o | Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 |
þ | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Title of Each Class | Name of Each Exchange on Which Registered | |
Ordinary shares, par value US$0.001 per share*
American depositary shares, each representing 20 ordinary shares |
The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market) |
* | 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. |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o |
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Exhibit 4.4 | ||||||||
Exhibit 4.13 | ||||||||
Exhibit 4.14 | ||||||||
Exhibit 4.15 | ||||||||
Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 15.1 | ||||||||
Exhibit 15.2 | ||||||||
Exhibit 15.3 |
| we, us, our company, our or CNinsure refer to CNinsure Inc., its subsidiaries and any entity carrying on CNinsures 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; |
| China or PRC refers to the Peoples Republic of China, excluding, solely for the purpose of this annual report, Taiwan, Hong Kong and Macau; |
| 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); |
| shares or ordinary shares refers to our ordinary shares, par value US$0.001 per share; |
| ADSs refers to our American depositary shares, each of which represents 20 ordinary shares; |
| all references to RMB or Renminbi are to the legal currency of China and all references to $, dollars, US$ and U.S. dollars are to the legal currency of the United States; and |
| 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; |
| the anticipated growth of our life insurance business; |
| our future business development, results of operations and financial condition; |
| factors that affect our future revenues and expenses; |
| the future growth of the Chinese insurance industry as a whole and the professional insurance intermediary sector in particular; |
| trends and competition in the Chinese insurance industry; and |
| economic and demographic trends in the PRC. |
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Discussion of Segment Operations
Historically, we had managed our business as a single
operating segment engaged in insurance agency and brokerage services in the PRC. In order to better manage and measure
the performance of the different lines of businesses we had been engaged in 2008, we restructured our subsidiaries and
consolidated affiliated entities December 2008 by grouping them into the following four operating segments:
We group Datong Investment and the entities controlled by it
under a separate segment because they target different customers than those targeted by our other affiliated insurance
intermediaries under the life insurance segment. In addition, our management review the performance of Datong
Investment and its subsidiaries separately from the other operating segments. As a result of this restructuring, we now
have four reportable segments.
The following table sets forth our net revenues, operating
costs and expenses and income from operations by reportable segments for the periods indicated. Figures for the years
ended December 31, 2006 and 2007 are presented in a manner consistent with the segment reporting starting in 2008.
The line item “Other” includes expenses not allocated to the reportable segments and corporate related
costs and expenses.
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1
Year ended December 31, 2008 Compared to Year Ended
December 31, 2007
Net Revenues
Net revenues from our property and casualty insurance segment
increased by 55.9% from RMB384.5 million in 2007 to RMB599.4 million (US$87.8 million) in 2008. The
increase primarily resulted from the acquisitions of controlling interests in 5 affiliated insurance agencies and one
insurance brokerage, in 2008 that were primarily engaged in the distribution of property and casualty insurance
products, a significant increase in the number of property and casualty insurance sales agents in our distribution and
service network, and higher productivity of sales agents.
Net revenues from our life insurance segment increased by
142.3% from RMB63.6 million in 2007 to RMB154.2 million (US$22.6 million) in 2008. The increase was
primarily attributable to (1) the establishment of seven new affiliated insurance agencies, and the acquisitions
of controlling interests in two affiliated insurance agencies, in 2008 that were primarily engaged in the distribution
of life insurance products, (2) a significant increase in the number of life insurance sales agents in our
distribution and service network, (3) slightly higher commission and fee rates, (4) higher productivity of sales
agents and (5) a significant increase in performance bonuses paid by life insurers as a result of growth in sales
volume and more contracts being entered into with life insurers at corporate headquarter levels, which allowed us to
obtain more favorable terms by combining the sales volumes of all of our affiliated insurance intermediary companies
located in different parts of the country.
We only began providing claims adjusting services in 2008,
through three newly acquired claims adjusting firms. Net revenues from our claims adjusting segment in 2008 were
primarily derived from the provision of claims adjusting services in connection with property and casualty insurance,
marine cargo insurance and automobile insurance
.
We acquired 55% of the equity interests in Datong Investment
in November 2008. Prior to our acquisition, Datong Investment had established an insurance agency in Beijing.
Subsequent to our acquisition, Datong Investment had established seven new insurance agencies in seven provinces by
April 30, 2009. Datong Investment currently operates eight insurance agencies that focus primarily on the
distribution of life insurance products.
Operating Costs and Expenses
Operating costs and expenses for our property and casualty
insurance segment increased by 49.3% from RMB214.2 million in 2007 to RMB319.8 million (US$46.9 million) in
2008. The increase was primarily due to the increase in commissions and fees paid to our property and casualty
insurance sales agents, which was in line with the increase in revenues.
Operating costs and expenses for our life insurance segment
increased by 113.9% from RMB59.7 million in 2007 to RMB127.6 million (US$18.7 million) in 2008. The
increase was primarily due to the increase in commissions and fees paid to our life insurance sales agents as a result
of higher sales volume, particularly due to the increase in the sales of new insurance policies.
Operating costs and expenses for our claims adjusting services
in 2008 primarily consisted of salaries for claim adjustors and traveling expenses. Operating costs and expenses for
our Datong segment in 2008 primarily consisted of commissions and fees paid to the sales agents
.
Income from Operations
As a result of the foregoing factors, income from operations
for our property and casualty insurance segment increased by 64.2% from RMB170.3 million in 2007 to
RMB279.6 million (US$41.0 million) in 2008. Meanwhile, income from operations for our life insurance segment
increased by 569.4% from RMB4.0 million in 2007 to RMB26.5 million (US$3.9 million) in 2008.
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2
Year ended December 31, 2007 Compared to Year Ended
December 31, 2006
Net Revenues
Net revenues from our property and casualty insurance segment
increased by 76.9% from RMB217.3 million in 2006 to RMB384.5 million in 2007. The increase primarily resulted
from (1) a significant increase in the number of property and casualty sales agents in our distribution network,
(2) slightly higher commission and fee rates, (3) higher productivity of sales agents and (4) the
establishment of one new affiliated insurance intermediary company in 2006 that was primarily engaged in the
distribution of property and casualty insurance products. The financial results of the newly established company were
more fully reflected in 2007.
Net revenues from our life insurance segment increased by
117.6% from RMB29.2 million in 2006 to RMB63.6 million in 2007. The increase was primarily attributable to
(1) a significant increase in the number of life insurance sales agents in our distribution network,
(2) slightly higher commission and fee rates, (3) higher productivity of sales agents and (4) the
establishment of three insurance intermediary companies and the acquisitions of majority interests in three affiliated
insurance agencies in 2006 that were primarily engaged in the distribution of life insurance products. The financial
results of those newly established and acquired companies were more fully reflected in 2007.
Operating Costs and Expenses
Operating costs and expenses for our property and casualty
insurance segment increased by 53.0% from RMB140.0 million in 2006 to RMB214.2 million in 2007. The increase was
primarily due to the increase in commissions and fees paid to our sales agents for the distribution of property and
casualty insurance products, which was in line with the increase in net revenues.
Operating costs and expenses for our life insurance segment
increased by 148.3% from RMB24.0 million in 2006 to RMB59.7 million in 2007. The increase largely tracked the
growth in sales volume, particularly the growth in the distribution of new life insurance policies, for which we
generally paid higher commissions and fees to our sales agents as compared with renewal insurance policies
Income from Operations
As a result of the foregoing factors, income from operations
for our property and casualty insurance segment increased by 120.4% from RMB77.2 million in 2006 to
RMB170.3 million in 2007. Meanwhile, income from operations for our life insurance segment decreased by 24.2% from
RMB5.2 million in 2006 to RMB4.0 million in 2007.
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Table of Contents
For the Year Ended December 31,
2004
2005
2006
2007
2008
RMB
RMB
RMB
RMB
RMB
US$
(in thousands, except share, per share and per ADS data)
33,401
142,520
245,652
446,929
843,107
123,577
564
1,179
897
1,216
855
125
33,965
143,699
246,549
448,145
843,962
123,702
(4,256
)
(65,752
)
(133,076
)
(232,550
)
(436,803
)
(64,024
)
(2,432
)
(5,527
)
(11,288
)
(9,514
)
(17,328
)
(2,540
)
(120,576
)
(78,879
)
(52,119
)
(68,177
)
(180,031
)
(26,388
)
(127,264
)
(150,158
)
(196,483
)
(310,241
)
(634,162
)
(92,952
)
(93,299
)
(6,459
)
50,066
137,904
209,800
30,750
525
77
49
445
5,364
16,235
47,967
7,031
(15
)
(19
)
(34
)
(25
)
(95
)
(14
)
158
(15
)
5
(2
)
(28
)
(4
)
(93,107
)
(6,048
)
55,401
154,112
258,169
37,840
396
(672
)
573
(3,178
)
(62,438
)
(9,152
)
(92,711
)
(6,720
)
55,974
150,934
195,731
28,688
135
20
27
1,421
2,424
(4,129
)
(605
)
(92,711
)
(6,693
)
57,395
153,358
191,737
28,103
(0.5552
)
(0.0139
)
0.0883
0.2178
0.2101
0.0308
(0.5552
)
(0.0139
)
0.0875
0.2143
0.2090
0.0306
(11.1040
)
(0.2780
)
1.7660
4.3551
4.2025
0.6160
(11.1040
)
(0.2780
)
1.7500
4.2858
4.1803
0.6128
166,980,000
482,770,000
650,000,000
704,273,232
912,497,726
912,497,726
166,980,000
482,770,000
655,970,000
715,649,950
917,335,390
917,335,390
170
523
585
0.1023
(1)
Share-based compensation expenses included in our general and administrative expenses were
RMB24.1 million, RMB5.0 million and RMB45.7 million (US$6.7 million) in 2006, 2007 and 2008,
respectively.
(2)
The 2004 and 2005 dividends were declared in 2006 and the 2006 and 2007 dividends were
declared in 2007. These dividends were not paid at the time they were declared. In 2007, we
paid all of the previously declared but unpaid dividends totaling approximately RMB140.0
million (US$19.2 million). The per-share amounts for 2004, 2005 and 2006 were determined based
on the number of shares of CISG Holdings Ltd. outstanding as of the respective record dates
for the dividends declared, without giving effect to the 10,000-for-1 share exchange in July
2007.
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As of December 31,
2004
2005
2006
2007
2008
RMB
RMB
RMB
RMB
RMB
US$
(in thousands)
29,123
174,634
223,926
1,544,817
1,510,432
221,389
53,664
281,752
355,703
1,608,256
1,876,883
275,105
56,922
286,736
379,622
1,640,164
2,046,515
299,964
14,005
43,049
75,524
53,337
190,222
27,881
14,591
43,370
76,321
54,928
200,444
29,379
2,423
13,717
18,324
94,423
13,840
42,331
240,943
289,584
1,566,912
1,751,648
256,745
42,331
240,943
289,584
1,566,912
1,751,648
256,745
56,922
286,736
379,622
1,640,164
2,046,515
299,964
Noon Buying Rate
(RMB per US$1.00)
Period
Period
End
Average
(1)
Low
High
8.2765
8.2768
8.2774
8.2764
8.0702
8.1826
8.2765
8.0702
7.8041
7.9579
8.0702
7.8041
7.2946
7.5806
7.8127
7.2946
6.8225
6.9193
7.2946
6.7800
6.8254
6.8281
6.8373
6.8220
6.8225
6.8539
6.8842
6.8225
6.8392
6.8361
6.8403
6.8225
6.8395
6.8363
6.8470
6.8241
6.8329
6.8360
6.8438
6.8240
6.8180
6.8306
6.8361
6.8180
6.8200
6.8197
6.8223
6.8176
(1)
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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engaging in misrepresentation or fraudulent activities when marketing or selling
insurance products or providing claims adjusting services to customers;
hiding unauthorized or unsuccessful activities, resulting in unknown and unmanaged
risks or losses; or
otherwise not complying with laws and regulations or our control policies or
procedures.
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exercise effective control over Meidiya Investment, Yihe Investment and their
subsidiaries;
receive a substantial portion of the economic benefits of the subsidiaries of
Meidiya Investment and Yihe Investment in consideration for the services provided by
our wholly-owned subsidiaries in China; and
have an exclusive option to purchase all or part of the equity interests in each of
Meidiya Investment, Yihe Investment and their subsidiaries when and to the extent
permitted by PRC law.
revoking the business and operating licenses of our PRC subsidiaries and
consolidated affiliated entities;
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;
requiring us, our PRC subsidiaries or our consolidated affiliated entities to
restructure the relevant ownership structure or operations; or
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;
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
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;
changes in financial estimates by securities research analysts;
conditions in the Chinese insurance industry;
changes in the economic performance or market valuations of other insurance
intermediaries;
announcements by us or our competitors of new products, acquisitions, strategic
partnerships, joint ventures or capital commitments;
addition or departure of key personnel;
fluctuations of exchange rates between the RMB and U.S. dollar or other foreign
currencies;
potential litigation or administrative investigations;
sales of additional ADSs; and
general economic or political conditions in China.
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% of Equity
Date of
Interests
Acquisition
(1)
or
Name of Acquired or
Attributable to
Main Insurance Products
Location
Establishment
(2)
Established Company
Us
Distributed or Services Provided
(Province)
Guangdong Fangzhong Insurance Surveyors & Loss Adjustors Co.,
Ltd.
(3)
51
%
Insurance claims adjusting services
Guangdong
Hubei Fanhua East
Century Insurance
Agency Co.,
Ltd.(Formerly known
as Hubei East
Century Insurance
Agency Co., Ltd.)
60
%
Distribution of life insurance products
Hubei
Tianjin Fanhua
Xianghe Insurance
Agency Co., Ltd.
70
%
Distribution of property and casualty
insurance products
Tianjin
Changsha Lianyi
Insurance Agency
Co., Ltd.
70
%
Distribution of property and casualty
insurance products
Hunan
Jiangmen Fanhua
Zhicheng Insurance
Agency Co., Ltd.
70
%
Distribution of property and casualty
insurance products
Guangdong
Zhejiang Fanhua
Tongchuang
Insurance Agency
Co., Ltd.
60
%
Distribution of life insurance products
Zhejiang
Hebei Lianda
Insurance Agency
Co., Ltd.
(4)
39
%
Distribution of property and casualty
insurance products
Hebei
Liaoning Fanhua
Gena Insurance
Agency Co., Ltd.
60
%
Distribution of life insurance products
Liaoning
Fuzhou Guoxin
Insurance Agency
Co., Ltd.
(5)
39
%
Distribution of property and casualty
insurance products
Fujian
CNinsure Surveyors
& Loss Adjustors
Co.,
Ltd.(Previously
known as Shenzhen
Khubon Insurance
Surveyors & Loss
Adjustors Co.,
Ltd.)
(6)
51
%
Insurance claims adjusting services
Guangdong
Guangxi Xingfu
Insurance Agency
Co., Ltd
(7)
60
%
Distribution of property and casualty
insurance products
Guangxi
Shanghai Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd.
51
%
Insurance claims adjusting services
Shanghai
Nanping Fanhua
Jinying Insurance
Agency Co.,
Ltd.
(8)
28
%
Distribution of life insurance products
Fujian
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% of Equity
Date of
Interests
Acquisition
(1)
or
Name of Acquired or
Attributable to
Main Insurance Products
Location
Establishment
(2)
Established Company
Us
Distributed or Services Provided
(Province)
Jiangsu Fanhua
Lianchuang
Insurance Agency
Co., Ltd.
70
%
Distribution of property and casualty
insurance products
Jiangsu
Quanzhou Fanlian
Insurance Agency
Co., Ltd.
(8)
28
%
Distribution of life insurance products
Fujian
Jiangxi Fanhua
Insurance Agency
Co., Ltd.
70
%
Distribution of life insurance products
Jiangxi
Shenyang Fanhua
Rongcheng Insurance
Agency Co.,
Ltd.
(9)
33
%
Distribution of life insurance products
Liaoning
Shenzhen Huameng
Joint Insurance
Brokerage Co., Ltd.
55
%
Distribution of property and casualty
insurance products
Guangdong
Beijing Fanhua
Datong Investment
Management Co.,
Ltd.
55
%
Holding company
Beijing
Beijing Datong
Insurance Agency
Co., Ltd.
(10)
55
%
Distribution of life insurance products
Beijing
Yunnan Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Yunnan
Hainan Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Hainan
Jiangsu Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Jiangsu
Suining Fanhua
Dezhong Insurance
Agency Co.,
Ltd.
(12)
39
%
Distribution of life insurance products
Sichuan
Hebei Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Hebei
Shaanxi Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Shaanxi
Shandong Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Shandong
Henan Datong
Insurance Agency
Co., Ltd.
(11)
33
%
Distribution of life insurance products
Henan
Hangzhou Fanhua
Zhixin Insurance
Agency Co.,
Ltd.
51
%
Distribution of property and casualty
insurance products
Zhejiang
Zhengzhou Fanhua
Anlian Insurance
Agency Co., Ltd.
51
%
Distribution of property and casualty
insurance products
Henan
(1)
Refers to the date on which we began to consolidate the acquired entity.
(2)
Refers to the date on which we obtained business licenses for the newly established company.
(3)
We initially acquired 60% of the equity interests in Guangdong Fangzhong Insurance Surveyors
& Loss Adjustors Co. Ltd., or Fangzhong Adjusting, on January 1, 2008. In connection with the
acquisition of 100% of the equity interests in Shenzhen Khubon Insurance Surveyors & Loss
Adjustors Co., Ltd., or Khubon Adjusting, by Fangzhong Adjusting on May 1, 2008, the original
shareholders of Khubon Adjusting acquired 29.4% of the equity interests in Fangzhong Adjusting
through capital injection, and our equity interests in Fangzhong Adjusting decreased to 51%.
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(4)
70% of the equity interests in this company are held directly by Shijiazhuang Fanhua Anxin
Investment Co., Ltd., which is 55%-owned by Sichuan Yihe Investment Co., Ltd.
(5)
70% of the equity interests in this company are held directly by Fujian Fanhua Investment
Co., Ltd., which is 55%-owned by Guangdong Meidiya Investment Co., Ltd.
(6)
This company is wholly-owned by Fangzhong Adjusting.
(7)
We disposed of the 60% equity interests in this company in December 2008 and recognized a
gain on disposal of RMB525,000.
(8)
51% of the equity interests in each of these companies are held directly by Fujian Fanhua Investment Co., Ltd.
(9)
55% of the equity interests in this company are held directly by Liaoning Fanhua Gena Insurance Agency Co., Ltd.
(10)
This company is wholly-owned by Beijing Fanhua Datong Investment Management Co., Ltd.
(11)
60% of the equity interests in each of these companies are held by Beijing Fanhua Datong Investment Management Co., Ltd.
(12)
55% of the equity interests in this company are held directly by Sichuan
Fanhua Xintai Insurance Agency Co., which is 70%-owned by Sichuan Yihe Investment Co., Ltd.
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six of our affiliated insurance agencies ranked Nos. 1, 2, 4, 8, 9 and 19,
respectively, among Chinas top 20 insurance agencies, together accounting for
approximately 11.0% of the total revenues of all insurance agencies in China;
one of our affiliated insurance brokerages ranked No. 13 among Chinas top 20
insurance brokerages, accounting for approximately 1.5% of the total revenues of all
insurance brokerages in China; and
our three affiliated insurance claims adjusting firms ranked Nos. 2, 3 and 9,
respectively, among Chinas top 20 insurance claims adjusting firms, collectively
accounting for 13.0% of the total revenues of all insurance claims adjusting firms in
China.
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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.
Individual Accident Insurance
. The individual accident insurance products we
distribute generally provide a guaranteed benefit 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, during the coverage period, which usually
is one year or a shorter period. 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.
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.
Homeowner Insurance
. The homeowner insurance products we distribute are primarily
home mortgage-based insurance policies. Home mortgage-based policies cover damage to
mortgaged property caused by a number of standard risks such as fire, flood and
explosion. Some policies also provide mortgage repayment protection in the event the
policyholder is unable to make mortgage payment due to death or injury.
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.
Liability Insurance
. The liability insurance products we distribute are primarily
product liability and employers 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.
Construction Insurance
. The construction insurance products we distribute cover
property damages and personal injury losses caused by natural disasters and accidents
in connection with construction projects in China.
Individual Whole Life Insurance
. The individual whole life insurance products we
distribute provide insurance for the insured persons 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.
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.
Individual Endowment Life Insurance
. The individual endowment products we
distribute generally provide maturity benefits if the insured reaches 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.
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, e.g., 18, for a fixed time period, e.g., four years, and
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.
Individual Health Insurance
. The individual health insurance products we distribute
primarily consist of dread disease insurance products, which provide guaranteed
benefits for specified dread diseases 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.
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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 survey, appraisal and
analysis.
Claims Adjusting
. When an accident involving the insured subject matter has
occurred, we conduct 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, indemnity proposal and, where
appropriate, 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 can
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.
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A Core Business System, which encompasses our life insurance unit, property and
casualty 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;
An e-learning system to provide online training to sales agents; and
A nationwide IT network and data center to support front-office operations.
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Number of In-house
Number of Sales and
Sales
Number of Sales
Number of In-house
Province
Service Outlets
Representatives
Agents
Adjustors
18
36
6,039
14
54
464
3,552
478
64
43
4,213
60
26
4,141
20
32
3,056
18
59
1,953
25
16
1,799
38
3
720
52
11
752
9
4
502
41
12
402
10
15
368
23
6
350
28
28
260
3
1
258
0
8
182
38
6
80
0
1
45
0
1
4
1
3
1
2
367
543
28,672
866
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Professional insurance intermediaries.
The professional insurance intermediary
sector in China is at an early stage of development and highly fragmented, accounting
for only 5.3% of the total insurance premiums generated in China in 2008. Several
insurance intermediary companies have received private equity or venture capital
funding in recent years and are actively pursuing expansion, including China Zhonghe
Ltd., Cars.cn Ltd. and HuaKang Financial Service Inc. We believe that we can compete
effectively with these insurance intermediary companies because we have a longer
operational history and over the years have assembled a strong and stable team of
managers and sales professionals and 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.
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Insurance companies.
The distribution of individual insurance products in China
historically has been dominated by insurance companies, which usually use both in-house
sales force and exclusive sales agents to distribute their own products. 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.
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 usually confined to those related to their main lines
of business, such as endowment and annuity 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.
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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 policy terms and premium rates for certain
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 Peoples Bank of China, 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 CIRCs 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.
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Strengthening protection of the insureds 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; and
order the suspension of all or part of an insurance company or an insurance
intermediarys business.
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selling insurance products on behalf of the insurer principal;
collecting insurance premiums on behalf of the insurer principal;
conducting loss surveys and handling claims of insurance businesses on behalf of the
insurer principal; and
other business activities specified 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 specified by the CIRC.
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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; and
other business activities approved by the CIRC.
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Foreign Currency Administration Rules (1996), as amended, or the Exchange Rules; and
Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996),
or the Administration Rules.
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Wholly Foreign-Owned Enterprise Law (1986), as amended; and
Wholly Foreign-Owned Enterprise Law Implementing Rules (1990), as amended.
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.
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exercise effective control over Meidiya Investment, Yihe Investment and their
subsidiaries;
receive a substantial portion of the economic benefits of the subsidiaries of
Meidiya Investment and Yihe Investment in consideration for the services provided by
our subsidiaries in China; and
have an exclusive option to purchase all or part of the equity interests in each of
Meidiya Investment and Yihe Investment when and to the extent permitted by PRC law.
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(1)
Direct or indirect ownership attributable to Yihe Investment and Meidiya Investment.
(2)
The remaining equity interests are held by one of our executive officers on behalf of our company.
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not transfer, pledge or otherwise dispose of or encumber his equity interests in
Meidiya Investment without the prior written consent of Xinlian Management, except for
equity pledge for the benefit of Xinlian Management.
not take any action without the prior written consent of Xinlian Management, if the
action will have a material impact on the assets, business and liabilities of Meidiya
Investment.
not vote for, or execute any resolutions 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 Meidiya Investment without the prior written consent of
Xinlian Management, except to Xinlian Management or its designee.
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 Meidiya
Investment without the prior written consent of Xinlian Management.
vote to elect the directors candidates nominated by Xinlian Management.
cause Meidiya Investment not to supplement, amend or modify its articles of
association in any manner, increase or decrease registered capital or change the
capital structure in any way without the prior written consent of Xinlian Management.
cause Meidiya Investment not to execute any contract with a value exceeding
RMB100,000 without the prior written consent of Xinlian Management, except in the
ordinary course of business.
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the ownership structures of Meidiya Investment and Yihe Investment, their
subsidiaries and our subsidiaries in China comply with all existing PRC laws and
regulations;
the contractual arrangements among our PRC subsidiaries, Meidiya Investment, Yihe
Investment, their 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, Meidiya Investment and Yihe
Investment and their subsidiaries comply in all material respects with existing PRC
laws and regulations.
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the overall premium growth of the Chinese insurance industry;
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 sale force;
acquisitions;
commission rates for individual sales agents;
product and service mix;
share-based compensation expenses; and
seasonality.
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commissions and fees paid by insurance companies, which accounted for 99.6%, 99.7%
and 99.9% of our net revenues for 2006, 2007 and 2008, respectively; and
other service fees, which refers to fees paid by insurance companies for certain
settlement-related services provided by us to the insured on behalf of the insurance
companies and accounted for 0.4%, 0.3% and 0.1% of our net revenues for 2006, 2007 and
2008, respectively.
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Year Ended December 31,
2006
2007
2008
RMB
%
RMB
%
RMB
US$
%
(in thousands except percentages)
225,027
91.6
400,954
89.7
633,530
92,859
75.1
20,625
8.4
45,975
10.3
120,565
17,671
14.3
89,012
13,047
10.6
245,562
100.0
446,929
100.0
843,107
123,577
100.0
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Year Ended December 31,
2006
2007
2008
RMB
%
RMB
%
RMB
US$
%
(in thousands except percentages)
246,549
100.0
448,145
100.0
843,962
123,702
100.0
(133,076
)
(54.0
)
(232,550
)
(51.9
)
(436,803
)
(64,024
)
(51.8
)
(11,288
)
(4.6
)
(9,514
)
(2.1
)
(17,328
)
(2,540
)
(2.1
)
(52,119
)
(21.1
)
(68,177
)
(15.2
)
(180,031
)
(26,388
)
(21.3
)
(196,483
)
(79.7
)
(310,241
)
(69.2
)
(634,162
)
(92,952
)
(75.2
)
employment benefits for our in-house sales staff and claims adjustors;
office rental, telecommunications expenses and office supply expenses incurred in
connection with sales activities; and
advertising expenses.
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salaries and benefits for our administrative staff;
share-based compensation expenses for managerial and administrative staff;
professional fees paid for certain PRC tax planning, market research, legal and
auditing services;
compliance-related expenses, including expenses for professional services;
depreciations and amortizations;
office rental expenses;
travel expenses;
entertainment expenses;
office supply expenses for our administrative staff; and
foreign exchange loss.
For the Year Ended December 31,
2006
2007
2008
RMB
%
RMB
%
RMB
US$
%
(in thousands except percentages)
52,119
100.0
68,177
100.0
180,031
26,388
100.0
24,142
46.3
5,037
7.4
45,659
6,692
25.4
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Entities Name
Tax Holiday Period
January 1, 2005 December 31, 2007
January 11, 2005 December 31, 2007
January 1, 2005 December 31, 2006
March 14, 2005 December 31, 2007
March 28, 2005 December 31, 2007
January 1, 2005 December 31, 2007
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For the Year Ended December 31,
2006 to
2007
2007 to 2008
Percentage
Percentage
2006
Change
2007
Change
2008
RMB
%
RMB
%
RMB
US$
(in thousands except percentages)
245,652
81.9
446,929
88.6
843,107
123,577
897
35.6
1,216
(29.7
)
855
125
246,549
81.8
448,145
88.3
843,962
123,702
(133,076
)
74.7
(232,550
)
87.8
(436,803
)
(64,024
)
(11,288
)
(15.7
)
(9,514
)
82.1
(17,328
)
(2,540
)
(52,119
)
30.8
(68,177
)
164.1
(180,031
)
(26,388
)
(196,483
)
57.9
(310,241
)
104.4
(634,162
)
(92,952
)
50,066
175.4
137,904
52.1
209,800
30,750
*
*
525
77
5,364
202.7
16,235
195.5
47,967
7,031
(34
)
(26.5
)
(25
)
280.0
(95
)
(14
)
5
*
(2
)
1,300.0
(28
)
(4
)
55,401
178.2
154,112
67.5
258,169
37,840
573
*
(3,178
)
1,864.7
(62,438
)
(9,152
)
55,974
169.7
150,934
29.7
195,731
28,688
*
*
135
20
1,421
(70.6
)
2,424
270.3
(4,129
)
(605
)
57,395
167.2
153,358
25.0
191,737
28,103
*
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.
a 58.0% increase in commissions and fees derived from the distributions of property
and casualty insurance products, from RMB401.0 million in 2007 to RMB633.5 million
(US$92.9 million) in 2008;
a 162.2% increase in commissions and fees derived from the distributions of life
insurance products, from RMB46.0 million in 2007 to RMB120.6 million (US$17.7 million)
in 2008; and
RMB89.0 million (US$13.0 million) service fees derived from the provision of claims
adjusting services which we started providing in 2008.
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a 78.2% increase in commissions and fees derived from the distributions of property
and casualty insurance products, from RMB225.0 million in 2006 to RMB401.0 million in
2007; and
a 122.9% increase in commissions and fees derived from the distributions of life
insurance products, from RMB20.6 million in 2006 to RMB46.0 million in 2007.
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•
property and casualty insurance segment, which refers to entities that have been primarily engaged in the
distribution of property and casualty insurance products;
•
life insurance segment, which refers to entities that have been primarily engaged in the distribution of life
insurance products;
•
claims adjusting segment, which refers to our claims adjusting firms that are engaged in claims adjusting
services such as pre-underwriting survey, claims adjusting, disposal of residual value, loading and unloading
supervision and consulting services; and
•
Datong segment, which refers to Beijing Fanhua Datong Investment Management Co., Ltd. and entities under its
control, which are primarily engaged in the distribution of life insurance products.
For the Year Ended December
31,
2006 to 2007
2007 to 2008
2006
Percentage
Change
2007
Percentage
Change
2008
RMB
%
RMB
%
RMB
US$
(in thousands except percentages)
217,308
76.9
384,521
55.9
599,353
87,849
29,241
117.6
63,624
142.3
154,174
22,598
—
—
—
—
89,012
13,047
—
—
—
—
1,423
208
246,549
81.8
448,145
88.3
843,962
123,702
140,012
53.0
214,268
49.3
319,776
46,871
24,035
148.3
59,672
113.9
127,634
18,708
—
—
—
—
70,961
10,401
—
—
—
—
5,837
856
32,436
11.9
36,301
202.4
109,954
16,116
196,483
57.9
310,241
104.4
634,162
92,952
77,233
120.4
170,253
64.2
279,577
40,978
5,211
(24.2
)
3,952
569.4
26,540
3,890
—
—
—
—
18,051
2,646
—
—
—
—
(4,414
)
(648
)
(32,378
)
12.1
(36,301
)
202.9
(109,954
)
(16,116
)
50,066
175.4
137,904
52.1
209,800
30,750
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For the Year Ended December 31,
2006
2007
2008
RMB
RMB
RMB
US$
(in thousands)
53,936
167,375
254,754
37,341
(2,411
)
63,214
(256,055
)
(37,532
)
(2,149
)
1,111,273
19,576
2,869
49,376
1,341,862
18,275
2,678
174,634
223,926
1,544,817
226,430
223,926
1,544,817
1,510,432
221,389
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Payment Due by Period
Less than
Total
1 year
1-3 years
3-5 years
(in thousands of RMB)
38,136
15,907
19,539
2,690
7,958
7,958
¾
¾
46,094
23,865
19,539
2,690
(1)
Represents payment commitment in connection with construction our Core Business System and
ERP-based financial and accounting system.
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Directors and Executive Officers
Age
Position/Title
43
Chairman and Chief Executive Officer
55
President and Director
38
Chief Financial Officer
43
Chief Operating Officer and Chief Information Officer
39
Vice President and Head of the Property and Casualty
Insurance Unit
43
Vice President and Head of the Life Insurance Unit
58
Director
66
Independent Director
55
Independent Director
40
Independent Director
54
Independent Director
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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.
Table of Contents
Ordinary Shares
Underlying
Outstanding
Exercise Price
Name
Options
(Per Share)
Grant Date
Expiration Date
4,500,000
US$
0.278
November 21, 2008
March 31, 2015
3,400,000
US$
0.278
November 21, 2008
March 31, 2015
3,350,000
US$
0.278
November 21, 2008
March 31, 2015
2,050,000
US$
0.278
November 21, 2008
March 31, 2015
2,050,000
US$
0.278
November 21, 2008
March 31, 2015
1,950,000
US$
0.278
November 21, 2008
March 31, 2015
400,000
US$
0.278
November 21, 2008
March 31, 2015
400,000
US$
0.278
November 21, 2008
March 31, 2015
600,000
US$
0.278
November 21, 2008
March 31, 2015
600,000
US$
0.278
November 21, 2008
March 31, 2015
10,000,000
US$
0.336
March 9, 2009
March 31, 2015
12,700,000
US$
0.278
November 21, 2008
March 31, 2015
2,840,000
US$
0.80
October 30, 2007
March 31, 2014
4,652,631
(1)
RMB
2.3214
February 03, 2007
February 1, 2017
(1)
Mr. David Tang, our former chief financial officer, resigned for personal reasons, effective
as of April 1, 2008. Options to purchase 4,652,631 ordinary shares, or 85% of the options
granted to him on February 3, 2007, became vested and immediately exercisable as of April 1,
2008. The remaining options granted to him in February 2007 were canceled.
Table of Contents
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
managements 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.
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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.
Table of Contents
Number of
Employees of Total
%
449
23.0
%
153
8.0
%
551
28.0
%
834
42.0
%
1,987
100.0
%
each of our current directors and executive officers; and
each person known to us to own beneficially more than 5% of our shares.
Shares Beneficially Owned
Number
%
236,121,393
25.9
236,121,393
25.9
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Shares Beneficially Owned
Number
%
171,600,000
18.8
*
*
*
*
407,881,393
44.7
160,705,286
17.6
236,121,393
25.9
171,600,000
18.8
*
Less than 1% of our total outstanding ordinary shares.
Except for Dr. Wu and Mr. Ma, the business address of our directors and executive officers is
c/o 21/F, Yinhai Building, No. 299 Yanjiang Zhong Road, Guangzhou, Guangdong 510110, Peoples
Republic of China.
(1)
Includes 236,121,393 ordinary shares of our company held by Kingsford Resources Limited, or
Kingsford Resources, a company incorporated in the British Virgin Islands. Approximately 93.3%
of the total outstanding shares of Kingsford Resources are held by High Rank Investments
Limited, or High Rank Investments, a company incorporated in the British Virgin Islands. Mr.
Hu holds approximately 87.6% of the total outstanding shares of High Rank Investments. Mr. Hu
disclaims beneficial ownership of all of our shares held by Kingsford Resources except to the
extent of his pecuniary interest therein.
(2)
Includes 236,121,393 ordinary shares of our company held by Kingsford Resources.
Approximately 93.3% of the total outstanding shares of Kingsford Resources are held by High
Rank Investments. Mr. Lai holds approximately 12.4% of the total outstanding shares of High
Rank Investments. Mr. Lai disclaims beneficial ownership of all of our shares held by
Kingsford Resources except to the extent of his pecuniary interest therein.
(3)
Mr. Ge holds approximately 50.0% of the total outstanding shares of Better Rise Investments
Limited, or Better Rise Investments, a company incorporated in the British Virgin Islands.
Better Rise Investments owns approximately 6.7% of Kingsford Resources. Therefore, Mr. Ge may
be deemed to beneficially own, indirectly through Better Rise Investments and Kingsford
Resources, approximately 7,861,256 ordinary shares of our company. Mr. Ge disclaims beneficial
ownership of all of our shares held by Kingsford Resources except to the extent of his
pecuniary interest therein.
(4)
Mr. Wang holds approximately 25.2% of the total outstanding shares of Better Rise Investments
and therefore may be deemed to beneficially own, indirectly through Better Rise Investments
and Kingsford Resources, approximately 3,955,998 ordinary shares of our company. Mr. Wang
disclaims beneficial ownership of all of our shares held by Kingsford Resources except to the
extent of his pecuniary interest therein.
(5)
Mr. Li holds approximately 7.2% of the total outstanding shares of Better Rise Investments
and therefore may be deemed to beneficially own, indirectly through Better Rise Investments
and Kingsford Resources, approximately 1,129,077 ordinary shares of our company. Mr. Li
disclaims beneficial ownership of all of our shares held by Kingsford Resources except to the
extent of his pecuniary interest therein.
(6)
Includes 171,600,000 ordinary shares held by CDH Inservice Limited, or 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 Company Limited, or 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. Dr. Wu is director, managing partner and member
of the investment committee of CDH Growth Capital Holdings. Dr. Wu disclaims beneficial
ownership of all of our shares held by CDH Inservice except to the extent of his pecuniary
interest therein. The business address of Dr. Wu is c/o CDH China Growth Capital Holdings
Company Limited, 2601, 26th Floor, Lippo Centre Tower 2, 89 Queensway, Admiralty, Hong Kong.
(7)
Includes 160,705,286 ordinary shares held by Cathay Auto Services Limited, or Cathay Auto, a
company incorporated in the British Virgin Islands. The Cathay Investment Fund, Limited, a
private investment fund organized under the laws of the Cayman Islands, owns 100% of Cathay
Auto. New China Investment Management Inc., a company incorporated under the laws of Delaware,
is the investment manager for The Cathay Investment Fund, Limited. and has the power to direct
The Cathay Investment Fund, Limited as to the voting and disposition of shares directly and
indirectly held by The Cathay Investment Fund, Limited. The voting and investment decisions for shares beneficially owned by The Cathay
Investment Fund, Limited are made by New China Investment Management, Inc., the principals of which are Mr. Paul Wolansky,
Mr. Donald Sussman and Mr. Hermann Leung. The business address of
Cathay Auto is c/o New China Investment Management Inc., One Dock Street, Stamford,
Connecticut 06902-5836, U.S.A.
(8)
Includes 236,121,393 ordinary shares held by Kingsford Resources. Approximately 93.3% of the
total outstanding shares of Kingsford Resources are held by High Rank Investments, which is
87.6% owned by Mr. Yinan Hu, our chairman and chief executive officer, and 12.4% owned by Mr.
Qiuping Lai, our president. The remaining 6.7% of the total outstanding shares of Kingsford
Resources are held by Better Rise Investments Limited, which is owned by three of our executive
officers and Mr. Yinan Hus wife. The registered address of Kingsford Resources is Beaufort
House, P.O. Box 438, Road Town, Tortola, British Virgin Islands.
Table of Contents
(9)
Includes 171,600,000 ordinary shares held by CDH Inservice. All of the issued and outstanding
shares of CDH Inservice are owned by 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 investment
committee of CDH Growth Capital Holdings is comprised of Wu Shangzhi and two other
individuals. Changes to the investment committee require the approval of the directors of CDH
Growth Capital Holdings. The directors of CDH Growth Capital Holdings are nominated by the
principal shareholders of CDH Growth Capital Holdings, being (i) an affiliate of Capital Z
Partners, (ii) an affiliate of the Government of Singapore Investment Corporation, and (iii)
China Diamond Holdings II, L.P., a British Virgin Islands limited partnership controlled by
senior members of the CDH Fund II investment team. CDH Growth Capital Holdings disclaims
beneficial ownership of all of our shares held by CDH Inservice except to the extent of its
pecuniary interest therein. The registered address of CDH Inservice is c/o Maples Finance BVI
Limited, P.O. Box 173, Kingston Chambers, Road Town, Tortola, British Virgin Islands.
Table of Contents
Table of Contents
Sales Price
High
Low
US$
US$
16.63
5.44
15.69
8.51
16.63
11.30
14.41
8.16
11.00
5.44
9.59
6.26
11.00
5.44
9.42
6.56
9.59
6.75
8.05
6.26
7.66
6.70
8.45
7.00
8.26
7.35
Table of Contents
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banks;
financial institutions;
insurance companies;
broker dealers;
traders that elect to mark to market;
tax-exempt entities;
persons liable for alternative minimum tax;
persons holding an ADS or ordinary share as part of a straddle, hedging, conversion
or integrated transaction;
persons that actually or constructively own 10% or more of our voting stock;
persons who acquired ADSs or ordinary shares pursuant to the exercise of any
employee stock options or otherwise as compensation; or
persons holding ADSs or ordinary shares through partnerships or other pass-through
entities.
a citizen or resident of the United States;
a corporation (or other entity taxable as a corporation) organized under the laws of
the United States, any state thereof or the District of Columbia;
an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
a trust that (1) is subject to the primary supervision of a court within the United
States and the control of one or more U.S. persons or (2) has a valid election in
effect under applicable U.S. Treasury regulations.
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at least 75% of its gross income 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 a taxable year) is attributable to assets that produce or are held
for the production of passive income. We refer to this test as the asset test.
the excess distribution or 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 year 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 that year and the interest charge applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
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approximately US$1.4 million to fund establishment of new insurance intermediary
companies;
approximately US$24.1 million to fund acquisitions; and
approximately US$7.1 million to construct our Core Business System and ERP-based
financial and accounting system.
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Guangdong Fangzhong Insurance Surveyors & Loss Adjustors Co., Ltd., acquired
on January 1, 2008;
Hubei Fanhua East Century Insurance Agency Co.,Ltd., acquired on February 1, 2008;
Jiangmen Fanhua Zhicheng Insurance Agency Co., Ltd., acquired on February 1, 2008;
Tianjin Fanhua Xianghe Insurance Agency Co., Ltd., acquired on February 1, 2008;
Changsha Lianyi Insurance Agency Co.,Ltd., acquired on February 1, 2008;
Hebei Lianda Insurance Agency Co.,Ltd., acquired on March 1, 2008;
Liaoning Fanhua Gena Insurance Agency Co.,Ltd., acquired on April 1, 2008;
Fuzhou Guoxin Insurance Agency Co.,Ltd., acquired on April 1, 2008;
Table of Contents
CNinsure Surveyors & Loss Adjustors Co., Ltd. (formerly known as Shenzhen Khubon
Insurance Surveyors & Loss Adjustors Co., Ltd.), acquired on May 1, 2008;
Shanghai Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd., acquired on
June 2, 2008;
Beijing Fanhua Datong Investment Management Co., Ltd., acquired on November 1, 2008;
and
Shenzhen Huameng Joint Insurance Brokerage Co., Ltd., acquired on November 1, 2008.
Table of Contents
Table of Contents
For the Year Ended December 31,
2007
2008
(
in thousands of US$
)
950
788
1,800
5
41
25
171
(1)
Audit 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 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. The fees billed in 2007 represented fees for our initial
public offering in October 2007. The fees billed in 2008 represented fees for review of S-8 registration statements.
(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. The fees billed in 2008 represented tax planning for
variable interest entities and retainer fees for our company.
(4)
All other fees meant the aggregate fees billed in each of the fiscal years listed for
products and services provided by our independent registered public accounting firm, other
than the services reported in the other categories. The fees billed in 2007 represented U.S.
GAAP training fee. The fees billed in 2008 mainly represented fees for due
diligence service in August 2008.
Table of Contents
Exhibit Number
Description of Document
1.1
1.2
2.1
2.2
2.3
4.1
4.2
4.3
4.4
*
4.5
4.6
4.7
Table of Contents
Exhibit Number
Description of Document
4.8
4.9
4.10
4.11
4.12
4.13
*
4.14
*
4.15
*
8.1
*
11.1
12.1
*
12.2
*
13.1
*
13.2
*
15.1
*
15.2
*
15.3
*
*
Filed with this Annual Report on Form 20-F
Table of Contents
CNINSURE INC.
By:
/s/ Yinan Hu
Name:
Yinan Hu
Title:
Chairman and Chief Executive Officer
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
F-2
F-3
F-5
F-6
F-7
F-9
F-36
Table of Contents
Deloitte Touche Tohmatsu
Hong Kong
May 15, 2009
Table of Contents
(
In thousands, except for shares and per share data
)
As of December 31,
2007
2008
2008
RMB
RMB
US$
1,544,817
1,510,432
221,389
12,748
4,200
616
18,150
90,452
13,258
541
21
3
30,703
57,151
8,377
1,808
268
207,595
30,428
1,297
5,224
766
1,608,256
1,876,883
275,105
11,148
72,538
10,632
9,165
37,888
5,553
4,325
53,518
7,844
1,936
4,836
706
427
62
5,334
425
62
1,640,164
2,046,515
299,964
Table of Contents
(
In thousands, except for shares and per share data
)
As of December 31,
2007
2008
2008
RMB
RMB
US$
10,138
59,867
8,775
12,748
4,200
616
20,945
73,712
10,804
6,949
15,336
2,248
2,085
26,140
3,831
369
10,967
1,607
103
53,337
190,222
27,881
57
1,160
1,871
274
374
8,351
1,224
54,928
200,444
29,379
18,324
94,423
13,840
7,036
7,036
1,031
1,621,064
1,666,723
244,298
47,903
71,237
10,441
(87,941
)
80,462
11,794
(21,150
)
(73,810
)
(10,819
)
1,566,912
1,751,648
256,745
1,640,164
2,046,515
299,964
Table of Contents
(
In thousands, except for shares and per share data
)
Year Ended December 31,
2006
2007
2008
2008
RMB
RMB
RMB
US$
245,652
446,929
843,107
123,577
897
1,216
855
125
246,549
448,145
843,962
123,702
(133,076
)
(232,550
)
(436,803
)
(64,024
)
(11,288
)
(9,514
)
(17,328
)
(2,540
)
(52,119
)
(68,177
)
(180,031
)
(26,388
)
(196,483
)
(310,241
)
(634,162
)
(92,952
)
50,066
137,904
209,800
30,750
525
77
5,364
16,235
47,967
7,031
(34
)
(25
)
(95
)
(14
)
5
(2
)
(28
)
(4
)
55,401
154,112
258,169
37,840
573
(3,178
)
(62,438
)
(9,152
)
55,974
150,934
195,731
28,688
135
20
1,421
2,424
(4,129
)
(605
)
57,395
153,358
191,737
28,103
0.0883
0.2178
0.2101
0.0308
0.0875
0.2143
0.2090
0.0306
1.7660
4.3551
4.2025
0.6160
1.7500
4.2858
4.1803
0.6128
650,000,000
704,273,232
912,497,726
912,497,726
655,970,000
715,649,950
917,335,390
917,335,390
*
Table of Contents
(In thousands, except for shares and per share data)
Share Capital
Subscription
(Accumulated
Accumulated
Additional
receivable
deficit)
other
Number of
Paid-in
from
Statutory
retained
comprehensive
Comprehensive
Share
Amounts
Capital
shareholder
Reserves
earnings
loss
Total
income (loss)
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
650,000,000
5,073
347,386
(935
)
11,818
(122,304
)
(95
)
240,943
(6,788
)
935
935
22,395
22,395
57,395
57,395
57,395
(32,000
)
(32,000
)
12,461
(12,461
)
(84
)
(84
)
(84
)
650,000,000
5,073
369,781
24,279
(109,370
)
(179
)
289,584
57,311
262,497,726
1,963
1,246,246
1,248,209
(305
)
(305
)
5,037
5,037
153,358
153,358
153,358
(108,000
)
(108,000
)
23,624
(23,624
)
(20,971
)
(20,971
)
(20,971
)
912,497,726
7,036
1,621,064
47,903
(87,941
)
(21,150
)
1,566,912
132,387
45,659
45,659
191,737
191,737
191,737
23,334
(23,334
)
(52,660
)
(52,660
)
(52,660
)
912,497,726
7,036
1,666,723
71,237
80,462
(73,810
)
1,751,648
139,077
1,031
244,298
10,441
11,794
(10,819
)
256,745
20,385
Table of Contents
(
In thousands, except for shares and per share data
)
At December 31
2006
2007
2008
2008
RMB
RMB
RMB
US$
57,395
153,358
191,737
28,103
1,856
3,218
6,222
912
112
300
3,260
478
251
37
(1,421
)
(2,424
)
4,129
605
3,562
5,037
45,659
6,692
20,580
184
249
37
(525
)
(77
)
(16,509
)
8,419
(58,265
)
(8,540
)
(126
)
453
2,419
355
(11,031
)
(12,966
)
(13,827
)
(2,026
)
(721
)
(441
)
(3,927
)
(575
)
1,450
(4,137
)
48,415
7,096
1,383
5,335
(11,361
)
(1,665
)
(2,931
)
6,781
13,641
1,999
1,053
2,047
6,830
1,001
568
1,287
23,310
3,417
855
712
104
(1,468
)
253
(4,175
)
(612
)
53,936
167,375
254,754
37,341
(200
)
(189
)
(28
)
(427
)
(62
)
(6,285
)
(5,374
)
(51,828
)
(7,597
)
759
111
(4,834
)
20,000
(8,050
)
(23,868
)
(3,498
)
Table of Contents
(
In thousands, except for shares and per share data
)
At December 31
2006
2007
2008
2008
RMB
RMB
RMB
US$
(3,000
)
(440
)
1,545
226
1,026
(50,299
)
(187,595
)
(27,497
)
42,579
78,957
(1,382
)
(5,335
)
8,548
1,253
(2,411
)
63,214
(256,055
)
(37,532
)
432
(531
)
(395
)
(1,634
)
(239
)
6,220
6,769
10,612
1,555
1,364
10,598
1,553
(5,569
)
(3,310
)
(5,000
)
935
1,248,209
(140,000
)
(2,149
)
1,111,273
19,576
2,869
49,376
1,341,862
18,275
2,678
174,634
223,926
1,544,817
226,430
(84
)
(20,971
)
(52,660
)
(7,719
)
223,926
1,544,817
1,510,432
221,389
34
25
95
14
325
784
42,590
6,202
Table of Contents
(
In thousands, except for shares and per share data
)
(1)
Table of Contents
(2)
(a)
(b)
(c)
Table of Contents
(d)
(e)
(f)
Estimated useful
Estimated residual
life (years)
value
3-5
0%-3%
5-10
0%-3%
5
0%
(g)
Table of Contents
At December 31, 2008
Accumulated
Net carrying
Useful life
Cost
amortization
values
RMB
RMB
RMB
Indefinite
20,111
20,111
4.6 to 8.9 years
16,446
2,440
14,006
3 to 14 years
19,529
861
18,668
4.6 to 10 years
817
84
733
56,903
3,385
53,518
(h)
(i)
(j)
(k)
Table of Contents
(l)
(m)
(n)
(o)
(p)
Table of Contents
(q)
(r)
Table of Contents
(s)
(t)
(u)
(v)
(w)
(x)
Table of Contents
(y)
(z)
(aa)
Table of Contents
(3)
(a)
Guangdong
Shenzhen
Shanghai
Fangzhong
Khubon
Teamhead
RMB
RMB
RMB
3,523
26,356
6,417
6,414
14,159
8,272
9,444
11,693
(2,499
)
2,499
(438
)
(1,458
)
(1,482
)
7,000
51,000
24,900
Table of Contents
Fair value acquired
(RMB)
Economic life
Guangdong
Shenzhen
Shanghai
(years)
Fangzhong
Khubon
Teamhead
Indefinite
4,662
8,328
2,346
4.6-5.0
1,554
5,275
5,400
3.6-4.0
102
530
388
4.6-5.0
96
26
138
6,414
14,159
8,272
Year ended December 31,
2007
2008
RMB
RMB
(unaudited)
(unaudited)
498,073
867,382
140,471
214,782
155,178
196,591
0.2203
0.2154
RMB
19,337
18,145
6,389
665
(4,536
)
40,000
Table of Contents
Fair value
Useful life
acquired
(years)
RMB
14
17,815
10
330
18,145
Year ended December 31,
2007
2008
RMB
RMB
(unaudited)
(unaudited)
446,929
843,127
137,902
204,961
153,358
186,896
0.2178
0.2048
Fujian
Hubei East
Liaoning
Xinheng
Century
Gena
RMB
RMB
RMB
1,972
3,367
3,729
2,560
912
1,704
607
590
295
208
268
(421
)
(94
)
(291
)
(1,406
)
3,000
5,000
6,000
Table of Contents
Year ended December 31,
2007
2008
RMB
RMB
(unaudited)
(unaudited)
453,143
844,579
137,132
209,527
151,550
191,462
0.2152
0.2098
Year ended December 31,
2007
2008
RMB
RMB
(unaudited)
(unaudited)
447,686
844,414
137,712
209,265
153,176
191,200
0.2175
0.2095
Table of Contents
(4)
At December 31,
2007
2008
RMB
RMB
7,802
7,424
13,986
20,471
800
77
181
1,107
3,763
1,490
19,088
5,441
6,224
30,703
57,151
(i)
(ii)
(iii)
(iv)
(5)
At December 31,
2007
2008
RMB
RMB
6,086
65,118
9,305
15,381
2,319
3,895
17,710
84,394
(6,562
)
(11,856
)
11,148
72,538
Table of Contents
(6)
Claims
P&C
Life
adjusting
Datong
segment
segment
segment
segment
Total
RMB
RMB
RMB
RMB
RMB
9,165
9,165
1,197
21,137
6,389
28,723
10,362
21,137
6,389
37,888
(7)
At December 31,
2006
2007
2008
RMB
RMB
RMB
150,195
212,379
432,808
99,782
115,206
236,777
138,570
250,224
709,536
31,074
43,525
90,787
3,989
41,318
23,850
(8)
At December 31,
2007
2008
RMB
RMB
3,260
13,327
6,188
11,748
4,013
12,146
4,169
11,406
2,025
6,044
4,652
3,717
3,355
1,742
6,865
20,945
73,712
Table of Contents
(9)
(10)
(11)
Table of Contents
Entities Name
Tax holiday period
2005.1.1-2007.12.31
2005.1.11-2007.12.31
2005.3.14-2007.12.31
2005.3.28-2007.12.31
2005.1.1-2007.12.31#
#
RMB
1,160
711
1,871
Year Ended December 31,
2006
2007
2008
RMB
RMB
RMB
(893
)
(2,070
)
(65,901
)
1,466
(1,108
)
3,463
573
(3,178
)
(62,438
)
Table of Contents
At December 31,
2007
2008
RMB
RMB
1,808
1,808
3,942
5,126
397
1,834
(2,403
)
(2,124
)
1,936
4,836
1,936
6,644
(374
)
(8,351
)
Year Ended December 31,
2006
2007
2008
RMB
RMB
RMB
55,401
154,112
258,169
33
%
33
%
25
%
18,282
50,857
64,542
188
47
355
1,140
1,940
118
613
178
21
(120
)
(2,877
)
(15,111
)
7,467
3,526
12,530
(29,640
)
(52,965
)
1,078
1,127
(279
)
1,457
241
45
283
(573
)
3,178
62,438
Table of Contents
(12)
Table of Contents
(13)
Year Ended December 31,
2006
2007
2008
RMB
RMB
RMB
57,395
153,358
191,737
650,000,000
704,273,232
912,497,726
0.0883
0.2178
0.2101
1.7660
4.3551
4.2025
57,395
153,358
191,737
650,000,000
704,273,232
912,497,726
5,970,000
11,376,718
4,837,664
655,970,000
715,649,950
917,335,390
0.0875
0.2143
0.2090
1.7500
4.2858
4.1803
(14)
(15)
At December 31,
2007
2008
RMB
RMB
500
1,593
205,502
207,595
Table of Contents
At December 31,
2007
2008
RMB
RMB
369
369
10,598
369
10,967
(i)
(ii)
(16)
Minimum Lease
Payment
RMB
15,907
11,743
7,796
2,031
659
38,136
Table of Contents
(17)
Year ended December 31,
2006
% of sales
2007
% of sales
2008
% of sales
RMB
RMB
RMB
149,976
61
%
148,879
33
%
180,595
21
%
*
*
68,240
15
%
165,879
20
%
25,880
11
%
50,422
11
%
98,410
12
%
175,856
72
%
267,541
59
%
444,884
53
%
*
At December 31,
2007
%
2008
%
RMB
RMB
4,511
25
%
18,256
20
%
4,549
25
%
15,216
17
%
1,249
7
%
12,445
14
%
10,309
57
%
45,917
51
%
Table of Contents
(18)
Year ended December 31,
2006
2007
2008
RMB
RMB
RMB
7,703
(59
)
20,000
(Note 15 (ii))
2,470
11,406
4,652
(19)
Option C1
Option C2
Option C3
Option C4
0%
0%
0%
0%
3.70%
3.71%
3.93%
4.07%
3.86 years
4.36 years
4.86 years
5.36 years
28.2%
28.9 %
28.0%
27.6%
Table of Contents
0%
2.71%
5.6 years
28.5%
Option B1
Option B2
Option B3
0%
0%
0%
3.81%
3.89%
3.97%
3.92 years
4.42 years
4.92 years
23.07%
23.29 %
24.20%
Table of Contents
0%
1.9%
2.21 years
24.8%
Weighted
No. of Shares
average
underlying
exercise price in
Aggregate
options granted
RMB
Intrinsic Value
34,210,526
0.8741
5,473,684
2.3214
42,000,000
5.8437
(34,210,526
)
0.8741
47,473,684
5.4376
32,000,000
1.8967
(30,804,500
)
5.8437
(9,176,553
)
5.5285
39,492,631
2.2305
4,652,631
2.3214
136,874,658
Year ended December 31,
2006
2007
2008
RMB
RMB
RMB
0.1030
1.5638
0.5790
7,441
3,562
5,037
3,414
Table of Contents
Weighted Average
Remaining
Contractual Life
Weighted average
Options outstanding
(yrs)
exercise price RMB
Options Exercisable
32,000,000
5.1
1.8967
4,652,631
8.0
2.3214
4,652,631
2,840,000
3.8
5.8437
(20)
(21)
Table of Contents
Year ended December 31
2006
2007
2008
2008
RMB
RMB
RMB
US$
217,308
384,521
599,353
87,849
29,241
63,624
154,174
22,598
89,012
13,047
1,423
208
246,549
448,145
843,962
123,702
140,012
214,268
319,776
46,871
24,035
59,672
127,634
18,708
70,961
10,401
5,837
856
32,436
36,301
109,954
16,116
196,483
310,241
634,162
92,952
Table of Contents
Year ended December 31
2006
2007
2008
2008
RMB
RMB
RMB
US$
77,233
170,253
279,577
40,978
5,211
3,952
26,540
3,890
18,051
2,646
(4,414
)
(648
)
(32,378
)
(36,301
)
(109,954
)
(16,116
)
50,066
137,904
209,800
30,750
290,254
350,759
749,253
109,820
52,154
56,409
106,796
15,653
137,052
20,088
48,117
7,053
37,214
1,232,996
1,005,297
147,350
379,622
1,640,164
2,046,515
299,964
(22)
Table of Contents
Balance Sheets
(In thousands, except for shares and per share data)
Table of Contents
(CONTINUED)
Statements of Operations
(In thousands, except for shares and per share data)
Year Ended December 31,
2007
2008
2008
RMB
RMB
US$
(10,166
)
(63,757
)
(9,345
)
9,186
17,089
2,505
154,338
238,405
34,943
153,358
191,737
28,103
Table of Contents
(CONTINUED)
Statements of Shareholders Equity and Comprehensive Loss
(In thousands, except for shares and per share data)
Share Capital
Subscription
(Accumulated
Accumulated
Additional
receivable
deficit)
other
Number of
Paid-in
from
Statutory
retained
comprehensive
Comprehensive
Share
Amounts
Capital
shareholder
Reserves
earnings
loss
Total
income (loss)
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
650,000,000
5,073
369,781
24,279
(109,370
)
(179
)
289,584
262,497,726
1,963
1,246,246
1,248,209
(305
)
(305
)
5,037
5,037
153,358
153,358
153,358
(108,000
)
(108,000
)
23,624
(23,624
)
(20,971
)
(20,971
)
(20,971
)
912,497,726
7,036
1,621,064
47,903
(87,941
)
(21,150
)
1,566,912
132,387
45,659
45,659
191,737
191,737
191,737
23,334
(23,334
)
(52,660
)
(52,660
)
(52,660
)
912,497,726
7,036
1,666,723
71,237
80,462
(73,810
)
1,751,648
139,077
1,031
244,298
10,441
11,794
(10,819
)
256,745
20,385
Table of Contents
(CONTINUED)
Statements of Cash Flows
(In thousands, except for shares and per share data)
At December 31
2007
2008
2008
RMB
RMB
US$
153,358
191,737
28,103
(154,338
)
(238,405
)
(34,943
)
5,037
45,659
6,692
(4,602
)
2,004
293
4,013
8,564
1,255
3,468
9,559
1,400
(12,252
)
(36,989
)
(5,422
)
(144,656
)
(664,893
)
(97,454
)
140,000
(16,908
)
(701,882
)
(102,876
)
1,248,209
(140,000
)
1,108,209
1,094,769
(692,323
)
(101,476
)
1,073,798
157,391
(20,971
)
(52,660
)
(7,719
)
1,073,798
328,815
48,196
Table of Contents
Table of Contents
Exhibit Number
Description of Document
1.1
1.2
2.1
2.2
2.3
4.1
4.2
4.3
4.4
*
4.5
4.6
4.7
4.8
Table of Contents
Exhibit Number
Description of Document
4.9
4.10
4.11
4.12
4.13
*
4.14
*
4.15
*
8.1
*
11.1
12.1
*
12.2
*
13.1
*
13.2
*
15.1
*
15.2
*
15.3
*
*
Filed with this Annual Report on Form 20-F
EXHIBIT 4.4
FORM OF EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “ Agreement” ), is entered into as of (the “ Effective Date ”) by and between CNinsure Inc., a company incorporated and existing under the laws of the Cayman Islands (the “ Company ”) and , an individual (the “ Executive” ). Except with respect to the direct employment of the Executive by the Company, the term “Company” as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its subsidiaries and affiliated entities (collectively, the “ Group ”).
RECITALS
A. |
The Company desires to employ the Executive as its
and to assure itself of the services of the Executive during the term of Employment (as defined below).
|
B. |
The Executive desires to be employed by the Company as its
during the term of Employment and upon the terms and conditions of this Agreement.
|
AGREEMENT
The parties hereto agree as follows:
1. |
POSITION
|
The Executive hereby accepts a position of (the “ Employment ”) of the Company.
2. |
TERM
|
Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be three years commencing on the Effective Date, unless terminated earlier pursuant to the terms of this Agreement. Upon expiration of the initial three-year term, the Employment shall be automatically extended for successive one-year terms unless either party gives the other party hereto a two-month prior written notice to terminate the Employment prior to the expiration of such three-year term or unless terminated earlier pursuant to the terms of this Agreement.
3. |
PROBATION
|
No probationary period.
4. |
DUTIES AND RESPONSIBILITIES
|
The Executive’s duties at the Company will include all jobs assigned by the Company’s Board of the Directors (the “ Board ”) or the Company’s Chief Executive Officer, as the case may be.
1
1
The Executive shall devote all of his or her working time, attention and skills to the performance of his or her duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement, the Memorandum and Articles of Association of the Company (the “ Articles of Association ”), and the guidelines, policies and procedures of the Company approved from time to time by the Board.
The Executive shall use his or her best efforts to perform his or her duties hereunder. The Executive shall not, without the prior written consent of the Board, become an employee of any entity other than the Company and any subsidiary or affiliate of the Company, and shall not be concerned or interested in any business or entity that carries on insurance intermediary business, including without limitation insurance agency, brokerage and claims adjusting business (any such business or entity, a “ Competitor ”), provided that nothing in this clause shall preclude the Executive from holding any shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere. The Executive shall notify the Company in writing of his or her interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require.
5. |
NO BREACH OF CONTRACT
|
The Executive hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Executive and the performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the Executive is a party or otherwise bound except for agreements entered into by and between the Executive and any member of the Group pursuant to applicable law, if any; (ii) that the Executive has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, the Executive entering into this Agreement or carrying out his or her duties hereunder; (iii) that the Executive is not bound by any confidentiality, trade secret or similar agreement (other than this) with any other person or entity except for other member(s) of the Group, as the case may be.
6. |
LOCATION
|
The Executive will be based in Guangzhou, China. The Company reserves the right to transfer or second the Executive to any location in China or elsewhere in accordance with its operational requirements.
7. |
COMPENSATION AND BENEFITS
|
(a) |
Cash Compensation
. The Executive’s cash compensation (including salary
and bonus) shall be subject to annual review and adjustment by the Company.
|
(b) |
Equity Incentives
. To the extent the Company adopts and maintains a share
incentive plan, the Executive will be eligible for participating in such plan pursuant to the terms thereof as
determined by the Company.
|
(c) |
Benefits
. The Executive is eligible for participation in any standard employee
benefit plan of the Company that currently exists or may be adopted by the Company in the future, including, but not
limited to, any retirement plan, life insurance plan, health insurance plan and travel/holiday plan.
|
2
2
8. |
TERMINATION OF THE AGREEMENT
|
(a) |
By the Company
.
|
(i) For Cause . The Company may terminate the Employment for cause, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:
(1) the Executive is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement,
(2) the Executive has been negligent or acted dishonestly to the detriment of the Company,
(3) the KPI score assessed by the Company of the executive is below 60 for any fiscal year or below 85 for two consecutive fiscal years, or
(4) the Executive has engaged in actions amounting to misconduct or failed to perform his or her duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure.
(ii) For death and disability . The Company may also terminate the Employment, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:
(1) the Executive has died, or
(2) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his or her employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 90 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.
(iii) Without Cause . In addition, the Company may terminate the Employment without cause, at any time, upon a two-month written notice, and upon termination without cause, the Company shall provide the Executive a lump-sum severance payment in an amount of RMB 500,000 (unless otherwise specifically required by applicable law). The vesting and excising time of the options which are granted but not vested to the executive in accordance with the Option Agreement between the Company and executive, if any, shall be subject to the written resolution by the Compensation Committee.
3
3
(b) |
By the Executive
. The Executive may terminate the Employment at any time with a
one-month prior written notice to the Company, if (1) there is a material reduction in the Executive’s
authority, duties and responsibilities, or (2) there is a material reduction in the Executive’s annual
salary before the next annual salary review. In addition, the Executive may resign prior to the expiration of the
Agreement if such resignation is approved by the Board or an alternative arrangement with respect to the Employment is
agreed to by the Board.
|
(c) |
Notice of Termination.
Any termination of the Executive’s employment
under this Agreement shall be communicated by written notice of termination from the terminating party to the other
party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting
the termination.
|
9. |
CONFIDENTIALITY AND NONDISCLOSURE
|
(a) |
Confidentiality and Non-disclosure.
The Executive hereby agrees at all times
during the term of the Employment and after its termination, to hold in the strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, corporation or other entity without written
consent of the Company, any Confidential Information. The Executive understands that “
Confidential
Information
” means any proprietary or confidential information of the Company, its affiliates, or their
respective clients, customers or partners, including, without limitation, technical data, trade secrets, research and
development information, product plans, services, customer lists and customers (including, but not limited to,
customers of the Company on whom the Executive called or with whom the Executive became acquainted during the term of
his or her employment), supplier lists and suppliers (including, but not limited to, insurance company partners),
software developments, inventions, processes, formulas, technology, designs, hardware configuration information,
personnel information, marketing, finances, information about the suppliers, joint ventures, franchisees, distributors
and other persons with whom the Company does business, information regarding the skills and compensation of other
employees of the Company or other business information disclosed to the Executive by or obtained by the Executive from
the Company, its affiliates, or their respective clients, customers or partners either directly or indirectly in
writing, orally or otherwise, if specifically indicated to be confidential or reasonably expected to be confidential.
Notwithstanding the foregoing, Confidential Information shall not include information that is generally available and
known to the public through no fault of the Executive.
|
(b) |
Company Property
. The Executive understands that all documents (including
computer records, facsimile and e-mail) and materials created, received or transmitted in connection with his work or
using the facilities of the Company are property of the Company and subject to inspection by the Company, at any time.
Upon termination of the Executive’s employment with the Company (or at any other time when requested by the
Company), the Executive will promptly deliver to the Company all documents and materials of any nature pertaining to
his work with the Company and will provide written certification of his compliance with this Agreement. Under no
circumstances will the Executive have, following his termination, in his possession any property of the Company, or any
documents or materials or copies thereof containing any Confidential Information.
|
4
4
(c) |
Former Employer Information
. The Executive agrees that he or she has not and
will not, during the term of his or her employment, (i) improperly use or disclose any proprietary information or
trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to
keep in confidence information acquired by Executive, if any, or (ii) bring into the premises of the Company any
document or confidential or proprietary information belonging to such former employer, person or entity unless
consented to in writing by such former employer, person or entity. The Executive will indemnify the Company and hold it
harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and
costs of suit, arising out of or in connection with any violation of the foregoing.
|
(d) |
Third Party Information
. The Executive recognizes that the Company may have
received, and in the future may receive, from third parties their confidential or proprietary information subject to a
duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain
limited purposes. The Executive agrees that the Executive owes the Company and such third parties, during the
Executive’s employment by the Company and thereafter, a duty to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner
consistent with, and for the limited purposes permitted by, the Company’s agreement with such third party.
|
This Section 9 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 9, the Company shall have right to seek remedies permissible under applicable law.
10. |
CONFLICTING EMPLOYMENT
|
The Executive hereby agrees that, during the term of his or her employment with the Company, he or she will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during the term of the Executive’s employment, nor will the Executive engage in any other activities that conflict with his or her obligations to the Company without the prior written consent of the Company.
11. |
NON-COMPETITION AND NON-SOLICITATION
|
In consideration of the salary paid to the Executive by the Company and subject to applicable law, the Executive agrees that during the term of the Employment and for a period of one (1) years following the termination of the Employment for whatever reason:
(a) |
The Executive will not approach clients, customers or contacts of the Company or other
persons or entities introduced to the Executive in the Executive’s capacity as a representative of the Company
for the purposes of doing business with such persons or entities which will harm the business relationship between the
Company and such persons and/or entities;
|
(b) |
unless expressly consented to by the Company, the Executive will not assume employment
with or provide services as a director or otherwise for any Competitor, or engage, whether as principal, partner,
licensor or otherwise, in any Competitor; and
|
5
5
(c) |
unless expressly consented to by the Company, the Executive will not seek, directly or
indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any
employee of the Company employed as at or after the date of such termination, or in the year preceding such
termination.
|
The provisions contained in Section 11 are considered reasonable by the Executive and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.
This Section 11 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 11, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). In any event, the Company shall have right to seek all remedies permissible under applicable law.
12. |
WITHHOLDING TAXES
|
Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
13. |
ASSIGNMENT
|
This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and (ii) in the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of the company with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
14. |
SEVERABILITY
|
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
15. |
ENTIRE AGREEMENT
|
This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Executive acknowledges that he or she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.
6
6
16. |
GOVERNING LAW AND JURISDICTION
|
This Agreement shall be governed by and construed in accordance with the laws of the People’s Republic of China. Each party hereto irrevocably agrees that the courts of the People’s Republic of China shall have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes which may arise out of or in connection with this Agreement and for such purposes irrevocably submits to the jurisdiction of such courts.
17. |
AMENDMENT
|
This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
18. |
WAIVER
|
Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
19. |
NOTICES
|
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.
20. |
LANGUAGE
|
This Agreement is written in Chinese and English language. If there are inconsistencies, the English version will prevail. Both English and Chinese language also will be the controlling language for all future communications between the parties hereto concerning this Agreement.
21. |
COUNTERPARTS
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
7
7
22. |
NO INTERPRETATION AGAINST DRAFTER
|
Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, he or she has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.
[Remainder of this page has been intentionally left blank.]
8
8
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
CNinsure Inc.
By:
Name
Title:
Executive
Signature:
Name:
Title:
9
9
(1) |
Party A and Party B entered into an Equity Transfer Agreement on
, 2009,
under which Party A agreed to transfer to Party B
% of the equity interests in
[Sichuan Yihe Investment Co., Ltd.]/[Guangdong Meidiya Investment Co., Ltd.];
|
||
(2) |
Party A entered into a Loan Agreement and an Equity pledge Agreement with Party C
on December 20, 2005.
|
1. |
The Parties unanimously confirm that Party A shall transfer all his credits and liabilities
under the Loan Agreement to Party B as of the execution date of this Agreement;
|
2. |
Party A shall pay to Party B RMB[an amount equal to Party As capital contribution in Sichuan
Yihe Investment Co., Ltd. or Guangdong Meidiya Investment Co., Ltd., as applicable] as
consideration for the liability transfer;
|
3. |
Party C agrees to the above-mentioned credit and liability transfer between Party A and Party
B, and will separately enter into the Equity Pledge Agreement with Party B for pledge of
equity interests in Sichuan Yihe Investment Co., Ltd.]/[Guangdong Meidiya Investment Co.,
Ltd.], as a guarantee for Party Bs performance under this Agreement.
|
|
4. |
Covenants of Party B:
|
1) |
In accordance with the Loan Agreement, Party B fully understands all the
liabilities of Party A to Party C under the Loan Agreement and agrees to accept all the
rights and obligations of Party A under the Loan Agreement;
|
2) |
Upon the effectiveness of this Agreement, Party B shall enter into the Equity
Pledge Agreement with Party C as a guarantee for his performance under the Agreement;
|
3) |
Upon the effectiveness of this Agreement, Party B shall not refuse to perform this
Agreement on account of the invalidity, cancellation or termination of any other
agreements or any other credit and liability that he has with Party A or any other third
party;
|
4) |
Party B shall not refuse to perform its obligations hereunder on account of any
fault of Party A.
|
5. |
Upon the effectiveness of this Agreement, Party C shall not claim any creditors right under
the Loan Agreement against Party A.
|
6. |
This Agreement shall bind upon inure solely to benefit of the Parties and their respective
heirs, successors and permitted assigns. Without the prior written consent of Party C, Party B
shall not transfer, pledge or otherwise dispose of the rights, interests or obligations
hereunder.
|
7. |
The formation, validity, interpretation, performance, amendment and termination and dispute
resolution of this Agreement shall be governed by the laws of the Peoples Republic of China.
|
|
8. |
Arbitration
|
1) |
In the event that a dispute or claim arises from the interpretation and performance
(including any disputes relating to the existence, validity or termination of this
Agreement) of the provisions under this Agreement, the Parties shall resolve such dispute
through amicable consultation. If the Parties cannot reach an agreement on resolving a
dispute within thirty (30) days after a Party requests resolution of such dispute, such
dispute may be submitted by any Party for arbitration to the China International Economic
and Trade
Arbitration Commission (CIETAC) according to its then effective arbitration rules. The
arbitration award by CEITAC shall be final and binding upon the Parties.
|
2
2) |
The seat of arbitration shall be in Beijing.
|
||
3) |
The language for arbitration shall be Chinese.
|
9. |
Without the prior written consent of the Parties hereto, no amendment or revision shall be
made to this Agreement. The Parties may enter into a supplemental agreement to address issues
not mentioned herein. Any amendment, revision, supplement of and all the exhibits to this
Agreement shall constitute an integral part of this Agreement.
|
10. |
This Agreement constitutes the entire agreement among the Parties and supersedes any oral
discussion or written agreements among the Parties concerning the subject matters hereof prior
to the execution of this Agreement.
|
11. |
This Agreement is severable. The invalidity and unenforceability of any provision hereunder
will not affect the validity and enforceability of the remaining provisions of this Agreement.
|
12. |
This Agreement is made in three (3) originals, with each Party holding one (1) original.
Each original has equal legal effect.
|
3
1
1. |
Party A is a company duly incorporated and validly existing under the laws of the British
Virgin Islands. It desires to acquire all shares of the Company currently held by Party B;
|
2. |
Party B is a company duly incorporated and validly existing under the laws of the British
Virgin Islands. It agrees to transfer all its shares of the Company to Party A, and repurchase
shares of the Company from Party A according to the terms and conditions set forth in this
Agreement (hereinafter referred to Share Repurchase);
|
3. |
Guangdong Meidiya Investment Co., Ltd., a related party of Party A, has entered into a
Shareholders Agreement on September 17, 2008 with Chengdu Mingxia Investment Co., Ltd. and
Keiping Lin, related parties of Party B, to acquire 55% equity interests of Beijing Fanhua
Datong Investment Management Co., Ltd. (hereinafter called the Datong).
|
1. |
Definition
|
16-2
2. |
Share Transfer
|
3. |
Consideration and Method of Payment
|
4. |
Share Repurchase
|
5. |
Closing
|
5.1 |
The Closing shall take effect when all of the following conditions are satisfied:
|
5.1.1 |
The Parties have obtained approval from their respective boards of
directors and/or shareholders or other decision-marking bodies for the share
transfer hereunder in accordance with applicable laws and the respective articles of
association of the Parties;
|
16-3
5.1.2 |
All representations and warranties made by Party B hereunder have
continued to be true, complete and accurate, and there have been no material
misrepresentations or omissions, until the date of the Closing;
|
||
5.1.3 |
Party B shall ensure that the Company prepare a complete inventory of
all existing assets, provide true, complete and accurate financial statements
supported by legal accounting documents, and obtain written confirmation from Party
A.
|
5.2 |
Upon Closing, or beginning from another date agreed upon by the Parties hereto,
Party A will become the lawful owner of the transferred shares and have all the rights
and obligations related to the transferred shares (including all the rights, interests
and obligations relating to its investment). Party B shall cease to have any right or
obligation relating to the transferred shares, except as otherwise provided hereunder.
|
5.3 |
In the event that all of the conditions listed above have not been satisfied or
waived in writing by Party A, and the Closing has not occurred, by the end of the three
(3)-month period beginning from the Execution Date, this Agreement shall be terminated
immediately, unless the Parties agree in writing to defer the termination to a date no
later than six (6) months after Execution Date.
|
6. |
Representations, Warranties and Covenants of the Parties
|
6.1 |
Representations, Warranties and Covenants of Party A
|
6.1.1 |
Party A is a company duly incorporated and validly existing under the
laws of the British Virgin Islands;
|
6.1.2 |
Party A has full right and power, and has obtained all internal and
external authorizations necessary, for the execution of and performance of the
obligations under this Agreement;
|
6.1.3 |
When executed by the Parties hereto, this Agreement shall constitute a
valid and binding agreement of Party A. The execution and performance of this
Agreement by Party A will not violate any law, articles of association, contract,
agreement or other legal document to which Party A is subject;
|
6.1.4 |
Party A has sufficient funds and has made adequate financial
arrangements to enable it to fulfill its payment obligations pursuant to the
terms and conditions hereof.
|
16-4
6.2 |
Representations, Warranties and Covenants of Party B
|
6.2.1 |
Party B is a company duly incorporated and validly existing under the
laws of the British Virgin Islands and has obtained all licenses, approvals and
authorizations necessary for lawful operations of its business;
|
6.2.2 |
Party B is the registered shareholder of the Company and has legal
ownership of the shares to be transferred, of which it is the sole owner. There has
been no false capital contribution or illegal withdrawal of capital contribution;
|
6.2.3 |
Party B has not, for its own benefit or for the benefit of any third
party, placed any mortgage, pledge, guarantee, lien, trust or any other encumbrance
that may subject the shares to any claims by any third party;
|
6.2.4 |
Party B has full right and power, and has obtained all internal and
external authorizations necessary, for the execution of and performance of the
obligations under this Agreement;
|
6.2.5 |
When executed by the Parties hereto, this Agreement shall constitute a
valid and binding agreement of Party B. The execution and performance of this
Agreement by Party B will not violate any law, regulation, rule, administrative
ruling, legal judgment, arbitral decision that is binding upon Party B, breach the
terms, conditions or covenants of any agreement with any third party or otherwise
cause any conflicts of interest;
|
16-5
6.2.6 |
Except for this Agreement, there is no binding agreement, decision or
third partys right with respect to the sale, transfer, allocation, guarantee or
disposal in any other manner of such shares held by Party B;
|
6.2.7 |
The financial information, technical information, managerial information
and other material information disclosed by Party B is complete and accurate in all
material respects, and there are no material misrepresentations or omissions;
|
6.2.8 |
Except as expressly disclosed to Party A (see Annex 1), the Company has
not provided any form of guarantee to any other party, and there is no litigation,
investigation, penalty or arbitration caused or likely to be caused by any guarantee
or improper transaction;
|
6.2.9 |
Except for the liabilities and defects of titles as expressly disclosed
to Party A (see Annex 1), the Company has full title and right to the properties,
assets, real properties and the interests therein, and intangible assets and the
rights therein, free of any encumbrance;
|
6.2.10 |
Except as expressly disclosed to Party A (see Annex 1), there are no litigations,
claims, arbitrations, or other legal or administrative proceedings pending against
the Company; no claims have been threatened against the Company that could affect
any of its properties, assets or businesses, and there exist no facts or
circumstances that could give rise to such claims;
|
6.2.11 |
Except as expressly disclosed to Party A (see Annex 1), there is no existing
default under any material agreement or commitment by the Company, nor is there any
circumstance, event or act that could give rise to such default.
|
7. |
Treatment of Credits and Liabilities
|
7.1 |
Except as otherwise provided hereunder, all credits and liabilities of the
Company that exist as of the date of the Closing shall continue to be enjoyed and borne
by the Company.
|
16-6
7.2 |
The following liabilities that exist as of the date of the Closing, or that
result from events that occurred before the date of the Closing shall not continue to be
borne by the Company:
|
7.2.1 |
Liabilities of the Company that has not been disclosed expressly to
Party A;
|
7.2.2 |
Taxes and fees payable that has not been disclosed expressly to
Party A;
|
7.2.3 |
Obligations and responsibilities of the Company in accordance with
agreements to which the Company is a party that have not been disclosed expressly
to Party A.
|
7.3 |
In the event that the Company assumes the liabilities set forth in Section 7.2,
Party B shall provide timely, adequate and full indemnification to the Company.
|
8. |
Transition Period Arrangement
|
8.1 |
The transition period hereunder refers to the period from the Execution Date to the
date of the Closing. During the transition period, Party B shall ensure that Party A have
the following rights with respect to the Company:
|
8.1.1 |
Party A will have the right to assign a financial employee to supervise
the operational and financial condition of the Company for the purposes of ensuring
that the operational and financial condition of the Company will not fall below the
level on the Execution Date;
|
8.1.2 |
Party A will have the right to assign an observer to the Company, who
will have the right to attend meetings of the board of directors and meetings of
senior management of the Company.
|
8.2 |
During the transition period, Party B covenants to Party A that:
|
8.2.1 |
The Company will conduct its business in the same manner as it has been
doing prior to the Execution Date, will not dispose of any assets or businesses out
of its ordinary course of business, and will not enter into any agreement or take
any other similar action that could cause adverse changes to the operational and
financial condition of the Company.
|
16-7
8.2.2 |
The Company will cooperate with the observer by promptly reporting to
the observer the operational and financial condition of the Company, and providing
relevant materials, such as financial statements, balance sheets, income statements
and statements of changes in financial
condition. Party B shall provide necessary explanations to the relevant
materials as requested by the observer.
|
8.3 |
Upon mutual discussion and agreement of the Parties hereto, the transition period
may be terminated earlier than specified herein.
|
9. |
Confidentiality
|
9.1 |
Each Party hereto agrees that it and its employees and consultants shall keep
confidential, and shall not disclose to any third party or use for other purposes, any
and all business, technical, and financial information and other related documents,
materials, information and data provided by the other Party in connection with the
negotiation, execution or performance of this Agreement.
|
||
9.2 |
Section 9.1 is not applicable to the following information:
|
9.2.1 |
Information that has already been publicly disclosed or can be
obtained in other manners in accordance with this Agreement;
|
9.2.2 |
Information that has been obtained by a Party in a manner that does
not violate the obligations of confidentiality;
|
9.2.3 |
Information that is required to be disclosed in accordance with
applicable laws;
|
9.2.4 |
Information that is disclosed by CNinsure Inc, a related party of
Party A, in accordance with the laws of the United States;
|
9.2.5 |
Information that is disclosed for the purpose of performing the
obligations hereunder.
|
9.3 |
The confidentiality obligations hereunder shall be binding upon the relevant
persons for a period of three years commencing from the date when such person becomes
aware of, gets hold of, knows, or comes into contact with the confidential information.
|
16-8
10. |
Non-competition
|
11. |
Taxes and Expenses
|
11.1 |
Each of Party A and Party B shall be responsible for its own tax liabilities
incurred in connection with the Share Transfer in compliance with the laws.
|
11.2 |
All the other expenses incurred, including without limitation filing fees for the
change of registration with the industrial and commercial authority, and the expenses
incurred by Party A in connection with due diligence and the engagement of legal counsel,
accountants, appraisers, financial advisers and other professionals shall be borne by
Party A.
|
12. |
Liabilities for Breach
|
12.1 |
A Party hereto is in breach of this Agreement if such Party:
|
12.1.1 |
fails to perform any obligation hereunder;
|
||
12.1.2 |
violates any representation, warranty or covenant hereunder;
|
12.1.3 |
makes any false or misleading representation and warranty hereunder (whether in
bad faith or not).
|
12.2 |
In the event of an aforesaid breach, the observing party will have the right to
require the breaching party to take remedial measures within 30 days and, if the
breaching party fails to remediate the breach within the specified period, to terminate
this Agreement and seek damages from the breaching party.
|
12.3 |
Each Party agrees that, without compromising or limiting the observing partys
rights to assert claims and seek damages for breach of the covenants, warranties or
obligations under this Agreement, the breaching party shall indemnify the observing party
as requested by observing party:
|
12.3.1 |
No less than US$500,000 to have the Parties conditions restored to those that
existed before the breach;
|
12.3.2 |
Reasonable fees and expenses the observing party directly and indirectly incurred
as a result of the breach, including but not limited to reasonable expenses for
litigation, arbitration and/or attorneys fees.
|
16-9
12.4 |
Cross-breach
|
||
Considering that a related party of Party A will acquire 55% of the equity interests
of Datong held by related parties of Party B and enter into the Shareholders Agreement, each
Party hereto agrees that the representations, warranties and covenants made by its related
party or parties under the Shareholders Agreement are incorporated by reference into this
Agreement as representations, warranties and covenants of such Party hereunder. A breach by a
related party of a Party hereto under the Shareholders Agreement shall be deemed as a breach
by such Party under this Agreement and will entitle the other Party to assert any and all
claims for the breach pursuant to this Agreement. For the avoidance of doubt, the Parties
hereto agree and confirm that, if Datong fails to fulfill the performance targets set forth
under the Shareholders Agreement, Party B shall pay a penalty fee to Party A in an amount
equal to the remaining amount of the security deposit provided by the original shareholders of
Datong and kept at a related party of Party A as of December 31, 2011. The original
shareholders of Datong and Party B agree that Party A may decide at its sole discretion
whether to offset the penalty fee due with the remaining amount of the security deposit its
related party holds. The original shareholders of Datong and Party B shall fully cooperate
with Party A on any decision made by Party A.
|
13. |
Force Majeure
|
13.1 |
Exemption from liabilities for breach
|
||
Should any Party fail to perform its obligations pursuant to the terms and conditions under
this Agreement due to Force Majeure, such Party may seek for exemption from liabilities for
breach, to the extent such breach was caused by Force Majeure, in accordance with applicable
laws and this Agreement.
|
|||
13.2 |
Obligations in the event of Force Majeure
|
||
In order to be exempted from liabilities for breach in reliance on Section 13.1, the Party
that claims to be unable to perform its obligations hereunder due to Force Majeure shall
perform the following obligations:
|
13.2.1 |
take all necessary measures to minimize or remove the effects of Force Majeure so
that the losses caused by Force Majeure are minimized; otherwise such Party shall be
responsible for the excess losses caused by Force Majeure;
|
16-10
13.2.2 |
notify the other Party promptly and in any event no later than fifteen
(15) days after the occurrence of Force Majeure;
|
13.2.3 |
use reasonable effort to resume performance of the obligation(s) affected by Force
Majeure as soon as possible;
|
13.2.4 |
provide sufficient evidence of the existence and duration of the event of Force
Majeure.
|
13.3 |
Performance in the Event of Force Majeure
|
13.3.1 |
During the period when one or more Parties are unable to perform part or all of
the obligations under this Agreement due to Force Majeure, the Parties shall
continue to perform the other obligations set forth in this Agreement;
|
13.3.2 |
Should the event of Force Majeure continue for a period of more than ninety (90)
days, the Parties may, through amicable consultations, decide how to continue with
the performance of this Agreement, or seek other equitable ways and use all
reasonable efforts to minimize the effects of the event of Force Majeure.
|
14. |
Governing Law
|
15. |
Dispute Resolution
|
15.1 |
Any dispute arising from or in connection with this Agreement shall be resolved by
the Parties through amicable consultation.
|
15.2 |
If the Parties cannot resolve the dispute through amicable consultation within
sixty (60) days after the occurrence thereof, such dispute shall be submitted for
arbitration to the Hong Kong International Arbitration Centre. The seat of the
arbitration shall be in Hong Kong.
|
15.3 |
If any provision hereof is held invalid under applicable laws, such invalidity will
not affect the validity and enforceability of the other provisions of this Agreement.
|
16-11
16. |
Miscellaneous
|
16.1 |
This Agreement constitutes the entire representations and agreement between the
Parties and supersedes all oral or written representations, warranties, understandings
and agreements concerning the subject matters hereof between the Parties made or reached
prior to the execution hereof. The Parties acknowledge and agree that any representation
or warranty not explicitly included herein do not constitute the basis of this Agreement,
and therefore will not serve as the basis for the determination of the rights and
obligations of the Parties and the interpretation of the terms and conditions hereof.
|
16.2 |
All provisions of this Agreement are independent and severable. If any provision of
this Agreement is held to be illegal, invalid or unenforceable by any government,
governmental agency, judicial authority or arbitration institution, the validity of the
other provisions of this Agreement will not be affected thereby.
|
16.3 |
The Parties agree that they may engage in further negotiations on issues not
covered herein, and enter into a supplemental agreement in writing, after the execution
of this Agreement. Such supplemental agreement will constitute an integral part of this
Agreement.
|
16.4 |
No Party may assign its rights hereunder without the prior written consent of the
other Party. This Agreement will be binding upon the respective successors and permitted
assigns of the Parties hereto.
|
16-12
16.5 |
This Agreement will become effective upon the execution and affixing of corporate
seal by the Parties.
|
16.6 |
All notices specified in this Agreement shall be in writing, in Chinese, and
delivered via registered mail, facsimile or other electronic means of communication. A
notice is deemed to have been duly given when it is delivered to the registered address
of the receiving Party. If the notice is sent by registered mail, it will be deemed to
have been duly given on the delivery date noted on the return receipt thereof. If the
notice is transmitted by facsimile, it will be deemed to have been duly given upon the
receipt of the confirmation of such transmission from the fax machine.
|
16.7 |
This Agreement shall be written in Chinese and executed in six originals. Each
Party shall hold one original, and the remaining originals shall be filed for approval or
registration with applicable government agencies. Each
original shall have equal legal effect.
|
16-13
16-14
16-15
16-16
1. |
The Company is a limited liability company duly incorporated and validly existing under the
PRC laws, with a registered capital of RMB20 million, of which RMB11 million were contributed
by Party B, representing 55% of the equity interests in the Company, and RMB9 million were
contributed by Party C, representing 45% of the equity interests in the Company. As of the
date of execution of this Agreement, Party B and Party C lawfully enjoy all the shareholders
rights underlying their
capital contributions to the Company.
|
2. |
Party B is a limited liability company duly incorporated and validly existing under the PRC
laws. It intends to transfer all of its 55% equity interests in the Company to Party A.
|
3. |
Party A is a limited liability company duly incorporated and validly existing under the PRC
laws. It intends to acquire the 55% equity interests in the Company currently held by Party B.
|
4. |
Party C agrees that Party B may transfer all of its 55% equity interests in the Company to
Party A. It also undertakes to invest RMB20 million into the capital reserve of the Company.
|
5. |
The Original Shareholders guarantee the Companys performance targets for the years 2009 to
2010 in favor of Party A, and agree to provide a security deposit and adjust the equity
interests in connection with such guarentee.
|
1. |
Definition and Interpretation
|
2
2. |
Equity Transfer and Consideration
|
2.1 |
Party B intends to transfer all of its 55% equity interests in the Company to
Party A, and Party A agrees to acquire the said equity interests.
|
2.2 |
Each of Party A and Party B confirms that the consideration for the Equity
Transfer shall be RMB11 million, which Party A shall pay in full within
sixty (60) business days after the Closing Date.
|
3
2.3 |
After the Closing, the proportion of each Partys contribution in the registered
capital of the Company shall be:
|
3. |
Capital Reserve
|
4. |
Performance Guarantee
|
4.1 |
The Original Shareholders undertake that the annual net profit of the Company
shall not be less than RMB10 million, RMB30 million and RMB80 million in 2009, 2010 and
2011, respectively.
|
4.2 |
Party A and the Original Shareholders agree that the above-mentioned net profit
refers to the sum of the net profit as presented in the consolidated financial
statements of the Company prepared in accordance with the U.S. GAAP, plus the consulting
fees, trademark licensing fees and other fees which the Company and its subsidiaries pay
to Party A and its related companies in the year.
|
4.3 |
The Original Shareholders agree to adjust their equity interests according to the
actual result of the above-mentioned performance targets, and to provide a security
deposit as a guarantee. Annex 2 hereto sets forth the details of the equity adjustment
and the security deposit.
|
5. |
Corporate Governance
|
5.1 |
Party A shall support Party C to continue to serve as the chairman of the board of
directors of the Company, whose term shall be governed by the Articles of Association of
the Company.
|
5.2 |
The shareholders, the board of directors and the management of the Company shall
operate the Company in accordance with their respective terms of reference set out in the
Articles of Association of the Company (see Annex 3).
|
4
5.3 |
The board of directors of the Company shall consist of seven (7) members, of whom
four (4) shall be designated by Party A and three (3) shall be designated by Party C. An
audit committee of the board of directors shall be established and shall consist of three
(3) members, two (2) of whom shall be designated by Party A and one (1) shall be
designated by Party C. The chairman of the audit committee shall be designated by Party
A. The audit committee shall be responsible for establishing the budget management system
and accounting management procedures of the Company and its subsidiaries.
|
5.4 |
The Company and its subsidiaries shall strictly observe the Nasdaq Marketplace
Rules to which Nasdaq-listed companies are subject and Sarbanes-Oxley Act.
|
6. |
Profits Distribution
|
7. |
Closing
|
7.1 |
The Closing is subject to the following conditions:
|
7.1.1 |
In accordance with the relevant laws, regulations, administrative
rulings and the respective articles of association, the internal authority of each
Party has made their respective resolution and has agreed upon the Equity Transfer
contemplated under this Agreement;
|
7.1.2 |
The government authorities have duly approved (if necessary) the
change of shareholders of the Company pursuant to this Agreement, and the Parties
agree to use their best efforts to work with such authorities and provide the
necessary material and information;
|
7.1.3 |
All representations and warranties made by the Parties hereunder
have continued to be true, complete and accurate, and there have been no material
misrepresentations or omissions, until the Closing Date;
|
7.1.4 |
The Parties have performed their obligations hereunder in
accordance with this Agreement by the Closing Date;
|
5
7.1.5 |
The Parties shall have duly prepared a complete inventory of all
existing assets and financial resources of the Company before the Closing Date;
|
7.1.6 |
Party C shall have formed a management team, established the
functional departments of the Company, and formulated the operational model,
internal policies and procedures and the financial budget model of the Company.
|
7.2 |
After the Closing, the equity interests of Party B, together with the rights and
obligations thereof, shall be transferred to Party A, and Party A shall enjoy the rights
and bear the obligations in accordance with the Articles of Association of the Company.
|
7.3 |
In the event that all of the conditions listed above have not been satisfied or
waived in writing by Party A, and the Closing has not occurred, by the end of the three
(3)-month period beginning from the Execution Date, this Agreement shall be terminated
immediately, unless the Parties agree in writing to defer the termination to a date no
later than six (6) months after the Execution Date.
|
8. |
Representations, Warranties and Covenants of the Parties
|
8.1 |
Representations, Warranties and Covenants of Party A
|
8.1.1 |
Party A is a company duly incorporated and validly existing under
the PRC laws;
|
8.1.2 |
Party A has full right and power, and has obtained all internal and
external authorizations necessary, for the execution of and performance of the
obligations under this Agreement;
|
6
8.1.3 |
When executed by the Parties hereto, this Agreement shall constitute
a valid and binding agreement of Party A. The execution and performance of this
Agreement by Party A will not violate any law, regulation, rule, administrative
decision, legal judgment or arbitral award that is binding upon Party A, its
articles of association or
board resolutions, breach the terms, conditions and covenants in any agreement
with any third party, or otherwise cause any conflicts of interest;
|
8.1.4 |
Party A has sufficient funds and has made adequate financial
arrangements to enable it to fulfill its payment obligations pursuant to the terms
and conditions hereof.
|
8.2 |
Representations, Warranties and Covenants of Party B
|
8.2.1 |
Party B is a company duly incorporated and validly existing under
the PRC laws. Party B is a shareholder of the Company duly registered at the
Administration for Industry and Commerce and lawfully owns the equity interests
that it intends to transfer to Party A. Party B is the sole owner of such equity
interests;
|
8.2.2 |
Party B has not, for its own benefit or for the benefit of any third
party, placed any mortgage, pledge, guarantee, lien, trust or any other
encumbrance that may subject the equity interests to any claims by any third
party;
|
8.2.3 |
Party B has full right and power, and has obtained all internal and
external authorizations necessary, for the execution of and performance of the
obligations under this Agreement;
|
8.2.4 |
When executed by the Parties hereto, this Agreement shall constitute
a valid and binding agreement of Party B. The execution and performance of this
Agreement by Party B will not violate any law, regulation, rule, administrative
ruling, legal judgment, arbitral decision that is binding upon Party B, breach the
terms, conditions or covenants of any agreement with any third party or otherwise
cause any conflicts of interest;
|
8.2.5 |
Except for this Agreement, there is no binding agreement, decision
or third partys right with respect to the sale, transfer, allocation, guarantee
or disposal in any other manner of such equity interests held by Party B;
|
7
8.2.6 |
The financial information, technical information, managerial
information and other material information disclosed by Party B is complete
and accurate in all material respects, and there are no material
misrepresentations or omissions;
|
8.2.7 |
Except as expressly disclosed to Party A (see Annex 4), the Company
has not provided any form of guarantee to any other party, and there is no
litigation, investigation, penalty or arbitration caused or likely to be caused by
any guarantee or improper transaction;
|
8.2.8 |
Except for the liabilities and defects of titles as expressly
disclosed to Party A (see Annex 3), the Company has full title and right to the
properties, assets, real properties and the interests therein, and intangible
assets and the rights therein, free of any encumbrance;
|
8.2.9 |
Except as expressly disclosed to Party A (see Annex 4), there are no
litigations, claims, arbitrations, or other legal or administrative proceedings
pending against the Company; no claims have been threatened against the Company
that could affect any of its properties, assets or businesses, and there exist no
facts or circumstances that could give rise to such claims;
|
8.2.10 |
Except as expressly disclosed to Party A (see Annex 4), there is no existing
default under any material agreement or commitment by the Company, nor is there
any circumstance, event or act that could give rise to such default.
|
8.3 |
Representations, Warranties and Covenants of Party C
|
8.3.1 |
Party C is a PRC citizen with full civil capacity under the PRC
laws;
|
8.3.2 |
Party C has full right and power, and has obtained all
authorizations necessary for the execution of and performance of the obligations
under this Agreement;
|
8
8.3.3 |
When executed by the Parties hereto, this Agreement shall constitute
a valid and binding agreement of Party C. The execution and performance of this
Agreement by Party C will not violate any law, regulation, rule, administrative
ruling, legal judgment, arbitral decision that is binding upon Party C, breach the
terms, conditions
or covenants of any agreement with any third party or otherwise cause any
conflicts of interest;
|
8.3.4 |
Party C has sufficient funds and has made adequate financial
arrangements to enable it to fulfill its obligations pursuant to the terms and
conditions hereof.
|
9. |
Treatment of Credits and Liabilities
|
9.1 |
Except as otherwise provided hereunder, all credits and liabilities of the
Company that exist as of the Closing Date shall continue to be enjoyed and borne by the
Company.
|
9.2 |
The following liabilities that exist as of the Closing Date, or that result from
events that occurred before the date of the Closing shall not continue to be borne by
the Company:
|
9.2.1 |
Liabilities of the Company that has not been disclosed expressly to
Party A;
|
9.2.2 |
Taxes and fees payable that has not been disclosed expressly to
Party A;
|
9.2.3 |
Obligations and responsibilities of the Company in accordance with
agreements to which the Company is a party that have not been disclosed expressly
to Party A.
|
9.3 |
In the event that the Company assumes the liabilities set forth in Article 9.2,
Party A is entitled to be indemnified by the Original Shareholders, who shall be jointly
and severally liable for such indemnifications.
|
10. |
Transition Period Arrangement
|
10.1 |
The transition period hereunder refers to the period from the Execution Date to
the Closing Date.
|
10.2 |
During the transition period, the Original Shareholders shall ensure that Party A
enjoys the following rights with respect to the Company:
|
10.2.1 |
Party A will have the right to assign a financial employee to supervise the
operational and financial condition of the Company for the purposes of ensuring
that the operational and financial condition of the Company will not fall below
the level on the Execution Date;
|
9
10.2.2 |
Party A will have the right to assign an observer to the Company,
who will have the right to attend meetings of the board of directors and
meetings of senior management of the Company.
|
10.3 |
During the transition period, the Original Shareholders covenant that:
|
10.3.1 |
The Company will conduct its business in the same manner as it does on the
Execution Date, will not dispose of any assets or businesses out of its ordinary
course of business, and will not enter into any agreement or take any other
similar action that could cause adverse changes to the operational and financial
condition of the Company.
|
10.3.2 |
They will cooperate with the observer by promptly reporting to the observer the
operational and financial condition of the Company, and providing relevant
materials, such as financial statements, balance sheets, income statements and
statements of changes in financial condition. The Original Shareholders shall
provide necessary explanations to the relevant materials as requested by the
observer.
|
11. |
Confidentiality
|
11.1 |
Each Party hereto agrees that it and its employees and consultants shall keep
confidential, and shall not disclose to any third party or use for other purposes, any
and all business, technical, and financial information and other related documents,
materials, information and data provided by the other Party in connection with the
negotiation, execution or performance of this Agreement.
|
11.2 |
Section 11.1 is not applicable to the following information:
|
11.2.1 |
Information that has already been publicly disclosed or can be obtained in other
manners in accordance with this Agreement;
|
11.2.2 |
Information that has been obtained by a Party in a manner that does not violate
the obligations of confidentiality;
|
11.2.3 |
Information that is required to be disclosed in accordance with applicable laws;
|
10
11.2.4 |
Information that is disclosed by CNinsure Inc, a related party of Party A, in
accordance with the laws of the United States;
|
11.2.5 |
Information that is disclosed for the purpose of performing the
obligations hereunder.
|
11.3 |
The confidentiality obligations hereunder shall be binding upon the relevant
persons for a period of three years commencing from the date when such person becomes
aware of, gets hold of, knows, or comes into contact with the confidential information.
|
12. |
Non-competition
|
13. |
Expenses and Taxes
|
13.1 |
Each of the Parties shall be responsible for its/his own expenses incurred for
the engagement of legal counsel, accountants, appraisers, financial advisers and other
professionals.
|
13.2 |
Each of Party A and Party B shall be responsible for its own tax liabilities
incurred in connection with the Equity Transfer in compliance with the laws.
|
13.3 |
All the other expenses incurred, including without limitation filing fees for the
change of registration with the administration for industry and commerce, shall be borne
by the Company.
|
11
14. |
Liabilities for Breach
|
14.1 |
A Party hereto is in breach of this Agreement if such Party:
|
14.1.1 |
fails to perform any obligation hereunder;
|
||
14.1.2 |
violates any representation, warranty or covenant hereunder;
|
||
14.1.3 |
makes any false or misleading representation and warranty hereunder.
|
14.2 |
In the event of an aforesaid breach, the observing party will have the right to
require the breaching party to take remedial measures within 30 days and, if the
breaching party fails to remediate the breach within the specified period, to terminate
this Agreement and seek damages from the breaching party.
|
14.3 |
Each Party agrees that, without compromising or limiting the observing partys
rights to assert claims and seek damages for breach of the covenants, warranties or
obligations under this Agreement, the breaching party shall indemnify the observing
party as requested by the observing party:
|
14.3.1 |
No less than RMB1 million to have the Parties conditions restored to those that
existed before the breach;
|
14.3.2 |
Reasonable fees and expenses the observing party directly and indirectly
incurred as a result of the breach, including but not limited to reasonable
expenses for litigation, arbitration and/or attorneys fees.
|
15. |
Force Majeure
|
15.1 |
Should any Party fail to perform its obligations pursuant to the terms and
conditions under this Agreement due to Force Majeure, such Party may seek exemption from
liabilities for breach, to the extent such breach was caused by Force Majeure, in
accordance with applicable laws and this Agreement.
|
15.2 |
In order to be exempted from liabilities for breach in reliance on Section 15.1,
the Party that claims to be unable to perform its obligations hereunder due to Force
Majeure shall perform the following obligations:
|
15.2.1 |
take all necessary measures to minimize or remove the effects of Force Majeure
so that the losses caused by Force Majeure are minimized; otherwise such Party
shall be responsible for the excess losses caused by Force Majeure;
|
15.2.2 |
notify the other Party promptly and in any event no later than fifteen (15) days
after the occurrence of Force Majeure;
|
12
15.2.3 |
use reasonable effort to resume performance of the obligation(s) affected by
Force Majeure as soon as possible;
|
15.2.4 |
provide sufficient evidence of the existence and duration of the event of Force
Majeure.
|
15.3 |
Performance in the Event of Force Majeure
|
15.3.1 |
During the period when one or more Parties are unable to perform part or all of
the obligations under this Agreement due to Force Majeure, the Parties shall
continue to perform the other obligations set forth in this Agreement;
|
15.3.2 |
Should the event of Force Majeure continue for a period of more than ninety (90)
days, the Parties may, through amicable consultations, decide how to continue with
the performance of this Agreement, or seek other equitable ways and use all
reasonable efforts to minimize the effects of the event of Force Majeure.
|
16. |
Governing Laws
|
17. |
Dispute Resolution
|
17.1 |
Any dispute arising from or in connection with this Agreement shall be resolved
by the Parties through amicable consultation.
|
17.2 |
If the Parties cannot resolve the dispute through amicable consultation within
sixty (60) days after the occurrence thereof, such dispute shall be submitted for
arbitration to the China International Economic and Trade Arbitration Commission. The
seat of the arbitration shall be in Beijing.
|
17.3 |
If any provision hereof is held invalid under applicable laws, such invalidity
will not affect the validity and enforceability of the other provisions of this
Agreement.
|
13
18. |
Miscellaneous
|
18.1 |
This Agreement constitutes the entire representations and agreement between the
Parties and supersedes all oral or written representations, warranties, understandings
and agreements concerning the subject matters hereof between the Parties made or reached
prior to the execution hereof. The Parties acknowledge and agree that any
representation or warranty not explicitly included herein do not constitute the basis of
this Agreement, and
therefore will not serve as the basis for the determination of the rights and
obligations of the Parties and the interpretation of the terms and conditions hereof.
|
18.2 |
All provisions of this Agreement are independent and severable. If any provision
of this Agreement is held to be illegal, invalid or unenforceable by any government,
governmental agency, judicial authority or arbitration institution, the validity of the
other provisions of this Agreement will not be affected thereby.
|
18.3 |
The Parties agree that they may engage in further negotiations on issues not
covered herein, and enter into a supplemental agreement in writing, after the execution
of this Agreement. Such supplemental agreement will constitute an integral part of this
Agreement.
|
18.4 |
No Party may assign its rights hereunder without the prior written consent of the
other Party. This Agreement will be binding upon the respective successors and permitted
assigns of the Parties hereto.
|
18.5 |
This Agreement will become effective upon the execution and affixing of corporate
seal by the Parties.
|
18.6 |
All notices specified in this Agreement shall be in writing, in Chinese, and
delivered via registered mail, facsimile or other electronic means of communication. A
notice is deemed to have been duly given when it is delivered to the registered address
of the receiving Party. If the notice is sent by registered mail, it will be deemed to
have been duly given on the delivery date noted on the return receipt thereof. If the
notice is transmitted by facsimile, it will be deemed to have been duly given upon the
receipt of the confirmation of such transmission from the fax machine.
|
18.7 |
This Agreement shall be written in Chinese and executed in eight originals. Each
Party shall hold one original, and the remaining originals shall be filed for approval
or registration with applicable government agencies. Each original shall have equal
legal effect.
|
14
15
Standard Premium Conversion Table
Insurance
Conversion
category
Payment period
rate
Remarks
Single payment and under
5 years
10
%
The aggregate amount of premiums from traditional personal life insurance policies with one
single premium payment or a payment period of less than 5 years (excluding five years),
universal life insurance and investment-linked insurance policies with one single premium payment
and their respective additional and supplemental parts shall not exceed 10% of the total
standard premiums.
5 years to 9 years
35
%
10 years to 14 years
65
%
15 years to 19 years
80
%
more than 20 years
100
%
Single payment, and the
additional and supplemental parts
5
%
Basic part
50
%
Single payment, and additional
and supplemental parts
5
%
Basic part
50
%
1. |
Scope of Investment
|
2. |
Adjustment of Equity Interests
|
2.1 |
If the Company achieves lower than 50% of the net profit target of any of the years
2009, 2010 and 2011, the Original Shareholder shall transfer 15% of the equity interests
in the Company held by them to Party A at a consideration of RMB 1.00. If the Company
achieves higher than 50%, but lower than 60% of the net profit target in any of the three
years mentioned above, the Original Shareholders shall transfer 10% of the equity
interests in Datong held by them to Party A at a consideration of RMB 1.00.
|
2.2 |
If the actual total net profit of the Company for the years 2009 to 2011 is less
than RMB96 million, the Original Shareholders shall transfer 15% of the equity interests
in the Company held by them to Party A at a consideration of RMB 1.00. However, if the
Company achieves lower than 60% of the net profit target for any year, the Original
Shareholders may transfer 5% less of the equity interests that they otherwise are
required to transfer to Party A for that year.
|
2.3 |
The actual fulfillment of the aforesaid performance targets shall be confirmed
jointly by Party A and Party C.
|
3. |
Security Deposit
|
3.1 |
The Original Shareholders agree to irrevocably provide RMB180 million as a security
deposit to Party A within six (6) months after the Closing Date. Party A has the right
to return the security deposit to the Original Shareholders in installments based on the
number of sales teams, the number of productive sales agents and the monthly Standard
Premiums with a Payment Period of more than 5 Years of the Company and its subsidiaries,
provided, however, that each installment may not exceed RMB20 million. The particulars
are set forth in the following table:
|
Time | Installments | Conditions | ||
|
||||
Before December 31,
2011
|
First Installment | 1) 10 sales teams, 2) 200 productive sales agents, 3) 2 million standard premiums per month | ||
|
||||
|
Second Installment | 1) 20 sales teams, 2) 500 productive sales agents, 3) 5 million standard premium per month | ||
|
||||
|
Third Installment | 1) 30 sales teams, 2) 900 productive sales agents, 3) 9 million standard premiums per month | ||
|
||||
|
Fourth Installment | 1) 40 sales teams, 2) 1,300 productive sales agents, 3) 13 million standard premiums per month | ||
|
||||
|
Fifth Installment | 1) 50 sales teams, 2) 1,700 productive sales agents, 3) 17 million standard premiums per month | ||
|
||||
|
Sixth Installment | 1) 60 sales teams, 2) 2,100 productive sales agents, 3) 21 million standard premiums per month | ||
|
||||
|
Seventh Installment | 1) 70 sales teams, 2) 2,500 productive sales agents, 3) 25 million standard premiums per month | ||
|
||||
|
Eighth Installment | 1) 80 sales teams, 2) 2,900 productive sales agents, 3) 29 million standard premiums per month | ||
|
||||
|
Ninth Installment | 1) 90 sales teams, 2) 3,300 productive sales agents, 3) 33 million standard premiums per month |
3.2 |
If Party A does not return all the security deposit to the Original Shareholders
due to the Companys failure to meet all of the above-mentioned requirements before
December 31, 2009, Party A will be entitled to keep the remaining amount of the security
deposit and will no longer be obligated to return it.
|
Percentage | ||||||||||
attributable to our | ||||||||||
Subsidiaries | company | Place of incorporation | ||||||||
1. |
CISG Holdings Ltd.
|
100 | % | BVI | ||||||
2. |
CNinsure Holdings Ltd.
|
100 | % | BVI | ||||||
3. |
Intense Rise Limited
|
100 | % | Hong Kong | ||||||
4. |
Fanhua Zhonglian Enterprise Image Planning
(Shenzhen) Co., Ltd. (formerly known as
Haidileji Enterprise Image Planning (Shenzhen)
Co., Ltd.)
|
100 | % | PRC | ||||||
5. |
Fanhua Xinlian Information Technology
Consulting (Shenzhen) Co., Ltd. (formerly known
as Yiqiman Enterprise Management Consulting
(Shenzhen) Co., Ltd.)
|
100 | % | PRC | ||||||
6. |
Shenzhen Fanhua Nanfeng Investment Holding
Co., Ltd. (Shenzhen Fanhua Nanfeng Enterprise
Management Consulting 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 |
Percentage | ||||||||||
attributable to Yihe | ||||||||||
Investment and/or | ||||||||||
Meidiya | ||||||||||
Consolidated Affiliated Entities | Investment | Place of incorporation | ||||||||
1. |
Guangdong Meidiya Investment Co., Ltd.
|
| PRC | |||||||
2. |
Sichuan Yihe Investment Co., Ltd.
|
| PRC | |||||||
3. |
Beijing Fanhua Datong Investment Management Co., Ltd.
|
55 | % | PRC | ||||||
4. |
Beijing Datong Insurance Agency Co., Ltd.
(1)
|
55 | % | PRC | ||||||
5. |
Beijing Fanhua Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
6. |
Beijing Fanlian Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
7. |
Beijing Fanhua Fumin Insurance Agency Co., Ltd. (formerly
known as Beijing Fumin Insurance Agency Co., Ltd.)
|
100 | % | PRC | ||||||
8. |
Changsha Lianyi Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
9. |
Dongguan Nanfeng Jiayu Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
10. |
Foshan Tuohua Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
11. |
Fujian Fanhua Investment Co., Ltd.
|
55 | % | PRC | ||||||
12. |
Fujian Fanhua Xinheng Insurance Agency Co., Ltd. (formerly
known as Fujian Xinheng Insurance Agency Co., Ltd.)
|
100 | % | PRC | ||||||
13. |
Fuzhou Fanhua Lianxin Insurance Agency Co., Ltd.
(2)
|
28 | % | PRC | ||||||
14. |
Fuzhou Guoxin Insurance Agency Co., Ltd.
(3)
|
39 | % | PRC | ||||||
15. |
Guangdong Fangzhong Insurance Surveyors & Loss
Adjustors Co. Ltd.
|
51 | % | PRC | ||||||
16. |
Guangdong Kafusi Insurance Brokerage Co., Ltd.
|
100 | % | PRC | ||||||
17. |
Guangdong Nanfeng Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
18. |
Guangdong Qicheng Insurance Brokerage Co., Ltd.
|
51 | % | PRC | ||||||
19. |
Guangzhou Desheng Insurance Brokerage Co., Ltd.
|
51 | % | PRC | ||||||
20. |
Guangzhou Fanhua Insurance Agency Co., Ltd. (Formerly known
as Guangzhou Xiangxing Insurance Agency Co., Ltd.)
|
100 | % | PRC | ||||||
21. |
Guangzhou Fanhua Yian Insurance Agency Co., Ltd. (Formerly
known as Guangzhou Yian Insurance Agency Co., Ltd.)
|
100 | % | PRC | ||||||
22. |
Hainan Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
23. |
Hangzhou Fanhua Zhixin Insurance Agency Co., Ltd.
|
51 | % | PRC | ||||||
24. |
Hebei Fanhua Anxin Insurance Agency Co., Ltd. (formerly
known as Hebei Anxin Insurance Agency Co., Ltd.)
|
55 | % | PRC |
-2-
Percentage | ||||||||||
attributable to Yihe | ||||||||||
Investment and/or | ||||||||||
Meidiya | ||||||||||
Consolidated Affiliated Entities | Investment | Place of incorporation | ||||||||
25. |
Hebei Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
26. |
Hebei Lianda Insurance Agency Co., Ltd.
(5)
|
39 | % | PRC | ||||||
27. |
Henan Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
28. |
Huaihua Jixiang Insurance Agency Co., Ltd.
(6)
|
30 | % | PRC | ||||||
29. |
Hubei Fanhua East Century Insurance Agency Co., Ltd.
(Formerly known as Hubei East Century Insurance Agency Co.,
Ltd.)
|
60 | % | PRC | ||||||
30. |
Hunan Fanhua Insurance Agency Co., Ltd.
|
55 | % | PRC | ||||||
31. |
Jiangmen Fanhua Zhicheng Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
32. |
Jiangsu Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
33. |
Jiangsu Fanhua Lianchuang Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
34. |
Jiangxi Fanhua Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
35. |
Jinan Fanhua Rongtai Insurance Agency Co., Ltd.
(7)
(Formerly known as Jinan Fanrong Insurance Agency
Co., Ltd)
|
35 | % | PRC | ||||||
36. |
Liaoning Fanhua Gena Insurance Agency Co., Ltd.
|
60 | % | PRC | ||||||
37. |
Nanping Fanhua Jinying Insurance Agency Co., Ltd
.
(2)
|
28 | % | PRC | ||||||
38. |
Quanzhou Fanlian Insurance Agency Co., Ltd
. (2)
|
28 | % | PRC | ||||||
39. |
Shandong Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
40. |
Shandong Fanhua Xintai Insurance Agency Co., Ltd.
|
63 | % | PRC | ||||||
41. |
Shanghai Fanhua Guosheng Insurance Agency Co., Ltd.
|
55 | % | PRC | ||||||
42. |
Shanghai Teamhead Insurance Surveyors & Loss
Adjustors Co., Ltd.
|
51 | % | PRC | ||||||
43. |
Shaanxi Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
44. |
Shenyang Fanhua Rongcheng Insurance Agency Co., Ltd
(8)
|
33 | % | PRC | ||||||
45. |
CNinsure Insurance Surveyors & Loss Adjustors Co., Ltd.
(Formerly known as Shenzhen Khubon Insurance Surveyors & Loss
Adjustors Co., Ltd.)
(9)
|
51 | % | PRC | ||||||
46. |
Shenzhen Huameng Joint Insurance Brokerage Co., Ltd.
|
55 | % | PRC | ||||||
47. |
Shenzhen Nanfeng Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
48. |
Shijiazhuang Fanhua Anxin Investment Co., Ltd.
|
55 | % | PRC |
-3-
Percentage | ||||||||||
attributable to Yihe | ||||||||||
Investment and/or | ||||||||||
Meidiya | ||||||||||
Consolidated Affiliated Entities | Investment | Place of incorporation | ||||||||
49. |
Sichuan Fanhua Bocheng Insurance Brokerage Co.,
Ltd.(Formerly known as Sichuan Bocheng Insurance Brokerage Co.,
Ltd)
|
100 | % | PRC | ||||||
50. |
Sichuan Fanhua Insurance Agency Co., Ltd.
|
100 | % | PRC | ||||||
51. |
Sichuan Fanhua Xintai Insurance Agency Co., Ltd.
(Formerly known as Sichuan Xintai Insurance Agency Co.,
Ltd.)
|
70 | % | PRC | ||||||
52. |
Suining Fanhua Dezhong Insurance Agency Co.,
Ltd.
(10)
|
39 | % | PRC | ||||||
53. |
Tianjin Fanhua Xianghe Insurance Agency Co., Ltd.
|
70 | % | PRC | ||||||
54. |
Yunnan Datong Insurance Agency Co., Ltd.
(4)
|
33 | % | PRC | ||||||
55. |
Zhejiang Fanhua Tongchuang Insurance Agency Co., Ltd.
|
60 | % | PRC | ||||||
56. |
Zhengzhou Fanhua Anlian Insurance Agency Co., Ltd.
|
51 | % | PRC |
(1) | This company is wholly-owned directly by Beijing Fanhua Datong Investment Management Co., Ltd. | |
(2) | 51% of the equity interests in each of these companies are held directly by Fujian Fanhua Investment Co., Ltd. | |
(3) | 70% of the equity interests in this company are held directly by Fujian Fanhua Investment Co., Ltd. | |
(4) | 60% of the equity interests in each of these companies are held directly by Beijing Fanhua Datong Investment Management Co., Ltd. | |
(5) | 70% of the equity interests in this company are directly held by Shijiazhuang Fanhua Anxin Investment Co., Ltd. | |
(6) | 55% of the equity interests in this company are held directly by Hunan Fanhua Insurance Agency Co., Ltd. | |
(7) | 55% of the equity interests in this company are direcly by Shandong Fanhua Xintai Insurance Agency Co., Ltd. | |
(8) | 55% of the equity interests in this company are held directly by Liaoning Fanhua Gena Insurance Agency Co., Ltd. | |
(9) | This company is wholly-owned directly by Guangdong Fanhua Fangzhong Insurance Surveyors & Loss Adjustors Co. Ltd. | |
(10) | 55% of the equity interests in this company are held directly by Sichuan Fanhua Xintai Insurance Agency Co., Ltd. |
-4-
By: | /s/ Yinan Hu | |||||
|
Name: | Yinan Hu | ||||
|
Title: | Chief Executive Officer |
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/ Yinan Hu | |||||
|
Name: | Yinan Hu | ||||
|
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 |
/s/ Maples and Calder
|
||
Maples and Calder
|
/s/ Commerce & Finance Law Offices
|
||
Commerce & Finance Law Offices
|
Exhibit 15.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements No. 333-156486 and No. 333-151271 on Form S-8 of our reports dated May 15, 2009, relating to the consolidated financial statements and financial statement schedule of CNinsure Inc., its subsidiaries and variable interest entities (collectively the “Group”) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the translation of Renminbi amounts into U.S. dollar amounts for the convenience of the readers) and the effectiveness of the Group’s internal control over financial reporting, appearing in the Annual Report on Form 20-F of the Group for the year ended December 31, 2008.
/s/ Deloitte Touche Tohmatsu
Hong Kong
May 15, 2009