposal and, where appropriate, a request for payment.
|
·
|
Disposal of Residual Value. In the course of providing claims adjusting services, we also can appraise the residual value of the insured property and offer suggestions on the disposal of such property. Upon appointment by the insurance company, we handle the actual disposal of the insured property through auction, discounted sale, lease or other means.
|
·
|
Loading and Unloading Supervision. Upon appointment by ship owners, shippers, consignees or insurance companies, we can monitor and record the loading and unloading processes of specific cargos.
|
·
|
Consulting Services. We provide consulting services to both the insured and the insurance companies on risk assessment and management, disaster and damage prevention, investigation, and loss assessment.
|
·
|
standardized operating procedures;
|
·
|
Core Business System, which encompasses our property and casualty insurance unit, life insurance unit, and claims adjusting unit, that will better support business operations and facilitate risk control;
|
·
|
a centralized and computerized accounting and financial management system;
|
·
|
a human resources management system;
|
·
|
an office automation system;
|
·
|
an e-learning system to provide online training to sales agents;
|
·
|
a nationwide IT network and data center to support front-office operations; and
|
·
|
an e-commerce platform.
|
Province
|
Number of Sales
and Service Outlets
|
Number of Sales
Agents
|
Number of Sales
Agents
|
Number of In-
house Adjustors
|
Number of In-
house Brokers
|
|||||||||||||||
Hebe
|
64 | 11,011 | — | 72 | — | |||||||||||||||
Shandong
|
40 | 10,082 | 4 | 12 | — | |||||||||||||||
Guangdong
|
77 | 7,400 | 129 | 256 | — | |||||||||||||||
Henan
|
16 | 5,200 | — | 5 | — | |||||||||||||||
Beijing
|
25 | 4,505 | — | 107 | 16 | |||||||||||||||
Liaoning
|
43 | 4,068 | — | 65 | — | |||||||||||||||
Hunan
|
19 | 2,923 | 5 | 31 | — | |||||||||||||||
Sichuan
|
64 | 2,324 | — | 83 | — | |||||||||||||||
Fujian
|
34 | 2,004 | — | 24 | — | |||||||||||||||
Shaanxi
|
5 | 807 | 8 | 41 | — | |||||||||||||||
Hubei
|
18 | 794 | — | 66 | — | |||||||||||||||
Tianjin
|
5 | 748 | 8 | 43 | — | |||||||||||||||
Zhejiang
|
28 | 712 | 17 | 50 | — | |||||||||||||||
Shanghai
|
11 | 154 | 3 | 145 | — | |||||||||||||||
Jiangsu
|
12 | 108 | — | 114 | — | |||||||||||||||
Jiangxi
|
7 | 20 | — | 30 | — | |||||||||||||||
Yunan
|
3 | — | — | 65 | — | |||||||||||||||
Hainan
|
2 | — | — | 5 | — | |||||||||||||||
Guangxi
|
4 | — | — | 47 | — | |||||||||||||||
Anhui
|
2 | — | — | 13 | — | |||||||||||||||
Chongqin
|
3 | — | — | 5 | — | |||||||||||||||
Inner Mongolia
|
1 | — | — | 7 | — | |||||||||||||||
Gansu
|
1 | — | — | 7 | — | |||||||||||||||
Shanxi
|
1 | — | — | 8 | — | |||||||||||||||
Xinjiang
|
1 | — | — | 4 | — | |||||||||||||||
Guizhou
|
3 | — | — | 41 | — | |||||||||||||||
Jilin
|
2 | — | — | 54 | — | |||||||||||||||
Qinghai
|
1 | — | — | 1 | — | |||||||||||||||
Total
|
492 | 52,860 | 174 | 1,401 | 16 |
·
|
Professional insurance intermediaries. The professional insurance intermediary sector in China is highly fragmented, accounting for only 5.3% of the total insurance premiums generated in China in the first quarter of 2013, according to the latest Chinese Insurance Intermediary Market Report. Several insurance intermediary companies have received private equity or venture capital funding in recent years and are actively pursuing expansion. We believe that we can compete effectively with these insurance intermediary companies because we have a longer operating history, we have a strong and stable team of managers and sales professionals equipped with CNpad, we offer diversified products to our sales agents and clients, and we have built a unified operating platform. With increasing consolidation expected in the insurance intermediary sector in the coming years, we expect competition within this sector to intensify.
|
·
|
Insurance companies. The distribution of individual life insurance products in China historically has been dominated by insurance companies, which usually use both in-house sales forces and exclusive sales agents to distribute their own products. In addition, in recent years several major insurance companies have been increasing the use of telemarketing to distribute auto insurance. We believe that we can compete effectively with insurance companies because we focus only on distribution and offer our customers a broad range of insurance products underwritten by multiple insurance companies.
|
·
|
Entities that offer insurance products online. In recent years, domestic insurance companies, portal websites and professional insurance intermediaries have begun providing online information to consumers interested in purchasing insurance products. However, each of their insurance e-commerce operations has its own limitations. The insurance products offered on an insurance company’s website are usually confined to those under its own brand. Most portal websites provide separate product information with little ability to compare among insurance plans. None of the professional insurance intermediaries that organize online product distribution has a nation-wide sales and service network to support after-sale service. We believe that we can compete effectively with these business entities because our independent insurance comparison website offers a broad range of insurance products underwritten by multiple insurance companies, product comparisons between prices, services and policy benefits and good after-sale services that are backed by our call center and nation-wide service network.
|
·
|
Other business entities. In recent years, business entities that distribute insurance products as an ancillary business, primarily commercial banks and postal offices, have been playing an increasingly important role in the distribution of insurance products, especially life insurance products. However, the insurance products distributed by these entities are mostly confined to those related to their main lines of business, such as investment-related life insurance products. We believe that we can compete effectively with these business entities because we offer our customers a broader variety of products.
|
·
|
Licensing of insurance companies and insurance intermediaries, such as agencies and brokerages. The 1995 Insurance Law established requirements for minimum registered capital levels, form of organization, qualification of senior management and adequacy of the information systems for insurance companies and insurance agencies and brokerages.
|
·
|
Separation of property and casualty insurance businesses and life insurance businesses. The 1995 Insurance Law classified insurance between property, casualty, liability and credit insurance businesses, on the one hand, and life, accident and health insurance businesses on the other, and prohibited insurance companies from engaging in both types of businesses.
|
·
|
Regulation of market conduct by participants. The 1995 Insurance Law prohibited fraudulent and other unlawful conduct by insurance companies, agencies and brokerages.
|
·
|
Substantive regulation of insurance products. The 1995 Insurance Law gave insurance regulators the authority to approve the basic policy terms and premium rates for major insurance products.
|
·
|
Financial condition and performance of insurance companies. The 1995 Insurance Law established reserve and solvency standards for insurance companies, imposed restrictions on investment powers and established mandatory reinsurance requirements, and put in place a reporting regime to facilitate monitoring by insurance regulators.
|
·
|
Supervisory and enforcement powers of the principal regulatory authority. The principal regulatory authority, then the PBOC, was given broad powers under the 1995 Insurance Law to regulate the insurance industry.
|
·
|
Authorizing the CIRC to be the insurance supervisory and regulatory body nationwide. The 2002 Insurance Law expressly grants the CIRC the authority to supervise and administer the insurance industry nationwide.
|
·
|
Expanding the permitted scope of business of property and casualty insurers. Under the 2002 Insurance Law, property and casualty insurance companies may engage in the short-term health insurance and accident insurance businesses upon the CIRC’s approval.
|
·
|
Providing additional guidelines for the relationship between insurance companies and insurance agents. The 2002 Insurance Law requires an insurance company to enter into an agent agreement with each insurance agent that will act as an agent for that insurance company. The agent agreement sets forth the rights and obligations of the parties to the agreement as well as other matters pursuant to law. An insurance company is responsible for the acts of its agents when the acts are within the scope authorized by the insurance company.
|
·
|
Relaxing restrictions on the use of funds by insurance companies. Under the 2002 Insurance Law, an insurance company may use its funds to make equity investments in insurance-related enterprises, such as asset management companies.
|
·
|
Allowing greater freedom for insurance companies to develop insurance products. The 2002 Insurance Law allowed insurance companies to set their own policy terms and premium rates, subject to the approval of, or a filing with, the CIRC.
|
·
|
Strengthening protection of the insured’s interests. The 2009 Insurance Law added a variety of clauses such as incontestable clause, abstained and estoppels clause, common disaster clause and amending immunity clause, claims-settlement prescription clause, reasons for claims rejection and contract modification clause.
|
·
|
Strengthening supervision on the qualification of the shareholders of the insurance companies and setting forth specific qualification requirements for the major shareholders, directors, supervisors and senior managers of insurance companies.
|
·
|
Expanding the business scope of insurers and further relaxing restriction on the use of fund by insurers.
|
·
|
Strengthening supervision on solvency of insurers with stricter measures.
|
·
|
Tightening regulations governing the administration of insurance intermediary companies, especially those relating to behaviors of insurance agents.
|
·
|
promulgate regulations applicable to the Chinese insurance industry;
|
·
|
investigate insurance companies and insurance intermediaries;
|
·
|
establish investment regulations;
|
·
|
approve policy terms and premium rates for certain insurance products;
|
·
|
set the standards for measuring the financial soundness of insurance companies and insurance intermediaries;
|
·
|
require insurance companies and insurance intermediaries to submit reports concerning their business operations and condition of assets;
|
·
|
order the suspension of all or part of an insurance company or an insurance intermediary’s business;
|
·
|
approve the establishment, change and dissolution of an insurance company, an insurance intermediary or their branches;
|
·
|
review and approve the appointment of senior managers of an insurance company, an insurance intermediary or their branches; and
|
·
|
punish insurance companies or intermediaries for improper behaviors or misconducts.
|
·
|
selling insurance products on behalf of the insurance companies;
|
·
|
collecting insurance premiums on behalf of the insurance companies;
|
·
|
conducting loss surveys and handling claims of insurance businesses on behalf of the insurer principal; and
|
·
|
other business activities approved by the CIRC.
|
·
|
making insurance proposals, selecting insurance companies and handling the insurance application procedures for the insurance applicants;
|
·
|
assisting the insured or the beneficiary to claim compensation;
|
·
|
reinsurance brokering business;
|
·
|
providing consulting services to clients with respect to disaster and damage prevention, risk assessment and risk management; and
|
·
|
other business activities approved by the CIRC.
|
·
|
inspecting, appraising the value of and assessing the risks of the subject matter before it is insured;
|
·
|
surveying, inspecting, estimating the loss of and adjusting the insured subject matter after loss has been incurred;
|
·
|
risk management consulting; and
|
·
|
other business activities approved by the CIRC.
|
·
|
a registered capital of at least RMB100 million;
|
·
|
no record of material violation by investors of applicable laws and regulations in the previous three years; and
|
·
|
at least five subsidiaries, among which at least two are professional insurance intermediary companies which contribute at least 50% of the total revenues of the group.
|
·
|
The applicant must have operated an insurance brokerage businesses in Hong Kong and Macao for over 10 years;
|
·
|
The applicant's average annual revenue of insurance brokerage business for the past three years before application must not be less than HKD500,000 and the total assets as at the end of the year before application must not be less than HKD500,000;
|
·
|
Within the years before application, there has been no serious misconduct or record of disciplinary action; and
|
·
|
The applicant must have set up a representative office in mainland China for over one year.
|
·
|
Foreign Currency Administration Rules (1996), as amended pursuant to the Decision on Revising the Foreign Currency Administration Rules promulgated by the State Council on January 14, 1997 and the Foreign Currency Administration Rules promulgated by the State Council on August 5, 2008; and
|
·
|
Administration Rules of the Settlement, Sale and Payment of Foreign Exchange.
|
·
|
Wholly Foreign-Owned Enterprise Law (1986), as amended pursuant to the Decision of the Standing Committee of the National People's Congress on Revising the Wholly Foreign-Owned Enterprise Law promulgated on October 31, 2000; and
|
·
|
Wholly Foreign-Owned Enterprise Law Implementing Rules (1990), as amended pursuant to the Decision of the State Council on Amending the Rules for the Implementation of the Law on Foreign-Owned Enterprises promulgated by the State Council on April 12, 2001 and the Decision of the State Council on Revising the "Detailed Implementing Rules for the Wholly Foreign-Owned Enterprise Law which took effect as of the promulgation date of March 1, 2014.
|
·
|
the CSRC had jurisdiction over our initial public offering;
|
·
|
the CSRC had not issued any definitive rule or interpretation concerning whether offerings like our initial public offering are subject to the M&A Rule; and
|
·
|
despite the above, given that we had completed our inbound investment before September 8, 2006, the effective date of the M&A Rule, an application was not required under the M&A Rule to be submitted to the CSRC for its approval of the listing and trading of our ADSs on the Nasdaq Global Market, unless we are clearly required to do so by subsequent rules of the CSRC.
|
C.
|
Organizational Structure
|
·
|
exercise effective control over Yihe Investment, Xinbao Investment and their subsidiaries;
|
·
|
have an exclusive option to purchase all or part of the equity interests in each of Yihe Investment and Xinbao Investment when and to the extent permitted by PRC law; and
|
·
|
receive a substantial portion of the economic benefits of the subsidiaries of Yihe Investment and Xinbao Investment in consideration for the services provided by our subsidiaries in China.
|
·
|
not transfer, pledge or otherwise dispose of or encumber his equity interests in Yihe Investment , except for equity pledge for the benefit of Xinlian Information, without the prior written consent of Xinlian Information;
|
·
|
not take any action that will have a material impact on the assets, business and liabilities of Yihe Investment without the prior written consent of Xinlian Information;
|
·
|
not vote for, or execute any resolution to approve, the sale, transfer, mortgage, or disposal of, or the creation of any encumbrance on, any legal or beneficial interests in the equity of Yihe Investment, except to Xinlian Information or its designee, without the prior written consent of Xinlian Information;
|
·
|
not vote for, or execute any resolutions to approve, any merger or consolidation with any person, or any acquisition of or investment in any person by Yihe Investment without the prior written consent of Xinlian Information;
|
·
|
vote to elect the director candidates nominated by Xinlian Information;
|
·
|
cause Yihe Investment not to supplement, amend or modify its articles of association in any manner, increase or decrease its registered capital or change the capital structure in any way without the prior written consent of Xinlian Information; and
|
·
|
cause Yihe Investment not to execute any contract with a value exceeding RMB100,000, except in the ordinary course of business, without the prior written consent of Xinlian Information.
|
·
|
the ownership structures of Yihe Investment and Xinbao Investment, their subsidiaries and our subsidiaries in China comply with all existing PRC laws and regulations;
|
·
|
the contractual arrangements among our PRC subsidiaries, Yihe Investment, Xinbao Investment, their individual shareholders and their subsidiaries governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect; and
|
·
|
the business operations of our PRC subsidiaries, Yihe Investment and Xinbao Investment and their subsidiaries comply in all material respects with existing PRC laws and regulations.
|
D.
|
Property, Plant and Equipment
|
Item 4A.
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
A.
|
Operating Results
|
·
|
total premium payments to Chinese insurance companies;
|
·
|
the extent to which insurance companies in the PRC outsource the distribution of their products and claims adjusting functions;
|
·
|
premium rate levels and commission and fee rates;
|
·
|
the size and productivity of our sales force;
|
·
|
acquisitions;
|
·
|
commission rates for individual sales agents;
|
·
|
product and service mix;
|
·
|
share-based compensation expenses; and
|
·
|
seasonality.
|
·
|
commissions and fees paid by insurance companies, which accounted for 99.6%, 99.6% and 99.9% of our net revenues for 2011, 2012 and 2013, respectively; and
|
·
|
other service fees, which refers to fees paid by insurance companies for certain insurance-related services provided by us to the insured on behalf of the insurance companies and fees for IT platform and software services that we provide. These other service fees accounted for 0.4%, 0.4% and 0.1% of our net revenues for 2011, 2012 and 2013, respectively.
|
Year Ended December 31,
|
||||||||||||||||||||||||||||
2011
|
2012
|
2013
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands except percentages)
|
||||||||||||||||||||||||||||
Property and casualty insurance reporting unit
|
1,032,594 | 68.1 | 1,090,205 | 68.7 | 1,264,317 | 208,850 | 72.0 | |||||||||||||||||||||
Life insurance reporting unit
|
276,402 | 18.2 | 272,755 | 17.2 | 230,086 | 38,007 | 13.1 | |||||||||||||||||||||
Claims adjusting services
|
202,003 | 13.3 | 217,497 | 13.7 | 261,206 | 43,148 | 14.8 | |||||||||||||||||||||
Other service
|
5,676 | 0.4 | 5,660 | 0.4 | 1,415 | 234 | 0.1 | |||||||||||||||||||||
Total net revenues
|
1,516,675 | 100.0 | 1,586,117 | 100.0 | 1,757,024 | 290,239 | 100.0 |
Year Ended December 31,
|
||||||||||||||||||||||||||||
2011
|
2012
|
2013
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||||||
Total net revenues
|
1,516,675 | 100.0 | 1,586,117 | 100.0 | 1,757,024 | 290,239 | 100.0 | |||||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||||||
Commissions and fees
|
(796,843 | ) | (52.5 | ) | (1,085,809 | ) | (68.5 | ) | (1,293,372 | ) | (213,650 | ) | (73.6 | ) | ||||||||||||||
Selling expenses
|
(77,802 | ) | (5.1 | ) | (78,449 | ) | (4.9 | ) | (96,461 | ) | (15,934 | ) | (5.5 | ) | ||||||||||||||
General and administrative expenses
|
(333,281 | ) | (22.0 | ) | (356,033 | ) | (22.4 | ) | (349,205 | ) | (57,684 | ) | (19.9 | ) | ||||||||||||||
Impairment loss
|
(1,057,522 | ) | (69.7 | ) | — | — | — | — | — | |||||||||||||||||||
Total operating costs and expenses
|
(2,265,448 | ) | (149.3 | ) | (1,520,291 | ) | (95.8 | ) | (1,739,038 | ) | (287,268 | ) | (99.0 | ) |
·
|
salaries for employees who work in back office below the provincial management level and employment benefits for our in-house sales staff;
|
·
|
office rental, telecommunications and office supply expenses incurred in connection with sales activities; and
|
·
|
advertising and marketing expenses.
|
·
|
salaries and benefits for our administrative staff;
|
·
|
share-based compensation expenses for managerial and administrative staff;
|
·
|
professional fees paid for valuation, market research, legal and auditing services;
|
·
|
compliance-related expenses, including expenses for professional services;
|
·
|
depreciations and amortizations;
|
·
|
office rental expenses;
|
·
|
travel and telecommunications expenses;
|
·
|
entertainment expenses;
|
·
|
office supply expenses for our administrative staff; and
|
·
|
foreign exchange loss.
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||
2011
|
2012
|
2013
|
||||||||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
%
|
||||||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||||||
General and administrative expenses
|
333,281 | 100.0 | 356,033 | 100.0 | 349,205 | 57,684 | 100.0 | |||||||||||||||||||||
Share-based compensation expenses
|
57,003 | 17.1 | 66,878 | 18.8 | 45,317 | 7,485 | 13.0 |
·
|
For the P&C segment, we projected a five-year discounted cash flow. Basic assumptions in the cash flow projection included, among others, an estimated annual growth of between 3% to 15% in net revenues in the coming 5 years with reference to the stabilizing growth rate in 2013, and gross profit of around 25%, which is similar to the level in 2013. Any projection beyond 5 years by us cannot be estimated with reasonable accuracy, since the business environment is rapidly changing. The discount rate was set at 22%, based on the segment’s weighted average cost of capital and adjusted to reflect our and business-specific risks. For the P&C segment, we had goodwill of RMB61.7 million as of December 31, 2013. The estimated fair value of the reporting unit exceeded its carrying value at December 31, 2013. Consequently, no goodwill impairment has been recognized.
|
·
|
For the Life segment, we projected a five-year discounted cash flow. Basic assumptions in the cash flow projection included, among others, an estimated annual growth of between 3% to 10% in net revenues in the coming 5 years, and gross profit of around 30%, which is similar to the level in 2013. Any projection beyond 5 years by us cannot be forecast with reasonable accuracy, since the business environment is rapidly changing. A discount rate is set at 25%, based on the segment’s weighted average cost of capital and adjusted to reflect our and business-specific risk. For the Life segment, we had goodwill of RMB16.9 million as of December 31, 2013. The estimated fair value of the reporting unit exceeded its carrying value at December 31, 2013. Consequently, no goodwill impairment has been recognized.
|
·
|
For the Adjusting segment, related goodwill was completely written off in 2011.
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2011
|
2011 to 2012
Percentage
Change
|
2012
|
2012 to 2013
Percentage
Change
|
2013
|
||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||
Consolidated Statement of Income (Loss) Data
|
||||||||||||||||||||||||
Net revenues:
|
||||||||||||||||||||||||
Commissions and fees
|
1,510,886 | 4.6 | 1,580,234 | 11.1 | 1,755,545 | 289,995 | ||||||||||||||||||
Other service fees
|
5,789 | 1.6 | 5,883 | (74.9 | ) | 1,479 | 244 | |||||||||||||||||
Total net revenues
|
1,516,675 | 4.6 | 1,586,117 | 10.8 | 1,757,024 | 290,239 | ||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||
Commissions and fees
|
(796,843 | ) | 36.3 | (1,085,809 | ) | 19.1 | (1,293,372 | ) | (213,650 | ) | ||||||||||||||
Selling expenses
|
(77,802 | ) | 0.8 | (78,449 | ) | 23.0 | (96,461 | ) | (15,934 | ) | ||||||||||||||
General and administrative expenses
|
(333,281 | ) | 6.8 | (356,033 | ) | (1.9 | ) | (349,205 | ) | (57,684 | ) | |||||||||||||
Impairment losses on goodwill and intangible assets
|
(1,057,522 | ) | (100.0 | ) | — | * | — | — | ||||||||||||||||
Total operating costs and expenses
|
(2,265,448 | ) | (32.9 | ) | (1,520,291 | ) | 14.4 | (1,739,038 | ) | (287,268 | ) | |||||||||||||
Income (loss) from operations
|
(748,773 | ) | 108.8 | 65,826 | (72.7 | ) | 17,986 | 2,971 | ||||||||||||||||
Other income, net:
|
||||||||||||||||||||||||
Investment income
|
— | * | — | 100.0 | 8,886 | 1,468 | ||||||||||||||||||
Interest income
|
52,031 | 73.6 | 90,323 | (6.7 | ) | 84,250 | 13,917 | |||||||||||||||||
Finance cost
|
— | 100.0 | (2,439 | ) | (100.0 | ) | — | — | ||||||||||||||||
Others, net
|
22,436 | (70.0 | ) | 6,742 | (168.2 | ) | (4,601 | ) | (760 | ) | ||||||||||||||
Income (loss) from continuing operations before income taxes and income of affiliatesand discontinued operations
|
(674,306 | ) | 123.8 | 160,452 | (33.6 | ) | 106,521 | 17,596 | ||||||||||||||||
Income tax expense
|
(84,030 | ) | (40.1 | ) | (50,373 | ) | (46.1 | ) | (27,158 | ) | (4,486 | ) | ||||||||||||
Share of income of affiliates
|
14,246 | 2.9 | 14,658 | 40.7 | 20,621 | 3,406 | ||||||||||||||||||
Net income (loss) from continuing operations
|
(744,090 | ) | 116.8 | 124,737 | (19.8 | ) | 99,984 | 16,516 | ||||||||||||||||
Net income (loss) from discontinued operations, net of tax
|
127,553 | (100 | ) | — | * | — | — | |||||||||||||||||
Net income (loss)
|
(616,537 | ) | 120.2 | 124,737 | (19.8 | ) | 99,984 | 16,516 | ||||||||||||||||
Less: Net (loss) income attributable to the noncontrolling interests
|
(317,163 | ) | (98.2 | ) | (5,773 | ) | 175.2 | 4,341 | 717 | |||||||||||||||
Net income (loss) attributable to the Company’s shareholders
|
(299,374 | ) | 143.6 | 130,510 | (26.7 | ) | 95,643 | 15,799 |
*
|
Not meaningful for analysis because the percentage change is mathematically undeterminable or involves a change from income or benefit to loss or expense, or vice versa.
|
·
|
an increase of 17.3% in share-based compensation expenses from RMB57.0 million for fiscal year 2011 to RMB66.9 million in fiscal year 2012. Share-based compensation expenses for fiscal year 2012 were mainly associated with options granted to employees in March 2012, which were recognized on an accelerated basis. Share-based compensation expenses for fiscal year 2011 were mainly related to the cancellation of certain stock options in November 2011;
|
·
|
11.4% increase in payroll expense from RMB100.7 million for fiscal year 2011 to RMB112.2 million for the fiscal year 2012; offset by
|
·
|
the recognition of approximately RMB10.0 million in financial advisor and legal fees incurred in the third quarter of 2011 in relation to a non-binding going-private proposal which was later withdrawn.
|
Year Ended December 31,
|
||||||||||||||||||||||||
2011
|
2011 to 2012
Percentage
Change
|
2012
|
2012 to 2013
Percentage
Change
|
2013
|
||||||||||||||||||||
RMB
|
%
|
RMB
|
%
|
RMB
|
US$
|
|||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||
Net revenues:
|
||||||||||||||||||||||||
Property and casualty
|
1,032,594 | 5.6 | 1,090,205 | 16.0 | 1,264,317 | 208,850 | ||||||||||||||||||
Life
|
276,402 | (1.3 | ) | 272,755 | (15.6 | ) | 230,086 | 38,007 | ||||||||||||||||
Claims adjusting
|
202,003 | 7.7 | 217,497 | 20.1 | 261,206 | 43,148 | ||||||||||||||||||
Other
|
5,676 | (0.3 | ) | 5,660 | (75.0 | ) | 1,415 | 234 | ||||||||||||||||
Total net revenues
|
1,516,675 | 4.6 | 1,586,117 | 10.8 | 1,757,024 | 290,239 | ||||||||||||||||||
Operating costs and expenses:
|
||||||||||||||||||||||||
Property and casualty
|
(1,626,472 | ) | (44.0 | ) | (911,330 | ) | 25.4 | (1,142,677 | ) | (188,757 | ) | |||||||||||||
Life
|
(245,571 | ) | 8.3 | (266,062 | ) | (12.5 | ) | (232,794 | ) | (38,455 | ) | |||||||||||||
Claims adjusting
|
(243,072 | ) | (23.2 | ) | (186,694 | ) | 25.4 | (234,129 | ) | (38,675 | ) | |||||||||||||
Other
|
(150,333 | ) | 3.9 | (156,205 | ) | (17.1 | ) | (129,438 | ) | (21,381 | ) | |||||||||||||
Total operating costs and expenses
|
(2,265,448 | ) | 32.9 | (1,520,291 | ) | 14.4 | (1,739,038 | ) | (287,268 | ) | ||||||||||||||
Income (Loss) from operations:
|
||||||||||||||||||||||||
Property and casualty
|
(593,878 | ) | 130.1 | 178,875 | (32.0 | ) | 121,640 | 20,093 | ||||||||||||||||
Life
|
30,831 | (78.3 | ) | 6,693 | (140.5 | ) | (2,708 | ) | (448 | ) | ||||||||||||||
Claims adjusting
|
(41,069 | ) | 175.0 | 30,803 | (12.1 | ) | 27,077 | 4,473 | ||||||||||||||||
Other
|
(144,657 | ) | 4.1 | (150,545 | ) | (15.0 | ) | (128,023 | ) | (21,147 | ) | |||||||||||||
Total income (loss) from operations
|
(748,773 | ) | 108.8 | 65,826 | (72.7 | ) | 17,986 | 2,971 |
B.
|
Liquidity and Capital Resources
|
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
||||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Net cash generated from operating activities
|
491,400 | 157,808 | 185,945 | 30,716 | ||||||||||||
Net cash (used in) generated from investing activities
|
(46,023 | ) | 234,914 | (419,308 | ) | (69,264 | ) | |||||||||
Net cash (used in) generated from financing activities
|
(129,810 | ) | (86,696 | ) | 3,350 | 553 | ||||||||||
Net increase (decrease) in cash and cash equivalents
|
315,567 | 306,026 | (230,013 | ) | (37,995 | ) | ||||||||||
Cash and cash equivalents at the beginning of the year
|
1,924,884 | 2,222,160 | 2,525,618 | 417,202 | ||||||||||||
Cash and cash equivalents at the end of the year
|
2,222,160 | 2,525,618 | 2,288,623 | 378,054 |
C.
|
Research and Development, Patents and Licenses, etc.
|
D.
|
Trend Information
|
E.
|
Off-Balance Sheet Commitments and Arrangements
|
F.
|
Contractual Obligations
|
Payment Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
||||||||||||||||
(in thousands of RMB)
|
||||||||||||||||||||
Operating lease obligations
|
51,728 | 20,665 | 25,726 | 5,337 | — | |||||||||||||||
Purchase obligations
|
— | — | — | — | — | |||||||||||||||
Total
|
51,728 | 20,665 | 25,726 | 5,337 | — |
Item 6.
|
Directors, Senior Management and Employees
|
A.
|
Directors and Senior Management
|
Directors and Executive Officers
|
Age
|
Position/Title
|
||
Chunlin Wang
|
44
|
Chief Executive Officer
|
||
Qiuping Lai
|
60
|
President and Director
|
||
Peng Ge
|
43
|
Chief Financial Officer
|
||
Yinan Hu
|
48
|
Chairman
|
||
Xiaojun Shang
|
41
|
Director
|
||
Yunxiang Tang
|
68
|
Independent Director
|
||
Stephen Markscheid
|
60
|
Independent Director
|
||
Allen Warren Lueth
|
45
|
Independent Director
|
||
Mengbo Yin
|
58
|
Independent Director
|
B.
|
Compensation
|
·
|
options to purchase our ordinary shares;
|
·
|
restricted shares, which represent non-transferable ordinary shares, that may be subject to forfeiture, restrictions on transferability and other restrictions; and
|
·
|
restricted share units, which represent the right to receive our ordinary shares at a specified date in the future, which may be subject to forfeiture.
|
Name
|
Options Outstanding
|
Exercise Price (Per
Ordinary Share)
|
Grant Date
|
Expiration Date
|
||||||||
Chunlin Wang
|
4,000,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
2,050,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Qiuping Lai
|
4,000,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
3,400,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Peng Ge
|
4,000,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
3,350,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Yinan Hu
|
4,000,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
4,500,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Xiaojun Shang
|
— | — | — | — | ||||||||
Yunxiang Tang
|
800,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
Stephen Markscheid
|
1,600,000 | US$0.3135 |
March 12, 2012
|
March 12, 2022
|
||||||||
600,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Allen Warren Lueth
|
1,600,000 | US$0.3135 |
March 12, 2012
|
March 12, 2022
|
||||||||
600,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Mengbo Yin
|
1,600,000 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
400,000 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
Other individuals as a group
|
73,552,381 | US$0.3000 |
March 12, 2012
|
March 12, 2022
|
||||||||
7,143,800 | US$0.3360 |
March 9, 2009
|
December 31, 2017
|
|||||||||
13,280,380 | US$0.2780 |
November 21, 2008
|
December 31, 2017
|
|||||||||
652,631(1) |
RMB2.3214
|
February 3, 2007
|
February 1, 2017
|
C.
|
Board Practices
|
·
|
selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;
|
·
|
reviewing with the independent auditors any audit problems or difficulties and management’s response;
|
·
|
reviewing and approving all proposed related-party transactions;
|
·
|
discussing the annual audited financial statements with management and the independent auditors;
|
·
|
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;
|
·
|
annually reviewing and reassessing the adequacy of our audit committee charter;
|
·
|
meeting separately and periodically with management, the independent auditors and the internal auditor; and
|
·
|
reporting regularly to the full board of directors.
|
·
|
reviewing and recommending to the board with respect to the total compensation package for our chief executive officer;
|
·
|
approving and overseeing the total compensation package for our executives other than the chief executive officer;
|
·
|
reviewing and making recommendations to the board with respect to the compensation of our directors; and
|
·
|
reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.
|
·
|
identifying and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy;
|
·
|
reviewing annually with the board the current composition of the board in light of the characteristics of independence, skills, experience and availability of service to us;
|
·
|
identifying and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as the corporate governance and nominating committee itself;
|
·
|
advising the board periodically with respect to significant developments in the law and practice of corporate governance, as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any corrective action to be taken; and
|
·
|
monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
|
D.
|
Employees
|
Number of Employees
|
% of Total
|
|||||||
Management and administrative staff
|
2,340 | 54.6 | ||||||
Financial and accounting staff
|
337 | 7.8 | ||||||
Sales and marketing staff
|
167 | 3.9 | ||||||
Professional claims adjustors
|
1,362 | 31.8 | ||||||
Information technology staff
|
82 | 1.9 | ||||||
Total
|
4,288 | 100 |
E.
|
Share Ownership
|
·
|
each of our current directors and executive officers; and
|
·
|
each person known to us to own beneficially more than 5% of our shares.
|
Ordinary Shares Beneficially Owned(1) (2)
|
||||||||
Number
|
%
|
|||||||
Directors and Executive Officers:
|
||||||||
Chunlin Wang(3)
|
7,293,020 | 0.7 | ||||||
Qiuping Lai(4)
|
30,121,200 | 3.0 | ||||||
Peng Ge(5)
|
12,389,340 | 1.2 | ||||||
Yinan Hu(6)
|
199,368,110 | 19.8 | ||||||
Xiaojun Shang
|
— | — | ||||||
Yunxiang Tang
|
* | * | ||||||
Stephen Markscheid
|
* | * | ||||||
Allen Warren Lueth
|
* | * | ||||||
Mengbo Yin
|
* | * | ||||||
All Directors and Executive Officers as a Group(7)
|
253,171,670 | 24.8 | ||||||
Principal Shareholders:
|
||||||||
Sea Synergy Limited (8)
|
183,198,110 | 18.3 | ||||||
CDH Inservice Limited(9)
|
165,765,260 | 16.6 | ||||||
S. Donald Sussman(10)
|
68,487,280 | 6.9 | ||||||
Norges Bank (the Central Bank of Norway)(11)
|
78,300,000 | 7.8 | ||||||
FMR LLC(12)
|
63,901,180 | 6.4 |
*
|
Less than 0.5% of our total outstanding ordinary shares.
|
†
|
Except for Ms. Shang and independent directors, the business address of our directors and executive officers is c/o 22/F, Yinhai Building, No. 299 Yanjiang Zhong Road, Guangzhou, Guangdong 510110, People’s Republic of China.
|
(1)
|
The number of shares beneficially owned by each director and executive officer includes the shares beneficially owned by such person, the shares underlying all options held by such person that have vested or will vest within 60 days after March 15, 2014.
|
(2)
|
Percentage of beneficial ownership of each director and executive officer is based on 998,861,526 ordinary shares outstanding as of March 15, 2014, and the number of ordinary shares underlying options held by such person that have vested or will vest within 60 days after March 15, 2014.
|
(3)
|
Mr. Chunlin Wang holds approximately 32.7% of the total outstanding shares of Better Rise Investments. Better Rise Investments owns approximately 30.6% of Kingsford Resources. Kingsford Resources holds 23,883,560 ordinary shares and 12,320,000 ordinary shares in the form of ADSs of our company. Therefore, Mr. Chunlin Wang may be deemed to beneficially own, indirectly through Better Rise Investments and Kingsford Resources, approximately 2,403,320 ordinary shares and 1,23,700 ordinary shares in the form of ADSs of our company. 3,650,000 ordinary shares held by Mr. Chunlin Wang are issuable upon exercise of options within 60 days after March 15, 2014. Mr. Wang disclaims direct beneficial ownership of all of our shares held by Kingsford Resources except to the extent of his pecuniary interest through Better Rise Investment therein.
|
(4)
|
Includes 16,572,440 ordinary shares, 8,548,760 ordinary shares in the form of ADSs of our Company and 5,000,000 ordinary shares issuable upon exercise of options within 60 days after March 15, 2014 held by Mr. Lai who is the sole shareholder of High Rank Investments Limited, or High Rank Investments. High Rank Investments holds approximately 69.4% of the total outstanding shares of Kingsford Resources. Mr. Lai disclaims beneficial ownership of all of our shares held by Kingsford Resources except to the extent of his pecuniary interest therein.
|
(5)
|
Mr. Ge holds approximately 67.3% of the total outstanding shares of Better Rise Investments. Therefore, Mr. Ge may be deemed to beneficially own, indirectly through Better Rise Investments and Kingsford Resources, approximately 4,907,800 ordinary shares and 2,531,540 ordinary shares in the form of ADSs of our company. 4,950,000 ordinary shares held by Mr. Ge are issuable upon exercise of options within 60 days after March 15, 2014. Mr. Ge disclaims beneficial ownership of all of our shares held by Kingsford Resources except to the extent of his pecuniary interest therein.
|
(6)
|
Includes 10,070,000 ordinary shares in the form of ADSs of our Company acquired by Mr. Hu on the open market, 6,100,00 ordinary shares issuable upon exercise of options within 60 days after March 15, 2014 held by Mr. Hu. and 183,198,110 ordinary shares of our Company directly held by Sea Synergy Limited, or Sea Synergy. Mr. Hu and his wife hold approximately 98.6% and 1.4%, respectively, of the total outstanding shares of Sea Synergy. Mr. Hu disclaims beneficial ownership of all of our shares held by Sea Synergy except to the extent of his pecuniary interest therein. 54,959,433 of the ordinary shares beneficially owned by Mr. Hu through Sea Synergy have been pledged under a loan from an individual entered into in November 2012 for a term of two year.
|
(7)
|
Includes ordinary shares beneficially owned by all of our directors and executive officers as a group and ordinary shares underlying all options held by such persons that have vested or will vest within 60 days after March 15, 2014.
|
(8)
|
Includes 183,198,110 ordinary shares of our Company directly held by Sea Synergy. Mr. Hu and his wife hold approximately 98.6% and 1.4%, respectively, of the total outstanding shares of Sea Synergy. The registered address of Sea Synergy is P.O.Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.
|
(9)
|
Includes 91,600,000 ordinary shares and 74,165,260 ordinary shares in the form of ADSs of our Company held by CDH Inservice, a British Virgin Islands company. All of the issued and outstanding shares of CDH Inservice are owned by CDH China Growth Capital Fund II, L.P., or CDH Fund II, a Cayman Islands exempted limited partnership. CDH Growth Capital Holdings, a Cayman Islands exempted limited liability company, is the general partner of CDH Fund II and has the power to direct CDH Fund II as to the voting and disposition of shares directly and indirectly held by CDH Fund II. The percentage of beneficial ownership was calculated based on the total number of our ordinary shares outstanding as of March 15, 2014. The business address of CDH Inservice is One Temasek Avenue #18-02, Millenia Tower, Singapore 039192.
|
(10)
|
As reported on Schedule 13D/A filed by Cathay Capital Holdings II, L.P., or Cathay Capital, on January 8, 2013, the number includes (1) 21,511,600 ordinary shares in the form of ADS of our Company directly held by Mr. Sussman, (2) 271,320 ordinary shares in the form of ADS of our Company held by a grantor retained annuity trust, of which Mr. Sussman is a co-trustee, acquired through transfers of ordinary shares from Mr. Sussman to the grantor retained annuity trust, (3) 4,292,420 ordinary shares in the form of ADSs of our Company held by Caremi Partners Ltd., of which Mr. Sussman is the sole shareholder, (4) 10,013,120 ordinary shares in the form of ADS of our Company directly held collectively by Paloma Partners LLC, or Paloma Partners, and Paloma International Limited, or Paloma Limited. Mr. Sussman is Chairman and founder of Paloma Partners Management Company, or PPMC, and co-owns PPMC with certain of its senior employees. PPMC is the special member of Paloma Partners, provides advisory and non-advisory services to Paloma Limited and Paloma Partners based on a services agreement, (5) 32,294,420 ordinary shares of in the form of ADS of our Company directly held by Cathay Capital. Mr. Sussman is the co-owner of Cathay Master GP, Ltd., the general partner of Cathay Capital. He is also the owner of New China Capital Management, LP, the investment manager for Cathay Capital, and (6) 104,400 ordinary shares in the form of ADS of our Company directly held by Cathay Investment Fund, Limited, or CIF. Mr. Sussman directly and/or indirectly owns 50% of New China Investment Management, Inc., the investment manager for CIF. The percentage of beneficial ownership was calculated based on the total number of our ordinary shares outstanding as of March 15, 2014. The business address of Mr. Sussman is 6100 Red Hook Quarters, Suite C1-C6 St. Thomas, United Virgin Islands 00802-1348.
|
(11)
|
Represents 78,300,000 ordinary shares in the form of ADSs of our Company held by Norges Bank, as reported on Schedule 13G/A filed by Norges Bank on February 7, 2013. The percentage of beneficial ownership was calculated based on the total number of our ordinary shares outstanding as of March 15, 2014. The address of Norges Bank is Bankplassen 2, PO Box 1179 Sentrum, NO 0107 Oslo, Norway.
|
(12)
|
Represents 63,901,180 ordinary shares in the form of ADSs of our Company held by FMR LLC, as reported on Schedule 13G/A filed by FMR LLC on February 14, 2014. The percentage of beneficial ownership was calculated based on the total number of our ordinary shares outstanding as of March 15, 2014. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210, USA.
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major Shareholders
|
B.
|
Related Party Transactions
|
C.
|
Interests of Experts and Counsel
|
Item 8.
|
Financial Information
|
A.
|
Consolidated Statements and Other Financial Information
|
B.
|
Significant Changes
|
Item 9.
|
The Offer and Listing
|
A.
|
Offer and Listing Details
|
Sales Price
|
||||||||
High
|
Low
|
|||||||
US$
|
US$
|
|||||||
Annual High and Low
|
||||||||
2009
|
24.74 | 6.26 | ||||||
2010
|
28.62 | 15.33 | ||||||
2011
|
20.88 | 5.28 | ||||||
2012
|
9.02 | 5.00 | ||||||
2013
|
7.00 | 4.75 | ||||||
Quarterly Highs and Lows
|
||||||||
First Quarter of 2012
|
9.02 | 5.90 | ||||||
Second Quarter of 2012
|
7.80 | 5.23 | ||||||
Third Quarter of 2012
|
7.00 | 5.00 | ||||||
Fourth Quarter of 2012
|
8.29 | 5.28 | ||||||
First Quarter of 2013
|
7.00 | 5.73 | ||||||
Second Quarter of 2013
|
6.77 | 5.99 | ||||||
Third Quarter of 2013
|
6.31 | 4.75 | ||||||
Fourth Quarter of 2013
|
6.10 | 4.85 | ||||||
Monthly Highs and Lows
|
||||||||
October 2013
|
5.35 | 4.85 | ||||||
November 2013
|
5.60 | 4.86 | ||||||
December 2013
|
6.10 | 4.86 | ||||||
January 2014
|
6.50 | 5.50 | ||||||
February 2014
|
6.35 | 5.54 | ||||||
March 2014
|
9.44 | 5.85 | ||||||
April 2014 (through April 25)
|
7.94 | 6.13 |
B.
|
Plan of Distribution
|
C.
|
Markets
|
D.
|
Selling Shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the Issue
|
Item 10.
|
Additional Information
|
A.
|
Share Capital
|
B.
|
Memorandum and Articles of Association
|
C.
|
Material Contracts
|
D.
|
Exchange Controls
|
E.
|
Taxation
|
·
|
banks and other financial institutions;
|
·
|
insurance companies;
|
·
|
broker-dealers;
|
·
|
traders that elect to use a mark-to-market method of accounting;
|
·
|
tax-exempt entities;
|
·
|
persons liable for alternative minimum tax;
|
·
|
U.S. expatriates;
|
·
|
entities subject to the United States anti-inversion rules;
|
·
|
regulated investment companies or real estate investment trusts;
|
·
|
persons holding an ADS or ordinary share as part of a straddle, hedging, conversion or integrated transaction;
|
·
|
Persons holding ADSs or ordinary shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;
|
·
|
persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee stock options or otherwise as compensation;
|
·
|
persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock; or
|
·
|
partnerships or other pass-through entities, or persons holding ADSs or ordinary shares through such entities.
|
·
|
an individual who is a citizen or resident of the United States;
|
·
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia;
|
·
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
·
|
a trust that (i) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions; or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
·
|
at least 75% of its gross income for such year is passive income; or
|
·
|
at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”).
|
·
|
the excess distribution or recognized gain will be allocated ratably over your holding period for the ADSs or ordinary shares;
|
·
|
the amount allocated to the current taxable year, and any taxable years in your holding period prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and
|
·
|
the amount allocated to each other year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
|
F.
|
Dividends and Paying Agents
|
G.
|
Statement by Experts
|
H.
|
Documents on Display
|
I.
|
Subsidiary Information
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 12.
|
Description of Securities Other than Equity Securities
|
Category
|
Depositary Actions
|
Associated Fees
|
|||
(a) |
Depositing or substituting the underlying shares
|
Each person to whom ADRs are issued against deposits of shares, including deposits and issuances in respect of:
● Share distributions, stock split, rights, merger
● Exchange of securities or any other transaction or event or other distribution affecting the ADSs or the Deposited Securities
|
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered
|
||
(b) |
Receiving or distributing dividends
|
Distribution of dividends
|
US$0.02 or less per ADS
|
||
(c) |
Selling or exercising rights
|
Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities
|
US$5.00 for each 100 ADSs (or portion thereof)
|
||
(d) |
Withdrawing an underlying security
|
Acceptance of ADRs surrendered for withdrawal of deposited securities
|
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered
|
||
(e) |
Transferring, splitting or grouping receipts
|
Transfers, combining or grouping of depositary receipts
|
US$1.50 per ADS
|
||
(f) |
General depositary services, particularly those charged on an annual basis.
|
● Other services performed by the depositary in administering the ADRs
● Provide information about the depositary’s right, if any, to collect fees and charges by offsetting them against dividends received and deposited securities
|
US$0.02 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the depositary by billing Holders or by deducting such charge from one or more cash dividends or other cash distributions
|
(g) |
Expenses of the depositary
|
Expenses incurred on behalf of Holders in connection with
● Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment
● The depositary's or its custodian's compliance with applicable law, rule or regulation
● Stock transfer or other taxes and other governmental charges
● Cable, telex, facsimile transmission/delivery
● Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency)
● Any other charge payable by depositary or its agents
|
Expenses payable at the sole discretion of the depositary by billing Holders or by deducting charges from one or more cash dividends or other cash distributions
|
For the Year Ended December 31,
|
||||||||
2012
|
2013
|
|||||||
(in thousands of US$)
|
||||||||
Investor relations(1)
|
81.4 | 50.6 | ||||||
Directors and officers liability insurance
|
357.0 | 122.8 | ||||||
Legal fees incurred in connection with preparation of Form 20-F and ongoing SEC compliance and listing requirements
|
6.8 | 0.9 | ||||||
Listing fees
|
26.3 | — | ||||||
Others
|
26.0 | 21.8 | ||||||
497.5 | 196.1 |
(1)
|
Includes expenses in relation with roadshows, press release distribution, maintenance of investor relations website and printing.
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
·
|
approximately US$13.1 million to fund development of an e-commerce insurance platform;
|
·
|
approximately US$42.9 million to fund acquisitions; and
|
·
|
approximately US$1.3 million to fund development of wealth management business.
|
Item 15.
|
Controls and Procedures
|
Item 16A.
|
Audit Committee Financial Expert
|
Item 16B.
|
Code of Ethics
|
Item 16C.
|
Principal Accountant Fees and Services
|
For the Year Ended December 31,
|
||||||||
2012
|
2013
|
|||||||
(in thousands of US$)
|
||||||||
Audit fees(1)
|
1,680 | 1,770.9 | ||||||
Audit-related fees(2)
|
— | — | ||||||
Tax fees(3)
|
— | 28.1 |
(1)
|
“Audit fees” meant the aggregate fees billed and expected to be billed in each of the fiscal years listed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements and review of quarterly financial statements included in our reports on Form 6-K, services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.
|
(2)
|
“Audit-related fees” meant the aggregate fees billed in each of the fiscal years listed for assurance and related services by our independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”
|
(3)
|
“Tax fees” meant the aggregate fees billed in each of the fiscal years listed for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice, and tax planning.
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Item 16F.
|
Change in Registrant’s Certifying Accountant
|
Item 16G.
|
Corporate Governance
|
Item 17.
|
Financial Statements
|
Item 18.
|
Financial Statements
|
Item 19.
|
Exhibits
|
Exhibit
Number
|
Description of Document
|
|
1.1
|
Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
1.2
|
Amendments to the Articles of Association adopted by the shareholders of the Registrant on December 18, 2008 (incorporated by reference to Exhibit 99.2 of our report on Form 6-K furnished to the Commission on December 22, 2008)
|
|
2.1
|
Registrant’s Specimen American Depositary Receipt (incorporated by reference to Exhibit 4.1 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
2.2
|
Registrant’s Specimen Certificate for Ordinary Shares (incorporated by reference to Exhibit 4.2 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
2.3
|
Form of Deposit Agreement among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated by reference to Exhibit 4.3 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007
|
|
4.1
|
2007 Share Incentive Plan (as amended and restated effective December 18, 2008) (incorporated by reference to Exhibit 99.3 of our report on Form 6-K furnished to the Commission on December 22, 2008)
|
|
4.2
|
Form of Indemnification Agreement with the Registrant’s directors and officers (incorporated by reference to Exhibit 10.3 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.3
|
Form of Director Agreement with Independent Directors of the Registrant (incorporated by reference to Exhibit 10.4 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
Exhibit
Number
|
Description of Document
|
|
4.4
|
Form of Employment Agreement between the Registrant and an Executive Officer of the Registrant (incorporated by reference to Exhibit 4.4 of our annual report on Form 20-F filed with the Commission on May 15, 2009)
|
|
4.5
|
English translation of Form of Loan Agreement between Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd. (previously known as Yiqiman Enterprise Management Consulting (Shenzhen) Co., Ltd.) and each shareholder of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.) (incorporated by reference to Exhibit 10.6 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.6
|
English translation of Form of Equity Pledge Agreement among Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd., each shareholder of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.) and Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.) (incorporated by reference to Exhibit 10.7 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.7
|
English translation of Form of Power of Attorney issued by each shareholder of Guangdong Meidiya Investment Co., Ltd. and Sichuan Yihe Investment Co., Ltd. (incorporated by reference to Exhibit 10.8 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.8
|
English translation of Form of Exclusive Purchase Option Agreement among Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd., each shareholder of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.), and Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.) (incorporated by reference to Exhibit 10.9 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.9
|
English translation of Form of Employment Agreement between an acquired company and its founder (incorporated by reference to Exhibit 10.13 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
4.10
|
English translation of Form of Credit and Liability Transfer Agreement among a former shareholder of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.), Mr. Peng Ge and Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd. (incorporated by reference to Exhibit 4.13 of our annual report on Form 20-F filed with the Commission on May 15, 2009)
|
|
4.11
|
Put Option Agreement dated October 29, 2010 among Hu Yinan, Apollo & Muse Holding Limited, Wang Strategic Capital Partners (II) Limited and Harbor Pacific Capital Partners I, LP (incorporated by reference to Exhibit 4.21 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
4.12*
|
English translation of Loan Agreement dated April 18, 2011 between Ying Si Kang Information Technology (Shenzhen) Co., Ltd. and Chunlin Wang
|
|
4.13*
|
English translation of Equity Pledge Agreement dated April 18, 2011 between Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Chunlin Wang and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.14*
|
English translation of Exclusive Purchase Option Agreement dated April 18, 2011 among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Chunlin Wang and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.15*
|
English translation of Power of Attorney dated April 18, 2011 of Chunlin Wang
|
Exhibit
Number
|
Description of Document
|
|
4.16*
|
English translation of Supplementary Agreement dated March 6, 2013 entered into among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Chunlin Wang and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.17*
|
English translation of Loan Agreement dated April 18, 2011 between Ying Si Kang Information Technology (Shenzhen) Co., Ltd. and Yuan Tian
|
|
4.18*
|
English translation of Equity Pledge Agreement dated April 18, 2011 between Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Yuan Tian and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.19*
|
English translation of Exclusive Purchase Option Agreement dated April 18, 2011 among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Yuan Tian and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.20*
|
English translation of Power of Attorney dated April 18, 2011 of Yuan Tian
|
|
4.21*
|
English translation of Supplementary Agreement dated March 6, 2013 entered into among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Yuan Tian and Shenzhen Xinbao Investment Management Co., Ltd.
|
|
4.22
|
Subscription and Share Purchase Agreement relating to InsCom Holdings Limited dated October 29, 2010 among InsCom Holding Limited, InsCom Group Limited, InsCom HK Limited, Apollo & Muse Holding Limited, Clever Star Holdings Limited, Wang Strategic Capital Partners (II) Limited, Harbour Pacific Capital Partners I, LP (incorporated by reference to Exhibit 4.20 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
4.23
|
Deed of Adherence relating to InsCom Holdings Limited dated October 29, 2010 among InsCom Holdings Limited, InsCom Group Limited, InsCom HK Limited, Apollo & Muse Holding Limited, Clever Star Holdings Limited, CISG Holdings Ltd., Wang Strategic Capital Partners (II) Limited, Harbor Pacific Capital Partners I, LP (incorporated by reference to Exhibit 4.19 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
4.24
|
Supplemental Subscription and Share Purchase and Shareholders Agreement relating to InsCom Holdings Limited dated April 27, 2011 among InsCom HK Limited, InsCom Group Limited, InsCom Holdings Limited, Apollo & Muse Holding Limited, Clever Star Holdings Limited, CISG Holdings Ltd. and Subscription and Shares Purchase and Shareholders Agreement dated July 29, 2010 among the same parties (incorporated by reference to Exhibit 4.18 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
4.25
|
Second Supplemental Subscription and Share Purchase and Shareholders Agreement relating to InsCom Holding Limited dated April 1, 2012 among InsCom HK Limited, InsCom Group Limited, InsCom Holding Limited, Apollo & Muse Holding Limited, Clever Star Holdings Limited and CISG Holdings Ltd. (incorporated by reference to Exhibit 4.23 of our annual report on Form 20-F filed with the Commission on April 24, 2013)
|
|
4.26
|
English translation of Form of Consulting and Service Agreement made with Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd. (incorporated by reference to Exhibit 4.35 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
4.27
|
English translation of Form of Consulting and Service Agreement made with Fanhua Zhonglian Enterprise Image Planning (Shenzhen) Co., Ltd. (incorporated by reference to Exhibit 4.36 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
Exhibit
Number
|
Description of Document
|
|
4.28
|
English translation of Form of IT Platform Service Agreement made with Litian Zhuoyue Software (Beijing) Co., Ltd. (incorporated by reference to Exhibit 4.37 of our annual report on Form 20-F filed with the Commission on May 4, 2011)
|
|
8.1*
|
Subsidiaries and Consolidated Affiliated Entities of the Registrant
|
|
11.1
|
Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 of our F-1 registration statement (File No.333-146605), as amended, initially filed with the Commission on October 10, 2007)
|
|
12.1*
|
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
12.2*
|
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
13.1**
|
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
13.2**
|
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
15.1*
|
Consent of Maples and Calder
|
|
15.2*
|
Consent of Global Law Office
|
|
15.3*
|
Consent of Deloitte Touche Tohmatsu Certified Public Accountants
|
|
101***
|
Financial information from Registrant for the year ended December 31, 2013 formatted in eXtensible Business Reporting Language (XBRL):
(i) Consolidated Balance Sheets as of December 31, 2012 and 2013; (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Years Ended December 31, 2011, 2012 and 2013; (iii) Consolidated Statements of Shareholder’s Equity for the Years Ended December 31, 2011, 2012 and 2013; (iv) Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2012 and 2013; (v) Notes to Consolidated Financial Statements; and (vi) Schedule 1—Condensed Financial Statements of CNinsure Inc.
|
* | Filed with this Annual Report on Form 20-F. |
** | Furnished with this Annual Report on Form 20-F. |
*** | The amounts in the financial statements, “Notes to the Consolidated Financial Statements” and “Schedule 1—Condensed Financial Statements” of the Interactive Data Files are in thousands, except for shares and per share data. XBRL-related documents are not deemed filed for purposes of section 11 of the Securities Act, or section 18 of the Exchange Act, or otherwise subject to the liabilities of these sections; are not part of any registration statement to which they relate; are not deemed incorporated by reference; are subject to all other liability and anti-fraud provisions of these Act; and are deemed filed for purposes of Item 103 of Regulation S-T. |
CNINSURE INC. | |||
By: | /s/ Chunlin Wang | ||
Name: Chunlin Wang
Title: Chief Executive Officer
|
|||
Date: April 29, 2014
|
Page
|
|
F-6 | |
As of December 31,
|
||||||||||||
2012
|
2013
|
2013
|
||||||||||
RMB
|
RMB
|
US$
|
||||||||||
ASSETS:
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
2,525,618 | 2,288,623 | 378,054 | |||||||||
Restricted cash
|
10,871 | 11,100 | 1,834 | |||||||||
Short term investments
|
600 | 253,900 | 41,941 | |||||||||
Accounts receivable, net of allowance for doubtful accounts of RMB9,903and RMB12,655 (US$2,090) as of December 31, 2012 and 2013, respectively(Note 2(e))
|
196,244 | 199,482 | 32,952 | |||||||||
Insurance premium receivables
|
10 | 57 | 9 | |||||||||
Other receivables (Note 5)
|
86,565 | 254,776 | 42,086 | |||||||||
Deferred tax assets (Note 12)
|
4,942 | 4,858 | 802 | |||||||||
Amounts due from related parties (Note 16)
|
151,785 | 144,371 | 23,848 | |||||||||
Other current assets
|
17,265 | 20,634 | 3,409 | |||||||||
Total current assets
|
2,993,900 | 3,177,801 | 524,935 | |||||||||
Non-current assets:
|
||||||||||||
Property, plant and equipment, net (Note 6)
|
94,921 | 69,562 | 11,491 | |||||||||
Goodwill (Note 7)
|
78,553 | 78,553 | 12,976 | |||||||||
Intangible assets, net (Note 2(g))
|
42,780 | 29,115 | 4,809 | |||||||||
Deferred tax assets (Note 12)
|
3,967 | 3,382 | 559 | |||||||||
Investment in affiliates(Note 8)
|
168,620 | 189,241 | 31,260 | |||||||||
Other non-current assets
|
18,048 | 13,076 | 2,160 | |||||||||
Total non-current assets
|
406,889 | 382,929 | 63,255 | |||||||||
Total assets
|
3,400,789 | 3,560,730 | 588,190 |
As of December 31,
|
||||||||||||
2012
|
2013
|
2013
|
||||||||||
RMB
|
RMB
|
US$
|
||||||||||
LIABILITIES AND EQUITY:
|
||||||||||||
Current liabilities:
|
||||||||||||
Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to CNinsure Inc. of RMB30,689 and RMB10,282 (US$1,699) as of December 31, 2012 and 2013, respectively)
|
98,124 | 92,324 | 15,251 | |||||||||
Insurance premium payables (including insurance premium payables of the consolidated VIEs without recourse to CNinsure Inc. of RMB202 and RMB223 (US$37) as of December 31, 2012 and 2013, respectively)
|
2,941 | 4,066 | 672 | |||||||||
Other payables and accrued expenses (including other payables and accrued expenses of the consolidated VIEs without recourse to CNinsure Inc. of RMB35,000 and RMB21,129 (US$3,490) as of December 31, 2012 and 2013, respectively) (Note 10)
|
116,124 | 147,954 | 24,440 | |||||||||
Accrued payroll (including accrued payroll of the consolidated VIEs without recourse to CNinsure Inc. of RMB4,382and RMB2,172(US$359) as of December 31, 2012 and 2013, respectively)
|
42,317 | 39,089 | 6,457 | |||||||||
Income taxes payable (including income taxes payable of the consolidated VIEs without recourse to CNinsure Inc. of RMB2,037 and RMB2,603 (US$430) as of December 31, 2012 and 2013, respectively)
|
56,003 | 55,992 | 9,249 | |||||||||
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to CNinsure Inc. of RMB3,030 and nil as of December 31, 2012 and 2013, respectively) (Note 15)
|
3,030 | — | — | |||||||||
Total current liabilities
|
318,539 | 339,425 | 56,069 |
As of December 31,
|
||||||||||||
2012
|
2013
|
2013
|
||||||||||
RMB
|
RMB
|
US$
|
||||||||||
Non-current liabilities:
|
||||||||||||
Other tax liabilities (Note 12)
|
47,589 | 50,735 | 8,381 | |||||||||
Deferred tax liabilities (Note 12)
|
26,754 | 23,808 | 3,933 | |||||||||
Total non-current liabilities
|
74,343 | 74,543 | 12,314 | |||||||||
Total liabilities
|
392,882 | 413,968 | 68,383 | |||||||||
Commitments and contingencies (Note 17)
|
||||||||||||
Ordinary shares (Authorized shares:10,000,000,000 at US$0.001 each; issued and outstanding shares: 998,861,526 and998,861,526 as of December 31, 2012 and 2013, respectively) (Note 13)
|
7,624 | 7,624 | 1,259 | |||||||||
Additional paid-in capital
|
2,284,906 | 2,329,962 | 384,882 | |||||||||
Statutory reserves
|
178,440 | 182,740 | 30,186 | |||||||||
Retained earnings
|
527,542 | 618,885 | 102,233 | |||||||||
Accumulated other comprehensive loss
|
(104,132 | ) | (111,114 | ) | (18,355 | ) | ||||||
Total CNinsure Inc. shareholders’ equity
|
2,894,380 | 3,028,097 | 500,205 | |||||||||
Noncontrolling interests
|
113,527 | 118,665 | 19,602 | |||||||||
Total equity
|
3,007,907 | 3,146,762 | 519,807 | |||||||||
Total liabilities and equity
|
3,400,789 | 3,560,730 | 588,190 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Net revenues:
|
||||||||||||||||
Commissions and fees
|
1,510,886 | 1,580,234 | 1,755,545 | 289,995 | ||||||||||||
Other service fees
|
5,789 | 5,883 | 1,479 | 244 | ||||||||||||
Total net revenues
|
1,516,675 | 1,586,117 | 1,757,024 | 290,239 | ||||||||||||
Operating costs and expenses:
|
||||||||||||||||
Commissions and fees
|
(796,843 | ) | (1,085,809 | ) | (1,293,372 | ) | (213,650 | ) | ||||||||
Selling expenses
|
(77,802 | ) | (78,449 | ) | (96,461 | ) | (15,934 | ) | ||||||||
General and administrative expenses*
|
(333,281 | ) | (356,033 | ) | (349,205 | ) | (57,684 | ) | ||||||||
Impairment loss on goodwill and intangible assets
|
(1,057,522 | ) | — | — | — | |||||||||||
Total operating costs and expenses
|
(2,265,448 | ) | (1,520,291 | ) | (1,739,038 | ) | (287,268 | ) | ||||||||
Income (loss) from operations
|
(748,773 | ) | 65,826 | 17,986 | 2,971 | |||||||||||
Other income, net:
|
||||||||||||||||
Investment income
|
— | — | 8,886 | 1,468 | ||||||||||||
Interest income
|
52,031 | 90,323 | 84,250 | 13,917 | ||||||||||||
Finance cost
|
— | (2,439 | ) | — | — | |||||||||||
Other, net
|
22,436 | 6,742 | (4,601 | ) | (760 | ) | ||||||||||
Income (loss) from continuing operations before income taxes and income of affiliates and discontinued operations
|
(674,306 | ) | 160,452 | 106,521 | 17,596 | |||||||||||
Income tax expense
|
(84,030 | ) | (50,373 | ) | (27,158 | ) | (4,486 | ) | ||||||||
Share of income of affiliates
|
14,246 | 14,658 | 20,621 | 3,406 | ||||||||||||
Net income (loss) from continuing operations
|
(744,090 | ) | 124,737 | 99,984 | 16,516 | |||||||||||
Net income from discontinued operations, net of tax
|
127,553 | — | — | — | ||||||||||||
Net income (loss)
|
(616,537 | ) | 124,737 | 99,984 | 16,516 | |||||||||||
Less: Net (loss) income attributable to the noncontrolling interests
|
(317,163 | ) | (5,773 | ) | 4,341 | 717 | ||||||||||
Net income (loss)attributable to the CNinsure Inc’s shareholders
|
(299,374 | ) | 130,510 | 95,643 | 15,799 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Net income(loss) per share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Net income (loss) from continuing operations
|
(0.43 | ) | 0.13 | 0.10 | 0.02 | |||||||||||
Net income from discontinued operations
|
0.13 | — | — | — | ||||||||||||
Net income (loss)
|
(0.30 | ) | 0.13 | 0.10 | 0.02 | |||||||||||
Diluted:
|
||||||||||||||||
Net income (loss) from continuing operations
|
(0.43 | ) | 0.13 | 0.10 | 0.02 | |||||||||||
Net income from discontinued operations
|
0.13 | — | — | — | ||||||||||||
Net income (loss)
|
(0.30 | ) | 0.13 | 0.10 | 0.02 | |||||||||||
Net income (loss) per American Depositary Shares ("ADS"):
|
||||||||||||||||
Basic:
|
||||||||||||||||
Net income (loss) from continuing operations
|
(8.51 | ) | 2.60 | 1.92 | 0.32 | |||||||||||
Net income from discontinued operations
|
2.54 | — | — | — | ||||||||||||
Net income (loss)
|
(5.97 | ) | 2.60 | 1.92 | 0.32 | |||||||||||
Diluted:
|
||||||||||||||||
Net income (loss) from continuing operations
|
(8.51 | ) | 2.60 | 1.91 | 0.32 | |||||||||||
Net income from discontinued operations
|
2.54 | — | — | — | ||||||||||||
Net income (loss)
|
(5.97 | ) | 2.60 | 1.91 | 0.32 | |||||||||||
Shares used in calculating net income (loss) per share:
|
||||||||||||||||
Basic
|
1,002,810,673 | 1,002,308,275 | 998,861,526 | 998,861,526 | ||||||||||||
Diluted
|
1,002,810,673 | 1,005,301,969 | 1,000,570,018 | 1,000,570,018 | ||||||||||||
Net income (loss)
|
(616,537 | ) | 124,737 | 99,984 | 16,516 | |||||||||||
Other comprehensive loss, net of tax:
|
||||||||||||||||
Foreign currency translation adjustments
|
(18,291 | ) | (2,481 | ) | (6,982 | ) | (1,153 | ) | ||||||||
Comprehensive income (loss)
|
(634,828 | ) | 122,256 | 93,002 | 15,363 | |||||||||||
Less: Comprehensive loss attributable to the noncontrolling interests
|
(317,163 | ) | (5,773 | ) | 4,341 | 717 | ||||||||||
Comprehensive income (loss) attributable to the CNinsure Inc’s shareholders
|
(317,665 | ) | 128,029 | 88,661 | 14,646 |
Share Capital
|
||||||||||||||||||||||||||||||||
Number of
Share
|
Amounts
|
Additional
Paid-in
Capital
|
Statutory
Reserves
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Noncontrolling
Interests
|
Total
|
|||||||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||||||
January 1, 2011
|
1,002,977,326 | 7,649 | 2,261,849 | 136,681 | 738,165 | (83,360 | ) | 456,079 | 3,517,063 | |||||||||||||||||||||||
Net loss
|
— | — | — | — | (299,374 | ) | — | (317,163 | ) | (616,537 | ) | |||||||||||||||||||||
Foreign currency translation
|
— | — | — | — | — | (18,291 | ) | — | (18,291 | ) | ||||||||||||||||||||||
Exercise of share options
|
2,670,340 | 17 | 5,288 | — | — | — | — | 5,305 | ||||||||||||||||||||||||
Repurchase of ordinary shares
|
(3,106,220 | ) | (20 | ) | (13,702 | ) | — | — | — | — | (13,722 | ) | ||||||||||||||||||||
Share-based compensation
|
— | — | 57,003 | — | — | — | — | 57,003 | ||||||||||||||||||||||||
Provision for statutory reserves
|
— | — | — | 34,004 | (34,004 | ) | — | — | — | |||||||||||||||||||||||
Capital injection by noncontrolling interest
|
— | — | — | — | — | — | 6,937 | 6,937 | ||||||||||||||||||||||||
Acquisition of additional shares in a subsidiary
|
— | — | (37,858 | ) | — | — | — | (4,778 | ) | (42,636 | ) | |||||||||||||||||||||
Disposal of subsidiaries
|
— | — | — | (3,538 | ) | 3,538 | — | (16,127 | ) | (16,127 | ) | |||||||||||||||||||||
Balance as of December 31, 2011
|
1,002,541,446 | 7,646 | 2,272,580 | 167,147 | 408,325 | (101,651 | ) | 124,948 | 2,878,995 | |||||||||||||||||||||||
Net income
|
— | — | — | — | 130,510 | — | (5,773 | ) | 124,737 | |||||||||||||||||||||||
Foreign currency translation
|
— | — | — | — | — | (2,481 | ) | — | (2,481 | ) | ||||||||||||||||||||||
Exercise of share options
|
183,380 | 1 | 347 | — | — | — | — | 348 | ||||||||||||||||||||||||
Repurchase of ordinary shares
|
(3,863,300 | ) | (23 | ) | (9,221 | ) | — | — | — | — | (9,244 | ) | ||||||||||||||||||||
Share-based compensation
|
— | — | 66,878 | — | — | — | — | 66,878 | ||||||||||||||||||||||||
Provision for statutory reserves
|
— | — | — | 11,293 | (11,293 | ) | — | — | — | |||||||||||||||||||||||
Capital injection by noncontrolling interest
|
— | — | — | — | — | — | 12,655 | 12,655 | ||||||||||||||||||||||||
Acquisition of additional interests in a subsidiary
|
— | — | (45,678 | ) | — | — | — | (16,570 | ) | (62,248 | ) | |||||||||||||||||||||
Disposal of subsidiaries
|
— | — | — | — | — | — | (1,733 | ) | (1,733 | ) | ||||||||||||||||||||||
Balance as of December 31, 2012
|
998,861,526 | 7,624 | 2,284,906 | 178,440 | 527,542 | (104,132 | ) | 113,527 | 3,007,907 |
Share Capital
|
||||||||||||||||||||||||||||||||
Number of
Share
|
Amounts
|
Additional
Paid-in
Capital
|
Statutory
Reserves
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Noncontrolling
Interests
|
Total
|
|||||||||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||||||
Net income
|
— | — | — | — | 95,643 | — | 4,341 | 99,984 | ||||||||||||||||||||||||
Foreign currency translation
|
— | — | — | — | — | (6,982 | ) | — | (6,982 | ) | ||||||||||||||||||||||
Share-based compensation
|
— | — | 45,317 | — | — | — | — | 45,317 | ||||||||||||||||||||||||
Provision for statutory reserves
|
— | — | — | 4,300 | (4,300 | ) | — | — | — | |||||||||||||||||||||||
Capital injection by noncontrolling interest
|
— | — | — | — | — | — | 3,350 | 3,350 | ||||||||||||||||||||||||
Disposal of subsidiaries
|
— | — | (261 | ) | — | — | — | (2,553 | ) | (2,814 | ) | |||||||||||||||||||||
Balance as of December 31, 2013
|
998,861,526 | 7,624 | 2,329,962 | 182,740 | 618,885 | (111,114 | ) | 118,665 | 3,146,762 | |||||||||||||||||||||||
Balance as of December 31, 2013 in US$
|
1,259 | 384,882 | 30,186 | 102,233 | (18,355 | ) | 19,602 | 519,807 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
OPERATING ACTIVITIES
|
||||||||||||||||
Net income (loss)
|
(616,537 | ) | 124,737 | 99,984 | 16,516 | |||||||||||
Adjustments to reconcile net income (loss) to net cash generated from operating activities:
|
||||||||||||||||
Depreciation
|
27,370 | 26,349 | 31,253 | 5,163 | ||||||||||||
Amortization of acquired intangible assets
|
26,454 | 15,285 | 13,665 | 2,257 | ||||||||||||
Impairment loss on goodwill and intangible assets
|
1,057,522 | — | — | — | ||||||||||||
Allowance for doubtful receivables
|
3,572 | 4,523 | 5,303 | 876 | ||||||||||||
Compensation expenses associated with stock options
|
57,003 | 66,878 | 45,317 | 7,485 | ||||||||||||
Loss (gain) on disposal of property, plant and equipment
|
542 | 3,662 | (17 | ) | (2 | ) | ||||||||||
Net income from discontinued operations
|
(127,553 | ) | — | |||||||||||||
Investment income
|
— | — | (2,700 | ) | (446 | ) | ||||||||||
Finance cost
|
— | 2,439 | — | — | ||||||||||||
Write down of dividend receivables
|
— | — | 7,561 | 1,249 | ||||||||||||
Share of income of affiliates
|
(14,246 | ) | (14,658 | ) | (20,621 | ) | (3,406 | ) | ||||||||
Changes in fair value of contingent assets
|
(12,500 | ) | (4,500 | ) | — | — | ||||||||||
Deferred taxes
|
(16,431 | ) | (3,000 | ) | (3,404 | ) | (562 | ) | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
8,819 | (34,404 | ) | (12,496 | ) | (2,064 | ) | |||||||||
Insurance premium receivables
|
99 | (6 | ) | (47 | ) | (8 | ) | |||||||||
Other receivables
|
(33,646 | ) | (12,834 | ) | 16,710 | 2,760 | ||||||||||
Increase in amounts due from related parties
|
— | — | 4,500 | 743 | ||||||||||||
Other current assets
|
515 | (4,273 | ) | (3,886 | ) | (642 | ) | |||||||||
Other non-current assets
|
— | (1,400 | ) | 1,400 | 231 | |||||||||||
Accounts payable
|
33,686 | (8,460 | ) | (5,643 | ) | (932 | ) | |||||||||
Insurance premium payables
|
1,348 | 258 | 1,124 | 186 | ||||||||||||
Other payables and accrued expenses
|
65,125 | 180 | 7,215 | 1,192 | ||||||||||||
Accrued payroll
|
6,406 | 7,413 | (2,412 | ) | (398 | ) | ||||||||||
Income taxes payable
|
15,484 | (14,384 | ) | (9 | ) | (2 | ) | |||||||||
Other tax liabilities
|
8,368 | 4,003 | 3,148 | 520 | ||||||||||||
Net cash generated from operating activities
|
491,400 | 157,808 | 185,945 | 30,716 | ||||||||||||
Cash flows from investing activities:
|
||||||||||||||||
Purchase of short term investments
|
(70,492 | ) | (40,600 | ) | (283,900 | ) | (46,897 | ) | ||||||||
Proceeds from disposal of short term investments
|
39,262 | 71,080 | 32,291 | 5,334 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Purchase of non-current assets
|
(1,450 | ) | (1,948 | ) | — | — | ||||||||||
Return of investment in non-current assets
|
— | 1,300 | — | — | ||||||||||||
Addition in investment in affiliates
|
(600 | ) | — | — | — | |||||||||||
Purchase of property, plant and equipment
|
(20,859 | ) | (11,624 | ) | (36,181 | ) | (5,976 | ) | ||||||||
Purchase of intangible assets
|
(758 | ) | — | — | — | |||||||||||
Proceeds from disposal of property and equipment
|
793 | 584 | 249 | 41 | ||||||||||||
Increase in other receivables
|
— | (3,400 | ) | (67,706 | ) | (11,184 | ) | |||||||||
Acquisition of subsidiaries, net of cash acquired of RMB208, nil and nil in 2011,2012 and 2013, respectively
|
(49,996 | ) | — | — | — | |||||||||||
Disposal of subsidiaries, net of cash disposed of RMB23,607, RMB80 and RMB2,656 (US$439) in 2011, 2012 and 2013, respectively and transaction cost of RMB3,557 in 2011
|
390,836 | 1,967 | (1,532 | ) | (253 | ) | ||||||||||
Repayments from(advance to) related parties
|
(331,860 | ) | 218,350 | (62,300 | ) | (10,291 | ) | |||||||||
Increase in restricted cash
|
(899 | ) | (795 | ) | (229 | ) | (38 | ) | ||||||||
Net cash (used in) from investing activities
|
(46,023 | ) | 234,914 | (419,308 | ) | (69,264 | ) | |||||||||
Cash flows from financing activities:
|
||||||||||||||||
Payment for contingent consideration
|
(100,000 | ) | — | — | — | |||||||||||
Acquisition of additional interests in subsidiaries
|
(28,330 | ) | (90,455 | ) | — | — | ||||||||||
Increase in capital injection by noncontrolling interests
|
6,937 | 12,655 | 3,350 | 553 | ||||||||||||
Proceeds on exercise of stock options
|
5,305 | 348 | — | — | ||||||||||||
Repurchase of ordinary shares
|
(13,722 | ) | (9,244 | ) | — | — | ||||||||||
Net cash from (used in) financing activities
|
(129,810 | ) | (86,696 | ) | 3,350 | 553 | ||||||||||
Net increase(decrease) in cash and cash equivalents
|
315,567 | 306,026 | (230,013 | ) | (37,995 | ) | ||||||||||
Cash and cash equivalents at beginning of year
|
1,924,884 | 2,222,160 | 2,525,618 | 417,202 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(18,291 | ) | (2,568 | ) | (6,982 | ) | (1,153 | ) | ||||||||
Cash and cash equivalents at end of year
|
2,222,160 | 2,525,618 | 2,288,623 | 378,054 | ||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||||||
Interest paid
|
— | — | — | — | ||||||||||||
Income taxes paid
|
93,913 | 63,400 | 27,153 | 4,485 |
(1)
|
Organization and Description of Business
|
(2)
|
Summary of Significant Accounting Policies
|
|
(a)
|
Basis of Presentation and Consolidation
|
|
(b)
|
Use of Estimates
|
|
(c)
|
Cash and Cash Equivalents and Restricted Cash
|
(d)
|
Short Term Investment
|
|
(e)
|
Accounts Receivable and Insurance Premium Receivables
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Accounts receivable
|
206,147 | 212,137 | ||||||
Allowance for doubtful accounts
|
(9,903 | ) | (12,655 | ) | ||||
Accounts receivable, net
|
196,244 | 199,482 |
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Balance at the beginning of the year
|
5,790 | 9,348 | 9,903 | |||||||||
Provision for doubtful accounts
|
3,572 | 4,523 | 5,303 | |||||||||
Write-offs
|
(14 | ) | (3,968 | ) | (2,551 | ) | ||||||
Balance at the ending of the year
|
9,348 | 9,903 | 12,655 |
|
(f)
|
Property, Plant and Equipment
|
Estimated useful
life (Years)
|
Estimated residual
value
|
|||||||
Building
|
36
|
|
0%
|
|
||||
Office equipment, furniture and fixtures
|
3 | - |
5
|
0%
|
- |
3%
|
||
Motor vehicles
|
5 | - |
10
|
0%
|
- |
3%
|
||
Leasehold improvements
|
5
|
|
0%
|
|
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Commission and fees under operating costs
|
6,776 | 3,585 | 4,988 | |||||||||
Selling expenses
|
1,937 | 1,880 | 1,636 | |||||||||
General and administrative expenses
|
17,472 | 20,884 | 24,629 | |||||||||
Net income from discontinued operations
|
1,185 | — | — | |||||||||
Depreciation for the year
|
27,370 | 26,349 | 31,253 |
|
(g)
|
Goodwill and Other Intangible Assets
|
As of December 31, 2012
|
||||||||||||||||||||
Useful life
(Years)
|
Cost
|
Accumulated
amortization
|
Accumulated
Impairment
loss
|
Net carrying
values
|
||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||||||
Brand name
|
Indefinite
|
|
24,091 | — | (20,384 | ) | 3,707 | |||||||||||||
Trade name
|
9.4 | to |
10
|
8,898 | (1,984 | ) | — | 6,914 | ||||||||||||
Customer relationship
|
4.6 | to |
9.8
|
54,706 | (33,684 | ) | (5,760 | ) | 15,262 | |||||||||||
Non-compete agreement
|
3 | to |
6.25
|
68,215 | (27,080 | ) | (34,692 | ) | 6,443 | |||||||||||
Agency agreement and license
|
4.6 | to |
9.8
|
16,004 | (8,222 | ) | (581 | ) | 7,201 | |||||||||||
Software and system
|
5 | to |
10
|
5,740 | (2,487 | ) | — | 3,253 | ||||||||||||
177,654 | (73,457 | ) | (61,417 | ) | 42,780 |
As of December 31, 2013
|
||||||||||||||||||||
Useful life
(Years)
|
Cost
|
Accumulated
amortization
|
Accumulated
Impairment
loss
|
Net carrying
values
|
||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||||||
Brand name
|
Indefinite
|
|
24,091 | — | (20,384 | ) | 3,707 | |||||||||||||
Trade name
|
9.4 | to |
10
|
8,898 | (2,925 | ) | — | 5,973 | ||||||||||||
Customer relationship
|
4.6 | to |
9.8
|
54,706 | (39,738 | ) | (5,760 | ) | 9,208 | |||||||||||
Non-compete agreement
|
3 | to |
6.25
|
68,215 | (29,835 | ) | (34,692 | ) | 3,688 | |||||||||||
Agency agreement and license
|
4.6 | to |
9.8
|
16,004 | (10,989 | ) | (581 | ) | 4,434 | |||||||||||
Software and system
|
5 | to |
10
|
5,740 | (3,635 | ) | — | 2,105 | ||||||||||||
177,654 | (87,122 | ) | (61,417 | ) | 29,115 |
|
(h)
|
Other Receivables and Other Current Assets
|
(i)
|
Investment in Affiliates
|
|
(j)
|
Other Non-current Assets
|
|
(k)
|
Impairment of Long-Lived Assets
|
|
(l)
|
Insurance Premium Payables
|
|
(m)
|
Income Taxes
|
|
(n)
|
Share-based Compensation
|
|
(o)
|
Employee Benefit Plans
|
|
(p)
|
Revenue Recognition
|
|
(q)
|
Contingent Consideration
|
|
(r)
|
Fair Value of Financial Instruments.
|
|
(s)
|
Foreign Currencies
|
(t)
|
Foreign Currency Risk
|
|
(u)
|
Translation into United States Dollars
|
|
(v)
|
Segment Reporting
|
|
(w)
|
Earnings per Share ("EPS") or ADS
|
(x)
|
Advertising Costs
|
(y)
|
Operating Leases
|
|
(z)
|
Accumulated Other Comprehensive Income (Loss)
|
(aa)
|
Recently Issued Accounting Standards
|
(3)
|
Acquisitions
|
Huajie
|
Zhongxin
|
|||||||
RMB
|
RMB
|
|||||||
Net tangible assets acquired
|
55 | 888 | ||||||
Intangible assets
|
4,840 | 5,389 | ||||||
Goodwill
|
21,204 | 20,070 | ||||||
Deferred tax assets
|
111 | — | ||||||
Deferred tax liabilities
|
(1,210 | ) | (1,347 | ) | ||||
Total consideration
|
25,000 | 25,000 |
Fair Value Acquired
|
|||||||||||
Useful life
|
RMB
|
||||||||||
(Years)
|
Huajie
|
Zhongxin
|
|||||||||
Customer relationship
|
5.3 | 2,860 | 3,490 | ||||||||
Non-compete agreement
|
3.0 | 1,460 | 1,379 | ||||||||
Agency agreement
|
5.3 | 520 | 520 | ||||||||
Total
|
4,840 | 5,389 |
Acquisition of Huajie
|
||||
Year ended December 31,
2011
|
||||
RMB
|
||||
(unaudited)
|
||||
Pro forma net revenues
|
1,522,665 | |||
Pro forma loss from operations
|
(749,337 | ) | ||
Pro forma net loss
|
(299,904 | ) | ||
Pro forma net loss per share
|
(0.30 | ) |
Acquisition of Zhongxin
|
||||
Year ended December 31,
2011
|
||||
RMB
|
||||
(unaudited)
|
||||
Pro forma net revenues
|
1,524,763 | |||
Pro forma loss from operations
|
(749,143 | ) | ||
Pro forma net loss
|
(299,579 | ) | ||
Pro forma net loss per share
|
(0.30 | ) |
(4)
|
Discontinued Operations
|
Year ended
December 31,
2011
|
||||
RMB
|
||||
Net revenues
|
65,854 | |||
Profit before tax
|
2,062 | |||
Gain on the disposal of Datong
|
177,949 | |||
Income tax
|
(52,458 | ) | ||
Net income from discontinued operations
|
127,553 |
ASSET: | ||||
Current assets:
|
RMB
|
|||
Cash and cash equivalents
|
23,607 | |||
Other current assets
|
107,826 | |||
Goodwill and intangible assets, net
|
201,704 | |||
Other non-current assets
|
21,571 | |||
Assets of discontinued operation
|
354,708 | |||
Current liabilities
|
88,258 | |||
Non-current liabilities
|
3,829 | |||
Liabilities of discontinued operation
|
92,087 | |||
Noncontrolling interest
|
16,127 |
(5)
|
Other Receivables
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Advances to staff (i)
|
9,784 | 9,494 | ||||||
Advances to entrepreneurial agents (ii)
|
1,959 | 1,984 | ||||||
Rental deposits
|
5,893 | 6,213 | ||||||
Interest income receivables (iii)
|
51,315 | 47,273 | ||||||
Value-added tax recoverable (iv)
|
10,745 | 1,867 | ||||||
Receivable from third parties(v)
|
— | 141,938 | ||||||
Reimbursement from insurance company (vi)
|
— | 40,106 | ||||||
Other
|
6,869 | 5,901 | ||||||
86,565 | 254,776 |
(i)
|
This represented advances to staff of the Group for daily business operations which are unsecured, interest-free and repayable on demand.
|
(ii)
|
This represented advances to entrepreneurial agents who provide services to the Group. The advances are used by agents to build business. The advances are unsecured, interest-free and repayable on demand.
|
(iii)
|
This represented accrued interest income on bank deposits and interest bearing receivable from third parties as described in (v).
|
(iv)
|
As of December 31, 2012 and December 31, 2013, the amount represented value-added tax to be refunded from tax bureau. The amount of value-added tax outstanding as of December 31, 2012 had been refunded during the year 2013, and the amount as of December 31, 2013 had been refunded during the first quarter of year 2014.
|
(v)
|
Receivable from third parties mainly included receivables from two third parties: 1) receivable from Guangdong Jintaiping Asset Management Co. Ltd. ( “Jintaiping” ), in which the Group held 19.5% equity interest before December 2013. On December 2, 2013, the Group disposed of its entire equity interest in Jintaiping to Shanghai Puyi Investment Consulting Co. Ltd. ("Shanghai Puyi"), an independent third party at a consideration of RMB7,987. Accordingly, receivable from Jintaiping which was included in amounts due from related parties as of December 31, 2012 was reclassified as other receivables. The loan receivable from Jintaiping is unsecured, repayable on demand and bears annual interest rate at 8%. As of December 31, 2013, the amount due from Jintaiping was RMB130,651; 2) receivable from Shanghai Puyi as a result of the above mentioned equity transfer. As of December 31, 2013, the amount due from Shanghai Puyi was RMB7,987.
|
(vi)
|
On April 23, 2014, the company has signed a settlement agreement with an insurance company. Refer to note 17 (iv) for details.
|
(6)
|
Property, Plant and Equipment
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Building
|
11,346 | 11,346 | ||||||
Office equipment, furniture and fixtures
|
125,294 | 127,849 | ||||||
Motor vehicles
|
40,041 | 40,039 | ||||||
Leasehold improvements
|
9,073 | 9,033 | ||||||
Total
|
185,754 | 188,267 | ||||||
Less: Accumulated depreciation
|
(90,833 | ) | (118,705 | ) | ||||
Property, plant and equipment, net
|
94,921 | 69,562 |
(7)
|
Goodwill
|
P&C
segment
|
Life segment
|
Claims
Adjusting
segment
|
Datong
segment
|
Total
|
||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
||||||||||||||||
Balance as of January 1, 2011
|
983,007 | 16,900 | 38,077 | 116,389 | 1,154,373 | |||||||||||||||
Addition for acquisitions
|
41,274 | — | — | — | 41,274 | |||||||||||||||
Addition for contingent considerations
|
— | — | — | 70,000 | 70,000 | |||||||||||||||
Disposal of Datong
|
— | — | — | (186,389 | ) | (186,389 | ) | |||||||||||||
Impairment loss
|
(962,628 | ) | — | (38,077 | ) | — | (1,000,705 | ) | ||||||||||||
Balance as of January 1, 2012 and 2013
|
61,653 | 16,900 | — | — | 78,553 | |||||||||||||||
Impairment loss
|
— | — | — | — | — | |||||||||||||||
Balance as of December 31, 2012 and 2013
|
61,653 | 16,900 | — | — | 78,553 |
P&C
segment
|
Life segment
|
Claims
Adjusting
segment
|
Total
|
|||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
|||||||||||||
Goodwill, gross
|
1,024,281 | 16,900 | 38,077 | 1,079,258 | ||||||||||||
Accumulated impairment loss
|
(962,628 | ) | — | (38,077 | ) | (1,000,705 | ) | |||||||||
Goodwill, net as of December 31, 2012 and 2013
|
61,653 | 16,900 | — | 78,553 |
(8)
|
Investment in Affiliates
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Teamhead Automobile
|
471 | 473 | ||||||
Jiaxing
|
347 | 192 | ||||||
Sincere Fame
|
167,802 | 188,576 | ||||||
Total
|
168,620 | 189,241 |
|
As of December 31,
|
|||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Balance sheets
|
||||||||
Current assets
|
970,114 | 641,314 | ||||||
Non-current assets
|
243,230 | 556,067 | ||||||
Current liabilities
|
721,431 | 582,734 | ||||||
Non-current liabilities
|
743 | 1,057 |
Year Ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
|
RMB
|
RMB
|
RMB
|
|||||||||
Results of operations | ||||||||||||
Net Revenues
|
223,089 | 328,385 | 365,521 | |||||||||
Gross profit
|
202,755 | 240,644 | 295,954 | |||||||||
Income from operations
|
60,571 | 89,963 | 139,211 | |||||||||
Net profit
|
49,687 | 73,869 | 116,674 |
(9)
|
Variable Interest Entities
|
·
|
revoking the business and operating licenses of the Group's PRC subsidiaries and VIEs;
|
·
|
restricting or prohibiting any related-party transactions among the Group's PRC subsidiaries and VIEs;
|
·
|
imposing fines or other requirements with which the Group may not be able to comply;
|
·
|
requiring the Group to restructure the relevant ownership structure or operations; or
|
·
|
restricting or prohibiting the Group from providing additional funding for its business and operations in China.
|
As of December 31,
|
||||||
2012
|
2013
|
|||||
RMB
|
RMB
|
|||||
Total assets
|
185,235 | 114,232 | ||||
Total liabilities
|
169,077 | 110,133 |
Year Ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Net Revenues
|
1,394,032 | 374,529 | 125,961 | |||||||||
Net loss
|
(245,060 | ) | (4,755 | ) | (3,767 | ) | ||||||
Net cash generated from (used in) operating activities
|
73,425 | (34,601 | ) | (13,500 | ) | |||||||
Net cash (used in) generated from investing activities
|
(80,473 | ) | 81,593 | 12,041 | ||||||||
Net cash used in financing activities
|
(105,903 | ) | (38,305 | ) | — |
(10)
|
Other Payables and Accrued Expenses
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Business and other tax payable
|
26,117 | 28,313 | ||||||
Refundable deposits from employees and agents
|
12,714 | 12,452 | ||||||
Professional fees
|
12,378 | 11,818 | ||||||
Advances from third parties
|
16,014 | 22,490 | ||||||
Payables for addition of office equipment, furniture and fixtures
|
38,537 | 8,618 | ||||||
Insurance compensation claim payable to customers
|
2,699 | 1,487 | ||||||
Payable for equity transfers of investment in affiliates
|
- | 15,006 | ||||||
Consideration payable to settle the lawsuit (i)
|
- | 40,106 | ||||||
Others
|
7,665 | 7,664 | ||||||
Total
|
116,124 | 147,954 |
(i)
|
On March 19, 2014, the Company signed a settlement agreement with the plaintiff to settle the lawsuit at US$6,625 (approximately RMB40,106). Please refer to note (17) (iv) for details of the lawsuit.
|
(11)
|
Employee Benefit Plans
|
(12)
|
Income Taxes
|
RMB
|
||||
Balance as of January 1, 2011
|
5,519 | |||
Gross increase in prior-period tax positions
|
38,067 | |||
Balance as of December 31, 2011
|
43,586 | |||
Gross increase in prior-period tax positions
|
4,003 | |||
Balance as of December 31, 2012
|
47,589 | |||
Gross increase in prior-period tax positions
|
3,146 | |||
Balance as of December 31, 2013
|
50,735 |
Year Ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Current tax expense
|
100,461 | 56,467 | 29,436 | |||||||||
Deferred tax income
|
(16,431 | ) | (6,094 | ) | (2,278 | ) | ||||||
Income tax expense
|
84,030 | 50,373 | 27,158 |
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Current deferred tax assets:
|
||||||||
Operating loss carryforward
|
4,942 | 4,858 | ||||||
Less: valuation allowances
|
— | — | ||||||
Current deferred tax asset, net
|
4,942 | 4,858 | ||||||
Non-current deferred tax assets:
|
||||||||
Operating loss carryforward
|
22,826 | 36,053 | ||||||
Less: valuation allowances
|
(18,859 | ) | (32,671 | ) | ||||
Non-current deferred tax asset, net
|
3,967 | 3,382 | ||||||
Total
|
8,909 | 8,240 | ||||||
Deferred tax liabilities:
|
||||||||
Intangible assets, net
|
8,592 | 5,646 | ||||||
Investment income
|
18,162 | 18,162 | ||||||
Total
|
26,754 | 23,808 |
Year Ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Net income (loss) before income taxes and income of affiliates and discontinued operations
|
(674,306 | ) | 160,452 | 106,521 | ||||||||
PRC statutory tax rate
|
25 | % | 25 | % | 25 | % | ||||||
Income tax at statutory tax rate
|
(168,576 | ) | 40,113 | 26,630 | ||||||||
Expenses not deductible for tax purposes:
|
||||||||||||
Entertainment
|
659 | 668 | 494 | |||||||||
Goodwill and unamortized intangible asset impairment
|
255,272 | — | — | |||||||||
Other
|
3,579 | 3,312 | 1,635 | |||||||||
Tax exemption and tax relief:
|
||||||||||||
Tax rate differential
|
(30,140 | ) | (3,947 | ) | (16,347 | ) | ||||||
Change in valuation allowance
|
13,654 | 5,003 | 13,812 | |||||||||
Uncertain tax provisions
|
8,367 | 4,003 | 3,148 | |||||||||
Other
|
1,215 | 1,221 | (2,214 | ) | ||||||||
Income tax expense
|
84,030 | 50,373 | 27,158 |
(13)
|
Capital Structure
|
(14)
|
Net Income (Loss) Per Share
|
Year Ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Basic:
|
||||||||||||
Net income (loss) from continuing operations
|
(744,090 | ) | 124,737 | 99,984 | ||||||||
Net income from discontinued operations
|
127,553 | — | — | |||||||||
Less: Net income(loss) attributable to the noncontrolling interests
|
(317,163 | ) | (5,773 | ) | 4,341 | |||||||
Net income (loss) attributable to the Company’s shareholders
|
(299,374 | ) | 130,510 | 95,643 | ||||||||
Weighted average number of ordinary shares outstanding
|
1,002,810,673 | 1,002,308,275 | 998,861,526 | |||||||||
Basic net income (loss) from continuing operations per ordinary share
|
(0.43 | ) | 0.13 | 0.10 | ||||||||
Basic net income from discontinued operations per ordinary share
|
0.13 | — | — | |||||||||
Basic net income (loss) per ordinary share
|
(0.30 | ) | 0.13 | 0.10 | ||||||||
Basic net income (loss) from continuing operations per ADS
|
(8.51 | ) | 2.60 | 1.92 | ||||||||
Basic net income from discontinued operations per ADS
|
2.54 | — | — | |||||||||
Basic net income (loss) per ADS
|
(5.97 | ) | 2.60 | 1.92 | ||||||||
Diluted:
|
||||||||||||
Net income (loss) from continuing operations
|
(744,090 | ) | 124,737 | 99,984 | ||||||||
Net income from discontinued operations
|
127,553 | — | — | |||||||||
Less: Net loss attributable to the noncontrolling interests
|
(317,163 | ) | (5,773 | ) | 4,341 | |||||||
Net income (loss) attributable to the Company’s shareholders
|
(299,374 | ) | 130,510 | 95,643 | ||||||||
Weighted average number of ordinary shares outstanding
|
1,002,810,673 | 1,002,308,275 | 998,861,526 | |||||||||
Share options
|
— | 2,993,694 | 1,708,492 | |||||||||
Total
|
1,002,810,673 | 1,005,301,969 | 1,000,570,018 | |||||||||
Diluted net income (loss)from continuing operations per ordinary share
|
(0.43 | ) | 0.13 | 0.10 | ||||||||
Diluted net income from discontinued operations per ordinary share
|
0.13 | — | — | |||||||||
Diluted net income (loss) per ordinary share
|
(0.30 | ) | 0.13 | 0.10 | ||||||||
Diluted net income (loss)from continuing operations per ADS
|
(8.51 | ) | 2.60 | 1.91 | ||||||||
Diluted net income from discontinued operations per ADS
|
2.54 | — | — | |||||||||
Diluted net income (loss) per ADS
|
(5.97 | ) | 2.60 | 1.91 |
(15)
|
Distribution of Profits
|
(16)
|
Related Party Balances and Transactions
|
|
a)
|
Amounts due from related parties:
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Amount due from an affiliate and its subsidiaries, net (i)
|
100,684 | 144,371 | ||||||
Amounts due from noncontrolling shareholders (ii)
|
51,101 | — | ||||||
Total
|
151,785 | 144,371 |
|
b)
|
Amounts due to related parties:
|
As of December 31,
|
||||||||
2012
|
2013
|
|||||||
RMB
|
RMB
|
|||||||
Amounts due to noncontrolling shareholders (iii)
|
3,030 | — |
(i)
|
The Group agreed to grant a revolving loan with a maximum amount of US$50,000 (equivalent to RMB317,990 as per the agreement) to Sincere Fame and its subsidiaries pursuant to a facility letter entered in October 2011 (the "Facility"). The Facility is valid for two years and is renewed upon mutual agreement for another two years in October 2013. On January 1, 2012, the Group and Sincere Fame further entered into a supplemental loan agreement, which established the legal rights to offset the interests and amounts receivable or payable between the Group and Sincere Fame, and all the subsidiaries of the Group and Sincere Fame. As of December 31, 2012 and 2013, the amount due from Sincere Fame and its subsidiaries represented RMB91,277 and RMB126,621 (US$20,916) principal receivable, RMB9,407and RMB16,250 (US$2,684) interest receivable and nil and RMB1,500(US$248) account receivables. These amounts are unsecured, bear interest at 7.3% and are repayable on demand.
|
(ii)
|
As of December 31, 2012, the amounts due from noncontrolling shareholders represented RMB44,436 of principal receivable and RMB2,165 interest receivable from Guangdong Jintaiping Asset Management Service Company (“Jintaiping”), and RMB4,500 of acquisition consideration refund receivable from the selling shareholder of a subsidiary acquired in 2010, which failed to meet its performance target pursuant to the acquisition agreement. The Group formerly owned an equity interest of 19.5% in Jintaiping, which is also the non-controlling interest shareholder of one of the Group's subsidiaries. The Group granted a revolving loan with a maximum amount of RMB50,000 to Jintaiping, pursuant to a facility letter entered in June 2012. The revolving loan is valid for one year and bears annual interest rate at 8%. On December 2, 2013, the Group disposed its entire equity interest in Jintaiping. As a result, Jintaiping is no longer a related party to the Group and corresponding receivable was reclassified to other receivables as of December 31, 2013 (refer to note 5).
|
(iii)
|
The amount was unsecured, interest-free and repayable on demand. As of December 31, 2012, the amount represented consideration payable for the acquisition of equity investment of Jintaiping.
|
|
c)
|
A subsidiary of the Company provided information technology service to an affiliate and charged RMB5,000, RMB5,660 and RMB1,415 for the years ended December 31, 2011, 2012, and 2013, respectively.
|
|
The Group charged affiliates interest income of RMB1,276, RMB10,298 and RMB6,843 for loans receivable for the years ended December 31, 2011, 2012, and 2013, respectively.
|
|
d)
|
A subsidiary of the Group held a 30% equity interest in Beijing Fanhua Micro-credit Company Limited (“Micro-credit”), on behalf of Shenzhen Fanhua United Investment Group, which is a subsidiary of Sincere Fame.
|
|
e)
|
The Group had acquired non-controlling interests of a number of its subsidiaries from shareholders who are also employees of the Group in 2011 and 2012. The excess of the fair values of these non-controlling interests acquired from these equity shareholders over the transaction prices as of the respective transaction dates were considered to be compensation expenses, which amounted to RMB6,000 and RMB7,900, and had been charged to the consolidated statement of income (loss) and comprehensive income (loss) for the years ended December 31, 2011 and 2012, respectively. The valuation of the equity of a private company is highly judgmental, so changes in the significant assumptions related to these valuations could materially affect the fair values of these entities and the related compensation expenses. There was no such transaction for the year ended December 31, 2013.
|
|
f)
|
Puyi Asset Management Co., Ltd (“Puyi Asset”), previously one of its subsidiaries, distributed certain wealth management products supplied by one of our affiliates. Commission revenues generated from such affiliate were nil, RMB7,522 and RMB13,112 for the years ended December 31, 2011, 2012 and 2013. However, Puyi Asset was disposal of in December, 2013 and no longer a subsidiary of the Group as of December 31, 2013.
|
(17)
|
Commitments and Contingencies
|
Minimum Lease
Payment
|
|||||
RMB
|
|||||
Year ending December 31:
|
|||||
2014
|
20,665 | ||||
2015
|
14,967 | ||||
2016
|
10,759 | ||||
2017
|
4,965 | ||||
2018
|
372 | ||||
Total
|
51,728 |
(18)
|
Concentrations of Credit Risk
|
Year ended December 31,
|
||||||||||||||||||||||||
2011
|
% of sales
|
2012
|
% of sales
|
2013
|
% of sales
|
|||||||||||||||||||
RMB
|
RMB
|
RMB
|
||||||||||||||||||||||
PICC Property and Casualty Company Limited ("PICC")
|
331,556 | 22 | % | 330,699 | 21 | % | 346,405 | 20 | % | |||||||||||||||
Ping An Property & Casualty Insurance Company of China, Ltd.
|
181,088 | 12 | % | 185,595 | 12 | % | 248,102 | 14 | % | |||||||||||||||
China Pacific Property Insurance Co., Ltd. ("CPIC")
|
184,717 | 12 | % | 208,797 | 13 | % | 204,983 | 12 | % | |||||||||||||||
697,361 | 46 | % | 725,091 | 46 | % | 799,490 | 46 | % |
As of December 31,
|
||||||||||||||||
2012
|
%
|
2013
|
%
|
|||||||||||||
RMB
|
RMB
|
|||||||||||||||
PICC
|
32,980 | 17 | % | 41,375 | 21 | % | ||||||||||
CPIC
|
— | — | 20,654 | 10 | % | |||||||||||
32,980 | 17 | % | 62,029 | 31 | % |
(19)
|
Non-Cash Transactions
|
Year ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Considerations payable in connection with acquisition of subsidiaries
|
20,402 | 96 | — | |||||||||
Considerations payable in connection with other investment (i)
|
— | 3,030 | 3,720 | |||||||||
Payables for addition of office equipment, furniture and fixtures
|
9,666 | 38,537 | 8,618 |
(20)
|
Share-based Compensation
|
Option J1
|
Option J2
|
Option J3
|
|
Fair value per underlying ordinary shares of InsCom
|
RMB0.02
|
RMB0.02
|
RMB0.02
|
Risk-free interest rate
|
0.08%
|
0.13%
|
0.68%
|
Expected life (years)
|
0.8
|
1.3
|
3
|
Expected volatility
|
30.00%
|
32.00%
|
60.00%
|
Expected dividend yield
|
0%
|
0%
|
0%
|
Early exercise multiple
|
3.0
|
3.0
|
3.0
|
a.
|
2012 Options G
|
Option G1
|
Option G2
|
Option G3
|
Option G4
|
Option G5
|
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
2.02%
|
2.16%
|
2.29%
|
2.42%
|
2.55%
|
Expected life (years)
|
5.11
|
5.61
|
6.11
|
6.61
|
7.11
|
Expected volatility
|
74.54%
|
74.54%
|
74.54%
|
74.54%
|
74.54%
|
b.
|
2012 Options H
|
Option H1
|
Option H2
|
Option H3
|
Option H4
|
Option H5
|
Option H6
|
|
Stock price per ordinary shares
|
US$0.31
|
US$0.31
|
US$0.31
|
US$0.31
|
US$0.31
|
US$0.31
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
1.87%
|
1.98%
|
2.09%
|
1.82%
|
1.93%
|
2.04%
|
Expected life (years)
|
5.37
|
5.87
|
6.37
|
5.12
|
5.62
|
6.12
|
Expected volatility
|
74.54%
|
74.54%
|
74.54%
|
74.54%
|
74.54%
|
74.54%
|
Option H1
|
Option H2
|
Option H3
|
Option H5
|
Option H6
|
|
Stock price per ordinary shares
|
US$0.30
|
US$0.30
|
US$0.30
|
US$0.30
|
US$0.30
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
1.26%
|
1.43%
|
1.60%
|
1.26%
|
1.43%
|
Expected life (years)
|
4.31
|
4.81
|
5.31
|
4.31
|
4.81
|
Expected volatility
|
59.29%
|
60.32%
|
64.83%
|
59.29%
|
60.32%
|
c.
|
2012 InsCom Options
|
Option I1
|
Option I2
|
Option I3
|
Option I4
|
|
Fair value per underlying ordinary shares of InsCom
|
RMB0.02
|
RMB0.02
|
RMB0.02
|
RMB0.02
|
Risk-free interest rate
|
1.74%
|
1.83%
|
1.94%
|
2.06%
|
Expected life (years)
|
2.7
|
2.7
|
5.2
|
5.2
|
Expected volatility
|
77.00%
|
71.00%
|
67.00%
|
67.00%
|
Expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
Early exercise multiple
|
3.0
|
3.0
|
3.0
|
3.0
|
Post-vesting forfeiture rate
|
0%
|
0%
|
5%
|
5%
|
Option F1
|
Option F2
|
Option F3
|
Option F4
|
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
1.93%
|
2.27%
|
2.54%
|
2.81%
|
Expected life (years)
|
3.43
|
3.93
|
4.43
|
4.94
|
Expected volatility
|
35.54%
|
34.34%
|
32.93%
|
32.49%
|
Option E1
|
Option E2
|
Option E3
|
Option E4
|
|
Weight average assumptions – expected dividend yield
|
1.31%
|
1.31%
|
1.31%
|
1.31%
|
Risk-free interest rate
|
2.35%
|
2.61%
|
2.82%
|
3.06%
|
Expected life (years)
|
3.64
|
4.14
|
4.64
|
5.14
|
Expected volatility
|
34.91%
|
33.7%
|
32.62%
|
31.82%
|
Option D1
|
Option D2
|
Option D3
|
Option D4
|
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
3.35%
|
3.51%
|
3.55%
|
3.61%
|
Expected life (years)
|
3.56
|
4.06
|
4.56
|
5.06
|
Expected volatility
|
33.0%
|
31.9%
|
32.2%
|
31.2%
|
Option C1
|
Option C2
|
Option C3
|
Option C4
|
|
Weight average assumptions – expected dividend yield
|
0%
|
0%
|
0%
|
0%
|
Risk-free interest rate
|
3.70%
|
3.71%
|
3.93%
|
4.07%
|
Expected life (years)
|
3.86
|
4.36
|
4.86
|
5.36
|
Expected volatility
|
28.2%
|
28.9%
|
28.0%
|
27.6%
|
Weighted average assumptions—expected dividend yield
|
0%
|
Risk-free interest rate
|
2.71%
|
Expected life (years)
|
5.6
|
Expected volatility
|
28.5%
|
Number of
options
|
Weighted
average
exercise price in
RMB
|
Aggregate
Intrinsic Value
RMB
|
|||||||||
Outstanding as of January 1, 2011
|
88,019,441 | 4.04 | 146,782 | ||||||||
Granted on April 28, 2011
|
28,400,000 | 4.77 | |||||||||
Exercised
|
(2,670,340 | ) | 2.28 | ||||||||
Cancelled
|
(44,646,484 | ) | 5.37 | ||||||||
Forfeited
|
(31,991,516 | ) | 5.36 | ||||||||
Outstanding as of December 31, 2011
|
37,111,101 | 1.99 | 7,070 | ||||||||
Granted on March12, 2012
|
96,645,000 | 1.90 | |||||||||
Exercised
|
(183,380 | ) | 1.95 | ||||||||
Cancelled
|
— | — | |||||||||
Forfeited
|
(411,490 | ) | 2.09 | ||||||||
Outstanding as of December 31, 2012
|
133,161,231 | 1.92 | 15,436 | ||||||||
Granted
|
— | — | |||||||||
Exercised
|
— | — | |||||||||
Cancelled
|
— | — | |||||||||
Forfeited
|
(1,431,734 | ) | 1.96 | ||||||||
Outstanding as of December 31, 2013
|
131,729,497 | 1.92 | — | ||||||||
Exercisable as of December 31, 2013
|
73,752,289 | 1.94 | — |
Year ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
RMB
|
RMB
|
RMB
|
||||||||||
Weighted-average grant-date fair value per share of options granted
|
1.45 | 1.48 | — | |||||||||
Total intrinsic value of options exercised
|
9,495 | 74 | — | |||||||||
Total fair value of share options vested
|
7,355 | 30,513 | 34,362 |
Options
outstanding
|
Weighted
average
remaining
contractual life
(Years)
|
Weighted
average
exercise price
in RMB
|
Options
Exercisable
|
|||||||||||
2012 Options G
|
91,897,750 | 8.3 | 1.90 | 37,390,750 | ||||||||||
2012 Options H
|
3,656,336 | 8.3 | 1.90 | 186,128 | ||||||||||
2009 Options
|
7,218,700 | 4.0 | 2.30 | 7,218,700 | ||||||||||
2008 Options
|
28,304,080 | 4.0 | 1.90 | 28,304,080 | ||||||||||
2007 Option A
|
652,631 | 3.0 | 2.32 | 652,631 | ||||||||||
Total
|
131,729,497 | 73,752,289 |
(21)
|
Restricted Net Assets
|
(22)
|
Segment Reporting
|
Year ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
Net revenues
|
||||||||||||||||
P&C
|
1,032,594 | 1,090,205 | 1,264,317 | 208,850 | ||||||||||||
Life
|
276,402 | 272,755 | 230,086 | 38,007 | ||||||||||||
Claims Adjusting
|
202,003 | 217,497 | 261,206 | 43,148 | ||||||||||||
Other
|
5,676 | 5,660 | 1,415 | 234 | ||||||||||||
Total net revenues
|
1,516,675 | 1,586,117 | 1,757,024 | 290,239 | ||||||||||||
Operating costs and expenses
|
||||||||||||||||
P&C
|
(1,626,472 | ) | (911,330 | ) | (1,142,677 | ) | (188,757 | ) | ||||||||
Life
|
(245,571 | ) | (266,062 | ) | (232,794 | ) | (38,455 | ) | ||||||||
Claims Adjusting
|
(243,072 | ) | (186,694 | ) | (234,129 | ) | (38,675 | ) | ||||||||
Other
|
(150,333 | ) | (156,205 | ) | (129,438 | ) | (21,381 | ) | ||||||||
Total operating costs and expenses
|
(2,265,448 | ) | (1,520,291 | ) | (1,739,038 | ) | (287,268 | ) | ||||||||
Income (loss) from operations
|
||||||||||||||||
P&C
|
(593,878 | ) | 178,875 | 121,640 | 20,093 | |||||||||||
Life
|
30,831 | 6,693 | (2,708 | ) | (448 | ) | ||||||||||
Claims Adjusting
|
(41,069 | ) | 30,803 | 27,077 | 4,473 | |||||||||||
Other
|
(144,657 | ) | (150,545 | ) | (128,023 | ) | (21,147 | ) | ||||||||
Total income (loss) from operations
|
(748,773 | ) | 65,826 | 17,986 | 2,971 |
As of December 31,
|
||||||||||||
2012
|
2013
|
2013
|
||||||||||
RMB
|
RMB
|
US$
|
||||||||||
Segment assets
|
||||||||||||
P&C
|
1,542,536 | 1,262,728 | 208,587 | |||||||||
Life
|
250,126 | 221,748 | 36,630 | |||||||||
Claims Adjusting
|
84,325 | 103,126 | 17,035 | |||||||||
Other
|
1,523,802 | 1,973,128 | 325,938 | |||||||||
Total assets
|
3,400,789 | 3,560,730 | 588,190 |
As of December 31,
|
||||||||||||
2012
|
2013
|
2013
|
||||||||||
RMB
|
RMB
|
US$
|
||||||||||
ASSETS:
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
14,589 | 11,471 | 1,895 | |||||||||
Other receivables
|
1,212 | 40,106 | 6,625 | |||||||||
Amounts due from subsidiaries
|
1,528,450 | 1,491,025 | 246,300 | |||||||||
Total current assets
|
1,544,251 | 1,542,602 | 254,820 | |||||||||
Non-current assets:
|
||||||||||||
Investment in subsidiaries
|
1,386,753 | 1,561,555 | 257,950 | |||||||||
Total assets
|
2,931,004 | 3,104,157 | 512,770 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY:
|
||||||||||||
Current liabilities:
|
||||||||||||
Other payables
|
5,578 | 45,102 | 7,451 | |||||||||
Amounts due to subsidiaries
|
31,046 | 30,958 | 5,114 | |||||||||
Total liabilities
|
36,624 | 76,060 | 12,565 | |||||||||
Ordinary shares (Authorized shares:10,000,000,000 at US$0.001 each; issued and outstanding shares: 998,861,526 and 998,861,526 as of December 31, 2012and 2013, respectively)
|
7,624 | 7,624 | 1,259 | |||||||||
Additional paid-in capital
|
2,284,906 | 2,329,962 | 384,882 | |||||||||
Retained earnings
|
705,982 | 801,625 | 132,419 | |||||||||
Accumulated other comprehensive loss
|
(104,132 | ) | (111,114 | ) | (18,355 | ) | ||||||
Total shareholders’ equity
|
2,894,380 | 3,028,097 | 500,205 | |||||||||
Total liabilities and shareholders' equity
|
2,931,004 | 3,104,157 | 512,770 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
General and administrative expenses
|
(70,893 | ) | (77,993 | ) | (50,633 | ) | (8,364 | ) | ||||||||
Interest income
|
2,011 | 13,215 | 6,847 | 1,131 | ||||||||||||
Equity in earnings (loss) of subsidiaries
|
(230,492 | ) | 195,288 | 139,429 | 23,032 | |||||||||||
Net income (loss)
|
(299,374 | ) | 130,510 | 95,643 | 15,799 | |||||||||||
Other comprehensive loss, net of tax: Foreign currency translation adjustments
|
(18,291 | ) | (2,481 | ) | (6,982 | ) | (1,153 | ) | ||||||||
Comprehensive income (loss)attributable to the CNinsure Inc’s shareholders
|
(317,665 | ) | 128,029 | 88,661 | 14,646 |
Accumulated
|
||||||||||||||||||||||||
Share Capital
|
Additional
|
Retained |
Other
Comprehensive
|
|||||||||||||||||||||
Number of Share
|
Amounts
|
Paid-in Capital
|
Earnings
|
Income (Loss)
|
Total
|
|||||||||||||||||||
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
||||||||||||||||||||
Balance as of January1, 2011
|
1,002,977,326 | 7,649 | 2,261,849 | 874,846 | (83,360 | ) | 3,060,984 | |||||||||||||||||
Net loss
|
— | — | — | (299,374 | ) | — | (299,374 | ) | ||||||||||||||||
Foreign currency translation
|
— | — | — | — | (18,291 | ) | (18,291 | ) | ||||||||||||||||
Exercise of share options
|
2,670,340 | 17 | 5,288 | — | — | 5,305 | ||||||||||||||||||
Repurchase of ordinary shares
|
(3,106,220 | ) | (20 | ) | (13,702 | ) | — | — | (13,722 | ) | ||||||||||||||
Share-based compensation
|
— | — | 57,003 | — | — | 57,003 | ||||||||||||||||||
Other
|
— | — | (37,858 | ) | — | — | (37,858 | ) | ||||||||||||||||
Balance as of December 31, 2011
|
1,002,541,446 | 7,646 | 2,272,580 | 575,472 | (101,651 | ) | 2,754,047 | |||||||||||||||||
Net income
|
— | — | — | 130,510 | — | 130,510 | ||||||||||||||||||
Foreign currency translation
|
— | — | — | — | (2,481 | ) | (2,481 | ) | ||||||||||||||||
Exercise of share options
|
183,380 | 1 | 347 | — | — | 348 | ||||||||||||||||||
Repurchase of ordinary shares
|
(3,863,300 | ) | (23 | ) | (9,221 | ) | — | — | (9,244 | ) | ||||||||||||||
Share-based compensation
|
— | — | 66,878 | — | — | 66,878 | ||||||||||||||||||
Other
|
— | — | (45,678 | ) | — | — | (45,678 | ) | ||||||||||||||||
Balance as of December 31, 2012
|
998,861,526 | 7,624 | 2,284,906 | 705,982 | (104,132 | ) | 2,894,380 | |||||||||||||||||
Net income
|
— | — | — | 95,643 | — | 95,643 | ||||||||||||||||||
Foreign currency translation
|
— | — | — | — | (6,982 | ) | (6,982 | ) | ||||||||||||||||
Share-based compensation
|
— | — | 44,904 | — | — | 44,904 | ||||||||||||||||||
Other
|
— | — | 152 | — | — | 152 | ||||||||||||||||||
Balance as of December 31, 2013
|
998,861,526 | 7,624 | 2,329,962 | 801,625 | (111,114 | ) | 3,028,097 | |||||||||||||||||
Balance as of December 31, 2013 in US$
|
1,259 | 384,882 | 132,419 | (18,355 | ) | 500,205 |
Year Ended December 31,
|
||||||||||||||||
2011
|
2012
|
2013
|
2013
|
|||||||||||||
RMB
|
RMB
|
RMB
|
US$
|
|||||||||||||
OPERATING ACTIVITIES
|
||||||||||||||||
Net income (loss)
|
(299,374 | ) | 130,510 | 95,643 | 15,799 | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||||||||||
Equity in (earnings) loss of subsidiaries
|
230,492 | (195,288 | ) | (139,016 | ) | (22,965 | ) | |||||||||
Compensation expenses associated with stock options
|
57,003 | 66,878 | 44,904 | 7,418 | ||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Other receivables
|
(188,182 | ) | 189,004 | 1,212 | 201 | |||||||||||
Other payables
|
(6,790 | ) | (189 | ) | (582 | ) | (96 | ) | ||||||||
Net cash (used in)generated from operating activities
|
(206,851 | ) | 190,915 | 2,161 | 357 | |||||||||||
Cash flows from investing activities
|
||||||||||||||||
Increase in investment in subsidiaries
|
(56,374 | ) | (12,899 | ) | (34,102 | ) | (5,633 | ) | ||||||||
Advances (to) from subsidiaries
|
205,316 | (176,826 | ) | 37,337 | 6,167 | |||||||||||
Disposal of subsidiaries
|
— | — | (1,532 | ) | (253 | ) | ||||||||||
Net cash (used in) generated from investing activities
|
148,942 | (189,725 | ) | 1,703 | 281 | |||||||||||
Cash flows from financing activities:
|
||||||||||||||||
Proceeds on exercise of stock options
|
5,305 | 348 | — | — | ||||||||||||
Repurchase ordinary shares
|
(13,722 | ) | (9,244 | ) | — | — | ||||||||||
Net cash used in financing activities
|
(8,417 | ) | (8,896 | ) | — | — | ||||||||||
Net increase (decrease) in cash and cash equivalents
|
(66,326 | ) | (7,706 | ) | 3,864 | 638 | ||||||||||
Cash and cash equivalents at beginning of year
|
109,393 | 24,776 | 14,589 | 2,410 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(18,291 | ) | (2,481 | ) | (6,982 | ) | (1,153 | ) | ||||||||
Cash and cash equivalents at end of year
|
24,776 | 14,589 | 11,471 | 1,895 |
1.
|
Party A is a wholly foreign-owned enterprise duly incorporated under the laws of the People’s Republic of China (the “PRC”);
|
2.
|
Party B is a Chinese citizen and holds 75% equity interest in Shenzhen Xinbao Investment Management Co., Ltd. (“ Shenzhen Xinbao”);
|
3.
|
Party B desires to borrow a loan from Party A by pledging its equity interest in Shenzhen Xinbao, and Party A agrees to extend a loan in an amount of Seven Million and Five Hundred Thousand Renminbi (RMB7,500,000) to Party B.
|
1.
|
In accordance with the terms and conditions of this Agreement, Party A agrees to grant an interest-free loan in an amount of Seven Million and Five Hundred Thousand Renminbi (RMB7,500,000) to Party B, and Party B agrees to accept such loan.
|
2.
|
The term of the loan under this Agreement shall start from the date when the loan is withdrawn until ten (10) years after signing this Agreement, and may be extended subject to the mutual agreement between both parties. During the loan term or any extension thereof, Party A shall have the right, by giving written notice to Party B, to decide that the loan under this Agreement is due immediately and request Party B to repay the loan in the manner as specified herein if Party B has any of the following circumstances:
|
2.1
|
Party B resigns from or is dismissed by Party A or any of its affiliates;
|
2.2
|
Party B dies or loses its civil capacity or its capacity for civil conduct is restricted;
|
2.3
|
Party B commits a crime or is involved in a crime;
|
2.4
|
Any other third party claims more than One Hundred Thousand Renminbi (RMB100,000) against Party B; or
|
2.5
|
Party A has given to Party B a written notice regarding the purchase of Party B’s equity interest in Shenzhen Xinbao according to the provisions of the “Exclusive Purchase Option Agreement” as set forth in Article 3 hereof to exercise its call option.
|
3.
|
Both parties hereby agree and acknowledge that, subject to the permission of and to the extent permitted by the PRC laws, Party A shall be entitled but not obliged to, at any time, purchase, or designate other person (including natural person, legal person or any other entity), to purchase all or part of the equity interest held by Party B in Shenzhen Xinbao (the “Call Option”), provided, however, that Party A gives a written notice about equity purchase to Party B. Once such written notice about exercising the Call Option is given by Party A, Party B shall, according to Party A’s intention and instructions, transfer its equity interest in Shenzhen Xinbao to Party A or other person designated by Party A at its original investment price (the “Original Investment Price”) or if otherwise specified by laws, at another price agreed upon by Party A. Both parties hereby agree and acknowledge that when Party A exercises the Call Option, if the lowest equity price permitted by the applicable laws and regulations then in effect is higher than the Original Investment Price, the purchase price for Party A or its designee shall be the lowest price permitted by laws. Both parties agree to execute the “Exclusive Purchase Option Agreement” with respect thereto.
|
4.
|
Both parties hereby agree and acknowledge that Party B shall repay the loan in the manner as given below only: when the loan is due, Party B (or any of its successors, heirs or assignees) shall, at Party A’s written request, transfer its equity interest in Shenzhen Xinbao to Party A or its designee subject to the permission of the PRC laws, and shall use the proceeds from such equity transfer to repay the loan under this Agreement.
|
5.
|
Both parties hereby agree and acknowledge that except as otherwise provided for herein, the loan under this Agreement is interest-free. But when the loan is due and Party B needs to transfer its equity interest hereunder to Party A or its designee, if the actual equity transfer price is higher than Party B’s loan principal, due to legal requirements or other reasons, the excess shall be deemed as loan interest or fund utilization costs to the extent permitted by laws, and shall paid to Party A together with loan principal.
|
6.
|
Both parties hereby agree and acknowledge that Party B’s obligations under this Agreement are deemed to be fully performed only if all the following conditions are met:
|
6.1
|
Party B has transferred all its equity interest in Shenzhen Xinbao to Party A and/or its designee; and
|
6.2
|
Party B has paid to Party A as loan repayment all proceeds from equity transfer or the maximum amount permitted by laws (including principal and the highest loan interest permitted by applicable laws then in force).
|
7.
|
To secure the performance of the debts under this Agreement, Party B agrees to pledge all its equity interest in Shenzhen Xinbao to Party A (the “Equity Pledge”). Both parties agree to execute an “Equity Pledge Agreement” with respect thereto.
|
8.
|
As of the execution date of this Agreement, Party A hereby represents and warrants to Party B that:
|
8.1
|
Party A is a wholly foreign-owned enterprise incorporated and validly existing under the PRC laws;
|
8.2
|
Party A has the authority to execute and perform this Agreement. The execution and performance by Party A of this Agreement comply with its business scope, articles of association or other organizational documents, and Party A has obtained all necessary and appropriate approvals and authorizations with respect to the execution and performance of this Agreement;
|
8.3
|
The execution and performance of this Agreement by Party A do not violate any laws, regulations, government approvals, authorizations, notices or other government documents binding upon or influencing it, any agreement signed by it with any third party or any undertaking made by it to any third party; and
|
8.4
|
Once executed, this Agreement constitutes a legal, valid and binding obligation of Party A, enforceable against Party A in accordance with its provisions.
|
9.
|
From the execution date of this Agreement until the termination hereof, Party B hereby represents and warrants to Party A that:
|
9.1
|
Shenzhen Xinbao is a limited liability company incorporated and validly existing under the PRC laws, whose registered capital has been paid up and which has obtained capital verification report issued by a qualified accounting firm. Shenzhen Xinbao has completed all government approvals, authorizations, licenses, registrations, filing, etc necessary to carry out the business activities within its business scope and to possess its assets;
|
9.2
|
Party B legally owns 75% equity interest in Shenzhen Xinbao;
|
9.3
|
Party B has the authority to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply with the articles of association or other organizational documents of Shenzhen Xinbao, and Party B has obtained all necessary and appropriate approvals and authorizations with respect to the execution and performance of this Agreement;
|
9.4
|
The execution and performance of this Agreement by Party B do not violate any laws, regulations, government approvals, authorizations, notices or other government documents binding upon or influencing it, any agreement signed by it with any third party or any undertaking made by it to any third party;
|
9.5
|
Once executed, this Agreement constitutes a legal, valid and binding obligation of Party B, enforceable against Party B in accordance with its provisions;
|
9.6
|
Except for the provisions stipulated in the “Equity Pledge Agreement” and “Exclusive Purchase Option Agreements”, Party B has not mortgaged, pledged or otherwise encumbered its equity interest in Shenzhen Xinbao, given an offer about the transfer of such equity interest to any third party, made any commitment about the offer of any third party to purchase its equity interest, or executed any agreement with any third party to transfer its equity interest in Shenzhen Xinbao;
|
9.7
|
There are no existing or potential disputes, litigations, arbitrations, administrative proceedings or other legal proceedings in connection with Party B’s equity interest in Shenzhen Xinbao.
|
10.
|
Party B covenants that it shall, during the term of this Agreement:
|
10.1
|
Without Party A’s prior written consent, not sell, transfer, mortgage or otherwise dispose of or cause any other security interest to be created on its equity interest or other interests in Shenzhen Xinbao, except for the equity pledge and other rights created for the benefit of Party A;
|
10.2
|
Without Party A’s prior written consent, not vote for or support or execute at the shareholders’ meetings of Shenzhen Xinbao any shareholders’ resolution approving the sale, transfer, mortgage or otherwise disposal of, or causing any other security interest to be created on, its legal or beneficial interest in the equity interest of Shenzhen Xinbao;
|
10.3
|
Without Party A’s prior written consent, not vote for or support or execute at the shareholders’ meetings of Shenzhen Xinbao any resolution approving Shenzhen Xinbao to be merged or consolidated with, acquire or invest in, any person;
|
10.4
|
Promptly inform Party A of any existing or potential litigation, arbitration or administrative proceedings relating to Party B’s equity interest in Shenzhen Xinbao;
|
10.5
|
Execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriate lawsuits or make all necessary and appropriate defenses against all claims in order to maintain the ownership over its equity interest in Shenzhen Xinbao;
|
10.6
|
Not do any act and/or omission that may materially affect the assets, business and liabilities of Shenzhen Xinbao without Party A’s prior written consent;
|
10.7
|
At Party A’s request, appoint any person nominated by Party A as the director of Shenzhen Xinbao;
|
10.8
|
When Party A exercises its Call Option described herein, transfer all of Party B’s equity interest in Shenzhen Xinbao promptly and unconditionally to Party A and/or its designee subject to the permission of and to the extent permitted by the PRC laws;
|
10.9
|
Not request Shenzhen Xinbao to distribute dividends or profits to it;
|
10.10
|
In case its equity interest in Shenzhen Xinbao is transferred to Party A or its designee, Party B will, subject to compliance with legal requirements, pay all equity transfer proceeds to Party A as the loan principal and as the loan interests or fund utilization costs permitted by laws;
|
10.11
|
Comply strictly with the provisions of this Agreement, fully perform its obligations under this Agreement and not do any act/omission that affects or impairs the validity and enforceability of this Agreement.
|
11.
|
Party B undertakes that within the term of this Agreement, it will, in the capacity of the shareholder of Shenzhen Xinbao, cause Shenzhen Xinbao:
|
11.1
|
Not to supplement, amend or modify its articles of association in any way, or to increase or decrease its registered capital, or to change its capital structure in any way without Party A’s prior written consent;
|
11.2
|
To maintain its existence, and to operate its business and deal with matters prudently and effectively, subject to good financial and business rules and practices;
|
11.3
|
Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interests in any of its assets, business or income at any time after the signing of this Agreement without Party A’s prior written consent;
|
11.4
|
Not to create any liability, without Party A’s prior written consent, except (i) the liability arising from the normal course of business, but not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in writing;
|
11.5
|
To operate persistently all the business in the normal course of business to maintain the value of its assets;
|
11.6
|
Not to execute any material contracts (a contract will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000)), without Party A’s prior written consent, other than those executed during the normal course of business;
|
11.7
|
To provide information concerning all of its operations and financial performance at Party A’s request;
|
11.8
|
Not to be merged or consolidated with, acquire or invest in, any other person without Party A’s prior written consent;
|
11.9
|
Not to distribute dividends to each shareholder in any way without Party A’s prior written consent. However, Shenzhen Xinbao shall promptly distribute all its distributable profits to Party A’s shareholders upon Party A’s request;
|
11.10
|
To inform promptly Party A of any existing or potential litigation, arbitration or administrative proceedings concerning its assets, business or income;
|
11.11
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate lawsuits or to make all necessary and appropriate defenses against all claims in order to maintain the ownership over all its assets;
|
11.12
|
To comply strictly with the agreements with respect to the technological support and consulting services (the “Service Agreements”) and other agreements executed by it with Party A’s affiliates, to perform its obligations under the Service Agreements and other agreements, and not to do any act/omission that affects the validity and enforceability of such agreements.
|
12.
|
This Agreement shall be binding on and inure to the benefit of both parties hereto and their respective successors, heirs and permitted assignees. Without the prior written approval of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, benefits or obligations under this Agreement.
|
13.
|
Party B hereby agrees that Party A may assign its rights and obligations under this Agreement to any other third parties when necessary. Party A shall only be required to notify Party B in writing when such transfer occurs and no further consent from Party B shall be needed in respect of the transfer.
|
14.
|
The formation, validity, interpretation, performance, amendment and termination of and resolution of disputes in connection with this Agreement shall be governed by the PRC laws.
|
15.
|
Arbitration
|
15.1
|
Any dispute, controversy or claim arising from the interpretation and performance in connection with this Agreement (including any question regarding its existence, validity or termination) shall be settled by both parties through friendly consultations. In case no settlement can be reached within thirty (30) days after one party makes a request for settlement, either party may submit such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with its arbitration rules then in effect at the time of applying for arbitration. The arbitration award shall be final and binding upon both parties;
|
15.2
|
The seat of arbitration shall be Shenzhen;
|
15.3
|
The language of arbitration proceedings shall be Chinese.
|
16.
|
This Agreement shall be formed on its signing date. This Agreement shall be effective as of the date on which the loan is released until both parties have performed their obligations under this Agreement.
|
17.
|
Party B shall not terminate or revoke this Agreement unlessParty A commits a gross negligence, fraud or other material illegal acts; or Party A goes bankrupt.
|
18.
|
This Agreement shall not be amended or modified except with the written consent of both parties. In case of anything not covered herein, both parties may make supplements hereto by signing a written agreement. Any amendment, modification, supplement or annex to this Agreement shall form an integral part of this Agreement.
|
19.
|
This Agreement constitutes the entire agreement between both parties with respect to the transactions contemplated herein and supersedes all prior oral discussions or written agreements reached by both parties with respect to the transactions mentioned above.
|
20.
|
This Agreement is severable. If any provision of this Agreement is held to be invalid or unenforceable, such provision shall not affect the validity and enforceability of the remainder of this Agreement.
|
21.
|
Each party hereto shall keep in strict confidence the information concerning the other party’s business, operation, financial performance or other confidential data obtained under this Agreement or during the performance of this Agreement.
|
22.
|
Any obligation arising out of this Agreement or that is due before the expiration or early termination of this Agreement shall survive such expiration or early termination. Articles 14, 15 and 21 hereof shall survive the termination of this Agreement.
|
23.
|
This Agreement is executed in four originals, with each of Party A and Party B holding one original. All originals have the same legal effect.
|
1.
|
Party A is a wholly foreign-owned enterprise incorporated in the People’s Republic of China (hereinafter the “PRC”).
|
|
2.
|
Party B is a citizen of the PRC and holds 75% equity interest (“Pledged Equity Interest”) in Shenzhen Xinbao Investment Management Co., Ltd. (hereinafter “Shenzhen Xinbao”), a limited liability company incorporated in Shenzhen, China.
|
|
3.
|
Party A and Party B signed the Loan Agreement on Aril 18, 2011, pursuant to which, Party A will provide an interest-free loan in the total amount of Seven Million and Five Hundred Thousand Renminbi (RMB7,500,000) (hereinafter the “Loan”) to Party B, and Party B will provide the Pledged Equity Interest to Party A as a guarantee for the Loan.
|
1.
|
Right of Pledge
|
2.
|
Registration of Pledge
|
2.1
|
Within one (1) week after the signing of this Agreement, the Pledgor shall cause Shenzhen Xinbao to record the Pledgee’s Right of Pledge over his Pledged Equity Interest in the register of shareholders and deliver the copy of the register of shareholders bearing the common seal of Shenzhen Xinbao, as well as the original of equity contribution certificate of Shenzhen Xinbao to the Pledgee for safe-keeping.
|
2.2
|
Both parties agree that if conditions permit, they will make their best effort to file, and cause the pledge under this Agreement to be filed, with the industrial and commercial administrative department in the place where Shenzhen Xinbao is registered, but both parties confirm that unless compulsorily stipulated by the PRC laws and regulations, whether this Agreement is filed as above or not will not affect the validity of this Agreement.
|
3.
|
Rights of the Pledgee
|
3.1
|
Where the Pledgor does not perform his liabilities, the Pledgee shall be entitled to be first compensated from the money converted from, or the proceeds from the auction or sale of, such Pledged Equity Interest.
|
3.2
|
The Pledgee shall be entitled to the bonus arising from the Pledged Equity Interest.
|
4.
|
Representation and Warranty of the Pledgor
|
4.1
|
The Pledgor is the legal owner of the Pledged Equity Interest.
|
4.2
|
Except for the interest of the Pledgee, the Pledgor has not created other pledges or any other kinds of rights over the Pledged Equity Interest.
|
4.3
|
The pledge of the equity interest by the Pledgor has obtained the consent of the other shareholders of Shenzhen Xinbao, and other shareholders have unanimously agreed that they will give up the exercise of their respective preemptive right when the Pledgee actually exercises the Right of Pledge.
|
5.
|
Undertakings by the Pledgor
|
5.1
|
During the term of this Agreement, the Pledgor undertakes to the Pledgee for the benefit of the Pledgee that he will:
|
5.1.1
|
Not transfer or dispose of the Pledged Equity Interest, nor create or cause to be created any pledge (except the pledge pursuant to this Agreement) on the Pledged Equity Interest without the prior written consent of the Pledgee.
|
|
5.1.3
|
Timely notify the Pledgee of any events or any received notices which may affect the Pledgor’s right over the Pledged Equity Interest or any part thereof, or may change the Pledgor’s any warranty and obligation under this Agreement or may have effects on it.
|
5.2
|
The Pledgor agrees that the Pledgee’s right to exercise the Right of Pledge obtained pursuant to this Agreement shall not be interrupted or hindered by the Pledgor or any of its successors or principals or any other person through legal proceedings.
|
5.3
|
The Pledgor undertakes to the Pledgee that in order to protect or improve the guarantee for the repayment of the loan under this Agreement, the Pledgor will execute in good faith and cause other interested persons relating to the Right of Pledge to execute all right certificates and contracts required by the Pledgee and/or perform and cause other interested persons to perform the acts required by the Pledgee and facilitate the exercise of the rights and authority granted to the Pledgee under this Agreement.
|
5.4
|
The Pledgor undertakes to the Pledgee that he will execute all documents relating to any change in equity interest that is pledged with the Pledgee and any persons designated by it (natural persons/ legal persons) within a reasonable period.
|
5.5
|
The Pledgor undertakes to the Pledgee that for the purpose of the Pledgee’s benefits, he will comply with and perform all warranties, undertakings, agreements, representations and conditions. Where the Pledgor does not perform, in whole or in part, his warranties, undertakings, agreements, representations and conditions, the Pledgor shall compensate all losses suffered by the Pledgee arising therefrom.
|
6.
|
Event of Default
|
6.1
|
The following events shall be regarded as the Events of Default:
|
|
6.1.1
|
The Pledgor fails to perform his obligations under the Loan Agreement;
|
|
6.1.2
|
Any representation or warranty made by the Pledgor in Article 4 hereof contains misleading or false information that is material and/or the Pledgor breaches any warranty in Article 4 hereof;
|
|
6.1.3
|
The Pledgor breaches the undertakings under Article 5 hereof;
|
|
6.1.4
|
The Pledgor breaches any of the other provisions of this Agreement;
|
|
6.1.5
|
Any borrowing, guarantee, compensation, undertaking or other debt liabilities of the Pledgor (1) is required to be repaid or performed in advance due to a default; or (2) has been due but cannot be repaid or performed on time, which, in the opinion of the Pledgee, would have affected the ability of the Pledgor in performing his obligations under this Agreement;
|
|
6.1.6
|
Shenzhen Xinbao is incapable of repaying the general debts or other debts;
|
|
6.1.7
|
The properties owned by the Pledgor have significant adverse changes, which, in the opinion of the Pledgee, would have affected the ability of the Pledgor in performing his obligations under this Agreement;
|
6.2
|
If the Pledgor knows or finds that any matter stated in Article hereof or any event possibly resulting in any of the above matters has occurred, he shall immediately inform the Pledgee in writing.
|
6.3
|
Unless the Events of Default listed in this Article 6.1 has been resolved to the satisfactory of the Pledgee, the Pledgee may give a written Notice of Default to the Pledgor at any time when the Pledgor is in default or thereafter, requesting the Pledgor to immediately pay the outstanding debts and other payables under the Loan Agreement or requesting to dispose of the Right of Pledge according to Article 7 hereof.
|
7.
|
Exercise of the Right of Pledge
|
7.1
|
The Pledgor shall not transfer the Pledged Equity Interest before his obligations under the Loan Agreement have been fully performed and without the prior written consent of the Pledgee.
|
7.2
|
The Pledgee shall give a notice to the Pledgor when the Pledgee exercises the Right of Pledge.
|
7.3
|
Subject to Article 6.3, the Pledgee may exercise the Right of Pledge when it gives a Notice of Default in accordance with Article 6.3 or at any time thereafter.
|
7.4
|
The Pledgee shall be entitled to be first compensated from the money converted from, or the proceeds from auction or sale of, all or part of the equity interest hereunder in accordance with statutory procedures until the outstanding debts and all other payables of the Pledgor under the Loan Agreement are repaid.
|
7.5
|
When the Pledgee disposes of the Right of Pledge in accordance with this Agreement, the Pledgor shall not pose any obstacles, and shall give necessary assistance in this regard so that the Pledgee can realize its Right of Pledge.
|
8.
|
Assignment of this Agreement
|
8.1
|
The Pledgor shall have no right to transfer any of his rights and obligations under this Agreement without the prior consent of the Pledgee.
|
8.2
|
The Pledgee may, at any time and to the extent permitted by laws, transfer or assign all or any of its rights and obligations under the Loan Agreement to any person designated by it (natural person or legal person). In this case, such assignee shall have the same rights and obligations hereunder as those of the Pledgee as if the assignee is a party hereto. When the Pledgee transfers or assigns the rights and obligations under the Loan Agreement, only a written notice shall be given by the Pledgee to the Pledgor, and the Pledgor shall, at the request of the Pledgee, execute the relevant agreements and/or documents with respect to such transfer or assignment.
|
8.3
|
This Agreement shall be binding upon the Pledgor and his successors or heirs, and shall be valid and binding upon the Pledgee and each of its successors, heirs or permitted assigns.
|
9.
|
Termination
|
10.
|
Tax and Expenses
|
11.
|
Force Majeure
|
11.1
|
“Force Majeure” means any event that is beyond the reasonable control of either party and unavoidable or unpreventable and such event hinders, affects or delays any party to perform all or part of the obligations hereunder. Such events include but not limited to earthquake, typhoons, flood, fire and other disasters, wars, riots, strikes or any other similar events.
|
11.2
|
Both parties agree and acknowledge that the party who is affected by the “Force Majeure” and cannot perform this Agreement shall not constitute the default as set forth in Articles 6.1 hereto and shall not be required to assume any liabilities hereunder. However, the party who is affected by the “Force Majeure” shall inform the other party as soon as possible of the event and shall take appropriate measures to minimize or eliminate the impact of “Force Majeure”, and make endeavors to resume the performance of the obligations delayed or prevented by the “Force Majeure”. Both parties agree to make their best efforts to resume the performance of this Agreement once the “Force Majeure” is eliminated.
|
12.
|
Confidentiality
|
13.
|
Dispute Resolution
|
13.1
|
This Agreement shall be governed by and construed in accordance with the PRC laws.
|
13.2
|
Any dispute between the parties arising from the interpretation and performance of the provisions of this Agreement shall be settled by both parties in good faith through negotiations. In case no settlement can be reached by both parties, either party may refer such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with its arbitration rules then in effect. The seat of arbitration shall be Shenzhen and the language of proceedings shall be Chinese. The arbitral award shall be final and binding upon both parties.
|
14.
|
Integrity of this Agreement
|
15.
|
Severability of this Agreement
|
16.
|
Amendment or Supplement to this Agreement
|
16.1
|
The parties hereto may make amendments or supplements to this Agreement by written agreement. All amendment agreements and supplemental agreements in relation to this Agreement that are duly signed by both parties shall form an integral part of this Agreement, and shall have the same legal effect as this Agreement.
|
16.2
|
This Agreement and any amendments, supplements or changes thereof shall be in writing and will come into effect upon being executed and sealed by both parties hereto.
|
17.
|
Counterparts
|
1.
|
Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (hereinafter the “PRC”);
|
2.
|
Party C is a limited liability company incorporated in Shenzhen, the PRC;
|
3.
|
Party B is a shareholder of Party C. Party B holds 75% equity interest in Party C (hereinafter the “Equity Interest”);
|
4.
|
Party A and Party B signed the Loan Agreement on April 18, 2011, pursuant to which Party B will borrow a loan of Seven Million and Five Hundred Thousand Renminbi (RMB7,500,000) from Party A;
|
5.
|
Party A and Party B signed the Equity Pledge Agreement on April 18, 2011, pursuant to which Party B will pledge his Equity Interest in Party C as a guarantee for the loan under the Loan Agreement;
|
6.
|
Party B intends to grant an exclusive purchase option to Party A so that Party A may request Party B to sell his Equity Interest to it if certain conditions are met;
|
7.
|
Simultaneously with the execution hereof, Party A signed the Exclusive Purchase Option Agreements with Yuan Tian, another shareholder of Party C, pursuant to the terms similar to this Agreement. In accordance with the Exclusive Purchase Option Agreement, Yuan Tian will grant to Party A an exclusive purchase option for the purchase of his Equity Interest in Party C.
|
1.
|
Purchase and Sale of Equity Interest
|
1.1
|
Grant of Option
Party B hereby irrevocably grants to Party A an option to purchase or cause any person or persons designated by Party A (hereinafter the “Designee”) to purchase from Party B all or part of his Equity Interest in Party C (hereinafter the “Call Option”) at any time according to the steps determined by Party A at its own discretion to the extent permitted by PRC Laws and at the price specified in Article 1.3 of this Agreement. No Call Option shall be granted to any other third person other than Party A and/or the Designee. Party B shall not sell, offer to sell, transfer or offer as gift any Equity Interest to any other third person. Party C hereby agrees to the grant of the Call Option by Party B to Party A and/or the Designee. The “person” set forth in this Agreement includes an individual, corporation, joint venture, partnership, enterprise, trust or a non-corporate body.
|
1.2
|
Exercising Steps
Subject to the PRC laws and regulations, Party A and/or the Designee may exercise the Call Option by giving a written notice (hereinafter the “Equity Purchase Notice”) to Party B, which specifies the Equity Interest to be purchased from Party B (hereinafter the “Purchased Equity”) and the manner in which purchase is made.
|
1.3
|
Purchase Price
|
1.3.1
|
When Party A exercises the Call Option, the purchase price of the Purchased Equity (the “Purchase Price”) shall be equal to the actual capital contribution made by Party B for the Purchased Equity, unless an appraisal is required to be made in respect of the Equity Interest by applicable PRC laws and regulations then in effect or there are other restrictions imposed by such PRC laws and regulations on the price of Equity Interest.
|
1.3.2
|
If an appraisal is required to be made in respect of the Equity Interest by the PRC laws and regulations that are applicable at the time when Party A exercises its Call Option or there are other restrictions imposed by such PRC laws and regulation on the price of Equity Interest, the Parties agree that the Purchase Price shall be the lowest price permitted by applicable laws.
|
1.4
|
Transfer of the Purchased Equity
At each exercise of the Call Option:
|
1.4.1
|
Party B shall cause Party C to convene a shareholders’ meeting in a timely manner, during which a resolution approving the transfer by Party B of his Equity Interest to Party A and/or the Designee shall be passed;
|
1.4.2
|
Party B shall, pursuant to the requirements of this Agreement and the Equity Purchase Notice in connection with the Purchased Equity, enter into an equity transfer agreement with Party A and/or the Designee for each transfer;
|
1.4.3
|
Upon request by Party A ,Party B shall execute all other necessary contracts, agreements or documents, obtain all necessary government approvals and consents and take all necessary actions to grant the valid ownership of the Purchased Equity to Party A and/or the Designee without any security interest being attached thereto and cause Party A and/or the Designee to be the registered owner of the Purchased Equity. In this Article and this Agreement, “Security Interest” includes guarantee, mortgage, pledge, third party right or interest, any share option, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements, but excluding any security interest arising under the Equity Pledge Agreement.
|
1.5
|
Payment
The payment method of the Purchase Price shall be determined by Party A and/or the Designee and Party B through negotiation. The Parties hereby agree that any amount that is paid by Party A and/or the Designee to Party B with respect to the Purchased Equity shall be used to repay his loan principal under the Loan Agreement as well as the loan interest or fund utilization costs permitted by laws.
|
2.
|
Each Party’s Undertakings
|
2.1
|
Undertakings by Party B and Party C
|
2.1.1
|
Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change its registered capital structure in any way without Party A’s prior written consent;
|
2.1.2
|
To maintain the existence of Party C, and to operate the business of Party C prudently and effectively, subject to good financial and business rules and practices;
|
2.1.3
|
Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interests in any of Party C’s assets, business or income at any time after the signing of this Agreement without Party A’s prior written consent;
|
2.1.4
|
Not to create any liability, without Party A’s prior written consent, except (i) the liability arising from the usual or normal course of business, but not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in writing;
|
2.1.5
|
To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets;
|
2.1.6
|
Without the prior written consent of Party A, not to enter into any material agreement, other than the agreements in the normal course of business (for the purpose of this Agreement, an agreement will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000);
|
2.1.7
|
Without the prior written consent of Party A, not to provide loan or credit to any person;
|
2.1.8
|
To provide information concerning Party C’s operations and financial condition at Party A’s request;
|
2.1.9
|
To purchase and maintain the insurance at the insurance company acceptable to Party A, whose amount and type shall be the same as those of the insurance normally procured by the companies engaged in similar businesses and possessing similar properties or assets in the area where Party C is located;
|
2.1.10
|
Not to be merged or consolidated with, acquire or invest in, any other person without Party A’s prior written consent;
|
2.1.11
|
To inform promptly Party A of any existing or potential litigation, arbitration or administrative proceedings concerning Party C’s assets, business or income;
|
2.1.12
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;
|
2.1.13
|
Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute all or part of its distributable profits to Party A’s shareholders upon Party A’s request;
|
2.1.14
|
At the request of Party A, to appoint any person nominated by Party A as the director of Party C.
|
2.2
|
Undertakings by Party B
|
2.2.1
|
Not to sell, transfer, pledge or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interest in his Equity Interest at any time after the signing of this Agreement without Party A’s prior written consent, but except the right of pledge created on Party B’s Equity Interest in accordance with the Equity Pledge Agreement;
|
2.2.2
|
Without Party A’s prior written consent, not to vote for or support or execute at shareholders’ meetings of Party C any shareholders’ resolution approving the sale, transfer, mortgage or otherwise disposal of, or causing any other security interest to be created on, his legal or beneficial interest in the Equity Interest of Party C, except to Party A or its Designee;
|
2.2.3
|
Without Party A’s prior written consent, not to vote for or support or execute at shareholders’ meetings of Party C any resolution approving Party C to be merged or consolidated with, acquire or invest in, any person;
|
2.2.4
|
To irrevocably agree to the grant by Party C’s another shareholder, Yuan Tian, of an exclusive Call Option to Party A, and to irrevocably waive his preemptive right to such Equity Interest to be transferred by Yuan Tian to Party A;
|
2.2.5
|
To promptly inform Party A of any existing or potential litigation, arbitration or administrative proceedings with respect to his Equity Interest;
|
2.2.6
|
To cause the shareholders’ meeting of Party C to approve the transfer of the Purchased Equity under this Agreement;
|
2.2.7
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order to maintain the ownership over his Equity Interest;
|
2.2.8
|
At Party A’s request, to appoint any person nominated by Party A as the director of Party C;
|
2.2.9
|
To strictly comply with the provisions of this Agreement and other agreements entered into jointly or severally by and among Party B, Party C and Party A, to perform all obligations under these agreements and not to do any act/omission that affects or impairs the validity and enforceability of these agreements.
|
3.
|
Representations and Warranties
Party B and Party C hereby represent and warrant to Party A as follows:
|
3.1
|
They have the power to execute and deliver this Agreement. Once executed, this Agreement will constitute a legal, valid and binding obligation and shall be enforceable against them in accordance with the provisions thereof;
|
3.2
|
The execution, delivery and performance of this Agreement shall not: (i) violate any relevant PRC laws and regulations; (ii) conflict with their Articles of Association or other organizational documents; (iii) violate any contract or instrument to which they are a party or that binds upon them;
|
3.3
|
Party C has good and saleable ownership over all assets. Party C has not created any security interest on the above assets;
|
3.4
|
Party C has no outstanding debts, except debts arising from its normal course of business; and debts disclosed to Party A and approved by Party A in writing;
|
3.5
|
Currently, there are no existing, pending or threatened litigation, arbitration or administrative proceedings related to the Equity Interest or Party C’s assets; and
|
3.6
|
Party B has good and saleable ownership over all his Equity Interest and has not created any security interest on such Equity Interest, but excluding the security interest under the Equity Pledge Agreement.
|
4.
|
Assignment of this Agreement
|
4.1
|
Party B and Party C shall not transfer any of their rights and obligations under this Agreement to any third party without the prior written consent of Party A.
|
4.2
|
Party B and Party C hereby agree that Party A shall have the right to transfer all of its rights and obligations under this Agreement to other third parties when necessary. Party A shall only be required to serve written notice to Party B and Party C when such transfer is made, and no consent shall be further required from Party B and Party C in respect of such transfer.
|
5.
|
Effectiveness and Term
|
5.1
|
This Agreement shall become effective as of the date first above written.
|
5.2
|
The term of this Agreement shall be ten (10) years unless it is early terminated in accordance with the provisions of this Agreement or the relevant agreements separately signed by the Parties. The term of this Agreement may be extended with the written confirmation of Party A before its expiration. The extension thereof shall be agreed upon by the Parties through negotiation.
|
5.3
|
If the operation term (including any extension thereof) of Party A or Party C expires or terminates for other reasons within the term set forth in the preceding Article, this Agreement shall be terminated at the time of the termination of such Party, unless Party A has transferred its rights and obligations in accordance with Article 4.2 hereof.
|
6.
|
Applicable Law and Dispute Resolution
|
6.1
|
Applicable Law
The formation, validity, interpretation and performance of and settlement of disputes under this Agreement shall be protected and governed by the laws of PRC.
|
6.2
|
Dispute Resolution
Any dispute arising from the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties through amicable negotiation. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolution through negotiation, either party may refer such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with its arbitration rules then in effect. The seat of arbitration shall be Shenzhen and the language of proceedings shall be Chinese. The arbitral award shall be final and binding upon the Parties.
|
7.
|
Taxes and Expenses
Every Party shall bear any and all taxes, expenses and charges incurred by or levied on it in connection with the execution and performance of this Agreement.
|
8.
|
Confidentiality
The Parties agree and acknowledge that any oral or written information exchanged between them in connection with this Agreement shall be confidential information. Each Party shall keep confidential all such information, and shall not disclose any of the information to any third party without the prior written consent of the other Party, except for the following:
|
(a)
|
the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party);
|
(b)
|
the information required to be disclosed by applicable laws or stock exchange’s rules or regulations; or
|
(c)
|
the information required to be disclosed by either Party to his/its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those stated in this Article.
|
9.
|
Miscellaneous
|
9.1
|
Amendment, Modification and Supplement
The Parties may make amendments or supplements to this Agreement by written agreement. All amendment agreements and supplemental agreements to this Agreement that are duly signed by the Parties shall form an integral part of this Agreement, and shall have the same legal effect as this Agreement.
|
9.2
|
Integrity of this Agreement
The Parties acknowledge this Agreement constitutes the entire representations and agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral and/or written representations, warranties, understandings and agreements reached by the Parties made before the execution of the Agreement with respect to the subject matter hereof.
|
9.3
|
Severability of this Agreement
If any provision or provisions of this Agreement is/are held to be invalid or unenforceable or violate(s) any applicable laws, the validity, legality and enforceability of the other provisions hereof shall not be affected.
|
9.4
|
Language and Counterparts
This Agreement is executed in Chinese in four (4) originals and each Party shall hold one original. All of the originals shall have the same legal effect.
|
9.5
|
Successors
This Agreement shall be binding upon the respective successors or heirs of the Parties and the permitted assignees of such Parties.
|
9.6
|
Survival
Any obligations that occur or are due as a result of this Agreement before the expiration or early termination of this Agreement shall survive the expiration or early termination hereof. The provisions of Articles 6 and 8 hereof shall survive the termination of this Agreement.
|
/s/ Chunlin Wang
Chunlin Wang
April 18, 2011
|
1.
|
A Loan Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party A agreed to grant an interest-free loan in an amount of Seven Million and Five Hundred Thousand Renminbi (RMB7,500,000) to Party B (“Loan”).
|
2.
|
An Equity Pledge Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party B agreed to pledge all of his 75% equity interest in Party C to Party A as a security pledge for the Loan under the Loan Agreement..
|
3.
|
An Exclusive Purchase Option Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party B agreed to grant an exclusive purchase option to Party A so that Party A may request Party B to sell his equity interest in Party C to it if certain conditions are met.
|
4.
|
On March 6, 2013, upon unanimous approval of shareholders of Party C, the registered capital of Party C was decreased from RMB10 million to RMB8 million. As a result, Party B holds 93.75% of equity interest in Party C.
|
1.
|
Loan
|
2.
|
Equity Pledge
|
3.
|
Exclusive Purchase Option
|
4.
|
Validity
|
5.
|
Language and Counterparts
|
1.
|
Party A is a wholly foreign-owned enterprise duly incorporated under the laws of the People’s Republic of China (the “PRC”);
|
2.
|
Party B is a Chinese citizen and holds 5% equity interest in Shenzhen Xinbao Investment Management Co., Ltd. (“ Shenzhen Xinbao”);
|
3.
|
Party B desires to borrow a loan from Party A by pledging its equity interest in Shenzhen Xinbao, and Party A agrees to extend a loan in an amount of Five Hundred Thousand Renminbi (RMB500,000) to Party B.
|
1.
|
In accordance with the terms and conditions of this Agreement, Party A agrees to grant an interest-free loan in an amount of Five Hundred Thousand Renminbi (RMB500,000) to Party B, and Party B agrees to accept such loan.
|
2.
|
The term of the loan under this Agreement shall start from the date when the loan is withdrawn until ten (10) years after signing this Agreement, and may be extended subject to the mutual agreement between both parties. During the loan term or any extension thereof, Party A shall have the right, by giving written notice to Party B, to decide that the loan under this Agreement is due immediately and request Party B to repay the loan in the manner as specified herein if Party B has any of the following circumstances:
|
2.1
|
Party B resigns from or is dismissed by Party A or any of its affiliates;
|
2.2
|
Party B dies or loses its civil capacity or its capacity for civil conduct is restricted;
|
2.3
|
Party B commits a crime or is involved in a crime;
|
2.4
|
Any other third party claims more than One Hundred Thousand Renminbi (RMB100,000) against Party B; or
|
2.5
|
Party A has given to Party B a written notice regarding the purchase of Party B’s equity interest in Shenzhen Xinbao according to the provisions of the “Exclusive Purchase Option Agreement” as set forth in Article 3 hereof to exercise its call option.
|
3.
|
Both parties hereby agree and acknowledge that, subject to the permission of and to the extent permitted by the PRC laws, Party A shall be entitled but not obliged to, at any time, purchase, or designate other person (including natural person, legal person or any other entity), to purchase all or part of the equity interest held by Party B in Shenzhen Xinbao (the “Call Option”), provided, however, that Party A gives a written notice about equity purchase to Party B. Once such written notice about exercising the Call Option is given by Party A, Party B shall, according to Party A’s intention and instructions, transfer its equity interest in Shenzhen Xinbao to Party A or other person designated by Party A at its original investment price (the “Original Investment Price”) or if otherwise specified by laws, at another price agreed upon by Party A. Both parties hereby agree and acknowledge that when Party A exercises the Call Option, if the lowest equity price permitted by the applicable laws and regulations then in effect is higher than the Original Investment Price, the purchase price for Party A or its designee shall be the lowest price permitted by laws. Both parties agree to execute the “Exclusive Purchase Option Agreement” with respect thereto.
|
4.
|
Both parties hereby agree and acknowledge that Party B shall repay the loan in the manner as given below only: when the loan is due, Party B (or any of its successors, heirs or assignees) shall, at Party A’s written request, transfer its equity interest in Shenzhen Xinbao to Party A or its designee subject to the permission of the PRC laws, and shall use the proceeds from such equity transfer to repay the loan under this Agreement.
|
5.
|
Both parties hereby agree and acknowledge that except as otherwise provided for herein, the loan under this Agreement is interest-free. But when the loan is due and Party B needs to transfer its equity interest hereunder to Party A or its designee, if the actual equity transfer price is higher than Party B’s loan principal, due to legal requirements or other reasons, the excess shall be deemed as loan interest or fund utilization costs to the extent permitted by laws, and shall paid to Party A together with loan principal.
|
6.
|
Both parties hereby agree and acknowledge that Party B’s obligations under this Agreement are deemed to be fully performed only if all the following conditions are met:
|
6.1
|
Party B has transferred all its equity interest in Shenzhen Xinbao to Party A and/or its designee; and
|
6.2
|
Party B has paid to Party A as loan repayment all proceeds from equity transfer or the maximum amount permitted by laws (including principal and the highest loan interest permitted by applicable laws then in force).
|
7.
|
To secure the performance of the debts under this Agreement, Party B agrees to pledge all its equity interest in Shenzhen Xinbao to Party A (the “Equity Pledge”). Both parties agree to execute an “Equity Pledge Agreement” with respect thereto.
|
8.
|
As of the execution date of this Agreement, Party A hereby represents and warrants to Party B that:
|
8.1
|
Party A is a wholly foreign-owned enterprise incorporated and validly existing under the PRC laws;
|
8.2
|
Party A has the authority to execute and perform this Agreement. The execution and performance by Party A of this Agreement comply with its business scope, articles of association or other organizational documents, and Party A has obtained all necessary and appropriate approvals and authorizations with respect to the execution and performance of this Agreement;
|
8.3
|
The execution and performance of this Agreement by Party A do not violate any laws, regulations, government approvals, authorizations, notices or other government documents binding upon or influencing it, any agreement signed by it with any third party or any undertaking made by it to any third party; and
|
8.4
|
Once executed, this Agreement constitutes a legal, valid and binding obligation of Party A, enforceable against Party A in accordance with its provisions.
|
9.
|
From the execution date of this Agreement until the termination hereof, Party B hereby represents and warrants to Party A that:
|
9.1
|
Shenzhen Xinbao is a limited liability company incorporated and validly existing under the PRC laws, whose registered capital has been paid up and which has obtained capital verification report issued by a qualified accounting firm. Shenzhen Xinbao has completed all government approvals, authorizations, licenses, registrations, filing, etc necessary to carry out the business activities within its business scope and to possess its assets;
|
9.2
|
Party B legally owns 5% equity interest in Shenzhen Xinbao;
|
9.3
|
Party B has the authority to execute and perform this Agreement. The execution and performance by Party B of this Agreement comply with the articles of association or other organizational documents of Shenzhen Xinbao, and Party B has obtained all necessary and appropriate approvals and authorizations with respect to the execution and performance of this Agreement;
|
9.4
|
The execution and performance of this Agreement by Party B do not violate any laws, regulations, government approvals, authorizations, notices or other government documents binding upon or influencing it, any agreement signed by it with any third party or any undertaking made by it to any third party;
|
9.5
|
Once executed, this Agreement constitutes a legal, valid and binding obligation of Party B, enforceable against Party B in accordance with its provisions;
|
9.6
|
Except for the provisions stipulated in the “Equity Pledge Agreement” and “Exclusive Purchase Option Agreements”, Party B has not mortgaged, pledged or otherwise encumbered its equity interest in Shenzhen Xinbao, given an offer about the transfer of such equity interest to any third party, made any commitment about the offer of any third party to purchase its equity interest, or executed any agreement with any third party to transfer its equity interest in Shenzhen Xinbao;
|
9.7
|
There are no existing or potential disputes, litigations, arbitrations, administrative proceedings or other legal proceedings in connection with Party B’s equity interest in Shenzhen Xinbao.
|
10.
|
Party B covenants that it shall, during the term of this Agreement:
|
10.1
|
Without Party A’s prior written consent, not sell, transfer, mortgage or otherwise dispose of or cause any other security interest to be created on its equity interest or other interests in Shenzhen Xinbao, except for the equity pledge and other rights created for the benefit of Party A;
|
10.2
|
Without Party A’s prior written consent, not vote for or support or execute at the shareholders’ meetings of Shenzhen Xinbao any shareholders’ resolution approving the sale, transfer, mortgage or otherwise disposal of, or causing any other security interest to be created on, its legal or beneficial interest in the equity interest of Shenzhen Xinbao;
|
10.3
|
Without Party A’s prior written consent, not vote for or support or execute at the shareholders’ meetings of Shenzhen Xinbao any resolution approving Shenzhen Xinbao to be merged or consolidated with, acquire or invest in, any person;
|
10.4
|
Promptly inform Party A of any existing or potential litigation, arbitration or administrative proceedings relating to Party B’s equity interest in Shenzhen Xinbao;
|
10.5
|
Execute all necessary or appropriate documents, take all necessary or appropriate actions and bring all necessary or appropriate lawsuits or make all necessary and appropriate defenses against all claims in order to maintain the ownership over its equity interest in Shenzhen Xinbao;
|
10.6
|
Not do any act and/or omission that may materially affect the assets, business and liabilities of Shenzhen Xinbao without Party A’s prior written consent;
|
10.7
|
At Party A’s request, appoint any person nominated by Party A as the director of Shenzhen Xinbao;
|
10.8
|
When Party A exercises its Call Option described herein, transfer all of Party B’s equity interest in Shenzhen Xinbao promptly and unconditionally to Party A and/or its designee subject to the permission of and to the extent permitted by the PRC laws;
|
10.9
|
Not request Shenzhen Xinbao to distribute dividends or profits to it;
|
10.10
|
In case its equity interest in Shenzhen Xinbao is transferred to Party A or its designee, Party B will, subject to compliance with legal requirements, pay all equity transfer proceeds to Party A as the loan principal and as the loan interests or fund utilization costs permitted by laws;
|
10.11
|
Comply strictly with the provisions of this Agreement, fully perform its obligations under this Agreement and not do any act/omission that affects or impairs the validity and enforceability of this Agreement.
|
11.
|
Party B undertakes that within the term of this Agreement, it will, in the capacity of the shareholder of Shenzhen Xinbao, cause Shenzhen Xinbao:
|
11.1
|
Not to supplement, amend or modify its articles of association in any way, or to increase or decrease its registered capital, or to change its capital structure in any way without Party A’s prior written consent;
|
11.2
|
To maintain its existence, and to operate its business and deal with matters prudently and effectively, subject to good financial and business rules and practices;
|
11.3
|
Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interests in any of its assets, business or income at any time after the signing of this Agreement without Party A’s prior written consent;
|
11.4
|
Not to create any liability, without Party A’s prior written consent, except (i) the liability arising from the normal course of business, but not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in writing;
|
11.5
|
To operate persistently all the business in the normal course of business to maintain the value of its assets;
|
11.6
|
Not to execute any material contracts (a contract will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000)), without Party A’s prior written consent, other than those executed during the normal course of business;
|
11.7
|
To provide information concerning all of its operations and financial performance at Party A’s request;
|
11.8
|
Not to be merged or consolidated with, acquire or invest in, any other person without Party A’s prior written consent;
|
11.9
|
Not to distribute dividends to each shareholder in any way without Party A’s prior written consent. However, Shenzhen Xinbao shall promptly distribute all its distributable profits to Party A’s shareholders upon Party A’s request;
|
11.10
|
To inform promptly Party A of any existing or potential litigation, arbitration or administrative proceedings concerning its assets, business or income;
|
11.11
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate lawsuits or to make all necessary and appropriate defenses against all claims in order to maintain the ownership over all its assets;
|
11.12
|
To comply strictly with the agreements with respect to the technological support and consulting services (the “Service Agreements”) and other agreements executed by it with Party A’s affiliates, to perform its obligations under the Service Agreements and other agreements, and not to do any act/omission that affects the validity and enforceability of such agreements.
|
12.
|
This Agreement shall be binding on and inure to the benefit of both parties hereto and their respective successors, heirs and permitted assignees. Without the prior written approval of Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, benefits or obligations under this Agreement.
|
13.
|
Party B hereby agrees that Party A may assign its rights and obligations under this Agreement to any other third parties when necessary. Party A shall only be required to notify Party B in writing when such transfer occurs and no further consent from Party B shall be needed in respect of the transfer.
|
14.
|
The formation, validity, interpretation, performance, amendment and termination of and resolution of disputes in connection with this Agreement shall be governed by the PRC laws.
|
15.
|
Arbitration
|
15.1
|
Any dispute, controversy or claim arising from the interpretation and performance in connection with this Agreement (including any question regarding its existence, validity or termination) shall be settled by both parties through friendly consultations. In case no settlement can be reached within thirty (30) days after one party makes a request for settlement, either party may submit such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with its arbitration rules then in effect at the time of applying for arbitration. The arbitration award shall be final and binding upon both parties;
|
15.2
|
The seat of arbitration shall be Shenzhen;
|
15.3
|
The language of arbitration proceedings shall be Chinese.
|
16.
|
This Agreement shall be formed on its signing date. This Agreement shall be effective as of the date on which the loan is released until both parties have performed their obligations under this Agreement.
|
17.
|
Party B shall not terminate or revoke this Agreement unless Party A commits a gross negligence, fraud or other material illegal acts; or Party A goes bankrupt.
|
18.
|
This Agreement shall not be amended or modified except with the written consent of both parties. In case of anything not covered herein, both parties may make supplements hereto by signing a written agreement. Any amendment, modification, supplement or annex to this Agreement shall form an integral part of this Agreement.
|
19.
|
This Agreement constitutes the entire agreement between both parties with respect to the transactions contemplated herein and supersedes all prior oral discussions or written agreements reached by both parties with respect to the transactions mentioned above.
|
20.
|
This Agreement is severable. If any provision of this Agreement is held to be invalid or unenforceable, such provision shall not affect the validity and enforceability of the remainder of this Agreement.
|
21.
|
Each party hereto shall keep in strict confidence the information concerning the other party’s business, operation, financial performance or other confidential data obtained under this Agreement or during the performance of this Agreement.
|
22.
|
Any obligation arising out of this Agreement or that is due before the expiration or early termination of this Agreement shall survive such expiration or early termination. Articles 14, 15 and 21 hereof shall survive the termination of this Agreement.
|
23.
|
This Agreement is executed in four originals, with each of Party A and Party B holding one original. All originals have the same legal effect.
|
1.
|
Party A is a wholly foreign-owned enterprise incorporated in the People’s Republic of China (hereinafter the “PRC”).
|
2.
|
Party B is a citizen of the PRC and holds 5% equity interest (“Pledged Equity Interest”) in Shenzhen Xinbao Investment Management Co., Ltd. (hereinafter “Shenzhen Xinbao”), a limited liability company incorporated in Shenzhen, China.
|
3.
|
Party A and Party B signed the Loan Agreement on Aril 18, 2011, pursuant to which, Party A will provide an interest-free loan in the total amount of Five Hundred Thousand Renminbi (RMB500,000) (hereinafter the “Loan”) to Party B, and Party B will provide the Pledged Equity Interest to Party A as a guarantee for the Loan.
|
1.
|
Right of Pledge
The Pledgor pledges all of his Pledged Equity Interest in Shenzhen Xinbao to the Pledgee as a guarantee for all of his liabilities under the Loan Agreement. The “Right of Pledge” refers to the right owned by the Pledgee to be first compensated from the money converted from, or the proceeds from the auction or sale of, such equity interest pledged by the Pledgor to the Pledgee.
|
2.
|
Registration of Pledge
|
2.1
|
Within one (1) week after the signing of this Agreement, the Pledgor shall cause Shenzhen Xinbao to record the Pledgee’s Right of Pledge over his Pledged Equity Interest in the register of shareholders and deliver the copy of the register of shareholders bearing the common seal of Shenzhen Xinbao, as well as the original of equity contribution certificate of Shenzhen Xinbao to the Pledgee for safe-keeping.
|
2.2
|
Both parties agree that if conditions permit, they will make their best effort to file, and cause the pledge under this Agreement to be filed, with the industrial and commercial administrative department in the place where Shenzhen Xinbao is registered, but both parties confirm that unless compulsorily stipulated by the PRC laws and regulations, whether this Agreement is filed as above or not will not affect the validity of this Agreement.
|
3.
|
Rights of the Pledgee
|
3.1
|
Where the Pledgor does not perform his liabilities, the Pledgee shall be entitled to be first compensated from the money converted from, or the proceeds from the auction or sale of, such Pledged Equity Interest.
|
3.2
|
The Pledgee shall be entitled to the bonus arising from the Pledged Equity Interest.
|
4.
|
Representation and Warranty of the Pledgor
|
4.1
|
The Pledgor is the legal owner of the Pledged Equity Interest.
|
4.2
|
Except for the interest of the Pledgee, the Pledgor has not created other pledges or any other kinds of rights over the Pledged Equity Interest.
|
4.3
|
The pledge of the equity interest by the Pledgor has obtained the consent of the other shareholders of Shenzhen Xinbao, and other shareholders have unanimously agreed that they will give up the exercise of their respective preemptive right when the Pledgee actually exercises the Right of Pledge.
|
5.
|
Undertakings by the Pledgor
|
5.1
|
During the term of this Agreement, the Pledgor undertakes to the Pledgee for the benefit of the Pledgee that he will:
|
5.1.1
|
Not transfer or dispose of the Pledged Equity Interest, nor create or cause to be created any pledge (except the pledge pursuant to this Agreement) on the Pledged Equity Interest without the prior written consent of the Pledgee.
|
5.1.3
|
Timely notify the Pledgee of any events or any received notices which may affect the Pledgor’s right over the Pledged Equity Interest or any part thereof, or may change the Pledgor’s any warranty and obligation under this Agreement or may have effects on it.
|
5.2
|
The Pledgor agrees that the Pledgee’s right to exercise the Right of Pledge obtained pursuant to this Agreement shall not be interrupted or hindered by the Pledgor or any of its successors or principals or any other person through legal proceedings.
|
5.3
|
The Pledgor undertakes to the Pledgee that in order to protect or improve the guarantee for the repayment of the loan under this Agreement, the Pledgor will execute in good faith and cause other interested persons relating to the Right of Pledge to execute all right certificates and contracts required by the Pledgee and/or perform and cause other interested persons to perform the acts required by the Pledgee and facilitate the exercise of the rights and authority granted to the Pledgee under this Agreement.
|
5.4
|
The Pledgor undertakes to the Pledgee that he will execute all documents relating to any change in equity interest that is pledged with the Pledgee and any persons designated by it (natural persons/ legal persons) within a reasonable period.
|
5.5
|
The Pledgor undertakes to the Pledgee that for the purpose of the Pledgee’s benefits, he will comply with and perform all warranties, undertakings, agreements, representations and conditions. Where the Pledgor does not perform, in whole or in part, his warranties, undertakings, agreements, representations and conditions, the Pledgor shall compensate all losses suffered by the Pledgee arising therefrom.
|
6.
|
Event of Default
|
6.1
|
The following events shall be regarded as the Events of Default:
|
6.1.1
|
The Pledgor fails to perform his obligations under the Loan Agreement;
|
6.1.2
|
Any representation or warranty made by the Pledgor in Article 4 hereof contains misleading or false information that is material and/or the Pledgor breaches any warranty in Article 4 hereof;
|
6.1.3
|
The Pledgor breaches the undertakings under Article 5 hereof;
|
6.1.4
|
The Pledgor breaches any of the other provisions of this Agreement;
|
6.1.5
|
Any borrowing, guarantee, compensation, undertaking or other debt liabilities of the Pledgor (1) is required to be repaid or performed in advance due to a default; or (2) has been due but cannot be repaid or performed on time, which, in the opinion of the Pledgee, would have affected the ability of the Pledgor in performing his obligations under this Agreement;
|
6.1.6
|
Shenzhen Xinbao is incapable of repaying the general debts or other debts;
|
6.1.7
|
The properties owned by the Pledgor have significant adverse changes, which, in the opinion of the Pledgee, would have affected the ability of the Pledgor in performing his obligations under this Agreement;
|
6.2
|
If the Pledgor knows or finds that any matter stated in Article hereof or any event possibly resulting in any of the above matters has occurred, he shall immediately inform the Pledgee in writing.
|
6.3
|
Unless the Events of Default listed in this Article 6.1 has been resolved to the satisfactory of the Pledgee, the Pledgee may give a written Notice of Default to the Pledgor at any time when the Pledgor is in default or thereafter, requesting the Pledgor to immediately pay the outstanding debts and other payables under the Loan Agreement or requesting to dispose of the Right of Pledge according to Article 7 hereof.
|
7.
|
Exercise of the Right of Pledge
|
7.1
|
The Pledgor shall not transfer the Pledged Equity Interest before his obligations under the Loan Agreement have been fully performed and without the prior written consent of the Pledgee.
|
7.2
|
The Pledgee shall give a notice to the Pledgor when the Pledgee exercises the Right of Pledge.
|
7.3
|
Subject to Article 6.3, the Pledgee may exercise the Right of Pledge when it gives a Notice of Default in accordance with Article 6.3 or at any time thereafter.
|
7.4
|
The Pledgee shall be entitled to be first compensated from the money converted from, or the proceeds from auction or sale of, all or part of the equity interest hereunder in accordance with statutory procedures until the outstanding debts and all other payables of the Pledgor under the Loan Agreement are repaid.
|
7.5
|
When the Pledgee disposes of the Right of Pledge in accordance with this Agreement, the Pledgor shall not pose any obstacles, and shall give necessary assistance in this regard so that the Pledgee can realize its Right of Pledge.
|
8.
|
Assignment of this Agreement
|
8.1
|
The Pledgor shall have no right to transfer any of his rights and obligations under this Agreement without the prior consent of the Pledgee.
|
8.2
|
The Pledgee may, at any time and to the extent permitted by laws, transfer or assign all or any of its rights and obligations under the Loan Agreement to any person designated by it (natural person or legal person). In this case, such assignee shall have the same rights and obligations hereunder as those of the Pledgee as if the assignee is a party hereto. When the Pledgee transfers or assigns the rights and obligations under the Loan Agreement, only a written notice shall be given by the Pledgee to the Pledgor, and the Pledgor shall, at the request of the Pledgee, execute the relevant agreements and/or documents with respect to such transfer or assignment.
|
8.3
|
This Agreement shall be binding upon the Pledgor and his successors or heirs, and shall be valid and binding upon the Pledgee and each of its successors, heirs or permitted assigns.
|
9.
|
Termination
This Agreement shall be terminated when the Loan under the Loan Agreement is paid off and the Pledgor ceases to undertake any obligations under the Loan Agreement, and the Pledgee shall, within the earliest reasonable and practicable time, offer assistance to complete necessary formalities so as to discharge the pledge of the Equity Interest.
|
10.
|
Tax and Expenses
The Pledgee shall be responsible for all the fees and actual expenses in relation to this Agreement, including but not limited to legal fees, cost of production, stamp tax and any other taxes and charges. If the Pledgee shall pay the relevant taxes in accordance with the laws, it shall compensate all such taxes paid by the Pledgor.
|
11.
|
Force Majeure
|
11.1
|
“Force Majeure” means any event that is beyond the reasonable control of either party and unavoidable or unpreventable and such event hinders, affects or delays any party to perform all or part of the obligations hereunder. Such events include but not limited to earthquake, typhoons, flood, fire and other disasters, wars, riots, strikes or any other similar events.
|
11.2
|
Both parties agree and acknowledge that the party who is affected by the “Force Majeure” and cannot perform this Agreement shall not constitute the default as set forth in Articles 6.1 hereto and shall not be required to assume any liabilities hereunder. However, the party who is affected by the “Force Majeure” shall inform the other party as soon as possible of the event and shall take appropriate measures to minimize or eliminate the impact of “Force Majeure”, and make endeavors to resume the performance of the obligations delayed or prevented by the “Force Majeure”. Both parties agree to make their best efforts to resume the performance of this Agreement once the “Force Majeure” is eliminated.
|
12.
|
Confidentiality
Both parties agree and acknowledge that any oral or written information exchanged between them in connection with this Agreement shall be confidential information. Each party shall keep confidential all such information, and shall not disclose any of the information to any third party without the prior written consent of the other party, except for the following: (a) the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party); (b) the information required to be disclosed by applicable laws or stock exchange’s rules or regulations; or (c) the information required to be disclosed by either party to his/its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those stated in this Article. Any divulgence of confidential information by any personnel of either party or any institutions engaged by him/it shall be deemed as the divulgence of confidential information by such party, and such party shall be liable for the breach pursuant to this Agreement.
|
13.
|
Dispute Resolution
|
13.1
|
This Agreement shall be governed by and construed in accordance with the PRC laws.
|
13.2
|
Any dispute between the parties arising from the interpretation and performance of the provisions of this Agreement shall be settled by both parties in good faith through negotiations. In case no settlement can be reached by both parties, either party may refer such dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with its arbitration rules then in effect. The seat of arbitration shall be Shenzhen and the language of proceedings shall be Chinese. The arbitral award shall be final and binding upon both parties.
|
14.
|
Integrity of this Agreement
This Agreement constitutes the entire representations and agreement between both parties with respect to the subject matter thereof and supersedes and replaces all prior oral and/or written representations, warranties, understandings and agreements reached by both parties made before the execution of the Agreement with respect to the subject matter thereof.
|
15.
|
Severability of this Agreement
Should any provision of this Agreement be held invalid or unenforceable for any reasons, or violates any applicable laws, such provision shall not affect the legal effect of the other provisions hereof.
|
16.
|
Amendment or Supplement to this Agreement
|
16.1
|
The parties hereto may make amendments or supplements to this Agreement by written agreement. All amendment agreements and supplemental agreements in relation to this Agreement that are duly signed by both parties shall form an integral part of this Agreement, and shall have the same legal effect as this Agreement.
|
16.2
|
This Agreement and any amendments, supplements or changes thereof shall be in writing and will come into effect upon being executed and sealed by both parties hereto.
|
17.
|
Counterparts
This Agreement is executed in five originals in Chinese. Each of Party A and Party B shall hold one original, one original shall be held by Shenzhen Xinbao for filing and the other originals shall be provided for approval by or filing with the relevant authorities. Each original shall have the same legal effect.
|
1.
|
Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (hereinafter the “PRC”);
|
2.
|
Party C is a limited liability company incorporated in Shenzhen, the PRC;
|
3.
|
Party B is a shareholder of Party C. Party B holds 5% equity interest in Party C (hereinafter the “Equity Interest”);
|
4.
|
Party A and Party B signed the Loan Agreement on April 18, 2011, pursuant to which Party B will borrow a loan of Five Hundred Thousand Renminbi (RMB500,000) from Party A;
|
5.
|
Party A and Party B signed the Equity Pledge Agreement on April 18, 2011, pursuant to which Party B will pledge his Equity Interest in Party C as a guarantee for the loan under the Loan Agreement;
|
6.
|
Party B intends to grant an exclusive purchase option to Party A so that Party A may request Party B to sell his Equity Interest to it if certain conditions are met;
|
7.
|
Simultaneously with the execution hereof, Party A signed the Exclusive Purchase Option Agreements with Chunlin Wang, another shareholder of Party C, pursuant to the terms similar to this Agreement. In accordance with the Exclusive Purchase Option Agreement, Chunlin Wang will grant to Party A an exclusive purchase option for the purchase of his Equity Interest in Party C.
|
1.
|
Purchase and Sale of Equity Interest
|
1.1
|
Grant of Option
Party B hereby irrevocably grants to Party A an option to purchase or cause any person or persons designated by Party A (hereinafter the “Designee”) to purchase from Party B all or part of his Equity Interest in Party C (hereinafter the “Call Option”) at any time according to the steps determined by Party A at its own discretion to the extent permitted by PRC Laws and at the price specified in Article 1.3 of this Agreement. No Call Option shall be granted to any other third person other than Party A and/or the Designee. Party B shall not sell, offer to sell, transfer or offer as gift any Equity Interest to any other third person. Party C hereby agrees to the grant of the Call Option by Party B to Party A and/or the Designee. The “person” set forth in this Agreement includes an individual, corporation, joint venture, partnership, enterprise, trust or a non-corporate body.
|
1.2
|
Exercising Steps
Subject to the PRC laws and regulations, Party A and/or the Designee may exercise the Call Option by giving a written notice (hereinafter the “Equity Purchase Notice”) to Party B, which specifies the Equity Interest to be purchased from Party B (hereinafter the “Purchased Equity”) and the manner in which purchase is made.
|
1.3
|
Purchase Price
|
1.3.1
|
When Party A exercises the Call Option, the purchase price of the Purchased Equity (the “Purchase Price”) shall be equal to the actual capital contribution made by Party B for the Purchased Equity, unless an appraisal is required to be made in respect of the Equity Interest by applicable PRC laws and regulations then in effect or there are other restrictions imposed by such PRC laws and regulations on the price of Equity Interest.
|
1.3.2
|
If an appraisal is required to be made in respect of the Equity Interest by the PRC laws and regulations that are applicable at the time when Party A exercises its Call Option or there are other restrictions imposed by such PRC laws and regulation on the price of Equity Interest, the Parties agree that the Purchase Price shall be the lowest price permitted by applicable laws.
|
1.4
|
Transfer of the Purchased Equity
At each exercise of the Call Option:
|
1.4.1
|
Party B shall cause Party C to convene a shareholders’ meeting in a timely manner, during which a resolution approving the transfer by Party B of his Equity Interest to Party A and/or the Designee shall be passed;
|
1.4.2
|
Party B shall, pursuant to the requirements of this Agreement and the Equity Purchase Notice in connection with the Purchased Equity, enter into an equity transfer agreement with Party A and/or the Designee for each transfer;
|
1.4.3
|
Upon request by Party A ,Party B shall execute all other necessary contracts, agreements or documents, obtain all necessary government approvals and consents and take all necessary actions to grant the valid ownership of the Purchased Equity to Party A and/or the Designee without any security interest being attached thereto and cause Party A and/or the Designee to be the registered owner of the Purchased Equity. In this Article and this Agreement, “Security Interest” includes guarantee, mortgage, pledge, third party right or interest, any share option, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements, but excluding any security interest arising under the Equity Pledge Agreement.
|
1.5
|
Payment
The payment method of the Purchase Price shall be determined by Party A and/or the Designee and Party B through negotiation. The Parties hereby agree that any amount that is paid by Party A and/or the Designee to Party B with respect to the Purchased Equity shall be used to repay his loan principal under the Loan Agreement as well as the loan interest or fund utilization costs permitted by laws.
|
2.
|
Each Party’s Undertakings
|
2.1
|
Undertakings by Party B and Party C
|
2.1.1
|
Not to supplement, amend or modify Party C’s articles of association in any way, or to increase or decrease its registered capital, or to change its registered capital structure in any way without Party A’s prior written consent;
|
2.1.2
|
To maintain the existence of Party C, and to operate the business of Party C prudently and effectively, subject to good financial and business rules and practices;
|
2.1.3
|
Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interests in any of Party C’s assets, business or income at any time after the signing of this Agreement without Party A’s prior written consent;
|
2.1.4
|
Not to create any liability, without Party A’s prior written consent, except (i) the liability arising from the usual or normal course of business, but not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in writing;
|
2.1.5
|
To operate persistently all the business in the normal course of business to maintain the value of Party C’s assets;
|
2.1.6
|
Without the prior written consent of Party A, not to enter into any material agreement, other than the agreements in the normal course of business (for the purpose of this Agreement, an agreement will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000);
|
2.1.7
|
Without the prior written consent of Party A, not to provide loan or credit to any person;
|
2.1.8
|
To provide information concerning Party C’s operations and financial condition at Party A’s request;
|
2.1.9
|
To purchase and maintain the insurance at the insurance company acceptable to Party A, whose amount and type shall be the same as those of the insurance normally procured by the companies engaged in similar businesses and possessing similar properties or assets in the area where Party C is located;
|
2.1.10
|
Not to be merged or consolidated with, acquire or invest in, any other person without Party A’s prior written consent;
|
2.1.11
|
To inform promptly Party A of any existing or potential litigation, arbitration or administrative proceedings concerning Party C’s assets, business or income;
|
2.1.12
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets;
|
2.1.13
|
Not to distribute dividends to Party C’s shareholders in any way without Party A’s prior written consent. However, Party C shall promptly distribute all or part of its distributable profits to Party A’s shareholders upon Party A’s request;
|
2.1.14
|
At the request of Party A, to appoint any person nominated by Party A as the director of Party C.
|
2.2
|
Undertakings by Party B
|
2.2.1
|
Not to sell, transfer, pledge or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interest in his Equity Interest at any time after the signing of this Agreement without Party A’s prior written consent, but except the right of pledge created on Party B’s Equity Interest in accordance with the Equity Pledge Agreement;
|
2.2.2
|
Without Party A’s prior written consent, not to vote for or support or execute at shareholders’ meetings of Party C any shareholders’ resolution approving the sale, transfer, mortgage or otherwise disposal of, or causing any other security interest to be created on, his legal or beneficial interest in the Equity Interest of Party C, except to Party A or its Designee;
|
2.2.3
|
Without Party A’s prior written consent, not to vote for or support or execute at shareholders’ meetings of Party C any resolution approving Party C to be merged or consolidated with, acquire or invest in, any person;
|
2.2.4
|
To irrevocably agree to the grant by Party C’s another shareholder, Chunlin Wang, of an exclusive Call Option to Party A, and to irrevocably waive his preemptive right to such Equity Interest to be transferred by Chunlin Wang to Party A;
|
2.2.5
|
To promptly inform Party A of any existing or potential litigation, arbitration or administrative proceedings with respect to his Equity Interest;
|
2.2.6
|
To cause the shareholders’ meeting of Party C to approve the transfer of the Purchased Equity under this Agreement;
|
2.2.7
|
To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order to maintain the ownership over his Equity Interest;
|
2.2.8
|
At Party A’s request, to appoint any person nominated by Party A as the director of Party C;
|
2.2.9
|
To strictly comply with the provisions of this Agreement and other agreements entered into jointly or severally by and among Party B, Party C and Party A, to perform all obligations under these agreements and not to do any act/omission that affects or impairs the validity and enforceability of these agreements.
|
3.
|
Representations and Warranties
Party B and Party C hereby represent and warrant to Party A as follows:
|
3.1
|
They have the power to execute and deliver this Agreement. Once executed, this Agreement will constitute a legal, valid and binding obligation and shall be enforceable against them in accordance with the provisions thereof;
|
3.2
|
The execution, delivery and performance of this Agreement shall not: (i) violate any relevant PRC laws and regulations; (ii) conflict with their Articles of Association or other organizational documents; (iii) violate any contract or instrument to which they are a party or that binds upon them;
|
3.3
|
Party C has good and saleable ownership over all assets. Party C has not created any security interest on the above assets;
|
3.4
|
Party C has no outstanding debts, except debts arising from its normal course of business; and debts disclosed to Party A and approved by Party A in writing;
|
3.5
|
Currently, there are no existing, pending or threatened litigation, arbitration or administrative proceedings related to the Equity Interest or Party C’s assets; and
|
3.6
|
Party B has good and saleable ownership over all his Equity Interest and has not created any security interest on such Equity Interest, but excluding the security interest under the Equity Pledge Agreement.
|
4.
|
Assignment of this Agreement
|
4.1
|
Party B and Party C shall not transfer any of their rights and obligations under this Agreement to any third party without the prior written consent of Party A.
|
4.2
|
Party B and Party C hereby agree that Party A shall have the right to transfer all of its rights and obligations under this Agreement to other third parties when necessary. Party A shall only be required to serve written notice to Party B and Party C when such transfer is made, and no consent shall be further required from Party B and Party C in respect of such transfer.
|
5.
|
Effectiveness and Term
|
5.1
|
This Agreement shall become effective as of the date first above written.
|
5.2
|
The term of this Agreement shall be ten (10) years unless it is early terminated in accordance with the provisions of this Agreement or the relevant agreements separately signed by the Parties. The term of this Agreement may be extended with the written confirmation of Party A before its expiration. The extension thereof shall be agreed upon by the Parties through negotiation.
|
5.3
|
If the operation term (including any extension thereof) of Party A or Party C expires or terminates for other reasons within the term set forth in the preceding Article, this Agreement shall be terminated at the time of the termination of such Party, unless Party A has transferred its rights and obligations in accordance with Article 4.2 hereof.
|
6.
|
Applicable Law and Dispute Resolution
|
6.1
|
Applicable Law
The formation, validity, interpretation and performance of and settlement of disputes under this Agreement shall be protected and governed by the laws of PRC.
|
6.2
|
Dispute Resolution
Any dispute arising from the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties through amicable negotiation. In case no resolution can be reached by the Parties within thirty (30) days after either party makes a request for dispute resolution through negotiation, either party may refer such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with its arbitration rules then in effect. The seat of arbitration shall be Shenzhen and the language of proceedings shall be Chinese. The arbitral award shall be final and binding upon the Parties.
|
7.
|
Taxes and Expenses
Every Party shall bear any and all taxes, expenses and charges incurred by or levied on it in connection with the execution and performance of this Agreement.
|
8.
|
Confidentiality
The Parties agree and acknowledge that any oral or written information exchanged between them in connection with this Agreement shall be confidential information. Each Party shall keep confidential all such information, and shall not disclose any of the information to any third party without the prior written consent of the other Party, except for the following:
|
(a)
|
the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party);
|
(b)
|
the information required to be disclosed by applicable laws or stock exchange’s rules or regulations; or
|
(c)
|
the information required to be disclosed by either Party to his/its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those stated in this Article.
|
9.
|
Miscellaneous
|
9.1
|
Amendment, Modification and Supplement
The Parties may make amendments or supplements to this Agreement by written agreement. All amendment agreements and supplemental agreements to this Agreement that are duly signed by the Parties shall form an integral part of this Agreement, and shall have the same legal effect as this Agreement.
|
9.2
|
Integrity of this Agreement
The Parties acknowledge this Agreement constitutes the entire representations and agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral and/or written representations, warranties, understandings and agreements reached by the Parties made before the execution of the Agreement with respect to the subject matter hereof.
|
9.3
|
Severability of this Agreement
If any provision or provisions of this Agreement is/are held to be invalid or unenforceable or violate(s) any applicable laws, the validity, legality and enforceability of the other provisions hereof shall not be affected.
|
9.4
|
Language and Counterparts
This Agreement is executed in Chinese in four (4) originals and each Party shall hold one original. All of the originals shall have the same legal effect.
|
9.5
|
Successors
This Agreement shall be binding upon the respective successors or heirs of the Parties and the permitted assignees of such Parties.
|
9.6
|
Survival
Any obligations that occur or are due as a result of this Agreement before the expiration or early termination of this Agreement shall survive the expiration or early termination hereof. The provisions of Articles 6 and 8 hereof shall survive the termination of this Agreement.
|
/s/ Yuan Tian | |
Yuan Tian | |
April 18, 2011 |
1.
|
A Loan Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party A agreed to grant an interest-free loan in an amount of Five Hundred Thousand Renminbi (RMB500,000) to Party B (“Loan”).
|
2.
|
An Equity Pledge Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party B agreed to pledge all of his 5% equity interest in Party C to Party A as a security pledge for the Loan under the Loan Agreement..
|
3.
|
An Exclusive Purchase Option Agreement was entered into between Party A and Party B on April 18, 2011, pursuant to which Party B agreed to grant an exclusive purchase option to Party A so that Party A may request Party B to sell his equity interest in Party C to it if certain conditions are met.
|
4.
|
On March 6, 2013, upon unanimous approval of shareholders of Party C, the registered capital of Party C was decreased from RMB10 million to RMB8 million. As a result, Party B holds 6.25% of equity interest in Party C.
|
1.
|
Loan
|
2.
|
Equity Pledge
|
3.
|
Exclusive Purchase Option
|
4.
|
Validity
|
5.
|
Language and Counterparts
|
Subsidiaries
|
Percentage
Attributable to
Our Company
|
Place of
Incorporation
|
||
1. CISG Holdings Ltd.
|
100%
|
BVI
|
||
2. Minkfair Insurance Management Limited
|
100%
|
Hong Kong
|
||
3. CNinsure Holdings Ltd.
|
100%
|
BVI & Hong Kong
|
||
4. CNinsure Zhonglian Enterprise Image Planning (Shenzhen) Co., Ltd. (formerly known as Haidileji Enterprise Image Planning (Shenzhen) Co., Ltd. and Fanhua Zhonglian Enterprise Image Planning (Shenzhen) Co., Ltd.).
|
100%
|
PRC
|
||
5. CNinsure Xinlian Information Technology Consulting (Shenzhen) Co., Ltd. (formerly known as Yiqiman Enterprise Management Consulting (Shenzhen) Co., Ltd. and Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd.)
|
100%
|
PRC
|
||
6. CNinsure Insurance Sales Service Group Company Limited (formerly known as Shenzhen Fanhua Nanfeng Investment Holding Co., Ltd.)
|
100%
|
PRC
|
||
7. Guangzhou Zhongqi Enterprise Management Consulting Co., Ltd.
|
100%
|
PRC
|
||
8. Beijing Ruisike Management Consulting Co., Ltd.
|
100%
|
PRC
|
||
9. Beijing Fanlian Investment Co., Ltd.
|
100%
|
PRC
|
||
10. Litian Zhuoyue Software (Beijing) Co., Ltd.
|
100%
|
PRC
|
||
11. Shenzhen Bangbang Auto Services Co., Ltd.
|
100%
|
PRC
|
||
12. InsCom Holdings Limited
|
65.1%
|
BVI
|
||
13. InsCom Group Limited(1)
|
65.1%
|
BVI
|
||
14. InsCom HK Limited(1)
|
65.1%
|
Hong Kong
|
||
15. Ying Si Kang Information Technology (Shenzhen) Co., Ltd.(1)
|
65.1%
|
PRC
|
||
16. Guangzhou Huajie Insurance Agency Co., Ltd.(2)
|
100%
|
PRC
|
||
17. Dongguan Zhongxin Insurance Agency Co., Ltd.(2)
|
100%
|
PRC
|
||
18. CNinsure Bocheng Insurance Brokerage Co., Ltd. (also known as Fanhua Bocheng Insurance Brokerage Co., Ltd.)(2)
|
100%
|
PRC
|
||
19. CNinsure Times Insurance Sales & Service Co., Ltd. (formerly known as Guangzhou Fanhua Insurance Agency Co., Ltd.)(2)
|
100%
|
PRC
|
||
20. CNinsure Lianxing Insurance Sales Co., Ltd.(also known as Fanhua Lianxin Insurance Sales Co., Ltd.)(3)
|
100%
|
PRC
|
Subsidiaries
|
Percentage
Attributable to
Our Company
|
Place of
Incorporation
|
||
21. Sichuan CNinsure Insurance Agency Co., Ltd.( also known as Sichuan Fanhua Insurance Agency Co., Ltd.) (4)
|
100%
|
PRC
|
||
22. Beijing Fanlian Insurance Agency Co., Ltd.(4)
|
100%
|
PRC
|
||
23. Beijing CNinsure Insurance Agency Co.,Ltd.(also known as Beijing CNinsure Insurance Agency Co.,Ltd.)(4)
|
100%
|
PRC
|
||
24. Beijing CNinsure Fumin Insurance Agency Co., Ltd.(also known as Beijing Fanhua Fumin Insurance Agency Co., Ltd.)(4)
|
100%
|
PRC
|
||
25. Guangdong CNinsure Kafusi Insurance Brokerage Co., Ltd.( also known as Beijing Fanhua Fumin Insurance Agency Co., Ltd.)(4)
|
100%
|
PRC
|
||
26. Guangzhou Fanhua Yi’an Insurance Agency Co., Ltd. (also known as Guangzhou CNinsure Yi’an Insurance Agency Co., Ltd.) (4)
|
100%
|
PRC
|
||
27. Foshan Tuohua Insurance Agency Co., Ltd.(4)
|
100%
|
PRC
|
||
28. Dongguan Nanfeng Jiayu Insurance Agency Co., Ltd.(4)
|
100%
|
PRC
|
||
29. Guangdong CNinsure Nanfeng Insurance Agency Co., Ltd.( also known as Guangdong Fanhua Nanfeng Insurance Agency Co., Ltd.)(4)
|
100%
|
PRC
|
||
30. Shenzhen CNinsure Nanfeng Insurance Agency Co.,Ltd. (also known as Shenzhen Fanhua Nanfeng Insurance Agency Co.,Ltd.) (5)
|
100%
|
PRC
|
||
31. Hebei Lianda Insurance Agency Co., Ltd.(4)
|
100%
|
PRC
|
||
32. Fujian CNinsure Guoxin Insurance Agency Co., Ltd. (also known as Fujian Fanhua Guoxin Insurance Agency Co., Ltd.) (4)
|
100%
|
PRC
|
||
33. Hangzhou CNinsure Zhixin Insurance Agency Co., Ltd. (also known as Hangzhou Fanhua Zhixin Insurance Agency Co., Ltd.) (4)
|
100%
|
PRC
|
||
34. Tianjin CNinsure Xianghe Insurance Agency Co., Ltd. (also known as Tianjin Fanhua Xianghe Insurance Agency Co., Ltd.) (6)
|
70%
|
PRC
|
||
35. Changsha Lianyi Insurance Agency Co., Ltd.(6)
|
70%
|
PRC
|
||
36. Henan CNinsure Anlian Insurance Agency Co., Ltd. (also known as Henan Fanhua Anlian Insurance Agency Co., Ltd.) (6)
|
51%
|
PRC
|
||
37. Ninbo Baolian Insurance Agency Co., Ltd.(6)
|
51%
|
PRC
|
||
38. Shandong CNinsure Mintai Insurance Agency Co., Ltd. (also known as Shandong Fanhua Mintai Insurance Agency Co., Ltd.) (6)
|
51%
|
PRC
|
Subsidiaries
|
Percentage
Attributable to
Our Company
|
Place of
Incorporation
|
||
39. Hunan CNinsure Insurance Agency Co., Ltd. (also known as Hunan Fanhua Insurance Agency Co., Ltd.) (7)
|
55%
|
PRC
|
||
40. Hubei CNinsure Insurance Agency Co., Ltd. (also known as Hubei Fanhua Insurance Agency Co., Ltd.) (7)
|
60%
|
PRC
|
||
41. Liaoning CNinsure Gena Insurance Agency Co., Ltd. (also known as Liaoning Fanhua Gena Insurance Agency Co., Ltd.)(7)
|
60%
|
PRC
|
||
42. Zhejiang CNinsure Tongchuang Insurance Agency Co., Ltd. (also known as Zhejiang Fanhua Tongchuang Insurance Agency Co., Ltd.)(7)
|
60%
|
PRC
|
||
43. Jiangsu CNinsure Lianchuang Insurance Agency Co., Ltd. (also known as Zhejiang Fanhua Tongchuang Insurance Agency Co., Ltd.) (7)
|
70%
|
PRC
|
||
44. Sichuan CNinsure Xintai Insurance Agency Co., Ltd. (also known as Sichuan Fanhua Xintai Insurance Agency Co., Ltd.) (7)
|
100%
|
PRC
|
||
45. Guangdong Meidiya Investment Co., Ltd.(8)
|
100%
|
PRC
|
||
46. Jiangmen CNinsure Zhicheng Insurance Agency Co.,Ltd. (also known as Jiangmen Fanhua Zhicheng Insurance Agency Co.,Ltd.) (9)
|
100%
|
PRC
|
||
47. Hebei Fanlian Insurance Agency Co., Ltd.(9)
|
51%
|
PRC
|
||
48. Shenyang Fangda Insurance Agency Co., Ltd.(9)
|
51%
|
PRC
|
||
49. Shanghai CNinsure Guosheng Insurance Agency Co., Ltd. (also known as Shanghai Fanhua Guosheng Insurance Agency Co., Ltd.) (9)
|
55%
|
PRC
|
||
50. Jiangxi CNinsure Insurance Agency Co., Ltd. (also known as Jiangxi Fanhua Insurance Agency Co., Ltd.) (9)
|
70%
|
PRC
|
||
51. Fujian CNinsure Investment Co., Ltd. (also known as Fujian Fanhua Investment Co., Ltd.) (10)
|
100%
|
PRC
|
||
52. Fujian CNinsure Xinheng Insurance Agency Co., Ltd. (also known as Fujian Fanhua Xinheng Insurance Agency Co., Ltd.) (10)
|
100%
|
PRC
|
||
53. Nanping CNinsure Jinying Insurance Agency Co., Ltd. (also known as Nanping Fanhua Jinying Insurance Agency Co., Ltd.) (11)
|
51%
|
PRC
|
||
54. Guangdong CNinsure Fangzhong Investment Management Co., Ltd. (also known as Guangdong Fanhua Fangzhong Investment Management Co., Ltd.) (9)
|
51%
|
PRC
|
||
55. CNinsure Insurance Surveyors & Loss Adjustors Co., Ltd. (also known as Fanhua Insurance Surveyors & Loss Adjustors Co., Ltd.) (12)
|
51%
|
PRC
|
Subsidiaries
|
Percentage
Attributable to
Our Company
|
Place of
Incorporation
|
||
56. Shanghai CNinsure Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd. (also known as Shanghai Fanhua Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd.) (12)
|
51%
|
PRC
|
||
57. Shenzhen CNinsure Property and Casualty Insurance Surveyors & Loss Adjustors Co., Ltd. (also known as Shenzhen Fanhua Property and Casualty Insurance Surveyors & Loss Adjustors Co., Ltd.) (12)
|
51%
|
PRC
|
||
58. Shenzhen CNinsure Software Technology Co., Ltd. (also known as Shenzhen Fanhua Software Technology Co., Ltd.) (12)
|
51%
|
PRC
|
Affiliated Entities
|
Percentage
Attributable to
Our Company
|
Place of
Incorporation
|
||
1. Sichuan Yihe Investment Co., Ltd.(13)
|
100%
|
PRC
|
||
2. Shenzhen Xinbao Investment Management Co., Ltd.(14)
|
65.1%
|
PRC
|
||
3. Shijiazhuang CNinsure Anxin Investment Co., Ltd. (also known as Shijiazhuang Fanhua Anxin Investment Co., Ltd.) (15)
|
100%
|
PRC
|
||
4. Hebei CNinsure Anxin Insurance Agency Co., Ltd. (also known as Hebei Fanhua Anxin Insurance Agency Co., Ltd.) (16)
|
100%
|
PRC
|
||
5. Shandong CNinsure Xintai Insurance Agency Co., Ltd. (also known as Shandong Fanhua Xintai Insurance Agency Co., Ltd.) (15)
|
100%
|
PRC
|
||
6. Jinan CNinsure Rongtai Insurance Agency Co., Ltd. (also known as Jinan Fanhua Rongtai Insurance Agency Co., Ltd.) (17)
|
100%
|
PRC
|
||
7. CNinsure Century Insurance Sales & Service Co., Ltd. (also known as Fanhua Shiji Insurance Co., Ltd.) (18)
|
65.1%
|
PRC
|
||
8. Shenzhen InsCom E-commerce Co., Ltd.(19)
|
65.1%
|
PRC
|
||
9. CNinsure Puyi Fund Sales Co., Ltd. (also known as Fanhua Puyi Investment Management Co., Ltd.)(20)
|
19.5%
|
PRC
|
||
10. Sincere Fame International Limited
|
20.6%
|
BVI
|
||
11. Shanghai Teamhead Automobile Surveyors Co., Ltd.(21)
|
20.4%
|
PRC
|
||
12. Jiaxing Baolian Insurance Agency Co., Ltd(22)
|
30%
|
PRC
|
(1)
|
100% of the equity interests in each of these companies are held directly or indirectly by InsCom Holdings Limited.
|
(2)
|
100% of the equity interests in each of these companies are held directly by CNinsure Insurance Sales Service Group Company Limited.
|
(3)
|
We beneficially own 100% equity interests in this Company, of which 99% of the equity interests are held directly by CNinsure Insurance Sales Service Group Company Limited and the the remaing 1% by Sichuan Yihe Investment Co., Ltd. in which we beneficially own 100% equity interests.
|
(4)
|
100% of the equity interests in each of these companies are held directly by CNinsure Times Insurance Sales & Service Co., Ltd..
|
(5)
|
100% of the equity interest in this company are held directly by Guangdong CNinsure Nanfeng Insurance Agency Co., Ltd..
|
(6)
|
Majority equity interests in the range of 51-70% in each of these companies are are held directly by CNinsure Times Insurance Sales & Service Co., Ltd..
|
(7)
|
Majority equity interests in the range of 51-100% in each of these companies are held directly by CNinsure Lianxing Insurance Sales Co., Ltd..
|
(8)
|
We beneficially own 100% equity interests in this company, of which 90% of the equity interests are held directly by CNinsure Insurance Sales Service Group Company Limited and the remaining 10% by two individual shareholders.
|
(9)
|
Majority equity interests in the range of 51-100% in each of these companies are held directly by Guangdong Meidiya Investment Co., Ltd..
|
(10)
|
We beneficially own 100% equity interests in each of these company, of which 55% of the equity interests are held directly by Guangdong Meidiya Investment Co., Ltd. and the remaining by Sichuan Yihe Investment Co., Ltd. in which we beneficially own 100% equity interests.
|
(11)
|
51% of the equity interests in this companies are held directly by Fujian CNinsure Xinheng Insurance Agency Co., Ltd..
|
(12)
|
100% of the equity interests in each of these companies are held directly by Guangdong CNinsure Fangzhong Investment Management Co., Ltd..
|
(13)
|
We beneficially own 100% equity interests in this company, of which 20% of the equity interests are held directly by CNinsure Insurance Sales Group Company Limited and the remaining 80% by two individual shareholders.
|
(14)
|
We beneficially own 65.1% of the quity interests in this company.
|
(15)
|
100% of the equity interests in each of these companies are held directly by Sichuan Yihe Investment Co., Ltd..
|
(16)
|
100% of the quity interests in each of these company are held directly by Shijiazhuang CNinsure Anxin Investment Co., Ltd..
|
(17)
|
100% of the quity interests in this company are held directly by Shandong CNinsure Xintai Insurance Agency Co., Ltd.
|
(18)
|
100% of the equity interests in this company are held directly by Shenzhen Xinbao Investment Co., Ltd..
|
(19)
|
100% of the equity interest in this company are held directly by CNinsure Century Insurance Sales & Service Co., Ltd..
|
(20)
|
19.45% of the quity interests in this company are held directly by Sichuan Yihe Investment Co., Ltd..
|
(21)
|
40% of the equity interest in this company are held by Shanghai CNinsure Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd..
|
(22)
|
30% of the equity interest in this company are held by Guangdong Meidiya Investment Co., Ltd..
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
By: | /s/ Chunlin Wang | |
Name: |
Chunlin Wang
|
|
Title: |
Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
By: | /s/ Peng Ge | |
Name: |
Peng Ge
|
|
Title: | Chief Financial Officer |
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|||
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: | /s/ Chunlin Wang | |
Name: |
Chunlin Wang
|
|
Title: |
Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
||
|
||||
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: | /s/ Peng Ge | |
Name: |
Peng Ge
|
|
Title: | Chief Financial Officer |
Our ref
|
SSY/628018-000001/7011201v1
|
Direct tel
|
+852 3690 7498
|
Email
|
sophie.yu@maplesandcalder.com
|
Yours faithfully
|
/S/ Maples and Calder
Maples and Calder
|