China Shenhua Energy : DISCLOSEABLE TRANSACTION; CONTINUING CONNECTED TRANSACTION; RESCISSION OF THE ORIGINAL FINANCIAL SERVICES AGREEMENT AND ENTERING INTO FINANCIAL SERVICES AGREEMENT; PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR; REDUCTION OF REGISTERED CAPITAL AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION; PROPOSAL FOR GENERAL MANDATE TO REPURCHASE H SHARES

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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

If you have sold or transferred all your shares in China Shenhua Energy Company Limited, you should at once pass this circular to the purchaser, the transferee, the bank, the stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of China Shenhua Energy Company Limited.

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 01088)

DISCLOSEABLE TRANSACTION

CONTINUING CONNECTED TRANSACTION

RESCISSION OF THE ORIGINAL FINANCIAL SERVICES AGREEMENT AND

ENTERING INTO FINANCIAL SERVICES AGREEMENT

PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR

REDUCTION OF REGISTERED CAPITAL AND AMENDMENTS TO THE

ARTICLES OF ASSOCIATION

PROPOSAL FOR GENERAL MANDATE TO REPURCHASE H SHARES

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 1 to 30 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on page 31 of this circular. A letter from the Independent Financial Adviser containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 32 to 46 of this circular.

Notices convening the AGM and the H Shareholders' Class Meeting with reply slips and forms of proxy for use at the said meetings will be dispatched by the Company to the Shareholders as soon as practicable in accordance with the Hong Kong Listing Rules.

14 May 2021

	CONTENTS
		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
1	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
2	RESCISSION OF THE ORIGINAL FINANCIAL SERVICES AGREEMENT AND
	ENTERING INTO FINANCIAL SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . .	2
3	PROPOSED APPOINTMENT OF NON-EXECUTIVE DIRECTOR. . . . . . . . . . . . . . .	18
4	REDUCTION OF REGISTERED CAPITAL AND AMENDMENTS TO THE
	ARTICLES OF ASSOCIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
5	PROPOSAL FOR GENERAL MANDATE TO REPURCHASE H SHARES . . . . . . . .	27
6	THE AGM AND THE CLASS MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
7	RECOMMENDATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . .	31
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . . . .	32
APPENDIX I - GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	47
APPENDIX II - EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	51

- i -

DEFINITIONS

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

"2019 Financial Services	the Financial Services Agreement entered into on 22 March 2019
Agreement"	between the Company and Finance Company;
"2020 Financial Services	the Financial Services Agreement entered into on 27 March 2020
Agreement"	between the Company and Finance Company;
"A Share(s)"	the domestic share(s) issued by the Company to domestic investors
	denominated in RMB and which are listed on the Shanghai Stock
	Exchange;
"A Shareholder(s)"	holder(s) of A Share(s);
"A Shareholders' Class	the class meeting of the A Shareholders to be held at Conference Room
Meeting"	1906, 19/F, Block C, Shenhua Tower, 16 Ande Road, Dongcheng
	District, Beijing, the PRC on Friday, 25 June 2021 at 10:00 a.m.;
"Abstained Directors"	Mr. Wang Xiangxi and Mr. Jia Jinzhong, who had abstained from
	voting as Directors on the relevant board resolution(s);
"AGM"	the 2020 annual general meeting of the Company to be held on 25 June
	2021;
"Articles of Association"	the articles of association of the Company;
"associate"	has the meaning ascribed thereto under the Hong Kong Listing Rules;
"Board"	the board of Directors;
"CBIRC"	China Banking and Insurance Regulatory Commission;
"CSRC"	China Securities Regulatory Commission;
"China Energy"	China Energy Investment Corporation Limited (國家能源投資集團有
	限責任公司), the controlling shareholder of the Company as defined
	under the Hong Kong Listing Rules;

- ii -

	DEFINITIONS
"China Energy Group"	collectively, China Energy and its subsidiaries (excluding the Group);
"Company"	China Shenhua Energy Company Limited (中國神華能源股份有限
	公司), a joint stock limited company incorporated in the PRC, the H
	shares of which are listed on the Hong Kong Stock Exchange and the
	A shares of which are listed on the Shanghai Stock Exchange;
"Director(s)"	the director(s) of the Company;
"Finance Company"	China Energy Finance Co., Ltd. (國家能源集團財務有限公司), a
	limited company incorporated in the PRC, formerly known as Shenhua
	Finance Co., Ltd. (神華財務有限公司);
"Financial Services Agreement"	the financial services agreement dated 26 March 2021 entered into
	between the Company and Finance Company;
"Group"	the Company and its subsidiaries;
"H Share(s)"	the overseas-listed foreign invested share(s) in the Company's share
	capital, with a nominal value of RMB1.00 each, which are listed on the
	Hong Kong Stock Exchange;
"H Share Repurchase Mandate"	the general mandate to exercise the power of the Company to
	repurchase H Shares not exceeding 10% of the number of H Shares in
	issue as at the date of passing the proposed resolution(s) approving the
	H Share Repurchase Mandate at the AGM, the A Shareholders' Class
	Meeting and the H Shareholders' Class Meeting, details of which are
	set out in the notice of the AGM and the notice of the H Shareholders'
	Class Meeting;
"H Shareholder(s)"	holder(s) of H Share(s);
"H Shareholders' Class	the class meeting of the H Shareholders to be held at Conference Room
Meeting"	1906, 19/F, Block C, Shenhua Tower, 16 Ande Road, Dongcheng
	District, Beijing, the PRC on Friday, 25 June 2021 at 10:15 a.m.;
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC;
"Hong Kong Listing Rules"	The Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited;
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited;

- iii -

	DEFINITIONS
"Independent Board	an independent board committee of the Board comprising all
Committee"	independent non-executive Directors;
"Independent Financial	Gram Capital Limited, a licensed corporation to carry on Type 6
Adviser" or "Gram Capital"	(advising on corporate finance) regulated activity as defined under
	the SFO, the independent financial adviser to the Independent Board
	Committee and the Independent Shareholders in respect of the
	transactions contemplated under the Financial Services Agreement;
"Independent Shareholders"	Shareholders who are not required to abstain from voting on the
	relevant resolution(s) relating to the subject transactions to be proposed
	at the AGM under the Hong Kong Listing Rules;
"Latest Practicable Date"	10 May 2021, being the latest practicable date prior to the issuance of
	this circular for ascertaining certain information contained herein;
"Members of China Energy	including China Energy, its subsidiaries in which China Energy
Group"	holds over 51% equity interests (the "China Energy Subsidiaries"),
	companies in which China Energy and the China Energy Subsidiaries
	individually or jointly hold(s) over 30% equity interests, public
	institution(s) or social organisation(s) with legal person(s) status under
	China Energy and its subsidiaries, but excluding the Group;
"Members of the Group"	including the Company, its subsidiaries in which the Company holds
	over 51% equity interests (the "Company Subsidiaries"), companies
	in which the Company and the Company Subsidiaries individually or
	jointly hold(s) over 30% equity interests, public institution(s) or social
	organisation(s) with legal person(s) status under the Company and its
	subsidiaries;
"Original Financial Services	the financial services agreement dated 29 December 2020 entered into
Agreement"	between the Company and Finance Company;

- iv -