XINJIANG GOLDWIND SCIENCE & TECHNOLOGY CO., LTD. *

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, accountant or other professional adviser. If you have sold or transferred all your shares in Xinjiang Goldwind Science & Technology Co., Ltd., you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. XINJIANG GOLDWIND SCIENCE & TECHNOLOGY CO., LTD. * (a joint stock limited liability company incorporated in the People s Republic of China) Stock Code: PROPOSED ISSUE OF CORPORATE BONDS ELECTION OF DIRECTOR PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION GENERAL MANDATE TO ISSUE SHARES AND NOTICE OF ANNUAL GENERAL MEETING A notice convening an annual general meeting of the shareholders of Xinjiang Goldwind Science & Technology Co., Ltd. (the Company ) to be held at No. 107, Shanghai Road, Economic & Technology Development District, Urumqi, Xinjiang, PRC at 10:30 a.m. on Friday, 24 June 2011 is set out on pages 27 to 33 of this circular. A form of proxy and a reply slip for use in connection with the annual general meeting are enclosed herewith and published on the website of the Stock Exchange ( Whether or not you are able to attend the meeting, please complete and return the reply slip and the form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not later than 20 days and 24 hours, respectively, before the time designated for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish. * For identification purposes only 9 May 2011

2 CONTENTS Page DEFINITIONS LETTER FROM THE CHAIRMAN INTRODUCTION PROPOSED ISSUE OF CORPORATE BONDS ELECTION OF DIRECTOR PROPOSED AMENDMENTS TO ARTICLES GENERAL MANDATES TO ISSUE SHARES ANNUAL GENERAL MEETING RECOMMENDATION APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR NOTICE OF ANNUAL GENERAL MEETING i

3 DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise: A Shares ordinary shares issued by the Company, with RMBdenominated par value of RMB1.00 each, which are and listed on the SZSE and traded in RMB; Annual General Meeting or AGM the annual general meeting of the Company to be convened at No. 107, Shanghai Road, Economic & Technology Development District, Urumqi, Xinjiang, PRC at 10:30 a.m. on 24 June 2011, the notice of which is set out on pages 27 to 33 of this circular; Articles of Association the articles of association of the Company, as amended, modified or otherwise supplemented from time to time; Board of Directors the board of directors of the Company; Company Xinjiang Goldwind Science & Technology Co., Ltd., a joint stock limited liability company incorporated in the PRC on 26 March 2001; Company Law the company law of the PRC; Corporate Bonds the proposed issue of corporate bonds with an aggregate principal amount of not more than RMB5 billion in the PRC; Directors the directors of the Company; Group the Company and its subsidiaries; Hong Kong the Hong Kong Special Administrative Region of the PRC; H Shares ordinary shares issued by the Company, with RMBdenominated par value of RMB1.00 each, which are subscribed for and paid up in Hong Kong dollars and listed on the Stock Exchange; Latest Practicable Date or LPD 5 May 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular; 1

4 DEFINITIONS Listing Rules PRC RMB Shareholders Stock Exchange subsidiary the Rules Governing the Listing of Securities on the Stock Exchange; the People s Republic of China. References in this circular to the PRC exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan; Renminbi, the lawful currency of the PRC; shareholders of the Company; The Stock Exchange of Hong Kong Limited; and has the meaning as ascribed in the Listing Rules. 2

5 LETTER FROM THE CHAIRMAN XINJIANG GOLDWIND SCIENCE & TECHNOLOGY CO., LTD. * (a joint stock limited liability company incorporated in the People s Republic of China) Stock Code: Directors: Executive Directors: Wu Gang Guo Jian Wei Hongliang Non-executive Directors: Li Ying Gao Zhong Lv Houjun Independent non-executive Directors: Wang Yousan Shi Pengfei Li, Man Bun, Brian David Registered Office: No. 107, Shanghai Road Economic & Technological Development Zone Urumqi Xinjiang PRC Place of Business in Hong Kong: Edinburgh Tower, 33/F, The Landmark 15 Queen s Road Central Hong Kong 9 May 2011 To Our Shareholders, Dear Sir or Madam, PROPOSED ISSUE OF CORPORATE BONDS ELECTION OF DIRECTOR PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION GENERAL MANDATE TO ISSUE SHARES AND NOTICE OF ANNUAL GENERAL MEETING 1. INTRODUCTION The purpose of this circular is to set out (i) the proposed issue of Corporate Bonds; (ii) the proposed election of a Director; (iii) the proposed amendments to the Articles of Association; (iv) the proposed general mandate to issue Shares; and (v) to give you the notice of the AGM to consider and approve the proposed ordinary resolutions and special resolutions. 2. PROPOSED ISSUE OF CORPORATE BONDS The Board resolved on 19 April 2011 to submit to the Shareholders at the AGM for consideration and, if thought fit, approving the offer and issue of Corporate Bonds in the PRC with an aggregate principal amount of not more than RMB5 billion. * For identification purposes only 3

6 LETTER FROM THE CHAIRMAN The proposed terms of the Corporate Bonds Aggregate principal amount : Not more than RMB5 billion Maturity : Not more than 10 years (subject to final determination by the Board according to market conditions prevailing at the time of issue) Interest rate : Subject to the approval and authorization of the Shareholders, to be determined by the Board according to the prevailing marketing conditions and other circumstances relating to the issue of the Corporate Bonds Use of proceeds : The net proceeds from issue of the Corporate Bonds shall be used for working capital of the Company and repayment of bank loans to reduce its financing cost and adjust its debt structure The Corporate Bonds to be issued are not convertible into shares of the Company. Authorization to the Board It will be submitted to the Shareholders to consider and, if thought fit, approve to authorize the Board to deal with (including, but not limited to) the following matters in relation to the issue of Corporate Bonds according to the applicable laws and regulations and the market conditions prevailing at the time of issue: (a) (b) (c) (d) to determine, depending the needs of the Company and the prevailing market conditions, the specific terms and arrangements of the issue of Corporate Bonds, including but not limited to, total amount, maturity, interest rate, intended investors, use of proceeds, placing to the existing Shareholders, offer tranches (if any) and preparation, filing, execution, signing, acceptance and publication of any necessary legal documents; to make, within the authorisation of the Shareholders, any changes and adjustments to the terms and arrangements of the issue of Corporate Bonds in accordance with any change to the regulatory policies or the market conditions except for matters relating to the laws, regulations or the Articles of Association of the Company which require the shareholders approval; to appoint the relevant intermediaries; to determine any other matters relating to the issue of Corporate Bonds; and 4

7 LETTER FROM THE CHAIRMAN (e) to further authorise Mr. Wu Gang, the chairman of the Board, to sign on behalf of the Company any legal documents and to implement the issue of Corporate Bonds. The above mentioned authorization, if granted, shall be valid for 18 months from the date of approval by the Shareholders at the AGM. 3. ELECTION OF DIRECTOR As disclosed by the Company on 19 April 2011, Mr. Li Man Bun, Brian David ( Mr. Li ), an independent non-executive director has indicated to the Company that he wishes to resign as the independent non-executive director as well as a member and the chairman of the Audit Committee at the AGM due to increasing engagement in his other businesses. Mr. Li has confirmed that he has no disagreement with the Board and there is no matter relating to his resignation that needs to be brought to the attention of the shareholders of the Company. The Board proposed Dr. Kelvin Wong (, Dr. Wong ) to be elected as an independent and non-executive director of the Company at the AGM. Dr. WONG, aged 50, is the Chairman of The Hong Kong Institute of Directors, the council advisor and past Chairman of the Hong Kong Chinese Orchestra Limited, a member of the OECD/World Bank Asian Corporate Governance Roundtable, a member of the Main Board and GEM Listing Committee of The Stock Exchange of Hong Kong Limited, a member of the SFC (HKEC Listing) Committee of the Securities and Futures Commission, a member of the Appeal Board Panel (Town Planning), a council member of The Hong Kong Management Association, a member of The Board of Review (Inland Revenue Ordinance), a Board Director of Business Environment Council and was appointed by the Hong Kong Special Administrative Region as a member of the Standing Committee on Company Law Reform and the Corruption Prevention Advisory Committee of Independent Commission Against Corruption. He obtained his Master of Business Administration degree from Andrews University in Michigan, the USA in 1992 and his Doctor of Business Administration degree from The Hong Kong Polytechnic University in Dr. WONG is currently an executive director, deputy managing director, the chairman of the Corporate Governance Committee and member of the Executive Committee of COSCO Pacific Limited, an Independent Non-executive Director and Chairman of the Audit Committee of China Metal International Holdings Inc. and China ZhengTong Auto Services Holdings Limited, an Independent Non-executive Director of CIG Yangtze Ports PLC and I.T Limited and was an Independent Non-executive Director of Tradelink Electronic Commerce Limited. All the aforementioned companies are listed on The Stock Exchange of Hong Kong Limited. As at the LPD, Dr. Wong does not have any interest in the Company s securities within the meaning of Part XV of the Securities and Futures Ordinance nor any relationships with any directors, senior management or substantial or controlling shareholders of the Company. Apart from being a director of the Company, Dr. Wong does not hold any other position with the Company or any other member of the group of companies of which the Company forms part. In view of these, the Directors have determined that Dr. Wong is independent. 5

8 LETTER FROM THE CHAIRMAN Other than the information disclosed in this circular, there are no other information to be disclosed pursuant to any of the requirements of the provisions under Rule 13.51(2) of the Listing Rules, nor are there other matters that need to be brought to the attention of Shareholders in relation to the proposed appointment of Dr. Wong as an independent non-executive director of the Company. Subject to approval of the Shareholders on the proposed election of director, the Company will enter into a service contract with Dr. Wong, for his services to the Company stating, among other things, their respective annual remuneration and the length of service. 4. PROPOSED AMENDMENTS TO ARTICLES The Board proposed to make the following amendments to the Articles of Association: (1) Article 8.03 Two items, i.e. Item (5) and Item (6), are added behind Item (4) of Article 8.03 of the original Articles of Association, so Article 8.03 is proposed to be changed into: Article 8.03 Any of the following guarantees to be provided by the Company (including its subsidiary) shall be subject to the shareholders approval: (1) any subsequent guarantee after the total amount of external guarantee provided by the Company and its subsidiaries reaching or exceeding 50% of the latest audited net asset; (2) any subsequent guarantee after the total amount of external guarantee provided by the Company reaching or exceeding 30% of its latest audited total asset; (3) any guarantee provided to any party with a gearing ratio exceeding 70%; (4) a single guarantee whose amount exceeds 10% of latest audited net assets; (5) any subsequent guarantee after the total amount of guarantees for the 12 consecutive months exceeding 30% of the Company s latest audited total assets; (6) any subsequent guarantee after the total amount of guarantees for the 12 consecutive months exceeding 50% of the Company s latest audited net assets and with an amount of more than RMB50 million; 6

9 LETTER FROM THE CHAIRMAN (7) any guarantee provided to shareholders, actual controllers and their respective related parties. (2) Article Item 10 of Article is proposed to be amended as: (10) unless otherwise required by the stock exchange on which the Company are listed, to decide on matters relating to the Company s external investments, assets pledges and entrusted financial management, and, by establishment of the relevant rules and system, to authorise the chairman of the board of directors and/or the subsidiaries of the Company to determine such matters in accordance with the relevant authorisations. The proposed amendments shall come into effect upon the approval of the Shareholders by way of special resolution at the AGM and obtaining all necessary approvals, authorisations, or registration (if applicable) from or filing with the relevant governmental or regulatory authorities. 5. GENERAL MANDATE TO ISSUE SHARES In order to increase the flexibility for raising capital to facilitate expansion plan of the Company as the Directors consider appropriate, the Company will seek approval from their shareholders at the AGM for the grant of a general mandate (the General Mandate ) which is exercisable by the Board of Directors to issue new Shares not exceeding 20% of entire issued H Shares as at the date of the relevant shareholders meeting. In this connection, it is proposed that the Shareholders will, by a special resolution, grant the Board of Directors the power to issue new H Shares on the terms of the relevant resolution set out in the notice of AGM set out on pages 27 to 33 of this circular. Any exercise of the power by the Board of Directors under the general mandate to issue new Shares will have to comply with the relevant requirements of the applicable laws and regulations of the PRC and Hong Kong, including the Company Law, the Listing Rules and the Articles of Association. The Board of Directors has no present plan to cause the Company to issue any additional Shares under this general mandate if this general mandate is approved by the Shareholders. However, the Directors believe that it is in the best interests of the Company and the Shareholders for the Board of Directors to have a general authority from the Shareholders to enable the Board of Directors to issue new Shares. As at the LPD, the total number of shares in issue is 2,694,588,000, of which 500,046,800 Shares are H Shares and 2,194,541,200 shares are A Shares. Subject to the passing of the proposed special resolution approving the granting of the General Mandate and no further shares are issued prior to the AGM, the Company would be allowed under the General Mandate to issue a maximum of 100,009,360 H Shares, being 20% of the entire issued H Shares of the Company as at the date of passing of the resolution in relation thereof. 7

10 LETTER FROM THE CHAIRMAN 6. ANNUAL GENERAL MEETING The Annual General Meeting is proposed to be held at No. 107, Shanghai Road, Economic & Technology Development District, Urumqi, Xinjiang, PRC at 10:30 a.m. on 24 June 2011 at which resolutions to approve, among other things, the general mandate will be proposed to the Shareholders (details has been set out in the notice of the AGM on pages 27 to 33 of this circular). As announced by the Company on 19 April 2011, its register of members will be closed from Wednesday, 25 May 2011 to Friday, 24 June 2011 (both days inclusive) for the purposes of determining final dividends entitlement and the shareholders entitled to attend the AGM. During the above mentioned period no share transfer will be registered. Holders of H Shares whose names appear on the registers of members as at the close of business on 24 May 2011 are entitled to the final dividends of 2010 and attending the AGM. In order to attend and vote at the AGM and to be entitled to the final dividends of 2010, holders of H Shares whose transfers have not been registered shall deposit the transfer documents together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops , 17th Floor, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on 24 May Pursuant to rule 13.39(4) of the Listing Rules, the votes of the Shareholders of the Company at the AGM shall be taken by poll. 7. RECOMMENDATION The Directors believe that the proposed resolutions in respect of (i) the proposed issue of Corporate Bonds; (ii) the proposed election of Dr. Wong as an independent non-executive director; (iii) the General Mandate to issue Shares; and (iv) the proposed amendments to the Articles or Association are all in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that Shareholders should vote in favour of all resolutions to be proposed at the AGM. Yours faithfully, WU Gang Chairman 8

11 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) Rules for Management of External Investments (Revised) Chapter 1 General Provisions 1.1 These rules are formulated by Xinjiang Goldwind Science & Technology Co., Ltd. ( the Company ) in accordance with the stipulations of the Company Law, the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange, the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association of the Company ( the Articles of Association ), for the purposes of strengthening the regulation on external investment activities, realizing strategic investment objectives, ensuring asset preservation and appreciation, and maintaining the overall image of the Listed Company and safeguarding the interests of investors. 1.2 These rules aim to establish an effective risk control mechanism, to enable the Company to make decisions correctly, to manage and control effectively the investment activities of the Company and its subsidiaries (including wholly-owned subsidiaries throughout this document), to safeguard the safety and returns of external investments, and to improve risk prevention capability. 1.3 External investments referred to herein represent external investment activities carried out by the Company and its subsidiaries. Chapter 2 Respective Duties of Management of External Investments 2.1 The Board is the decision making body of the Company in relation to external investments, which is responsible for formulating, amending and determining the rules for external investment management. 2.2 The Strategy Committee is the appraisal body of the Company in relation to external investments, which is responsible for appraising external investment projects that are determined by the Board, and submitting projects which have satisfied the Company s investment criteria to the Board for consideration. 2.3 The Investment and Equity Management Department is the competent authority in charge of external investments of the Company and its subsidiaries, which is responsible for preparing external investment plans and proposals, organizing preliminary reviews and reviews for projects, implementing examination and approval procedures, managing the implementation of projects and monitoring risks. 2.4 The Audit Committee of the Board is responsible for auditing of external investment projects, specific procedures will be carried out in accordance with the relevant provisions of the Company. 9

12 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) Chapter 3 Decision Making Procedures for External Investments 3.1 The Investment and Equity Management Department is responsible for the preliminary review of proposals for external investment projects, and will organize the Secretariat of the Board and relevant departments (including strategic planning, finance, audit and legal matters, and human resources) of the Company to conduct an initial review and issue an Initial Review Report for Investment Project and submit the same to the Office of the President for review and consideration, and the project will be approved to initiate after passing the review. 3.2 For external investment projects that are approved to be initiated, the Investment and Equity Management Department shall organize and carry out feasibility studies and prepare relevant documents for submission to the Strategy Committee of the Board for review and consideration. Upon the approval of the Strategy Committee, the external investment project will be submitted to the Board for review and consideration. 3.3 For external investment projects reviewed and approved by the Board, the Investment and Equity Management Department will be responsible for leading the implementation. 3.4 For an external investment project within the scope of review and approval authority of a subsidiary, its operating and management organ shall submit the investment project to the board of the subsidiary after preliminary review, and then file the relevant approval document with the Investment and Equity Management Department of the Company upon approval, such that the subsidiary shall be responsible to implement the project. For an external investment project beyond the scope of review and approval authority of a subsidiary, its operating and management organ shall submit the investment project to the board of the subsidiary after preliminary review, and then submit the same to the Company for examination and approval in accordance with the procedures stipulated in 3.1 and 3.2 herein, and the subsidiary shall be responsible to implement the project upon approval. Chapter 4 Authority for Reviewing and Approving External Investments 4.1 The Board of directors of the Company shall have the power to decide on matters concerning external investments and shall authorize the Chairman of the Board to approve any single equity investment within the limit of RMB50 million (inclusive, similarly elsewhere hereinafter), or an accumulated investment amount within the limit of RMB300 million during each fiscal year, except otherwise required by the stock exchange on which the securities of the Company are listed. 4.2 The Board of the Company shall prescribe the authorization limit of a subsidiary for reviewing and approving external investments, based on the actual requirements of operation, including: Beijing Tianrun New Energy Investment Co., Ltd., a wholly-owned subsidiary of the Company, shall, by approval of its Board of directors, have the right to decide on an 10

13 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) investment within the limit of RMB100 million on wind power development projects, and the Board may authorize the Chairman or the General Manager to exercise part of its decision-making power within the limit of the aforesaid authorization. The decision-making and implementation of such investments are subject to the requirements set forth in Article 3.4 of these rules. For an investment involving connected transaction, it shall be subject to the examination and approval of the relevant competent authorities as required by the stock exchange of the jurisdiction where the Company was listed Goldwind Investment Holding Co., Ltd., a wholly-owned subsidiary of the Company, shall, by approval of its Board of directors, have the right to decide on a single equity investment within the limit of RMB50 million or accumulated investments within the limit of RMB300 million during each fiscal year, and the Board may authorize the Chairman or the General Manager to exercise part of its decision-making power within the limits of the aforesaid authorization. The decision-making and implementation of such investments are subject to the requirements set forth in Article 3.4 of these rules. For an investment involving connected transaction, it shall be subject to the examination and approval of the relevant competent authorities as required by the stock exchange of the jurisdiction where the Company was listed Goldwind International Holding (Hong Kong) Co., Ltd., a wholly-owned subsidiary of the Company, shall, by approval of its Board of directors, have the right to decide on a single equity investment within the limit of RMB100 million, or accumulated investments within the limit of RMB500 million on wind power development projects during each fiscal year. The decision-making and implementation of such investments are subject to the requirements set forth in Article 3.4 of these rules. For an investment involving connected transaction, it shall be subject to the examination and approval of the relevant competent authorities as required by the stock exchange of the jurisdiction where the Company was listed. 4.3 For the implementation of an external investment project by a subsidiary which has certain power for examination and approval of external investments as authorized by the Board of the Company, any disposal of its equity interests shall be subject to the approval of the original examination and approval authorities of the project, except otherwise required by the Articles of Association of the Company or by the stock exchange of the jurisdiction where the Company was listed. 4.4 Where a subsidiary engages in external investments involving securities, futures, options, foreign exchange or funds, they shall be subject to the approval of the Board of the Company. Chapter 5 Management of personnel assigned to invested companies 5.1 For entities that are newly established by the Company through external investment and meet eligibility criteria, the Company shall take part in and have influence over these 11

14 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) entities operation and decision-making by appointing or nominating directors and supervisors thereto, in all cases subject to election through legal procedure. 5.2 For subsidiaries formed by the Company through external investment, the Company shall appoint a chairman or an executive director (legal representative), in each case subject to election through legal procedure, and assign appropriate chief executives (including chief financial officer) thereto so as to play an important role in their operations and decision-making. To strengthen the management of Beijing Tianrun New Energy Investment Co., Ltd. and guard against any risk therein, the Company s senior management shall represent no less than half of the membership of the board of Beijing Tianrun New Energy Investment Co., Ltd. 5.3 Appointees of the Company shall faithfully perform their duties as specified in the Company Law and the Articles of Association of the Company and safeguard the Company s interest in the course of management and operation of the newly established entity so as to retain and increase the value of the Company s investment. 5.4 The Company may appoint proxies to the entity acquired through external investment. Proxies shall signed letter of responsibility with the Company, accept performance targets set by the Company, submit an annual activity report to the Company and receive inspection by the Company As for wholly-owned subsidiaries that have executive directors only and for joint ventures ( JV s) in which the Company has appointed merely one director, such executive directors or directors shall be the Company s de facto proxy. As for the Company s wholly-owned subsidiaries, controlled entities or JVs to which the Company has appointed two or more directors, the Company shall designate one of such directors as its proxy. As for JVs to which the Company has appointed no director but a supervisor, the supervisor shall serve as the Company s proxy. As for JVs to which the Company is unqualified to appoint director or supervisor, the Company shall designate one business contact as its proxy Prior to voting on any resolution in respect of any material issues of the entities to which a proxy relates, he/she shall go though a request procedure on key issues by presenting a recommendation to the Company before voting as instructed by the Company. As for the same wholly-owned subsidiaries, controlled entities or JVs to which the Company has appointed more than one director and/or supervisor, a proxy shall make reference to advices of other directors and supervisors appointed in the same entity before submitting his/her recommendation The Company shall gradually establish and improve the equity management system featuring an accountability mechanism of proxy, develop the system of annual activity reporting and evaluation of proxy and establish the system governing the assessment, reward and punishment and incentives for proxies during his/her term. 12

15 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) Chapter 6 Financial Management and Audit of External Investment 6.1 Accounting policies, accounting estimates and changes adopted in accounting method and financial management of the subsidiaries shall comply with the Accounting Standards for Business Enterprises and the relevant requirements. 6.2 The subsidiaries shall submit financial statements to the finance department of the Company every month, and report and provide financial statements and accounting information on time in accordance with the requirements of the Company on the preparation of consolidated financial statements and public disclosure of financial information. 6.3 The Chief Financial Officer ( CFO ) of the Company or the financial controller designated by the CFO shall be responsible for the authenticity and legality of the financial status of the employing companies. 6.4 The audit department of the Company shall perform regular or special audits on accounts of the subsidiaries and conduct relevant procedures adopted by the Company. Chapter 7 Reporting and Information Disclosure of Significant Events 7.1 The Company and its subsidiaries shall comply with the relevant requirements of information disclosure in respect of the Company s external investment and perform its basic obligations on information disclosure. 7.2 The subsidiaries shall report in a timely manner the following events to the secretariat of the Board and the investment and equity management department of the Company: Disposal of assets; Material litigation or arbitration; Guarantee to other companies; Provision for material asset impairment; Connected transactions; Entering into material contracts; The conclusion, amendment and termination of material contracts (borrowings, entrusted operation, commissioned operation, entrusted wealth management, donations, contracting and leasing); Large amount cheques rejected by banks; 13

16 APPENDIX I THE RULES FOR MANAGEMENT OF EXTERNAL INVESTMENTS (REVISED) Material operating or non-operating loss; Suffering material losses; Being imposed of material administrative punishment; Other reportable events required by the Company; Other noticeable events required by the Rules Governing Listing of Stocks on Shenzhen Stock Exchange and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. 7.3 The subsidiaries shall designate a person and a department to take charge of information disclosure and file the relevant method of communication and means to contact with the secretariat of the Board and the investment and equity management department of the Company. Chapter 8 Annex 8.1 These rules shall be applicable to the Company and its subsidiaries. 8.2 All monetary amounts referred to in these rules are Renminbi. 8.3 Events not covered by these rules shall be handled according to the relevant laws and regulations of the PRC, the requirements of the stock exchanges where the Company is listed, and the Articles of Association of the Company. 8.4 These rules shall be construed and subject to amendment by the Board. 14

17 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 The Report on Use of Proceeds for the Year 2010 I. SUMMARY OF PROCEEDS In accordance with Notice of Approval regarding of the Initial Public Offering of Shares by Xinjiang Goldwind Science & Technology Co., Ltd. (Zheng Jian Fa Xing Zi [2007] No.453) issued by China Securities Regulatory Commission, the Company received approval and issued to the public 50,000,000 ordinary shares (A Share) at a price of RMB36.00 per share on 13 and 14 December The total proceeds raised by the Company were RMB1,800,000,000.00, and net proceeds (less issuance fees) totaled RMB1,744,663, The figures above have been audited by Wuzhou Songde Accountants Firm on 19 December 2007, in accordance with the Capital Verification Report (Wu Zhou Shen Zi (2007) No.8-622) issued. As of 31 December 2010, the Company has used a total of RMB1,529,705, of the proceeds. Details are as follows: i. RMB1,489,705, were used for projects, of which: 1. RMB402,413, for replacing those investments made by the Company utilizing its own capital resources in the projects before such share proceed become available; 2. RMB1,087,291, were invested in projects. ii. As of 31 December 2010, the Company used RMB40,000, of share proceeds for working capital. On 2 September 2010, the proposal to use RMB40.00 million of unused proceeds for working capital was approved at the 2010 Second Extraordinary General Meeting. This amount will be repaid after six months from the date of last repayment (13 October 2010). As at 31 December 2010, the balance of the Company s proceeds stands at RMB214,958, (excluding the fund, the temporarily allocated for working capital amounting to RMB40.00 million). 15

18 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 II. MANAGEMENT OF PROCEEDS In order to standardize the management and use of proceeds, and protect the investors interests, the Company issued the Management Rules of Use of Proceeds pursuant to the Company Law, the Securities Law, the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange, and the Rules on the Administration of Proceeds of Companies Listed on the Small and Medium-sized Enterprise Board. In accordance with the rules, the Company deposited the proceeds in a designated account, performed strict authorization procedures, and guaranteed the proper use with regards to the proceeds. During the reporting period, the proceeds deposited in accounts with China Construction Bank, Urumqi Zhongshan Road Sub-branch by the Company and Bank of China, Baotou Development Zone Sub-branch by Inner Mongolia Goldwind Science & Technology Co., Ltd., have been used and the respective accounts have been closed. As at 31 December 2010, the balance of proceeds in all accounts of the Company is RMB268,224, Details are as follows: Unit: RMB Bank Account No. Account Type Balance Company Bank of China, Xinjiang Uygur Autonomous Region Branch General account 15,671, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Time deposit 20,000, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Time deposit 40,000, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Time deposit 30,000, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Notice deposit 2,500, Goldwind 16

19 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Bank Account No. Account Type Balance Company Bank of China, Xinjiang Uygur Autonomous Region Branch Notice deposit 35,000, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Notice deposit 4,000, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Notice deposit 2,850, Goldwind Bank of China, Xinjiang Uygur Autonomous Region Branch Notice deposit 10,000, Goldwind Bank of China, Nanjing Jiangning Sub-branch General account 3,129, Nanjing Goldwind Notice Deposit at Bank of China, Nanjing Jiangning Sub-branch Notice deposit account 90,553, Nanjing Goldwind China Construction Bank, Beijing Development Zone Sub-branch General account 4,519, Beijing Science & Creation 2296 Transferred to Seven- Day Notice Deposit at CCB Notice deposit 10,000, Beijing Science & Creation Total 268,224, As of 31 December 2010, the balance of proceeds of the Company is RMB268,224, The total balance in the designated accounts was RMB53,266, which was more than the balance of the proceeds. The difference was due to that the Company had not remitted an amount of RMB40,288, out of the designated accounts to replace the funds previously invested by the Company with its owns funds. Interests from the proceeds amounted to RMB12,977,

20 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 III. USE OF PROCEEDS IN THE FINANCIAL YEAR OF 2010 Details of the use of proceeds in 2010 are set out in Table 1, Breakdown of Use of Share Proceeds. IV. CHANGES TO PROJECTS Projects. Details of the changes to projects are set out in Table 2: Changes to Share Proceeds V. CURRENT SHARE PROCEEDS PROJECTS Due to delays in certain projects during the reporting period, investment plans had to be adjusted accordingly. The Company made the following adjustments to the use of proceeds according to our future development strategy: i. Progress of various projects currently under construction: Jiangsu Dafeng offshore WTG R&D and production base: According to the Company s development strategy and production facility layout, we will change the use of proceeds for the Nanjing MW-level WTG Industrialization project, and the Jiangsu Dafeng offshore WTG R&D and production base due to its close proximity to Dafeng (Jiangsu province). As of 31 December 2010, a total of RMB25,454,100 has been invested in the Nanjing MW-level WTG Industrialization project. The remaining project budget of RMB89,609,700 will be invested in the Jiangsu Dafeng offshore WTG R&D and production base. 3.0MW hybrid PM WTG R&D: In 2010, the first prototype of our 3.0 MW hybrid WTG was developed and successfully connected to power grid, and began trial operation. During the first half of 2010, the improvements to the WTG design were completed, and the second batch of prototypes is in production. 6.0MW DDPM WTG R&D: In 2010, the WTG overall design has been completed, detailed design is substantially finished, and detailed design and trial production of all components are planned for completion by the end of In 2012, the first onshore prototype will be installed. 18

21 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 ii. Details of project investments and progress are as follows: Unit: RMB ten thousand Committed Project Proceeds investment progress Accumulated investment as of 31 December Total investment of proceeds Production project Jiangsu Dafeng offshore WTG R&D and production base 8, , R&D projects 3.0MW hybrid PM WTG R&D 11, , , , MW DDPM WTG R&D , , Total 11, , , , VI. DISCLOSURE IN USE OF PROCEEDS The Company acted in strict compliance with relevant regulations including the Rules on the Administration of Proceeds of Companies Listed on the Small and Medium-sized Enterprise Board and the Company s Management Rules of Use of Proceeds, and disclosed the deposit and use of proceeds truthfully and accurately, and the information was complete and provided in a timely manner. VII. ADVICE OF INDEPENDENT DIRECTORS The advice of the Company s independent directors Mr. Wang Yousan, Mr. Shi Pengfei, and Mr. Li Man Bun are as follows: The independent non-executive directors are in agreement with the 2010 Use of Proceeds Report of Goldwind Science & Technology issued by the board of the Company. The report truthfully reflected the Company s management and use of proceeds. The disclosed information on proceeds was truthful, accurate, complete, and provided in a timely manner. There were no violations regarding the management of proceeds. VIII. COMMENTS OF HAITONG SECURITIES COMPANY LIMITED There are no violations regarding the Company s management and use of proceeds, changes in investment of projects, use of unused proceeds for working capital, etc. All such activities were performed pursuant to relevant policies and regulations, and were promptly disclosed. 19

22 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 The Report on Use of Proceeds of Goldwind Science & Technology for the year of 2010 issued by the Board of the Company accurately and completely reflected the Company s use of share proceeds in IX. ADVICE OF SUPERVISORY COMMITTEE The Company acted in strict compliance with the Management Rules of Use of Proceeds. During the financial year, the Company s proceeds were not pledged to secure loans, the use of proceeds were in compliance with the Company s project plans, and there were no violations with regards to the use of proceeds. All uses of proceeds were approved in accordance with the relevant regulations. The Supervisory Committee believes that the disclosure of relevant information were accurate, complete, and on time. 20

23 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Table 1: BREAKDOWN OF USE OF SHARE PROCEEDS Unit: RMB ten thousand Total amount of share proceeds 174, Share proceeds invested between January-December 2010 Total share amount of proceeds involving changes in investment purpose As a % of the total amount of share proceeds 2.63% 12, , Accumulated total of share proceeds investments 148, Committed projects If changed (including partial changes) Committed total investment from share proceeds Adjusted total Investment Total amount committed for investment as at the end of 2010 (1) Total amount Invested during the reporting period Aggregate amount invested as at the end of 2010 (2) Difference between accumulated total amount invested and the Total amount committed for investment as at the end of 2010 (3) = (2)-(1) Investment rate % as at the end of 2010 (4) = (2)/(1) Date of the projects becoming ready for intended use Profit achieved during the reporting period Whether the Expected profit is achieved Whether there were any material changes in relation to the feasibility of the project I. Capacity expansion Beijing MW-level WTG high-tech Industrialization Project No May Yes No Xinjiang MW-level WTG Capacity Expansion Project No Oct Yes No Inner Mongolia MW-level DDPM WTG Industrialization Project No Dec Yes No Nanjing MW-level WTG Industrialization Project No Jul No 21

24 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Committed projects If changed (including partial changes) Committed total investment from share proceeds Adjusted total Investment Total amount committed for investment as at the end of 2010 (1) Total amount Invested during the reporting period Aggregate amount invested as at the end of 2010 (2) Difference between accumulated total amount invested and the Total amount committed for investment as at the end of 2010 (3) = (2)-(1) Investment rate % as at the end of 2010 (4) = (2)/(1) Date of the projects becoming ready for intended use Profit achieved during the reporting period Whether the Expected profit is achieved Whether there were any material changes in relation to the feasibility of the project II. R&D projects 1.5MW Series WTG R&D No Sep No 2.5MW DDPW WTG R&D No Oct No 3MW Hybrid PM WTG R&D No Dec No 5MW WTG R&D Yes Jun No Testing Laboratory No Dec No III. Wind farm development and sales Projects Capital Injection to Fuhui Wind Energy and Implementation of Wulate Wind Farm Project No Aug Yes No Tacheng Mayitasi 49.5MW Trial Demonstration Wind Farm No Mar Yes No Gold Wind Damao Domestic Demonstration Wind Farm No Oct , No Total ,

25 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Project not progressing as scheduled or not achieving expected profit and the reason (by project) Description of project not progressing as scheduled: (1) Nanjing MW-level WTG industrialization project: According to the Company s development strategy, we will stop production at the Nanjing MW-level WTG Industrialization project, due to its close proximity to Dafeng (Jiangsu province), The remaining project budget will be invested in the Jiangsu Dafeng offshore WTG R&D and production base. (2) 3.0MW hybrid PM WTG R&D: In 2010, the first prototype of our 3.0 MW hybrid WTG was developed and successfully connected to the grid, and began trial operation. During the first half of 2010, the improvements to the WTG design were completed, and the second batch of prototypes is in production. Explanation for material changes in the feasibility of project nil Change of the location of share proceeds projects nil Adjustment to the implementation methods for share proceeds projects nil Initial investment in share proceed projects and replacement with share proceeds nil Idle share proceeds used for short-term liquidity In March 2010, the Company was approved to use RMB60 million idle share proceeds for short-term liquidity during the 2009 Annual General Meeting of the Company, for a term of six months starting from the date of repayment of funds utilized for such purpose lately (i.e. 13 April 2010). On 12 October 2010, the Company repaid all aforesaid amounts and deposited them into the specific account for share proceeds. In September 2010, the Company was approved to use 40 million idle share proceeds for short-term liquidity during the second extraordinary general meeting of the Company for a term of six months starting from the date of repayment of funds utilized for such purpose lately (i.e. 13 October 2010). 23

26 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Amount surplus of share proceeds after implementation and the reasons nil others on the use of share proceeds nil Note: (1) Total share proceeds amounting to RMB1,744,663,800 as shown in the table represented the actual net proceeds after deduction of underwriting fees and issuance costs. (2) Particulars of Projects that have achieved profits during the reporting period as shown in the above table are as follows: Beijing MW-level WTG high-tech Industrialization Project, Inner Mongolia MW-level DDPM WTG Industrialization Project and Xinjiang MW-level WTG Capacity Expansion Project recorded net profits; revenues from various R&D projects can not be measured independently and hence are reflected in the overall operating results of the Company; as for the revenues from wind farm development and sale projects, Goldwind Damao Domestic Demonstration Wind Farm recorded net gains from equity transfer in December (3) As at 31 December 2010, the Company had accumulatively used up to RMB1,489,705,800 out of the proceeds, including RMB6,367,600 on the 6MW DDPW WTG R&D project, which was recorded in the breakdown of changes in share proceeds investment projects. 24

27 APPENDIX II THE REPORT ON USE OF PROCEEDS FOR THE YEAR 2010 Table 2: BREAKDOWN OF CHANGES IN INVESTMENT PURPOSES OF SHARE PROCEEDS Unit: RMB ten thousand Committed project after change Committed project before change Total amount of proceeds intended for investment in committed project Total amount intended for investment as at the end of the period (1) Actual amounts invested during the year Actual total amount invested (2) Investment rate % (3) = (2)/(1) Date of of the project becoming ready for intended use Profit achieved during the year Whether the expected profit is achieved Whether there are any material changes in the feasibility of the project 6MW DDPW WTG R&D Project 5MW WTG R&D Project June 2012 No Total