Skip to main content
Find a Lawyer

Capital Contribution Agreement - China Mobile Communications Corp., Liaoning Communication Service Co. Ltd., and Liaoning Mobile Communication Co. Ltd.

                         CAPITAL CONTRIBUTION AGREEMENT

         This Capital Contribution Agreement (the "Agreement") is executed by
the following three parties on August 30, 2000 in Liaoning:

(1)      CHINA MOBILE COMMUNICATIONS CORPORATION, a wholly state-owned limited
         liability company duly established and in valid existence under the
         laws of the People's Republic of China ("PRC"), with its legal address
         at 53 A, Xibianmen Nei Da Jie, Xuanwu District, Beijing, PRC ("China
         Mobile Group");

(2)      LIAONING COMMUNICATION SERVICE COMPANY LIMITED, a limited liability
         company duly established and in valid existence under the laws of PRC,
         with its legal address at 128, Shi Xi Wei Lu, Shenhe District,
         Shenyang, PRC (the "Service Company"); and

(3)      LIAONING MOBILE COMMUNICATION COMPANY LIMITED, a limited liability
         company duly established and in valid existence under the laws of PRC,
         with its legal address at 128, Shi Xi Wei Lu, Shenhe District,
         Shenyang, PRC ("Liaoning Mobile").

WHEREAS:

1.       China Mobile Group and the Service Company have jointly established
         Liaoning Mobile, and hold 80% and 20% of its equity interest,
         respectively;

2.       Pursuant to the "Notice of Guidance Opinions on Establishing China
         Mobile Group" (Xin Bu Zheng [1999]No. 360) issued by the Ministry of
         Information Industry, the communication businesses and related assets
         in Liaoning shall be transferred to and managed by China Mobile Group;

3.       China Mobile Group has decided to inject and contribute the
         communication businesses and related assets in Liaoning to Liaoning
         Mobile;

4.       The Board of Liaoning Mobile agrees by resolution to China Mobile
         Group's injection and contribution of the communication businesses and
         related assets in Liaoning to Liaoning Mobile Company;

         THEREFORE, the three Parties, namely China Mobile Group, the Service
Company and Liaoning Mobile, have reached the following agreement:

                             ARTICLE ONE DEFINITIONS

1.1      Unless the context indicates otherwise, the following terms shall have
         the meanings as defined below:





                                       1
   2

         "ASSET APPRAISAL REPORT" shall mean the asset appraisal report, with
         the Base Date being June 30, 2000, prepared by Zhongzi Asset Appraisal
         Company Limited and approved by the Ministry of Finance with regard to
         the assets and liabilities of communication businesses of Liaoning
         Mobile (see Appendix A of the Agreement).

         "RELATED INTERESTS AND ASSETS" shall mean all rights, interests and
         assets included in the Asset Appraisal Report and the contracts,
         agreements, certificates, business operation data, files and documents
         in connection with such rights, interests and assets, as well as any
         profits and benefits from such rights, interest and assets accrued
         thereon after June 30, 2000.

         "RELATED LIABILITIES" shall mean all liabilities set out in the
         Liability List in Appendix A of the Agreement and the contracts,
         agreements, certificates, business operation data, files and documents
         in connection with such liabilities.

         "RELATED PERSONNEL" shall mean 3,440 employees engaged in mobile
         communication services and employed by the Liaoning Mobile
         Communication Company (the predecessor of the Service Company).

         "RELATED SERVICES" shall mean the mobile communication businesses
         operated by the Liaoning Mobile Communication Company (the predecessor
         of the Service Company) in Liaoning and all the telecommunication
         operating licenses, spectrum use permits, telecommunication networks
         number resources use approvals, mobile communication base station
         licenses and all other related authorizations held by it.

         "EFFECTIVE DATE" shall mean the date when the Agreement is executed.

1.2      Unless the Agreement specifies otherwise, the articles and schedules
         mentioned herein shall mean the articles and schedules of the
         Agreement. All schedules constitute an integral part of the Agreement.

                  ARTICLE TWO INJECTION OF ASSETS AND SERVICES

2.1      China Mobile Group shall, on the Effective Date, inject all the Related
         Interests and Asset, the Related Liabilities and the Related Services
         into Liaoning Mobile.

2.2      Upon the Effective Date, Liaoning Mobile shall beneficially own the
         Related Interest and Assets and the Related Services, clear and free of
         any encumbrance, pledge or any other third-party interests, and shall
         assume the Related Liabilities.

2.3      Pursuant to the Asset Appraisal Report, the total value of such Related
         Interests and Asset, the Related Liabilities and the Related Services
         is RMB5,130,126,700.





                                       2
   3

2.4      The Base Date of the Asset Appraisal Report is June 30, 2000. During
         the period from the Base Date to the Effective Date, Liaoning Mobile
         shall enjoy and assume any and all assets, interests, rights and
         liabilities arising from the Related Interests and Assets, the Related
         Liabilities and Related Services.

2.5      The Service Company should notify the other party to any relevant
         contract regarding the transfer of the Related Interest and Asset, the
         Related Liabilities and the Related Businesses, and obtain such party's
         consent to such transfer.

      ARTICLE THREE EQUITY INTERESTS OF PARTIES AFTER CAPITAL CONTRIBUTION

3.1      After the capital contribution, China Mobile Group and the Service
         Company will own 99.961% and 0.039% of the equity interests,
         respectively, in Liaoning Mobile.

                         ARTICLE FOUR RELATED PERSONNEL

4.1      From the Effective Date, the Related Personnel shall be employed by
         Liaoning Mobile.

            ARTICLE FIVE REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

5.1      Each Party hereto warrants that it has all requisite authority, power
         and ability to execute and perform the Agreement. The Agreement, upon
         execution, will constitute legal, valid and binding obligations of each
         of China Mobile Group, the Service Company and Liaoning Mobile.

5.2      Each of China Mobile Group and the Service Company hereby represents
         and warrants to Liaoning Mobile that, as of the Effective Date,
         Liaoning Mobile will own the Related Interests and Assets and the
         Related Services, clear and free of any encumbrance, pledge or any
         other third-party interests, and will assume the Related Liabilities.

                       ARTICLE SIX SETTLEMENT OF DISPUTES

6.1      Any dispute arising from or in connection with the interpretation or
         performance of this Agreement shall be settled by the Parties through
         friendly negotiations conducted among representatives appointed by the
         Parties for this purpose. In the case that no resolution is reached
         through consultations within 90 days after the occurrence of any
         dispute, any Party may bring an action to a competent people's court
         for its judgment.

                              ARTICLE SEVEN NOTICES

7.1      Any notice to be given under the Agreement shall be made in writing and
         sent by mail, telex, telegraph or facsimile to the other Party's
         address set out in the




                                       3
   4

         front page of the Agreement or to any other address as such Party may 
         designate in writing from time to time.

7.2      Any notice shall be deemed to have been received at the time as
         follows:

         if delivered in person, at the time of delivery;

         if delivered by mail, on the date of the receipt;

         if delivered by telex, at the time of taking back the receipt;

         if transmitted by facsimile, upon delivery.

                           ARTICLE EIGHT GOVERNING LAW

8.1      The Agreement shall be governed by and interpreted in accordance with
         the laws of the PRC.


                              ARTICLE NINE LANGUAGE

9.1      The Agreement is executed in Chinese.

                           ARTICLE TEN EFFECTIVE DATE

10.1     The Agreement shall come into effect upon the date when it is executed
         by the authorized representatives of the Parties.


PARTY A: CHINA MOBILE COMMUNICATIONS CORPORATION


By:        s/ Xue Taohai          
   ---------------------------------
      Authorized representative


PARTY B: LIAONING COMMUNICATION SERVICE COMPANY LIMITED

By:        s/ Gong Xianbin         
   ----------------------------------
      Authorized representative



PARTY C: LIAONING MOBILE COMMUNICATION COMPANY LIMITED

By:        s/ Zhang Xuehong          
   ----------------------------------
      Authorized representative






                                       4
   5
APPENDIX A

                          MINISTRY OF FINANCE DOCUMENT

                              Cai Qi [2000] No. 269

             ------------------------------------------------------

    LETTER REGARDING OPINIONS ON VERIFICATION OF ASSET APPRAISAL OF INCREASE
  OF CAPITAL IN MOBILE COMMUNICATION COMPANIES LIMITED IN BEIJING AND OTHER SIX
  MUNICIPALITIES, PROVINCES AND AUTONOMOUS REGION AND OF CAPITAL CONTRIBUTION
           IN CHINA MOBILE (HONG KONG) LIMITED BY CHINA MOBILE GROUP

Ministry of Information Industry,

         We are in receipt from your Ministry of the "Application for
Confirmation of Asset Appraisal Results of Increase of Capital in Mobile
Communications Companies Limited in Beijing and Other Six Municipalities,
Provinces and Autonomous Region and of Capital Contribution in China Mobile
(Hong Kong) Limited by China Mobile Group" (Xin Bu Qing [2000] No. 780) and the
Asset Appraisal Reports (Zhong Zi Ping Bao Zi [2000] No. 004-017, 14 such
reports in all) prepared by Zhongzi Asset Appraisal Company Limited. We hereby
reply as follows:

1.       In connection with China Mobile Group's intention to increase its
         investment in the Mobile Communications Companies Limited of seven
         provinces/autonomous region/municipalities, including Beijing, Tianjin,
         Shanghai, Shandong, Hebei, Liaoning and Guangxi, and to inject all of
         its increased interests in the above Mobile Communications Companies
         Limited in such seven provinces/autonomous region/municipalities into
         China Mobile (Hong Kong) Limited, we have found, following our
         verification, that the project proposal regarding asset appraisal of
         the above increase of investment in domestic companies and overseas
         investment by China Mobile Group has been approved, that Zhongzi Asset
         Appraisal Company Limited, the appraisal institution undertaking asset
         appraisal in this project, possesses the asset appraisal credentials
         duly granted by the Ministry of Finance, and that the relevant
         appraisal personnel signing all the asset appraisal reports are
         certified for asset appraisal.

2.       The replacement cost method has been adopted as the major method of
         such appraisals.

3.       The base date of such appraisals is June 30, 2000. The appraisal
         results in the appraisal reports are valid only in respect of the
         assets appraised in this project, the increase of investment by China
         Mobile Group in the Mobile Communications Companies Limited in the
         above seven provinces/autonomous region/cities, and the injection by
         China Mobile Group injects of its entire interests of the above Mobile
         Communications Companies 






   6

         Limited into China Mobile (Hong Kong) following such increase of
         investment. Such result shall become invalid as of June 30, 2001.

4.       Users of such appraisal reports shall focus their attention on the
         special items disclosed therein, the items adjusted as of the base date
         and the legal validity of the appraisal reports.

5.       Legal liabilities of such appraisal reports shall be borne by the
         appraisal institution engaged to undertake such appraisals and the
         registered asset appraisers signing such appraisal reports, and shall
         not be borne by the appraisal administrative department by virtue of
         this verification.

         EXHIBITS:

         1.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Beijing Mobile Communication Company
                  Limited by China Mobile Group.

         2.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Tianjin Mobile Communication Company
                  Limited by China Mobile Group.

         3.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Shanghai Mobile Communication Company
                  Limited by China Mobile Group.

         4.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Shandong Mobile Communication Company
                  Limited by China Mobile Group.

         5.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Hebei Mobile Communication Company
                  Limited by China Mobile Group.

         6.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Liaoning Mobile Communication Company
                  Limited by China Mobile Group.

         7.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding the proposed
                  increase of capital in Guangxi Mobile Communication Company
                  Limited by China Mobile Group.

         8.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China 





   7

                  Mobile Group of the assets of Beijing Mobile Communication
                  Company Limited into China Mobile (Hong Kong) Limited.

         9.       Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Tianjin Mobile
                  Communication Company Limited into China Mobile (Hong Kong)
                  Limited.

         10.      Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Shanghai Mobile
                  Communication Company Limited into China Mobile (Hong Kong)
                  Limited.

         11.      Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Shandong Mobile
                  Communication Company Limited into China Mobile (Hong Kong)
                  Limited.

         12.      Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Hebei Mobile Communication
                  Company Limited into China Mobile (Hong Kong) Limited.

         13.      Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Liaoning Mobile
                  Communication Company Limited into China Mobile (Hong Kong)
                  Limited.

         14.      Summary statement of the asset appraisal results issued by
                  Zhongzi Asset Appraisal Company Limited regarding injection by
                  China Mobile Group of the assets of Guangxi Mobile
                  Communication Company Limited into China Mobile (Hong Kong)
                  Limited.

                                 August 28, 2000

                   (official seal of the Ministry of Finance)

Key Terms: Assets, Appraisal, Verification, Opinion, Letter

Copy to: China Mobile Group, China Mobile (Hong Kong) Limited


   8

EXHIBIT 6

                SUMMARY STATEMENT OF THE ASSETS APPRAISAL RESULTS
               ISSUED BY ZHONGZI ASSETS APPRAISAL COMPANY LIMITED
  REGARDING THE PROPOSED INCREASE OF CAPITAL IN LIAONING MOBILE COMMUNICATIONS
                     COMPANY LIMITED BY CHINA MOBILE GROUP

Appraisal base date: June 30, 2000                          in RMB Ten Thousands
Book Value Increase/ After Appraisal Increase/ Decrease Item Book Value Adjustment Value Decrease Rate(%) ---- ---------- ---------- --------- --------- ---------- Current assets 183,433.14 184,518.04 186,119.38 1,601.34 0.87 Fixed assets 866,167.39 861,971.72 880,503.33 18,531.61 2.15 Including: Construction in 36,073.62 36,188.91 34,731.58 -1,457.33 -4.03 progress Buildings 69,122.49 64,811.54 68,985.40 4,173.86 6.44 Machinery 759,305.28 759,305.28 776,786.26 17,480.98 2.30 Intangible assets 12,254.46 16,583.24 34,027.73 17,444.49 105.19 Including: Land use rights 1,110.70 5,439.49 23,109.77 17,670.28 324.85 Total assets 1,061,854.99 1,063,073.00 1,100,650.44 37,577.44 3.53 Current liabilities 325,861.08 327,061.26 327,061.26 0.00 0.00 Long-term liabilities 260,576.51 260,576.51 260,576.51 0.00 0.00 Total liabilities 586,437.59 587,637.77 587,637.77 0.00 0.00 Net assets 475,417.40 475,435.23 513,012.67 37,577.44 7.90
Was this helpful?

Copied to clipboard