CAI Corp - Capital/Financing Update 2015

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Prospectus or as to the action you should take, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China New Economy Fund Limited (the ‘‘Company’’), you should at once hand this Prospectus and the PAL (as defined herein) (together, the ‘‘Prospectus Documents’’) to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

A copy of each of the Prospectus Documents and the consent letter referred to in the paragraph headed ‘‘Exert and Consent’’ in appendix III to this Prospectus has been registered with the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility for the contents of any of these documents. Dealings in the securities of the Company may be settled through CCASS (as defined herein) and you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser for details of the settlement arrangements and how such arrangements may affect your rights and interests.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares on the Stock Exchange (as defined herein) as well as compliance with the stock admission requirements of HKSCC (as defined herein), the Rights Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement date of dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates as determined by HKSCC. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Prospectus, 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 Prospectus.

CHINA NEW ECONOMY FUND LIMITED

中國新經濟投資有限公司

(Incorporated in the Cayman Islands as an exempted company with limited liability)

(Stock code: 80)

RIGHTS ISSUE ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO SHARES HELD ON RECORD DATE

The latest time for acceptance and payment for the Rights Shares is 4:00 p.m. (Hong Kong time) on Thursday, 7 January 2016. The procedures for acceptance of the Rights Shares are set out on pages 7 to 9 of this Prospectus.

The Shares (as defined herein) have been dealt with on an ex-entitlements basis from Wednesday, 2 December 2015. Dealing in the Rights Shares in the nil-paid form will take place from 9:00 a.m. on Friday, 18 December 2015 to 4:00 p.m. on Monday, 4 January 2016. If the Underwriter (as defined herein) terminates the Underwriting Agreement (as defined herein), or the conditions of the Rights Issue (as defined herein) are not fulfilled, the Rights Issue will not proceed. Any Shareholders (as defined herein) or other persons contemplating selling or purchasing Shares up to the date when the conditions of the Rights Issue are fulfilled (which is expected to be on Friday, 8 January 2016) will accordingly bear the risk that the Rights Issue could not become unconditional and may not proceed.

The Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company served prior to 4:00 p.m. on Friday, 8 January 2016 to terminate the Underwriting Agreement on the occurrence of certain events as set out in the section headed ‘‘Termination of the Underwriting Agreement’’ on pages 11 to 13 of this Prospectus.

If the Underwriter terminates the Underwriting Agreement, or if the conditions of the Underwriting Agreement are not fulfilled (or waived by the Underwriter) in accordance with the terms thereof, the Rights Issue will not proceed. Shareholders should therefore exercise caution when dealing in the Shares, and if they are in any doubt about their position, they are recommended to consult their professional advisers.

16 December 2015

		Page
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Termination	of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iv
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix I	— Financial Information of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Appendix II	— Unaudited pro forma financial information . . . . . . . . . . . . . . . . . . . . . .	19
Appendix III — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		23
Accompanying: PAL

– i –

EXPECTED TIMETABLE

The expected timetable for the Rights Issue set out below is for indicative purposes only and it has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled. The expected timetable is subject to change, and any changes will be announced in a separate announcement by the Company as and when appropriate.

Event

First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 18 December 2015 Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Tuesday, 29 December 2015 Last day of dealings in nil-paid Rights Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 4 January 2016 Latest time for acceptance of and payment for the Rights Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 7 January 2016 Latest time for Underwriting Agreement to terminate and the Rights Issue to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 8 January 2016 Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . Thursday, 14 January 2016 Despatch of certificates for fully paid Rights Shares on or before. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 15 January 2016 Despatch of refund cheques, if any, if the Rights Issue is terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 15 January 2016 Commencement of dealings in fully paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Monday, 18 January 2016

All times and dates in this Prospectus refer to Hong Kong times and dates. Dates or deadlines specified in this Prospectus are indicative only and may be varied by agreement between the Company and the Underwriter. Any consequential changes to the expected timetable will be published or notified to the Shareholders as and when appropriate.

– ii –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER IN THE LATEST TIME FOR ACCEPTANCE AND PAYMENT FOR THE RIGHTS SHARES

The latest time for acceptance of and payment for Rights Shares will not take place if there is:

tropical cyclone warning signal number 8 or above, or
a ‘‘black’’ rainstorm warning
(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on Thursday, 7 January 2016. Instead the latest time for acceptance of and payment for the Rights Shares will be extended to 5:00 p.m. on the same Business Day;
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Thursday, 7 January 2016. Instead the latest time for acceptance of and payment for the Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance does not take place on Thursday, 7 January 2016, the dates mentioned in the section headed ‘‘Expected timetable’’ of the Rights Issue may be affected. The Company will notify Shareholders by way of announcement on any change to the expected timetable as soon as practicable.

– iii –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriter may terminate the arrangements set out in the Underwriting Agreement by notice in writing given by it to the Company at any time prior to 4:00 p.m. on the Latest Time for Termination if there occurs:

(i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially or adversely affect the business or the financial or trading position or prospects of the Company or is materially adverse in the context of the Rights Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic, currency (including a change in the system under which the value of the Hong Kong currency is linked to the currency of the United States of America) or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets or the occurrence of any combination of circumstances which may, in the absolute opinion of the Underwriter materially or adversely affect the business or the financial or trading position or prospects of the Company or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(ii) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities or a combination of the above circumstances) occurs which in the absolute opinion of the Underwriter is likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(iii) there is any change in the circumstances of the Company which in the absolute opinion of the Underwriter will adversely affect the prospects of the Company, including without limiting the generality of the foregoing, the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of the Company or the destruction of any material asset of the Company; or
(iv) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(v) any other material adverse change in relation to the business or the financial or trading position or prospects of the Company whether or not ejusdem generis with any of the foregoing; or

– iv –

TERMINATION OF THE UNDERWRITING AGREEMENT

(vi) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus Documents, would have constituted, in the absolute opinion of the Underwriter, a material omission in the context of the Rights Issue; or
(vii) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than thirty consecutive business days, excluding any suspension in connection with the clearance of the Announcement (if necessary) or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue; or
(viii)there is: (a) any material breach of any of the representations, warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or (b) any specified event described in the Underwriting Agreement comes to the knowledge of the Underwriter.

Upon the giving of notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and neither it nor the Company shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement provided that the Company shall remain liable to pay to the Underwriter the fees and expenses (other than the underwriting commission) payable by the Company pursuant to the Underwriting Agreement. If the Underwriter exercises such right, the Rights Issue will not proceed.

– v –

DEFINITIONS

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

‘‘Announcement’’
the announcement of the Company dated 23 November 2015 in relation to the Rights Issue
‘‘associates’’
has the meaning ascribed to this term under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Day’’

a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

‘‘CCASS’’
the Central Clearing and Settlement System established and operated by HKSCC
‘‘Company’’
China New Economy Fund Limited (stock code: 80), a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Stock Exchange
‘‘Directors’’ the directors of the Company
‘‘HK$’’ Hong Kong dollars, the lawful currency of the Hong Kong
‘‘HKSCC’’
the Hong Kong Securities Clearing Company Limited
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the People’s Republic of China
‘‘Investment Manager’’
China Everbright Securities (HK) Limited, a company incorporated in Hong Kong and licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, the investment manager of the Company
‘‘Last Trading Day’’
23 November 2015, being the date of the Underwriting Agreement
‘‘Latest Acceptance Time’’
4:00 p.m. on Thursday, 7 January 2016 (or such other time or date as the Underwriter may agree in writing with the Company), being the latest date for acceptance of, and payment of, Rights Shares

– 1 –

DEFINITIONS

‘‘Latest Practicable Date’’
‘‘Latest Time for Termination’’
‘‘Listing Rules’’
‘‘Non-Qualifying Shareholder(s)’’
‘‘Overseas Shareholder(s)’’
‘‘PAL(s)’’
‘‘Posting Date’’
‘‘PRC’’
‘‘Prospectus’’
‘‘Prospectus Documents’’
‘‘Qualifying Shareholder(s)’’
14 December 2015, being the latest practicable date prior to the printing of this Prospectus for the purpose of ascertaining certain information herein
4:00 p.m. on Friday, 8 January 2016, being the next Business Day following the Latest Acceptance Time or such later time and/or date as the Company and the Underwriter may agree, being the latest time to terminate the Underwriting Agreement
the Rules Governing the Listing of Securities on the Stock Exchange
Overseas Shareholder(s) in respect of whom the Directors, based on legal opinions provided by legal advisers, consider it necessary or expedient not to offer the Rights Issue to such Overseas Shareholder(s) on account either of restrictions under the laws of the relevant place or the requirements of a relevant regulatory body or stock exchange in that place
Shareholder(s) whose name(s) appear on the register of members of the Company at the close of business on the Record Date and whose address(es) as shown on such register is/are in a place(s) outside Hong Kong
the provisional allotment letter(s) accompanying this Prospectus in connection with the Rights Issue
Wednesday, 16 December 2015, or such other day as may be agreed between the Company and the Underwriter, being the date of despatch of the Prospectus Documents
The People’s Republic of China, which for the purpose of this prospectus shall exclude Hong Kong, Macau Special Administrative Region and Taiwan
this prospectus, issued by the Company in relation to the Rights Issue
the Prospectus and PAL
Shareholder(s), other than the Non-Qualifying Shareholders, whose name(s) appear on the register of members of the Company at the close of business on the Record Date

– 2 –

DEFINITIONS

‘‘Record Date’’
Thursday, 10 December 2015, being the date by reference to which entitlements to the Rights Issue are expected to be determined
‘‘Rights Issue’’ the issue of the Rights Shares by way of rights to the Qualifying Shareholders for subscription on the terms to be set out in the Prospectus Documents and summarized herein
‘‘Rights Share(s)’’ 309,060,000 new Shares to be offered to the Qualifying Shareholders for subscription on the basis of one (1) Rights Share for every two (2) Shares held at the Record Date pursuant to Rights Issue
‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company
‘‘Shareholder(s)’’ holder(s) of issued share(s)
‘‘Share Registrar’’ the Company’s Hong Kong branch share registrar and transfer office, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subscription Price’’ HK$0.235 per Rights Share
‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers
‘‘Underwriter’’
Win Fung Securities Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 4 (advising in securities) regulated activities under the SFO
‘‘Underwriting Agreement’’ the underwriting agreement dated 23 November 2015 entered into between the Company and the Underwriter in relation to the underwriting and certain other arrangements in respect of the Rights Issue
‘‘%’’

percentage

– 3 –

LETTER FROM THE BOARD

CHINA NEW ECONOMY FUND LIMITED 中國新經濟投資有限公司

(Incorporated in the Cayman Islands as an exempted company with limited liability)

(Stock code: 80)

Executive Directors: Mr. GU Xu Mr. CHAN Cheong Yee

Independent non-executive Directors: Mr. LAM Chun Ho Mr. HUANG Liangkuai Mr. AYOUB Faris Ibrahim Taha

Registered Office: P.O. Box 309, Ugland House South Church Street, George Town Grand Cayman KYI-1104 Cayman Islands

Principal place of business in Hong Kong: Room 707, 7/F, New World Tower 1 16–18 Queen’s Road Central Central, Hong Kong

16 December 2015

To the Qualifying Shareholders,

and the Non-qualifying Shareholders (if any) for information only

Dear Sir or Madam,

RIGHTS ISSUE ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO SHARES HELD ON RECORD DATE

INTRODUCTION

On 23 November 2015, the Company proposes to carry out the Rights Issue to raise approximately HK$72.6 million before expenses by way of rights to the Shareholders. The Rights Issue involves the issue of 309,060,000 Rights Shares at the Subscription Price of HK$0.235 per Rights Share.

The purpose of this Prospectus is to provide you with, among other things, further details of (i) the Rights Issue; (ii) financial information of the Company; and (iii) general information of the Company.

– 4 –

LETTER FROM THE BOARD

THE RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue : One (1) Rights Share for every two (2) Shares held on the Record Date

Subscription Price

: HK$0.235 per Rights Share

Number of Shares in issue at the : 618,120,000 Shares Record Date and the Latest Practicable Date

Number of Rights Shares : 309,060,000 Rights Shares Underwriter : Win Fung Securities Limited

Enlarged issued share capital upon : 927,180,000 Shares completion of the Rights Issue

The number of Rights Shares to be issued pursuant to the Rights Issue represents 50% of the issued share capital of the Company as at the Latest Practicable Date and approximately 33.33% of enlarged issued share capital of the Company immediately following the completion of the Rights Issue.

As at the Latest Practicable Date, save for 35,026,800 share options granted under the share option scheme of the Company which remain outstanding, the Company does not have any other derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares.

Subscription Price

The Subscription Price is HK$0.235 per Rights Share, payable in full upon acceptance under the PAL(s).

The Subscription Price represents:

(i) a discount of approximately 11.32% to the closing price of HK$0.265 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 11.65% to the average of the closing prices of HK$0.266 per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 7.84% to the theoretical ex-rights price of HK$0.255 per Share as adjusted for the effect of the Rights Issue, based on the closing price of HK$0.265 per Share as quoted on the Stock Exchange on the Last Trading Day;

– 5 –

LETTER FROM THE BOARD

(iv) a premium of approximately 1.29% over the closing price of HK$0.232 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v) a discount of approximately 58.77% to the unaudited net asset value per Share of HK$0.57 per Share as at 30 November 2015.

The Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to, among others, the targeted fund raising amount for making further investment, the prevailing market price and trading liquidity of the Shares. The Directors consider that the discount to the prevailing market price would encourage the Shareholders to participate in the Rights Issue to maintain their shareholdings in the Company. In view of the prevailing market conditions of the capital market in Hong Kong and the benefits of the Rights Issue, the Directors consider that the terms of the Rights Issue (including the Subscription Price) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Basis of provisional allotment

The Rights Shares will be allotted on the basis of one (1) Rights Share for every two (2) Shares held on the Record Date. Acceptances of all or any part of a Qualifying Shareholder’s provisional allotment can be made only by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for by the Latest Acceptance Time in accordance with the procedures specified in the section headed ‘‘Procedure for acceptance and payment or transfer’’ below.

Status of the Rights Shares

The Rights Shares, when allotted, issued and fully-paid, shall rank pari passu in all respects with the Shares then in issue, including as to the right to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment of the Rights Shares.

Fractional entitlements to the Rights Shares

The Company will not provisionally allot to and will not accept applications for any fractions of Rights Shares from Qualifying Shareholders. Fractional entitlements will be rounded down to the nearest whole number of Rights Shares. Such fractional entitlements will be aggregated and the fractions of Rights Shares shall be provisionally allotted to a nominee of the Company. The Company shall procure such of its nominees, if possible, to sell all the fractions of the nil-paid Rights Shares in the market and the net proceeds of such sales, after deduction of expenses, will be aggregated and an equivalent amount will accrue for the benefit of the Company.

Qualifying Shareholders

To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company and not be a Non-Qualifying Shareholder at the close of business on the Record Date. Overseas Shareholders whose names appear on the register of members of the Company

– 6 –

LETTER FROM THE BOARD

at the close of business on the Record Date whom the Company, based on legal opinions to be provided by legal advisers, considers necessary or expedient not to offer the Rights Shares on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place will not be regarded as Qualifying Shareholders.

Based on the register of members of the Company as at the Record Date, there is no Overseas Shareholder.

The Prospectus Documents are sent to the Qualifying Shareholders only.

Non-Qualifying Shareholders

The Company will only send the Prospectus (without PAL) to the Non-Qualifying Shareholders, if any, for their information.

Based on the register of members of the Company as at the Record Date, there is no NonQualifying Shareholders.

No application for excess Rights Shares

After arm’s length negotiation with the Underwriter, the Board has decided that the Qualifying Shareholders will not be entitled to subscribe for any additional Rights Shares in excess of their respective assured entitlements. Given that each Qualifying Shareholder will be given equal and fair opportunity to participate in the Rights Issue, the Board considers that it will be burdensome to the Company to put in additional effort and costs (i.e. preparing, printing and processing the excess application form with costs of approximately HK$100,000, not including the time for discussing and agreeing on the related allocation basis with the Underwriter and Share Registrar, the costs of which cannot be quantified) to administer the excess application procedures. Accordingly, it is not cost effective from the viewpoint of the Company to provide for excess application. Any Rights Shares not taken up by the Qualifying Shareholders will be taken up by the Underwriter pursuant to the terms of the Underwriting Agreement.

Procedure for acceptance and payment or transfer

If you are a Qualifying Shareholder, you will find the PAL enclosed with this Prospectus which entitles you to accept the number of Rights Shares in your assured entitlement shown thereon. If you wish to accept such Rights Shares, you must complete and lodge the same in accordance with the instructions printed thereon, together with the remittance for full amount payable on acceptance with the Share Registrar by not later than 4:00 p.m. (Hong Kong time) on Thursday, 7 January 2016. All remittances must be made in Hong Kong dollars. Cheques must be drawn on an account with, and banker’s cashier orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘China New Economy Fund Limited — Rights Issue Account’’ and crossed ‘‘Account Payee Only’’.

– 7 –

LETTER FROM THE BOARD

It should be noted that unless the PAL, together with the appropriate remittance, has been lodged with the Share Registrar at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by not later than the Latest Acceptance Time by the Qualifying Shareholder, his/her/its entitlement to accept under the Rights Issue will be deemed to have been declined and will be cancelled.

If you are a Qualifying Shareholder and you wish to accept only part of, or to renounce your provisional allotment of Rights Shares, or transfer part of your rights to subscribe for the Rights Shares provisionally allotted to you, or to transfer your rights to more than one person, the entire PAL must be surrendered and lodged for cancellation together with a covering letter stating clearly the number of split PALs required and the number of nil-paid rights to be comprised in each split PAL (which, in aggregate, should be equal to the number of Rights Shares provisionally allotted to such Qualifying Shareholder as stated in Box B of the original PAL), by not later than 4:30 p.m. on Tuesday, 29 December 2015 with the Share Registrar at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, who will cancel the original PAL and issue new PALs in the denominations required. The new PALs will be available for collection at the Share Registrar at the address above after 9:00 a.m. on the second Business Day after the surrender of the original PAL. This process is commonly known as ‘‘splitting’’ the nil-paid rights. It should be noted that Hong Kong stamp duty is payable in connection with the transfer of the rights to subscribe for the Rights Shares.

Having ‘‘split’’ the nil-paid rights, a Qualifying Shareholder who wishes to accept the provisional allotment of Rights Shares represented by a new PAL should do so in accordance with the instructions given above.

If you are a Qualifying Shareholder and you wish to renounce or transfer all of your nilpaid rights under a PAL (or a split PAL, as the case may be) to another person, you should complete and sign the ‘‘Form of Transfer and Nomination’’ (Form B) in the PAL and hand the PAL to the person to or through whom he/she/it is transferring his/her/its nil-paid rights. The transferee must then complete and sign the ‘‘Registration Application Form’’ (Form C) in the PAL and lodge the PAL intact together with a remittance for the full amount payable on acceptance with the Share Registrar at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by not later than the Latest Acceptance Time. It should be noted that Hong Kong stamp duty is payable in connection with the transfer of the rights to subscribe for the Rights Shares.

The PAL contains full information regarding the procedures to be followed if you wish to accept a number of Rights Shares different from your assured entitlement and the procedures to transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders.

All cheques or banker’s cashier orders will be presented for payment immediately following receipt and all interest earned on such application monies will be retained for the benefit of the Company. Any PAL in respect of which the cheque or cashier’s order is dishonoured on first presentation is liable to be rejected, and in that event the relevant entitlements of the Qualifying Shareholder under the Rights Issue will be deemed to have been declined and will be cancelled.

– 8 –

LETTER FROM THE BOARD

If the Underwriter exercises the right to terminate its obligations under the Underwriting Agreement before the Latest Time for Termination and/or if any of the conditions to which the Rights Issue is subject are not fulfilled in accordance with the section headed ‘‘Conditions of the Rights Issue’’ below, the application monies will be refunded, without interest, by sending cheques made out to the applicants (or in the case of joint applicants, to the first named applicant) and crossed‘‘Account Payee Only’’, through ordinary post at the risk of the applicants on or before Friday, 15 January 2016.

No receipt will be issued in respect of any application monies received.

Application for listing

The Company has applied to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares, in both their nil-paid and fully-paid forms.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirement of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement dates of the dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates as may be determined by HKSCC.

Dealing in the Rights Shares in both their nil-paid and fully-paid forms will be in the existing board lots of 100,000 Rights Shares. Dealing in the Rights Shares will be subject to the payment of the stamp duty and other applicable fees and charges in Hong Kong.

Certificates for the Rights Issue

Subject to the fulfillment of the conditions of the Rights Issue, share certificates for all fully-paid Rights Shares are expected to be posted on or before Friday, 15 January 2016 to those who have accepted and paid for the Rights Shares, by ordinary post at their own risk.

Taxation

Qualifying Shareholders are recommended to consult their professional advisers if they are in any doubt as to the tax implications of the holding or disposal of, or dealings in the Rights Shares in both their nil-paid and fully-paid forms and, as regards the Non-Qualifying Shareholders (if any), their receipt of the net proceeds of sale of the Rights Shares otherwise falling to be issued to them under the Rights Issue. It is emphasised that none of the Company, the Directors or any other parties involved in the Rights Issue accepts responsibility for any tax effects or liabilities of holders of the Rights Shares resulting from the purchase, holding or disposal of, or dealing in the Rights Shares in both their nil-paid and fully-paid forms.

– 9 –

LETTER FROM THE BOARD

Conditions of the Rights Issue

The Rights Issue is conditional upon, among other things, the followings:

(i) the passing of all necessary resolution(s) by the Board approving the Rights Issue and the transactions contemplated hereunder by no later than the Posting Date;
(ii) the delivery to the Stock Exchange and registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) not later than the Posting Date and otherwise in compliance with the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the laws of Hong Kong);
(iii) the posting of the Prospectus Documents to Qualifying Shareholders on the Posting Date;
(iv) the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in all the Rights Shares (in their nil-paid and fully-paid forms) by no later than the Posting Date;
(v) compliance with and performance of all the undertakings and obligations of the Company under the Underwriting Agreement;
(vi) the obligations of the Underwriter under the Underwriting Agreement becoming unconditional and that the Underwriting Agreement not being terminated in accordance with its terms;
(vii) compliance with and performance of all undertakings and obligations of the Underwriter under the Underwriting Agreement; and
(viii)there being no event occur prior to the Latest Time for Termination which would render the warranties of the Company untrue and incorrect.

No parties to the Underwriting Agreement are capable to waive any of the above conditions. As at the date of this Prospectus, conditions (i), (ii), (iii) and (iv) above have been fulfilled. If all the above conditions are not satisfied by the Latest Time for Termination or such other date as the Underwriter and the Company may agree in writing, the Underwriting Agreement shall be terminated, and no parties to the Underwriting Agreement will have any claim against any other parties for costs, damages, compensation or otherwise (except certain expenses of the Underwriter shall remain payable by the Company under the Underwriting Agreement). The Rights Issue will not proceed accordingly.

– 10 –

LETTER FROM THE BOARD

UNDERWRITING ARRANGEMENT FOR THE RIGHTS ISSUE

Win Fung Securities Limited, the Underwriter, is a licensed corporation to carry out Type 1 (dealing in securities) and Type 4 (advising in securities) regulated activities under the SFO. To the best of the Directors’ knowledge, information and belief, the Underwriter and its ultimate beneficial owner(s) are independent third parties not connected with the Company and its connected persons within the meaning of the Listing Rules.

Pursuant to the Underwriting Agreement, the Underwriter has agreed to fully underwrite 309,060,000 Right Shares under the Right Issue.

Pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its own account, for such number of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 10% of the voting rights of the Company upon the completion of the Rights Issue; and shall use all reasonable endeavours to ensure that each of the subscribers or purchasers of the Untaken Shares procured by it (i) will be third party independent of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Company, any of the Directors, chief executive of the Company or substantial shareholders of the Company or their respective associates (as defined in the Listing Rules); and (ii) save for the Underwriter itself and its associates, will not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 5.0% or more of the voting rights of the Company upon completion of the Rights Issue.

Commission

The Company will pay the Underwriter an underwriting commission of 3.25% of the aggregate subscription price of the Rights Shares underwritten by it. The Directors consider that the underwriting commission accords with market rates.

Termination of the Underwriting Agreement

(i) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially or adversely affect the business or the financial or trading position or prospects of the Company or is materially adverse in the context of the Rights Issue; or

– 11 –

LETTER FROM THE BOARD

(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic, currency (including a change in the system under which the value of the Hong Kong currency is linked to the currency of the United States of America) or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets or the occurrence of any combination of circumstances which may, in the absolute opinion of the Underwriter materially or adversely affect the business or the financial or trading position or prospects of the Company or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(ii) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities or a combination of the above circumstances) occurs which in the absolute opinion of the Underwriter is likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(iii) there is any change in the circumstances of the Company which in the absolute opinion of the Underwriter will adversely affect the prospects of the Company, including without limiting the generality of the foregoing, the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of the Company or the destruction of any material asset of the Company; or
(iv) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(v) any other material adverse change in relation to the business or the financial or trading position or prospects of the Company whether or not ejusdem generis with any of the foregoing; or
(vi) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus Documents, would have constituted, in the absolute opinion of the Underwriter, a material omission in the context of the Rights Issue; or
(vii) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than thirty consecutive business days, excluding any suspension in connection with the clearance of the Announcement (if necessary) or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue; or

– 12 –

LETTER FROM THE BOARD

(viii)there is: (a) any material breach of any of the representations, warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or (b) any specified event described in the Underwriting Agreement comes to the knowledge of the Underwriter.

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE RIGHTS ISSUE

The changes in the shareholding structure of the Company arising from the Rights Issue are as follows (assuming there being no other changes in shareholding of the Company):

Laberie Holdings Limited (Note 1) Public Shareholders Underwriter (Note 2) Total	As at the Latest Practicable Date Number of Shares % 103,020,000 16.7 515,100,000 83.3 — — 618,120,000 100.0	Immediately after completion of the Rights Issue (assuming no Rights Shares are subscribed by the Qualifying Shareholders) Number of Shares % 103,020,000 11.1 515,100,000 55.6 309,060,000 33.3 927,180,000 100.0	Immediately after completion of the Rights Issue (assuming all Rights Shares are subscribed by the Qualifying Shareholders) Number of Shares % 154,530,000 16.7 772,650,000 83.3 — — 927,180,000 100.0	Immediately after completion of the Rights Issue (assuming all Rights Shares are subscribed by the Qualifying Shareholders) Number of Shares % 154,530,000 16.7 772,650,000 83.3 — — 927,180,000 100.0
				100.0

Notes:

To the best information, knowledge and belief of the Directors, Laberie Holdings Limited is a wholly owned subsidiary of SEEC Media Group Limited, which is a company listed on the main board of the Stock Exchange (under stock code: 205).
Pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its own account, for such number of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to exceed 10% of the voting rights of the Company upon the completion of the Rights Issue; and shall use all reasonable endeavours to ensure that each of the subscribers or purchasers of the Untaken Shares procured by it (i) will be third party independent of, not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Company, any of the Directors, chief executive of the Company or substantial shareholders of the Company or their respective associates (as defined in the Listing Rules); and (ii)

– 13 –

LETTER FROM THE BOARD

save for the Underwriter itself and its associates, will not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 5.0% or more of the voting rights of the Company upon completion of the Rights Issue.

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

The Company is an investment company listed under Chapter 21 of the Listing Rules. The investment objective of the Company is to achieve long-term capital appreciation through investing globally in both private and publicly listed enterprises that have demonstrated the ability to manufacture a product or deliver a service that is supported by the economies of mainland China, Hong Kong, Macau and Taiwan.

The gross proceeds and the estimated net proceeds of the Rights Issue will be approximately HK$72.6 million and HK$70.0 million respectively. The Company intends to apply such net proceeds from the Rights Issue for investment in line with its ordinary course of business. The Company intends to invest in the publicly listed and private enterprises in information technology, education, creative culture, environmental and healthcare sectors, of which the Directors consider to be relatively newly emerging industry with higher potential growth. The Company is expected to make such investments in the next 12 months, and the exact timing of investments will depend on the appropriate market opportunities and prices. There is no concrete investment schedule at as the Latest Practicable Date, and there is no agreement or memorandum of understanding signed in relation to the making of any investment (save for any of those already announced by the Company prior to the Latest Practicable Date). The Company will comply with the requirement of the Listing Rules for any investment made by the Company in the future. The Company also has a working capital management policy that targets to maintain its cash position not less than 10% of its net asset value for its internal operation. As at the Latest Practicable Date, the Directors considered that no fund raising activities will be carried out for at least the next twelve months due to insufficiency of general working capital of the Company. In addition, as at the Latest Practicable Date, save for the Rights Issue, the Company did not have any immediate plan or was not contemplating to have further fund raising for at least the next twelve months for financing its business or investments referred to in this prospectus and any other potential projects or transactions of the Company. The net price per Rights Share shall be approximately HK$0.226.

Having considered other fund raising alternatives for the Company, such as placing of new Shares or other convertible securities, and taking into account the benefits and cost of each of the alternatives, the Board considers that the Rights Issue is in the interest of the Company and the Shareholders as a whole as it offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company at the same price and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and to continue to participate in the future development of the Company should they wish to do so.

– 14 –

LETTER FROM THE BOARD

The Board considers that the Rights Issue will increase the capital base of the Company and give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company. Hence, the Board considers that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole and the terms of the Rights Issue are fair and reasonable.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Save as disclosed below and the proposed subscription of new Shares as announced by the Company dated 28 January 2015 which was terminated on 12 March 2015, there have not been any equity fund raising activities conducted by the Company in the past 12 months immediately preceding the Latest Practicable Date.

Date of			Intended use of	Actual use of
announcement	Event	Net proceeds	net proceeds	net proceeds
16 July 2015	Placing of 103,020,000	Approximately	Investment in line with	Used as
	new Shares at a	HK$38.3	the Company’s	intended
	price of HK$0.385	million	ordinary course of
	per Share under the		business
	general mandate

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Shares will be dealt in on an ex-rights basis from Wednesday, 2 December 2015. Dealings in the Rights Shares in the nil-paid form will take place from Friday, 18 December 2015 to Monday, 4 January 2016 (both dates inclusive). If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated, the Rights Issue will not proceed.

Any Shareholders or other persons contemplating selling or purchasing Shares and/ or Rights Shares in their nil-paid form who are in any doubt about their position are recommended to consult their professional advisers. Any Shareholders or other persons dealing in Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled (and the date on which the Underwriter’s right of termination of the Underwriting Agreement ceases) and any persons dealing in the nil-paid Rights Shares during the period from Friday, 18 December 2015 to Monday, 4 January 2016 (both dates inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and may not proceed.

– 15 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this Prospectus.

Yours faithfully, By order of the Board China New Economy Fund Limited GU Xu

Chairman, Chief Executive Officer and Executive Director

– 16 –

FINANCIAL INFORMATION OF THE COMPANY

APPENDIX I

1. FINANCIAL SUMMARY

The audited financial information of the Company for each of the three years ended 31 December 2012, 2013, and 2014 can be referred to the annual reports of the Company for the years ended 31 December 2012 (pages 51 to 95), 2013 (pages 50 to 95) and 2014 (pages 46 to 103) respectively.

The above-mentioned financial information are available on the Company’s website at http://www.chinaneweconomyfund.com/document/Annual%20Report%202012%20(Eng).pdf (for the year ended 31 December 2012), http://www.chinaneweconomyfund.com/document/ E W 0 0 8 0 A R . P D F ( f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 3 ) a n d http://www.chinaneweconomyfund.com/document/EW00080-AR.pdf (for the year ended 31 December 2014) and the website of the Stock Exchange at www.hkexnews.hk. The auditors of the Company have not issued any qualified opinion on the Company’s financial statements for the financial years ended 31 December 2012, 2013 and 2014.

2. STATEMENT OF INDEBTEDNESS

As at 31 October 2015, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Prospectus, the Company up had no borrowing and did not have any outstanding loan capital, bank overdrafts, loans, mortgages, charges or other similar indebtedness, or hire purchase of finance lease commitments, liabilities under acceptances or acceptance credits, guarantees or other material contingent liabilities.

3. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Company since 31 December 2014, being the date to which the latest audited financial statements of the Company were made up.

4. WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after taking into account the present financial resources and the estimated net proceeds from the Rights Issue, the Company has sufficient working capital for at least twelve months from the date of this Prospectus.

5. FINANCIAL AND TRADING PROSPECT OF THE COMPANY

During the six months ended 30 June 2015 (the ‘‘Period’’), China has been faced with complicated external and domestic economic conditions. The national economy is showing moderate but stable and sound momentum of development. According to the data of the National Bureau of Statistics of China, the gross domestic product (‘‘GDP’’) of China in the

– 17 –

FINANCIAL INFORMATION OF THE COMPANY

APPENDIX I

first half of 2015 increased by 7.0% over the corresponding period, which represents a decline of 0.4% compared with the first half of 2014. The GDP of the second quarter of 2015 went up by 1.7% on a quarter-to-quarter basis.

During the Period, the benchmark of Shanghai Composite Index spiked 27.7%, while Hang Seng Index surged 10.0%. The Company has adopted a different investment approach and implementing a better strategy. By expanding our horizon, our investment team worked closely with variety of professional analysts for more timely reliable resources. This method allows the Company to detect investment opportunities from the emerging sectors efficiently and benefiting from substantial net asset appreciation. The Company will continue to develop its investment strategies with an aim to achieve stable return on investments for our shareholders.

In addition, the Chinese government is stepping up to excite the economy although the GDP growth of 7.0% has been met, it is well below the double digit annual growth seen in the past decade. During the Period, the People’s Bank of China (‘‘PBOC’’) has lowered, not once but twice, the reserve requirement ratio (‘‘RRR’’) from 20.0% to 18.5% for all banks. The reduction of RRR is to add more liquidity to its market to help spur bank lending and combat slowing growth. Similarly, the PBOC also cut interest rate twice within the Period from 5.6% lending rate to 5.1%, in a bid to lower borrowing costs and spur demand.

During the Period, the Company has invested an additional private equity fund, making a total of two private equity investments in our diversified portfolio. The new private equity fund is specialized in conducting investments in pre-initial public offerings (‘‘IPO’’) equities. The Company believes it will bring a potential return in the long-run. Our Company will explore more investment opportunities toward private equities.

We are continuously optimistic towards the information technology, healthcare, environmental and creative culture industries as they will continue to benefit from the transformation of Chinese economy.

The Company will continue to deploy an investment strategy focusing on Greater China and closely monitor the changes in the global market. With our professional and experienced investment and risk management team, we are confident to capture valuable investment opportunities to maximize profit to our shareholders.

– 18 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS OF THE COMPANY

The unaudited pro forma statement of adjusted net tangible assets of the Company prepared in accordance with Rule 4.29 of the Listing Rules is set out below to illustrate the effect of the Rights Issue on the net tangible assets of the Company as if the Rights Issue had been completed on 30 June 2015.

The unaudited pro forma statement of adjusted net tangible assets of the Company has been prepared on the basis set out on the notes below for illustrative purpose only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Company had the Rights Issue been completed as at 30 June 2015 or at any future date.

				Unaudited		Unaudited
				pro forma		pro forma
				adjusted net		adjusted net
				tangible	Unaudited	tangible
				assets of the	net tangible	assets per
				Company	assets of the	Share after
				after	Company	completion
	Unaudited			completion	per Share	of the
	net tangible	Net proceeds	Estimated	of the	attributable	placing of
	assets of the	from placing	net proceeds	placing of	to the equity	new share
	Company as	of new	from the	new Shares	holders as at	and the
	at 30 June	Shares	Rights Issue	and the	30 June 2015	Rights Issue
	2015 (Note 2)	(Note 3)	(Note 4)	Rights Issue	(Note 5)	(Note 4)
	HK$’000	HK$’000	HK$’000	HK$’000	HK$	HK$
Based on 309,060,000 Rights
Shares to be issued at a
subscription price of
HK$0.235 per Rights Share	514,837	38,300	70,000	623,137	1.00	0.67

Notes:

The Rights Issue of 309,060,000 Rights Shares is based on 618,120,000 Shares is issued as at the Latest Practicable Date.
The unaudited net tangible assets of the Company as at 30 June 2015 is extracted from the published interim results announcement of the Company for the six months ended 30 June 2015.
The Company completed the placing of 103,020,000 new Shares at HK$0.385 per Share on 24 July 2015 raising a net proceeds of HK$38.3 million.
The estimated net proceeds from the Rights Issue are based on 309,060,000 Rights Shares to be issued at the Subscription Price of HK$0.235 per Rights Share, after deduction of the related estimated expenses of approximately HK$2,600,000.
The number of Shares used for the calculation of unaudited net tangible assets per Share is 515,100,000 as at 30 June 2015.
The unaudited pro forma adjusted net tangible assets per Share after completion of the Right Issue is arrived at on the basis that 927,180,000 Shares were in issue assuming the placing of new Shares as set out in Note 3 and Rights Issue had been completed on 30 June 2015.
No adjustment has been made to reflect any trading results or other transactions of the, except the net proceeds from placing of new Shares as set out in Note 3, Company entered into subsequent to 30 June 2015.

– 19 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

2. ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

The following is the text of a report received from Ernst & Young, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this Prospectus:

22/F, CITIC Tower 1 Tim Mei Avenue Central, Hong Kong

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

To the Directors of China New Economy Fund Limited

We have completed our assurance engagement to report on the compilation of pro forma financial information of China New Economy Fund Limited (the ‘‘Company’’) prepared by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The pro forma financial information consists of the pro forma net tangible assets as at 30 June 2015, and related notes as set out on page 19 of the Prospectus issued by the Company (the ‘‘Pro Forma Financial Information’’). The applicable criteria on the basis of which the Directors have compiled the Pro Forma Financial Information are described in note 1.

The Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of rights issue of shares of the Company on its financial position as at 30 June 2015 as if the transaction had taken place at 30 June 2015. As part of this process, information about the Company’s financial position has been extracted by the Directors from the Company’s financial statements for the period ended 30 June 2015, on which a review report has been published.

Directors’ responsibility for the Pro Forma Financial Information

The Directors are responsible for compiling the Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

Our Independence and Quality Control

We have complied with the independence and other ethical requirement of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

– 20 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

Our firm applies Hong Kong Standard on Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Pro Forma Financial Information, in accordance with paragraph 4.29 of the Listing Rules and with reference to AG7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the Pro Forma Financial Information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the Pro Forma Financial Information.

The purpose of Pro Forma Financial Information included in the Prospectus is solely to illustrate the impact of rights issue of the Company on unadjusted financial information of the Company as if the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the transaction would have been as presented.

A reasonable assurance engagement to report on whether the Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the transaction, and to obtain sufficient appropriate evidence about whether:

. The related pro forma adjustments give appropriate effect to those criteria; and
. The Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

– 21 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Company’s, the transaction in respect of which the Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Company; and
(c) the adjustments are appropriate for the purpose of the Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

Ernst & Young Certified Public Accountants Hong Kong

16 December 2015

– 22 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Prospectus, for which the Directors and the directors of the Investment Manager collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors and the directors of the Investment Manager, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this Prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this Prospectus misleading.

2. SHARE CAPITAL

(a) Share capital as at the Latest Practicable Date:

Authorised 2,000,000,000 Shares Issued and to be issued, fully paid or credited as fully paid: 618,120,000 Shares as at the Latest Practicable Date 309,060,000 Rights Shares to be issued 927,180,000 Shares	HK$ 200,000,000.00
	61,812,000.00 30,906,000.00
	92,718,000.00

As at the Latest Practicable Date, save for 35,026,800 share options granted under the share option scheme of the Company which remain outstanding, the Company has no outstanding warrants, share options or convertible or exchangeable securities granted or in issue which confer any right to convert into or subscribe for Shares.

All the issued Shares rank pari passu with each other in all respects including the rights as to voting, dividends and return of capital. The Rights Shares to be allotted and issued will, when issued and fully paid, rank pari passu in all respects with the existing Shares.

The Shares in issue are listed on the Stock Exchange. No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

There are no arrangements under which future dividends will be waived or agreed to be waived.

– 23 –

GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the following Directors had or were deemed to have interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO): (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provision of the SFO); or (ii) which were required pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules:

				Approximate
				percentage of
		Number of		total issued
	Nature of	underlying		share capital of
Name of Director	Interest	shares	Position	the Company
Gu Xu	Beneficial owner	5,151,000	Long	0.83%
Chan Cheong Yee	Beneficial owner	5,151,000	Long	0.83%
Lam Chun Ho	Beneficial owner	515,100	Long	0.08%
Huang Liangkuai	Beneficial owner	515,100	Long	0.08%
Ayoub Faris Ibrahim Taha	Beneficial owner	515,100	Long	0.08%

Note: The all interests represent share options granted to the Directors.

– 24 –

GENERAL INFORMATION

APPENDIX III

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

As at the Latest Practicable Date, so far as was known to the Directors or chief executives of the Company, the following persons (other than the Directors or chief executives of the Company as disclosed herein) had interests or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO:

				Approximate
				percentage of
				total issued
	Nature of	Number of		share capital of
Name of Shareholder	Interest	Shares	Position	the Company
Universe International	Interest of	326,573,400	Long	33.33%
Holdings Limited	controlled
	corporation
Win Fung Securities Limited	Other	326,573,400	Long	33.33%
Laberie Holdings Limited	Beneficial owner	103,020,000	Long	16.67%
SEEC Media Group Limited	Beneficial owner	103,020,000	Long	16.67%
Guocang Group Limited	Interest of	34,350,000	Long	5.55%
	controlled
	corporation

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors or chief executives of the Company, the Company had not been notified of any other interests or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO.

4. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the Company within two years immediately preceding the date of this Prospectus and are or may be material:

(a) the investment management agreement entered into between the Company and the Investment Manager dated 18 December 2013 in relation to the provision of nondiscretionary investment management services to the Company for which the Company shall pay to the Investment Manager a monthly management fee of HK$80,000 for a period of three years commencing from 1 January 2014 to 31 December 2016;
(b) the underwriting agreement entered into between the Company and Trinity Finance Investment Limited in relation to the underwriting the issue of 151,500,000 new Shares to the qualifying Shareholders for subscription at HK$0.28 per Share on the basis of one rights Share for every two Shares held by way of rights issue;

– 25 –

GENERAL INFORMATION

APPENDIX III

(c) the placing agreement entered into between the Company and SBI China Capital Financial Services Limited dated 11 November 2014 in relation to the placing of up to 60,600,000 new Shares at HK$0.35 per Share on a best effort basis;
(d) the placing agreement entered into between the Company and Astrum Capital Management Limited dated 16 July 2015 in relation to the placing of up to 103,020,000 new Shares at HK$0.385 per Share on a best effort basis;
(e) the custodian agreement entered into between the Company and Deutsche Bank AG, Hong Kong Branch for the provision of custody services in relation to securities and cash which the Company may deposit with the custodian from time to time;
(f) the administration agreement entered into between the Company and Amicorp Hong Kong Limited for the provision of certain administrative services; and
(g) the Underwriting Agreement.

5. LITIGATION

As at the Latest Practicable Date, the Company was not engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company.

6. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or was proposing to enter into any service contracts with the Company (excluding contracts expiring or determinable by the Company within one year without payment of compensation (other than statutory compensation)).

7. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

(a) As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company, or was proposed to be acquired, or disposed of by, or leased to the Company since 31 December 2014, the date to which the latest published audited financial statements of the Company were made up.
(b) Save for the investment management agreement dated 18 December 2013 and entered into between the Company and the Investment Manager, of which Mr. Chan Cheong Yee, one of the executive Directors, is also one of the responsible officers of the Investment Manager, as at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by the Company since 31 December 2014, being the date to which the latest published audited financial statements of the Company were made up, and which was significant in relation to the business of the Company.

– 26 –

GENERAL INFORMATION

APPENDIX III

8. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective associates had any interest in a business which compete or may compete either directly or indirectly with the business of the Company.

9. EXPERT AND CONSENT

The following is the qualification of the expert who has given its opinions and advice which are included in this Prospectus:

Name Qualification

Ernst & Young

Certified Public Accountants

As at the Latest Practicable Date, Ernst & Young did not have any shareholding, directly or indirectly, in the Company or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company.
Ernst & Young has given and has not withdrawn its written consent to the issue of this Prospectus, with the inclusion of the references to its name and/or its opinion or report in the form and context in which they are included.
As at the Latest Practicable Date, Ernst & Young did not have any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to the Company, or was proposed to be acquired, or disposed of by, or leased to the Company since 31 December 2014, the date to which the latest published audited financial statements of the Company were made up.

10. PARTIES INVOLVED IN THE RIGHTS ISSUE AND CORPORATE INFORMATION

Board of Directors Mr. GU Xu Mr. CHAN Cheong Yee Mr. LAM Chun Ho Mr. HUANG Liangkuai Mr. AYOUB Faris Ibrahim Taha Head office and principal Room 707, 7/F, place of business New World Tower 1 16–18 Queen’s Road Central Central, Hong Kong

Registered office

P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, Cayman Islands

– 27 –

GENERAL INFORMATION

APPENDIX III

Underwriter	Win Fung Securities Limited
Legal advisers to the Company	As to Hong Kong Law
	Michael Li & Co.
	19/F, Prosperity Tower
	No. 39 Queen’s Road Central,
	Hong Kong
	As to Cayman Islands Law
	Maples and Calder
	P.O. Box 309, Ugland House
	South Church Street
	George Town
	Grand Cayman KY1-1104
	Cayman Islands
Auditors	Ernst & Young
	22/F, CITIC Tower
	1 Tim Mei Avenue
	Central
	Hong Kong
Principal banker	DBS Bank (Hong Kong) Limited
	73/F, The Center,
	99 Queen’s Road Central,
	Hong Kong
Hong Kong share registrar	Computershare Hong Kong Investor Services Limited
and transfer office	Shops 1712–1716, 17th Floor
	Hopewell Centre
	183 Queen’s Road East
	Wanchai
	Hong Kong
Investment manager	China Everbright Securities (HK) Limited
	36/F, Far East Financial Centre
	16 Harcourt Road
	Hong Kong
Custodian	Deutsche Bank AG, Hong Kong Branch
	52/F, International Commerce Centre
	1 Austin Road West
	Kowloon, Hong Kong

– 28 –

GENERAL INFORMATION

APPENDIX III

Administrator Amicorp Hong Kong Limited Rooms 2103–4, 21/F Wing On Centre 111 Connaught Road Central Hong Kong Authorised representatives Mr. Chan Cheong Yee Suite F, 29/F, Tower 10 South Horizons Apleichau Hong Kong Mr. Tai Man Hin Tony Flat 10B, All Fit Garden 20 Bonham Road Hong Kong Company secretary Mr. Tai Man Hin Tony (CPA, ACA, FCCA)

Particulars of the Directors

(a) Name and address of Directors

Name Address Executive Directors Mr. GU Xu Room 703, No. 11 Lane 289 Ouyang Road, Hongkou District Shanghai, China Mr. CHAN Cheong Yee Suite F, 29/F, Tower 10 South Horizons Apleichau Hong Kong

Independent Non-executive Directors

Mr.	LAM Chun Ho	Flat C, 7/F, Block 1, Site 7
		Whampoa Garden, Hung Hom
		Kowloon,
		Hong Kong
Mr.	HUANG Liangkuai	Room 502, No. 28 Xia Da Hai Bin
		Siming District, Xiamen
		Fujian Province, China
Mr.	AYOUB Faris Ibrahim Taha	G/F Pokfulam Heights
		86C Pok Fu Lam Road
		Hong Kong

– 29 –

GENERAL INFORMATION

APPENDIX III

(b) Profiles of Directors

Executive Directors

Mr. GU Xu (‘‘Mr. Gu’’), aged 51, was appointed as executive Director of the Company since 25 November 2010. Mr. Gu completed a bachelor’s degree majoring in Economics from Shanghai University of Finance and Economics (上海財經大學) in 1986. He further received a master’s degree majoring in Economics from the same university in 1989 and a master’s degree majoring in Business Administration awarded jointly by Fudan University (復旦大學) and The University of Hong Kong in 2003. Mr. Gu has accumulated 19 years’ experience in asset management, investment and financial management in both financial conglomerate and private company. From October 2006 to May 2008, Mr. Gu was the president and partner of 上海格雷特投資管理有限公司 (Create Capital Co., Ltd.) and he was responsible for the management and investment decision making of a fund in the PRC. Since July 2009, Mr. Gu has been acting as the director of 河南農開投資基金管理有限責任公司 (Henan Agriculture Development Investment Fund Management Limited) and is responsible for the management and supervision of a fund named 河南農業開發產業投資基金 (Henan Agriculture Development Investment Fund). Since August 2010, Mr. Gu has been serving as the general manager of 上海宏華文化創業投資有限責任公司 (Shanghai Honghua Cultural Venture Investment Company Limited) (the ‘‘Honghua Fund’’), a fund company targeting investment in culture industry in China. He is also the general manager and director of the investment manager of the Honghua Fund. Mr. Gu is also the chairman of the board of 上海東晟投資管理有限公司 (Shanghai Dongsheng Investment Management Co., Ltd.). Mr. Gu was appointed as an independent supervisor of Bank of Suzhou in May 2015.

Mr. CHAN Cheong Yee (‘‘Mr. Chan’’), aged 51, was appointed as an executive Director since 1 June 2013. Mr. Chan is one of the responsible officers of the Investment Manager. Mr. Chan is currently a licensed person to carry out type 1 (dealing in securities), type 2 (dealing in futures contracts), type 3 (leveraged foreign exchange trading) and type 9 (asset management) regulated activities under the SFO. Mr. Chan obtained a Bachelor of Science degree from the College of Business Administration of The University of South Florida in the United States of America. Mr. Chan is experienced in dealing in securities, fund management, corporate management, corporate finance and managing listed investment companies under Chapter 21 of the Listing Rules.

Since June 2003, Mr. Chan joined China Innovation Investment Limited (1217.HK), an investment company listed on the Stock Exchange, as an executive director. Mr. Chan was appointed as an independent non-executive director of Bingo Group Holdings Limited (8220.HK), a company listed on the Growth Enterprise Market of the Stock Exchange, in August 2007, and was re-designated as an executive director of Bingo Group Holdings Limited in April 2009. Mr. Chan was appointed as an independent non-executive director of Agritrade Resources Limited (1131.HK), a company listed on the Stock Exchange, in June 2010. Mr. Chan was appointed as an executive director of China Investment and Finance Group Limited

– 30 –

GENERAL INFORMATION

APPENDIX III

(1226.HK), an investment company listed on the Stock Exchange, in March 2011. Mr. Chan was appointed as an executive director of China Investment Development Limited (204.HK), an investment company listed on the Stock Exchange, in May 2012 and was appointed as an executive director of Capital VC Limited (2324. HK), an investment company listed on the Stock Exchange, in November 2012. Mr. Chan was appointed as an executive director of Alpha Returns Group PLC, an investment company listed on AIM of London Stock Exchange, in May 2013.

Independent Non-executive Directors

Mr. LAM Chun Ho (‘‘Mr. Lam’’), aged 33, graduated from Hong Kong Baptist University with a bachelor degree of Business Administration in Accounting. Mr. Lam is an associate member of the Hong Kong Institute of Certificate Public Accountants and he has over 8 years’ experience in the field of auditing, financial reporting and financial management. Mr. Lam is currently a manager of a local corporate service company.

Since 24 October 2014, Mr. Lam has been appointed as an independent nonexecutive director of China Renji Medical Group Ltd (648. HK), a company listed on the main board of the Stock Exchange.

Mr. HUANG Liangkuai (‘‘Mr. Huang’’), aged 73, graduated from the department of economics of Xiamen University (Fujian, PRC) in August 1966, majoring in statistics. Mr. Huang has been appointed as an external Supervisor of Shengjing Bank Co., Ltd. (Stock Code: 2066) since May 2014. He has been the chief representative of the Shenzhen Research Institute of Xiamen University (廈門大學深圳研究院) and vice chairman of Xiamen University Alumni General Association since August 1999. From November 1984 to December 1998, he served as chief of the general affairs division, chief of the assets division and vice chairman of the alumni association at Xiamen University. He was the secretary to the party committee of the school of economics at Xiamen University from September 1979 to October 1984.

Mr. AYOUB Faris Ibrahim Taha (‘‘Mr. Ayoub’’), aged 36, was appointed as an independent non-executive Director since 1 February 2014. He is a member of the audit committee, nomination committee and remuneration committee of the Company. Mr. Ayoub holds a Master of Arts (Hons) in Economics & Political Science from University of Edinburgh. He has over 13 years’ experience in financial advisory and investments. Mr. Ayoub was an executive director in global principal investments & trading division of JP Morgan, Hong Kong. Since March 2012, he became the Managing Director of Cassia Investments Limited, which is a consumer focused investment firm specializing in lower middle-market companies across Asia.

11. EXPENSES

The expenses in connection with the Rights Issue, including the underwriting commission and professional fees payable to lawyers, reporting accountants and financial printer, etc., are estimated to be approximately HK$2.6 million and will be payable by the Company.

– 31 –

GENERAL INFORMATION

APPENDIX III

12. BINDING EFFECT

The Prospectus Documents and all acceptances of any offer or application contained in such documents, are governed by and shall be construed in accordance with the laws of Hong Kong. When an acceptance or application is made in pursuance of any such documents, the relevant document(s) shall have the effect of rendering all persons concerned bound by the provisions (other than the penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

13. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Upon the listing of the Shares on the Stock Exchange on 6 January 2011, the Company has adopted an investment policy which, as stated in the prospectus (the ‘‘Listing Document’’) of the Company for the listing of its Shares dated 31 December 2010, in accordance with the Listing Rules, for a period of three years from the date of Listing Document, may only be changed with the approval of the majority of Shareholders at a general meeting of the Company. After such period, on 23 January 2014, the Board adopted a new Investment policy in place of the old one which the Directors consider is in the best interests of the Company and the Shareholders as a whole in light of the latest development and current market situation. The investment objective and such policies are summarized below:

Investment Objectives

The Company may invest its funds (including but not limited to surplus funds, funds or not designated for specific purpose, or any funds realised from realization of any investment) (collectively the ‘‘Company’s Funds’’) in such forms and terms in compliance with this investment policy and considered by the Board or any delegates of the Board to be appropriate through investing the Company’s Funds in diversified portfolio of investments products including listed or unlisted securities, unit trust funds, derivatives, futures, warrants, options, bonds or such other investments as the Board, or such committees or person as the Board may authorize, may decide from time to time, so as to achieve capital appreciation.

– 32 –

GENERAL INFORMATION

APPENDIX III

Investment Policy

The investment policies of the Company shall be as follows:

(i) Forms of Investment: The Company’s Funds may be invested in (i) equity securities, equity-related securities, cash deposits, fixed deposits, trusts, unit trusts, mutual funds, derivatives, futures, warrants, options, bonds or debt instruments (collectively, the ‘‘Investment Tools’’) issued by listed or unlisted enterprises established and/or conducting business in or outside Hong Kong, or (ii) in the form of interests in private companies, establishment of a partnership or participation in unincorporated investments, or (iii) such other types of investments in accordance with the investment objective and policies adopted by the Company from time to time, subject to the requirements of the memorandum and articles of association of the Company and the Listing Rules;
(ii) Industries to be invested in: The Company’s Funds shall normally be invested in the Investment Tools issued by any listed or unlisted companies engaged in different industries including, but not limited to, information technology, telecommunications, biological technology, manufacturing, service, property, internet-related business, financial services, entertainment business and hotel catering, which the Board, the research and operation team of the Company, the investment manager of the Company appointed from time to time, or such committees or person as the Board may authorize from time to time, consider to be of high growth potential or to be with significant potential return, and where appropriate and necessary, to invest in such Investment Tools issued by any listed or unlisted companies in such a variety of industries with a view to maintain a balance in the Company’s exposure to different industry sectors in order to minimise the impact on the Company in respect of any downturn in any particular sector in which the Company has investments; where it is not to the benefit of the Company to realise such investments and the market conditions are favourable, the Company may package such investments into equity and/or equity-related products to hedge against unfavourable conditions;
(iii) Factors to be considered in making particular investment: The Company’s Funds shall normally be invested in enterprises which are established in their respective fields and in which the Board, the research and operation team of the Company, the Investment Manager, or such committees or person as the Board may authorize from time to time, believes there are potential prospects for possible growth. In particular, the Company shall seek to identify enterprises with competitive products and concepts, strong management, high level of technical expertise and research and development capabilities, large potential markets, as well as management commitment to the long-term growth;
(iv) Investment in entities in recovery situation: The Company’s Funds may also be invested in companies or other entities which are considered by the Board, or such committees or person as the Board may authorize from time to time, as being special or in recovery situations on a case-by-case basis, such as

– 33 –

GENERAL INFORMATION

APPENDIX III

companies in the course of recovery situations or the shares of which are trading below their net asset value per share, which may have potential to attain growth within the foreseeable future which may provide attractive returns to the Company;

(v) Additional factor in making investment decision: Where possible (but not compulsory), the Company’s Funds shall be invested in entities where there is a certain degree of synergy with other investee entities and where co-operation between such companies would be of mutual benefit to each other;
(vi) Term of investment: The actual holding period of the Investment Tools shall be dependent on the return from investment, the prospect of the investee entities, and/or the potential of being listed on the Stock Exchange or other internationally recognised stock exchanges. The Company may, however, realise investments where the Board, the research and operation team of the Company, the Investment Manager, or such committees or person as the Board may authorize from time to time, believes that such realisation would be in the best interests of the Company and its shareholders as a whole or where the terms on which such realisation can be made are considered by the Board to be particularly favourable to the Company; and
(vii) Preservation of Company’s Funds: Before suitable investments are identified, the Company may seek to protect the capital value of the Company’s Funds by placing the funds not deployed on deposits in Hong Kong Dollars or any currency with financial institutions in Hong Kong or investing in debt securities, money market instruments, bonds, treasury securities or other instruments denominated in any currency. The Company may also engage in transactions in options and futures which are traded on recognised securities exchanges, futures exchanges or other over-the-counter markets.

The investment policy above can be changed by a resolution of the Board without Shareholders’ approval.

Investment Restriction

Under the articles of association of the Company and the Listing Rules, certain restrictions on investments are imposed on the Company:

(i) the Company shall not make any investment which would expose the Company to unlimited liability;
(ii) the Company shall not either by itself or through its wholly-owned subsidiaries (if any) or in conjunction with any connected person (as defined in the Listing Rules) take legal or effective management control of underlying investments and in no event, will the Company itself or through its wholly-owned subsidiaries (if any) invest in or own or control more than 30% (or such other percentage as may from time to time be specified in the Hong Kong Code on Takeovers and Mergers or other laws, regulations, rules, codes, orders or

– 34 –

GENERAL INFORMATION

APPENDIX III

policies of other relevant jurisdictions as being the level of interest for triggering a mandatory general offer for all the interest in any of the investee companies or any other similar action or consequence) of the voting rights in any one company or body, except in relation to wholly-owned subsidiaries (if any) of the Company for the sole purpose of holding investments of the Company; and

(iii) save in respect of cash deposits awaiting investment, the value of the Company’s holding of investments issued by any one company or body shall not exceed 20% of the net asset value of the Company at the time the investment is made.

The Company has to comply with investment restrictions (ii) and (iii) above at all times while it remains as an investment company under Chapter 21 of the Listing Rules. The investment restriction (i) above can be changed by a resolution of the Board without Shareholders’ approval.

Save for the unlisted securities, as at the Latest Practicable Date, the Company has no present intention to invest in options, warrants, commodities, futures contracts or precious metals.

14. INVESTMENT PORTFOLIO

Details of all the Company’s financial assets at fair value through profit or loss as at 31 December 2014 and 30 June 2015 respectively are as follows:

At 30 June 2015

Listed Equity Securities — Hong Kong

									Dividend
				Proportion				Net assets	received/	% of net
			Particular	of investee’s			Unrealized	attributable	receivable	assets
		Place of	of issued	capital		Market	gain/(loss)	to the	during	of the
	Name of investee	incorporation	shares held	owned	Cost	value	recognized	Company	the Period	Company
							(Note 1)	(Note 2)
					HK$’000	HK$’000	HK$’000		HK$’000
(a)	Finsoft Financial	The Cayman	100,000,000	2.50%	18,500	89,000	70,500	HK$1.48	—	17.24
	Investment	Islands	ordinary					million
	Holdings Limited		shares of
	(Formerly known		HK$0.0005
	as Finsoft		each
	Corporation)
(b)	Suncorp Technologies	Bermuda	102,000,000	0.67%	24,992	53,040	28,050	HK$3.68	—	10.28
	Limited		ordinary					million
			shares of
			HK$0.0003
			each

– 35 –

GENERAL INFORMATION

APPENDIX III

									Dividend
				Proportion				Net assets	received/	% of net
			Particular	of investee’s			Unrealized	attributable	receivable	assets
		Place of	of issued	capital		Market	gain/(loss)	to the	during	of the
	Name of investee	incorporation	shares held	owned	Cost	value	recognized	Company	the Period	Company
							(Note 1)	(Note 2)
					HK$’000	HK$’000	HK$’000		HK$’000
(c)	Town Health	The Cayman	25,236,000	0.34%	35,414	51,986	16,590	HK$15.46	83	10.07
	International	Islands	ordinary					million
	Medical Group		shares of
	Limited		HK$0.01
			each
(d)	BBI Life Sciences	The Cayman	11,079,000	2.08%	19,584	35,231	15,648	RMB10.79	89	6.83
	Corporation	Islands	ordinary					million
			shares of
			HK$0.01
			each
(e)	Convoy Financial	The Cayman	36,000,000	1.46%	9,000	34,560	25,591	HK$12.31	—	6.70
	Holdings Limited	Islands	ordinary					million
			shares of
			HK$0.1 each
(f)	China Harmony New	The Cayman	3,995,500	0.25%	36,334	34,441	(1,892)	RMB6.82	350	6.67
	Energy Auto	Islands	ordinary					million
	Holding Limited		shares of
			HK$0.01
			each
(g)	DX.com Holdings	The Cayman	194,848,000	3.48%	22,879	27,668	4,903	HK$6.01	—	5.36
	Limited	Islands	ordinary					million
			shares of
			HK$0.01
			each
(h)	China Culiangwang	Bermuda	64,272,000	1.08%	12,854	20,246	7,491	RMB37.69	—	3.92
	Beverages Holdings		ordinary					million
	Limited		shares of
			HK$0.1 each

Private Equity Funds — Cayman Islands

									Dividend
				Proportion				Net assets	received/	% of net
			Particular	of investee’s			Unrealized	attributable	receivable	assets
		Place of	of issued	capital		Market	gain	to the	during the	of the
	Name of investee	incorporation	shares held	owned	Cost	value	recognized	Company	Period	Company
							(Note 1)	(Note 2)
					HK$’000	HK$’000	HK$’000		HK$’000
(i)	Hydra Capital SPC	The Cayman	3,750	16.74%	37,500	43,197	5,697	HK$43.20	—	8.37
		Islands	shares of					million
			HK$10,000
			each
(j)	SBI China Capital	The Cayman	N/A	15.04%	15,000	16,838	1,838	HK$16.84	—	3.26
	M&A Fund LP	Islands						million

– 36 –

GENERAL INFORMATION

APPENDIX III

At 31 December 2014

Listed Equity Securities — Hong Kong

								Dividend
			Proportion				Net assets	received/	% of net
		Particular	of investee’s			Unrealized	attributable	receivable	assets
Name of investee	Place of	of issued	capital		Market	gain/(loss)	to the	during	of the
	incorporation	shares held	owned	Cost	value	recognized	Company	the year	Company
						(Note 3)	(Note 2)
				HK$’000	HK$’000	HK$’000		HK$’000
Finsoft Corporation	The Cayman	173,650,000	4.34%	32,125	209,248	177,123	HK$2.62	—	43.85
	Islands	ordinary					million
		shares of
		HK$0.0005
		each
China Mobile Games and	The Cayman	300,006,000	12.02%	33,682	57,601	23,919	HK$29.31	—	12.07
Cultural Investment	Islands	ordinary					million
Limited		shares of
		HK$0.01
		each
Town Health International	The Cayman	22,236,000	0.44%	28,191	27,128	(1,063)	HK$5.26	—	5.69
Medical Group Limited	Islands	ordinary					million
		shares of
		HK$0.01
		each
BBI Life Sciences	The Cayman	11,079,000	2.11%	19,584	18,502	(1,082)	RMB10.43	—	3.88
Corporation	Islands	ordinary					million
		shares of
		HK$0.01
		each
Jun Yang Solar Power	Bermuda	100,500,000	2.26%	18,741	18,090	(651)	HK$26.34	—	3.79
Investments Limited		ordinary					million
		shares of
		HK$0.01
		each
Nanjing Sinolife United	The People’s	10,000,000	1.19%	21,075	15,900	(5,175)	RMB7.47	—	3.33
Company Limited	Republic of	H shares of					million
	China	RMB0.1
	(‘‘the PRC’’)	each
DX.com Holdings Limited	The Cayman	100,000,000	1.78%	17,252	13,100	(4,152)	HK$3.08	—	2.75
	Islands	ordinary					million
		shares of
		HK$0.01
		each
Hong Kong Education	The Cayman	60,000,000	3.68%	7,339	7,020	(319)	HK$10.68	—	1.47
(Int’l) Investments	Islands	ordinary					million
Limited		shares of
		HK$0.1 each
New Ray Medicine	Bermuda	14,288,000	1.49%	8,030	7,001	(1,029)	HK$4.52	—	1.47
International Holding		ordinary					million
Limited		shares of
		HK$0.01
		each

– 37 –

GENERAL INFORMATION

APPENDIX III

Private Equity Fund — Cayman Islands

									Dividend
				Proportion				Net assets	received/	% of net
			Particular	of investee’s			Unrealized	attributable	receivable	assets
		Place of	of issued	capital		Market	gain	to the	during	of the
Name	of investee	incorporation	shares held	owned	Cost	value	recognized	Company	the year	Company
							(Note 3)	(Note 2)
					HK$’000	HK$’000	HK$’000		HK$’000
Hydra	Capital SPC	The Cayman	3,750	16.74%	37,500	37,522	22	HK$37.52	—	7.86
		Islands	shares of					million
			HK$10,000
			each

Notes:

(1) The unrealized gain/(loss) represented the changes in fair value of the respective investments during the Period.
(2) The calculation of net assets attributable to the Company is based on the latest published interim/annual report of the respective investments as at the latest practicable date at the end of each reporting period.
(3) The unrealized gain/(loss) represented the changes in fair value of the respective investments during the year ended 31 December 2014.

A brief description of the business and financial information of the investments is as follows:

(a) Finsoft Financial Investment Holdings Limited (‘‘Finsoft’’) is principally engaged in the provision of financial trading software solution, provision of other internet financial platforms, provision of referral services, money lending business, securities investments and provision of corporate finance advisory services. The unaudited loss attributable to shareholders of Finsoft for the six months ended 30 June 2015 was approximately HK$1,041,355 and the unaudited net assets attributable to the shareholders of Finsoft as at 30 June 2015 was approximately HK$59,267,709. The fair value of the investment in Finsoft is based on quoted market bid prices.
(b) Suncorp Technologies Limited (‘‘Suncorp’’) is principally engaged in the sales and marketing of residential telephone products under its license for the Motorola brand, and the processing and trading of used computer-related components such as integrated circuit chips, hard-disk and motherboards from developed countries to developing countries. The unaudited loss attributable to shareholders of Suncorp for the six months ended 30 June 2015 was approximately HK$22,755,000 and the unaudited net assets attributable to the shareholders of Suncorp as at 30 June 2015 was approximately HK$549,510,000. The fair value of the investment in Suncorp is based on quoted market bid prices.
(c) Town Health International Medical Group Limited (‘‘Town Health’’) is principally engaged in investment in healthcare business including medical institutions operation and pharmaceutical distribution in Hong Kong and China. The unaudited profit attributable to shareholders of Town Health for the six months ended 30 June 2015 was approximately HK$258,297,000 and the unaudited net assets attributable to the

– 38 –

GENERAL INFORMATION

APPENDIX III

shareholders of Town Health as at 30 June 2015 was approximately HK$4,546,619,000. The fair value of the investment in Town Health is based on quoted market bid prices.

(d) BBI Life Sciences Corporation (‘‘BBI’’) is principally engaged in the provision of DNA synthesis products and life sciences research consumables primarily in China, North America, South America, Europe and Africa. The unaudited profit attributable to shareholders of BBI for the six months ended 30 June 2015 was approximately RMB21,283,000 and the unaudited net assets attributable to the shareholders of BBI as at 30 June 2015 was approximately RMB518,621,000. The fair value of the investment in BBI is based on quoted market bid prices.
(e) Convoy Financial Holdings Limited (‘‘Convoy’’) is principally engaged in the independent financial adviser business, money lending business, proprietary investment business, asset management business and corporate finance advisory services. The audited profit attributable to shareholders of Convoy for the year ended 31 December 2014 was approximately HK$246,173,000 and the audited net assets attributable to the shareholders of Convoy as at 31 December 2014 was approximately HK$843,186,000. The fair value of the investment in Convoy is based on quoted market bid prices.
(f) China Harmony New Energy Auto Holding Limited (‘‘Harmony Auto’’) is principally engaged in the sale and service of motor vehicles in China. The audited profit attributable to shareholders of Harmony Auto for the year ended 31 December 2014 was approximately RMB544,365,000 and the audited net assets attributable to the shareholders of Harmony Auto as at 31 December 2014 was approximately RMB2,726,153,000. The fair value of the investment in Harmony Auto is based on quoted market bid prices.
(g) DX.com Holdings Limited (‘‘DX.com’’) is principally engaged in e-commerce and provision of online sales platform and professional IT contract and maintenance services business. The unaudited loss attributable to shareholders of DX.com for the six months ended 31 December 2014 was approximately HK$29,115,000 and the unaudited net assets attributable to the shareholders of DX.com as at 31 December 2014 was approximately HK$172,774,000. The fair value of the investment in DX.com is based on quoted market bid prices.
(h) China Culiangwang Beverages Holdings Limited (‘‘China Culiangwang’’) is principally engaged in growing, processing and sales of agricultural products and consumer food and beverage products. The audited loss attributable to shareholders of China Culiangwang for the year ended 30 April 2015 was approximately RMB269,549,000 and the audited net assets attributable to the shareholders of China Culiangwang as at 30 April 2015 was approximately RMB3,489,391,000. The fair value of the investment in China Culiangwang is based on quoted market bid prices.

– 39 –

GENERAL INFORMATION

APPENDIX III

(i) Hydra Capital SPC (‘‘Hydra Capital’’) is an exempted company incorporated with limited liability and registered as a segregated portfolio company under the laws of the Cayman Islands established for the purpose of making investments on behalf of its portfolio holders. Hydra Capital has engaged a manager to make day-to-day decisions regarding the management of its investments. The manager has appointed an investment manager to manage and invest the assets of the investment portfolio on a discretionary basis. The investment manager is a company incorporated in Hong Kong with limited liability principally engaged in the provision of investment advisory, funds dealing, introducing brokers and asset management service. The investment portfolio of Hydra Capital is currently focused on making investments in internet-related and mobile-applications-related industries. The fair value of the investment in Hydra Capital is stated as net asset value.
(j) SBI China Capital M&A Fund LP (‘‘SBI China Capital Fund’’) is a segregated portfolio company registered with limited partnership under the laws of the Cayman Islands for the purpose of conducting investment in financial securities. The fund principally engaged in pre-IPO investments and is under the management of SBI China Capital, which owns extensive work experience in the research, IPO sponsorship and underwriting and financial advisers. The fair value of the investment in SBI China Capital Fund is stated as net asset value.

No impairment loss and diminution in value of investments was provided for the year ended 31 December 2014 and the six months ended 30 June 2015.

15. DISTRIBUTION POLICY

The Company’s investment objective is to achieve long-term capital appreciation and, accordingly, the Company’s investment portfolio is not expected to generate significant income. It is therefore not expected that the Company will have significant (if any) dividend income after expenses available for distribution by way of dividend and therefore the Company does not expect to declare dividend. Any declaration of distributions will be made at the discretion of the Directors and may be either from profit, reserves of the Company (including Share premium account) or any amount lawfully available for distribution.

16. FOREIGN EXCHANGE POLICY

The Company’s investments may be denominated in currencies other than HK Dollars. As such, it may receive income, or make payments in foreign currency and is therefore subject to exchange rate fluctuations.

The PRC’s system of foreign exchange administration imposes significant restrictions on the ability of enterprises located in the PRC to purchase, retain and make outward remittance of foreign currency. The relevant rules governing exchange control relating to the inflow and outflow of foreign exchange are contained primarily in the Regulations of Foreign Exchange Control (as amended) promulgated on 29th January, 1996 and effected on 1st April, 1996. In summary, all foreign exchange receipts (from capital injection or sales) must be deposited in the foreign exchange account opened with the designated bank approved to operate foreign exchange business by State Administration of Foreign Exchange (‘‘SAFE’’). Foreign exchange

– 40 –

GENERAL INFORMATION

APPENDIX III

under current account items (such as dividends and profits) can be remitted abroad upon presentation of necessary documents, including auditor’s report, capital verification report, foreign exchange registration certificate and tax certificates as well as other documents requires by SAFE.

Foreign exchange under capital account items (such as interest and repatriation of capital) may be remitted abroad upon presentation of necessary documents and subject to approval of SAFE. The Company may also enter into hedging transactions to seek to reduce risk associated with currency exchange rate.

17. TAXATION

General

The taxation of income and capital gains of the Company and its subsidiaries are subject to the fiscal law and practice of Hong Kong. The following summary of the anticipated tax treatment generally applicable to the Company and its subsidiary in Hong Kong is based on current law and practice subject to changes therein and does not constitute legal or tax advice. Prospective investors should consult their own professional advisers on the tax implications of investing, holding or disposing of Shares or of exercising any rights attached to them under the laws of the jurisdiction in which they are liable to taxation.

Hong Kong

The Company and its subsidiaries will be subject to tax in Hong Kong if they carry on business in Hong Kong and derive Hong Kong sourced profits from such business. In that case, they will be subject to profits tax, currently imposed at a rate of 16.5% on any profits (including interest) which arise in or are derived from Hong Kong. Capital gains and offshore profits are not taxable.

In this regard, profits derived from the offshore disposal of shares listed or registered outside Hong Kong may in certain circumstances be considered as derived from outside Hong Kong and would, therefore, not attract a Hong Kong profits tax liability.

Under current law and practice, no tax will be payable by the Company in Hong Kong in respect of dividends paid by the Company. Gains arising on the sale of shares will be subject to profits tax where derived by certain persons carrying on a trade, profession or business of share dealing in Hong Kong.

Hong Kong stamp duty, currently at the rate of 0.1% of the consideration or its value will be payable by the buyer on every purchase, and also by the seller on every sale, of Shares (that is, a total of 0.2% is currently payable on a typical sale and purchase transaction). In addition a fixed duty of HK$5 is currently payable on any instrument of transfer of Shares.

– 41 –

GENERAL INFORMATION

APPENDIX III

Cayman Islands

The government of the Cayman Islands will not, under the existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the Company or the Shareholders. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

The Company has obtained an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable, (i) on or in respect of the Shares, debentures or other obligations of the Company, or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by the Company to its members or a payment of principal or interest or other sums due under a debenture or other obligation of the Company.

No stamp duty is payable in the Cayman Islands on transfer of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

THE PRC

The information set out below is a summary of the principal areas of the PRC taxation and fees which are likely to be relevant to the investments of the Company in the PRC.

Income Tax

According to the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法), which was promulgated on 16 March 2007, the income tax for both domestic and foreign-invested enterprises has been at the same rate of 25% effective since 1 January 2008.

Business Tax

Pursuant to the Provisional Regulations of the PRC on Business Tax (中華人民共和國營業稅暫行條例) enacted by the State Council on 13 December 1993 and enforced on 1 January 1994 and which was later amended in November 2008 and became enforceable on 1 January 2009 and its Implementation Rules on the Provisional Regulations of the PRC on Business Tax (中華人民共和國營業稅暫行條例實施細則) issued by the Ministry of Finance on 25 December 1993, which was later amended in 2008 (enforceable on 1 January 2009) and amended in 2011 (enforceable on 1 November 2011), business tax is imposed on income derived from the furnishing of specified services and transferring of immovable property or intangible property at rates ranging from 3% to 20%, depending on the activity.

– 42 –

GENERAL INFORMATION

APPENDIX III

18. BORROWING POWERS

Generally the Company will not exceed aggregate borrowings of 25% of the latest available net asset value of the Company at the time of any borrowing. Subject thereto, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party. Where the Directors believe it is in the best interests of the Company, the above borrowing restrictions may be altered without Shareholders’ approval.

19. INFORMATION ON THE INVESTMENT MANAGER

(a) Set out below is the information of the investment manager of the Company:

China Everbright Securities (HK) Limited 36/F, Far East Financial Centre 16 Harcourt Road Hong Kong

The Investment Manager is a company incorporated in Hong Kong with limited liability and a licensed corporation under the SFO authorised to carry out regulated activities of type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management).

(b) The full names, addresses and descriptions of the directors of the Investment Manager is as follows:

Name Address Mr. Li Bingtao 36/F, Far East Financial Centre 16 Harcourt Road Hong Kong Mr. Cheung Pang To 36/F, Far East Financial Centre 16 Harcourt Road Hong Kong Mr. So Hin Pong 36/F, Far East Financial Centre 16 Harcourt Road Hong Kong Mr. Ho Chi Ho 36/F, Far East Financial Centre 16 Harcourt Road Hong Kong

– 43 –

GENERAL INFORMATION

APPENDIX III

The biographies of the directors of the Investment Manager are as follows:

Li Bingtao

Mr. Li is the Director of China Everbright Securities (HK) Limited. He joined China Everbright Securities (HK) Limited on 13 October 2014. Mr. Li holds several degrees including a Master of Arts from New York University. Mr. Li started his financial career at Lianhe Securities in 2001, and worked for Washington Mutual and JP Morgan Chase Bank later on. From April 2009 to March 2014, Mr. Li served at China Securities Regulation Committee, and joined Everbright Securities Company Limited in April 2014. On 24 September 2014, Mr. Li has become the Executive Director and Chief Executive Officer of China Everbright Securities International Limited. Mr. Li also holds the CFA and FRM designation.

So Hin Pong

Mr. So is the Director and the Head of Customer Services of China Everbright Securities (HK) Limited. He joined China Everbright Securities (HK) Limited on 12 June 2001. Mr. So attained Diploma in Finance awarded by the Chinese University of Hong Kong. Mr. So has 30 years of working experience in Hong Kong financial industry. Mr. So is the Responsible Officer of China Everbright Securities (HK) Limited and its associates holding licence for carrying on types 1, 2, 3, 4, 5, 6 and 9 regulated activities pursuant to the SFO.

Cheung Pang To

Mr. Cheung is the Managing Director and the Head of Sales of China Everbright Securities (HK) Limited. He joined China Everbright Securities (HK) Limited on 11 June 2001. Mr. Cheung attained Bachelor of Business Administration in 1988 and a Master’s degree in Business Administration in 1996. Mr. Cheung has over 22 years of working experience in the Hong Kong financial industry. Mr. Cheung is the Responsible Officer of China Everbright Securities (HK) Limited and its associates holding licence for carrying on types 1, 2, 3, 4, 5 and 9 regulated activities pursuant to the SFO. Before joining China Everbright Securities (HK) Limited, he worked for Sun Hung Kai & Co., Ltd. for over 12 years.

Ho Chi Ho

Mr. Ho is the Director of China Everbright Capital Limited and China Everbright Securities (HK) Limited. He joined China Everbright Capital Limited on 20 June 2005. Mr. Ho graduated from the Chinese University of Hong Kong in 1996 with a bachelor degree in Business Administration. Mr. Ho has been in the corporate finance industry for over 16 years. Mr. Ho is the Principal and the Responsible Officer for carrying on types 1, 4, 6 regulated activities pursuant to the SFO of China Everbright Capital Limited and China Everbright Securities (HK) Limited. Prior to joining China Everbright Capital Limited, Mr. Ho worked for Guotai Junan Capital Limited and First Shanghai Capital Limited as their senior management.

– 44 –

GENERAL INFORMATION

APPENDIX III

(c) None of the Directors, the directors of the Investment Manager, any investment adviser or any distribution company, or any associate of any of those persons, is or will become entitled to receive any part of any brokerage charged to the Company, or any re-allowance of other types on purchases charged to the Company.
(d) On 18 December 2013, the Company has entered into the agreement with the Investment Manager, pursuant to which the Investment Manager has agreed to provide non-discretionary investment management services to the Company for a period of three years from 1 January 2014 to 31 December 2016.

The maximum aggregate fee payable by the Company to the Investment Manager under the New Investment Management Agreement will not exceed HK$960,000 per annum.

The Investment Manager will provide non-discretionary investment management services to the Company under the New Investment Management Agreement including: (i) identifying, reviewing and evaluating investment and divestment opportunities for the Company and negotiating the terms of such investment and divestment for the Company in accordance with the investment policies of the Company and directions from the Investment Committee of the Company; (ii) providing investment recommendations to the Investment Committee and assisting the Investment Committee in structuring acquisitions and disposals; (iii) executing investment and divestment decisions of the Company in accordance with the instructions of the Investment Committee; and (iv) providing general administrative services.

20. CUSTODIAN

Deutsche Bank AG, Hong Kong Branch, whose address is at 52/F, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong, was appointed as the custodian in relation to the investments which the Company may from time to time deposit with the custodian.

21. RISK FACTORS OF INVESTING IN THE COMPANY

The Company is an investment company and its funds will be invested globally in both private and publicly listed enterprises that have demonstrated the ability to manufacture a product or deliver a service that is supported by the economies of mainland China, Hong Kong, Macau and Taiwan. These investments will be subject to market fluctuations and the risks inherent in all investments. Investors should also be aware that the Company’s income and its net assets value may be adversely affected by external factors beyond the control of the Company. As a result, the Company’s operating results and its net assets value may go down as well as up, subject to, among other factors, the prevailing market condition.

22. MISCELLANEOUS

The English text of this Prospectus and the PAL shall prevail over the Chinese text for the purpose of interpretation.

– 45 –

GENERAL INFORMATION

APPENDIX III

23. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

A copy of the Prospectus Documents and the consent letter referred to the paragraph headed ‘‘Expert and Consent’’ in this appendix have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

24. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours (i.e. during 9:30 a.m. to 12:00 p.m. and 2:00 p.m. to 5:30 p.m. on Monday to Friday) at Room 707, 7/F, New World Tower 1, 16–18 Queen’s Road Central, Central, Hong Kong, during the period of 14 days from the date of this Prospectus:

(a) the memorandum and articles of association of the Company;
(b) the audited annual reports of the Company for the three years ended 31 December 2012, 2013 and 2014;
(c) the written consent referred to in the paragraph headed ‘‘Expert and consent’’ in appendix III to this Prospectus;
(d) the unaudited pro forma statement of adjusted net tangible assets of the Company, the text of which is set out in appendix II to this Prospectus;
(e) the letter from Ernst & Young in respect of the pro forma financial information following completion of the Rights Issue, the text of which is set out in appendix II to this Prospectus;
(f) a copy of each of the material contracts referred to in the paragraph headed ‘‘Material contracts’’ in appendix III this Prospectus;
(g) the Underwriting Agreement; and
(h) this Prospectus.

– 46 –

AI assistant

CAI Corp — Capital/Financing Update 2015

48926_rns_2015-12-16_f5c332d1-502e-4323-9597-d9778b1ce6c7.pdf

CHINA NEW ECONOMY FUND LIMITED

中國新經濟投資有限公司

RIGHTS ISSUE ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO SHARES HELD ON RECORD DATE

CONTENTS

EXPECTED TIMETABLE

Event

EFFECT OF BAD WEATHER IN THE LATEST TIME FOR ACCEPTANCE AND PAYMENT FOR THE RIGHTS SHARES

TERMINATION OF THE UNDERWRITING AGREEMENT

DEFINITIONS

CHINA NEW ECONOMY FUND LIMITED 中國新經濟投資有限公司

(Stock code: 80)

RIGHTS ISSUE ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO SHARES HELD ON RECORD DATE

INTRODUCTION

THE RIGHTS ISSUE

Subscription Price

Basis of provisional allotment

Status of the Rights Shares

Fractional entitlements to the Rights Shares

Qualifying Shareholders

LETTER FROM THE BOARD

Non-Qualifying Shareholders

No application for excess Rights Shares

Procedure for acceptance and payment or transfer

LETTER FROM THE BOARD

Application for listing

Certificates for the Rights Issue

Taxation

Conditions of the Rights Issue

UNDERWRITING ARRANGEMENT FOR THE RIGHTS ISSUE

Commission

Termination of the Underwriting Agreement

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE RIGHTS ISSUE

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND NIL-PAID RIGHTS SHARES

ADDITIONAL INFORMATION

1. FINANCIAL SUMMARY

2. STATEMENT OF INDEBTEDNESS

3. MATERIAL ADVERSE CHANGE

4. WORKING CAPITAL STATEMENT

5. FINANCIAL AND TRADING PROSPECT OF THE COMPANY

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS OF THE COMPANY

2. ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

To the Directors of China New Economy Fund Limited

Directors’ responsibility for the Pro Forma Financial Information

Our Independence and Quality Control

Reporting accountants’ responsibilities

Opinion

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of the Company and its associated corporations

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

4. MATERIAL CONTRACTS

5. LITIGATION

6. DIRECTORS’ SERVICE CONTRACTS

7. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS AND OTHER INTERESTS

8. COMPETING INTERESTS

9. EXPERT AND CONSENT

Name Qualification

10. PARTIES INVOLVED IN THE RIGHTS ISSUE AND CORPORATE INFORMATION

(b) Profiles of Directors

Executive Directors

Independent Non-executive Directors

11. EXPENSES

12. BINDING EFFECT

13. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Investment Objectives

Investment Policy

Investment Restriction

14. INVESTMENT PORTFOLIO

At 30 June 2015

At 31 December 2014

Private Equity Fund — Cayman Islands

15. DISTRIBUTION POLICY

16. FOREIGN EXCHANGE POLICY

CAI Corp Capital/Financing Update 2015