THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Dongfang Electric Corporation Limited (the "Company"), you should at once hand this circular and the reply slips and proxy forms to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

(1) PROPOSED ADOPTION OF THE RESTRICTED

A SHARE INCENTIVE SCHEME FOR 2019

  1. CONNECTED TRANSACTION - PROPOSED GRANT UNDER INCENTIVE SCHEME
  2. PROPOSED CHANGE IN USE OF PARTIAL PROCEEDS

Independent Financial Adviser of Independent Board Committee and

Independent Shareholders

A letter from the Board is set out on pages 1 to 56 of this circular. A letter from the Independent Board Committee is set out on pages 57 to 58 of this circular. A letter from Gram Capital is set out on pages 59 to 71 of this circular.

The Company will hold the EGM and the H Shares Class Meeting on Friday, 22 November 2019 at conference room of the Company, 18 Xixin Road, High-Tech District (Western District), Chengdu City, Sichuan Province, the PRC. A notice convening the EGM and the H Shares Class Meeting, proxy forms and reply slips were dispatched to the Shareholders on 27 September 2019.

Any Shareholders entitled to attend and vote at the EGM or the H Shares Class Meeting are entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a shareholder of the Company. If you intend to appoint a proxy to attend the EGM or H Shares Class Meeting and vote on your behalf, you are requested to complete the proxy forms in accordance with the instructions printed thereon and return it by hand, by post or by facsimile to the Company's H Share registrar, Hong Kong Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong (for H Shareholders only) as soon as possible and in any event not less than 24 hours before the time fixed for holding the EGM or the H Shares Class Meeting. Completion and return of the proxy forms will not preclude you from attending the EGM or the H Shares Class Meeting or any adjournment thereof and voting in person if you so wish.

1 November 2019

CONTENTS

Page

Definitions . .

. . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ii

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57

Letter from Gram Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59

Appendix I

-

Restricted A Shares Incentive Scheme for 2019 (Amended Draft). . . . . . . . . .

72

Appendix II

-

Assessment Management Measures for the Restricted A Shares Incentive

Scheme for 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

121

Appendix III

-

Proposed Grant of Mandate to the Board to deal with matters pertaining to

the Restricted A Share Incentive Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . .

129

Appendix IV

-

General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

131

- i -

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

"A Share(s)"

the domestic ordinary share(s) of nominal value RMB1.00 each

in the share capital of the Company, which are listed on the Stock

Exchange and traded in RMB;

"A Shares Class Meeting"

the 2019 first A shares class meeting to be held on Friday, 22

November 2019 (or any adjournment thereof);

"Administrative Measures"

the Administrative Measures on Share Incentives of Listed

Companies (上市公司股權激勵管理辦法);

"Articles of Association"

the articles of association of the Company, as amended from time

to time;

"Board"

the board of Directors of the Company;

"China"or "PRC"

the People's Republic of China, which for the purpose of this

circular, excludes Hong Kong, Macau Special Administrative

Region of the People's Republic of China and Taiwan;

"Class Meetings"

the A Shares Class Meeting and the H Shares Class Meeting;

"Company"

東方電氣股份有限公司(Dongfang Electric Corporation Limited),

a joint stock limited company incorporated in the PRC with

limited liability whose H Shares are listed on the Main Board of

the Hong Kong Stock Exchange and A Shares are listed on the

Stock Exchange;

"Company Law"

the Company Law of the PRC;

"Connected Participant(s)"

Participant(s) who is/are connected person(s) of the Group;

"connected person(s)"

has the meaning ascribed thereto under the Hong Kong Listing

Rules;

"Convertible Bonds"

A share convertible bonds, with a nominal value of RMB4 billion

issued by the Company in July 2014. In accordance with the

prospectus on public issuance of convertible corporate bonds of

the Company, all outstanding Convertible Bonds were redeemed

on 16 February 2015;

- ii -

DEFINITIONS

"CSRC"

China Securities Regulatory Commission;

"Director(s)"

the director(s) of the Company;

"EGM"

the 2019 first extraordinary general meeting of the Company to be

held on Friday, 22 November 2019 (or any adjournment thereof);

"EVA"

Economic value added;

"First Grant"

the proposed grant of 29,000,000 Restricted Shares to the

Participants pursuant to the Incentive Scheme;

"Grant Date"

the date on which the Company grants the Restricted Shares to the

Participants, and the Grant Date must be a trading day;

"Grant Price"

the price of each Restricted Share granted by the Company to the

Participants;

"Group"

the Company and its subsidiaries;

"H Shares"

overseas listed foreign shares of the Company with an nominal

value of RMB1.00 each, which are listed on the Main Board of the

Hong Kong Stock Exchange and traded in Hong Kong dollars;

"H Shares Class Meeting"

the 2019 first H shares class meeting of the Company to be

convened on Friday, 22 November 2019 (or any adjournment

thereof);

"Hong Kong"

the Hong Kong Special Administrative Region of the PRC;

"Hong Kong Stock Exchange"

The Stock Exchange of Hong Kong Limited;

"Incentive Scheme" or

Restricted A Share Incentive Scheme for 2019 of the Company;

"Scheme"

"Independent Board Committee"

the committee formed by all independent non-executive directors

of the Company, so as to give advice to Independent Shareholders

in respect of the Incentive Scheme and the proposed grant to

connected person(s);

- iii -

DEFINITIONS

"Independent Financial

Gram Capital Limited, being a licensed corporation to conduct

Adviser" or "Gram Capital"

Type 6 (advising on corporate finance) regulated activities

under the SFO, the independent financial adviser appointed by

the Company to advise the Independent Board Committee and

Independent Shareholders of the proposed grant of Restricted

Shares to Connected Participants under the Incentive Scheme;

"Independent Shareholders"

Shareholders other than shareholders who are Connected

Participants;

"Latest Practicable Date"

31 October 2019, being the latest practicable date prior to the

printing of this circular for ascertaining certain information

contained herein;

"Listing Rules"

The Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited;

"Lock-up Period"

the period during which the Restricted Shares granted to the

Participants under the Incentive Scheme shall not be transferred,

used as security, or for repayment of debts;

"Notice"

the Notice on Issues concerning Regulating the Implementation of

the Share Incentive Schemes by State-Owned Listed Companies

(Guo Zi Fa Fen Pei [2008] No. 171) 《( 關於規範國有控股上市

公司實施股權激勵制度有關問題的通知（國資發分配[2008]171

號)》);

"Participant(s)"

the Directors, senior management personnel, middle management

personnel and Frontline leaders of the Company (including

subsidiaries and branches) to be granted the Restricted Shares

under the Incentive Scheme;

"Proposed Grant"

the proposed grant of an amount not exceeding 30,000,000

Restricted Shares to the Participants pursuant to the Incentive

Scheme;

"Remuneration and Assessment

the remuneration and assessment committee of the Company, the

Committee"

current members comprise of independent non-executive Directors

Mr. Gu Dake (Chairman), Mr. Xu Haihe, Mr. Liu Dengqing, and

executive Director Mr. Huang Wei;

- iv -

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Dongfang Electric Corporation Limited published this content on 31 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2019 13:11:03 UTC